The Patent Office's new headquarters in Arlington, Va.

Slow-Going at the Patent Office

February / March 2005 By: Tom Michael Volume 3 Number 1

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In testimony to Congress last year, the deputy director of the U.S. Patent and Trademark Office paraphrased Charles Dickens. "The state of the USPTO can accurately be described as the best of times and the worst of times," Jon W. Dudas told a House commerce subcommittee. The bad news, Dudas explained, was that record numbers of patent applications had created a "workload crisis" that could cause an already massive backlog of unexamined patent applications to skyrocket.

Furthermore, without money from Congress to hire more examiners, the average wait for a decision on a pending patent application could more than double—€”from a glacial two-year pace to a commerce-killing five years.

But there were also reasons for optimism, Dudas said. A bill moving through Congress last year would help pay for a five-year improvement plan at the agency, and curtail the ability of lawmakers to raid patent fee revenues to pay for general fund expenses.

The measure, called the USTPO Fee Modernization Act, cleared the House but never made it to the Senate floor before the 108th Congress adjourned. However, a key provision in the bill—€”a measure that provided enough money to hire 900 new examiners last year and 750 more this year—€”was inserted into an appropriations bill that President Bush ultimately signed into law.

The new employees should help stem the growing backlog of applications, but perhaps just as important was the provision allowing the agency to retain some of its fee revenue.

In 1991, the patent office began collecting fees from patent applicants. The idea was to shift the financial burden of patent approval from taxpayers to the entrepreneurs and inventors seeking the patents. But as these new revenues grew, Congress found them irresistible. Soon, lawmakers were raiding the patent fees to pay for other government programs. As of 2003, Congress had spent $650 million of these patent fees on programs that had nothing to do with patents. At the urging of Dudas and others, Congress seems to have realized that its disregard for the USPTO's budget needs was crippling the agency.

"I really think Congress is trying to help," said Brigid Quinn, deputy director of public affairs at the Patent Office.

The five-year plan also calls for outsourcing some of the patent office's workload to private companies, a move that has drawn some critics who contend it could slow, not expedite, the patent process.

Because of this criticism, the office has decided to start slowly with a pilot program. Contracts will be awarded to some private companies to help search for existing patents to determine if patent applications have already been granted for a particular invention.

Quinn said the FY2005 budget increases for the USPTO are monumental compared to those for other agencies. Congress has tightened the reins on spending because of the mounting deficit and the cost of the war in Iraq.

"All of the other non-defense agencies are getting close to a 1 percent increase in funding, we're getting a 25 percent increase," Quinn said.

It's easy to get frustrated with government bureaucracies that seem to move more slowly than a snail. But at the USPTO, there is at least a plausible excuse. With technology moving faster than ever, the number of patent applications has more than doubled since 1992. In the last five years alone, biotechnology-related patent filings increased 46 percent and pharmaceutical and chemical-related filings climbed 42 percent. Some of these applications are filed on CD —€“ROMS that contain the equivalent of a million paper pages or more.

Joanne Hayes-Rines, publisher of Inventors' Digest, a Boston-based national magazine that helps entrepreneurs navigate pitfalls in bringing an invention to the marketplace, says the Patent Office has become a bigger and bigger obstacle to success. She says the wait time for a typical patent has grown from about 18 months to at least two years and often longer, "They've been going in the wrong direction for years," she said. The delay can be devastating for inventors hoping to convince investors that they have a marketable idea.

"It can be really difficult if you are trying to get investors because unless you know if an invention is patentable you can't get anybody to invest in it," she said.

Hayes-Rines has little confidence that Congress will be able to resist future raids of Patent Office revenues. "There is nothing in current law that says they can't take that money in the future," she said.

Roger Jones, the chairman of Santa Fe-based Commodicast, which was recently merged with Complexica, also of Santa Fe, has plenty of experience with the patent process. A rare combination of entrepreneur and scientist, Jones enjoyed a long career at Los Alamos, where as a scientist he helped develop technology that earned several different patents.

Jones founded Complexica in 1999. The firm hatched spin-off companies using complexity science and other advanced data mining techniques to tackle hard-to-solve business problems. JThe last time Jones, who holds several patents, successfully completed a patent application was in 1994.
"It was painfully slow," he recalled.

Today, Jones and his colleagues rarely even consider slogging through the patent process because the information technology they develop is moving much quicker than the patent protection process. He said instead, the company relies on trademarks and copyrights to protect intellectual property. The company also zealously guards its new applications and computer coding.

"Nowadays we don't do patents at all because the technology is moving so fast now that the patent process isn't able to keep up with our needs for speed," Jones said. "Patents really don't offer much use to us anymore."

Stephen A. Slusher, an Albuquerque patent law attorney with the Peacock, Myers and Adams law firm, said the amount of time a patent application takes usually depends on the type of technology needing protection. Mechanical inventions generally take the least amount of time, with computer and information technology applications taking longer.

Shusler said patent applications for biological technology inventions can often take several years too, but that pales in comparison to the length of time it can take to get approval from the Food and Drug Administration. Computer software entrepreneurs tend to have the most anxiety about a pending patent.
"They can go through a whole product cycle before the patent is issued,"he said.
At Los Alamos National Laboratory, scientists are constantly earning patents for groundbreaking inventions that have application in the real world. The number of patents issued on behalf of work done at the lab has grown every year.
In the 1970s, the lab was granted 136 patents. In the 1980s that number grew to 302, and during the 1990s the number of patents increased again to 458.

The lab licenses its inventions to private companies for a fee. If the invention takes off in the marketplace, the lab collects an annual fee and royalties.
But before a patent is secured it can be difficult for the lab to determine how much a particular invention is worth. So, a slow-moving patent process can work against the laboratory. But at the same time, it can help small start-up companies that can sometimes obtain cutting-edge lab technology on the cheap.
"When we don't have a patent we tend to give discounts because we don't know the value of it," said John Mott, deputy program manager in the lab's Technology Management Office.

Once a patent for a licensed LANL invention is finally secured, the lab may attempt to renegotiate the terms of the fees and royalties.

The slow pace of patent approval "definitely has an effect," on negotiations, Mott said.

Still, most patent office observers tend to agree that the agency is doing what it can to meet the crushing demands placed on it.

Alan Thompson, director of the Patent Law Office at Lawrence Livermore National Laboratory, said he hasn't noticed a significvant increase in lag time between the patent application and the Patent Office's first action. He said inventions in the biotechnology area tend to take the longest—€”more than two years, generally—€”and mechnical inventions sometimes get a "first action" within a year.

Many interviewed for this article hailed the agency's commitment to moving from paper documents to electronic data. Quinn said none of the examiners at the USPTO's new office in Alexandria, Va. are forced to slog through old, cumbersome paper files. "Our examiners work completely from their desktops now, which is a huge development for us,"she said.

Quinn said the agency might never be able to hire enough examiners or become technologically savvy enough to process patent applications in weeks or even months. She said the agency is making a monumental effort to improve its efficiency simply to keep up with the staggering amounts of new applications each year.

She said the agency's goal is to maintain the current two-year average for expediting a patent request. "Even if we were able to hire (as many patent examiners as it wanted), I'm not sure we could hire enough to keep up with the workload," she said. "Our goal is to keep the wait at about two years."

Tom Michael writes for TechComm from Washington, D. C.