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June 26, 2009

Convenience of Coincidence

Decisions made at the UPSTO have ironically spawned an anti-patent culture at the very institute created to protect innovation. These decisions have consequences. Conveniently though, the US economy has tanked, providing the PTO with a thick sheet of smoke to help veil countless managerial missteps. Knowing his role as smoke machine, Acting Director John Doll recently provided a financial update of the patent office, transferring blame and hoping for a bailout.

From the USPTO Broadcast:

Back in March, I provided you an update on the budget challenges facing our agency. Today, I'd like to let you know where we stand and what steps we're taking to address these challenges.

As you know, the USPTO is funded solely by user fees. This process means the USPTO develops its budget based on projected fee collections. As the economy has worsened, fewer people have applied for patents or paid to maintain the ones they have. Declines in trademark filings continue to be experienced too. Thus, the agency has seen significant reductions in revenue.  As a result, a serious budget situation has developed.

Right now, we are operating at a "break even" level. This means, if the current pace of fee collection holds, the USPTO expects to finish FY09 without a budget shortfall.

But just getting to "break even" in this climate has required sacrifices. In response to the decrease in fee collections, we have enacted a series of budget cuts and cost-savings measures, which have resulted in more than $120 million in savings. Thus far, we have instituted a hiring freeze, curtailed non-bargaining unit performance awards, stopped overtime, and significantly reduced contracts, travel, supplies and other non-essential overhead expenses.  These cuts, while necessary, have been difficult, and I want to personally thank you for your understanding.

With the support of Commerce Secretary Locke, we are also seeking further cost-saving measures, which will save an additional $20 million in FY09.

All of this has been done with an eye toward avoiding furloughs.

Yet we know that in the current economy, fee collection could continue to decline. The USPTO and the Department of Commerce are monitoring the situation on a daily basis, and out of an abundance of caution, we are asking Congress for its help. We're now putting forward a number of different options to bridge any possible gaps, and we'll also be soliciting ideas from members of Congress.

We will continue to keep you apprised of any new developments, and I thank you again for your support during this challenging time.

Doll assumes no responsibility for declining fee collection. Any idiot can see the most likely cause of revenue reduction: decreasing allowance rates from over 70 percent to around 40 percent in less than 10 years, therefore crippling maintenance fee collection; and, declining applicant morality due to this new found rejection mentality, leading to decreased filings. This particular idiot is apparently too lazy or too stupid to enact any real meaningful change.

While cutting spending through a hiring freeze, curtailing performance awards, and eliminating overtime may provide temporary relief, these measures may also drastically increase pendency rates, providing additional disservice to already dissatisfied applicants.

Posted by Mr. Platinum at June 26, 2009 1:00 PM | The Patent Office

Comments

I still don't see what is so hard to understand... application filings are much more than they were 10 years ago, and the introduction of PGPUBS back in 2000 (?) both contribute to more prior art available to examiners. More prior art = more rejections, and therefore less allowance.

Posted by: Jules at June 27, 2009 6:38 AM

Wouldn't more prior art yield more innovation and thus less rejections based on how the theory of even granting patents is supposed to work (to spur innovation)?

Posted by: breadcrumbs at June 27, 2009 6:43 AM

In the long term that may be true, but 10 years is not a long time. If the average pendency is 3.3 years, then 10 years is only 3 generations of patents. That's not a long time at all to make any definitive conclusions especially considering how many substantial factors are at play in the short term.

Posted by: Jules at June 27, 2009 7:01 AM

breadcrumbs,

Your theory would also hold IF people were encouraged to review the prior art.

The directions that I receive and that inventors of Large Corp receive to purposely avoid reading recent prior art in fear of treble damages sicken me. I rail against the Office often - here I rail against the applicants.

Jules,

Regardless of the 3.3 year average pendency, most all art is available at the 18-month publication mark. Four generations in ten years IS long term. There is no viable excuse for NOT taking into account what is published - the fact of more prior art is not theoretically causally linked to more rejections. Rather, more rejections are more plausibly linked with my response to Mark Nowotarski at the Patently-O thread: http://www.patentlyo.com/patent/2009/06/timeline-of-the-bpai-backlog.html

Posted by: Noise above Law at June 27, 2009 8:17 AM

"the fact of more prior art is not theoretically causally linked to more rejections."

Actually, it is. See my first comment above.

Office actions 10 years ago did not consider PGPUBS, and therefore had less 102(e) rejections and 103 rejections based on 102(e) art.

With the tremendous amount of information now available, with PGPUBS and other advances having become available in the last 10 years, can you honestly say with a straight face that 10 years is a long time in patent law which is based on prior art? I don't think so. Ten years is a short amount of time for the impact of PGPUBS and increased filings to take their toll.

Posted by: Jules at June 27, 2009 9:24 AM

"Any idiot can see the most likely cause of revenue reduction:"

Filing fees being 1k dollars while maintenance fees are huge to make up for it?

I agree.

Posted by: 6 at June 27, 2009 1:05 PM

Remember all of those application filing fees paid (and maintenance fees paid) for applications filed a year or two ago. All of those monies were spent by last administration and now are not available for current examination. Sounds like we suffered from a Madoff ponzi scheme to me.

Posted by: John Prosecutor at June 27, 2009 9:24 PM

did this director play in a band called smashing pumpkins?

Posted by: Jimmy' s IP emporium at July 2, 2009 11:42 AM