ARLINGTON, VA — In April 12, 2011 letters to House and Senate leaders, the American Intellectual Property Law Association (AIPLA) expressed deep concern about the serious shortfall in the current legislation to fund the U.S. Patent and Trademark Office.
H.R. 1473, the Full-Year Continuing Appropriations Act, 2011, is the legislation reflecting the compromise on the Continuing Resolution to fund the government for fiscal 2011. The letters point out that the provisions of the bill related to the USPTO appropriate $100 million less than the projected user fee revenues to be collected, essentially diverting that money to other government programs. In addition, the bill lacks the appropriations “buffer” language included in previous bills to ensure that the Office may utilize the fee revenue that exceeds the original projected collections for the fiscal year.
The Innovation Alliance is disappointed that the America Invents Act as introduced today in the House of Representatives does not include some important safeguards against the potential for abuse of the post-grant review procedures at the U.S. Patent and Trademark Office (USPTO). In particular, the bill includes a weak threshold for ‘second window’ inter partes review proceedings, one that will allow virtually all challenges to proceed to a trial-like hearing before an administrative patent judge. We believe a higher threshold is needed to enable the USPTO to manage the increased workload of the new administrative review system fairly and efficiently by screening out meritless or unsubstantiated petitions.
EDITORIAL NOTE: What follows is a letter to Congress from Gary K. Michelson, MD, published here with permission.
President and inventor, Abraham Lincoln
As Abraham Lincoln said “The Patent system added the fuel of interest to the fire of genius”.
Many inventions allow a worker to be more productive. That is to provide more service or more product with no increase in the work performed. For example in the era of the building of the great canals in America steam shovels appeared such that one man and such a machine (an invention) could displace 100 men with shovels. Similarly a large room full of typists with typewriters were replaced by a single person with a word processor (an invention) who was then capable of turning out an unlimited supply of originals.
It’s crunch time. The Patent Reform Act of 2011 is scheduled for an up-or-down vote on the Senate floor this Monday, Feb. 28. It’s time for all intellectual property professionals to look carefully at the Patent Reform Act, and decide: is this bill good for American innovation or bad?
I am convinced that it is bad.
This bill (and its predecessors) has been extensively lobbied. A handful of large, multinational companies have lobbied vigorously for it. A handful of other large entities have lobbied vigorously against it. Yet consistently, small businesses, start-ups, entrepreneurs, and independent inventors – the present and future job creators in the U.S. – have said that this bill will hurt them today and it will hurt U.S. competitiveness tomorrow.
It is admittedly hard to get worked up about the prospects of patent reform given that over the last 5 to 6 years we have be variously told that it was only a matter of time, a done deal, imminent and/or guaranteed. Of course, patent reform hasn’t happened; legislative efforts have simply been unable to cross the finish line.
Notwithstanding, Congress is at it once again, with the Senate Judiciary Committee reporting out a bill last week that remarkably resembles the bill that has been unable to gain any traction in the Senate for the last several years. That would suggest that the same fate is in store for this legislation. Not so fast! I have a suspicion that this year things are different and that we really could be on the cusp of patent reform. Whether that is for better or for worse will largely be in the eye of the beholder, but what is emerging feels different and I think we are closer to change, and perhaps an end to fee diversion, than we have been at any point over the last 6 years.
Earlier today the current version of patent reform legislation in the United States Senate, S. 23 titled “Patent Reform Act of 2011,” was marked up in the Senate Judiciary Committee. The amendments offered by the Senators seemed relatively minor for the most part, with one notable exception. Senator Tom Coburn (R-OK) presented an amendment to the bill that would once and for all put an end to fee diversion and allow the United States Patent and Trademark Office to access its fees.
The Coburn Amendment would create a specialized fund within the Department of Treasury known as the “United States Patent and Trademark Office Public Enterprise Fund.” The PTO Director would have access to monies in the Fund for expenses ordinarily and reasonably necessary for running the Office. Perhaps most importantly, the Fund could grow so monies in the Fund could be accessed by the Director without fiscal year limitation. This could allow the Fund to grow in certain years to a critical mass that may be needed for capital expenditures. This is a brilliant idea and one that the industry needs to get behind wholeheartedly.
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.
Kappos at the Innovation Alliance conference, 1-21-2011.
Yesterday David Kappos, the Under Secretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office, went to Capitol Hill to testify before the House Subcommittee on Intellectual Property, Competition and the Internet, which is a part of the House of Representatives Committee on the Judiciary.
The title of Kappos’ prepared remarks was How an Improved U.S. Patent and Trademark Office Can Create Jobs. For those who are marinated in the goings on at the Patent Office a lot is review with a few tidbits of new information. Specifically, we learned that the USPTO projects an average first action pendency of 23 months by the end of fiscal 2011, that participating in the First Action Interview Pilot Program more than doubles the likelihood of getting a first action allowance, that Track 1 rules are imminent with rules for Tracks 2 and 3 to follow and during FY 2010 nearly 6,000 USPTO employees worked from home at least a portion of their work week. We also heard an ominous and declarative statement from Kappos, who told the House Subcommittee on Intellectual Property that the diversion of fees will cause the patent backlog to rise.
Director Kappos explains the USPTO IT systems are "too fragile" to give access to more patent data.
The United States Patent and Trademark Office is collecting $1 million per day that it is not allowed to use, thanks to the fact that Congress recessed for the elections without passing a budget for fiscal year 2011. What that means is that the Patent Office is frozen in place with a budget that restricts the amount of funds that the Patent and Trademark Office can use. Thus, they are taking in the work and only capable of using a portion of the fees collected for operations. That means there is a $1 million per day national innovation tax being imposed because Congress refuses to let the Patent Office keep the money it collects for services to be rendered.
The Honorable Paul Michel, Chief Judge of the CAFC (ret.)
In July 2010 I had the privilege of interviewing Chief Judge Paul Michel of the Federal Circuit, who had just recently retired from the Court effective May 31, 2010. Chief Judge Michel spoke with me on the record for over 1 hour and 40 minutes, and even then I only was able to get to a fraction of the topics that the Chief Judge agreed to discuss on the record. Chief Judge Michel agreed to go back on the record with me to address those additional topics, such as the confirmation process to become a judge, the state of the federal judiciary, funding for the Patent Office, Federal Circuit decisions over his tenure on the Court and more. We had our second interview on September 24, 2010, again at the University Club in Washington, DC.
The timing of the publication of this second interview with Chief Judge Michel is quite fortuitous. This evening the Federal Circuit Bar Association is holding a retirement party for him, together with dinner and dancing. Unfortunately, I find myself in San Francisco teaching the PLI patent bar review course and I am unable to attend. Renee Quinn is attending the event and will have a full report of the festivities, so check back tomorrow for more.