A survival analysis of the approval of US patent applications

Abstract

We model the length of time that it takes for a patent application to be granted by the US Patent and Trademark Office (USPTO), conditional on the patent actually being awarded eventually. Survival analysis is applied and both the nonparametric Kaplan–Meier and parametric accelerated failure time models are used to analyse the data. We find that the number of claims a patent makes, the number of citations a patent makes, the patent's technological category, and the type of applicant all have significant effects on the duration that a patent is under consideration. A log-normal survival model is the preferred parametric specification, and the results suggest that the hazard function is nonmonotonic over time.

Acknowledgements

We are grateful to Nilanjana Roy, David Scoones and a referee for their helpful comments on earlier versions of this work.

Notes

¹ We were unaware of this research until our own work was completed, and are grateful to Nilanjana Roy for bringing it to our attention. Popp et al. (2004, p. 14) report that their data set had to be cleaned to remove obviously erroneous data, resulting in a sample of 1 653 854 observations.

² According to the USPTO (2006), there are three types of patents that are distinguished in the US: ‘utility patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof; design patents may be granted to anyone who invents a new, original, and ornamental design for an article manufacture; and plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.’

³ Using the individual patent numbers, we looked into these long duration patents on the USPTO (2006) website and examined the individual file information. There were 243 items with application process time greater than 20 years, but all of these applications started before 1963, and we randomly selected 85% of these items and noticed that all of these patents were related to the US military, either directly or indirectly. Since the US–Cuba crisis occurred in 1962, we thus presume these outlier observations were due to the concern of the sensitive US–Soviet military confrontation in the 1960s–1970s, and hence all of these patents were kept ‘under wraps’ for an extended period of time for security reasons. Current evidence indicates that there are special examination procedures for particular inventions. For example, according to the examination of applications for countering terrorism, in view of the importance of developing technologies for countering terrorism and the desirability of prompt disclosure of advances made in these fields, the USPTO will accord ‘special’ status to patent applications for inventions which potentially materially contribute to countering terrorism. Thus, a similar situation was presumed to be applied in these earlier military-related inventions.

⁴ The choice of 0.5 years was based on an inspection of the front pages of the original files on the USPTO (2006) website for a sample of 100 of these cases. The sample mean was 0.51 years. However, we examined the robustness of our results to this choice by replicating the study with this duration coded as 0.25 years and as 0.75 years. The results are totally insensitive to this choice.

⁵ Citations made may constitute a article-trail for spillovers; and citations received may indicate the importance of the cited patents. The number of times a patent document has been cited may be a measure of its technological significance (Jaffe et al., 2002a, p. 418).

⁶ ‘Unassigned’ patents are those for which the inventors have not yet granted the rights to the invention to a legal entity such as a corporation, university or government agency, or to other individuals.

⁷ In contrast, Popp et al. (2004) found dummy variables for the grant year to be statistically significant, but this may be the result of their inappropriate use of a log-linear model and least squares estimation.

⁸ With sample sizes in the millions of observations (as we also have in our own analysis), true significance is associated with much smaller p-values than we traditionally adopt–almost all covariates will be ‘significant’ by the latter standards. (Granger, 2003).

⁹ All of the AIC and SIC values are calculated on the basis of a log-likelihood for w_t rather than for t itself, so the values are comparable across different model specifications.

¹⁰ The AIC and SIC values for the Weibull model were 1.4803 and 1.4804, respectively.

¹¹ These graphs and the median and modal survival times noted below use , evaluated at the sample means of the covariates.

¹² This estimated median duration compares well with the sample median of 2.0 years, taking into account that the sample SD is 0.981 years.