Saratoga Business Journal, February, 2010

New Director of the U.S. Patent and Trademark Office Is Pushing For Significant Reform of the Laws Governing Intellectual Property

Current Process Is Costly and Time Consuming

BY PETER MILLER­

As previously reported in the Business Journal. legislation was introduced in both houses of Congress in early 2009 that would change the rules that govern patents and trademarks. Bills in both the House and the Senate were quite similar and could substantially change the way patents are secured and the terms of patent protection. In some cases, these changes would bring the U.S. into conformity with most of the rest of the world: in other cases, new precedents would be established. At that time, it appeared that the bills were on a fast track toward consideration by the full houses, and subsequent approval. Then came some major diversions - health care reform and regulation of financial institutions - as well as other matters that needed congressional attention. The Patent Reform Act of 2009 bills are still pending on Capitol Hill.

Gerald Dudding reviews plans with George Putman, John Bird and David Chapman

Now, there is a new director at the U.S. Patent and Trademark Office (USPTO). In June, President Obama nominated David Kappos to be Undersecretary of Commerce for Intellectual Property and Director of USPTO. He was confirmed by the Senate on August 7 and sworn in on August 13.

Kappos, 49 years old, from California, earned his BS in electrical and computer engineering at the University of California at Davis and his law degree from UC Berkeley. He also studied intellectual property law at George Washington University Law School in Washington, D.C. Mr. Kappos joined IBM as an engineer in 1983 and progressed through a number of technical and intellectual property law positions, eventually being named Vice President and Assistant General Counsel in 2003.

In his first major speech in September, Director Kappos said "The time is now to get patent reform done." He added, "Without significant improvements to our patent system, we put at risk a major source of job creation, financial security and global competitiveness." He also reported that USPTO was seeking a solution to its projected $200 million under-funding, and has requested new fee-setting authority in the legislation to reasonably compensate the SPTO for the services it performs.

Among the substantial changes in the proposed law is the requirement that patent applicants must find out for themselves whether a patent already exists prior to submitting their application. This would free up the USPTO from a sizable administrative load. The law would also adopt a “first-to-file” policy, instead of the current “first to invent” system.

As Gerald Dudding, of GFD Patents explained. "In nearly every other country, the inventor who files a patent application first has priority over all other claims. In the U.S.. our policy grants priority based on when the inventor first thought of the idea."

Dudding pointed out that the first-to-invent policy often leads to disputes. "It has given rise to an expensive, time-consuming practice in which companies have to spend millions of dollars to prove their claim or disprove others. To reduce the waste and expense of this litigation, other countries would like the U.S. to conform. It looks as if that will happen under this new legislation. Dudding added, however, that critics of the first-to-file policy are concerned that it might lead very large companies to file patent applications on virtually everything to protect their ideas. "This would give them an advantage over less wealthy inventors. Smaller inventors are more likely to wait until they have determined how valuable the concept is before pursuing a patent."

"I advise all inventors, large and small that they should not go out and publicize their invention before they file an application for a patent, even though the U.S. currently gives priority to the first to invent," he said. "The reason is, you have to prove in court that you were first, and that's expensive.

When asked what impact he thought the new director might have at USPTO. Dudding said. "I am very much in favor of this new director because he's a former practitioner, not a bureaucrat. Many in the practitioner community are hopeful that a director selected from their own ranks will foster a more collaborative environment between the office and its customers, as opposed to the more adversarial relationship that had developed under previous administrations."

"One of his first initiatives was to withdraw a set of rules that his predecessor, Jon Dudas, had hoped would reduce the growing backlog, which is estimated at between 700,000 to 1.2 million applications." said Dudding. "The proposed rules would have limited patent applications to ten claims per invention, and would have limited the number of requests for continued examination, which would limit the opportunity to amend a patent application or pursue new claims."

"Kappos also is pushing for expanding ways for challengers to ask the USPTO to examine already-granted patents or so-called post-grant review. The proposal is part of the patent reform legislation that lingered in the Senate for most of 2009. In 2009, there were 2,120 total pending re-examinations.”

"The new process would bring complaints on a broader range of challenges in front of patent judges rather than patent examiners." Dudding explained, "Some liken this to a quasi-court inside the patent office, but without the expense of formal litigation. Rulings would occur within a year from the filing date. Critics say the new review process would make it easier to launch repeated attacks against a patent and that it would pit larger, established companies against smaller firms."

In December, the USPTO announced it will implement a pilot program to expedite the examination of patent applications directed to certain green technology inventions. The USPTO's press release stated t hat the expedited examination will reduce the time it takes to patent these inventions by an average of one year. They contrasted this reduction with the current average time of 40 months to a final decision for green technology inventions.

"The biggest problem contributing to the backlog at USPTO has been that the Patent Office does not want to be wrong when they review an application, because there is a lot at stake. So they actually do a high quality job: it just takes too long," said Dudding.

The Patent Reform Act of 2009 also would give defendants additional was to combat infringement and limit damages. It requires that suits be brought only in states where the defendant has a physical place of business. It sets new rules to determine willful infringement, requiring compelling evidence that the accused intentionally copied a patented invention. And the legislation proposes tighter rules for measuring damages and establishing reasonable royalties.

For more information about the pending legislation or the new director at the Patent Office, consult www.uspto.gov. For advice about filing a patent application, contact Gerald Dudding at 383-4620, or visit the website: www.gfdpatents.com.