Better Late Than Never: Major Media Tunes Into Patent Crisis

By Gene Quinn
August 11, 2010

David Kappos told CBS the biggest problem is the backlog and the PTO needs more money. "It's no taxpayer dollars at all-- all the fees we collect come from patent applicants."

Straight from the “it’s about time” department comes breaking word that the so-called popular press are finally identifying the most under reported news story of this recession.  The United States Patent and Trademark Office is foundering and it needs more money in order to do its job.  That alone ought to be newsworthy, but add the fact that the Patent Office is the one agency of government with the ability to recognize assets out of whole cloth and have industry organically grow as a direct result and without ANY taxpayer dollars.  The fact that the Patent Office can without any taxpayer dollars directly influence and creation of new, high paying jobs makes it virtually criminal that the elite press, who has reported on virtually every angle of this recession, has ignored the engine that could get us out of this mess.

Perhaps the press is not enamored with the fact that there is an agency of the federal government that does not operate thanks to any Congressional handouts, but rather is a fee for service enterprise.  Perhaps the capitalism and market driven economics that suggests is something that many would rather ignore in favor of other stories.  But the fact remains, the Patent Office is the engine of our nation’s high tech economy and thanks to inadequate oversight, bad choices by previous leadership and constant raiding of Patent Office fees to pay for unrelated government initiatives means that our leaders have turned a blind eye to innovation.  Despite their lip service to innovation and job creation, politicians seem to year after year leave the Patent Office under funded and incapable of satisfying its purpose.  But thankfully CBS did a 2 minute and 36 second segment on the crisis this past weekend!

Yes, this past Sunday, August 8, 2010, CBS did a story about how the Patent Office is under funded and that is hurting the economy.  The story, all 2 minutes and 36 seconds, can be viewed below:


I guess 2 minutes and 36 seconds was all that could be spared given the other earth shatteringly important news of the day, which largely seemed to revolve around whether the First Lady and White House are tone deaf; relating to the fallout of her vacation at a 5 star hotel in Spain. Please!

While I think the First Lady should have vacationed in the United States and helped the US economy, or perhaps been happy with any one of the other vacations she has already taken this year or will take later this year, the incessant babble about her vacation and so many other topics is unbelievable.  While I am a political junkie and love the 24/7 talking heads on cable, it is practically criminal that our so-called media has ignored the Patent Office crisis given the job creation implications.  This is particularly hard to swallow at a time where 14.6 million Americans remain unemployed, which corresponds to an unemployment rate of 9.5%, see August 2010 National Unemployment Summary, and a real unemployment rate (after factoring in those who have stopped looking for work) of somewhere between 16.5% to 22.5%.  Even the left leaning Huffington Post publishing an article recently saying the real unemployment rate is around 20%, see Better Than Nothing.  Way to go popular press!

The job creation story of the recession is right in front of you, presenting with all kinds of subtexts of Congressional incompetence and even an anti-Bush angle, and you miss it!  For crying out loud, every anti-Bush angle that can be played has been played except the one thing the Bush Administration did that was objectively bad from start to finish; namely the Patent Office policy and inane policies that approximated Soviet era quality metrics, which resulted in an epic backlog that is cutting off an innovation based recovery that would lead us out of the recession.

The only thing worse than how the Bush Administration ran the Patent Office is how the Congress has ignored the Patent Office for decades, and worse used it as a revenue generating business enterprise to fund other government programs.  Talk about an innovation tax!  Not only do you take fees paid by inventors and innovative businesses and use them for things other than the patent system, but then you cut off innovation based job creation due to the extraordinarily long wait for a patent.  Either this is as a result of staggering incompetence in DC or real maliciousness.  I hate to even ponder maliciousness when incompetence can explain a matter, but could our leaders really be that incompetent?  OK, don’t answer that question.  It will just be depressing.

Yes, the Milwaukee Journal Sentinel has been on top of this story practically from the beginning thanks to the wonderful reporting of John Schmid, see for example Backlog of patents still stifling potential jobs, but where have the rest of the media been? True, the popular press is getting on board finally.  CBS did this piece and the New York Times at least published an op-ed article titled Inventing Our Way Out of Joblessness by Chief Judge Paul Michel (ret.) and Tessera CEO Hank Nothhaft, but why is the best and virtually only reporting coming from those of us that are citizen journalists?  Is it that not enough money is at stake because the Patent Office budget at about $2 billion isn’t even hardly a rounding error in terms of spending?  Is it some bias against innovation or capitalism that the patent system represents?  Do they just not care?  Are they just unfamiliar with the Patent Office and how innovation and patenting works?

Thankfully, Congress has appropriated more money for the Patent Office.  Last week they gave the Patent Office another $129 million.  Actually, it is better to say that Congress is allowing the Patent Office to keep $129 million more of the fees it collects, but through the end of FY 2010, which ends on September 30, 2010, the Patent Office is estimated to collected between $200 million and $250 million more in fees than was projected at the start of the fiscal year.  Because Congress appropriated to the Patent Office only what the Patent Office projected they would achieve in fees the USPTO budget was capped at roughly $1.85 billion.  So while Congress allowing $129 million more to be kept by the Patent Office let us not lose sight of the fact that this means that somewhere between $71 million to $121 million of the fees collected by the Patent Office and paid by inventors and innovative companies will go to government projects that have nothing to do with the Patent Office.

The Patent Office ought not be a revenue generating entity for the federal government.  It should employ a self sustaining model, charging only what is necessary to do its job.  Any more and it imposes a tax on innovation and since innovation creates value and jobs that is just recklessly stupid.  Congress has treated the Patent Office as a piggy bank since at least 1992, and will at the end of this fiscal year come close to having taken $800 million (or more) from the Patent Office since 1992.  That is why the IT infrastructure is collapsing, efficiencies cannot be obtained and not enough examiners can be hired to do the job we need done.  In a word: pathetic.

Maybe with whatever meager attention the popular press shines on this crisis something useful can be done.  Unfortunately, an op-ed here and a 2:36 story there isn’t going to be enough.  Everyone with a vest interested needs to do whatever you can to send the message to Congress that enough is enough.  Revitalizing the patent system doesn’t even require a taxpayer dime.  Let’s start with just letting the Patent Office keep what it collects, which is sadly a novel concept.

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 7 Comments comments.

  1. David Feigenbaum August 11, 2010 9:50 am

    Is it about the money?

  2. Renee C. Quinn August 11, 2010 2:56 pm

    David,

    It absolutely is about the money. When the USPTO can’t even keep the money they bring in through the fees that inventors pay, how are they supposed to make things work? No tax payer money is used to fund the USPTO. In fact, Congress takes money that the USPTO brings in and allocates it to other areas that they see fit. So the USPTO isn’t even allowed to keep the money they make and is seen as a revenue generator to the government rather than as a way of creating jobs here in America and promoting new innovation so even more jobs are created. The USPTO if funded properly, would be a huge means of improving the financial mess that our government has gotten us into.

    -Renee

  3. Imano August 11, 2010 3:47 pm

    Well said. We need motivations for people to work hard and smart to come out of the recession, not penalties for working hard and smart. You think that both the right and the left could see eye to eye on this one.

  4. Gene Quinn August 11, 2010 3:58 pm

    Imano-

    Exactly! It is amazing to me that patent reform of some sort, at least aimed at adequately funding the Patent Office, wasn’t a true bipartisan accomplishment. This should have been something easy to come together on. Who actually thinks it is a good idea to inadequately fund the Patent Office? Sad, but hopefully we can shine more light on the plight of the Office and how it is holding back organic job creation at a time when so many are desperate for work.

    -Gene

  5. Dale B. Halling August 11, 2010 4:34 pm

    We ought to apply Sarbanes Oxley to Congress, then they would all be in jail for stealing money from the patent office.

  6. Cheryl Milone August 14, 2010 7:04 am

    Gene, I believe that there is a direct reason for CBS’ coverage, they made the right decision to hire Doug Luftman, former head of patents at Palm, inc. One thing the news media can do is to expand beyond media industry executives with traditional focuses grounded in public ratings and bring in executives of the level of Doug. Doug has made critical contributions to the high tech industry, I look forward to seeing further impact like this at CBS.
    – Cheryl

  7. patent litigation August 18, 2010 6:44 pm

    If some current congressional candidate were to start carrying the flag for USPTO operations, it’s a pretty good bet that s/he could win some serious attention (and a few extra votes) by pushing the points that helping the PTO (1) helps create jobs, and (2) costs taxpayers exactly nothing. I’m not quite sure why more haven’t picked up on this, but it’s probably because patent law is not on the radar of most Americans. I don’t know whether the main culprit is the media, or the patent law lobby’s failure to adequately publicize its own interests. Thankfully, David Kappos appears to be acutely aware of the need for major media attention when it comes to promoting the importance of IP.
    http://smallbusiness.aol.com/2010/05/10/how-to-file-a-patent/