Inventors fight fee hike, patent outsourcing

The U.S. Patent and Trademark Office wants to increase fees and require patent applicants to hire private
contractors to conduct prior-art searches for their inventions.

Kent Hoover Washington Bureau Chief San Francisco Business Journals.com

PTO Director James Rogan says these steps are needed in order to
address the office’s backlog of 400,000 patent applications and give
patent examiners more time to review increasingly complex
technologies.

"The office is in crisis, and bold action is needed," says Rogan, who
was named PTO director after losing his seat in Congress in the 2000
election.

Representatives of America’s inventors say they would be willing to pay
higher fees only if Congress stops diverting money from the patent
office to other agencies. More than $800 million in patent fees has
been siphoned off for unrelated programs over the past decade.

The Bush administration wants to use $162 million in patent fees for
other purposes next fiscal year, including homeland security.

"This diversion is a tax which decreases investment in research and
development in new technologies, and in turn diminishes the creation
of new jobs," says Charles Baker, who chairs the intellectual property
section of the American Bar Association.

"If there is a need for additional resources for some urgent program or
service unrelated to the patent and trademark systems, the president
and the Congress should explain that need, and, if the existing tax
revenues are insufficient, propose a tax increase on all citizens," says
Michael Kirk, executive director of the American Intellectual Property
Law Association. "It should not be hidden away as a stealth tax increase only on America’s inventive
community."

"My administration is making a mistake in this case," says Rep. Darrell Issa, R-Calif., founder and former
president of vehicle security systems manufacturer Directed Electronics.

Rogan, however, says the patent office "does not have the luxury of sitting back and waiting" for the day
when it can retain all of the fees it collects. It must take action now to address its growing workload, he
says, and congressional appropriators have rejected the agency’s request to hire thousands of additional
patent examiners.

"There aren’t many other options," Rogan says. "We’re hamstrung on this."

Validity of patents could be undermined

Rogan’s plan, which must be approved by Congress, calls for separating the basic filing fee into two
separate fees, one for filing and one for patent examination. This would give applicants up to 18 months to
decide if their invention has enough commercial potential to justify paying the examination fee, Rogan
says.

About 10 percent of applicants would decide to drop their applications under this change, the patent office
predicts.

The patent office also wants applicants to hire private contractors to conduct patent searches. Freeing
patent examiners of this responsibility would increase their productivity by at least 20 percent, Rogan
says.

These commercial search services would be certified by the patent office and would have to meet "the
most rigorous standards possible," he says.

But intellectual property attorneys say outsourcing patent searches is a bad idea. Patent examiners are
better equipped to do these searches because of their expertise in highly specialized areas, and private
contractors would be tempted to come up with the results that the people paying them want, attorneys
say.

"The search is part of the examination," Baker says, "and if the examiner does not do the search, it will
not be done as well, which would weaken the presumption of (a patent’s) validity. That presumption gives
certainty to U.S. patents, and without a reasonable level of certainty, investors will not invest to develop
new technology and create new jobs."

Plus the estimated $1,000 fee for hiring a private search firm, combined with increased filing and
examination fees, would increase the basic patent filing fee from its current $740 to more than $2,500,
Baker says.

These increased costs "will preclude some independent inventors and start-up companies from using the
patent system," Kirk says.

Patent office’s
proposal
• Current basic filing fee for
patents will be replaced with
separate fees for filing and
examination, giving applicants
time to determine whether their
invention has sufficient
commercial viability to proceed
with examinaion

• Higher fees will be charged for
longer applications with more
independent claims

• Applicants will pay private
contractors to conduct prior-art
searches, giving patent
examiners more time to spend
on examinations

Source: U.S. Patent and
Trademark Office
(www.uspto.gov)

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