Perspective: The looming threat to U.S. high tech's future

A system that supports a critical element of our nation's economic competitiveness--the patent system--is at risk.

The United States patent approval system is underfunded and overburdened. That means nothing but trouble for American technology-based companies, entrepreneurs and the American economy.

Our resource-starved United States Patent and Trademark Office (USPTO) is a particular problem for the nation's computing and advanced technology industry. Absent the assurance and incentives provided by a strong patent, few companies will invest in next-generation technologies. And absent investment, there will be less innovation and job creation in the U.S. tech sector.

The recently ended lame-duck session of Congress began to address this issue by doing the easy thing: It passed a bill (H.R. 1561) to raise the fees inventors pay to obtain patents, fees that in turn support the USPTO. But Congress did not do the more difficult thing to address the problem, which would be to stop the diversion of funds from the USPTO to unrelated government programs.

Since 1992, approximately $700 million in USPTO user fees have been diverted to unrelated government programs.

The USPTO clearly has not had the resources to do its job. According to its own executives, if current USPTO resource levels are not improved, "more than 140,000 patents will not issue over the next five years." The time it takes to obtain a patent approval--a period that should be about 18 months--is now approaching four years for some technologies and could double to eight years by 2008. At recent budget levels, the backlog of initial reviews by qualified patent examiners could grow from the current level of 475,000 to 1 million.

In sum, the system is overwhelmed, underfunded and grinding to a halt.

These delays and uncertainty not only increase the cost of getting a patent, but also increase the uncertainty of business planning and investment. Few companies are willing to invest millions of dollars in innovations that may not get protection.

The problem is made worse by the growth of patent applications for inventions that are increasingly complex. Patents on mechanical inventions are often relatively straightforward. But in today's world, patents reach into biogenetics, complex computing and nanotechnology--areas of research and scientific development that have been developed only in the last two decades.

Overburdened by the flood of patent applications, the USPTO could simply push patent awards through the system without adequate assessment and review. But that only makes the problem worse. When patents of dubious quality pass through the system, it only undermines confidence in the entire system and opens wide the door to litigation.

For some time, businesses have urged Congress to address the problem by raising patent fees. Since the USPTO is funded solely through patent-filing and other user fees, businesses supported increasing them to provide the USPTO with the resources it needed. There was one critical condition that businesses put on raising the patent tax: Stop the diversion of these monies from the USPTO to unrelated programs.

Congressional diversion of money away from the USPTO is a big problem. Since 1992, approximately $700 million in USPTO user fees have been diverted to unrelated government programs. That is almost three-quarters of a billion dollars that could have gone to speed up patent approval and spur investment. It could also have gone toward improving patent quality that would reduce litigation costs.

In the same bill that raised the patent-filing fees, Congress diverted $30 million of those fees into non-USPTO programs.

In the lame-duck session, Congress embraced the increase in patent fees. However, it left open the possibility--or the likelihood--of continued huge fee diversions in future years. In fact, in the same bill that raised the patent filing fees, Congress diverted $30 million of those fees into non-USPTO programs. That was relatively modest compared with some earlier years--but it was $30 million that the resource-starved USPTO badly needed.

It doesn't seem too much to ask that the USPTO keep 100 percent of its own patent fees, particularly given its current state of affairs. The nation's businesses felt so strongly about this that they were willing to support taxing themselves for their inventions.

It seems only fair that the federal government use the funds for what they are meant for--protecting and providing incentives through a world-class patent system. To do anything less is a disservice to our inventors and entrepreneurs and a drag on our nation's competitiveness and productivity.

Biography
Herb Wamsley is executive director of the Intellectual Property Owners Association.

More Perspectives

The next step?

I agree that diversion of PTO fees should end. I agree that the PTO needs more resources. However, there are some key "next steps" that need to be addressed.

What is the most important problem the needs to be solved? Is it the issuance of "bad" patents like the swing patent? Is it issuance of potentially overinclusive patents, like that for amazon.com litigated against Barnes & Noble or the Eolas browser patent litigated against Microsoft or the University of Rochester's COX-2 patent litigated against Searle? Is it simply the delay in finishing prosecution? Is it incomplete prosecution histories that create tedious litigations? Are key references being missed?

Depending on the problem, there may be different answers as to how to allocate the increased resources to optimize enhanced examination quality. Increased access to better databases? More time on examination for each application? Increased pay to hire more examiners with more technical background or do we simply need more examiners, not necessarily with deep technical background?

In his paper in the Northwestern Law Review on rational ignorance, Mark Lemley argued for the status quo. Because so few issued patents are ever litigated or licensed, he suggested that no more resources needed to be expended and somewhat arbitarily concluded things were "just right." A later paper argued for "optimal ignorance," but did not define what the optimum was.

If we are going to spend the money wisely, we need to identify the problem. For all the talk of amazon.com's patent, it was never invalidated in litigation, even though far more resources were expended in litigation than would ever be conceivably available to the PTO for examination.

Lawrence B. Ebert
December 1, 2004

Innovation mine field

The most serious impediment to new investment in the computer technology id is the large number of patents granted for applications that are neither innovative or clearly unique, that can hold new products up for ransom. Clicking once instead of twice is not novel any more than patenting the turning of a door knob from right to left instead of vice versa.

Allowing Microsoft to trademark the word "Windows" that was previously in common usage, is like granting Lever Bros. the right to trademark the word "Soap".

USPTO Not a Rubberstamp Court

I agree with Herb Wamsley that a healthy patent infrastructure is critical to our nation's competitiveness and productivity and that financial resources should not be diverted from the USPTO to other agencies. I disagree however that the patent system is on the verge of collapse unless fees are increased (again).

As holder of dozens of patents, I have seen the patent examination system work well for many years and I am still observing it now as my company (TVI) pursues a patent infringement case against Microsoft.

Yes it takes two to three years for a patent to issue but I have yet to see the kind of gross incompetence, negligence or hasty rubberstamp approval by overwhelmed patent examiners that is constantly debated by the public and reported by the press.

What I do see a lot of however, is fear, uncertainty and doubt spread by special interests that will benefit when patents are more difficult and more expensive to obtain. ([e-mail])

Have to disagree with all of you

Litigation.

Once the courts become more dependable in terms of the expected outcomes of patent cases, we can expect to see a streamlining of the patent applications. If the Republicans didn't hate trial lawyers so much, this would already be underway.

What is needed is law that relates directly to patents and copyrights, primarily by disallowing most of the patent applications. Most of what people are trying to patent fits under the provisions of 'prior art' in any event. If there is a reason for the more complex applications, it is that the inventor is trying to 'outrun' claims of 'prior art'. Worse are the patents that represent, at best, incremental improvements to existing ideas.

Companies which intend to commercialize the patent must be given precedence over 'originators' because this is the best for the public and the economy in the long run.

This leads to the Microsoft phenomenon, which I have heard stated thusly, "If Microsoft understands an idea, it thinks it invented it."

Monopolies of this sort are in the best interest of the U.S. and the recent DOJ-Microsoft anti-trust trial virtually proved.

You and I may not like it, as inventors, but it does put the emphasis on the need for "spectacular" inventions as opposed to incremental technical progress.

The alternative is for every inventor to be: part librarian, part lawyer, part researcher and lastly, inventor.

Under those conditions inventors aren't inventors at all, but opportunists.

[praveen s]

Frivolous patents are the problem

The issue with the patent system is not so much with the lack of funds, as it is the hijacking and abuse of the patent system by patent lawyers, corporations and individuals, who seem to have created a multi-billion dollar technology litigation industry. Some of the famously frivolous patents, especially software patents, that have been issued over the past few years, would seem to have the potential to make even fundamental arithmetic operations like addition and subtraction patentable. As every computer scientist or software engineer knows, some of the basic constructs and techniques in software engineering are fundamental in nature and ought not to be patented. Additionally, minute alterations and window-dressing of well known public-domain algorithms and techniques in software engineering, have been used as a means to acquire bogus patents. This hardly encourages innovation. On the contrary, it stifles innovation and technology entrepreneurship by dramatically raising the barrier to entry for technology start-ups, with the looming threat of frivolous litigation. On the other hand, it allows the absurd monopolistic acquisition of just about every little idea under the sun by large corporations who weild the money and legal clout. While lawmakers have talked of the need for reforming the Healthcare system to prevent frivolous lawsuits, which definitely are a contributing factor to the cost, perhaps it would be prudent on their part to take a serious look at the massive scale of similair abuse in the technology industry.