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.
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