by Jake Meyer

Previously, I discussed a proposed reform to the patent system: changing from a first-to-invent regime to a first-to-file regime.  This is just one of many proposed reforms being considered by Congress, as a part of two different bills.  An article published this week in Nature highlights how current proposed reforms to the U.S. patent system may appropriately address criticisms of U.S. patent quality.  The U.S. Patent and Trademark Office (USPTO) is understaffed and underfunded, which contributes to decreased patent quality.  Proposed changes to the U.S. patent system should help the USPTO to accumulate more resources, which should lead to higher patent quality.

An increasing number of patent applications are filed with the USPTO every year (from 355,000 in 2003 to about 495,000 in 2008).  The USPTO has a high turnover rate, where for every two examiners hired, one examiner leaves.  An examiner at the USPTO has about 20 hours to examine a patent application, which includes reading the patent application, searching through databases to determine if the subject of the application is novel and non-obvious, and to write a twenty page report on whether the subject of the application is patentable.  Despite the limited time spent on each patent application, an understaffed USPTO cannot examine the increasing number of patent applications filed which has lead to a growing backlog of unexamined patent applications (770,000 patents in 2008).  Currently it takes about 2 years to before a patent application is examined.

The USPTO collects about half of its income from fees for issuing patents, or for maintaining patents (fees must be paid every 3 ½ years to keep the patent enforceable).  However, recent attempts to increase patent quality has lead to more patent applications being rejected and therefore the USPTO is actually receiving less income for rejecting more low quality patents.  One of the proposed reforms to the patent system is to allow the USPTO to set its own fees, as opposed to Congress setting the fees.  By allowing the USPTO to set its own fees, the USPTO can increase the income received from fees for actions other than issuance and maintenance of patents to compensate for the decreased amount of fees that are collected when more patent applications are rejected for the sake of improving patent quality.

By increasing the resources available to the USPTO, more examiners can be hired to tackle the increasing number of filed and backlogged patent applications.  However, for this measure of allowing the USPTO to set its own fees to be effective in increasing the resources available to the USPTO, the fees collected will need to remain the resources of the USPTO and not be diverted.  This hasn’t been the case in the past. Between 1992 and 2000, $750 million were diverted to fund other programs.  To make this measure effective in providing more resources to the USPTO and improving examination quality, Congress should consider prohibiting the diversion of the fees collected by the USPTO to other programs.