Patent Reform and the Economy
One hundred and seventy-five years after Congress created the United States Patent Office and formalized the patenting process, 180,000 patents are being granted each year, but in this era of accelerated invention and innovation the system is backlogged and in need of reform.
The Coalition for 21st Century Patent Reform, an organization that represents 18 different industry sectors and advocates for patent reform, reports that the U.S. Patent & Trademark Office (USPTO) currently lacks sufficient funding and technical resources to process the number of patent applications being filed annually in a timely and efficient manner. The result is a backlog of filings waiting to be reviewed which, the organization believes, is preventing new technologies, and the jobs that would result, from reaching the marketplace and strengthening the economy.
Jim Bagarazzi, an intellectual property attorney with Dority & Manning in Greenville, says, "Politics plays a large role in our patent system. Money generated from fees is greater than the money allocated to support the office. The government depends on the USPTO as a revenue generator for funds that go straight into the General Fund," he says. The patent office is short-staffed and in need of an updated computer system. He explains that there has been some progress to reduce the percentage of funding bled off, "but there needs to be more, and it won't happen until the economy is in a better state."
David J. Kappos, Director of the United States Patent and Trademark Office, sat before a House of Representatives committee in May and stated that "innovation is a principal driver of our economy, and a well-run and appropriately funded USPTO is critical to promoting innovation, stimulating economic growth and creating highpaying jobs."
President Obama allocated funds in his FY2011 budget request which will help alleviate the backlog in the USPTO, but it also comes with a request for an interim patent fee increase that will be passed on to applicants.
The Patent Reform Act of 2010 has also been drafted and is on the table, but there is not a large constituency behind it. "With only a handful of patent attorneys per state, we really don't have much influence," says Bagarazzi.
"Bigger corporations have professional lobbyists that are the main proponents of new policies that could benefit their own companies, but not necessarily the whole system." It is sort of a system that often goes unnoticed, he says. With so many economic issues on the table as of late, general patent reform is not at the top of the list, and the bill could take a while and the backlog will continue to grow.
"If you file an application today, it could still be more than a year or more before it is examined," says Neal Pierotti, an intellectual property attorney with J. Bennett Mullinax, LLC, in Greenville.
In April of 2010, the U.S. Department of Commerce released a report stating that "a delay in the granting of patenting rights has substantial costs for Americans. The U.S. backlog (currently at 750,000 applications) could ultimately cost the U.S. economy billions of dollars annually in 'foregone innovation.'"
The report goes on to say that innovation is a key driver of a pro-growth, job-creating agenda. Patent reform legislation accelerates the pace of growth and of job creation.
Pierotti explains that the patent office did institute a procedure they thought would speed up the patenting process, but no one takes advantage of it. The USPTO allows applicants to do their own patent background research and include it with their application. The legwork does speed up the process, but the information submitted locks the applicant in to one interpretation of their patent and it can be used against an applicant at a later date, if their patent is challenged.
As it stands there are three hurdles to get a patent passed. The patent must be useful, novel and non-obvious, meaning the variation on an existing patent cannot be an obvious one.
"There are already too many frivolous lawsuits out there over patents," says Pierotti. He hopes new legislation will cut down on constantly-changing rulings on terminology such as obvious versus non-obvious that cause delays in the process.
Overall, though, Pierotti and Bagarazzi think the system is working. "If it wasn't, we would not be seeing so many advancements in different areas. If the system wasn't rewarding people for inventing, people wouldn't invent."
Views expressed in this article are not necessarily views held by any other persons at Dority & Manning or J. Bennett Mullinax, LLC, or by any of either company's clients.