Tech Policy Summit: Patent Office head lays out reform strategy

Tech Policy Summit: Patent Office head lays out reform strategy

Summary: The patent system is not broken, just not perfect. That is the viewpoint of Jon Dudas, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).

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TOPICS: Patents
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The patent system is not broken, just not perfect. That is the viewpoint of Jon Dudas, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).

Dudas knows his way around the patent and intellectual property worlds. He was appointed to head the USPTO in July 2004, was formerly acting Under Secretary and Director and Deputy Under Secretary and Deputy Director from 2002 to 2004, and served six years as Counsel to the Subcommittee on Courts and Intellectual Property, and Staff Director and Deputy General Counsel for the House Committee on the Judiciary. 

Speaking at the Tech Policy Summit in San Jose, Dudas said that characterizing the patent system as hurting innovation is a "fundamentally wrong" way to frame the debate. "I have traveled around the world, and every nation is thinking how it can model [intellectual property governance] after the U.S," Dudas said. "It's a proven system, over 200 years old. The Supreme Court, Congress and policy makers are involved [in cases and legal reforms] not because the system is broken. It's not perfect, and we should be having the debate on how to improve."  

Dudas' view on the health of the patent process wasn't fully shared by a panel of patent experts at the Tech Policy Summit. The critics claim that the USPTO lacks enough qualified examiners and issues too many bad patents. The delivery of patent rulings takes longer than applicants would like, slowing down the introduction of innovations into commercial markets.

The agency is trying to remedy that problem in part by hiring more examiners, Dudas told me. Last year, the USPTO hired 1,218 patent examiners, for a total of 5,500, and plans to hire 1,000 per year for the next five years.

The USPTO received in excess of 440,000 patent applications and completed 332,000 patent applications in 2006. However, the total backlog of patent applications in around 700,000.

In previous years, funds collected in the patent process were diverted from the agency, and now they have been reconstituted, allowing for the mass hiring of examiners. The USPTO budget for 2007 is $1.8 billion and the agency employs 8,500 people.

Dudas said that the average examiner salary is in six figures, and that the agency can offer competitive salaries for college graduates. The USPTO, headquartered in Alexandria, Va., is also flexible on workplace location--85 percent of trademark examiners work from home and currently 10 percent of patent examiners are working remotely. 

Dudas countered the claim that the agency issues an excess of unwarranted patents. "Only 54 percent of cases and some claims get approved," Dudas said. "Most important, our error rate [3.5 percent, based on random checks at the end of the review process] is the second lowest it's been. We are making sure to focus quality at front end in patent reform debate." 

The biggest threat today on bad quality patents is the "law of obviousness," Dudas said. The Supreme Court has heard oral arguments in KSR v. Teleflex, a case that could determine what makes up a 'nonobvious' invention. Dudas said that examiners need to be given more deference in determining what is obvious. 

Dudas doesn't believe the answer to improving the speed and efficiency of the organization is merely hiring more people and having them work at optimal production capacity. "Perfecting the system means an error rate of zero, which we are not likely to  achieve," Dudas said. "We have to get more and better information and make sure the examiners have the right tools and information to make the best decisions."

In the category of getting more information, Dudas said the having applicants submit more complete information, including their own search reports and analysis of why a patent should be granted given similar existing patents. Patent attorneys have been concerned that providing more information could be a liability. If information on a patent application is found out to be false, or a 'lie,' the application is summarily thrown out. Statues need to be changed to accommodate a standard of information accuracy that clearly allows for truly unintended misinformation.

In addition, sharing information with other countries--short of a world patent organization--could speed resolution on patent applications. Dudas cited an example of Microsoft U.S. patent information shared with Japan that led to faster approval of patents in Japan.

Allowing third-party information to be contributed to patent cases is another of the area of improvement at the front end. "We want to give third parties the opportunity to give information to the USPTO," Dudas said, "so the examiner has information from their own research, the applicant and from third parties. When examiners have all information, they almost always make the right choice."

The USPTO is experimenting with New York University on building wikis to collect data, such as prior art, from various participants and sources in the patent application process.

With the more open environment, companies and individuals could more easily game system, loading up examiners with more and more information from friendly or unfriendly parties. "We certainly can't allow having more information come in and harrassing the applicant, and we can't hold up the timing of application processing," Dudas said.

The agency is trying to improve procedures for post grant reviews, presenting a case before three USPTO judges.

Some of the proposals, such as third-party submissions and requirements for submitting information, as well as litigation reforms, require changes to laws and are part of the bill in the works from Congressman Berman and Senator Patrick Leahy due to be presented to Congress in the next few weeks.

Ultimately, "the measure of innovation and competitiveness is not the number of patents but the quality of patents," Dudas concluded. But, the measure of success for the USPTO will be the quantity and quantity of patents that it can process. Improvements are in place, but a backlog of 700,000 will take years to dissipate. 

Topic: Patents

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6 comments
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  • USPTO

    I think the problem of the USPTO is bigger than we all
    imagined. There was I thinking we needed to have a discussion
    about what fundamentally constitutes a patent, and instead we
    told that there is an "error rate" of only 3.5%. This is really
    just trivialising the issue.

    No one really believes that the (non-US) world is full of
    admiration for the US system of intellectual property
    management, Let's ask the Chinese?

    So, the problem can easily be solved in the good old US
    fashion...throw some money at it. Hire some college graduates
    and clear the backlog. And watch the $1.5 billion settlements
    follow.
    tassie_devil
  • I see that math can be patented

    Until Dudas really gets it that math, life forms (including DNA and proteins) and software alone, cannot be patented, I will have no confidence in him.

    Gene and software patents are the worst thing to happen to this country.

    Scott
    Scottman_z
  • What a Disingenuous Speech!

    Undersecretary Dudas says "[i]and every nation is thinking how it can model [intellectual property governance] after the U.S[/i]"? That's happening not because it's a good idea but because the US Commerce Department is lobbying very aggressively to get everybody else to do what the US Intellectual Property industry wants.
    <p>
    He also asserts that [i]"It's a proven system, over 200 years old."[/i] But business model patents, which are probably the most abused and the most common violators of "obviousness", are only a few years old, especially the common "Do {some normal business practice} ON THE INTERNET" business models which cropped up after the Internet became popular in the late 1990s. Even software patents didn't exist before 1979, and for the early years they had to work by pretending to describe hardware.
    billstewart_z
  • How do they know?

    How do they know what the error rate is? To know that the error rate was 3.5%, they would need to go through every single patent (issued or otherwise), determine with absolute accuracy whether it was adjudicated correctly or not...

    In other words, they would have to know whether they were right or not when they examined each and every patent. If they knew that, why would they make mistakes at all?
    fde101
    • How did this ever come about?

      20 years ago I couldn't patent our software idea, 2 years later our competition had it.
      Today if it is patentable, but too late.

      I am sorry, even thought I didn't make as much money because of no patent, it is the
      right thing for software. If we try to restrict software we will all end up worse off in
      the end.

      So what was the first software patent?
      LittleGuy
  • PATENT Process is BROKEN!!!

    What a lie... We did a patent in 2000, we tried and tried to get answers, no one to talk to, email, contact. Send data and it goes into a big black hole. Then they come back with bull about people that have filed AFTER our patent, probably looking at it in the internet. What would I do different, never patent, keep closely held and never do anything with the patent office again... Just sue in court later is all!!! The patent office is broken and it has cost my company time, investment money, and loss of business. As a SMALL company, the patent office is non responsive and does not work with anyone at all.
    dragonjohn77070@...