500 Million Patent Applications a Year?

By Gene Quinn
June 14, 2009

The Wall Street Journal Online just published an article titled Why Technologists Want Fewer Patents, which will apparently appear in the June 15, 2009, edition of the paper on page A13, under the heading “Opinion.”  The article discusses the US Supreme Court agreeing to hear Bilski v. Doll, which will decide the fate of at least some business method patents, and may have significant implications for the patenting of software as well.  The article does make one enormous error though, when it says that each year there are 500 million patent applications filed with the United States Patent and Trademark Office.  This is obviously a mistake, and one that will likely not strike many as over the top.   In reality, the USPTO has never had more than 500,000 applications in a single year.  In fact, the largest number of applications ever filed were 495,095, which was the total filed during fiscal year 2008.  During fiscal year 2009 there will likely be between 450,000 to 475,000 applications, so the Wall Street Journal op-ed page is off by several orders of magnitude.  In my opinion this is quite problematic though because people who don’t know any better will read it and believe it.  People will form beliefs based on what is clearly a ridiculous number of patent applications being filed, but the trouble is the Wall Street Journal claim of 500 million patent applications per year is off by a factor of 1,000.

I realize I am making a big deal out of something that most won’t care about, and I am certainly not perfect myself.  I make mistakes like everyone else does, but when you are the paper of record in the United States and make a fundamental mistake like this I have to ask myself what else is being said that is wrong in the paper?  In areas where I am intimately familiar, the popular press, including the Wall Street Journal, gets things wrong as often as they seem to get them correct.  With respect to certain topics in the patent field I would even say that the popular press gets things wrong far more often than they get them right.  This is extremely troubling.  The patent system is being assailed from all directions, and although it should not be the case, people believe what they read.  This is particularly true when reading an otherwise reliable source like the Wall Street Journal.

For those who might not believe me, allow me to quote the Wall Street Journal story:

The Patent Office now gets some 500 million applications a year, leading to litigation costs of over $10 billion a year to define who has what rights. As Judge Richard Posner has written, patents for ideas create the risk of “enormous monopoly power (imagine if the first person to think up the auction had been able to patent it).”

Also troubling is the quote from Judge Posner, who is considered to be a law and economics expert by many.  I have to tell you, if Judge Posner really said what he is quoted as saying I have lost a lot of respect for him and I will never look at him as an expert on economics.  The reality is that a patent does not grant a monopoly to anyone.  A monopoly presupposes that there is a market in the first place, and a dominant player in the market in the second place.  A patent neither ensures that you will have a dominant place in the market, nor does it guarantee that there will even be a market.  If consumers are not interested in buying a product or services there is no market, and the sad reality is that for the overwhelming majority of patented inventions there is no market at all, so there could never be a monopoly, unless of course Judge Posner thinks it is possible to monopolize something that doesn’t exist.

I for one am sick and tired of hearing the purely fictitious argument that patents create a monopoly.  Patents do nothing of the sort, and anyone who is fair minded and informed knows that.  Patents are extremely fragile, but no one ever wants to talk about that or even acknowledge this completely true and verifiable statement.

Let me make this as simple as I can.  Lets say that you have a patent on an ordinary Styrofoam coffee cup.  Then after you get your patent issued I file and receive a patent on an improvement.  This improvement I patent is an ordinary Styrofoam coffee cup with a lid that has a hole in it so that you can drink out of the cup without spilling it all over  yourself.  You own the base invention, and I own a substantial improvement.  I cannot make, use or sell a cup with a lid, but neither can you unless you obtain my rights through license or acquisition.  If you don’t want to do a deal, fine.  Once your patent is expired I will simply start making, using and selling your cup with my lid, preventing you of course from making, using or selling a cup with a lid, because after all, the lid is mine.

The truth is that having a patent is great, but having someone else block you and prevent the improvement of your own invention is a real detriment to acquiring a patent and then sitting around doing nothing.  Patents don’t harm innovation, they foster innovation because if you want to keep your patent portfolio from being poached by someone, like me in the above example, you need to continue to advance.  If you fail to continue advancing your patent rights, others will advance it for you, thereby blocking you from making improved versions of your own invention.  So whether you continue to invent to keep out poachers, or you sit on your laurels and allow me and others to improve your invention, improvement leads to rights and the possibility of rights cause competitors who did not win a patent on the base invention to constantly try and improve and advance the invention forward.  This is exactly what the founding fathers intended to set up, a system where you can have exclusive rights, but rights which are fragile and susceptible to poaching by others.

Those of you who want to say patents create a monopoly, and those of you who want to say patents harm innovation, you really should get a clue before you criticize something you clearly don’t understand.  As for those who think 500 million patent applications are filed each year in the US, you might want to check your facts and do a little more research, or perhaps stick with writing things you understand.  Getting things wrong by a factor of 1,000 shows you don’t know enough about this area to even appreciate you were way off base, and those who proofed the article didn’t understand either.  With a basic and fundamental mistake like this how can anyone take the remainder of the article serious?

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.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 15 Comments comments.

  1. David Koepsell June 15, 2009 4:45 am

    Gene-

    I think it’s deplorable what passes for journalism these days when they make such glaring factual errors, so thanks for calling attention to this.

    But of course I disagree that a patent is not a monopoly. Having exclusive hold of a market for a certain thing is a de facto monopoly. Patent law is a de jure monopoly as it grants an exclusive right to reproduce and sell a certain thing for a period of time. The institution of patent began historically with monopolies granted to certain individuals by monarchs over the fruits or spoils of their labors or, sometimes, thefts (as with privateers employed by the British crown to hijack Spanish ships — they were employed with “letters patent”).

    Thomas Jefferson, who served on the Board of Arts while also serving as Secretary of State, and who was as you know an inventor and patent holder, maintained that patent was a monopoly and applied it restrictively and conservatively (rejecting a number of claims), stating in 1813:

    “. . . other nations have thought these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.”

    But over time, we have come to believe this is a beneficial monopoly and there is evidence that bears this out, like the hyperbolic curve of growth in the 20th Century, much of which happened under a strong IP regime. Nonetheless, let’s not mince words. Patents are a government-sponsored monopoly, and they can harm innovation but they don’t necessarily if applied conservatively (meaning, not granted too broadly, for too long a term, nor for things which are not new, useful, nor non-obvious). I love Thomas Jefferson: scientist, philosopher, lawyer, and inventor. What a Renaissance man.

    best,
    David

  2. David Koepsell June 15, 2009 4:52 am

    Gene,

    Thanks for this, it’s a shame what passes for journalism these days when such glaring errors go unnoticed by editors.

    But of course I disagree about your statement that patents are not a monopoly. Giving an exclusive right to a party to market their item for a period of time is both a de jure and de facto monopoly. Thomas Jefferson, president, lawyer, scientist, inventor, and sometime head of the Board of Arts that reviewed patents while he was Secretary of State, stated as much in 1813:

    “. . . other nations have thought these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.”

    Even he was skeptical of too broad a reach for patents, and of even the necessity for them in the first place. Nonetheless, we have expanded the patent right over time, increasing the term of protection and subject matter patentable. There is evidence that it has at times spurred innovation, especially in the last 50 years. But if applied too liberally, it may hinder innovation. If, as I and others have argued, patents are granted “too far upstream” or terms are expanded, then I believe that patents may have an effect opposite of that for which they were intended. But let’s not mince words, patents are monopolies, even if generally they have happen to be good ones.

    best,
    David

  3. breadcrumbs June 15, 2009 7:24 am

    “…and I am certainly not perfect myself. ”

    So, was the item in paragraph one: “In fact, the largest number of applications ever filed were 495,095, which was the total filed during fiscal year 2009. During fiscal year 2009 there will likely be between 450,000 to 475,000 applications” a deliberate mistake? Did you mean 495,095 for fiscal year 2008?

  4. David Koepsell June 15, 2009 7:58 am

    Gene,

    It’s sad what passes for journalism these days when facts are not even checked before publishing. Thanks for pointing out the egregious error.

    Now for the part where I disagree a bit:

    Thomas Jefferson, President, lawyer, philosopher, and inventor, as well as head of the Board of Arts (original patent office) while he was Secy of State, described patents this way in 1813:

    “. . . other nations have thought these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.”

    I think he’s right. Any grant of an exclusive right to reproduce and sell something is pretty clearly a monopoly. I think that many of these monopolies encourage innovation, but there are likely to be exceptions, so let’s be moderate, as was Jefferson, in granting government-sponsored monopolies, what say?

    best,
    -d

  5. David Koepsell June 15, 2009 1:34 pm

    oops, weird, sorry for the multiple posts… each time I posted, nothing appeared or my browser crashed, so I tried reposting…

  6. KL June 15, 2009 3:06 pm

    So the WSJ made a mistake in the number applications. Big deal. Why aren’t you harping on the $10 Billion dollars spent on litigation costs? Seems that is a more stifling factor than the WSJ error.

  7. Gene Quinn June 15, 2009 3:15 pm

    KL-

    Thanks for your comment, but you are 100% wrong. When a news source like the Wall Street Journal gets something so basic wrong it is far more stifling (to use your word) than almost anything else could ever be. People believe what they read, and that influences policy decisions and the overall debate. You can choose to view this as no big deal, but you are missing the bigger picture. Without a strong and functioning patent system that grants strong exclusive rights we might was well just hit the reset button on the economy, because we will never pull out of this recession.

    In terms of $10 billion, that is really not that much in terms of litigation costs for an industry that creates millions of jobs and contributes far more to our national wealth than any other sector, and perhaps more than all other sectors combined. Remember also, when President Obama was trying to minimize earmarks his Press Secretary Robbert Gibbs made light of $8 billion, saying that was really just chump change anyway.

    -Gene

  8. Gene Quinn June 15, 2009 3:27 pm

    Breadcrumbs-

    First, I don’t know what you are talking about. It clearly says “fiscal year 2008” – at least now it does, and that’s my story and I am sticking to it!

    Second, thanks for pointing out the mistake, which comes with great irony I know. At least it wasn’t so bad as being off by a factor of 1,000 or anything like that!

    -Gene

  9. Gene Quinn June 15, 2009 3:38 pm

    David-

    First, there is absolutely no legitimate or intellectually honest argument that a patent provides a monopoly. What a patent does is provide others with the incentive to invent around and improve, which is exactly what the patent system is intended to foster — advancement. The fact that the Supreme Court doesn’t understand this, or Jefferson spoke in terms of “monopoly” doesn’t change economic truths. Jefferson spoke of “monopolies” because that was how patent rights were characterized in England, not because they resemble a monopoly.

    The trouble with the term, and my overwhelming objection to the term, is because it inaccurately describes what the patent right is and provides the owner. The term “monopoly” has a specific meaning in our language, and a patent does not provide that at all. Additionally, independent inventors are so frequently mislead by the Supreme Court and commentators talking about the “monopoly” a patent provides. These folks who are not sophisticated in patent legalese simply do not understand what they are really getting, and the scammers in the industry prey on the predisposition of individuals to believe that if they get a patent a money truck will back itself up and dump its load on their front porch. In truth, the inventing is the easy part, obtaining a patent marginally more difficult, and a lot lies between receiving a patent and making money, including a lot more investment and sweat equity. The monopoly label is simply wrong in economic terms (regardless of what Posner says) and it is wrong in terms of reality. My uncle was like so many. He invented for a need that he was told about by procurement officials of the Pentagon. By the time he invented and filed the patent technology moved past what the Pentagon wanted, thereby skipping several generations. So he received a patent and this alleged monopoly on an invention that had no market and no interest. How can one logically call that a monopoly?

    With respect to Jefferson’s views, they changed ultimately. See this excerpt from Graham v. John Deere, explaining Jefferson’s views:

    “His views ripened, however, and in another letter to Madison (Aug. 1789) after the drafting of the Bill of Rights, Jefferson stated that he would have been pleased by an express provision in this form:

    “Art. 9. Monopolies may be allowed to persons for their own productions in literature & their own inventions in the arts, for a term not exceeding – years but for no longer term & no other purpose.” Id., at 113.

    And he later wrote:

    “Certainly an inventor ought to be allowed a right to the benefit of his invention for some certain time. . . . Nobody wishes more than I do that ingenuity should receive a liberal encouragement.” Letter to Oliver Evans (May 1807), V Writings of Thomas Jefferson, at 75-76 (Washington ed.).

    Jefferson’s philosophy on the nature and purpose of the patent monopoly is expressed in a letter to Isaac McPherson (Aug. 1813), a portion of which we set out in the margin. 2 He rejected a natural-rights theory in [383 U.S. 1, 9] intellectual property rights and clearly recognized the social and economic rationale of the patent system. The patent monopoly was not designed to secure to the inventor his natural right in his discoveries. Rather, it was a reward, an inducement, to bring forth new knowledge. The grant of an exclusive right to an invention was the creation of society – at odds with the inherent free nature of disclosed ideas – and was not to be freely given. Only inventions and discoveries which furthered human knowledge, and were new and useful, justified the special inducement of a limited private monopoly. Jefferson did not believe in granting patents for small details, obvious improvements, or frivolous devices. His writings evidence his insistence upon a high level of patentability.”

  10. JD June 15, 2009 4:14 pm

    Gene,

    Thanks for debunking that horrible Jefferson misquote. He clearly wasn’t referring to patents on inventions that were the result of an examination.

    Sheesh.

  11. David Koepsell June 15, 2009 4:38 pm

    Folks,

    I never meant to suggest that Jefferson was completely opposed to the monopoly afforded by patent, for goodness sakes, he enjoyed their fruits and contributed to the system. He just didn’t always see them as necessary to encourage innovation. Let’s not get Manichean here, it’s not a black and white issue. One can support monopolies in practice while distrusting them in theory. Second, the term “monopoly” means, simply, and exclusive control of a market, which a patent literally involves:

    Monopoly: “exclusive control of a commodity or trade,” 1534, from L. monopolium, from Gk. monopolion “right of exclusive sale,” from mono- (q.v.) + polein “to sell,” from PIE base *pel- “to sell, purchase, barter, gain” (cf. Skt. panate “barters, purchases,” Lith. pelnas “gain,” O.C.S. splenu, Rus. polon “prey, booty,” O.N. falr, Du. veil, Ger. feil “for sale, venal”). The popular board game, invented by Charles Darrow, is from 1935. Monopoly money “unreal currency” is attested from 1972, in ref. to the game. Monopolize first recorded 1611; monopolistic is from 1883″ (online etymological dictionary).

    So, I’m not sure how a patent, which grants to the inventor an exclusive right to make and sell a product for a term of years fails somehow to be an exclusive right to make and sell something? Me, I take terms literally. Now, if the public thinks of “monopolies” as automatically bad, that’s their problem, but I am not interested in using politically correct terminology to prance around the truth. It’s probably baggage from the whole Standard Oil thing that cause people to wince (probably not, since most people wouldn’t recall that far back) and a sort of modern anti-monopolistic knee-jerk reaction, but the term itself has no moral connotations, so let’s just call a spade a spade, shall we?

    I am not one for marketing concepts by coming up with more appealing terms, which is at the heart of political correctness – something I despise both practically and theoretically. Instead, let’s educate people about the value of certain monopolies. It was monopolistic control of the rails that helped develop a single gauge of railroad track, after all. It took Ma Bell to wire the country’s phones to each other in the first place. Lots of great and valuable advances could not be done without monopolies, sometimes propped up by governments — like patents are.

    Now, Jefferson wanted and encouraged in his correspondence with Madison a guarantee of “monopolies,” in the form of patents and copyrights for inventors and authors, because he knew these monopolies were useful in encouraging invention (of course the terms of years were much shorter early on). So if the word is good enough for Jefferson, and if the word taken literally means exactly the same as is granted under the current and previous Patent Acts, then educate the public on the value of monopolies, don’t sugar-coat the truth with politically acceptable language.

    Someone once astutely said : “words mean things” … and they should, or else they can mean anything we wish whenever we wish. I’ve re-read Orwell enough times to know that’s a dangerous road to go down.

    best,
    -dk

  12. David Koepsell June 15, 2009 5:06 pm

    (acknowledged: not all monopolies automatically ensure profits, but this doesn’t mean they aren’t monopolies in every literal sense of the word)

  13. Stan E. Delo June 15, 2009 7:46 pm

    Hi Gene,
    I found L. Gordon Crovitz’s *article* to be completely clueless, and more importantly, dangerous for the future of US inventors, given the prediliction of some of our elected officials to gut the value of US patents at the behest of severely uninformed individuals like L. Gordon Crovitz. I am hoping that Mr. Crovitz will see thia message, but am not too sure that he would frequent a site like yours, where at least a modicum of intelligence is required to understand the relevant issues.

    I tend to agree with a long time subscriber to the WSJ that is a patent agent friend of mine, that the WSJ is slowly turning into the equivalent of the National Enquirer/Intruder, in the hopes that they can sell more of their *product* by making it more outrageous, and requisitely much more stupid. How pathetic for them.

    Best regards,
    Stan E. Delo

  14. Older attorney June 16, 2009 11:56 am

    Patents are property. Sometimes property can lead to a monopoly, but usually not. Perhaps Disney company’s Disneyland started out as a monopoly on amusement parks in the SoCal area, but got competition from Knott’s Berry Farm, Universal Studios, etc. Apple owns the MacIntosh operating system and can be said to have monopoly on it, but that “monopoly” faces competion from Windows, Linux, etc. Successful exploitation of a property right leads to competition, not monopoly.

    Irving Kayton used to make the point that patents are the anti-monopoly. When an established firm has a big market share, a startup competitor without the property rights of a patent is going to get crushed by the market power of the established firm. Now that is a monopoly.

  15. Dale B. Halling June 19, 2009 5:49 pm

    Excellent artilce. Several of the comments do not understand the rights obtained with a patent.

    A patent gives the holder the right to exclude others from making, using or selling the invention. 35 USC 154. It does not give the holder the right to make, use or sell their invention. A monopoly is an exclusive right to a market, such as an electric utility company. An electric utility company has the exclusive right to sell electricity in a certain territory. Since a patent does not even given the holder the right to sell their invention, let alone an exclusive right to a market, it is clearly not a monopoly.

    When a person describes a patent as a monopoly to be consistent they should also state that they have a monopoly over their car or over their house. In fact, they have more rights in their car and house than a patent gives the inventor over their invention, since you have a right to use and sell your car or house. A patent does not give these rights to an inventor over his invention. All invention are built upon existing elements (conservation of matter) and if the elements that the invention uses are patented, then the inventor will not have the right to sell their invention without a license.

    Some economists argue that a patent is designed to give the holder monopoly power. Those economists who are consistent also state that all property rights give some monopoly power. The property rights are monopolies thesis shows how confused economic thought is on this subject. The only logically consistent definition of a monopoly is an exclusive right to a market.

    People who suggest a patent is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.