Earlier today the United States Patent and Trademark Office announced more details relating to the “Three-Track” program, which was first published for public comment in June 2010. See USPTO Announces New Examination Rules). The Three-Track initiative is designed to enable applicants to choose the speed with which their patent application is processed. On Friday, February 4, 2011, the USPTO will publish in the Federal Register a notice of proposed rulemaking on “Track One” of the program, which will give applicants the opportunity for prioritized examination of a patent within 12 months of its filing date for a proposed fee of $4,000.
Sadly, because the Patent Office does not have fee setting authority there will be no reduction in fees available to small entities who otherwise normally pay 50% of most Patent Office fees. Because the Congress controls which fees qualify for small entity preference everyone will need to pay $4,000 to accelerate under Track One. Perhaps this will get Congress to stand up and take notice of the patent system they have so long neglected. I can only imagine the outcry from independent inventors and the small business community. If you are offended by the high fee just be sure to direct your ire where it is deserved; namely in the direction of Congress.
While many are not enamored with the pending patent reform legislation in the U.S. Senate, it would give the Patent Office fee setting authority. So small entities should know that the USPTO is working to offer a 50% discount on any filing fee associated with Track One, as it does with many other standard processing fees. While there are vast disagreements relating to the patent reform legislation, fee setting authority for the Patent Office seems particularly important. Even more important, however, would be “fee keeping authority,” which would put an end to fee diversion and guarantee that the Patent Office can use the fees it collects to provide the services it is obligated to provide. The nightmare scenario will be if Track-One goes final (which is virtually assured) and there are takers who pay the extra $4,000 and then Congress once again siphons off money from the Patent Office. That would be one extremely steep innovation tax indeed!
As a show of how important the Department of Commerce believes the Three-Track program to be, U.S. Commerce Secretary Gary Locke highlighted the Three-Track patent examination program at the White House’s launch of the “Startup America” initiative earlier this week. David Kappos also spoke of Track-One being “imminent” at the Innovation Alliance conference on January 21, 2011.
“The Patent and Trademark Office plays a key role in promoting innovation and entrepreneurship,” Locke said. “This new system will bring the most valuable patents, as determined by inventors, to market faster and will help shrink the backlog by catering to the business needs of America’s innovators.”
“Since putting our ‘Three-Track’ proposal out for public comment last summer, we have received feedback from innovators across the country supporting these processing options,” said Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos. ”Commenters have been particularly enthusiastic about the option to seek faster examination on their most important applications.”
While Secretary Locke and Director Kappos are indeed right, Track-One fees will simply be beyond the reach of many independent inventors and at least some small businesses. I suspect whatever the fee would be set at would be a cause of concern by many, and even a 50% reduction (if it were available) for small entities would likely not be enough to quell opposition from some corners. Notwithstanding, I would caution independent inventors and small businesses against completely ignoring Track-One.
In many situations, depending of course upon the technology involved, it is common to wait 4 to 6 years to obtain a patent, and not at all uncommon to wait 2 to 3 years to even hear from the Patent Office in any substantive fashion. If you have an invention that requires a patent quickly, perhaps to please investors, Track-One is for you. Thus, it is critically important in my opinion for everyone to be familiar with Track-One even if you don’t think you can afford it at the moment. There may become a time when you really need the speed it offers.
In some technologies, particularly cutting edge computer technologies and certainly in anything related to computer implemented methods, obtaining a patent is an excruciatingly long process. There are many scenarios where early stage funding can be obtained to help form the foundation of a company, including application being made for one or more patents. These early stage Angel investors who sometimes have a tolerance for there not being a patent initially will want to see a patent within some reasonable time frame otherwise they will cut of funding.
When that funding dries up the company stagnates and frequently cannot survive. For a filing fee of $4,000, which is significant no doubt, a determination on the patent application can be obtained within 1 year. Having a patent that quickly in a high tech area will no doubt be well worth the filing fee, making the $4,000 acceleration fee a worthwhile investment.
The forthcoming Federal Register notice will request comments from the public on a number of different proposed requirements for participation in Track One, including (a) the proposed fee of $4,000 for each application; (b) limits on the number of claims to four independent claims and 30 total claims; (c) application filing through the USPTO’s electronic filing system (EFS-Web); and other requirements. The comment period will close 30 days after the notice is published, so if you want to be heard you have a limited window of opportunity before the Track-One comment window closes and we wind up with final Track-One rules.
During the program’s first year, the USPTO plans to limit the number of applications in the program to 10,000 to ensure that the USPTO can meet the 12-month goal. While it is difficult to predict it seems likely to me that the 10,000 application limit will be more than sufficient to provide treatment for everyone who wants to accelerate under Track-One. I say this because with other innovative programs, for example the Green Technology Pilot Program, have had far less uptake than initial predicted. As these other programs become more well known they are attracting more applications, but there is always going to be a certain (and likely significant) population of patent attorneys and applicants that do not want to be riding the cutting-edge wave.
The patent industry is “small-c conservative,” and resists change. We know what works, we know what the laws and rules are (at least for the most part) and we fear how the Federal Circuit and Supreme Court might interpret creative decisions. Of course, if you can get a start-up client a patent quickly for an extra $4,000 that can mean the difference between the client having an ongoing company and being in the bankruptcy line. As with everything in the law the unique circumstances of the individual client need to be taken into consideration, and one size fits all legal advice is wholly inappropriate, but it seems that clients should at least be apprised of the options afforded by Track-One.
In other PTO news, earlier today the PTO also announced a new effort to eliminate the “tail” of backlog applications that were more than 16 months old at the beginning of the fiscal year and had not yet received a first Office Action, known as “Clearing the Oldest Patent Applications” (or COPA). I have also heard this referred to as the “working the tail off” or “working off the tail.” This initiative is deemed by the Patent Office to be a critical first step in reaching the agency’s strategic goal of providing first Office Actions on all new applications in an average of 10 months from their date of filing by 2014. I don’t know for fact, but suspect this initiative may be why we recently saw a patent application approved that had been pending for 11 years. See After 11 Years Apple Gets Design Patent on Drop Down Menu. So be prepared to see others issue with similarly unacceptable delays. As I rant about those that I come across I will attempt to keep in mind that those “working off the tail” are not the ones responsible for growing the tail. Nevertheless, we will likely see additional fodder for anti-patent activists who will ridicule the fact that something known for a decade has just been patented.
In any event, the goal for fiscal year 2011 is to have a first Office Action completed on nearly all of the 313,000 oldest backlog applications. Reaching this goal, however, will be highly dependent on the passage of a fiscal year 2011 budget that would provide sufficient resources for hiring and examiner overtime. As most know, the Patent Office is working under peculiar budgetary restrictions. They have plenty of money coming in every day, but because they are not allowed to keep the funds they collect they have to live with the funds that are allocated by Congress. So far the Patent Office is on pace to collect about $400 million more than it has been allocated by Congress, making it a nice revenue generating center at the expense of innovators, who Congress must feel need to be punished with a punitive tax that is akin to a ponzi scheme.- - - - - - - - - -
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About the Author
Gene Quinn is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.