Date: 20 February 2011

Source: The New York Times

WASHINGTON, President Obama, who emphasizes American innovation, says modernizing the federal Patent and Trademark Office is crucial to “winning the future.” So at a time when a quarter of patent applications
come from California, and many of those from Silicon Valley, the patent office is opening its first satellite office” in Detroit.  Add to Portfolio

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That is only one of the signs that have many critics saying that the office has its head firmly in the 20th century, if not the 19th.

Only in the last three years has the office begun to accept a majority of its applications in digital form. Mr. Obama astonished a group of technology executives last year when he described how the office has to print some applications filed by computer and scan them into another, incompatible computer system.

“There is no company I know of that would have permitted its information technology to get into the state we’re in,” David J. Kappos, who 18 months ago became director of the Patent and Trademark Office and undersecretary of commerce for intellectual property, said in a recent interview. “If it had, the C.E.O. would have been fired, the board would have been thrown out, and you would have had shareholder lawsuits.”

Once patent applications are in the system, they sit for years. The patent office’s pipeline is so clogged it takes two years for an inventor to get an initial ruling, and an additional year or more before a patent is finally issued.

The delays and inefficiencies are more than a nuisance for inventors. Patentable ideas are the basis for many start-up companies and small businesses. Venture capitalists often require start-ups to have a patent
before offering financing. That means that patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses.

Much of the patent office’s decline has occurred in the last 13 years, as the Internet age created a surge in applications. In 1997, 2.25 patents were pending for every one issued. By 2008, that rate had nearly tripled, to 6.6 patents pending for every one issued. The figure fell below six last year.

Though the office’s ranks of patent examiners and its budget have increased by about 25 percent in the last five years, that has not been enough to keep up with a flood of applications, which grew to more than 2,000 a day last year, for a total of 509,000, from 950 a day in 1997.

The office, like a few other corners of the government, has long paid its way, thanks to application and maintenance fees. That income “ $2.1 billion last year “ has made it an inviting target for Congress, which
over the last 20 years has diverted a total of $800 million to other uses, rather than letting the office invest the money in its operations.

Applications have also become far more complex, said Douglas K. Norman, president of the Intellectual Property Owners Association, a trade group mainly of large technology and manufacturing companies.

“When I was a young patent lawyer, a patent application would be 20 to 25 pages and have 10 to 15 claims,” Mr. Norman said. A claim is the part of the patent that defines what is protected. “Now they run hundreds of
pages, with hundreds, and sometimes thousands, of claims.”

Lost in the scrutiny of the office’s logjam, however, was the fact that the number of patents issued reached a record last year, more than 209,000, or 29 percent more than the average of 162,000 a year over the previous four years. Rejections also hit a high of 258,000, not a measure of quality, Mr. Kappos said, but a sign of greater efficiency.

Between the backlog of 700,000 patents awaiting their first action by an examiner and the 500,000 patents that are in process, a total of 1.2 million applications are pending.