Patent Backlog Is Clogging Job Growth

The greatest stockpile of unused, cutting-edge technology in the world is sitting in a warehouse in Northern Virginia gathering dust, author Pat Choate told Yahoo Finance Wednesday morning. The warehouse, Choate said, belongs to the U.S. Patent and Trademark Office (USPTO), and the stockpile is a backlog of 1.2 million unexamined patent applications.

A number of analysts claim that unclogging this patent build-up at the USPTO -- by ending a diversion of funds that has left the agency underfinanced -- could jump-start job creation in America.

Henry R. Notthaft calls the patent office the "biggest job creator you never heard of" in a recent Harvard Business Review article. "It is [the USPTO], after all, that issues the patents that technology startups and other small businesses need to attract venture capital to pay salaries," says Nothhaft in a separate New York Times op-ed. Increased funding at the patent office will reduce delays and result in the issuance of more patents. Nothhaft insists that this will lead to more innovation and more jobs.

But since 1992, Congress has diverted more than $750 million in patent fees from the USPTO to other purposes. Without the money, the agency hasn't had the resources to deal with the threefold increase in patent applications over the past 20 years. Today it takes an average of over three years for inventors to get a decision on a patent, which is at least twice as long the average wait time 15 years ago.

"Hundreds of thousands of groundbreaking innovations are sitting on the shelf literally waiting to be examined," David Kappos, Director of the USPTO, told an audience at a biotechnology conference earlier this year. "[This results in] jobs not being created, life-saving drugs not going to the marketplace, companies not being funded, businesses not being formed," Kappos added.

And while many say patents spur entrepreneurship because they give inventors a stronger incentive to invent, and offer venture capitalists more reason to open their wallets -- others disagree entirely.

Patents, they argue, do not increase incentives to invent, and are not vital to startups getting financing. In fact, they can harm innovation because they breed intellectual property battles that stall billion-dollar innovations over patents worth far less. Often these legal battles are between large technology firms and so-called "patent trolls" -- firms that buy up patents with the sole intention of shaking down large companies that allegedly infringe on them. As the Economist notes, a group recently found that these types of cases have risen from 109 in 2001 to 470 in 2009.

As the flood of patent-marking lawsuits continues to flow, and the debate spills into Congress, legislation to fix America's broken patent system remains tied up in the Senate.

Comments

[bynddrvn5]

06:05 PM on 09/13/2010

The largest issue with patents, is that there are not enough classifications of patent types for the modern day world. Almost, all of the complaints come from software patents, and there should be a separate classification for these types of patents.

Some companies took mechanical patents, changed the design slightly and applied for their own patent. As a consequence, patent attorneys started to write their patent applications to cover the original idea and anything similar. This creates a huge issue in the software patents, when many ideas are going to be similar due to the nature of the business.

I think there should also be a low cost "public good" patent classification, where patents that have a very limited business or low return of investment potential, but high science value could be patented. For example, if someone comes up with a new space propulsion system - they would have very few customers, but the idea may lower the cost of space travel, or would allow us to go further into space than is currently possible.

The original idea of patents is to reward creative ideas that advance technology and our understanding of science. We need to fix the system, not end it.

[rjmiller]

03:36 PM on 09/13/2010

The problem isn't entirely with funding of the USPTO, it's with the entire patent system. A lot of patents are no longer filed for actual tech innovation, but simply to stop inevitable lawsuits. Take the Apple v HTC dispute as an example; two companies literally comparing their nearly-identical patent portfolios in a game of billion-dollar Go Fish.

"Do you have a patent on phone unlocking by sliding?"
"Do you have a patent on the finger-moving-up scrolling gesture?"

What a waste of time.

[Sean 6399]

08:53 PM on 09/12/2010

Typical.

Issuing patents is one of the very few enumerated duties of the federal government actually in the U.S. Constitution, and government won't do it because they'd rather work on an infinity of global meddling and social engineering schemes that are not in the Constitution.

[guveqzero]

01:17 PM on 09/12/2010

I have been waiting 3 years to get a result, issued or rejected. The process can only be mitigated by established companies, not new ones or individuals seeking investors.

[banker67]

04:46 PM on 09/11/2010

Proposal: Release into the public domain, all patents on viable alternative energy products that are owned by oil and coal companies.
There is no justification -- legalities be hanged -- for allowing fossil-fuel corporate giants to block development of alternative energy. Even if such attempts are mostly urban myth, such a gesture would clear the air, literally.

[guveqzero]

01:23 PM on 09/12/2010

Pretty much, that is the case today. The purpose of the patent process is to spur on the creative work, not just protect some rights. The only people that can withold publication is the military or other reasons of national security. Like, how to refine nuclear materials.

[rtx47]

03:47 PM on 09/11/2010

We cannot rely on foreign consumer to save American jobs. We have to move beyond the left-wing mantra of govt spending more money (which it does not have) and the right-wing mantra of less taxes and govt expenditure leads to economic growth (with federal deficits). The challenge is to create American consumers and to provide American jobs. This can be done through fined-tuned careful planning.

The reason home-buying is flat is because people cannot afford the high mortgages on the high priced home. The reason why the home-building industry embarked on high-priced home is the same as the US auto industry; which embarked on making larger cars; leaving the small car segment to foreign manufacturers. Reason - there is higher unit-profit with high-ticket items (greater profit for less work).

If government encouraged building of medium priced homes ($75,000 - $150,000) one would create construction and allied jobs and help middle class. Building of medium-priced homes could be encouraged by capping home mortgage deductions on taxes.

This same principle can apply to various sectors of the economy. Thus without increased govt expenditure, the govt would stimulate the economy. America was built on a low-profit and large volume model (economy of scale). Somewhere along the line we (the auto, home-building and other industries) forgot the very successful Henry Ford business model for autos.

[OldCowboy]

11:39 AM on 09/11/2010

There is an old joke, "If pro is the opposite of con, what is the opposite of progress?" Unfortunately, it's no longer funny as Congress continues to continues to adversely impact those government functions that are essential to progress in America.

[mashtoe]

02:18 AM on 09/11/2010

The whole patent system needs to be scrapped.

[JScott]

10:13 AM on 09/11/2010

Oh yeah let the 'free market' take care of it.....so those who did the grunt work won't ever see the fruits of their works. Then they can be ripped off for pennies if that.

[Anthony Dolce]

08:01 PM on 09/10/2010

Looks as though this is an area where the "Help Wanted" sign should be turned on....

[sorosis]

06:33 PM on 09/10/2010

Look they are our vaulted Civil Servant's that barak keeps touting. They spend a good part of their day downloading p0rn and going to school during the day thanks to tuition assistance

[BBackSoon]

11:19 PM on 09/10/2010

What a stupid comment.

[vgirl1]

11:01 AM on 09/11/2010

And just what is your daily contribution besides attacking workers?

[Milash]

06:13 PM on 09/10/2010

Considering how much it actually costs to file a patent and prosecute it to issue, it amazes me that they don't have enough funds. The USPTO has been a fairly ineffective institution for quite some time.

[BBackSoon]

11:20 PM on 09/10/2010

Did you read the article? It said that the money is redirected away from the patent office by congress since '92.

[Milash]

11:24 PM on 09/10/2010

Are you always this big of a dbag?

[Rotobabe]

04:08 PM on 09/10/2010

One of the quickest ways to fix the backlog is to open Regional Patent Offices in 2-4 other cities, such as Chicago, LA, SF, Dallas/Houston. The biggest problem with the current USPTO is that they are trying to hire Examiners from the greater Washington DC area, and there are thousands of unemployed scientists in other cities who could become Examiners immediately. Regional patent offices also allow those of us on the West Coast and mid-West to have face-to-face interviews, which ALWAYS result in quicker patent prosecution. Fee diversion is not the sticking point - it's competent and numerous candidates for Examiner positions.

[Milash]

06:14 PM on 09/10/2010

Good idea.

[sorosis]

06:34 PM on 09/10/2010

how would that help it will still be staffed by federal civil sernavts who have 0 accountability?

[BBackSoon]

11:21 PM on 09/10/2010

Tr0ll.

[vgirl1]

11:03 AM on 09/11/2010

It is usally the laziest who criticize other workers.

[verycold]

03:57 PM on 09/10/2010

My husband has filed a few patents.  The point is they file EXPECTING to get a response in their lifetime.  So even if there are trolls, which is another problem from the filing, the system should work. 

As with most issues, there are two sides of the coin which should be debated.  So how about we fine tune this engine and get it working. 

[PeaceBunny00]

03:10 PM on 09/10/2010

y don't we create some jobs and get some people in the patent office to sort thru the applications!!!!!!!!!

[FoonTheElder]

02:24 PM on 09/10/2010

If the government would quit allowing corporations and people to patent everything under the sun, including the sun, just so they can sue someone somewhere down the line, maybe there wouldn't be such a backlog. 

"People will patent, or try to patent anything," says Parker Bagley, a partner in the IP group at the New York City office of law firm Milbank, Tweed, Hadley & McCloy LLP. "It's a problem for a lot of deep-pocketed companies." Not only are they facing infringement claims from competitors in their own industries, but increasingly they are attracting so-called "patent trolls"—which Bagley defines as "small holding companies, or individuals, who generally have no business other than exploiting their patents."

"Some of these are utterly obvious," complains Jim Shepherd, vice president of research at AMR Research, in Boston. Business methods such as Amazon's 1-click purchase and Priceline.com's reverse auction method—a computer-assisted variation on the Dutch auction, which has been around for centuries—don't deserve patent protection.  Inherently, I think that it damages competitiveness and limits innovation," he adds, noting that patent law was intended to do the opposite. "

http://www.cioinsight.com/c/a/Trends/Intellectual-Security-Patent-Everything-You-Do-Before-Someone-Else-Does/

[MaxProgressive]

04:34 PM on 09/10/2010

Thank you for your comment. Before reading your comment, I was starting to create a comment similar to yours.

[Legalize]

05:13 PM on 09/10/2010

Awhile back I worked as an independent patent searcher at the USPTO in Arlington VA, and it was a microcosm of what i saw in other agencies.

Overwhelmed patent examiners, pressured for volume, a pro-business appointed head of the agency totally at beck and call of industry, particularly the drug industry.