Joachim Henkel and Florian Jell
September 2010
Technical University Munich, Schöller Chair in Technology and Innovation Management
Arcisstr. 21, D-80333 Munich, Germany, phone: +49-89-289-25748; email: florian.jell@wi.tum.de
In this study we analyze why firms intentionally delay the patenting process. We analyze
443,988 applications at the German Patent Office, which—due to its comparatively long, seven-year examination deferral system—provides its applicants with a very strong leverage for increasing pendency of their applications. More than 50 percent of all filings show applicant-induced delays, more than 20 percent even for the maximum duration of seven years. A mail survey that was answered by 445 inventors (response rate 34.6 percent) of such patent applications reveals the motives behind the delays. The more importance is attributed to “create insecurity” and “gain time for evaluation” as filing motives, the more likely applicants delay the patent process. Implications from our study are twofold. Whereas patent applications that are withdrawn after a re-evaluation by the applicant disburden the patent office, patents that are filed solely in order to create insecurity give cause for concern. Such patent applications increase in-transparency of the patent system. Inefficient relocation of resources from innovative activities to patent screening and the development of invent-around solutions by third parties may result. This would ultimately hamper innovation.
Acknowledgements: We thank Rosemarie Ziedonis, Dietmar Harhoff, Georg von Graevenitz, Stefan Wagner, and the participants of the CCC Conference 2010 (Ann Arbor) and the TIME Presentation Series (Munich) for valuable comments on earlier versions of the paper.

Only very few studies exist on the relation of patent process duration and value appropriation by individual firms. They suggest that it is desirable for firms to obtain a speedy decision by the patent office on grant or refusal of their filed patent applications (Gans et al., 2008), and that firms with better appropriation capabilities achieve faster patent grants (Reitzig and Puranam, 2009).
Contrary to these findings, we argue that in many cases applicants benefit from a long period of patent pendency, and even actively delay the patenting process for many years. It has been conjectured, though empirical evidence is lacking, that such benefits accrue from uncertainty for competitors, and from the deferral of procedural fees and payments. With this study, we contribute empirical evidence.
Pending patent applications (as opposed to granted patents) of a focal can not be ignored by its rivals since the latter must assume a fair chance that at least some of the applications lead to granted patents. Yet, if patents are pending longer then necessary, rivals are confronted with an overly long period of uncertainty (Harhoff and Wagner, 2009), during which it remains unclear, which patents are going to be granted, withdrawn or rejected—information essential to the preparation of countermeasures such as opposition or invent-around. Further, the focal firm’s expectations about the commercial value of the underlying inventions are not revealed (Lemley and Shapiro, 2005). Pendency also induces uncertainty about the scope of a potential patent. Take the extreme example where an applicant considers it likely that some of the claims (or even the whole patent) will be rejected. In that case, delaying the patent process yields a broad, but pending patent, which might be more favorable for the applicant than a granted, but narrow patent or a rejection.
Finally, delaying the patent process involves a deferral of payments and fees dependent on certain events in the patent process (such as issue and publication fee at the U.S. Patent
Office; examination, translation, or grant fees in Europe).
The major challenge of any empiric analysis on pending patents is to identify whether pendency was caused by the patent office, e.g. due to heavy workload of examiners, or whether it was actively induced, and protracted by applicants. Extant studies on the duration of the patent process (e.g. Johnson and Popp, 2003; Popp et al., 2004; Harhoff and Wagner,
2009) fail to disentangle those two triggers of patent pendency. Further, these studies do not contain direct measures of motives behind pending patent applications.
In this study we present a methodical solution. Using data from the German Patent and
Trademark Office (GPTO) we are able to identify applicant-driven pendency. At the GPTO
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(unlike the U.S. Patent Office [USPTO]), patent applications are not given a substantive examination unless and until the applicant submits a request for examination (“deferred examination”). Failure to file the request for examination within seven years results in the lapse of the application. Before that request has been filed, no patent office-caused delays occur. They would rather accrue during examination (i.e. after the request for examination has been filed), which is much more time consuming from the patent office’s perspective. Thus, in Germany applicants are given the option to intentionally delay the patent process by seven years. While deferred examination at the GPTO was initially designed to give applicants a cost efficient opportunity for “second thoughts” on whether a patent is commercially valuable, we argue— as discussed above—that this procedure is also exploited strategically by applicants in order to increase uncertainty for their rivals.
In order to test these two motives to increase patent pendency (“evaluate patent” versus “create uncertainty”), we proceeded as follows. First, based on the analysis of 443,988
German patent applications filed between 1986 and 2000 we identify patent applications that show patterns of sophisticated filing strategies, such as extremely long pendency caused by the applicant. Second, to understand the motives behind this behavior, we conducted 25 interviews with inventors. Third, based on findings from our patent analysis and the interviews we designed a questionnaire that was distributed to a larger sample of inventors of the seemingly strategic patent applications that we identified above. The survey yielded 445 responses (response rate 34.6 percent). Using regression models, we relate filing motives identified in the survey to characteristics of the patenting process of the respective application.
We find that more than 20 percent of all patent applications are pending for seven years before they are either examined or lapse; more than 50 percent of them (11.4 percent in total) lapse after seven years of pendency without being examined.
Our interviews confirm that above motives drive such behavior. First, the underlying invention may have turned out not to be worth the cost of substantive examination. Second, in some cases it was clear from the beginning that the invention was not very valuable; however a patent was filed and kept pending in order to create uncertainty for competitors.
Econometric analysis reveals that the more importance is attributed to “create insecurity” and “gain time for evaluation” as filing motives, the lower are the odds that a request for examination is filed in general, and the less likely applicants expedite the patent process through filing the request for examination immediately after the patent application. Concrete plans for the usage of the underlying invention increase the likelihood that examination is requested immediately. Higher importance of the motive “create insecurity” makes pendency longer than three years more likely than an immediate request for examination, while having
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no significant influence on the likelihood of pendency lower than three years. Contrary to that, higher importance of the motive “gain time for evaluation” also makes withdrawal and lapse of patents after two and three years more likely. If a patent application is in a complex technology field, it is more likely that it is pending for seven years and lapses afterwards than having an immediate request for examination.
Implications from our study are twofold. Whereas patent applications that are withdrawn after a re-evaluation by the applicant disburden the patent office, patents that are filed solely in order to create insecurity give cause for concern. Such patent applications increase in-transparency of the patent system. Inefficient relocation of resources from innovative activities to patent screening and the development of invent-around solutions by third parties may result. This would ultimately hamper innovation.
In a larger sense, these results are relevant for all patent systems that provide direct or indirect means for delaying the patent process to applicants. In a narrow sense, they are relevant for patent systems with a deferred examination procedure, such as Germany, Canada, or
Japan. The results are especially relevant for the U.S. context, where a public debate is observed on whether the introduction of a deferred examination system could help the USPTO to deal with its ever-increasing backlog of unexamined patents (USPTO, 2009; Thomas,
2010).
The remainder of the article or organized as follows. Section 2 provides a background on prior research about the duration of the patent process. Section 3 briefly explains the procedure of deferred examination and derives hypotheses. Sections 4 and 5 present methods and results respectively. Sections 6 and 7 conclude.
2.1.
Determinants of patent pendency
Several studies have investigated the duration of the patent process from a patent-office and policy perspective (Kotabe, 1992; Johnson and Popp, 2003; Cockburn et al., 2003; King,
2003; Popp et al., 2004; Batabyal and Nijkamp, 2008; Harhoff and Wagner, 2009; Regibeau and Rockett, 2010). These studies test whether patent pendency is associated with characteristics of patent examiners or the patent application itself, such as technology field, citations, and assignee characteristics. However, none of these studies adequately identifies delays in the patent process caused by applicants. Further, none of them takes filing motives of applicants into account, a factor that might significantly drive applicant-caused delays in the patent process. Those are at most indirectly included, e.g. through types of applicants or their technology fields.
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To our knowledge, only two studies (by Gans et al. [2008] and by Reitzig and Puranam [2009]) exist putting their focus more closely on value appropriation by firms. We will discuss them later in this chapter. Before, we turn our attention to the studies with a stronger focus on the patent system level.
2.1.1
Studies with focus on patent system
Popp et al. (2004) analyze lags between initial applications and the ultimate granting of
1,653,854 patents in the U.S. between 1976 and 1996. They find that pendency time in the
U.S. is associated with characteristics of a patent such as assignee type (e.g. firm, university, etc.), and technology field. Johnson and Popp (2003) use the same dataset and find that more significant inventions (measured by patent citations) take longer to go through the application process.
In contrast, Regibeau and Rockett (2010), using a data set on U.S. patents granted in the field of genetically modified crops from 1983 to 1999 conclude that more important inventions would be approved more quickly.
Harhoff and Wagner (2009) analyze the influence of indicators of patent quality and value, complexity of the examination task, as well as applicant size and origin on the duration and outcomes of 215,265 patent applications at the European Patent Office (EPO) filed between 1982 and 1998. They also find evidence that more valuable patents have faster grant proceedings. Further, those patents seem to have longer battles if a refusal is imminent.
Cockburn et al. (2003), based on an analysis of 182 patents, show an influence of patent examiners’ characteristics on patent examination and litigation. King (2003), analyzing internal timesheets and activity reports, finds that ever-increasing examiner workloads resulted in longer grant lags at the USPTO. Kotabe (1992) find that Japanese patent practices seem to discriminate against foreign applicants with longer pendency periods than for domestic applicants. Batabyal and Nijkamp (2008) discuss whether the USPTO should increase its number of patent examiners in order to improve quality of granted patents and decrease pendency.
2.1.2
Studies with focus on value appropriation by firms
Reitzig and Puranam (2009) analyze the influence of an aggregated measure of functional specialization of intellectual property management organization on firms’ ability to achieve fast patent grants. Analyzing data on 30 firms and 4,144 patent applications, they conclude that firms with better appropriation capabilities achieve faster patent grants. Reitzig and Puranam (2009: 787) argue that “[o]btaining patent protection in a timely manner is an important indicator of appropriation capabilities”.
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Gans et al. (2008), using more than 200 technology licensing deals announced between 1990 and 1999, argue that patent grant delay may limit opportunities for efficient technology licensing.
While both studies imply that a speedy patent process is associated with better value appropriation by firms, we counter that in some cases value appropriation might be more effective with a long process. We argue that it might be in the best interest of a firm, and even the firm’s strategy, to delay the patent process.
2.2.
Strategically delaying the patent process
Scholarly evidence of firms strategically delaying the patent process is provided by Harhoff and Wagner (2009). Their interviews with patent attorneys and EPO officials confirm that applicants choose to delay office proceedings as an instrument to increase uncertainty for rivals. Practitioners have also noted that applicants are actively attempting to induce uncertainty and intransparency to the patent system (McGuinley, 2008; Guellec and van Pottelsberghe, 2007). As Alison Brimelow, former President of the EPO, put it : “If you spend several years waiting for a decision, you and others can play ‘rich man’s poker’, taking a bet on what your rights are going to be and discussing your commercial relationships in the shadow of that pending set of applications.”
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It may be advantageous for a firm to increase uncertainty about their patent applications in many situations. The rationale is the following. Patents are a good way of obtaining information about competitors’ strategy and the development of technology fields. Information from patent databases is used for strategic planning (Day and Schoemaker, 2005), knowledge sourcing (Arundel and Steinmueller, 1998; Gray and Meister, 2006), and technology business planning (Ashton and Sen, 1988; Horst, 1991; Ernst, 1998, 2003).
It is in the interest of any firm to hamper such planning by their rivals, and thusly, to prevent them from obtaining necessary information from patent databases. Keeping inventions secret would be one option. However, if secrecy is not feasible, a set of pending patent applications is an effective means of diluting and disguising relevant information contained in patent applications. The filing of a multitude of patents that are kept pending induces uncertainty about outcome of the patent processes itself, the scope of potential patents, and the commercial significance of the underlying inventions (Lemley and Shapiro, 2005). It limits the extent to which rivals and third parties can rely on information from patent databases for their strategic planning processes.
1
Interview with Alison Brimelow, president of the EPO, published on the website of the EPO.
( http://www.epo.org/about-us/press/backgrounders/interview_de.html
, accessed 12.02.2009).
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To date, no prior study as made the effort to disentangle whether patent pendency was due to the patent office or actively induced by applicants. Patent systems with a deferred examination procedure constitute a practical environment for the observation of applicant-induced pendency. In such systems patent applications are not given a substantive examination unless and until the applicant submits a request for examination. Thus, the lag between filing and grant or refusal effectively consists of two lags: One applicant-induced between the filing of the application and examination (“examination lag”), and a second one depending on both the applicant and the office’s performance between start of examination and grant or refusal
(“grant/refusal lag”).
Deferred examination procedures are in place at many patent offices, such as the Japanese Patent Office (JPO), the GPTO, the EPO, and in Canada. At the JPO, for example, applicants can wait up to three years before filing a request for examination (Hayashi, 2005).
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At the EPO, the request for examination may be filed by the applicant up to six months after the search report on the patent application has been mentioned in the European Patent Bulletin
(Article 94 [2], European Patent Convention).
Unlike the JPO and the EPO, there is no deferred examination in the U.S. At the
USPTO, the mere filing of a patent application and payment of the applicable fees is effectively a request for examination of the application (USPTO, 2009). However, there is an ongoing public discussion in the U.S. on whether the USPTO should adopt a deferred examination system in order to reduce its backlog of unexamined patent applications (McKie, 1973;
USPTO, 2009; Thomas, 2010).
This study is based on the deferred examination procedure at the GPTO. The German government introduced the deferred examination procedure in 1968 as a measure to reduce workload of GPTO patent examiners and the German Federal Patent Court (Lynfield, 1966,
GPTO, 1967: 247). The system allows applicants to wait for up to seven years before filing the request for examination. Failure to file the request for examination after seven years leads to the lapse of the patent application. We chose Germany, because it has the longest deferral.
This strong leverage for delaying examination makes the German patent process a magnifying glass for applicant-induced patent pendency.
2
Deferred examination was introduced at the JPO in 1971. Initially, applicants were given a period of seven years before filing the request for examination. The period was limited to three years in 2001 (Hayashi,
2005).
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3.1.
Traditional use hypothesis
The German examination deferral was designed to give applicants an opportunity for “second thoughts” on the commercial value of a potential patent. Introducing that feature the GPTO intended to disburden its examiners from examining marginal or commercially useless patents that would have been withdrawn shortly after grant anyway. Deferred examination allows applicants to evaluate whether a patent application is worth incurring the cost of a fully carried out examination process (such as examination and grant fee, patent attorneys to communicate with patent examiners) and examiners to focus on “important” patent applications.
Consider a firm that does not know how valuable a potential patent will be at the day of filing
(cf. Scherer, 2001; Denton and Heald, 2004). Such a firm will file a pre-emptive patent “just in case,” but will not file the request for examination immediately. We therefore state the following hypothesis about applicants that make use of the examination deferral.
Hypothesis 1: The probability that a patent application is pending before it enters examination or before it is (deemed to be) withdrawn is positively associated with the importance that the applicant attributes to gaining time to evaluate a potential exclusion right as a filing motive .
As this kind of usage of the examination deferral was intended by policy makers, we denote hypothesis 1 as the “ traditional use hypothesis ”. Firms benefit from that delay to make a more informed decision about the private value of an examination, by collecting and evaluating additional information about technology and market.
3.2.
Strategic use hypothesis
Based on anecdotal evidence (Lemley and Shapiro, 2005; Guellec and van Pottelsberghe,
2007; McGuinley, 2008; Harhoff and Wagner, 2009), we would also assume that some applicants use the deferred examination procedure to induce uncertainty to the patent system.
Take an applicant who considers it likely that its application, or at least some of the claims, will be rejected or withdrawn (a “deliberately deficient” filing, cf. Guellec and van
Pottelsberghe de la Potterie, 2007, p.180). In that case, by delaying the request for examination (the request costs 350 Euros)
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the applicant keeps its application in the state of “patent pending”, which is more favorable than a rejected or withdrawn application. It achieves a very long, and cost-efficient, period of patent pending (the cost of a seven-year pending GPTO
3
For an overview of GPTO patent fees see: http://www.dpma.de/english/patent/fees/index.html
(accessed
05.08.2010).
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patent application without request for examination is 580 Euros)
4
. Given that price, one could either file the request for examination for five existing patent applications or file three new patent applications and keep them pending for seven years. Note that quality and inventiveness of the three additional applications play no role, since they would not be examined. Since no examination takes place, there are no procedural costs, and no “risk” of too early termination of the process through a refusal. However, the patent application can not be ignored by competitors since the applicant could file the request for examination at any point in time and, later, potentially secure a patent right. Faced with such insecurity, competitors (in particular those unable to assess the quality of the application) might want to avoid the risk of infringement and thus incur expenses to adapt their business accordingly (e.g. try to invent around).
5
As an example, one interviewee from the vehicle manufacturing sector portrayed the following case:
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“Developing the wheel suspension for the [product X], we were afraid for a very long time that our R&D efforts could infringe upon patent claims of a similar design alternative of [competitor Y]. It took very long until [competitor Y] filed a request for examination. Thus, we were not sure which of the claims the office will grant or reject. […] For a long time, we thought that our invention infringes upon [competitor Y’s] claims and tried to develop invent-around solutions […].”
This strategy has another important advantage. It makes it difficult for competitors to identify potentially important technology fields in public patent data. Consider a firm that has filed 100 patent applications, 50 covering important inventions that will likely be embodied in future products, and 50 covering less important inventions. Even if the firm already knows the
50 valuable inventions today, it has an incentive to keep all 100 patents pending. If it requests examination for its 50 important filings immediately and let the remainder lapse, then it would reveal to its competitors which and how many of the 100 inventions are valuable.
Thus, from a firm’s perspective, holding a multitude of patent applications pending in the preexamination state effectively mitigates negative effects of patent disclosure (e.g. Anton and
Yao, 2004), since relevant information is being diluted.
Based on that reasoning, we state a second hypothesis about applicant-induced pendency through the deferred examination procedure. Since this kind of usage was not intended by policy makers, we denote the hypothesis as the “ strategic use hypothesis ”.
4
Cost of a German patent application including filing fee (with ten claims) and annual fees for the first seven years; see GPTO website: http://www.dpma.de/english/patent/fees/index.html
(accessed 02.07.2010).
5
Note that also third parties can request examination. This measure could be taken by competitors that do have the ability to identify non-patentability of the invention. However, requests for examination filed by third parties are observed in less than 1 percent of the cases.
6
Translated into English by the authors. Product and company names were replaced by [product X] and
[competitor Y] for reasons of confidentiality.
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Hypothesis 2: The probability that a patent application is pending before it enters examination or before it is (deemed to be) withdrawn is positively associated with the importance that the applicant attributes to the creation of insecurity for competitors as a filing motive.
Our empirical approach was threefold. As a first step, we used patent data from all 443,988 direct first filings at the GPTO between 1986 and 2000. We categorized these patent applications according to how long after the filing day the request for examination was filed, or whether the patent application lapsed without substantive examination. Second, we interviewed 25 of the inventors indicated on patents from our dataset in order to find out why firms would delay examination of their patent applications. Third, we distributed a mail survey, asking 1,286 inventors to indicate the importance of a set of filing motives for a concrete patent application from our initial dataset. We received 445 responses (total response rate
35.6 percent) that we linked to patent applications using application filing numbers. We obtained 445 patent-questionnaire couples that include bibliographic and process information on the patent application, and information on filing motives. The model that we used to analyze the 445 observations and test our hypothesis is specified below. Before, we provide more details on the process of creating the dataset in the following.
4.1.
Creating the dataset
4.1.1
Patent data
As a first step, we generated a database with patent applications filed directly and for the first time at the GPTO (“GPTO direct first filings”). Patent applications that were initially filed at a foreign patent office and then extended to Germany within the priority year were not included. Further, we excluded patent applications that were filed at the EPO with Germany as a designated state as well as patent applications filed through the PCT process.
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This step is essential, since the focus of our study is the usage of the GPTO examination deferral for delaying the patent process. If we had not excluded patent applications originating from other patent authorities, we would have been forced to include their “pre-GPTO” processes to our analysis. This would have increased complexity by magnitudes without enhancing explana-
7
PCT stands for “Patent Cooperation Treaty”, which provides a unified procedure for filing patent applications in each of its contracting states. Most important economies have signed the treaty. A list of contracting states can be found here: http://www.wipo.int/pct/guide/en/gdvol1/annexes/annexa/ax_a.pdf
(accessed
06.07.2010).
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tory power of our study. The sole limitation is that this approach biases our sample towards
German applicants.
In order to avoid truncation problems we cut off applications with filing dates later than 31.12.2000. This was necessary to obtain complete coverage of applicants who fully exhausted the seven-year examination deferral.
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The final dataset includes 443,988 GPTO direct first filings filed between 1986 and 2000. Our patent data was extracted from two sources.
Bibliographic information stems from the Worldwide Patent Statistical Database (PATSTAT,
April 2008). Information on the patent process, such as timing of the request for examination, was extracted from the International Patent Documentation Center (INPADOC).
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4.1.2
Interviews
In order to improve the interpretation of the process patterns that we identified in patent data, we conducted a qualitative survey among inventors. Therefore, letters requesting an interview were sent out to randomly drawn inventors indicated on the patent documents. In the weeks after, we were able conduct 25 interviews with inventors. We asked our interviewees about the motives behind the respective patent application. In particular, we asked about the underlying invention, its potential commercial value, and the role that pendency might have played in the patenting process. All interviews were documented in written protocols and then analyzed. The average duration of the interviews was 15 minutes. All interviewees had notably good knowledge of the patent application that they were willing to share with us. Further, it turned out that the time difference between filing of the patent and the interview was uncritical.
4.1.3
Survey
On the basis of our interviews we developed a questionnaire. The questionnaire was distributed to sample of inventors indicated on patent applications from our patent data analysis—an approach that Giuri et al. (2007) used in the PatVal-EU survey. Our sample was stratified by characteristic patterns in the filing process of these patent applications. In detail, stratification proceeded as follows.
First, we limited the population to applications filed later than December 31 st
1997 and earlier than January 1 st
2001. Pre-1998 applications were excluded since we wanted to avoid that inventors face problems answering a questionnaire on very “old” patent applications. Fur-
8
For example, an applicant that files a patent in 2005 can wait until 2012 to file the request for examination.
Since we want to observe whether the request for examination was filed or not, we had to exclude such cases.
9
We provide a more detailed description of the databases in Henkel and Jell (2009).
10

ther, all patent applications filed by individual persons (17.4 percent) instead of companies or other institutions were excluded.
Second, the remaining population of 59,787 GPTO direct first filings from the time window 1998 to 2000 was classified according to how their application process proceeded.
For example, patent applications that went to examination immediately were differentiated from those that were pending seven years before examination or those that lapsed after several years of pendency.
Third, a random sample of patent applications for which we were able to identify the current addresses of the inventor was drawn from each class. Since patent applications indicate name and city of the inventor address but lack street and house number, we used a software tool to extract the missing data from an online directory. In total, 1,286 valid addresses were obtained. Using this sampling method we over-sampled long pending patents and withdrawn patents with respect to immediately examined patent applications. The over-sampling was necessary since a random sample drawn from all patent applications would have yielded very few, for example, long pending applications, which are central to our analysis. Thus, stratification was used to correct for under-coverage of our target population. In our econometric analysis, we will include sampling weights to deal with the stratification (Binder,
1983; Eltinge and Sribney, 1997; Archer and Lemeshow, 2006; Archer et al., 2007). More details on the sampling structure and stratification are provided in the appendix (Table 6).
Fourth, paper-based two-page questionnaires were mailed to the 1,286 inventors.
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All questionnaires and cover letters had a personal salutation, including name and titles (such as
“Dr.” or “Professor”). Further, each questionnaire referred to a real invention made by the addressee for which patent protection was sought. Concretely, we used a heading that contained the title of the patent application (i.e. a very brief description of the underlying invention), the filing number, and the filing date. The questionnaire included questions about the importance of motives that might have triggered certain “behaviour” of the applicant, as well as questions about the characteristics of the invention underlying the patent. 20 additional pretestes assured clarity and understandability of the questionnaire, and confirmed the finding from our 25 interviews that it was no problem for the inventors to answer questions about a patent that has been filed several years in the past.
In the weeks after sending the questionnaire we received 445 responses Our response rate of 35.6 percent is slightly higher than in the PatVal EU survey (32.8 percent, see Giuri et al. [2007]), which is comparable to our study in terms of methodology.
10
An envelope and a stamp were enclosed with the mailing.
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4.2.
Model specification
In our analysis we fit three different types of econometric models. They are specified in the following. We begin explaining consecutively the dependent variables of a logistic (logit), ordinary least squares (OLS), and a multinomial logit regression model. An introduction of independent and control variables follows.
4.2.1
Dependent variables
Logit
First, we use logit models to estimate the outcome of the early phase of a patent application.
Possible outcomes are request for examination (= 1) , which induces the examination of the patent application, and lapse of the application before examination (= 0) . A further logit model is used to estimate the probability of observing a request for examination immediately after the filing of the patent application (= 1) , which would be somewhat the standard proceeding if fast patent protection is sought.
OLS
Second, we fit an OLS regression model in order to analyze what determines the duration of a patent application’s pre-examination or pre-lapse pendency (measured in days) in general.
Multinomial logit
Finally, we provide results from a multinomial logit model differentiating applicants’ choice between seven distinct and exhaustive patent filing strategies. As summarized in Table 1, these strategies are composed of how long a patent applicant waits until it files a request for examination or lets the application lapse without examination. The strategies range from filing the request for examination immediately after, or together with the patent application to keeping the patent pending for seven years and letting it lapse afterwards. Each patent applicant has to choose one of these seven strategies.
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The dependent variable in the multinomial logit model is a categorical variable indicating which of the seven strategies was chosen by the applicant. The base outcome of the multinomial logit is strategy (I): request for examination filed immediately after filing the patent. Our multinomial logit regression tables show the results from the comparison of strategy (I) to strategies (II), (III), (IV), (V), (VI), and (VII) respectively (Long and Freese 2006).
The multinomial logit model was fitted for a sample restricted to patent applications that have no subsequent filings at the EPO. This restriction is based on findings from the OLS
11
There are no other options than filing a request for examination or letting the patent application lapse at some point in time.
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and Logit estimations. It is being explained in more detailed in the results section. The restricted sample consists of 255 observations.
--- Insert Table 1 here ---
4.2.2
Independent variables
Explanatory variables in our models stem from a questionnaire that was sent to inventors and linked to their patent applications. Concretely, we asked our respondents to indicate how important the following items were as motives to file for the concrete patent that we referred to in the cover letter and the questionnaire.
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To the best of our knowledge, below list contains all major patenting motives that were discussed in the literature so far.
Block others
Blocking competitors and third parties from using one’s inventions is a common motive to file for patents (cf. Cohen et al., 2000). A blocking strategy is independent of own usage of the invention.
Secure freedom to operate
Patent applications are published 18 months after the filing day in most countries. They create prior art and prevent other firms’ or individuals’ attempts to patent the same invention in parallel (cf. Cohen et al., 2000; Henkel and Jell, 2009). Thusly, they secure freedom to operate for the focal firm independent of grant of a patent.
Create insecurity
The more patents a firm files, the higher is the effort for competitors or others to identify relevant information about this firm’s technology in patent databases. There are two reasons.
First, competitors have to read and analyze more patent applications. Second, if the firms also files patent applications on “unimportant” technologies, it becomes difficult to identify the
“important” ones among all filings. There is evidence that enhancing this kind of insecurity is a major motive of many patent applications (cf. Lemley and Shapiro, 2005; Guellec and van
Pottelsberghe, 2007; McGuinley, 2008; Harhoff and Wagner, 2009).
12
Importance was measured on five point Likert scales. The following scale was used: “very important motive” – “important motive” – “medium important motive” – “unimportant motive”- “completely unimportant motive”.
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Gain time for evaluation
Firms often do not know ex ante how valuable exclusion rights on their inventions would be
(cf. Scherer, 2001; Denton and Heald, 2004). Filing a patent application is an option on pursuing the process of obtaining such an exclusion right. Many patent applications are filed preemptively in order to obtain that option. If an exclusion right turns out to be worthless, the patenting process can be stopped at any time.
Gain time to find licensees
In the same sense, a patent application provides an option to start a search for licensees for the underlying invention. Once the patent application is published, no other firms can obtain exclusion rights on that invention and sell licenses. Obtaining that option might be a motive to file a patent application (cf. Cohen et al., 2000).
Enhance reputation
It has been found that patents signal innovativeness of the focal firm to investors, customers, and other stakeholders (cf. Cohen et al., 2000; Lemley, 2000; Long, 2002; Hall et al., 2005;
Hsu and Ziedonis, 2008). Thus, it is likely that patent applications are filed in order to enhance one’s reputation as “innovative” firm.
Forearm against infringement suits
In many industries, firms amass large patent portfolios as a defense against the allegation of patent infringement by competitors or others (cf. Hall and Ziedonis, 2001; Lemley, 2001; Parchomovsky and Wagner, 2004). Increasing the strength of one’s defense can be a motive to file patent applications.
Increase bargaining power
The same argument applies to industries were patents serve as bargaining chips in negotiations, such as for cross licensing agreements (cf. Grindley and Teece, 1997). Strengthen one’s position in such negotiations is a motive to file patent applications.
Secure priority
The last motive included in our survey is procedural. The Paris Convention gives applicants the right to file further patents on the same invention in other countries up to one year after the first patent filing has been made (so called “priority right”). Securing priority, and gaining one year to evaluate whether international patent protection is valuable, can be an important motive to file patent applications at a national patent office.
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We include three further explanatory variables to control for the kind of usage that was planned for the invention underlying the patent application at the day of filing. We did so because we assume that such plans affect whether the patent process is expedited or delayed.
Use in product planned
The variable is set “1” if it was planned to use the invention underlying the patent application in a product at the day of filing, “0” otherwise.
Use in process planned
The variable is set “1” if it was planned to use the invention underlying the patent application in an internal process at the day of filing, “0” otherwise.
Licensing planned
The variable is set “1” if it was planned to licence out the invention underlying the patent application at the day of filing, “0” otherwise.
4.2.3
Further control variables
Analog to Giuri et al. (2007) we control for industries using sector dummies based on the ISI-
INPI-OST classification system (Schmoch, 2008; Hinze et al., 1997; Grupp and Schmoch,
1992).
13
We differentiate among chemistry, electrical engineering, instruments, mechanical engineering, and other fields. In accordance with Cohen et al. (2000) and Graevenitz et al.
(2009), we used this classification to differentiate whether a technology filed is “complex” or
“discrete”. In estimations with sector dummies (instead of the complex technology dummy) the “chemistry” dummy was used as the basis and, thus, not included to the models. Further, we include measures of patent scope such as the number of 6-digit IPC classes ( number of
IPC) proposed by Lerner (1994) and the number of patent claims ( number of claims) used by
Tong and Frame (1992) and Lanjouw and Schankerman (2001). However, we would assume that the number of claims measures to some degree strategic behaviour of the applicant as well (Zeebroeck et al. 2009, Stevnsborg and van Pottelsberghe de la Potterie 2007). We also control for the voluminosity of the patent application, which has also been related to patent strategies (Zeebroeck et al. 2009, Archontopoulos et al. 2007), using number of pages ( number of pages) . Further, we include correlates of patent value such as the number of forward citations ( forward citations) as proposed by Trajtenberg (1990), Albert et al. (1991), Narin
(1994), Lanjouw and Schankerman (2001), Harhoff and Reitzig (2004), and Harhoff et al.
(2003) and backward citations (backward citations , cf. Narin et al. [1997]). Finally, we in-
13
The system was proposed by the German Fraunhofer Institute of Systems and Innovation Research (ISI), the
French Patent Office (Institut national de la propriété industrielle, INPI) and the Observatoire des sciences et des techniques (OST). It aggregates IPC classes to major technological fields.
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clude measures for patent family (Schmoch et al., 1988; Putnam, 1996; Guellec and van Pottelsberghe de la Potterie, 2000; Lanjouw and Schankerman, 2001; Harhoff and Reitzig, 2004).
The first one ( EPO filing designating Germany exists ) measures whether the GPTO first filing has a subsequent filing at the EPO indicating Germany as a designated contracting state. We control for that, since it is a common strategy of European firms to file a first patent application at their national home patent office, e.g. the GPTO. During the priority year, the firm would file a subsequent patent application at the EPO indicating its home country, and other
European countries, as designated states of protection. Grant of the EPO patent supersedes the national home filing, and the applicant would let it lapse. We control for the EPO patenting process using two further dummies. One measuring whether such EPO patent application was granted by the EPO, another one measuring whether an EPO patent application was withdrawn or refused before lapse of the GPTO application of or request for examination at the
GPTO ( EPO filing designating Germany granted before GPTO lapse/request for examination; EPO filing designating Germany withdrawn/refused before GPTO lapse/request for examination ).
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Finally, we measure the size of the GPTO application’s non-EPO patent family, i.e. all subsequent filings at foreign patent offices except for the EPO ( non-EPO subsequent filings ). Since we only have first filings in our dataset, patent family size is defined as the number of subsequent filings.
Our results are presented in two steps. First, we provide results from a descriptive analysis of the timing of the request for examination of 443,988 direct first filings at the GPTO. Then we present an econometric test of hypotheses one and two using our sample of 445 patentquestionnaire couples.
5.1.
Timing of requests for examination and lapse of GPTO patent applications
Figure 1 illustrates what happened to all 443,988 direct first patent applications at the GPTO after they have been filed. Not surprisingly, the largest share of all patent applications goes over to examination before the patent application is published after 18 months (labeled “immediate examination” in the following). This group corresponds to our “base” strategy I in
Table 1 and represents 47.8 percent of the applications in the population. What is more striking is the large share of 52.2 percent representing applications that are pending longer than 18
14
We treat refused and withdrawn EPO patent applications similarly. This is methodologically correct since it has been shown that many EPO withdrawals anticipate rejection by the EPO. They are induced by communication with patent examiners signaling negative prospects of patent grant (Lazaridis and van Pottelsberghe,
2007).
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months before they go over to examination or before they lapse. The majority of these pending applications lapses some years after the filing day (35.3 percent of all filings), whereas a much smaller share (17.9 percent of all filings) has a request for examination. Two further observations are striking: fist, the relatively large share of applications that lapse in year three
(8.3 percent of all filings), and, second, the apparently large share of 20.3 percent of all filings that are pending for the maximum duration of seven years. Whereas the early lapses can likely be attributed to annual fees which are due for the first time in year three
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(also for pending applications), explaining the large share of seven-year pending applications is not that straight forward. The tests of our hypotheses in the following section contribute to further understanding these patterns.
--- Insert Figure 1 here ---
5.2.
Motives to accelerate and delay the patent process
5.2.1
Summary statistics
Table 2 provides summary statistics of our sample. Regarding the importance of filing motives we find “secure freedom to operate” and “block others” ranked first and second.
Whereas we would have inferred from older studies such as Cohen et al. (2000) that blocking will rank high also in our study, it is very interesting that “secure freedom to operate” ranks first. It seems that, for many firms, patent applications play a more important role as defensive mechanisms against being blocked by others than as offensive measures to actively block others.
The two filing motives underlying our hypothesis, “gain time for evaluation” and
“create insecurity” rank seventh and eighth. This low ranking is not surprising, since we conjecture that the two motives underlie long pending patent applications, but not necessarily the majority of patents that go to examination immediately.
Further, we find that for 85 percent of the inventions, usage in an own product was planned, for 24.4 percent usage in an own process, and licensing for 16.2 percent.
--- Insert Table 2 here ---
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The annual fees are payable in advance. For the third year, the fee is due on the last day of the 24th month after the filing date. In case of payment delays, there is a grace period of six month which may lead to additional charges. The fees increase over time, with 70€ for the 3rd year, 70€ for the 4th year, 90€ for the 5th year, 130€ for the 6th year, and 180€ for the 7th year ( http://dpma.de/english/patent/fees/index.html
, accessed 13.02.2009).
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Table 3 provides the correlation matrix of all dependent variables. Variance inflation factors (VIFs) for all variables are all below 2.93 (mean VIF: 1.58). Thus, we can clearly reject multicollinearity concerns (O’Brien, 2007).
--- Insert Table 3 here ---
5.2.2
Results from full sample: Logit and OLS
In the following, we present results from the estimation of the outcome of the early patent process (lapse or request for examination), of whether the request for examination is filed immediately (i.e. whether the patenting process is expedited by the applicant or not), and on the duration of patent pendency in general. Table 4 presents the respective regression results.
Effects of filing motives
Model 1 suggests that the more importance is attributed to “create insecurity” and “gain time for evaluation”, the lower are the odds that a request for examination is filed for a patent application; thus, the more it is likely that the patent application will lapse. Model 2 corroborates this finding. The more important the two motives, the less likely applicants expedite the patent process through filing the request for examination immediately after the patent application. Both models provide strong evidence for hypotheses 1 and 2. Model 4 provides evidence only for the strategic use hypothesis (H2). The more important “create insecurity” as a filing motive, the longer is the patent application pending before it either lapses or the request for examination is filed by the applicant.
Further, we find that the more important the enhancement of reputation as an innovative firm is, the less are the odds of observing an immediate request for examination (Model
2) and the longer is pendency (Model 3). This suggests that pending patent filings (as opposed to granted patents) have positive effect on a firm’s reputation—at least they seem to be perceived that way.
Effects of planned usage
If there are plans to use the invention that the patent application was filed on in an own product at the day of filing the patent, it is more likely that a request for examination will be filed as well (Model 1). Further, we find that plans to license the invention significantly increase the odds of a fast request for examination (Model 2) and decrease the length of pendency of the patent application in general (Model 3). These findings are very comprehensible. The more concrete an applicant’s plans with its invention are, the higher the incentive to obtain fast patent protection. In that case, a fast request for examination constitutes a necessary pre-
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condition. The finding is corroborated by our interviews. One interviewee from a large electronics manufacturer commented as follows: “[We] […] maintain pendency of patent applications covering technologies that belong to a field considered strategically important but that are not yet embodied in concrete products or processes .”
Industry effects
In Models 2 and 3, we find strong industry effects. Firms in the electrical engineering sector tend to file requests for examination immediately (as compared to firms in the chemistry sector), whereas firms in the instruments and the mechanical engineering sectors tend to delay the patenting process more than firms from the chemistry sector.
Role of EPO subsequent filings
Model 1 shows that the outcome of a subsequent filing at the EPO covering the same invention and designating Germany as a state of protection has influence on the outcome of the
GPTO patenting process. Specifically, grant, refusal, and withdrawal of an EPO patent trigger lapse of the corresponding GPTO “twin” patent application. That behavior makes sense in all three cases. If the EPO grants a patent (designating Germany), there is no more need to get a patent on the same invention granted by the German office. If the EPO patent is refused, it is unlikely that the GPTO will contradict the EPO and grant the patent instead. Thus, the applicant would abandon the GPTO patent application. Withdrawal of an EPO application can be interpreted fairly the same way, since many EPO withdrawals are nothing else than the anticipation of a rejection (so called “induced withdrawals”; Lazaridis and van Pottelsberghe
[2007]).
However, it seems that applicants tend to wait for the EPO outcome before they terminate the patent process at the GPTO. We find that the existence of subsequent filings at the
EPO covering the same invention and designating Germany as a state of protection makes an immediate request for examination at the GPTO less likely (Model 2) and significantly increases pendency of the GPTO twin patent application (Model 3).
To test the hypotheses, we need to focus the remainder of the paper on the influence of filing motives on patent pendency. Yet, the existence of EPO subsequent filings and their outcome have a significant and strong influence on the GPTO process. Since we want to make sure that these effects do not interfere with the effects of filing motives on patent pendency, we exclude patents with EPO subsequent filings from the sample for the following model.
5.2.3
Results from restricted sample: Multinomial logit
In this section we present results from a multinomial logit model. As illustrated in Table 1, the model allows seven strategy choices: file the request for examination (I) immediately, after
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(II) short, (IV) medium, or (VI) long pendency; let the patent application lapse after (III) short, (V) medium, or (VII) long pendency. This set of alternatives is exhaustive, i.e. each
GPTO patent application has to belong to one of the seven strategy groups. We estimate the model for a sample restricted to patent applications that have no subsequent application at the
EPO. We do so in order to exclude the pendency-enhancing effects of EPO applications that we analyzed in the previous section. The restricted sample consists of 255 observations. Results from the multinomial logit model are presented in Table 5. Each column represents a comparison of one strategy choice with strategy I (immediate request for examination). We chose strategy I as the base outcome, because it constitutes somewhat the “standard case”, and by far the largest group in the population (47.8 percent of all GPTO direct first filings, cf.
Figure 1). A positive sign of a marginal effect in Table 5 indicates that a higher value of the respective variable makes it more likely that the respective strategy is observed instead of strategy I. The version of the model presented in Table 5 excludes insignificant variables
(these are “increase bargaining power”, “gain time to find licensees”, “number of pages”, and
“backward citations”). “Number of non-EPO subsequent filings” was excluded because of a too low number of non-zero observations (which is due to the restriction of the sample). For the same reason, industry dummies were aggregated to a combined measure for complex versus discrete technologies (cf. Cohen et al., 2000; Graevenitz et al., 2009).
The multinomial logit model makes the implicit assumption that the ratio of the probabilities of choosing any two alternatives is independent of the attributes of any other alternative in the choice set (Hausman and McFadden, 1984). This is the “independence from irrelevant alternatives (IIA)” assumption. We checked the validity of this assumption for our data using Hausman tests (Hausman, 1978). Our test results strongly support the IIA assumption.
Drivers of long pendency
The most striking results of our analysis are the drivers of patent applications that are pending for the maximum duration of seven years (strategy VI and VII).
Most interestingly, higher importance attributed to creating insecurity as a filing motive makes strategy VI and VII more likely than the base strategy I. This can be interpreted as evidence for strategic usage of the GPTO examination deferral: patent applications that fully exploit the examination deferral are to a large extent filed in order to create insecurity. That insecurity arises because a pending patent leaves competitors uncertain about the outcome of examination, the scope of a potential patent, and whether the applicant attributes commercial value to the exclusion right. Filing a multitude of such patent applications and keeping those pending for the maximum duration is a rational strategy to create insecurity and increase competitors’ efforts to identify relevant information in patent databases. 20.3 percent of all
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GPTO direct first filings exhibit that pattern. If creating insecurity is the major motive, it is theoretically not necessary to file the request for examination, since “insecurity” has already been created during seven year of pendency. In fact, the marginal effect of the motive “create insecurity” on applications that lapse (strategy VII) is stronger than on applications that have a request for examination (strategy VI) after seven years.
As a further driver we identify the motive of gaining the time necessary for a more informed evaluation of whether incurring the cost of substantive examination of the patent application is justified by the commercial value of a potential exclusion right. This motive drives both: the likelihood of observing applications that lapse (strategy VII) and applications that have a request for examination after seven years (strategy VI). This result is meaningful.
Once an applicant has gained the time it needed for evaluation, the decision might be both, in favor or against carrying on with the patent and requesting its examination.
These findings, i.e. the positive effects of “create insecurity” and “gain time for evaluation” on the likelihood of observing long pending patent applications, represent strong evidence for hypotheses 1 and 2.
Interestingly, the more important the motive “blocking others”, the higher are the odds of observing strategy VII instead of strategy I. Intuitively, one would assume that the blocking motive is associated with an early request for examination. Yet, it seems that pending patents are intended more intensively for blocking purposes than the large group of standard patents that go over to examination immediately after the filing day (47.8 percent of the GPTO direct first filings).
“Secure priority” and “forearm against infringement suits” have significant negative impact on strategy VI and VII. Both effects are straightforward. For securing priority, it is not necessary to keep the initial filing pending. If patent applications are filed as a defense in the case of infringement allegation, it is advisable also to seek grant of these patents—otherwise it would be difficult, for example, to use them to counter-sue a potential attacker. Thus, it is not surprising that patent applications intended for that purpose rather have immediate requests for examination than being pending unexamined.
A further major driver of strategy VII is the technology field. It is more likely that a patent application is pending for seven years and lapses afterwards than having an immediate request for examination, if the application was filed in a technology field characterized as
“complex” (cf. Cohen et al. 2000). One interpretation would be that in complex technology fields, where firms usually have very high patenting rates, the cost-saving impact of replacing granted patents with pending applications is higher than in a discrete technology market, where only few patents are filed. We would assume that if high patenting rates are common,
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firms focus more on filing as many patents as possible, than on obtaining single, high-quality patents granted, since an individual patent is less observable. As noted above, one could, given the cost of 350 Euros for a request for examination and 580 Euros for a seven-year pending GPTO patent application, “exchange” five requests for examination with three new, seven-year pending patent applications. Quality and inventiveness of the three new applications would not matter, since they will not be examined. In the context of high industry dynamicity—as it is usually the case in complex technology fields—, and a mean duration of examination at the GPTO of around three years (Schmoch, 1990; Harhoff et al., 2003), this strategy might be quite favorable.
Drivers of short and medium pendency
As already seen for long pendency applications, medium pendency (i.e. four, five or six years, strategy IV and V) is also driven by the motive “create insecurity”. Short pendency of two or three years (strategy II or III) is not driven by that motive. With respect to “create insecurity”, we observe no difference between patent applications that lapse and those with a request for examination. Such difference is only observed with respect to the motive “gain time for evaluation”. This motive is associated with a higher likelihood of observing patent applications lapsing between two and six years after the filing day (as opposed to observing an immediate request for examination). This indicates that applicants not knowing if a patent application is worth the cost of examination at the filing day, are more likely to wait and protract the patent process—but then evaluate the exclusion right low, and abandon the patent application. 23.9 percent of all applications show that pattern.
The positive effects of “create insecurity” on strategy IV and V suggest the acceptance of hypothesis two, those of “gain time for evaluation” on strategy III and V speak for hypothesis one.
Again, all significant effects of “secure priority” and “forearm against infringement suits” are negative. Further, the positive significant effects of the motive “block others” on short pending patents indicate that these filings were more intensively intended for blocking purposes than the base group. Finally, we find that patent applications in complex technology sectors are more likely to have an immediate request for examination than to lapse after short pendency. Yet they are more likely to have the request after medium pendency than immediately.
Effects of planned usage
All significant effects of plans to use the invention underlying the patent applications have negative signs. This means that if an applicant had plans to use an invention at the filing day
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of the respective patent, it is more likely that it will file the request for examination immediately and expedite the patenting process than chose any other strategy. We find significant negative effects of plans to use the invention in a product (on strategy IV), in a process (on strategies II, III, IV, VI, and VII) as well as to license it (on strategy VI).
6.1.
Summary
In this paper we investigate the drivers of applicant-induced patent pendency. We analyze the
German patent system, which—due to its comparatively long, seven-year examination deferral system—provides its applicants with a very strong leverage for increasing pendency of their applications. At the GPTO, 52.2 percent of all direct first applications are pending before they go over to examination or before they lapse. 35.3 percent of all filings lapse some years after the filing day. Only 17.9 percent have a request for examination after pendency. We test two hypotheses about the drivers of that pendency. The first one stating that pendency is driven by the motive to gain time for a further evaluation of the value of a potential patent, the second one claiming that pendency is driven by the motive of creating insecurity for competitors and third parties. We find evidence for both hypotheses. The data shows that the more importance is attributed to “create insecurity” and “gain time for evaluation” as filing motives, the lower are the odds that a request for examination is filed in general and the less likely applicants expedite the patent process through filing the request for examination immediately after the patent application. Plans to use the underlying invention increase the likelihood that a request for examination is filed immediately. A more detailed model reveals that a higher importance of the motive “create insecurity” makes pendency longer than three years more likely than a request for examination filed immediately after or together with the patent application. It does not drive pendency lower than three years. Opposed to that, higher importance of the motive “gain time for evaluation” also makes withdrawal and lapse of patents after two and three years more likely. Finally, we find that it is more likely that a patent application is pending for seven years and lapses afterwards than having an immediate request for examination if the application is in a complex technology field.
6.2.
Discussion
We will discuss our findings on the traditional and the strategic usage of the examination deferral in the following. In doing so, we will take the perspective of policy makers and managers within a firm. The findings on the traditional use hypothesis are discussed first.
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Our data confirms the hypothesis that applicants use the GPTO examination deferral in order to gain time to evaluate whether a patent would be worth the cost of a full, substantive examination. Many patent applications, 35.3 percent of all filings, lapse after some years of pendency, and before a substantive examination is undertaken by the patent office. If these patents have no commercial value, it would not be in the interest of society to devote the patent office’s resources to their examination. Without the examination deferral, the patent office would have had to examine these patent applications. This would have distracted resources from examining valuable patents.
From a private perspective, the option to defer examination is desirable as well. Firms that are given time to re-evaluate their patent applications can save cost that would accrue for the examination of worthless patents. These resources can be devoted to other, value creating activities.
The second private benefit for firms is more problematic, if seen from the welfare perspective. For applicants, a seven-year pending patent application is similar to a low-cost means of protection—which certainly is less effective than a granted patent, but still, cannot be fully ignored by third parties. One interviewee commented the effectiveness of pending patent applications as follows: “ [Pendency] is less expensive than a patent but still effective enough to negotiate […].” A system that allows patent applications to be pending for seven years regardless of inventiveness and novelty is very similar to a system where patents are just registered without substantive examination. In such a system, patent applications that would normally be rejected after examination can exist many years longer than necessary.
Theoretically, one could even file a patent on prior art technology used by competitors and keep it pending for seven years. Competitors are left uncertain about the outcome of such a patent application generally (i.e. grant, refusal, withdrawal), and about its scope given it is being granted. The same is possible for minor or commercially useless inventions. One could file patents on all kinds of minor inventions—in fact, they do not even have to be inventions—and keep them pending. Such filings can be used as “smoke grenades” to obscure commercially valuable patents. It would be difficult for competitors to identify important technologies in a portfolio of hundreds of pending patent applications.
Our results give cause for concern. We find significant evidence that the more importance inventors attribute to the creation of this kind of insecurity as a motive for filing the patent, the higher the likelihood that the patent application is pending four years and longer
(as opposed to having an immediate request for examination). In total, 37.3 percent of all applications fall into that group. The effect is strongest on patent applications that lapse after seven years of pendency (11.4 percent of all filings). These findings give a clear indication
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that long patent pendency is to a large extent driven by the goal to induce insecurity and intransparency to the patent system. It is even likely that some of these applications, or certain claims, would not have been filed, if the examination deferral option had not existed. This leads to an increase in patent-like rights that are not associated with innovative activity. If the network of pending patents becomes too dense, it could even hamper innovation. This would be the case if firms have to shift resources from innovative activities to screening and inventing around pending patents that would not have been filed without the examination deferral, or if the patent (or certain claims) would have been rejected if the patent office had examined it earlier.
As a result, we have to notice that the seven-year examination deferral is likely to enhance both: sorting out of patents that were filed just in case, and later evaluated as worthless; but also the filing of patents and claims that are intended to create insecurity.
Thus, abolishing the examination deferral system at the GPTO would not be an optimal solution. However, we found that patent applications with pendency below four years are not significantly associated with the filing motive “create insecurity”. Opposed to that, patent applications that lapse in the third year, when the first annual fees are due, are significantly and positively associated with the motive of gaining time for evaluation. A reduction of the examination deferral from seven to three years (as it has been done in Japan in 2001 [Hayashi,
2005]) could probably reduce the share of patent applications filed to create insecurity while not fully removing the option to gain time for evaluation. And even if this measure not prevented patents filed just for the creation of insecurity, it would still weaken their effectiveness due to the shorter period of maximum pendency.
It has to be added that the GPTO has so far no incentive to solve that problem, since patent applications the are pending long before they lapse do not increase the examination workload of the patent office while at the same time generating revenue from filing and annual fees.
Or results suggest that firms strategically exploit features the patent system. Taking the GPTO patent process as a magnifying glass, we find that firms use its features to either expedite or delay the process according to their needs. The suggestion by Reitzig and Puranam (2009) that firms with better appropriability capabilities achieve faster patent grants needs to be broadened: firms with good intellectual property management achieve the optimal duration of the patent process. On the policy level we can affirm Harhoff and Wagner’s (2009) conjecture
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that firms delay the patent process in order to induce insecurity and in-transparency to the patent system.
An important implication of our study is that not all patent applications can be treated the same way. Patent applications that are filed only in order to create insecurity should be treated differently for patent applications that were filed in order to obtain a patent. Patent systems with deferred examination enhance such strategies. This has to be taken into account when interpreting patent applications as indictors for innovation or firm performance. It is even problematic to include such patent applications in indicators for inventive activity. Since such patents can be filed without any inventive activity, serious flaws can result. Thus, patent applications should be interpreted as what they are: measures of intellectual property strategy, rather than measures of performance or innovativeness.
In the narrow sense our findings are relevant for all patent systems that have a deferred examination procedure in place. In the boarder sense, they are relevant for all patent systems that give their applicants means for delaying the patent process. Such means may be as explicitly observable as the deferred request examination request at the GPTO, or less easy to observe, such as applicants delaying interaction with the patent office during examination (e.g. communications, payment of fees), or filing appeals and divisional applications (cf. Guellec and van Pottelsberghe de la Potterie, 2007, p.180).
Specifically, our results are relevant for the U.S., where a public debate is conducted on whether the introduction of a deferred examination system would be a solution the problem of an ever-increasing backlog of unexamined patent examinations at the USPTO (cf.
Thomas [2010] for a summary of the public discussion; cf. also: Dickinson [2009], DiLenge
[2009], Katznelson, [2009], Simon [2009], USPTO [2009], Prestia and Cocca [2008], McKie
[1973]). Given our results, deferred examination could lead to severe problems in the U.S. If applicants can easily increase pendency of their patent applications, and at the same time opt out of publication of the application (as it is possible for national U.S. patent applications that are not filed at foreign patent offices), “submarine” patent strategies become much easier to implement (Dickinson, 2009; Graham and Mowrey, 2004; Blount, 1999). The opportunity to modify a patent application while it is pending would aggravate the problem.
16
This mechanism can be used to adapt a pending patent to changes in the technology field and the market, and theoretically also to modify a patent in a way threatening competitors, who have made investments in a particular area (von Graevenitz et al., 2007: 64).
16
This can be achieved through “continuations” in the United States (Quillen and Webster, 2001), and comparable rules in Europe (von Graevenitz et al., 2007).
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Further, it has been criticised that in the U.S., the introduction of deferred examination with a low threshold for initial patent applications would lead to more poor-quality filings
(DiLenge, 2009). This criticism is supported by our results.
Our study contributes empirical evidence to that debate from a system that has long experience with deferred examination. Our findings, such as strategic use of the system for creation of insecurity through patent applications pending four years or longer, would help to find the optimal length of the deferral—which, according to our findings, would be three years.
Our study points to several avenues for further research. One would be gathering further findings from other patent systems with deferred examination. The Japanese patent system would be a good case. Here, the reduction of the maximum period of deferral from seven to three years in 2001 (Hayashi, 2005) constitutes a natural experiment. It would be interesting to study how that change affected the usage of the system for the creation of insecurity.
Research in the European or the U.S. context could focus on disentangling whether delays in the patent process were caused by applicants or be the patent office. Such findings would allow better measures to deal with the increasing backlog of unexamined patents that both offices are facing. Finally, we would like to encourage research on the effect of delaying strategies on rivals. Evidence from our interviews suggests that it is significant and leads to inefficient investment in invent around solutions.
Further research should be undertaken to better understand the mechanics of patent filing strategies and their impact on competition. Such understanding is an essential precondition for the improvement of international patent systems, and, thusly, a major driver of good innovation policy.
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32

… immediately
(before publication)
Applicant's strategy after filing patent application:
File request for examination …
Let application lapse/withdraw application …
Observed pendency before request for examination or lapse of patent application in restricted sample:
Min | Max Mean
(I)
37 obs.
— * 0 | 366 days 31.81 days
… after short pendency
(2 – 3 years)
… after medium pendency
(4 – 6 years)
(II)
27 obs.
(IV)
23 obs.
(III)
67 obs.
(V)
39 obs.
550 | 1273 days
1286 | 2351 days
1042.78 days
1789.60 days
… after long pendency
(7 years)
(VI)
18 obs.
(VII)
44 obs.
2413 | 2938 days 2666.36 days
Table 1: Definition of categories of dependent variable in multinomial logit according to outcome and duration of pre-examination/pre-lapse phase of patent process (* Immediate lapse after filing is not observed)
Figure 1: Timing of request for examination and lapse of GPTO direct first filings (N = 443,988)
(Time intervals in the figure are defined as follows; intervals are given in days since filing date: year 2: [541, 912], mean: 2yrs; year 3: [913, 1285], mean: 3yrs; year 4: [1286, 1665], mean: 4yrs; year 5: [1666,
2030], mean: 5yrs; year 6: [2031, 2394], mean: 6yrs; year 7: [2395, 5294], mean: 7.2yrs); for more details see appendix)
33

Obs.
Mean
(including sampling weights)
Sample mean
Std. Dev.
Min Max Median
Dependent variables
Outcome of pre-examination/lapse phase*
Request for examination filed immediately after patent application
Days of pendency until request for examination or lapse
Filing strategy **
Independent variables
Secure freedom to operate
Block others
Create insecurity
Gain time for evaluation
Forearm against infringement suits
Enhance reputation
Increase bargaining power
Gain time to find licensees
Secure priority
Use in product planned
Use in process planned
445
445
445
426
426
429
425
420
425
445
445
255
437
432
422
0.6156
0.4195
1219.844
3.1390
4.5108
4.0469
2.3747
2.4442
2.7841
3.0950
3.0629
1.7420
3.8040
0.8502
0.2448
0.3528
0.1169
0.4784
0.3216
1594.56 874.2386
3.9020 1.9966
4.5126 0.8116
4.0856 1.1150
2.5237 1.1464
2.6362 1.1216
2.7653 1.3621
3.3706 1.2210
3.0541 1.2810
1.7714 0.8956
3.7459 1.1059
0.8292 0.3767
0.2517 0.4345
0
0
0
1
1
0
0
1
1
1
1
1
1
1
1
1
1
2938
Licensing planned
Number of pages
Forward citations
Backward citations
Number of claims
Number of IPC
EPO filing designating Germany exists
EPO filing designating Germany withdrawn/refused before GPTO lapse/request for examination
EPO filing designating Germany granted before GPTO lapse/request for examination
Non-EPO subsequent filings
Chemistry
445
445
445
445
445
445
445
445
445
445
445
0.1623
8.0762
1.4236
2.3322
11.5091 10.5865 6.1101
7.8744 7.7663 5.2121
0.5234
0.0902
0.1389
2.1279
0.1706
0.1326
8.0292
1.5843
2.0989
0.4270
0.1101
0.1573
0.3395
7.9266
3.4836
3.1112
0.4952
0.3134
0.3645
1.8517 3.6398
0.2022 0.4021
0
2
0
0
0
3
0
0
0
0
0
1
146
45
16
48
45
1
1
1
35
1
Electrical engineering
Instruments
Mechanical engineering
Other fields
445
445
445
445
0.1774
0.0741
0.4451
0.1327
0.1393
0.1056
0.4449
0.1079
0.3467
0.3077
0.4975
0.3106
0
0
0
0
1
1
1
1
Complex technology 445 0.6768 0.6652 0.4725 0 1
Table 2: Summary statistics of all variables (* 1 = “request for examination”, 0 = “lapse”, ** only used in restricted sample)
5
5
1
1
5
5
5
5
7
5
5
5
0
0
1483
0
0
0
0
0
0
0
0
0
1
2
4
1
0
3
3
4
3
3
5
4
2
0
6
0
0
9
6
34

Variables
(1) Secure freedom to operate
(2) Block others
(3) Create insecurity
(4) Gain time for evaluation
(5) Forearm against infringement suits
(6) Enhance reputation
(7) Increase bargaining power
(8) Gain time to find licensees
(9) Secure priority
(10) Use in product planned
(11) Use in process planned
(12) Licensing planned
(13) Number of pages
(14) Forward citations
(15) Backward citations
(16) Number of claims
(17) Number of IPC
(18) EPO filing designating Germany exists
(19) EPO filing designating Germany granted before GPTO lapse/request for examination
(20) EPO filing designating Germany withdrawn/refused before GPTO lapse/request for examination
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) VIF*
1.00
0.41
0.17 0.14
0.11 0.18 0.24
0.17 0.11 0.31 0.29
0.12 0.07 0.28 0.19 0.28
0.09 0.00 0.16 0.20 0.36 0.26
0.03 -0.01 0.16 0.35 0.20 0.13 0.42
0.23 0.27 0.18 0.19 0.12 0.16 0.16 0.10
0.10 0.15 0.16 0.04 0.14 0.06 -0.01
-0.16
0.08
-0.02 -0.01 0.03 -0.07
-0.14
0.04 -0.07
-0.05
0.00 -0.31
-0.05 -0.11 -0.14
-0.01
-0.08
-0.06
0.21 0.32 0.02 -0.28
0.00
0.04 0.05 0.08 0.00 0.05 -0.02
-0.02
-0.10
0.16 0.06 -0.04
-0.06
-0.07 -0.11 0.04 -0.05
0.03 0.01 -0.01
0.02 -0.09
0.10 -0.14
-0.06 0.01
-0.03 -0.01 0.00 0.08 -0.02
0.06 -0.04
0.02 -0.10
0.08 -0.06
0.00 -0.07 0.09
0.09 0.09 0.09 0.06 -0.02
-0.07
0.04 -0.05
0.12 0.06 0.00 -0.07 0.20 0.07 0.05
0.08 0.00 -0.03
0.02 -0.10
-0.07
-0.01
-0.07
0.17 0.01 0.01 -0.03 0.12 0.06 -0.12
0.11
1.27
1.47
1.57
1.32
1.38
1.27
1.34
1.18
1.30
1.33
1.34
1.35
1.52
1.12
1.10
1.13
1.32
0.08 0.14 0.00 -0.05
0.04 -0.08
0.01 -0.02
0.21 -0.02
-0.04
-0.04 0.14 -0.09
-0.04
0.09 0.17
0.09 0.12 0.04 0.04 0.02 0.03 0.02 0.00 0.16 0.00 -0.07
-0.10 -0.02 -0.04
0.02 -0.03
0.01 0.50
0.01 0.02 -0.03
0.00 0.09 -0.09
0.03 0.03 -0.01
0.01 -0.01
-0.05 0.13 -0.05
-0.01
0.05 -0.01
0.41 -0.15
2.58
1.91
1.66
(21) Non-EPO subsequent filings
(22) Chemistry
(23) Electrical engineering
(24) Instruments
(25) Mechanical engineering
0.11 0.09 0.11 -0.05
-0.05
-0.07
-0.01
-0.07
0.22 -0.06
0.04 0.01 0.21 -0.07
-0.11
0.06 0.29 0.49 0.38 -0.02
0.06 0.05 -0.01
0.01 -0.19
-0.12
-0.04
-0.02
0.16 -0.16
0.19 0.03 0.19 -0.10
-0.16
0.12 0.33 0.18 -0.05
0.09 0.26
0.03 0.01 -0.04
0.01 0.16 0.01 0.04 0.03 0.07 0.11 -0.07
-0.08 -0.05 0.02 0.02 -0.04
0.05 0.03 -0.03
0.05 -0.07
-0.20
-0.17 -0.07 -0.02
-0.01
-0.01
0.00 0.02 0.00 -0.12
-0.04
-0.01
-0.05 0.04 0.12 0.06 0.02 -0.06
-0.05
-0.09
0.02 -0.07
-0.17
-0.14
0.02 0.00 0.03 0.02 0.06 0.03 -0.03
0.00 -0.08
0.07 -0.06
0.06 -0.13 0.02 0.08 -0.10
-0.20
-0.12
0.11 -0.10
-0.09
-0.45
-0.36
-0.31
(26) Other fields 0.01 0.00 0.04 -0.05
-0.02
0.11 0.03 -0.01
-0.03
0.00 -0.05
-0.01 -0.02 -0.05
-0.02
0.03 -0.10
-0.02
0.01 -0.03
-0.05
-0.18
-0.14
-0.12 -0.31 1.16
Table 3: Correlation matrix of independent variables (N = 445 Obs.; * VIF = variance inflation factors; the VIF are calculated based on an OLS model with “pre-examination pendency” as dependent variable; correlations with an absolute value larger than 0.0944 are significant at p<0.05)
1.69
2.77
2.11
1.87
2.93
35

Variables
Filing motives
Secure freedom to operate
Block others
Create insecurity
Gain time for evaluation
Forearm against infringement suits
Enhance reputation
Increase bargaining power
Gain time to find licensees
Secure priority
Planned usage
Use in product planned
Use in process planned
Licensing planned
(Model 1)
Logit
(marginal effects):
Outcome of preexamination/lapse phase
(1 = “request for examination”, 0 = “lapse”)
-0.0101 (0.0454)
0.0188 (0.0362)
-0.0769** (0.0347)
-0.125*** (0.0418)
0.0236 (0.0335)
-0.0227 (0.0327)
0.0324 (0.0324)
0.0436 (0.0580)
0.0537 (0.0335)
0.293*** (0.113)
0.0798 (0.0879)
0.0519 (0.111)
(Model 2)
Logit
(marginal effects):
Request for examination filed immediately after patent application
-0.0637 (0.0540)
0.00924 (0.0484)
-0.116*** (0.0433)
-0.109** (0.0474)
0.0511 (0.0434)
-0.134*** (0.0380)
-0.00654 (0.0458)
0.0367 (0.0677)
0.136*** (0.0520)
0.125 (0.126)
0.0917 (0.129)
0.292* (0.157)
(Model 3)
OLS
(coefficients):
Days of pendency until request for examination or lapse
74.00 (88.45)
-3.151 (82.26)
203.3*** (65.72)
101.0 (65.65)
-107.5 (70.96)
195.0*** (61.90)
76.11 (73.87)
-33.76 (105.2)
-221.0** (86.07)
-126.9 (216.5)
-153.7 (186.1)
-599.7*** (210.6)
Patent information
Number of pages
Forward citations
Backward citations
Number of claims
EPO filing designating Germany exists
EPO filing designating Germany granted before GPTO lapse/request for examination
EPO filing designating Germany withdrawn/refused before GPTO lapse/request for examination
Number of non-EPO subsequent filings
Number of IPC
-0.00114 (0.0106)
0.00189 (0.00861)
0.00763 (0.0140)
0.00296 (0.00708)
-0.457*** (0.0795)
-0.619*** (0.0361)
-0.00280 (0.0129)
-0.00643 (0.00853)
0.00637 (0.00724)
-0.00500 (0.0193)
-0.00527 (0.0161)
0.000797 (0.00722)
-0.231*** (0.0727)
-0.0135 (0.0138)
0.00493 (0.00994)
-16.52 (12.67)
-7.993 (19.95)
19.14 (20.54)
4.374 (11.18)
356.8*** (133.5)
44.35*** (16.77)
-20.48 (17.16)
Industry
Electrical engineering
Instruments
0.104 (0.141)
0.0756 (0.155)
0.320** (0.158)
-0.294*** (0.0614)
-112.1 (235.3)
821.0*** (191.3)
Mechanical engineering
Other fields
Constant
Observations
Prob > F
0.0760 (0.131)
0.157 (0.136)
414
0.0000
0.0498 (0.125)
0.572*** (0.130)
414
0.0000
447.2*** (171.4)
-598.7** (284.9)
617.3 (592.5)
414
0.0000
R-squared 0.385
Table 4: Estimates of pre-examination and pre-lapse phase, immediate request for examination, and pendency
(Standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1)
36

Variables
Strategy
(II) short pendency, then request for examination
Strategy
(III) short pendency, then lapsed
Strategy
(IV) medium pendency, then request for examination
Strategy
(V)
Strategy
(VI) medium pendency, then lapsed long pendency, then request for examination
Strategy
(VII) long pendency, then lapsed
Filing motives
Secure freedom to operate
Block others
Create insecurity
Gain time for evaluation
Forearm against infringement suits
Enhance reputation
Secure priority
Planned usage
Use in product planned
Use in process planned
0.00363 -0.00939** -0.0217*
(0.0173) (0.00470) (0.0125)
0.0374** 0.0148***
(0.0165) (0.00506)
0.0122
(0.0225)
0.00862
(0.00585)
0.0145
(0.0112)
0.0427*
(0.0233)
0.0317
(0.0206)
0.0171**
(0.00713)
0.0121
(0.0117)
-0.0415** -0.0155*** -0.0199
(0.0185) (0.00589) (0.0123)
0.0141
(0.0135)
-0.00833** -0.00730
(0.00422) (0.0137)
-0.0284
(0.0209)
-0.0278
(0.0623)
-0.00884*
(0.00530)
0.00309
(0.0117)
-0.0229**
(0.0107)
-0.188**
(0.0945)
-0.0560* -0.0326*** -0.0621**
(0.0320) (0.0115) (0.0271)
0.00177
(0.0368)
-0.00111
(0.0286)
0.0496*
(0.0300)
-0.00128
(0.00498)
0.00446
(0.00303)
0.00586**
(0.00285)
-0.00566
(0.0226)
0.0467**
(0.0197)
0.0970***
(0.0286)
0.0777*** 0.00468* 0.0924***
(0.0266) (0.00273) (0.0272)
-0.0614* -0.00700*** -0.0779***
(0.0313) (0.00261) (0.0229)
-0.0202 0.00524*** -0.0168
(0.0192) (0.00198) (0.0210)
-0.0238
(0.0280)
-0.0611
(0.104)
-0.0699
(0.0566)
-0.00739* -0.0566**
(0.00378)
0.00810
(0.00588)
-0.00939*
(0.00549)
(0.0247)
-0.0687
(0.0765)
-0.102**
(0.0477)
Licensing planned
Patent information
Forward citations
0.161
(0.138)
0.0450
(0.0420)
0.00644
(0.0460)
0.00216
(0.0771)
-0.196***
(0.0391)
0.0143
(0.0743)
0.0109* 0.00223 0.00278 0.00215 0.000286 0.00104
(0.00574) (0.00205) (0.00333) (0.00765) (0.00106) (0.00801)
Number of claims
-0.000790 -0.00261** -0.00262 0.00610 0.000111 -0.000978
(0.00345) (0.00132) (0.00288) (0.00407) (0.000703) (0.00300)
Number of IPC
-0.00134 -0.000110 0.00408* -0.00734 0.000101 -0.00496
(0.00335) (0.000853) (0.00219) (0.00792) (0.000847) (0.00516)
Technology field
Complex technology
0.00732
(0.0496)
-0.0952*
(0.0504)
0.0436**
(0.0185)
0.00645
(0.0615)
0.00611
(0.00557)
0.0717**
(0.0334)
Table 5: Marginal effects of multinomial logit (237 observations; Prob > F = 0.0000; Strategy I “file request for examination immediately” is the base outcome. Each column represents a comparison of the respective filing strategy with strategy I; Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1)
37

Process pattern
Subsequent filings
Population size
Questionnaires sent out
Deemed to be withdrawn (no annual fees paid in year 3)
Deemed to be withdrawn (no annual fees paid in year 3)
Deemed to be withdrawn (no annual fees paid in year 4, 5 or 6)
Deemed to be withdrawn (no annual fees paid in year 4, 5 or 6)
Deemed to be withdrawn (no annual fees paid in year 7)
Deemed to be withdrawn (no annual fees paid in year 7)
Deemed to be withdrawn (no request for examination in year 7)
Deemed to be withdrawn (no request for examination in year 7)
Examination requested after publication (year 2 or 3)
Examination requested after publication (year 2 or 3)
Examination requested after publication (year 4, 5 or 6)
Examination requested after publication (year 4, 5 or 6)
Examination requested after publication (year 7)
Examination requested after publication (year 7)
Examination requested before publication
Examination requested before publication
Examination requested before publication (early published) yes no yes no yes no yes no yes no yes no yes no yes no yes
1574
1397
5292
2786
2375
915
3921
1673
841
1335
737
1267
4010
3622
15251
9095
69
50
122
93
50
50
50
50
50
50
50
50
50
50
50
50
50
20
Examination requested before publication (early published) no 579 50
Withdrawn by applicant in year 2
Withdrawn by applicant in year 2
Withdrawn by applicant in year
3,4,5 or 6
Withdrawn by applicant in year
3,4,5 or 6
Withdrawn by applicant in year 7 no yes no yes
428
1290
300
720
46
50
86
50 yes 223 50
Withdrawn by applicant in year 7
Total: no 87
59,787
19
1286
Table 6: Population and sampling structure
Responses received
Within-stratum response rate
22
50
36
15
19
16
17
19
22
16
18
19
18
13
13
18
5
15
5
15
33
16
21
4
445
44.0%
41.0%
38.7%
30.0%
38.0%
32.0%
34.0%
38.0%
44.0%
32.0%
36.0%
38.0%
36.0%
26,0%
26,0%
36.0%
25.0%
30.0%
10.9%
30.0%
38.4%
32.0%
42.0%
21.1%
34.6%
38

Time windows
The time windows (“immediate examination”, “year 2”, “year 3”, “year 4”, “year 5”, “year
5”, “year 7”) that we use for our analysis were obtained as follows. First, the group of patent applications was identified that have a requests for examination filed before the patent application was published by the patent office (i.e. 18 months after the filing day), or together with the patent application (“immediate examination”). Second, the remaining applications (i.e. those without the immediate request for examination) were classified according to how long after the filing day a later request for examination was filed, or how long after the filing day the patent application lapsed. We defined the following intervals: year 2: year 3:
Time until lapse or request for examination interval (days) mean (days) mean (years) meadian (days)
[541, 912]
[913, 1285]
741
1104
2.0
3.0
762
1095 year 4: year 5:
[1286, 1665]
[1666, 2030]
1468
1835
4.0
5.0
1462
1827 year 6: [2031, 2394] 2204 6.0 2193 year 7: [2395, 5294] 2612 7.2 2619
Table 7: Time intervals, mean, and median pendency used for classification of duration of patent pendency
The exact distribution of the number of patent applications that lapse or have a request for examination after a certain period of time (longer than 18 months), and the intervals that we used are presented in Figure 2 below.
39

year 2 year 3 year 4 year 5 year 6 year 7
Figure 2: Timing of lapse and request for examination (patent applications with request for examination before publication are not included)
40