Kasich, Patents and the Middle Class

By Peter Harter & Gene Quinn
February 22, 2016

John Kasich. Photo taken by Gage Skidmore. CC BY-SA 3.0.

John Kasich. Photo taken by Gage Skidmore. CC BY-SA 3.0.

During the Reagan Administration, then Congressman John Kasich (R-OH) co-sponsored legislation in 1983 to extend patent terms to address government agency and regulatory delays. [1] Twelve years later Kasich Chaired the House Budget Committee. Kasich proudly proclaims that he was the primary architect of the balanced budget, working with President Bill Clinton, even standing next to President Clinton as he signed the Balanced Budget Act of 1997 into law on August 5, 1997.

What Kasich doesn’t explain, however, is how he achieved a balanced budget. As part of the Kasich-Clinton deal the budget of the United States Patent and Trademark Office (USPTO) was raided for additional money to help plug shortfalls elsewhere. The appropriations cap placed on the USPTO for fiscal year 1998 was $691 million, and according to the IPO $199 million was collected but diverted, which means 22.4% of fee collections were taken from the USPTO in FY 1998 and used for other purposes. As a fee for service agency, taking money from the USPTO is literally picking the pockets of American innovators.ipo-fee-diversion-chart

Kasich, now Governor of Ohio, the state claiming the most elected to the White House, is running for President. The second time could be the charm for Kasich, who also briefly ran for President during the 2000 campaign, bowing out in July 1999 even before the Iowa straw poll due to lackluster fundraising.

Ohio has been rich with invention history, as the home to the National Inventors Hall of Fame, headquartered in North Canton, Ohio. [2] More recently, in 2008 Tim Russert of NBC’s Meet the Press interjected the issue of patent policy into the Democratic Presidential debate in Cleveland, put a patent question to candidates Barack Obama and Hillary Clinton. The question was based on a multi-decade study of drivers of economic development in all 50 states conducted by the Cleveland branch of the Federal Reserve Bank. By the time the race reaches Ohio this year, which will host its winner-take-all primary on March 15, the Republican field could be even smaller than it is today. More nuanced questions like patents and how they connect honestly to middle class wallets should start to surface. Given Kasich’s patent past it is not beyond the realm of possibility that patents will make their first explicit campaign appearance again in Ohio.

Kasich brands himself as fighting for the middle class, coming from meager roots. Since his time in Congress patents have become a game of kings where well heeled corporations capable of wielding political power rule, achieve the policies that will help their bottom line and become increasingly wealthy. Ironically, many of these power brokers have long since lost the ability to engage in paradigm shifting innovation (see here, here, here and here), which is no doubt why they almost uniformly support a weaker patent system so they can trample on the rights of true innovators who not only engage in swinging for the fences, but also strive to bring to bear that disruptive, creative destruction innovation. Unfortunately, ubiquity in the modern patent age is synonymous with widespread infringement.

Given Kasich’s positive brand of politics, which positions him as a champion for common sense reforms and working, middle class Americans, he would do well to consider not only the grave and severe consequences of his money grab from the USPTO, but also the consequences of the policies championed by those with an axe to grind against the patent system. The U.S. patent system was historically accessible to working class Americans, but thanks to both a chronically under funded patent office and a variety of post grant challenges that seek to strip patent rights after they issue, how can working class people participate in the 21st century American dream? It would be an inspiring move for Kasich to promise to restore “inventor” to the industry and occupation category of the US Census. It was eliminated by President Franklin Delano Roosevelt in 1940. [3]

We have an innovation-based economy, but it can take many years and tens of thousands of dollars to obtain a patent thanks to many delays. Then if the patent is commercially valuable you can be virtually certain that a post grant challenge will be filed, which can easily cost the patent owner over $1,000,000 to defend. The patent system is no longer in reach for working class Americans, or the millions of truly small, mom and pop businesses that drive the U.S. economy. Our system asks inventors to spend a small fortune to obtain a patent and then to spend a large fortune to fight to keep the patent as Uncle Sam’s own Patent Trial and Appeals Board or PTAB labors against property owners to rescind private property rights that are Constitutionally presumed valid.

Let’s face it: We no longer have a democratized patent system for the masses.

So where did it all start to go wrong? Remember that Contract with America when Republicans took over Congress in 1994 for the first time since 1953? That era was about reducing the size of government per Reagan’s view from the City on the Hill. It also ushered in a Republican Congress hell bent on a balanced budget, which is not necessarily a bad thing in and of itself, but how they went about balancing the budget on the backs of inventors was downright bizarre.

Republicans, including Kasich, love to lay claim to the Reagan legacy. But President Reagan was a supporter of the patent system. He never would have tolerated raiding the USPTO budget for any reason. We know that because it was President Reagan that demanded a build up of the USPTO as part of his overall strategy to make America great again and compete with the Japanese for technology dominance.

It was President Reagan that demanded the Patent Office push down unacceptably high pendency rates, getting the average pendency down to 18 months. President Reagan accomplished this goal by reaching a compromise with Congress. According to then head of the USPTO, Gerald Mossinghoff, President Reagan would commit to reducing patent application pendency if “Congress would enact a meaningful increase in user fees, which the USPTO could retain…” See Ronald Reagan, The Intellectual Property President. Thus, President Reagan did exactly the opposite of what John Kasich did as the architect of the Balanced Budget Act of 1997.

In a rush to reach Reagan’s City on the Hill, Kasich did a deal with the Clintons that squeezed the filling out of the Twinkie of innovation. Is that the world Kasich wants us to live in?

People today are not filing as much and they are maintaining less thanks to Alice, Myriad and Mayo, the multi-decade plague of pendency (the backlog of unexamined patent applications), and the perversely expensive risk presented by the PTAB. Heck, patents may be more valuable in Europe and China now by comparison, and patent litigators are increasingly recommending patent owners move battles to Germany where there is actually a likelihood that an injunction will be issued against infringers. How pathetic. Ronald Reagan built up the Patent Office so America could compete with Japan. Now thanks to neglect and poor judgment America’s leaders are allowing Europe and China to surge ahead.

Having been out of Washington since 2001, Kasich bears no responsibility for the America Invents Act (AIA) or the anti-patent culture that has at times permeated Washington, D.C. over the last decade. He does, however, bear great responsibility for having used the USPTO as a piggy bank in the 1990s. He set the stage for a generation of fee diversion and the damage that has been done by that fee diversion is catastrophic. On the 225th Anniversary of the patent system on March 10, 2015, former Directors of the USPTO in attendance all agreed – fee diversion has been the biggest problem the Patent Office has faced over the last generation. Even now the USPTO continues to struggle, and for that Kasich is responsible.

Today Kasich can take a stand. He can point out that the present plan by the US Commerce Department for sharing IT services with the USPTO is another form of fee diversion and should be stopped. And he can work with his Republican colleagues on this at the next debate. Senator Marco Rubio has already said he would vote against patent reform legislation that did not include an end to fee diversion. Kasich can ask Donald Trump what his Uncle John the inventor would think about fee diversion. Kasich can easily talk to Senator Ted Cruz who presently serves on the Senate Judiciary Committee and has voted against patent reform legislation and has also argued and won a patent case at the US Supreme Court. Kasich can ask Dr. Ben Carson how his work as a surgeon would have been different without inventions. Kasich can ask the American people why they should not get the service they paid for and in a timely manner.

 

Footnotes:

[1] https://www.govtrack.us/congress/bills/98/hr3502

[2] The Inventor’s Hall of Fame Museum is located in the Madison Building of the United States Patent and Trademark Office at 600 Dulany Street, Alexandria, VA.

[3] See page 9 of Juice: The Creative Fuel that Drives Today’s World-class Inventors, by Evan I. Schwartz.

The Author

Peter Harter

Peter Harter has over 20 years of experience bridging the ecosystems of technology, business, law, venture finance and politics by providing advice to management, boards and investors on legislation, regulation, court cases, media, standards, treaties, political campaigns, capital, property and labor. As the founder of The Farrington Group, Peter advises public and private companies, investors, startups and nonprofits on risks from legislation, regulation, court cases, standards, politics, and more. He also helps identify relationships for sales, finance and and executive recruitment. Peter’s career began in 1993 as an Internet lawyer. He broadened in Silicon Valley as head of global government affairs for Netscape and EMusic.com and in business development and sales for Securify. He deepened his experience in policy in Washington, DC, lobbying on patent reform for Intellectual Ventures. Peter has expertise in the areas of patents, copyrights, open source, cybersecurity, export controls, voting, antitrust, nuclear energy, big data, and medical research reform.

To contact Peter please connect with him via LinkedIn.

Peter Harter

Gene Quinn is a patent attorney and the founder and Editor of IPWatchdog.com. He is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene has worked with independent inventors and start-up businesses in a variety of different technology fields, but specializes in software, systems and electronics. is admitted to practice law in New Hampshire, is a Registered Patent Attorney licensed to practice before the United States Patent Office and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 2 Comments comments. Join the discussion.

  1. Night Writer February 22, 2016 2:45 pm

    I agree that Kasich has a chance of understanding patents and restoring them. Maybe partly because of his age. Maybe he can remember one of the big reasons for the Fed. Cir. and strengthening of patents was a cure to the malaise under Carter. The big corporations were going to have to innovate or lose their products. Maybe Kasich remembers what it was like before patents were strengthened.

  2. staff February 23, 2016 3:13 pm

    ‘Senator Marco Rubio has already said he would vote against patent reform legislation that did not include an end to fee diversion’

    But inventors need far more than that to once again make the patent system viable for small entities.

    For more information or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com/category/our-position/
    or, contact us at tifj@mail.com

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