USPTO Proposes Revised Strategic Plan

Business Intelligence Unit, Thomson Scientific, July 2003

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Introduction
The challenges
Addressing the challenges
Further information


Introduction

The average patent submitted for approval in the United States could take up to 40 months to reach approval in 2008, considerably longer than the typical 24 months needed for approval now. This grim forecast was reported in April 2003 by James A. Rogan, Director of the United States Patent and Trademark Office (USPTO), in his Congressional testimony to the House Subcommittee on Courts, the Internet and Intellectual Property. Rogan warned Congress that the applications backlog could reach over one million by 2008 – more than double today’s level.

During his testimony, Rogan presented his agency’s Revised Strategic Plan to the Committee. The revised plan presents the steps Rogan proposes to solve the problems faced by the USPTO.⁽³⁾

The challenges

The lengthening patent process results from outdated procedures, inadequate staffing, lack of adequate funding for the USPTO, and the diversion of USPTO funds. Federal funding and user fees fund the USPTO; however, some of that money is dispersed to other agencies.

Patent applications continue to increase in complexity and in number. For example, biotechnology patent applications increased to 47,473 in 2002 from 18,695 in 1996 (a 154% increase). In contrast, over the same period, there was only a 12% increase in the number of patent examiners. The biotech industry suffers as the backlog prevents many new drugs from reaching the market, with each patent-pending drug representing enormous financial investment and risk.

Janice T. Bourque, President and Chief Executive Officer of the Massachusetts Biotechnology Council, in speaking out about the problem of diversion of USPTO money, notes that about $650 million in USPTO funds has been “siphoned off” to other non-USPTO needs in the past 10 years. Bourque states, “The USPTO cannot address the increasing number of patents and their increasing complexity if its funds are continually diverted to other users.” ⁽⁴⁾

The backlog issue was also addressed in a joint letter submitted in October 2002 to Mitchell Daniels, then head of the US Office of Management and Budget. The letter was signed by representatives of four groups: American Intellectual Property Law Association (AIPLA), Biotechnology Industry Association (BIO), Intellectual Property Owners Association (IPO), and the International Trademark Association (ITA). The letter states, “the USPTO is in crisis.” It notes that the anticipation in increased pendency times [average time in months from patent filing to either issuance or abandonment], which may extend “to six years in some critical technologies,” is an “unacceptably long period of uncertainty for those desiring to avoid infringement. …[I]t also significantly lessens or removes incentives and protections of the patent system since the commercial life for such technologies often tends to be shorter.” These groups have since endorsed the Revised Strategic Plan presented by Rogan.⁽²⁾

Addressing the challenges

The USPTO Revised Strategic Plan announces several initiatives to address the backlog including streamlining, updating USPTO patent approval procedures and increasing USPTO funding resources. During his statement before Congress in April, Rogan noted that the current executive branch of the government, including the Office of Management and Budget, supports his plan. Rogan stated that he hopes to be able to increase fees by 15%. He described the newly proposed fee structure as a “linear fee system to ensure that fees charged for excessive claims and pages of complex specifications are proportional to the increased processing claims.” The House Committee approved the proposed fee structure on May 22, 2003.⁽⁶⁾ Rogan also noted that President Bush cut the “fee diversion” by nearly 50% in the Administration’s fiscal year 2004 budget request.

In addition to the funding proposals, the Revised Strategic Plan promises an overall focus on quality with specific initiatives to promote improved timeliness of procedures and transition to an electronic process. There are 37 “action initiatives” in the Revised Strategic Plan.

Rogan highlighted the following goals:

• Enhance the quality of patent and trademark examining operations through consolidation of quality assurance initiatives
• Accelerate processing time by transitioning from paper to e-government process for trademarks by November 2, 2003 – in tandem with the Madrid Protocol. [The Madrid Protocol allows for a single trademark application, filed in accordance with the Protocol procedures, to protect that trademark in member countries. There are now over 50 member countries from Europe, Asia, Asia Pacific, Africa and the Caribbean.]
• Deliver an operational system to process patent applications electronically by October 1, 2004, including electronic time capture of all incoming and outgoing paper documents
• Control patent and trademark pendency and reduce time to first Office actions
• Competitively outsource patent applications classification and search functions and concentrate Office expertise as much as possible on the core examination functions
• Provide for the hiring of almost 3,000 new patent examiners over the next five years
• Ensure proper training and certification of examiners

In the area of outsourcing, Rogan noted, “The USPTO has relied upon the European Patent Office’s (EPO) search examiners in The Hague to perform searches of applications filed under the Patent Cooperation Treaty. …[T]he results to date on more than 75,000 searches conducted by the EPO over the past four years have been positive and confirmed through extensive surveys of US patent applicants who have consistently expressed the view that EPO searches are high quality in nature.”

Industry reaction

Though generally supportive of the USPTO proposals, many are still urging caution. Michael Kirk, Executive Director of the American Intellectual Property Law Association, stated in an interview for the New York Law Journal, that “… [funding] diversion has been reduced and they hope to get rid of it in the future…But at the end of the day, they’re still doing it.” Others adopt a “wait and see” attitude as they anticipate the implementation of initiatives outlined in the Revised Strategic Plan. ⁽⁷⁾
Many who urge caution note that the USPTO may continue to see its funds diverted to solve problems aggravated by the increased US budgetary deficit.

Thus the USPTO is working to address the patent backlog/pendency times, but it will obviously take time before the new systems and examiners are in place – and if the pace of innovation continues, the backlog may continue to get worse before it gets better.

Further information

Under Secretary Rogan’s Statement before the Subcommittee on Courts, the Internet and Intellectual Property

USPTO 21st Century Strategic Plan: www.uspto.gov/web/offices/com/strat21/action/actionpapers.htm

American Intellectual Property Law Association: www.aipla.org

Biotechnology Industry Organization: www.bio.org

Intellectual Property Owners Association: www.ipo.org

International Trademark Association: www.inta.org

Sources:

• [1] Budget Squeeze Seen Delaying Patent Applications Decisions. Federal Technology Report. December 12, 2002.
• [2] Letter to Mitchell E. Daniels, Office of Management and Budget, October 24, 2002, from the American Intellectual Property Law Association (AIPLA), Biotechnology Industry Association (BIO), Intellectual Property Owners Association (IPO), and the International Trademark Association. (INTA).
• [3] Hartman, Carl. “What the Patent Office Needs: an Invention to Cut the Backlog,” Associated Press. April 18, 2003.
• [4] Biotech Industry Hopes Higher Patent Applications Fees Could Speed Process. Boston Globe. April 23, 2003.
• [5] Statement of James E. Rogan, Under Secretary of Commerce for Intellectual Property and Director, USPTO, before the Subcommittee on Courts, the Internet and Intellectual Property, Committee on the Judiciary, US House of Representatives, April 3, 2003.
• [6] House Committee Approves Fee Proposal. USPTO Press Release. May 22, 2003.
• [7] Loomis, Tamara. Opposition to Reform Has Scaled Back PTO Overhaul. New York Law Journals. February 18, 2003.