Patent logjam illustration by Kim Carney
Kim Carney / MSNBC
By John W. Schoen Senior producer
msnbc.com
updated 4/27/2004 6:15:18 PM ET 2004-04-27T22:15:18

For most inventors, developing and perfecting an idea takes far more time, energy and money than it does to get a patent. But with the U.S. Patent and Trademark Office drowning in paper, the patent process has become a frustrating waiting game.

Unless long-overdue reforms are put in place and the agency’s budget is expanded, the current backlog will balloon further, and the average time it takes to win a patent — now more than two years — will double in five years, according to the acting head of the agency, Jon W. Dudas.

And that, he says, could have a chilling effect on innovation.

“At what point will venture capitalists feel like it’s no longer useful to invest in certain technologies because they don’t know that they’re going to get a patent and actually get a return on their investment?” said Dudas.

The impact of allowing the patent logjam to worsen would be felt by more than just the companies and individuals currently awaiting word on nearly 500,000 patent applications that arecollecting dust until an examiner can be assigned to review them.

Short shrift for applications
Intellectual property — everything from new life forms to movies — represents the “single largest sector of the U.S. economy,” Dudas told Congress last month, and makes up more U.S. export value than “the automobile, automobile parts, agricultural and aircraft industries combined.”

“Patent quality has suffered,” in part because examiners are too busy to spend more time on applications, according to John R. Allison, a professor of Intellectual Property Law at the University of Texas at Austin. “Depending on the technology area, [review time] ranges from an average of about eight up to maybe 30or so hours for biotech applications.”

The result is that some patents aren't as thoroughly reviewed as they should be. In the case of a seemingly minor patent — like the "Beerbrella" (U.S. Patent # 6,637,447) or a method for using a tree swing (U.S. Patent #6,368,227) — there is probably no harm done. But if a duplicate patent is awarded for a far more lucrative and possibly unique idea, a court dispute could cost millions.

“Patent infringement litigation is just frightfully expensive,” said Allison. “Intellectual property lawyers are highly paid, and they’re among the most skilled litigants you’re going to find. “

Private parties in multimillion-dollar patent infringement cases often have a much greater incentive — and can bring much greater resources to bear – than the examiner who originally issued the paten, said Allison. Someone sued for patent infringement, for example, may be able to conduct a more thorough search that finds prior examples of the technology or invention — successfully challenging a patent that its owner had counted on for big profits.

Raiding the patent piggy bank
Money, it turns out, is one of the major reasons for the current patent logjam. In 1991, the financial burden of granting patents was shifted from taxpayers to patent applicants through the establishment of so-called user fees.  But over time, those fees became a politically attractive source of funds to help balance the federal budget without raising taxes. So Congress began raiding the patent office piggy bank; as of last year, more than $650 million had been siphoned off to pay bills for other government functions.

Meanwhile, the volume of patent applications mushroomed. At the patent office, they call it “technology creep” — the explosion of new technologies, many of which didn’t exist 20 years ago, when most patent applications were evenly divided among electrical, chemical and mechanical inventions. Today, far more complex fields like semiconductors, biotechnology and, increasingly, entirely new areas like nanotechnology make up a much a bigger share of the agency’s workload. And the number of new applications continues to set records every year.

“The fact of the matter is that innovation is increasing,” said Harry Roman, an inventor who for many years ran the New Jersey Inventors Hall of Fame. 

In the 145 years from its founding in 1790 until 1935, the U.S. Patent Office issued its first 2 million patents. It took just 41 years to grant the next 2 million patents. The next 2 million patents took only 23 years.   

“Look at that growth,” said Roman. “Since 1935, almost 70 percent of the patents ever issued have been issued. That’s an astounding figure.”

2,900 new examiners sought
Today, patent examiners have to slog through 50 percent more existing patents than they did 25 years ago; every new patent issued just adds to the pile that the next examiner has to search. And with more applications being filed, the pressure on examiners from applicants has increased, according to Ronald Stern, head of the Patent Office Professional Association, the patent examiners union.

“The interest in getting a patent has increased,” said Stern. “And, as a result, the aggressiveness of applicants has increased, which takes more time to deal with.”

To break the logjam, the patent office has lobbied Congress for the money to pay for its five-year plan to reform the agency. A central element of the plan is the hiring of more patent examiners — lots of them. The U.S. Patent and Trademark Office Fee Modernization Act, now awaiting a Senate vote after overwhelming approval by the House, would raise fees by 20 percent to boost the agency’s budget by $300 million, bringing it to $1.5 billion for the fiscal year beginning in October.That would pay for adding 2,900 new examiners over five years to the current workforce of 3,500. That's an 80 percent increase, after factoring in attrition of about 300 examiners a year. The bill would also end the congressional raid on patent fees, because the law says that all unspent fees would be returned to applicants.

Amid calls for greater productivity in government these days, most members of Congress are loathe to expand government agencies. But no one has yet come up with a way to dramatically speed up the patent examination process without more people.

“We’re more like a law firm than the post office,” said Dudas. “At a law firm, if you doubled the amount of litigation you have, no one would question that you need more lawyers.”

The five-year plan also includes a more controversial move to outsource some of the agency’s workload to the private sector. The current plan calls for contracting limited parts of the process to outsiders who would help, but not replace, existing examiners. Many applicants already perform patent searches on their own before investing heavily in new technologies. Dudas says the patent office is looking for ways to leverage work that’s already been done.

But not everyone thinks outsourcing will help clear the backlog.

“Outsourcing will slow down the entire process; it will not speed it up,” said Stern, "and it will make processing any one application more expensive. The best way to speed it up would be to hire more examiners.”

Catching up with technology
Exacerbating the patent office's struggle to keep up with an ever increasing number of applications is its own primitive technology. Despite the flood of patents issued each year for advances in collecting, analyzing and storing information, the office is still transitioning from a paper-based system that hasn’t changed much in 200 years. Although more than half of applications are now made electronically, the new system — which stores electronic images of paper-based applications — fails to take full advantage of electronic document handling, says Stern.

“They’re merely recording a piece of paper electronically to avoid physically moving that piece of paper around the office,” he said.

Dudas says the five-year plan includes a move to a system that uses fully searchable, Web-like documents. Document imaging, he says, is a critical first step and helps the patent office coordinate applications with its counterparts in other countries.

Still, even as the office struggles to upgrade its information processing systems, applicants are already a step or two ahead. “We receive patent applications now on 12 CD-ROMs that are the equivalent of 6 million pages of data,” said Dudas.

In the meantime, the office isn't waiting for Congress to cough up more money. More than 1,000 employees now telecommute, saving office space. Operations housed in 18 buildings spread over a mile and half are being consolidated into some 2 million square feet in five linked buildings.

Even if more funding is approved, Dudas says it will be years before the huge patent backlog is brought under control.

"Things will get worse at first," he said. "It takes a while to turn a ship around."

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