Saturday, October 09, 2010

The disconnect between the Patent Office and job creation

Way back in Spring 2009, USPTO Director Kappos asserted before BIO that the application backlog at the US Patent Office was stifling job creation. The Milwaukee Journal Sentinel covered the story with the following text:

Nearly nine months into his tenure as director of the U.S. Patent and Trademark Office, David Kappos said Monday that he thinks the agency still is stifling millions of potential jobs because of its inability to keep pace with the volume and complexity of the applications it receives.

While he lacks empirical data on the number of jobs that "our country's innovation agency" impedes because of its inability to keep up, Kappos said his instincts tell him the number runs into the millions.

"Hundreds of thousands of groundbreaking innovations that are sitting on the shelf literally waiting to be examined - jobs not being created, lifesaving drugs not going to the marketplace, companies not being funded, businesses not being formed - there's really not any good news in any of this," Kappos said during a panel discussion at the annual trade show of the Biotechnology Industry Organization [BIO].

[See Backlog of patents still stifling potential jobs, director says ]

Now, flash forward to the Fall of 2010 and note the article in EE Times titled Flush tech companies slow to hire. Why? which begins with the text

High technology companies, like businesses in other sectors, are sitting on piles of cash. Despite strong balance sheets, most technology companies are not contributing to an economic recovery by expanding their operations and hiring more engineers.
Why not? Could it be that corporate executives are more interested in holding down costs than in creating and designing new and better technologies and products needed to compete in the global marketplace?

There is a long string of comments after the article. As of 9 Oct 2010, only TWO of the comments relate to patents, neither of which relates to the patent application backlog:

One comment relates to patent litigation:

All the big companies are prosecuting and/or defending hecto-million dollar patent infringement lawsuits, or hoarding their cash so they will be able to prosecute and/or defend those lawsuits. Smaller companies are being bled dry by being forced to license patents that they are unable to defend against. I bet they would much rather spend that money hiring engineers. As long as the patent courts continue to operate as they do (burden of proof on defendant, no costs granted for defendants who win) this will continue to get worse and there won't be any USA technology companies any more.

The other comment elevates the know-how of individuals above patents:

But at the same time, companies also have intellectual property and internal expertise -- and those things are more than just patents issued or CAD files on the corporate engineering network. Some of that IP and that know-how is embodied in the engineers who created it or enhanced it for the latest incarnation, or embedded it with other IP in that latest SoC. Many of those engineers are the 'old guard' in the U.S., Europe, Japan, Israel, etc.

If they have no younger engineers to mentor, no new generation to whom they can transfer that specialized company expertise, then that expertise will disappear when those old guard engineers retire. I don't know how one puts a price tag on that, but my feeling is it's going to be very costly for some companies.

The real fight in patent reform has been about patent litigation, in the form of apportionment of damages. The first comment relates to that.

The real issue in dealing with backlog is giving the USPTO enough money to do its job of examination. Things like "first to file" and opposition proceedings are mindless diversions that will neither solve the immediate problem with backlog, solve the litigation issue, or create any new jobs.

S.515 has nothing to do with the real problem at the patent office. The EE Times article, and comments thereto, show the disconnect between Congress and the jobs problem.

Some other posts on IPBiz:

Reality check needed at the USPTO?
[IPBiz notes that it now been one month since the email to Susan Decker author of Patent Chief Kappos `On the Hunt' to Reduce U.S. Backlog, Spur Innovation, and Decker has not responded. Perhaps Decker has nothing to say about real issues at the USPTO.]

"We must unleash…innovation…and nurture the ideas the spring from our entrepreneurs.”

Locke on the USPTO: "In some ways, it's like a Ponzi scheme"

**Of the comment by "new" [below]: But at the same time, would simply throwing more money at the problem be a real solution?, observe that the USPTO can't even authorize overtime at the moment. Thus, the answer to the comment is "yes."

from David Kappos at the Director's Forum:

Overall in FY 2010, the allowance rate increased to 45.6%, compared to an allowance rate of 41.3% in FY 2009. In addition, actions per disposal decreased to 2.42 from 2.73 in FY 2009. Furthermore, as a result of a concerted campaign to begin turning the tide on our backlog, the patent application backlog dropped from 718,835 at the end of FY 2009, to 708,535 at the end of FY 2010. Pretty remarkable considering that application filings were up about 4%, that our examiner workforce shrunk and we were unable to authorize overtime for most of the year due to funding challenges, and that we affirmatively gave our examiners *more* time to examine each application as a clear signal that quality is our first priority.

Finally, the September figures show that there has been a further improvement in patent examination quality. The final rejection and allowance compliance rates (our existing quality measures previous to our announcement just last week of 5 new quality measures we will use starting immediately) increased from 94.4% in FY 2009 to 96.3% in FY 2010, and the non-final in-process compliance rate increased from 93.6% in FY 2009 to 94.9% in FY 2010.


Blogger staff said...

Just because they call it “reform” doesn’t mean it is.

Please see for a different/opposing view on patent reform.

4:32 PM  
Blogger New said...

It's true that S.515 does not constitute any substantial patent reform, and does little or nothing to address significant problems like the patent application backlog. But at the same time, would simply throwing more money at the problem be a real solution? I've been told by former patent examiners that inefficiency reigned at the USPTO in prior years because of mismanagement, not because of lack of funds. Granted, David Kappos is new blood, and so far seems to be doing an admirable job. And, yes, the PTO remains woefully underfunded. But I wonder whether some managerial fixes might also go a long way toward getting things back in order.

2:59 PM  

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