Pioneers , submariners , or thickets : Which firms use continuations in patenting and why ?

The continuations procedure is intended to benefit “pioneering” inventors, but is allegedly related to the various strategic uses by firms of the U.S. patent system including “submarine patents,” “junk patents,” and patent “thickets.” The procedure is hence the subject of several past and proposed patent policy reforms. Yet, very little is known about how applicants exploit differences in the major procedural variants of continuations --the Continuation Application (CAP), the Continuations-In-Part (CIP), and Divisions --to alter the term and scope of patents. To understand their use, and potential misuse, this paper empirically analyzes the three types of continuations filed between the years 1981 and 2000 by U.S. firms, and links their frequency to the characteristics of resulting patents, assignees and industries. We find that CIPs are disproportionately filed by firms with fewer patents operating in crowded technology spaces, and are more common in patents related to chemical and biological technologies. Also, patents resulting from CIP filings cover relatively “valuable” inventions, contain more claims per patent on average, and are statistically consistent with the “use by pioneering inventor” interpretation of continuations. In contrast, CAPs and Divisions are more likely filed by larger firms, cover mediocre to minor improvements, are common among computer and semiconductor patents, and can be linked, though not exclusively, to patent thickets. We also econometrically test effects of the 1995 change in patent term on continuation applications and find that the Act reduced, and perhaps altered, applicant incentives to engage in continuations. * PRELIMINARY WORK! Please email [email protected] with comments and questions. † This draft: February 12, 2007