At first sight, the drafting and procedural costs associated with such an IP strategy suggest that only higher-value inventions would justify them, and the corresponding variables should be associated with more valuable patents as a result. However, should a given scope of protection be split into different filings, one could hardly foresee the way the value of the underlying invention would spread across these filings. Assuming that most value could remain concentrated in one application, such an IP strategy would generate one highly-valuable filing and several filings of much lower value.
The strategic variables adopted by the applicants for intellectual-property rights in drafting, filing, and managing their patent applications include: the raw number of claims, the PCT route, the requests for accelerated search or examination, and more strategic “internal” characteristics relating to the structure and quality of the drafts such as the amount of excess claims filed, the share of claims lost in the examination, the construction of the drafts by assembly or disassembly, and the filing of divisionals – strategic vantage points from a patent litigation perspective.
van Pottelsberghe has shown that the higher the quality index, the lower the demand for patent rights (measured using three alternative indicators, including the number of claims filed, by domestic organizations and from abroad, and the number of patents filed). In other words, applicants gauge the quality of patent offices, and adapt their filing behavior accordingly.
This negative relationship between quality and the demand for patent rights is still observed when the roles of relative fees, the number of researchers, and the strength of enforcement mechanisms are taken into account. It is noted that non-resident applicants are more sensitive to quality and relative fees than resident applicants in executing a global IP strategy.
The reputation of the EPO as a patent regime that prides itself on examination rigor in the name of exceptional patent quality is well known. However, due to the relationship described above between high quality thresholds and examination fees with lower filing rates for intellectual property, many pundits have suggested a causal relationship with the EU’s lackluster performance in the realm of industrial competitiveness and innovative activity.
Accentuating this point, The Economist ran an article with the awkwardly embarrassing title, “Europe’s unwieldy patent regime: Smother of invention.” Thus, virtuous cycles can inadvertently become vicious cycles when the bigger picture of national economic growth and domestic economic strength is considered.
The underlying questions regarding the effects of patent-examination quality are whether the quality of patent systems affects applicants’ filing behavior and how. Do patent offices with a high quality index receive fewer patent applications? How do patent-office characteristics relate to patent value and its role in patent litigation?
Patent-value determinants can be grouped into three classes: patent characteristics (including complexity measures), ownership characteristics, and “insider” information obtained from field surveys or interviews. Most dimensions of filing strategies are observed to be positively associated with more valuable patents. This is particularly the case with the amount of excess claims filed, the drafting by assembly, the choice of the PCT route, and the parents of divisional applications for follow-on intellectual-property rights. Such results further confirm the positive impact of some popular determinants (such as the number of inventors).
Well-established determinants of patent value such as backward patent citations and the applicant’s patent-portfolio size appear to have a very ambiguous relationship with patent value, which heavily depends upon the country from which patents originate, the technology area they are related to, and the value indicator chosen.
The strikingly strong relationship between filing strategies and patent value raises several policy issues. The recent surge in the size of patent applications is testimony to an exploitation of all procedural possibilities offered by patent systems in an applicant’s overall IP strategy to build the most suitable filing strategy. van Pottelsberghe empirically establishes that these filing strategies consisting in drafting excessively-long patents – often by assembly or disassembly – and in particular the filing of divisional applications, are indicative of more important patents (and higher stakes in patent litigation).
The benefits of such divisional or drafting strategies to patent holders can easily be guessed: they may induce complexity and uncertainty on the market, not to mention a larger field of exclusive exploitation for the patent owner. A common denominator of these strategies is that they may also induce considerable delays in the granting process of the intellectual-property rights.
There is a distinct danger that such strategies could result in abuse of the patent system, possibly to the benefit of the owner and at the expense of the consumer. For instance, by refiling the same subject-matter over and over again by means of divisionals over several generations, a patentee could unduly keep some subject-matter alive from a parent application that had been refused for grant by a patent office. The EPO previously allowed the filing of divisionals of an application, and then divisionals of divisionals, and so on for up to twenty years. Such an IP strategy could provide the applicant with provisional protection for such intellectual property.
Recently, the EPO has restricted such practice by only allowing divisional applications to be filed for up to twenty-four months after a first substantive communication is issued by the EPO for the earliest application in the family for which such a communication has been issued. Thus, once an office action issues on a parent application, a time limit is set for filing subsequent divisional applications.
In its ruling, the EPO Enlarged Board of Appeal confirmed this strategy as a legitimate exploitation of the procedural possibilities afforded by the EPC as it is, although some consider it “an abuse in relation to the law as they think it ought to be …” Sentiments that fueled the two-year limit for divisional filings mentioned above were voiced by the Board, stating that it was “unsatisfactory that sequences of divisional applications each containing the same broad disclosures of the original patent application should be pending for up to twenty years…. [However,] it would be for the legislator to consider where there are abuses and what the remedy could be.”
The results of van Pottelsberghe reinforce assertions by others that such strategies may well be an endogenous response to value, suggesting that applicants simply need more time and flexibility in the patenting process when the perceived value of their future patents is higher. Distinguishing between this legitimate quest for flexibility and abusive behaviors may be a very delicate task, which should be achieved in view of social or economic optima, to determine whether the legal framework, or the examination practice, should be adapted to better control these strategies.
Patent attorneys and patent lawyers would most likely favor few restrictions on subject matter, and welcome high flexibility to adapt a patent over time – ameloriating intellectual property to the current climate of dynamic patent litigation. Examiners, in contrast, would opt for more decision power, and less flexibility toward the applicants. To maintain academic impartiality, van Pottelsberghe makes the assessment based on logical considerations regarding the extent to which each component improves stringency and transparency.
