It seems pretty clear that under the direction of David Kappos the United States Patent and Trademark Office is pursuing an “all of the above” strategy to cutting into the backlog and ultimately reducing the pendency of patent applications.  It is easy to criticize any one of the initiatives that the USPTO is pursuing, but that would be to miss the forest for the trees.  The reality is that unless and until Congress steps up to the plate and does something, which seems extraordinarily unlikely, the Patent Office will be left to attempt to piecemeal together solutions.  So while no one solution can or will solve all of the problems plaguing the patent system, if cascading solutions are employed at least some applicants can be helped and at least some applications can be accelerated.  Of course, the name of the game today is job creation, so I propose a creative way to accelerate patent applications out of order upon proper showing that jobs will be created, and focus my suggestions on those companies that are most likely to create jobs; namely those 5 years or younger and with 99 or fewer employees.

Last week David Kappos, Undersecretary of Commerce and Director of the USPTO, told a packed room of people at the BIO International Convention that innovation produces high paying jobs and patents are a critical component of the innovation to commercialization to job creation cycle. He didn’t receive any disagreement, but lets face it, he was preaching to the choir. As Jim Greenwood, President & CEO of BIO told me, “the only thing [most biotech companies] have is intellectual property… They start off with that and then they have to raise money to even begin to have microscopes and bricks and mortar and staff. It is on the strength of that intellectual property that they have to raise all of those dollars for a very long time.”  So without patents the biotechnology sector simply wouldn’t exist, and that means many tens of thousands of jobs, if not hundreds of thousands of jobs, wouldn’t exist.  So the BIO Convention was well in tune with the message Kappos delivered, but preaching to the choir is only so helpful.  With that in mind allow me to take a stab at explaining how vital the US patent system is to the economy, why ignoring the USPTO has directly lead to this recession lasting far longer than it should have, and why properly funding the USPTO is critical to job creation and the US climbing out of this horrible economic crisis.

First, allow me to point out the reality that so many want to ignore.  We can all pretend that innovation simply happens without funding, and the naysayers and anti-patent advocates will just assume that is true, but the unspeakable reality is that innovation requires funding.  Without funding there can be no innovation, period!  Anyone that believes otherwise is ignoring reality and akin to the quacks that run around claiming they have discovered the secrets of a perpetual motion machine.  Perpetual motion machines don’t exist, and neither does unfunded innovation.  Even if you are operating in an area where innovation doesn’t require enormous capital investment, it always requires the investment of time, which comes with opportunity costs.  So please save me the ridiculous, head-in-sand ravings that innovation doesn’t cost.  It does, and the overwhelming majority of investors want to see issued patents.  It really is that simple.

Robert Reich at the Progressive Governance Conference 2009

Today in the Wall Street Journal Robert Reich, a Professor of Public Policy at the University of California at Berkeley and former Secretary of Labor under President Clinton, painted a bleak picture of the future of the US economy over the next decade.  Reich explains that the latest job numbers are a positive sign relatively speaking, but that “the bleeding hasn’t stopped.”  While the economy added some 162,000 jobs in March, 40,000 were temporary jobs thanks to the ongoing census.  That means 112,000 “real new jobs,” as Reich calls them, were created, which is below the 150,000 needed on a monthly basis just to keep up with US population growth.  Reich blames outsourcing in large part, and says that even with robust job growth of 300,000 jobs per month it would take between 5 to 8 years to return to pre-recession levels of employment.

As a former Labor Secretary Reich knows a thing or two about the economy and employment in particular.  I don’t frequently agree with him on policy, but it is hard not to notice the man’s intelligence and grasp of issues, even if you oppose him philosophically or ideologically.  The reality he paints is altogether true, unfortunate and extremely unnecessary.  He concludes that “those who have lost their jobs to foreign outsourcing or labor-replacing technologies are unlikely ever to get them back. And they have little hope of finding new jobs that pay as well.”  This may be true, but I know that it doesn’t have to be that way.  The outsourcing of jobs is largely in violation of US export laws and that seems to me to demonstrate the reckless disregard for the American worker rampant in Washington, DC.  The US government is not doing anything to enforce US export laws on the books and stop outsourcing that is in violation of US law.  Sadly, this is not a Democrat problem or an Obama Administration problem, rather it is a government problem.  The same US export laws were ignored under President Bush and when Republicans controlled Congress.

Earlier this week, on Tuesday, February 16, 2010, TiVo, Inc. (NASDAQ: TIVO) was granted US Patent No. 7,665,111, titled Data storage management and scheduling system.  This patent is indicative of what I suspect will become a growing problem in the years to come, which is a resurgence in so-called submarine patents.  This patent matured from a patent application filed on October 20, 1999, which means it was pending at the United States Patent and Trademark Office for over 10 years.  Amazingly, according to the Patent Office no patent term extension is owed.  Exactly how can a patent remain pending for over 10 years and not be entitled to an extension in the term?  I really don’t know to be perfectly honest, but it seems that this patent will apply to pretty much any and all DVRs currently on the market, so even if there is no patent term extension granted it could produce a choke-hold on the industry through October 20, 2019, which should create a tidy sum of royalty payments for TiVo, at least over the near term.  Of course, it will also spark a rush to innovate around the TiVo patent, thereby causing innovation to march forward, much to the chagrin of anti-patent advocates who are already proclaiming this patent to be evidence that patents harm innovation.   In any event, a patent that issues after 10+ years suggests problems, even if the intended march of innovation is encouraged, which will of course be the case.

Back in November of 2009, I wrote Obviously Non-obvious and Patentable Inventions Part I.  I have for some time wanted to return to this and continue with Part II, which really is implied explicitly if you are going to call something Part I.  In any event, Part I was a combination of a rant about KSR tied together with frustration that the NCAA and otherwise brilliant (or so they tell us) University President’s cannot figure out a way to concoct a Division I (I refuse to call it Football Bowl Subdivision) playoff for College Football. Obviously, a Division I College Football playoff must not be obvious because it if were you would think a bunch of bright people in ivory towers would have figured out how to make it work, particularly given that there would be more money to be made off the labor of unpaid (except perhaps for USC players) amateur college athletes. With there being college playoffs for every other sport, including in other divisions of college football, the conclusion must be that a Division I playoff must not be “common sense” and, therefore, must be non-obvious. Picking up on this theme and focusing on things that at first glance seem incredibly obvious but must not be at all obvious given that those who are exceptionally smart can’t figure them out, I thought with tax season right around the corner it might be worthwhile to explore method of stimulating the economy by cutting taxes.

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.

In the popular press there have been a number of stories over the last week or so regarding how the US is losing its edge in innovation as indicated by the drop in patent filings between fiscal year 2008 and fiscal year 2009.  The headlines have been sensational at times, claiming that the recession is affecting US innovation.  While such headlines no doubt grab attention, they largely mischaracterize what is really happening, which is unfortunate because in today’s sound-bite news culture such headlines could well sway the hearts and minds of the public, and more importantly sway those in Washington, DC who may otherwise be able to help.  The truth is that fiscal year 2009 saw more patent applications filed than any other year in the history of the United States, save only one year — fiscal 2008.  So while many will no doubt want to blame the dip in filings on the recession, doing so misses the larger picture and obfuscates the real problem, which has little to do with the recession and everything to do with what became an enormously dysfunctional US Patent Office during President Bush’s second term.

David Kappos addresses Inventors Conference 2009 at USPTO

I am just getting back from two days at the United States Patent and Trademark Office, having attended the 14th Annual Inventors Conference.  There is much to report, and much to write about, and I will continue to digest, analyze and write about what I saw and my impressions in the days to come.  It is, however, undeniable that there is a completely different tone at the Patent Office.  Senior level management, from Director David Kappos,  Deputy Director Sharon Barner, Patent Commissioner Bob Stoll and Deputy Commissioner Peggy Focarino, mingled with inventors and seemed genuinely happy to discuss issues and appear committed to revitalizing the patent system.  There were many, including myself, who wondered what direction the Patent Office would take under new leadership, and while it is early to give a grade, if we are going to be honest and give an interim report card the only fair grade to give at this point is an A.  From top to bottom there is an optimism that exudes from everyone I spoke to at the Patent Office.  Changes that ordinarily would take months are taking weeks, and the political leadership seems to REALLY understand the importance of innovation.  In fact, in video-taped comments played during lunch today Commerce Secretary Gary Locke said that the Obama Administration pledges to provide US inventors the strongest IP protection available anywhere in the world.  What more could we realistically ask for at this point?

Jim Greenwood, BIO CEO

A study released today by the Biotechnology Industry Organization (BIO) provides first-of-its-kind data on the importance of university/industry research and development partnerships to the U.S. economy. The study of university technology licensing from 1996 to 2007 shows a $187 billion dollar positive impact on the U.S. Gross National Product (GNP) and a $457 billion addition to gross industrial output, using very conservative models.

“It has long been believed that the Bayh-Dole Act, which permits and encourages industry to partner with research universities to turn federally-funded basic research into new and valuable products, is a critical factor in driving America’s innovation economy. Indeed, because of this inspired piece of legislation, the U.S. leads the world in commercializing university-based research to create new companies and good, high-paying jobs throughout the country,” stated BIO President & CEO Jim Greenwood. “This new study provides the evidence to back up that belief.”

When it comes to talking with their kids, parents say the topics of math and science are harder to discuss than drug abuse, according to a survey of 561 adults who have children ages 5 to 18. The survey was conducted online between Sept. 23 and 28, 2009 by Penn, Schoen and Berland Associates on behalf of Intel Corporation, and is reported to have a margin of error of +/- 4.14 percent. The survey found that although more than 50 percent of parents rank math or science as the subjects most critical to their children’s future success, they report discomfort talking to their children about these subjects. In fact, nearly a quarter of parents who admit to being less involved in their child’s math and science education than they would like say that a key barrier is their own lack of understanding of these subjects. On top of this, last week, the National Assessment of Educational Progress (NAEP) revealed that fewer than 40% of fourth-graders and eighth-graders in the United States are proficient in math.

I seem to have started a firestorm by writing a post openly questioning how a patent attorney (i.e., Stephan Kinsella) could be of the opinion that it is preferable to have weak patent rights.  I openly questioned how and why any individual or corporation would hire a patent attorney who does not believe in the patent system and seems to think that patents are bad, perhaps even evil, and certainly the preferable model would be to have exceptionally limited rights.  I appreciate the debate that is ongoing in the comments to that article, but I remain extremely confused regarding the irrational arguments being made.  It seems facts are largely being ignored, and when they are being used they are distort reality, history and truth.  When I make direct statements about facts and history off handed non-responsive and dismissive statements are made along the lines of “if you hold that belief it is obvious you don’t understand.”  Saying that is fine, but that needs to be backed up with facts and argument, which is not happening.  We all know why that isn’t happening, namely because there are no facts or legitimate arguments that can be made to counter what I am saying, so rather than addressing them an artificially zen approach to deflecting and recasting, even ridiculing, is preferred.  Notwithstanding, below are my thoughts regarding some of what is being said.

Let me set the record straight from the start. I do not agree with President Obama on much, and I voted for and supported John McCain dating all the way back to his first run for President. Having said this, it is impossible to ignore the fact that so far President Obama and his Administration is saying all the right things with respect to innovation and patents, and there is real cause for optimism, at least if you believe that innovation and strong patent rights will lead to a better economy and leverage what Americans do best, which is solve problems with ingenuity and innovation. Not only has President Obama appointed a patent attorney to run the Patent Office, which is sadly revolutionary, but when he speaks of innovation his words sound Reaganesque. This has never been more apparent than in his speech on innovation and sustainable growth delivered at Hudson Valley Community College in Troy, New York, on Monday, September 21, 2009.

Several weeks ago, as summer was winding down and most of us were enjoying some slow times and gearing up for back-to-school, preparing for Labor Day festivities, on vacation or studiously studying fantasy football player projections, Law.com published a very interesting piece titled Slot Opens on Federal Circuit Bench, More Vacancies to Come? The article started out by discussing how Judge Alvin Schall recently informed the White House that he would be exercising his option to take senior status come October 2009.  When Judge Schall takes senior status that will raise the number of judges on the Federal Circuit with senior status to five.  So come October 2009 there will be five out of sixteen Federal Circuit judges on senior status, with another eight qualifying for senior status, should they choose, within the next two years.  Times are definitely changing at the Federal Circuit and whether all those judges who qualify for senior status take senior status or not, even if President Obama winds up spending only one term in Office, which is far from a foregone conclusion, his legacy may well wind up being defined by the impact he will have on innovation policy and patent law.

I want to thank Mr. Quinn for graciously inviting me to write a post on my forthcoming book The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation, which should be available on Amazon.com in December 2009.

This book started as a project based on my observations. I deal with technology start-up entrepreneurs everyday as a patent attorney. I noticed a difference between the sort of projects my clients were undertaking since the technology downturn of 2000-2001 and the previous decade. Clients, in the 90s, would come into my office with plans to build businesses that were disruptive or revolutionary. The underlying technologies of these companies often held the potential to completely redefine a market. This energy was infectious and the potential implications of their work was mesmerizing. However, the technology downturn of 2000-2001 forced a reevaluation of these aggressive business plans. I expected that after a couple years of the technology market taking a breath, I would again be working with companies trying to change the world.

Professor Arti K. Rai

I wish I had some inside information to pass along, but I do not.  All I can seem to come up with is unsubstantiated rumor and innuendo, but the report the other day from Patently-O that Duke Law Professor Arti Rai is heading to the Patent Office to fill a long vacant policy setting position has too much of a ring of truth to completely ignore.  There have long been rumors associated with Professor Rai given that she is a long-time friend of President Barack Obama, both having been in the same Harvard Law School class.  What we do know is that Rai was a member of the Obama transition team, and was rumored to be on the short list for Undersecretary of Commerce for Intellectual Property, a position that also carries the title and responsibilities of Director of the Patent and Trademark Office.  As practically everyone in the patent bar that came in contact with Professor Rai was kissing her ring in anticipation that she would become the new PTO Director, I heard an unsubstantiated rumor that she had been offered the position and declined.  I want to make as clear as possible that I am writing about rumors, and unsubstantiated ones at that in order to distinguish from hard facts and inside information so that readers understand that this may all be much ado about nothing.  Having said that, as well respected in academic circles as Professor Rai is, it would be an enormous mistake for her to be given a policy setting position within the USPTO.  So allow me for a moment to buy into the rumors and make my case.