Patents in Transition

The USPTO’s new workload raises a red flag—why can’t a user-funded agency just spend what it needs to keep up?
By Paul Craane | September 20, 2011

When Congress returned from its August recess, it passed the America Invents Act. The act represents the most sweeping rewrite of the U.S. patent code in 60 years. The solution proposed by the act to many of the problems associated with the patent system is for the U.S. Patent and Trademark Office to assume greater responsibility for the quality of U.S. patents.

Congress, however, has not expressly coupled greater responsibility with increased funding. Because the USPTO already has a sizable backlog, such news is troubling. The director of the USPTO stated in a recent interview that if the office does not have complete access to the funds it collects, then the USPTO has “no hope of implementing this legislation.”

Without a doubt, the USPTO has made significant progress recently in reducing its backlog, but more than 680,000 applications are still presently pending. As a consequence, the time it takes for an application to make its way through the examination process from filing to issuance, appeal or abandonment is approximately three years. If you decide to appeal the examiner’s rejection of your application, then expect the process to take an additional three years from the filing of the appeal to the decision.

One of the fundamental changes brought about by the act is the shift from a first-to-invent patent system to a first-to-file patent system. In the future, most disputes between competing inventors will be resolved simply by comparing application filing dates. The earliest filer will obtain the right to seek a patent. Executing such a straightforward procedure should result in time- and cost-savings for the USPTO generally, and for the newly-constituted Patent Trial and Appeal Board that will be responsible for handling inventorship disputes, in particular.

The act also gives the PTAB responsibility for three new programs that can be used to challenge an issued patent’s validity. If these programs are used extensively as alternatives to litigation, as intended, then this workload will represent a sizable burden for the PTAB, in addition to the considerable appellate backlog the PTAB will inherit from its predecessor, the Board of Patent Appeals and Interferences.

As to these three programs, inter partes review is essentially a reworking of an existing procedure, the inter partes reexamination. The BPAI, however, did not handle this program, so the new program represents a workload gain for the PTAB. The PTAB would also be responsible for post grant review, a completely new program that addresses a range of validity challenges that the USPTO has never decided previously. Additionally, the PTAB will be responsible for a transitional program used exclusively for challenging business method patents.

Furthermore, there will be a period during which existing programs dealing with inventorship disputes and validity challenges will co-exist with the new programs established by the act. For example, the USPTO will be handling inventorship disputes under the old first-to-invent law as well as the new first-to-file law for at least the next several years. 

The USPTO is not funded like other agencies, but rather is funded by user fees, meaning that each applicant is assessed an amount that the agency determines is necessary for examination of the application. According to such a system, one would expect that the USPTO could simply adjust fees to address the increased workload, as necessary.

The USPTO is not permitted, however, to spend every dollar that it collects. Like other agencies, the USPTO is dependent upon Congress to approve its expenditures through the appropriations process. Consequently, the same budget compromises that affect other federal agencies generally affect the USPTO in a similar fashion. Many commentators suggest that Congress has been essentially diverting USPTO funds to address other budget issues for some time now; the backlog suggests there may be some truth to these suggestions.

So where does that leave patent applicants? That depends on how strongly you trust the assurances of those in Congress who removed a provision of the act that would have given the USPTO the ability to avoid the appropriation process and spend all of the fees collected. The representatives who removed the provision asserted that such action was necessary to prevent circumvention of Congressional oversight and an out-of-control USPTO. At the same time, the USPTO was promised whatever access was necessary to carry out its operations. With the country’s confidence in Congress at a new low, patent applicants may have good reason to be concerned instead of reassured.

Author: Paul Craane
Partner Attorney, Marshall, Gerstein & Borun LLP
(312) 474-6623