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Third Party Submissions: They work!

Being accused of patent infringement is an expensive place to be. The accused infringer has options, but all of them are costly. One option is to initiate an Inter Partes Review (IPR) to invalidate the accuser’s patent, which can cost $100k just to initiate the proceedings. A complete IPR proceeding through PTAB hearing can cost more than $300k. Defending a patent infringement suit is even more expensive: Even with less than $1m at risk the cost of defending a patent suit averages about $500k.

Therefore, preventing a competitor (or other potential accuser) from obtaining a patent can be a good business decision. Since September 16, 2012, 35 U.S.C. 122(e) provides a mechanism for third parties to submit patents, published patent applications, or other printed publications of potential relevance to the examination of a patent application with a concise description of the asserted relevance of each document submitted (1). The cost of submitting a Third Party Submission is typically low. We have filed Third Party Submissions for less than $1000 in cases where clients already knew the prior art that applied.

But in the spirit of our motto “patent that matter” we wanted to make sure that these Third Party Submissions (3PS) actually work. Does a Third Party Submission influence the prosecution of the case where they are submitted? And if so, by what degree? In short: Do they work?  Should we advise clients to utilize this tool? Are we adding value to our client by filing Third Party Submissions?

Third Party Submission - Effect on Allowance

Unfortunately, searching the web did not provide any good answers. Most of the publications around Third Party Submissions deal with the law and the mechanics around them, but not with their efficacy. So we did our own research. In particular, we looked at every patent application that was filed in 2013. We chose 2013 so that the applications would be published when the rules regarding these submissions had already been in effect for some time. On the other hand we wanted to look at application where a significant portion of the applications had already been finally disposed, i.e. where either a patent had issued or the application had been abandoned. So 2013 it was.

We then concentrated our analysis on those Technology Centers where most of the Third Party Submissions had been filed: TC 1600, 1700, 2400, 2800, 3600, 3700. Those Technology Centers accounted for 92% of the total 725 applications in which third party submission had been filed.

We then compared the allowance rate of applications for each Technology Center in applications in which no Third Party Submission had been filed and compared it with those in which a Third Party Submission had been filed. The results are shown in the table and chart below:

Technology CenterAllowance Rate w/o 3PSAllowance Rate with 3PSChange

Third Party Submissions reduce the allowance rate of patent applications

The data shows that Third Party Submissions reduce the allowance rate of patent applications, in particular in Technology Centers 3600, 2800 and 2400. Third Party Submission seem less effective in preventing competitor’s patents in TC1700 which handles chemical cases and  in TC3700 which deals with mechanical engineering, manufacturing, and products.

Next, we wanted to see if in those cases where a patent issued the Third Party Submission may have helped reduce the scope of the claim. To do that, we counted how many final rejections were issued in the allowed patents. While not being precise, we suggest that the number of final rejections in an application is correlated with a loss of claim scope.

Technology CenterFinal Rejection / Patent w/o 3PDSFinal Rejection / Patent with 3PSChange

That analysis shows in increase in final rejections being issued in applications in which a Third Party Submission was present. Technology Center 1600 was 62% more likely to issue a final rejection in an application with 3PS than in one without, followed by TC2400 which was 53% more likely to finally reject (but ultimately allow) an application with a 3PS present.

Conclusion: Third Party Submissions work

We believe the data indicates that Third Party Submissions are an effective tool to prevent or at least limit the scope of competitors’ patent applications. Unfortunately, Third Party Submissions are still not widely used: In more than 340,000 analyzed patent applications only 668 Third Party Submissions have been filed. We hope the popularity of Third Party Submissions will increase as people realize that they provide a cost effective way to avoid future litigation cost. And there is certainly no shortage of bad patent applications that deserve being abandoned.