More Funding Needed for Patent Granting Authority

By Gene Quinn
May 15, 2009

John White answers a student question in NYC at PLI Headquarters.

John White answers a student question in NYC at PLI Headquarters.

I am writing from New York City today.  I am here for the PLI Patent Bar Review Course, which kicks off our summer run of courses.  Over the next couple months John White and I will crisscross the country from New York, Houston, Boston, Los Angeles, Chicago and Atlanta, spreading patent teachings to aspiring patent attorneys and patent agents.  Right now I am sitting in the back of the room at PLI Headquarters in New York City listening to John White talking, waiting for him to discuss interviews with an examiner.  At some point John will talk about how you simply cannot show up at an interview and ask the examiner “so do you see anything patentable here?” He will then go on to say that you need to come to the interview with proposals and suggestions in an attempt to provide something to the examiner that is patentable.  I have always wondered why that is the case.  Why can’t you just go to an interview and ask the examiner whether they see anything patentable?  After all, the examiner is going to be the decision-maker.  I have never seen the wisdom behind a policy that prevents the examiner and attorney from having a meaningful dialogue to ascertain whether patentable matter exists and what can be done to allow a patent.  My thought for the Patent Office is that it be a Patent Granting Authority, and as I have written over many months, a meaningful and early interview that identifies patentable material can and should lead to the issuance of at least one patent quickly, which would be good for the applicant, lead to venture funding and consequently be good for the economy.

I was heartened to hear from Commissioner Focarino when I interviewed her that one important new quality initiative is to encourage examiners to hold interviews early in the process and attempt to identify allowable matter.  I think this is a brilliant idea, and I am not going to take the Patent Office to task for not doing something like this sooner.  I am getting messages from people saying that the initiatives discussed by Commissioner Focarino are good, but they should have been done long ago.  That is all very true, but it would be hypocritical not to acknowledge that the Patent Office seems to be changing its course in important ways.  Would I have liked it to happen sooner, yes, but I am happy to hear that attempts are being made to focus resources on helping examiners do a better job and working with applicants to actually issue patents.


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The magnitude of the problem facing the Patent Office is almost unbelievable.  The political leadership of the Patent Office over a number of years has lead to initiatives that had unintended consequences.  The message was sent to examiners that issuance rates were too high, so examiners responded.  It doesn’t matter whether that was the intended message, that was the message received.  Focusing on quality, Office wide implementation of second pair of eyes reviews, the perception that all that matter was production, the fear of allowing cases inappropriately and that impacting examiner standing all lead to a situation where the backlog continued to increase, allowance rates continued to decrease and applicants started giving up on the patent process.

It is an enormous mistake for anyone to believe that the decline in patent applications is due to the economy.  If the the decrease in overall numbers of patent applications has anything to do with the economy and the recession we are in then it would be the first time since at least 1963 that a recession has caused a decrease in the number of applications.  If you look at the chart below, which tracks the number of US patent applications filed each year since 1963, there is only one blip showing a downward trend, which occurred in 1997, which was not a time of recession, but rather right in the middle of the Clinton years and during the tremendous growth and expansion of the US economy, thanks in some part to the growth of the Internet.  In fact, this dip can be attributed to the change in patent term, which lead many to file patent applications prior to June 8, 1995, and all but certainly accounted for an unnatural dip due to early filing to beat the change in law. So there is simply no historical evidence that a recession leads to fewer patent applications.

Sure, large corporations do self-destructive things such as reduce research and development during economically troubled times, which may result in large corporations filing more patent applications, but during recessions when engineers and scientists are laid off their opportunity costs approach or hit zero, so they start new companies, file patent applications and build the next wave of successful companies.  So why is this time different?  It is different because the average patent pendency is out of control, and the issuance rate hit an all-time low of 42% during the first quarter of 2009.  So in many instances not only are you going to have to wait 4, 5, 6, 7 or 8 years or more, but the likelihood that you will get a patent issued during the first quarter of 2009 was about 4 in 10.  Those odds are miserable, and the pendency together with low odds are what has lead to a drop in the number of patent applications.  Even then, make no mistake, for fiscal year 2009 we will still be looking at about 450,000 to 475,000 patent applications, which is a lot by any measure.  But how many could it be if the Patent Office would issue patents in a technologically relevant time frame?

We all know there are trillions of dollars sitting idle waiting for things to get better.  We need to encourage that money to come out of hiding.  The initiatives discussed by Commisisoner Focarino should, if allowed to happen, help.  The Patent Office has dug itself an enormous whole though, and without assistance from the Obama Administration and Congress there is little that the Patent Office can do even with new initiatives.  Unlike virtually every other government agency the Patent Office is funded by user fees, and when you get fewer users you get less funding.  This is terrible because right now much more funding is necessary to dig out from under the mess created over the last 5 years.  There is little that can be done to move the US patent system forward without more work being done, and more work means more hours, more bodies and more funding.


Prior Art & Obviousness 2009
USPTO & CAFC Perspective on Patent Law Sections 102 & 103



What if President Obama were to do something radical like order the issuance of any patent that has been pending for more than 4 years?  The law is structured so that a patent application is presumed to be warranted.  Some examiners hate it when I say that, because some chose to ignore 35 USC 102, but the law is the law, and it is clear and uncontroverted.  “A person shall be entitled to a patent unless…” Section 102 then goes on to announce various circumstances under which a patent could not issue, and 102 prior art is used for obviousness review, so 102 is the dominant section of the patent laws when it comes to determining whether an invention is new and unique enough for a patent to issue.  But waiting in line for upwards 6 years has to be unreasonable by any definition, and I would say it is unreasonable to have to wait any more than 4 years for an up or down decision.  There is little technology useful in creating new industries that remains viable for 6, 7 or 8 years, and it is ridiculous for the law to presume a patent should issue and one never issuing within a reasonable and acceptable time frame.

An inefficient patent system is standing in the way.  Jobs are not being created or saved by the refusal to issue patents in a technologically relevant time frame.  So while patent reform is dying another horrible death nothing is being done to help the Patent Office and stimulate the economy in an organic way.  Thank goodness patent reform seems to be dying though, because if post-grant review were forced upon the Patent Office as per the proposed legislation resources would be stretched even more thin, the backlog would grow, pendency would balloon and fewer applications still would be filed.

Patent examiners working with attorneys, agents and applicants to identify patentable subject matter and then agree on what can be patented early in the process is a welcome and needed turn of events.  If Commissioner Focarino can combine this with the Office standing behind commitments made by examiners with negotiation authority, hopefully we will see patents being to issue and the allowance rate climb.  My firm is starting to see some loosening and allowances, even in software where it was believed by many (including myself) that Bilski would becoming a frightening impediment to patentability.  More to come on Bilski next week.

So while we wait for things to get better perhaps everyone with a patent line item in a budget should take time to write to Congress and the President and let them know that sensible patent reform is reform that focuses on the backlog and pendency, and providing more funding to the Patent Office is something that must happen.  If we can provide tens of billions to automobile companies to keep them afloat only long enough to file bankruptcy, can’t we spare a paltry $1 billion more for the Patent Office when it is the USPTO that holds the key to economic growth?

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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