The Effect of Patent Continuation on the Patenting Process

Even after final rejection, patent applications are never completely rejected. In the U.S., a patent applicant can reapply after a final rejection by submitting amended applications called continuations. While patent applicants benefit from this procedure (a final rejection is never final), examiners are worse off when examining continuations than when reviewing new applications. We theoretically investigate the impact of continuation on the patenting process. We find that the continuation process introduces a trade-off for examiners: a reduction in the initial applications' examination intensity can compensate for the loss incurred due to continuation in the case of rejection. Thus, examiners reduce their examination efforts when uncertainty about the innovation's patentability is the highest. When innovations are more likely to be patentable, examiners tend to grant patents after little scrutiny, reducing the chance of encountering continuations later on. Abolishing continuing applications could restore examiners' incentives to perform thorough evaluations of patent applications.