A PTO that Can Do Its Job

It's hard to overstate the patent system's importance to competition. Patent rights give an incentive to innovate; they create jobs; and they enable their owners to obtain financing. Patent licensing allows firms to transfer technology to the users best positioned to use it in particular fields. And in some industries, for better or worse, patents serve a defensive purpose, too--they give firms a seat at the table, allowing them to use cross-licenses in order to participate in a particular business. Strong, quality patents promote competition.

Bad patents, though, can do the opposite. And many observers worry that U.S. patents convey too much power to claimed inventions that don't even deserve protection. They see patents covering for illusory innovations over the prior art, with claims far broader than the actual invention, on naturally-occurring substances or phenomena, or for business methods that (at least in retrospect) seem intuitively obvious. The upshot, these critics say, is powerful exclusive rights over a broad spectrum of high-technology industries, hampering competition from new innovators. Others, in contrast, see the patent system as slow and unresponsive to inventors, with overwhelmed patent examiners issuing patents long after the underlying inventions have been revealed to the world.

So plenty of factors that could produce bad patents are in place: a huge backlog; an inadequate number of examiners--many inexperienced, all undercompensated; disincentives to conduct effective reviews; and badly outdated IT resources. No amount of substantive patent law reform would compensate for this. And whether you think that U.S. patents are too strong or too weak, that patents take too long to be issued or that many of them shouldn't be issued at all, USPTO's problems are bound to be contributing to your concerns.

So it should make everyone happy that the administration recently asked Congress to return to USPTO $129 million in user fees that had been diverted to the Census Bureau. And the pending patent reform bills would prohibit any further fee diversions. But that's only a start. Former Federal Circuit Chief Judge Paul Michel, who recently retired from the bench altogether to be able to speak freely about important issues like this one, estimates that a billion-dollar investment is necessary to counter the harm caused by the years of diverted fees. He proposes that the money be used to expand the examiner corps with more experienced professionals, to restructure their compensation system to retain examiners and reward excellence, to modernize the USPTO IT system, and to allow USPTO to open regional offices in other cities with significant concentrations of technology professionals.

Chris Kelly

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