Technological innovation has been key to generating new opportunities in the energy industry and is largely responsible for the resurgence of fossil fuel production in the United States. Advancements in horizontal drilling, coupled with hydraulic fracturing or “fracking,” have allowed operators to produce oil and gas more efficiently and have also allowed extraction from unconventional geological formations that were previously considered not conducive to production. In a similar manner, innovation in the renewable energy space is increasingly important as businesses seek to maximize efficiency and lower the cost of deliverables to compete with more traditional forms of energy production.
Bringing new technologies to market has historically been a long-term and risky endeavor. While the rewards may be great, the costs associated with research and development and the difficulty in obtaining customer or market support for new technologies present challenges to both start-ups and established businesses. Investing in new technology requires protecting that investment by obtaining patent or other forms of intellectual property protection. The rewards of investment in technology and intellectual property protection allow intellectual property owners and licensees to better differentiate themselves over competitors who are prevented from using that technology. Historically, a major impediment to protecting innovation, especially through patent protection, has been the multiple-year delay between filing a patent application and obtaining an issued or granted patent from the U.S. Patent and Trademark Office (USPTO). This protracted period has long been a source of frustration among businesses seeking to launch new product designs quickly and maintain protection from competitors adopting the new designs. In fast-moving industries such as the energy industry, long pendency times of patent applications also may lead to technology becoming obsolete or losing its cutting-edge status before a patent is granted.
Recent changes in the patent system have allowed prioritized examination of patent applications filed with the USPTO under the Track One Prioritized Examination (“Track One”) program. The program accelerates the USPTO’s consideration of a patent application and seeks to reach final disposition of the patent application within 12 months of the filing date of the patent application. In other words, within this 12-month period, the USPTO seeks to (1.) review the patent application, (2.) make any necessary rejections of the application, which are typically delivered to the patent applicant in a formal “Office Action” issued by the USPTO, and (3.) either resolve these rejections with the patent applicant so the patent application may be allowed (as indicated by a “Notice of Allowance”), or enter a final Office Action if any of the rejections cannot be resolved. Data collected by the USPTO about the program reveals that patent applications filed under the program have experienced reduced pendency times and fewer Office Actions than patent applications filed under normal, non-prioritized filing procedures.
To qualify for the Track One program, a patent applicant must petition the USPTO to grant prioritized status to the application and must submit a prioritized examination fee of $4,000 in addition to the normal filing, search, and examination fees required for patent applications. The $4,000 fee is reduced by half ($2,000) for patent applicants that qualify as “small entities,” which includes individual inventors and businesses with no more than 500 employees.
Recent data from the USPTO indicates that the Track One program is a much quicker route to examination and final disposition of a patent application. The average time between the filing date and final disposition date for Track One applications is approximately 7.4 months, while the average pendency for a normal patent application is approximately 29.5 months.
Track One applications also may be the cheapest to prosecute. The USPTO issued an average of 2.7 Office Actions prior to final disposition in normal patent applications but only 1.2 Office Actions in Track One applications. Thus, the increased up-front cost of participating in the program is largely offset by the reduction in legal costs associated with responding to Office Actions, especially if the patent applicant is a small entity. In addition to these potential cost benefits, since fewer Office Actions will likely result in less argument between the patent applicant and the USPTO about the merits of the patent application, it is possible that Track One applications will have fewer estoppel issues as a result of these arguments and any amendments made to the patent application. This in turn may result in a stronger issued patent.
The reduced number of Office Actions and relatively rapid response times for Track One patent applications highlight the benefits of the program. From the perspective of a business operating in a fast-paced industry such as the energy industry, the primary benefit of prioritized examination may be the ability to obtain patent protection while a technology is still cutting-edge. This rapidly obtained protection may be a key differentiator over competitors that would otherwise gain market share by taking advantage of a long delay between the filing of a patent application and the grant of patent rights. In this regard, obtaining full patent rights as many as two years faster than would be obtained without expedited examination may be key to the survival or future success of the business.
While the benefits of the Track One program are clear, only 10,000 requests for prioritized examination may be granted in a single calendar year. In 2012, the first full year of the Track One program, only 5,024 requests were granted. Yet the 10,000 application limit may soon be reached. The USPTO reported that 5,112 Track One requests were submitted between January 1 and July 8 of 2013, suggesting that the program is rapidly gaining in popularity and that the 10,000 application limit will soon prevent late-year requests from being granted. It follows that businesses whose success depends on being technologically competitive should consider using the Track One program and, if recent trends are any indication, requesting participation in the program earlier in the calendar year.
Patton Boggs’ IP group regularly assists clients in the renewable and non-renewable energy industries on patent and other intellectual property matters and is adept at prosecuting Track One patent applications. For additional information on the Track One program or other intellectual property issues, please contact Robert Hilton at (214) 758-1537 or Aaron Pickell at (214) 758-1546.