As you may have seen in the news (see, for example, here), Microsoft is now calling for reforms to the U.S. patent system in four areas: improving patent quality, reducing excessive litigation, improving the coordination of international patent law, and increasing the accessibility of patent laws for small companies and individuals. What’s not to like?
While some of Microsoft’s gripes are certainly legitimate, they’re not all together novel or ingenious. Microsoft General Counsel Brad Smith is advocating:
a. An end to patent fee diversion to other government uses. The U.S. Patent and Trademark Office has seen annual applications triple to more than 350,000 since the 1980s while funds to support the agency have not kept pace. Smith stated that this would best address patent quality and limit a system of “patent litigation lottery.” You’d be hard pressed to find someone who’s against this — other than the recipients of fee diversions, of course.
b. A special court to hear all patent cases at the federal district level, a la the Court of Appeals for the Federal Circuit, in an effort to bring consistency and predictability to patent litigation. Smith asked for a system that could alert the USPTO about questionable patents during the review process itself and not just after issuance through litigation, i.e., allow administrative challenges.
c. A need for patent plaintiffs to demonstrate that they or their company would face irreparable harm that could not be compensated by monetary damages before a court issues a patent injunction on a defendant. As pointed out by patent litigator Dave Schmit, the current standard for getting a temporary injunction is not different in that one must show: (1) likelihood of success on the merits; (2) irreparable harm to plaintiff, i.e., a non-economic harm that cannot be compensated for by monetary damages; (3) lack of irreparable harm to defendant in granting the injunction; and (4) that public interest is met. Therefore, it is not clear exactly what higher standard is being requested by Microsoft.
d. The coordination of international patent offices and their legal standards including mutual recognition of patents in Europe, Japan and the United States. Raise your hand if you’ve never heard this one. What, no one? Microsoft also lambastes the ‘first to invent’ standard for awarding patents pointing out the obvious that very other country applies a ‘first to file’ standard. Certainly not an original idea but maybe Microsoft has the clout to see some movement on this.
e. Finally, Smith called for the elimination of patent filing fees for individuals and small businesses. I don’t know what to think about this idea other than it seems like the way some financial aid works where income alone doesn’t really tell you the financial status of someone. Is this really the fairest system given that some individuals and small businesses have more economic power than many large businesses? What about eliminating taxes on individuals and small businesses?
At the same time, as reported in the Washington Times, the U.S. Patent and Trademark Office has begun a hiring spree to reduce an expected backlog of 580,000 applications by the end of the year. The USPTO plans to hire close to 1,800 patent examiners over the next two years, increasing its current staff of 3,800 examiners by 47 percent. This will be paid for by higher fees, which began in January and are expected to bring an extra $400 million for the patent office. I haven’t seen anyone mention the quality of Examiners to be hired, only the quantity of Examiners. Let’s hope the USPTO will put some of that scratch towards higher Examiner pay.
Last year, the patent office received 376,810 applications, up 6 percent from the 355,418 applications in 2003. About 50 percent of the requests are for technology such as semiconductors, computer hardware and software, and telecommunications. And, as many of you are acutely aware of, the average wait is about 2-1/2 years from the time of filing except that patents for computer technology and biotechnology products are taking up to five years or more. Unfortunately, everyone seems to agree that the situation probably will get worse before it gets better.
