It seems pretty clear that under the direction of David Kappos the United States Patent and Trademark Office is pursuing an “all of the above” strategy to cutting into the backlog and ultimately reducing the pendency of patent applications. It is easy to criticize any one of the initiatives that the USPTO is pursuing, but that would be to miss the forest for the trees. The reality is that unless and until Congress steps up to the plate and does something, which seems extraordinarily unlikely, the Patent Office will be left to attempt to piecemeal together solutions. So while no one solution can or will solve all of the problems plaguing the patent system, if cascading solutions are employed at least some applicants can be helped and at least some applications can be accelerated. Of course, the name of the game today is job creation, so I propose a creative way to accelerate patent applications out of order upon proper showing that jobs will be created, and focus my suggestions on those companies that are most likely to create jobs; namely those 5 years or younger and with 99 or fewer employees.
Recently the Patent Office announced expansion of the pilot program that allows a patent application to be expedited if the same applicant abandons another application. The criticism is that many independent inventors and small businesses don’t have a meaningless or trivial application to abandon like most of the tech giants, but does that mean the plan is not a good one because it will only help a subset of patent applicants? Of course not!
The reality is that in many cases because an application stays pending for so long when it was filed it was deemed useful and a core component of a future patent portfolio, but due to advancements in the innovation or delay in processing it is no longer viable, or not as viable. If this is you then give it up to have one of your other applications advanced. Sounds good to me, particularly if one of your other applications were a Continuation-in-Part that incorporated by reference the earlier application you are now abandoning. In that situation you lose nothing, so there is only benefit all around.
While the thinning out of unnecessary patent applications without any work by the Patent Office will inure to the benefit of everyone simply by paring down the size of the backlog, criticism of this initiative is completely unfounded if the Application Exchange program is part of a multi-faceted solution. Don’t begrudge the fortune of another, but do expect that the Patent Office will not stop here and will seek other creative ways to help additional applicants who might not be able to avail themselves of this opportunity.
At the Inventor Roundtable held at the USPTO in March 2010, Kappos explained that the PTO is trying to work out the details with respect to how to accelerate patent applications that realistically could contribute to job growth if and when patents ultimately issue. He explained they are trying to figure out how such a program would manifest itself because he doesn’t want to put applicants into a position where they would have to make assertions under oath that might not be able to be backed up by reality or facts. He asked for help and suggested that anyone with an idea should let the Patent Office know.
Picking up on this request I present the following suggestions (see bottom), which admittedly are not going to provide an across the board solution that will help all applicants, but they will help at least some applicants and lead to a greater potential impact on the economy and job creation than not doing anything. So it is with this in mind that I recommend the Patent Office consider these additional pinpoint programs aimed at filling out an “all of the above” solution that in totality will cut into the backlog and reduce pendency for at least those patent applications most likely to have real commercial and economic impact. As a preface to my suggestions, however, allow me to explain why I would focus on young start-up companies with 99 or fewer employees.
In March 2010 the Kauffman Foundation released a study titled High Growth Firms and the Future of the American Economy. This study focused on attempting to identify the characteristics of those companies that create the most jobs and found that the current national conversation would be more productive if focused on creating a favorable environment for entrepreneurship because that is the most fertile source for job creation. Furthermore, according to Dane Stangler, a senior analyst with the Kauffman Foundation and author of the study, “Without startups, our research shows that net job creation in most years would be negative, so policies that expand firm formation could increase both job creation and the number of high-growth firms.” See Kauffman Press Release.
The study explains that “the top 5 percent of companies (measured by employment growth), or about 273,000 firms, creates two-thirds of new jobs in any given year. The top 1 percent of companies (about 55,000), generate 40 percent of new jobs in any given year.” Three figures from the study deserve attention and explain the characteristics of these job creating companies. It should come as no surprise that they are overwhelmingly between 1 to 5 years old (see Figure 3) and high growth “young firms,” defined as those 3 to 5 years old, overwhelmingly have between 20 to 99 employees (see Figure 5).
With this in mind I offer the following suggestions, aimed at those companies 5 years or younger and with 20-99 employees or less, which I will refer to as “micro-companies.” I will refer to “sub-micro-companies” as those 5 years or younger but with fewer than 19 employees.
- Second Round Funding Advancement. In many situations companies receive some early rounds of funding from a Venture Capital group. It is common to obtain money and then explain what you will do with it to create value and make the company worth more than the amount invested. A portion of this can be used pursuing an appropriate patent strategy. Unfortunately, because in many technology areas the pendency has grown so long VCs can and do get restless when the company cannot produce a patent. Without at least one patent to show companies lose funding and languish and/or die, taking existing jobs with them, not to mention never fulfilling the promise of additional job creation.Therefore, any micro-company that has previously received funding and can demonstrate that additional funding will be provided contingent upon the issuance of a patent should have at least one of their pending patent applications advanced to the front of the line. One additional patent application should be advanced out of turn to the front of the line for every 10 jobs that will be created through the funding committed.
- Initial VC Funding Advancement. Investors love patents and sometimes it can be extremely difficult for start-up companies to attract even modest initial funding without the existence of at least one patent. This is true for many reasons, including the fact that many (if not most) start-up companies have modest sales records that would hardly justify investment of the funds required, thereby causing them to remain quite speculative investment vehicles. If a company has only modest sales history but an attractive technology plus an issued patent, then opportunity can open quite dramatically.Therefore, any micro-company that can produce a business plan and has a legally binding commitment from an investor for a minimum of $2,000,000 (a respectable but minimal level of VC funding) contingent upon the issuance of a patent should have at least one of their pending patent applications advanced to the front of the line. One additional patent application will be advanced out of turn to the front of the line for every 5 jobs that will be created through the funding committed.
- Initial Angel Funding Advancement. Investing in the earliest stage start-up comes with enormous risk and great potential reward for success. Unfortunately, most start-up companies do not succeed and there is a limited number of Angel Investors with the risk tolerance appropriate for providing critical seed funding to put the company in position to appropriately move forward with expansion and so that future rounds of funding can be realistically explored. In this time frame patent applications need to be filed to protect the fledgling innovation, and that alone comes with substantial costs for those who are bootstrapping a start-up. Given the “protect it now or lose it forever” reality of innovation, once patent applications are filed there is frequently a shortage of remaining funds to engage in appropriate business development, hiring and sales efforts. Without some expectation of patents being issued in a reasonable time frame it can be difficult to attract seed money.
Therefore, any sub-micro-company that can produce a business plan and has a legally binding commitment from an investor for a minimum of $100,000 (a respectable level of seed funding) contingent upon the issuance of a patent will have at least one of their pending patent applications advanced to the front of the line for immediate examination. One additional patent application will be advanced out of turn to the front of the line for every additional job that will be created through the funding committed.
- Licensing Advancement. America has always been blessed with independent inventors and small businesses that engage in the business of innovation for the purpose of licensing their inventions. While in some corners these folks are referred to as “patent trolls” or “non-practicing entities,” the reality is Thomas Edison was in the business of innovating and hardly anyone would ever call his motives nefarious, at least those who are subscribers to the capitalist culture. These independent inventors and small businesses deserve to also be able to partake in advancement out of order if their innovations are going to create jobs.
Therefore, any independent inventor or sub-micro-company that can produce a licensing commitment contingent upon the issuance of a patent, and proof that at least one full-time job will be created will have at least one of their pending patent applications advanced to the front of the line for immediate examination. One additional patent application will be advanced out of turn to the front of the line for every 5 jobs that will be created through the funding committed.
These acceleration models can be conditioned on the submitting of an affidavit, perhaps a variety of a Rule 132 affidavit, and appropriate documentation demonstrating a sufficient, legally binding commitment.
Let the debate begin!