Staggering Cost of Restrictions

Many companies focus their patent strategy on ensuring strategic filings, quality work, obtaining important coverage, etc. Other companies sometime focus entirely on “cost cutting” measures, often negatively affecting other aspects of their patent filings. While cost consciousness is important, it sometimes baffles the mind in its narrow focus on specific items like patent searching costs or patent preparation costs where there are other giant targets ripe for the picking.

One area that seems to get little attention is the massive expenditure (or corresponding massive loss of patent scope) cause by restriction requirements, many of which are improperly issued by the Office.

Some back of the envelope calculations illustrate the extent of the situation. In 2018, according to the USPTO annual report, some 643,349 new applications were filed at the USPTO. Of course, this includes utility, plant, reissue, design, and provisional filings, as well as requests for continued examination (RCE). Discounting for continuations and other re-filings, realistically the number is lower. While someone out there probably can provide the actual number of new patent filings, for this exercise let’s assume it is around 400,000.

Next assume a restriction rate of 30%. Again, someone out there probably has the exact number. Some art units are well above 50% and others well below it, but let’s go with 30% and see where that leads. Further, let’s assume that all restrictions are only a 2-way (i.e., two groups of claims) and there are no species, etc. This is likely conservative as many restrictions impose more than 2 groups and/or more than 2 species.

Assuming applicants always file and prosecute all divisional claims and are able to do so in just 1 divisional, the cost to applicants is on the order of a third of a billion dollars (conservatively assuming straight forward total prosecution costs of $3,000 for the DIV). That is a lot of money. The USPTO’s total annual budget for 2018 was around $3.6 billion. So we are talking about something on the order of 10% of the USPTO’s annual budget. Again, that is a lot of dough.

Now, of course, applicants do not always file divisional applications (and of course sometimes claims are rejoined, etc.) All true, but not pursuing subject matter the applicant originally deemed important enough to include in claims has a cost as well. The point is not the actual dollar amount, but the magnitude of it, and that if an applicant wants to look for cost savings opportunities, they should at least consider developing a restriction response strategy as one arrow in their quiver. Plus, as we have explained in many posts here, developing a restriction strategy can actually increase quality, prosecution efficiency, and the ability to obtain desired claim scope.

Restrictions will likely never go away, and an applicant cannot overcome every single restriction, and sometimes restrictions are good for the applicant’s strategy; but that does not mean that there are not opportunities for reducing resources spent accepting every restriction.