As the evening moves forward it is increasingly apparent that the Republicans are having an excellent night, and exactly what the vast majority of pundits have predicted seems to be coming true. The Republicans are poised at this hour to take control of the United States House of Representatives by margins larger than the last so-called Republican Revolution, which swept Republicans to power in 1994. The Republicans are also poised to gain substantial numbers in the United States Senate, although it seems likely they will fall short of the 10 needed to take control of the Senate, as widely predicted. Republican Governors seem to be fairing exceptionally well, as are Republican State Representatives and State Senators, which has long-term implications with redistricting on the agenda over the next several years. Not withstanding the potentially historic nature of this election, there will be plenty of time to consider what the election results mean in general, for business and for a variety of issues important to families; the so-called kitchen-table issues. But for tonight I will reserve my commentary to what the election results mean for patent reform. Those following my recent articles might find themselves surprised.
In order to discuss the impact of patent reform we first need to define what is meant by “patent reform.” I am going to divide patent reform into two categories: (1) pending patent reform that might get consideration in the lame duck session; and (2) patent reform that we desperately need the next Congress to take up.
Lame Duck Patent Reform
The election of November 2, 2010, will have little or no impact on whether the pending patent reform will pass in a lame duck session. Patent reform does not bring voters to the polls and it does not lend itself to sound-bites. It is not in the mind of most elected officials because patent reform is not a legacy issue, or likely something that most of our elected officials even truly understand given the byzantine nature of the law. If patent reform gets passed in the lame duck session it will be because it has been attached to one of the remaining funding bills that Congress passed on in favor of a continuing resolution to fund government operations.
We are currently operating without a complete budget for the fiscal year and in the past when patent reform has been done it sometimes has a way of getting attached to bills that have absolutely nothing to do with patents, innovation or technology. So there is a possibility that patent reform, as it is currently pending, could be attached to something and enacted upon. Last week I heard one insider handicap the chances of patent reform at 90%. I can’t say that I have heard that level of expectation from anyone else and in fact I have heard only cautious optimism from those who are in favor of patent reform. I have also heard that floor time is needed because certain amendments will be required in order to reach a compromise that will accept what many think is flawed patent reform, at least in terms of the watered down grace period — a la 102(b) — presently embodied in the bill.
The wild-card is what will the defeated Democrats do when they return for a lame duck session? Will they try and ram through a variety of things while they still have a chance, will they stick with the business of the people and do what is necessary in terms of the budget and items that need immediate attention or will they lose interest and just engage in being caretakers for the new Congress. If the Democrats do try and tackle controversial issues that would seem to suggest a very partisan lame duck session that will likely bog down efforts to do practically anything. If they largely lose interest and go into caretaker mode, it would seem unlikely that something as off-the-radar as patent reform would get any treatment. So a lot still needs to be decided.
Finally, while it may come as a shock to many, even in the political climate throughout the country and in Washington, DC, patent reform is not political, at least in a national sense. Patent reform is political on a regional and local level. It matters more who is in your district than anything else, perhaps second only to who donated to your campaign. So while you can count heads with respect to so many things, there is absolutely no sense counting up the number of Democrats and Republicans and thinking that could foretell things to come should patent reform take center (or even back) stage in Congress. This little known fact always makes it difficult to handicap the chances of patent reform.
Patent Reform in the New Congress
With so many Republicans being newly elected to both the House of Representatives and the Senate it will be difficult to predict how things will go for sure. That being the case I think it is critical to look at the theme of this election, which largely seems to be the economy, the deficit and out of control spending. Everyone wants the economy to pick up and jobs to be created, but many have different ideas on the deficit and spending. I don’t think anyone wants ridiculously high deficits, but when it comes to reducing spending long term, politicians have great difficulty. So what does this mean?
Before proceeding any further it makes sense to define what I mean by “patent reform in the new Congress.” Let’s face facts, the United States Patent and Trademark Office is in severe need of assistance. Every year Congress allocates money to the USPTO and if they bring in more money in fees it is siphoned off. The Patent Office has had nearly $1 billion siphoned off over the last 18 years. For an entity with a current annual budget of approximately $2 billion, that is real money.
David Kappos has a lot of great ideas, more energy than the Energizer Bunny and a team that seems as committed as he is to the greater good for the innovative community. The unfortunate reality is that Kappos and his great ideas are not enough. As with any organization, resources are necessary. For crying out loud, Kappos and his team have a sensible idea about making provisional patent applications pending for 24 months. Due to the fact that the statute says 12 months the USPTO can only do this through a convoluted set of rules that don’t really quite achieve the end goal, but come close. All Congress would have to do is erase “12” and insert “24.”
The Patent Office offers a fee for service, and it is absolutely essential that the Patent Office be allowed to keep 100% of the fees collected. Fee diversion must end and a serious commitment to the Patent Office must be made. Rather than engaging in a variety of reforms that do not fix the Patent Office while layering a great amount of unfunded additional work onto the Patent Office, the Congress MUST pass real reforms that allows for the upgrading of the antiquated computer systems at the USPTO, enable the USPTO to hire as many examiners as they can to get the backlog down and authorize the creation of regional Patent Offices, among other reforms, to get the Patent Office back on track. This needs to be done now while we have a tremendously efficient and effective teams in place at the USPTO.
What is the likelihood that this will happen? Unfortunately, I’m afraid, not good. The theme that has swept so many new Republicans into office is one of fiscal responsibility — read: mandate to cut spending. Will those who are new to politics and likely unfamiliar with the patent system understand that spending on the Patent Office is not traditional Washington spending, but rather investment in America, investment in job creation and investment in innovation?
Perhaps with a paltry annual budget of $2 billion, will the spending cuts that will likely be viewed as mandated by the vast majority of the electorate trickle down to the fee for service Patent Office? Will the new leaders who have business experience understand that a modest investment in the Patent Office (at least modest by Washington, DC standard) will reap great rewards and dramatically jump start the innovative economy by facilitating the natural maturation of technology-based start-ups? I fear the answer may be no, and that would be a disaster.
I am a student of history, and history shows us that while there may be a lot of positive expectations moving into 2011 — nothing ever changes. That is why we are in the mess we are in. Republicans have caused the mess; Democrats have caused the mess; and any Independents elected have contributed. Why would anyone expect anything to be different?
Einstein is famously said to have defined insanity as “doing the same thing over and over again and expecting different results.” I suppose we can excuse Democrats for believing in 2008 that things would be different, and I suppose we can excuse Republicans for believing in 2010 that things will be different, but at the end of the day we share a certain level of insanity. Just look at how hard it is to actually get adequate funding for the Patent Office. There is indeed plenty of insanity all around!