The U.S. Patent and Trademark Office has become overwhelmed by the growing volume and complexity of the applications it receives, creating a massive backlog that by its own reckoning could take at least six years to rectify, according to an analysis by the Milwaukee Journal Sentinel. The USPTO took 3.5 years, on average, to review each patent it issued in 2008 — more than twice the agency’s benchmark of 18 months to process a patent request. In fact, the last time the Patent Office met its own benchmark was 1991. The total number of applications awaiting approval — more than 1.2 million — has nearly tripled from 10 years ago. Of 1,349 patents issued to Wisconsin inventors last year, 123 took at least five years to issue, with some taking as long as nine years, according to the Journal Sentinel, which also found:

• Under a practice that Congress authorized a decade ago, the USPTO publishes applications on its web site 18 months after the inventor files them, outlining each innovation in detail regardless of whether an examiner has begun considering the application. The system invites competitors anywhere in the world to steal ideas.
• Between 1992 and 2004, Congress siphoned off $752 million in fees from the USPTO to pay for unrelated federal projects, decimating the agency’s ability to hire and train new examiners during that time. “If we had hired an additional 250 to 300 people each year through those years, we’d be at 18 months right now,” says John Doll, the USPTO’s acting director until the Senate confirmed former IBM executive David Kappos as the agency’s new leader on August 7.
• In conjunction with its growing backlog, the USPTO has been rejecting applications at an unprecedented pace. Where seven of 10 applications led to patents less than a decade ago, fewer than half are approved today — a shift that a federal appeals judge termed “suspicious” while characterizing the Patent Office as “practically dysfunctional.”
• Staff turnover has become epidemic. Experts say it takes at least three years for a patent examiner to gain competence, yet one examiner has been leaving on average for every two the agency hires.
• Many applications languish so long that the technology they seek to protect becomes obsolete, or a product loses the interest of investors who could give it a chance at commercial success. “Patents are becoming commercially irrelevant to product life cycles,” says John White, a patent attorney and former examiner.

Here’s a real-world example of how the PTO’s “dysfunction” can wreak havoc on technology commercialization efforts: MatriLab Inc. was a Milwaukee biotech company formed to commercialize a wound-healing gel based on technology licensed from the University of Wisconsin-Madison. Backed initially by the Wisconsin Alumni Research Foundation, MatriLab won the governor’s business plan contest in 2006. It went belly up in 2007, five years after a patent application was filed for the gel, because no new investors would come aboard as the application languished. “The absence of patent protection says to investors, ‘Maybe these people really don’t have anything,’” comments Grady Frenchick, a patent attorney with Whyte Hirschboeck Dudek in Madison who represented MatriLab. Kathleen Kelleher, CEO of the short-lived start-up, went on a 20-stop investor road show. But without a patent in hand, she couldn’t raise a penny. A patent was finally awarded for the compound this year; it went to WARF, which reclaimed its license when MatriLab ran out of cash. MatriLab ended up with nothing.

The U.S. patent system has bogged down just as other developing economies are ratcheting up efforts to innovate and protect their inventions. Because a patent carries legal force only in the nation of issue, developing economies striving to commercialize their technologies have added to the USPTO workload. In 2008, about 49% of U.S. patent filings came from foreign inventors — mainly Japan, South Korea, and Europe. Last year, for the first time, the agency issued more patents to foreign inventors (80,271) than to U.S. innovators (77,501). During his Senate confirmation hearing, Kappos said his No. 1 priority is to shorten the amount of time it takes to get a patent without sacrificing quality, but few expect change to come quickly. Previous efforts to expedite applications had little impact. Three years ago, Doll introduced a program called Accelerated Examination, meant to render a decision within 12 months. Only a fraction of applicants use it, patent attorneys say, because it saddles users with extra costs and creates a potential legal liability that may invalidate patents in court. “Since the ’60s, there’s [been] an under-appreciation of the importance of the Patent Office to our whole economy, to employment, to prosperity,” says Paul Michel, chief justice of the Court of Appeals for the Federal Circuit, which handles patent appeals. “It’s been neglected by the Congress and most high-level policy-makers.”

Source: Milwaukee Wisconsin Journal Sentinel

Posted August 19th, 2009 under Tech Transfer

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