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October 22, 2007

Insignificant Billions

Richard B. Belzer, on behalf of masked men, ran numbers from masked men that led him to conclude that the USPTO's proposed prior art Information Disclosure Statement (IDS) rules related to the pending 5-25 examination rules are economically significant, contrary to patent agency assertion. As in, $7.3 billion a year significant. As former Senator Scoop Jackson of Washington state once mused: "a billion here, a billion there; before you know it, you're talking real money."

Mr. Belzer, on fear for his clients:

I decline to reveal the identity of my clients. They have persuaded me that there is a reasonable expectation that revealing their identities could result in financially devastating retaliation with respect to patent applications now in process or which they would submit to USPTO in the future.

Belzer on patent office statement in its notice of proposed rule making (NPRM) regarding economic significant:

USPTO does not disclose any analysis of benefits, costs, or other effects in the NPRM. The entire relevant text reads as follows (71 Fed. Reg. 38819):

Executive Order 12866

This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

USPTO did not perform a Regulatory Impact Analysis (RIA), nor did it disclose the basis for its determination that the proposed rule is “not significant.”

“Not significant” under EO 12866 normally is limited to regulatory actions that have minor consequences and elicit little or no controversy, such as housekeeping actions, and matters for which the agency is willing and able to perform internal oversight equivalent to that of OMB.

Significance as a starting point, according to Belzer:

From the number of public comments submitted to USPTO (65), it is clear that the proposed IDS Rule is at least “significant” under EO 12866. From the contents of these comments, there is a prima facie case that the proposed IDS Rule has effects exceeding $100 million in any one year, and thus is “economically significant.”

Belzer redacted the identity of his first consultant on the matter -

In this declaration, the affiant estimates that the cost of complying with the major provisions of the proposed IDS Rule is about $7.3 billion per year:
    • Applications in which more than 20 references are cited: $3.4 billion per year
    • Additional explanations of foreign-language or moderately long references: $2.4 billion per year
    • Requirements for citation of references after first Office action on the merits: $2.1 billion per year

That startling result led Belzer further into the intrigue, gathering an anonymous consensus review that paved the road to a town called Irrefutable:

Based on my expertise in regulatory analysis, and more than 20 years’ experience reviewing such analyses (including 10 while employed as an economist at OMB), I am virtually certain that the proposed IDS Rule is economically significant and thus warranted the preparation of an RIA in accordance with the guidelines set forth in OMB Circular A-4.

Furthermore, based on my governmental experience it is inconceivable that USPTO could be unaware of the approximate magnitude of these costs, or that it employed any reasonable economic method or logic to determine that the proposed rule was “not significant.” The Declaration gives a useful first-order approximation of cost that USPTO itself could have performed during the regulatory development process and long before the Office proposed it in 2006. Had the Office done so, it would have known with reasonable certainty that the proposed IDS Rule could not legitimately be classified as “not significant,” and that an RIA containing the information required by Section 6(a)(3)(C) would be necessary. One can infer with reasonable certainty that USPTO deliberately evaded the requirements of Executive Order 12,866.

USPTO is required, pursuant to OMB’s and is own information quality guidelines, to adhere to the principles of substantive and presentational objectivity in the dissemination of influential information. The proposed IDS Rule was covered by these guidelines, but USPTO did not disclose any credible information about its cost. This is per se a violation of both substantive and presentational objectivity. The agency could not reasonably have believed that the costs of the proposed IDS Rule were trivial and thus not worth mentioning, and its failure to disclose an unbiased cost estimate was knowingly misleading.

Belzer's statement.

A hat tip to a masked man; you know who you are.

Posted by Patent Hawk at October 22, 2007 11:01 PM | The Patent Office


Actually, it was Everett Dirksen, who also said:

“I am a man of fixed and unbending principles, the first of which is to be flexible at all times.”

Posted by: Kevin E. Noonan at October 24, 2007 4:16 AM