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06:25 PM

Patent Problems Mean The Future Is... Later

A backlog of applications at the U.S. Patent Office has innovation in a stranglehold. That means big problems for small businesses, startups, and entrepreneurs.

As an inventor and a long-time engineer for Boeing, George Huggins has spent the better part of six decades conceptualizing and building things. But for all his experience and ingenuity, Huggins has yet to figure out how to get Uncle Sam to speed up the often-ponderous patent process.

Since retiring from Boeing, the 81-year-old Huggins, who also raises cattle and pecans on his farm in Blanchard, Okla., has had several of his ideas patented by the U.S. Patent and Trademark Office (USPTO), including the Tailgate-N-Tote-Um-Table, an integrated folding table and umbrella for sporting event tailgaters.

Start to finish, the application process for that product took about a year, he recalls. But that was in the late 1980s, before the Patent Office had to contend with a surge in patent applications and diminished resources for processing them. More recently, Huggins says, his patent application for a lightweight tailgate loading ramp has been pending at the USPTO for more than seven years. “It just takes forever” to move an application through the process, he says. “Each time I file, it seems like it takes a little longer to get the patent.”

A Pending Problem
Pendency is indeed a mounting problem at the USPTO, where, on average, it now takes more than 25 months to get first action on a patent application and 32 months to get one approved. “This has a direct, negative impact on America’s economic competitiveness--creating uncertainty for entrepreneurs and inventors,” Secretary of Commerce Gary Locke acknowledged in remarks at the August swearing-in ceremony for new USPTO Director David Kappos. (Kappos and other USPTO officials were unavailable to comment for this article, according to an agency spokesperson.)

Locke’s goal is to reduce the average period for first action to 10 months, which, he concedes, is “extremely aggressive.” How? “The answer is that we don’t know yet,” Kappos wrote in a late August blog posting directed at USPTO employees. “I’m working with members of the management team on a plan and timeline and I look forward to sharing it with you soon.”

Kappos has his work cut out for him. The number of applications filed with the USPTO totaled almost 497,000 in fiscal 2008, up 31% from fiscal 2004, according to figures provided by the agency. Evidently, however, the USPTO’s capacity for handling patent applications hasn’t grown in step with its workload. During that 5-year span, the total number of applications pending at the agency has increased 60%, from around 756,000 to more than 1.2 million. Meanwhile, the USPTO has struggled in efforts to beef up its workforce. Between 2002 and 2006, one patent examiner left the USPTO for every two hired, according to a 2008 report from the U.S. Government Accountability Office. It all adds up to increased application pendency: from 27.6 months in 2004 to 32.2 months in 2008.

Lost Opportunities
Critics of the USPTO claim the huge and growing backlog of patent applications is not only frustrating inventors, small businesses and the middlemen (attorneys, mainly) who expedite their patent applications, it’s slowing the progress of ideas that, when brought to market, could help stimulate a flagging economy. “It’s bad for American innovation and bad for inventors,” says Robert Susa, president of InventHelp, a firm that helps inventors secure patents and find buyers for their ideas.

Securing a patent in a timely fashion is especially crucial for individuals and small businesses, Susa explains. “Some companies we deal with -- especially larger ones -- will only look at patented ideas. They won’t even talk to you unless you have a patent. And now, instead of showing them a patented idea two years after it was invented, we’re showing it to them five years after it was invented. By then, it could be obsolete. Inventors are seeing their opportunity lost while they are waiting for an innovation to be patented.”

Startups in particular can be financially hamstrung by having a patent application in extended limbo. “Really, I think the biggest problem is for companies that are trying to leverage intellectual property as their key asset to attract financing and funding,” says Eric Waltmire, a patent attorney in Wheaton, Ill. “Many startups depend on patents to attract investors.”

From Copycats To Fat Cats
The application bottleneck also opens the door to copycats. It’s USPTO practice to publish details of patent applications within 18 months of when they are filed. Once published, details are open to public scrutiny. Because the pendency of an application can stretch for years beyond its initial publication, there’s plenty of opportunity for someone to use details from a pending application to develop a product that beats the original idea to market, Waltmire says.

Inside and outside USPTO, the consensus solution for alleviating the bottleneck is to hire and retain more patent examiners (of which there were about 6,000 at the close of fiscal 2008). But therein lies a conundrum: Because the USPTO is largely self-funded by application fees and other assessments, its bottom line stands to benefit from processing more applications. Those funds could then be used to hire more examiners. However, the high attrition rate among examiners has made it difficult for the agency to handle the growing application workload, limiting the influx of funds needed to put more examiners on the payroll. What’s more, says Locke, the USPTO has endured “inconsistent funding and diversion of resources to other government activities.”

Curbing examiner attrition should be top priority, Houston patent attorney David McEwing says, because more experienced examiners tend to produce at a higher level, both in terms of quality and quantity of patents.

To address the manpower issue, Susa even suggests putting patent attorneys to work as patent examiners on a contract basis. That’s one way for them to keep busy during an application’s prolonged pendency.

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