submariners, Pioneers, or thickets: Which firms use continuations in patenting and why?*
Deepak Hegde
University of California Berkeley
David Mowery
University of California Berkeley
Stuart Graham
Georgia Institute of Technology
Abstract
The continuations procedure is intended to benefit pioneering inventors, but is allegedly related to the various strategic uses by firms of the U.S. patent system including submarine patents, junk patents, and patent thickets. The procedure is hence the subject of several past and proposed patent policy reforms. Yet, very little is known about how applicants exploit differences in the major procedural variants of continuations --- the Continuation Application (CAP), the Continuations-In-Part (CIP), and Divisions --- to alter the term and scope of patents. To understand their use, and potential misuse, this paper empirically analyzes the three types of continuations filed between the years 1981 and 2000 by U.S. firms, and links their frequency to the characteristics of resulting patents, assignees and industries. We find that CIPs are disproportionately filed by firms with fewer patents operating in crowded technology spaces, and are more common in patents related to chemical and biological technologies. Also, patents resulting from CIP filings cover relatively valuable inventions, contain more claims per patent on average, and are statistically consistent with the use by pioneering inventor interpretation of continuations. In contrast, CAPs and Divisions are more likely filed by larger firms, cover mediocre to minor improvements, are common among computer and semiconductor patents, and can be linked, though not exclusively, to patent thickets. We also econometrically test effects of the 1995 change in patent term on continuation applications and find that the Act reduced, and perhaps altered, applicant incentives to engage in continuations.
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PRELIMINARY WORK! Please email [e-mail] with comments and questions. This draft: February 12, 2007
1.
Introduction
A large literature spanning law, economics, and strategic management has considered the strategic use by firms of intellectual property, including patents. With some exceptions, however, this literature has focused either on firms filing of patents or on the incidence and outcomes of patent litigation among firms (see Hall & Ziedonis 2007, as well as Somaya 2003). The use by firms of patent review procedures has received less attention from scholars, despite widespread acknowledgement by patent attorneys and other IP professionals of their importance. This paper examines the characteristics of firms of one such procedural strategy, the patent continuation. The limited empirical work on continuations to date (Graham 2004, Graham & Mowery 2004), has focused on inter-industry differences in the incidence of continuations. The continuation procedure allows inventors to restart the examination of their patent application while retaining the filing date of a previous application that discloses the same invention. Inventors can use continuations to revise their claims to reflect developments in their invention after the first application is filed, or to respond to an examiners arguments and comments. According to the U.S. Patent Office, the procedure, which has been a part of the U.S. patent system since at least 1863, is intended to lead to a well-designed set of claims that give the public notice of precisely what the applicant regards as his or her invention (Federal Register 2006 p 48). Continuations, which are rather unique to the U.S. patent system 1 , are criticized by economists and members of the patent bar because of its potential for strategic use, notably in the so-called submarine patents that are issued following long periods of examination and revision through continuation applications (Graham & Mowery 2004). 2 The procedure is also
The closest parallels elsewhere are the Divisional available in the European and Japanese Patent Offices, and the option allowing for the selective prosecution of claims from a search report by the German Patent Office (find ref). 2 Continuation applications have been available to patentees in the United States at least since 1863. In Godfrey v. Eames, 68 U.S. 317 (1863), the U.S. Supreme Court interpreted the Patent Act of 1836 to allow continuation applications, in that case when the original application was abandoned on the same day that
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allegedly used by applicants to badger examinees into granting patents of dubious quality, sometimes called junk patents, by repeatedly filing continuations of the same application (Quillen & Webster 2001). At the same time, however, continuations are defended by certain sections of the industry (see for example, comments of the Biotechnology Industry Organization on the USPTO proposed rules changes concerning continuation practice and claim limitations 2006) for their ability to protect the high-risk investments of pioneering inventors in young fields of invention that are subject to great uncertainty. Indeed, Japan is considering changes in its patent examination system that would include certain features of continuations. The premise is that relaxing the strict time and content limits of the current Japanese procedure by introducing continuations will promote front-runners to strategically obtain patents (Institute of Intellectual Property Bulletin 2005, p.2-5). Not for the first time in patent policy, however, the debate over the use, abuse, benefits, and costs of the continuation procedure has been conducted in an evidentiary vacuum. There is a surprising lack of analysis of the characteristics of the patents or patentholders that exploit the continuation procedure in the U.S. patent system. We do not know, for example, whether continuations are systematically more likely to be used in relatively young fields of invention, and whether these applications more frequently cover pioneering inventions. Here, we empirically analyze the characteristics of U.S. corporate patents that are subject to the three major types of continuations (see below for definition and discussion of these three types), and combine this with an examination of the publicly listed firms (and the patent portfolios of such firms) and technologies for which continuations were used intensively during the 1981-2000 period. The results of our analysis can be used to evaluate different versions of the conventional wisdom concerning the practice.
the new continued application was filed. The use of continuing applications was also upheld by the Supreme Court in Crown Cork & Seal Co. v. Gutmann Co., 304 U.S. 159 (1938) and General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175 (1938).
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Recent changes in U.S. patent law have sought to reduce the abuse of continuations. In 1995, the term of patent protection was changed from 17 years from the date of issue to 20 years from the date of application, forcing applicants who use continuations to trade off an extended term of pre-issue secrecy against a shorter period of post-issue protection (Graham 2004). Legislation that became effective in 1999 mandated the publication of most patent applications 18 months after submission, thereby making it impossible for such applications to remain submerged in the review process. 3 The second part of our study estimates the effects of the 1995 patent term change on the usage of continuation applications by U.S. corporate assignees. The rest of the paper is structured as follows. Section 2 describes the role of continuations in the patent examination process. We discuss procedural differences among the three types of continuations: the Continuation Application; the Continuation-In-Part; and the Division, and consider various purported motives of users of each type. Section 3 describes the construction of our data, compares the characteristics of continued patents with those of patents not subject to continuations, and analyzes variations in the practice among different technologies. Section 4 deals with the continuations propensity of U.S. corporate patentees and Section 5 econometrically tests the effects of the 1995 legislative change in patent term on the incidence, characteristics, and corporate users of continuations. Section 6 summarizes and discusses the implications of our findings.
2.
2.1
Continuations: Provisions and Practice
The patent review process and continuations
In the United States, the patent review process starts with the inventor filing an
application containing a written description of her invention. This description is formali...
HegdeMoweryGraham_11Feb07