When a company successfully secures an issued patent from the U.S. Patent & Trademark Office (USPTO) on an important discovery, technological advancement or other new and useful invention, it can boost the company’s valuation or reputation in the marketplace. For example, a patent issuance can favorably position the company for transactions with investors, or a purchaser, by demonstrating strength in the company’s intellectual property position and the ability to prevent competitors from entering or effectively competing in the company’s market. Issued patents can also serve as market differentiators to existing or potential customers who perceive value in the patented technology or otherwise create a buzz about the company in an industry. Bearing this in mind, it is generally better from the company’s perspective for its patent applications to issue as patents sooner rather than later. But what is the cost of seeking expedited issuance of a patent and what are the potential benefits?
Companies generally understand that they need to file patent applications on their inventions quickly in order to protect their rights. Currently, however, the applicant has a choice as to how quickly the USPTO examines each patent application, and the applicant’s decision in that regard is not as clear. Last year, the agency enacted a Track I Prioritized Examination Program as part of the America Invents Act. Under the program, the USPTO aims to complete its examination of a patent application within roughly a year or less, and sometimes as quickly as a few months. Thus, so long as the subject matter of the patent application is new and nonobvious from the prior art and meets other threshold requirements for patent eligibility, the agency should issue a patent within a year or less. In contrast, traditional or normal-track examination typically takes more than three years.
Given the choice, when should a company request to participate in the Track I program? One consideration is cost. The trade-off for a faster examination under the program is that the USPTO’s fee is about 300 percent higher than the cost of a normal-track examination. For smaller companies with less than 500 employees, the fee increases from about $830 to roughly $3,230 to participate in the Track I program. For larger companies, the cost rises from about $1,550 to about $6,350. In addition, the USPTO’s faster examination of the patent application means that companies will likely incur legal fees for responding to communications from the agency earlier in time (within one year of filing the patent application instead of more than three years later).
Notwithstanding the added cost, there are situations in which filing a patent application under the Track I program may be justified. For example, a company might consider filing under the program when the subject matter of the patent application covers aspects of the company’s current products or near-term, future product offerings. The company could potentially benefit from an ability to mark or otherwise identify those products as patented.
Companies can also convert existing patent applications, originally filed under the USPTO’s normal-track program, into Track I applications. Thus, a company might also wish to use the Track I program if it learns, after initially filing a patent application under the normal-track program, that the subject matter of the patent application covers aspects of a competitor’s product. If the company secures the patent, it can seek damages for patent infringement and potentially an injunction that would prevent its competitor from selling the infringing product in the future.
Another consideration is inventor satisfaction. Companies often incentivize their employees to invent on the company’s behalf. But the USPTO’s normal-track examination is often a “hurry up and wait” proposition. Under that process, an inventor’s “eureka” moment and the preparation and filing of a patent application is followed by virtual silence from the USPTO for more than three years. In contrast, under the Track I program, an inventor may remain more committed to the process because the USPTO will provide a much faster determination on patentability. Satisfied inventors can lead to more inventions. A faster examination also can help to ensure that the inventor is still present at the company or otherwise available to assist if the agency initially rejects the application.
The USPTO’s Track I Prioritized Examination Program is deserving of serious, but careful, consideration. Notwithstanding its additional cost, examination under the Track I program has its benefits.