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Tuesday Mar 20, 2012

Increased Fees v. Operational Efficiencies

Blog by Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos

Returning to our series on America Invents Act (AIA) implementation, I’d like to focus today on an aspect of USPTO fee-setting. During a number of our recent outreach events on the USPTO’s fee-setting proposal, some stakeholders have taken the view—to caricature it slightly—that the USPTO does not need to increase fees; it needs to get more efficient.

We could not agree more on the importance of improving efficiency at the USPTO. During the last three years, we have made many improvements aimed squarely at improving efficiency. To name a few, we’ve implemented a new count system, revised examiner performance plans, established a first action interview pilot, provided training and incentives to substantially increase interviews overall, instituted the Patents Ombudsman Program, reengineered our Patent Cooperation Treaty processing, reengineered our reexamination processing, introduced important IT improvements including e-petitions, a reengineered MPEP/TMEP, and modern computing platforms, as well as expanded our Patent Prosecution Highway and other work-sharing programs to avoid duplication of efforts with international IP offices.

And we have much more coming. Many additional process improvements have been identified through our patents reengineering effort, with work already underway to improve legacy IT systems and develop new 21st century systems and processes. These improvements, coupled with the efficiency elements of the AIA such as Track One accelerated examination, will assure continued efficiency gains into the future. In fact, we will never be done looking for ways to improve efficiency, and we will never be complacent about our efficiency.

But attempting to draw a corollary between fee-setting and speculation about the possible impact of potential future efficiency gains is difficult without the benefit of hindsight. As we have outlined in our fee proposal, our fees must be set in a manner that enables us to continue investing in reducing the backlog and improving all other areas of our agency. Our experience also reminds us that implementing improvements frequently causes short term disruptions, and likely won't immediately translate into efficiencies. Anyone who runs a business will tell you that productivity investments often take years to pay off.

Moreover, my judgment as the steward of this agency is that I cannot proceed with a funding model that assumes further efficiency gains, especially if we have not yet achieved them. It places our agency at risk, and is just not right for our employees or for our stakeholders.

The responsible approach is to rely on our experience and current cost model, factoring in the efficiency gains we have achieved to date, but not speculating about possible future gains. This approach of using current costs as a basis for setting prices is the common practice among businesses, and follows the sound advice of the accounting, finance, and economics professions. 

Then the question becomes the one asked in our fee proposal: does the U.S. innovation community want us to continue investing to quickly reduce the backlog and fully capture the promise of the AIA, or does it want us to back off a bit and accept a longer trajectory to reducing the backlog, and a higher level of risk relative to future funding downturns? The answer will ultimately have consequences for the kinds of efficiencies the agency is able to realize in the future, and what level of services the USPTO can deliver in years to come.


Director Kappos: Thanks to you and your colleagues at the USPTO for your improved efficiency, communications and transparency. You have made great progress in reducing the backlog by 100,000 or so applications in a year. Keep it up. Of course it is a benefit to inventors and the public to continue reducing the backlog and to issue meritorious patents promptly. In 1849, Abraham Lincoln's patent 6,469 issued two months after his application was filed, and now your fastest examinations are once again approaching that speed. That said, when you set fees, please try to make patent filings, prosecution and post-grant as affordable you can for inventors. The proposed post-grant fees are pretty steep. Thanks again to you and your colleagues for all you do.

Posted by Richard Beem on March 21, 2012 at 06:57 AM EDT #

Dear Director Kappos, One of the great needs identified by twenty-five years worth of librarians in the PTRC (formerly PTDL) Program is to capture the data for all U.S. patents prior to 1976 in electronic, fielded format. The creation of such a searchable database will increase the effectiveness of searching US patents online; preserve the integrity of this unique record of American invention at a time when the paper indexes are rapidly disappearing from repository shelves; and facilitate further study of how, in Lincoln's words, "The patent system added the fuel of interest to the fire of genius." Thank you for considering such an idea. Dave Morrison Marriott Library University of Utah Salt Lake City, UT

Posted by Dave Morrison, Salt Lake City PTRC, Salt Lake City, UT on March 21, 2012 at 09:32 AM EDT #

Have you tried? What about advanced software that dramatically improves search, available to the public, too? What about advanced tools that use the existing classification system, include both prior art and future citations to assist? What about a new requirement that all technical keywords, terminology and product names known to the inventor must be disclosed, in a new keyword abstract?" How about a completely new taxonomy that reflects today's economy? Don't claim improved efficiency is impossible until you try. Your budget is $2.8 billion and you have a few hundred million dollars in profit sitting around. You should offer a $250,000 reward to anyone who comes up with any scheme to improve efficiency, with public review (and voting) of ideas, with runner up prizes. Perhaps the winner wins a full development contract from the USPTO. Or are you going the way of the post office and staying with 19th century methods and technology?

Posted by Kim Rubin on March 22, 2012 at 08:54 AM EDT #

Dear Mr. Kappos, I'd like to ask that you take a step back and see whether the goals of reducing backlog is worth the increased cost that the Patent Office is proposing or forcing on the user community. When an application is filed, currently there is a 2 or 3 year delay to the first office action. When the inventor receives the office action, the inventor needs to spend more money on a patent attorney to properly respond to the office action. It is during this 2 to 3 year period of time that the patentee needs to spend time to seek investors and licensee and test the market to determine how vigorously one should argue with the Patent Office to get the patent. If the patent office were to render an office action the day after a patent application is filed, then the inventor must spend more money on the patent process without this market insight. This is money that the inventor could have spent determining market receptance, investor and licensee interest. Lets take a look at accelerated examination. Everyone said that they were losing money because of the long delay in getting a patent. Is that true? We have data from the accelerated program now. If you pay $4800, then your application is pushed to the front of the line. Well only 1.3% of all patent applications chose to push their application to the front of the line. These 1.3% believed that the benefit of early examination would be worth equal to or more than the pay to play fee. Mr. Kappos. I ask that you look after the interest of the other 98.7% . It seems that everyone is so focused on reducing patent pendency that they forgot how the patent system worked. If you reduced patent pendency to zero, then you would benefit only 1.3% but hurt the other 98.7%. I think that reducing patent pendency is a good goal but I'm just asking you to find the right balance for the entire patent user community and not just the 1.3%. Thank you for your consideration.

Posted by james on March 22, 2012 at 08:55 PM EDT #

James, you made an interesting point – that a backlog gives you the chance to (better) qualify your idea (if you haven’t done so). Sure, not everyone needs accelerated examination. But you should still qualify your idea first. Then Patent and Monetize. Patents 911 Inventions through a Business Lens!/Patents911

Posted by Valentin Uncheselu on April 21, 2012 at 07:49 AM EDT #

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