Senator Tom Coburn (R-OK)

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.

Todd Dickinson discussed Three Track at USPTO on 7/20/10

My interview with Q. Todd Dickinson, the current Executive Director of the AIPLA and former Under Secretary of Commerce for Intellectual Property and Director of the Patent and Trademark Office, took place on August 19, 2010, in a conference room at AIPLA headquarters. In part 1 of the interview we learned about Dickinson’s background and early career that eventually found him Director of the USPTO, the American Inventors Protection Act and his philosophical approach toward allowing patent applications. In part 2 of the interview we discussed average pendency and ways to bring it down, as well as a detailed discussion about patent reform, which Dickinson told me was not dead, and which has turned out to be prophetic indeed. See Bipartisan Group of Senators Urge Action on Patent Reform.  In this final installment of the interview we discuss how current USPTO Director David Kappos is doing, whether his honeymoon period will ever end, whether there is any concern he will burn-out, and we discuss the AIPLA position on Three Track, plus the usual fun questions at the end.

Washington – On Tuesday, August 10, President Barack Obama signed into law P.L. 111-224 that gives the United States Patent and Trademark Office (USPTO) the authority to spend an additional $129 million of the fees the agency will collect in Fiscal Year (FY) 2010. Due to an improving economy and increased patent examination productivity, the agency projects it will collect nearly $200 million more than its FY 2010 appropriation of $1.887 billion.

David Kappos told CBS the biggest problem is the backlog and the PTO needs more money. "It's no taxpayer dollars at all-- all the fees we collect come from patent applicants."

Straight from the “it’s about time” department comes breaking word that the so-called popular press are finally identifying the most under reported news story of this recession.  The United States Patent and Trademark Office is foundering and it needs more money in order to do its job.  That alone ought to be newsworthy, but add the fact that the Patent Office is the one agency of government with the ability to recognize assets out of whole cloth and have industry organically grow as a direct result and without ANY taxpayer dollars.  The fact that the Patent Office can without any taxpayer dollars directly influence and creation of new, high paying jobs makes it virtually criminal that the elite press, who has reported on virtually every angle of this recession, has ignored the engine that could get us out of this mess.

Chief Judge Paul Michel (ret.)

On July 9, 2010, I sat down with the Honorable Paul Michel, the recently retired Chief Judge of the United States Court of Appeals for the Federal Circuit.  In this interview, which lasted for 1 hour and 40 minutes, we talked about his experiences as a prosecutor in Philadelphia and then in Washington, DC where he was a special prosecutor in the Watergate investigations and the lead prosecutor in the Koreagate investigations (see Part I).  We also discussed the decline in the checks and balances the federal system; the Founding Fathers and how they viewed patents and how the Patent Office used to be held in such esteem (see Part II).

In this third installment things get interesting, perhaps even a bit explosive.  The former Chief of the Federal Circuit pulls no punches and talks openly and honestly about Congress, laying the blame for the decline of the Patent Office squarely on the feet of Congress who has since 1992 siphoned off at least $750 million thanks to fee diversion. This has left the Patent Office short on resources to do what needs to be done. The Judge also makes the case for regional Patent Offices and getting involved in the patent reform debate so that a handful of companies can’t dominate the discussions to their sole benefit. He talks about perhaps setting up a think tank to promote a pro-patent and innovation agenda, and how it is a “travesty” that patent rights cannot be enforced in a relevant time frame through litigation because of backlogs in the federal court system. I think it is fair to say that Congress was in the cross-hairs during this segment of our interview and some of what Chief Judge Michel tells me was surprisingly forceful, direct and extremely critical. Having said that, I think practically everyone in the industry will agree with him. I know I sure do!

Chief Judge Paul Michel, CAFC (ret.)

On July 9, 2010, I interviewed the recently retired Chief Judge of the United States Court of Appeals for the Federal Circuit, the Honorable Paul Michel.  Judge Michel and I talked on the record for 1 hour and 40 minutes at the University Club in Washington, DC, where he is a member.  This is Part 2 of a 4 part series.  In Part 1, On the Record Interview with Chief Judge Paul Michel, Part 1, we discussed judicial ethics and how cloistered members of the federal judiciary are, his role in investigating President Nixon in Watergate and his role as lead prosecutor investigating many Members of Congress in the Koreagate investigation, among other things.

In this installment we start out talking about Judge Michel’s work for Senator Arlen Specter and how today there seems to be a slow and steady decline in the checks and balances intended to be a part of the federal system.  This lead us into talking about the Founding Fathers and how they viewed intellectual property, and patents in particular, as critically important.  We discussed how the Patent Office used to be held in such esteem by the Founding Fathers and many generations, and how that seems to be a relic of the past.  We also discussed how Judge Michel would like to become “public nuisance #1″ and a trouble-maker as he attempts to proselytize for the patent system and a more responsible federal government.

Congressman Conyers seems interested in providing funding to the USPTO

Recently the United States Patent and Trademark Office released its draft Strategic Plan for FY 2010 – 2015.  This may seem odd given that FY 2010 is almost over, ending on September 30, 2010.  So it is probably a better title to call it the FY 2011 – 2015 Strategic Plan, but there is no doubt as you read the document that under the guidance of Director David Kappos the USPTO has already well launched the short term Strategic Plan.  Now if Congress would only be wise enough to grant funding for the Patent Office to actually accomplish what needs to be done!

Truth be told, it would be enough for Congress to just (1) stop siphoning off money from the USPTO through fee diversion; (2) grant the USPTO fee setting authority; and (3) stand out of the way.  So my message to Congress would be this: put the pocketbook down, slowly step back and raise your hands over your head so we can see them!

Representative Zoe Lofgren (D-CA) grills Kappos on Capitol Hill

On Wednesday, May 5, 2010, David Kappos, Undersecretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office, testified in front of the United States House of Representatives Committee on the Judiciary. See Hearing Page and Kappos Prepared Remarks.  Many issues were covered during the hearing, but there were a couple matters that jump out as quite important. Most significantly, it seems that once again the Senate patent reform bill may be running into some difficulty in the House of Representatives. Some in the House of Representatives seem interested in slowing down regarding the substantive changes embodied in the Senate bill, but seem willing to consider legislation less grandiose and focused solely on giving the Patent Office fee setting authority and perhaps the ability to retain its fees. This, however, lead to a heated exchange that has been misreported in some outlets, so lets set the record straight.

Earlier this week Mike Drummond, the Editor in Chief of Inventors Digest, authored an article titled US Senate Votes to Leave Patent Office Underfunded for 2010.  In this article Drummond explained that over the weekend, while no one was paying attention, the Senate voted to leave USPTO funding at the same level in 2010 as it was in 2009, which is bad enough because the Patent Office desperately needs more resources in order to tackle the problems left over by the previous regime.  Worse, the Senate vote would re-institute fee diversion, which means that if the Patent Office were to collect revenues over and above the amount allocated by Congress those additional fees would not be able to be used by the Patent Office to improve operations, or even for just handling the increased work generated by additional filings.  Rather, fees received over and above the allocated amount would be stripped from the Patent Office and diverted into the General Treasury account.  That is plain and simple a National Innovation Tax, and it is an enormously bad idea.

Congress convened in a rare session last Sunday. On that sleepy news day, the U.S. Senate passed an appropriations bill leaving the U.S. Patent and Trademark Office funding for 2010 essentially the same as 2009. President Obama should send this bill back. The USPTO is solely funded through fees. But Congress controls the purse strings. The USPTO has fewer examiners now than it did at the start of this year. The agency faces a $200 million budget shortfall. It’s instituted a hiring freeze and can’t pay for needed IT upgrades. Why Congress would leave the USPTO underfunded to the tune of $200 million – particularly during a time of nascent national economic recovery – is vexing.