Pacing IP Spend: Strategic Pros and Cons of Track One Filings

In today’s innovation-driven world, companies often face a critical decision: how quickly should they pace their intellectual property (IP) spend? The USPTO’s Track One program offers an accelerated route, delivering a final disposition in as little as five months. However, this speed comes at a significantly higher, front-loaded cost. This article explores the pros and cons of Track One filings compared to traditional prosecution timelines and examines the strategic considerations that impact business decisions.

The Upside: Speed and Certainty

One undeniable benefit of Track One examination is its speed. According to the USPTO Patent Dashboard, a Track One application progresses to final disposition on average in 5 months (post-acceptance) compared to the 26 months for a traditional filing and 30 months for ultimate disposition.

For companies looking to secure patents quickly—particularly those seeking to leverage their patent portfolios for financing—this rapid path can significantly impact a company’s financial status. Issued patents are often used as collateral to secure funding and attract investment and can significantly boost a company's value proposition.

At Schwegman Lundberg & Woessner, P.A., we ranked as the 10th largest Track One filer from 2011-2020. With extensive experience with Prioritized Exams, we can confidently say that Track One examination often achieves more positive and predictable prosecution outcomes. According to Juristat data, over 87% of Track One filings result in an allowance, which is about 10% higher than non-Track One filings. This success rate, paired with the speed of resolution, makes Track One filing a compelling choice for important intellectual property.

The Downside: Front-Loaded Costs and Limited Flexibility

However, the benefits of speed come at a price. The front-loaded costs of Track One filings are significant. Total estimated costs for a Track One filing can exceed $28,000 in Year 1, while traditional filing costs are less than $14,000 in Year 1 and about $25,000 overall over four years. This accelerated spend forces applicants to make early decisions about patent strategy, often without the benefit of evolving business intelligence.

While the real dollar cost of acceleration may be less than $3,000, the effective cost—accounting for lost opportunity from the front-loaded spend—is much higher. In Year 1, the initial cost difference is $15,000. Assuming average market returns, this translates to an effective cost difference of over $5,000 by Year 4. Although the Track One program accelerates patent protection, it may come at the expense of potential capital growth, especially in industries where market conditions and product-market fit are still uncertain.

Strategic Timing of Continuation Filings

Track One filings also accelerate decisions about continuations, which can affect later potential enforcement, monetization, and overall asset value. Traditional continuation decisions are typically made after allowance, often around Year 4. In contrast, the Track One program forces these decisions much earlier—sometimes before the end of Year 1.

Traditional filing strategies (e.g., including using provisional applications or coming back into the U.S. through the PCT) allow more time for the market to develop and for businesses to evaluate the value of additional patent filings. Track One filings, without strategies to slow progress, often push applicants into additional filings based on the momentum of the original decision, which may not always align with evolving business needs. Rising USPTO fees can exacerbate this problem.

Comparing Scenarios: Costs Over 5 Years

Assuming an applicant desires a pending family member in the U.S. for at least 5 years (which is relatively short for important subject matter), the cost differences between strategies can be significant.

1. Traditional Filing + Traditional Continuation: Expected cost of nearly $30,000 over 5 years.
2. Track One Filing + Track One Continuation + Traditional Continuation: Expected cost of $60,000 over 5 years. Although this includes a third family member, it is the result of timing constraints, not strategic necessity.
3. Track One Filing + Traditional Continuation: Expected cost of $44,000 over 5 years.

Interestingly, not all examiners are Track One examiners. Some suggest that the superior outcomes of Track One filings are due to the higher experience level of Track One examiners. While the cost difference between the ?first and third strategies is large through 5 years, the traditional continuation filed from the Track One filing in the third strategy should have the same Track One examiner in the later continuation filings, which may provide some beneficial outcome overall.

Long-Term Costs and Opportunity

Looking beyond 5 years, the cost of acceleration becomes even more pronounced. While the real dollar costs are similar, the effective cost difference diverges. Over 12 years, assuming average market returns, the two Track One filing (with one traditional continuation) strategy has an effective cost difference of $33,000 compared to traditional prosecution. Similarly, the one Track One filing (with two traditional continuations) strategy has an effective cost difference of $19,000 by Year 12.

These costs are especially important in the context of current and future IP budgets. It's essential to weigh whether the speed and benefits of Track One examination are worth the up-front costs, particularly in scenarios with likely continuations, where the long-term need for IP protection may require more time to develop and flexible budgeting.

Conclusion: Track One Benefits Come with Trade-Offs

In conclusion, Track One examination offers undeniable advantages in terms of speed and certainty of prosecution outcomes, but its higher upfront costs and accelerated pace may not fit every company’s IP strategy. If your goal is to quickly secure funding or establish a strong defensive patent position, Track One examination can be a powerful tool. However, if you're looking to spread costs over time and evaluate market conditions, traditional filings may offer greater flexibility.

At Schwegman Lundberg & Woessner, we are committed to helping our clients navigate these decisions with deep experience and strategic insight. We encourage you to reach out for tailored advice on how to optimize your IP strategy. Let’s discuss how these strategies could evolve and adapt to your business needs. We welcome your feedback and look forward to engaging on best practices for pacing IP spend.

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