On Monday, September 22, 2010, the United States Patent and Trademark Office announced via Federal Register Notice that the Office is considering pro-business strategies for incentivizing the development and widespread distribution of technologies that address humanitarian needs. One proposal being considered is a fast-track ex parte reexamination voucher pilot program to create incentives for technologies and licensing behavior that address humanitarian needs. Under the proposed pilot program, patent holders who make their technology available for humanitarian purposes would be eligible for a voucher entitling them to an accelerated re-examination of a patent. Given that patents under reexamination are often the most commercially significant patents, it is believed that a fast-track reexamination, which would allow patent owners to more readily and less expensively affirm the validity of their patents, could provide a valuable incentive for entities to pursue humanitarian technologies or licensing.
Under the proposed pilot program, patent holders who disseminate their patented technologies for humanitarian purposes would qualify for a fast-track ex parte re-examination voucher, which could then be used on any patent owned by the patent holder or transferred on the open market. The Federal Register Notice goes out of its way to point out that the concept of a government agency offer fast-track vouchers is not unique. In fact, the U.S. Food and Drug Administration (FDA) currently has a similar voucher program for fast-track review in place. Under the FDA program priority review vouchers are provided to entities that develop drugs to treat neglected tropical diseases.
Among the technologies which address humanitarian needs that would be eligible for the program are treatments for tropical diseases, diagnostic medical tools, crops with higher yields or better nutritional value, and treatments for sanitation or clean water. Participants could qualify for the proposed pilot in two ways: by making their patented technologies available to impoverished populations for humanitarian use, or by making their patented technologies available to researchers who are developing technologies that address humanitarian needs.
While the devil is always in the details, as a general rule I am predisposed to be highly supportive of incentive based maneuvers to encourage desired behavior. For example, the Orphan Drug Act can be viewed as nothing other than an enormous success, and for those who choose to remain intellectually honest it is clear that a strong patent system has created both enormous economic opportunity for the United States and the creation of extraordinary live saving treatments and cures. While reasonable minds might disagree with the famous (or infamous) statement of Gordon Gekko about greed being good, we can all agree that greed is a human condition. Ignoring the nature of some, if not most or even all, to be greedy is naive. So there is something quite natural about government recognizing the obvious and attempting to tickle what I refer to as “the greed gene” to incentivize a desired outcome.
Now, having sung the praises of using the dangling carrot approach to achieve a desired outcome, I am conflicted regarding this particular pilot program. First, I wonder whether a fast-track re-examination voucher is going to be much of an incentive. In any given year there are only several hundred ex part reexaminations anyway. Perhaps the prospect of having a particularly valuable patent reexamined quickly in an ex parte process and then made stronger as a result will be enticing, but I wonder. I also wonder whether it is appropriate to use a “move to the front of the line” to incentivize outside the Patent Office social policy at a time when the Patent Office is so horribly bogged down that it can only legitimately be characterized as barely keeping its head above water.
On Monday, Director Kappos wrote on his blog that this time last year there were 750,000 patent applications in the queue that had not been touched and were awaiting first action. Presently there are 725,000 patent applications awaiting first action, which is the first time in a decade there has been a dent in the backlog. This is particularly good news because during fiscal year 2010 filings were up 4% and the number of patent examiners continues to be in decline. So even with more applications and fewer patent examiners Kappos has been able to squeeze out a dent in the backlog. With 10 days remaining in the fiscal year he wrote that he hopes to get close to the 700,000 backlog target. Indeed all good news, but with this type of backlog and reexamination pendency that can easily be 3 to 4 years, should the Patent Office be encouraging humanitarian activities in exchange for a place in line?
This is a difficult question indeed. Who can blame the Obama Administration for trying to find ways to put humanitarian technologies into the hands of those who need those technologies sooner rather than later? I am happy to blame the Obama Administration for a lot, but humanitarian efforts are objectively good, moral, ethical and necessary. I just wish that humanitarian incentives wouldn’t cost a place in an already crowded and lengthy line.
I guess my problem, if in fact I really do have a problem with this pilot program, is the fact that it is quite different from the other fast-track or efficiency improving proposals of the Kappos Administration. I think it is fair to say the other programs that would allow acceleration or advancement related to either reducing the backlog (i.e., abandon one to move one up) or spurring the US economy (i.e., advancement of Green Technologies). The previous alterations of the first-in-first-out queue related to USPTO efficiency or economic development seems completely legitimate for the USPTO, a division of the Department of Commerce. I am less convinced that a purely humanitarian effort that offers advanced placement in line at the USPTO is appropriate given the monumental challenges facing the Patent Office and the fact that an advancement of one necessarily associates with the slowing of others.
I suspect that what I am writing will be taken by some to be cruel and immoral; such an incorrect characterization is to be expected. But my position is neither cruel or immoral. The patent system already provides enormous benefit to those most in need by granting to greedy individuals and companies exclusive rights for an exceptionally limited time, after which the technologies fall into the public domain for all to benefit from for practically free. So the patent system is by definition and through application an extraordinarily successful and driving humanitarian force. The question is whether some innovations should be slowed in process at the USPTO to encourage quicker humanitarian benefit, and I guess I just don’t think that is the appropriate trade-off.
What I would be in favor of, however, are incentives that would result in humanitarian technologies being donated that do not cause other innovators to suffer from line-cutters. Patents are property rights because Congress says they are, and the length of time a patent stays in effect is what it is because Congress declared it to be that way. So Congress can define the patent term however it chooses. So what would be wrong with Congress granting an additional 30, 60 or 90 days of patent term in exchange for the donation of humanitarian technologies? That could be a powerful incentive for many companies, particularly biotech and pharma companies, to donate certain technologies. Can you imagine how many pharma companies would line up to do that if they could extend the term of a blockbuster drug by even 30 days?
I know that the likelihood that Congress will do anything patent related, let alone something productive, asymptotically approaches zero. Thus, if any kind of patent reform or policy is to be implemented it will need to come from the Patent Office or the Courts. So I am mindful of the limitations on what solutions are available given the Patent Office’s interest in humanitarian efforts, and I do applaud the Patent Office and Department of Commerce for thinking outside the box. After all, the goal of the patent system is to spur the dissemination of technologies and information for the benefit of society.
In any event, what is your opinion? In addition to sharing your thoughts below, which I hope you will do, the Patent Office would like to hear your thoughts as well. To be ensured of consideration, written comments must be received by the Patent Office on or before November 19, 2010. No public hearing will be held. Written comments to the Patent Office should be sent by electronic mail message over the Internet addressed to HumanitarianProgram@uspto.gov. Comments may also be submitted by mail addressed to: Mail Stop Comments—Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313–1450, marked to the attention of Joni Y. Chang. Although comments may be submitted by mail, the USPTO prefers to receive comments via the Internet.