David Kappos is Under Secretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office. He assumed that role within the Obama Administration when he took over the USPTO in August of 2009, nearly 32 months ago. Upon arrival Director Kappos found a largely dysfunctional Patent Office, which had really become the “No Patent For You” Office owing to the philosophical and ideological beliefs of the prior Administration. This lead to the development of a massive backlog of un-examined patent applications and played no small part in the severity of the economic collapse and the sluggish rebound. We have a technology based economy and start-up companies that are the backbone of our economy struggled without patents to attract capital investment, expand and hire.
There is still a massive backlog of patent applications, but things are undeniably turning around. There are certainly some pockets of resistance within the USPTO, See Business Methods by the Numbers, but the Patent Office is by-and-large open for business. The USPTO has returned to the historical philosophy that patent examiners should work cooperatively with patent applicants to identify allowable subject matter and issue patents on what is allowable, not just focusing on rejection after rejection after rejection.
While there are quite a few positive changes, with more in the works, Track One is by far the most successful policy initiative that has come to bear during the Kappos Administration. The only problem with Track One is that more applicants are not using it! What are you waiting for? A look at the numbers shows that Track One is a huge success and ought to be employed far more than it has been.
The patent backlog has been well documented over the years. We don’t need to rehash the reasons for the backlog, but everyone in the industry knows that it takes far too long for the overwhelming majority of patents applications to mature into issued patents. Sure, pharmaceutical companies, biotech start-ups and Universities may want to delay issuance of a patent, or even delay USPTO consideration of an application, but how many clients of yours really want and even need a patent as quickly as possible? If you represent independent inventors, small businesses, entrepreneurs and start-ups the answer is almost universally that patents are needed with all due speed.
Over the past several years the Patent Office has attempted to offer a variety of procedures to speed up patent applications, such as project exchange where you drop one application to advance another out of turn and the Green Technology Pilot where certain green technologies are advanced out of turn. Most famously, perhaps because it was a part of the America Invents Act, is Track 1, where you pay an additional $4,800 fee to obtain a patent decision within 12 months. With all of these efforts some wonder why more haven’t taken advantage of the various acceleration options. There are two reasons: (1) patent attorneys are very conservative and don’t like change (with good reason); and (2) $4,800 is no small amount of money.
A new report published by WIPO today shows that intellectual property filings worldwide rebounded strongly in 2010 after a considerable decline in 2009. In fact, the recovery in IP filings was stronger than the overall economic recovery. This is probably to have been expected given that patent filings in particular are a leading indicator of the introduction of new technologies into the marketplace. The question now is whether the patent systems of the world can actually process these increased patent filings in a releavant time frame so that entrepreneurs and small businesses, who are the engine of growth, can be the catalyst pushing toward economic recovery.
According to the World Intellectual Property Organization (WIPO), patent and trademark filings grew by 7.2% and 11.8% respectively in 2010 compared to growth of 5.1% in the global gross domestic product (GDP). Not surprisingly China and the United States accounted for the greatest share of the increased filings. With China you have a growing economy in a country with over 1.3 billion people. With the United States you have the largest economy in the world and the rights granted are undoubtedly very strong given the fact that, for the most part, the U.S. judiciary is not anti-patent. Not to be outdone, however, in Europe the growth of IP filings in France, Germany and the UK also far exceeded the GDP growth rate of these three European economies in 2010.
Funding for Fiscal Year 2011 has been a thorny issue for quite a while now. Congress did not pass a Fiscal Year 2011 budget in the Fall of 2010, as they are supposed to do. It is widely believed Congress punted on this responsibility because of the 2010 elections and fear of the electoral response to budget negotiations in the election cycle. That, however, lead to a series of Continuing Resolutions that funded the government on a limited basis. The last Continuing Resolution (or CR) ran out on April 8, 2011, with an 11th hour agreement, which was ultimately passed by Congress and signed into law by President Obama the following week. When the dust had settled the United States Patent and Trademark Office did not fare well at all, with $100 million be diverted from the Patent Office. That lead to the Office today announcing severe austerity measures because they don’t have the funds available to operate as a going concern.
Earlier today I wrote about the FOX News piece on patent reform last night on the 6pm news show Special Report. What was shown during Special Report seems to have been a condensed version of a longer (4:27) piece from earlier in the day. While I’m sure everyone will find something to disagree with and argue about, it does strike me as pretty fair treatment of the issues and arguments of the parties for and against patent reform.
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.
Yesterday David Kappos, the Director of the United States Patent and Trademark Office, wrote on his blog an article titled Reflections on the USPTO Dashboard. Largely the article discusses the statistical reporting of the USPTO, and provides a look back at fiscal year 2010 and offers some comparisons to fiscal year 2009. One paragraph in particular captured my interest:
Overall in FY 2010, the allowance rate increased to 45.6%, compared to an allowance rate of 41.3% in FY 2009. In addition, actions per disposal decreased to 2.42 from 2.73 in FY 2009. Furthermore, as a result of a concerted campaign to begin turning the tide on our backlog, the patent application backlog dropped from 718,835 at the end of FY 2009, to 708,535 at the end of FY 2010. Pretty remarkable considering that application filings were up about 4%, that our examiner workforce shrunk and we were unable to authorize overtime for most of the year due to funding challenges, and that we affirmatively gave our examiners *more* time to examine each application as a clear signal that quality is our first priority.
In this second installment of my interview with current AIPLA Executive Director and former USPTO Director, Q. Todd Dickinson, we start out discussing pendency at the Patent Office. Dickinson tells me about the incentives he used to keep patent examiners as they matured into the level of experience where they are ready to really roll up their sleeves and become the work-horses the Office needs. We talk about the AIPLA position on the proposed Three Track Proposal now pending at the USPTO. We then moved into a very interesting discussion of patent reform, and a bombshell is dropped, at least in my opinion. I was surprised to hear Dickinson say that he does not think patent reform is dead for THIS legislative cycle. He says: “The clock’s running and, the plays have to be run a little faster,” but that he “can see a path forward once the Congress returns.” He goes on to point out that the American Inventors Protection Act was attached to an appropriations bill. Looking at what Congress has on its plate upon returning it looks like there are a lot of appropriations bills. Curious indeed!
On Wednesday, September 8, 2010, the Wall Street Journal published commentary titled Want to Create Jobs? Certainly Don’t Rely on the USPTO, which was an attempted rebuttal of the NY Times op-ed written by Chief Judge Paul Michel and Tessera CEO Hank Nothhaft, which was titled Inventing Our Way Out of Joblessness. I say that it was an attempted rebuttal because simply stated the article was embarrassingly incorrect about virtually everything it stated as fact, and provably so. The fact that the Wall Street Journal published such complete and utter nonsense, which could have been proven to be factually incorrect had anyone even read the study relied upon by the authors, is quite sad. Those who don’t believe innovation leads to job creation have their heads firmly implanted in the sand and simply must choose to ignore history, which proves otherwise.
Earlier this week USPTO Director David Kappos announced on his blog the USPTO Data Visualization Center and the Patents Dashboard. During my behind the scenes tour of the Patent Office in July 2010, I attended a meeting on the Visualization Center and the Patents Dashboard, and was favorably impressed with what the Patent Office is trying to accomplish. In a word – transparency; that is what the USPTO is attempting to accomplish . Director Kappos takes seriously the Obama Administration mantra and wants to provide the public with access to as much or as little data as desired. The Visualization Center shows graphics that look much like a speedometer, which is where the Patents Dashboard moniker comes from, but the data is also available for those who want to see the numbers and figures used to create the easy to understand graphics. In fact, during my time at the USPTO, Director Kappos continually would say that he wants to allow anyone who is interested to drill down as much as they desire, including to the raw data level if they want.
USPTO Director David Kappos in his office on the 10th floor of the Madison Building on July 19, 2010
On July 19, 2010, I was granted a back stage pass of sorts, for a behind-the-scenes look at the United States Patent and Trademark Office. I had initially requested an interview with Director David Kappos and was given an affirmative response, but then I floated the idea of a three-part series to commemorate the first anniversary of David Kappos leaving the private sector to take the helm at the USPTO. Kappos was confirmed by the United States Senate on August 7, 2009, and formally sworn in by Commerce Secretary Gary Locke on August 13, 2009.
Rather than just do an interview, I suggested something different. I had heard from numerous sources at the Patent Office that David Kappos is an extremely hard worker, coming to work by 7:00am and leaving most nights after 7:00pm. I had also heard over and over about his regular evening and weekend e-mail exchanges with his Senior Staff. It was apparent to me that Kappos is not like most political appointees, and unlike many, if not most, of the previous PTO Directors. So I thought it might be particularly interesting to profile a day in the life of David Kappos, much like the President allows certain journalists to do by giving them access to the White House for a day, with an associated tour and interview. Peter Pappas, the Chief Communications Officer and Senior Advisor to Kappos, liked the idea and agreed to work with me to get it scheduled. It was tentatively scheduled for July 20, 2010, but with the Three Track hearings that day it was moved up to Monday, July 19, 2010.
Earlier today the Wall Street Journal gave front page space to a story relating to the United States Patent and Trademark Office. Widely regarded as one of the “papers of record” in the United States, one might expect that the Wall Street Journal had brought its considerable clout to an important issue plaguing our time, such as an horribly under funded Patent Office that is holding innovation hostage, costing America perhaps millions of jobs. NO! Rather than educate itself and others, thereby exposing in real terms for the everyday observer the plight of the Patent Office and what it means to the United States economy, the Wall Street Journal wrote a front page article on the errant creation of a trademark class associated with medical marijuana.
Don’t get me wrong, every tabloid should have front page news story about pot, medical marijuana and have an image of a VW bus over the tag “the Canny Bus,” as the Journal did earlier today. Call me crazy, but I expected more from the Wall Street Journal.
Nick Godici, currently with Birch, Stewart, Kolasch & Birch LLP, is a former patent examiner, Commissioner for Patents and Acting Director of the United States Patent and Trademark Office. During the Summer of 2009 he was personally asked by Secretary of Commerce Gary Locke to return to the Patent Office as a special adviser to the Obama Administration and to pave the way for David Kappos to take over as Director. On Tuesday, June 29, 2010, I sat down with Godici in his Falls Church office for an in depth interview. This is part 2 of a 3 part series. For part 1 see On the Record with Former PTO Director Nick Godici – Part 1.
In this interview we talk about how two Presidents that are extremely different on so many fronts, Presidents Reagan and Obama, are pursuing quite similar strategies regarding the Patent Office. We also talk about the importance of good working relations between patent examiners and the patent bar, the enormous backlog of applications at the Patent Office, the Patent Office process for handling decisions and issuing guidance in situations such as the recent Supreme Court decision in Bilski v. Kappos and what it is like to be Commissioner for Patents and the Director of the Patent and Trademark Office.
The United States Patent and Trademark Office is seeking public comment on a major new patent examination initiative that would provide applicants greater control over the speed with which their applications are examined and promote greater efficiency in the patent examination process. This newly proposed Three-Track program aims to provide applicants with the ability to go faster or slower through the patent process, which will in turn hopefully reduce the pendency of those patent applications that are the most time sensitive.
There will likely be those who oppose this Three-Track proposal, but as far as I can tell what is being proposed is a mechanism to speed your application up or slow your application down. Up until I attended the BIO International Conference in early May 2010 I couldn’t imagine why anyone would want to slow the process down, but there are indeed many who would prefer a slower patent process. I most often work in the software, computer and Internet technology areas where the patent process is extremely slow and getting fast patents is extremely important to attract investors and gain traction. In the biotech, pharma and University sectors, however, there is a great preference for a slower process because basic research is being undertaken and that might not ultimately prove fruitful.
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