Patent Law

Patent Office Budget Shortfall Will Have Long-Term Effects

By Stephen Albainy-Jenei

You’re not alone in your suffering.  The recession has even hit the U.S. Patent and Trademark Office, which is funded by fees from patent applications and other services.  John Doll, acting director of the U.S. Patent and Trademark Office, said the patent office is projecting a 2 percent drop in applications, if trends continue.

What’s more, some are indicating that applications could end up being down 10 percent for the year:

“I talked to a large corporation today and they’re going through their patent portfolio to see what’s core,” said Doll, adding that the company could decide to abandon much of its portfolio.

So, what does that mean for the patent office?  In the short run, the office has stopped recruiting examiners, which it had been doing in an effort to clear the backlog of patent applications.   After remaining fairly steady over decades, allowance rates have now plummeted from over 70% in 2000 to an allowance rate of 44.3 % in 2007 (Note, the allowance rate hadn’t dropped below 50% in the prior 30 years).

Earlier, the Patent Office claimed that it would hire additional examiners to deal with the backlog.  Doll now contends that that “If we closed our doors today, it would take us almost two years to clear out our backlog.”  It’s not clear how a hiring freeze will make things better other than frustrated applicants will give up and abandon their applications.  Or, stop filing applications in the first place!

So what do we do?  Gene Quinn of IP Watchdog has proposed that if we really want to get out of this economic downturn we need a Patent Stimulus Plan.  This would require President Obama to issue an Executive Order directing the Patent Office to start allowing patents.  According to Gene:

A backlog of 800,000 patent applications that are pending and have not even been considered on any level by a patent examiner is unacceptable.  Why would anyone want to get a patent when you apply today and if it is a real invention where there is a lot of innovative activity you have to wait 8 to 11 years to get a patent, which are the current estimates used by experts familiar with the likely time applications filed today will have to wait in high-tech areas.  So while you are at it President Obama, order the Patent Office to issue a patent UNLESS there is a reason to deny it.

Don’t look for the current budget problem to solve itself.  All the many patents that have not been allowed will not issue as patents.  The Office will not pass go and collect the issue fees on all these applications.  This is further perpetuated downstream as the Office will not collect the large maintenance fees that would have been due at are 3 ½ years, 7 ½ years and 11 ½ years after the date of issuance.  The low patent allowance rate will set in motion a budget shortfall that will play out over decades.

Full post as published by Patent Baristas on March 17, 2009 (boomark / email).