by James V. DeLong
October 18, 2002

The patent system is under stress, and it is very important that its problems be fixed.

Patent issues get little press attention.  When the media notice intellectual property, they concentrate on copyright.  Everyone watches films, listens to music, and reads, so everyone is interested Napster and its progeny.  Everyone also feels qualified to have a strong opinion.

Patents, in contrast, are daunting.  An application for even a simple device -- a luggage cart handle, say – uses an argot impenetrable to the layperson, and high tech industries are more complex by orders of magnitude.  Most toilers in tech vineyards keep quiet, since commenting on patent issues would remove all doubt about our ignorance.  The field is left to patent lawyers, a few brave academicians, and in-groups of inventors, corporate patent departments, and trade associations.

The stakes in this esoteric discussion are high.  The late economist Julian Simon titled his final work The Ultimate Resource, by which he meant human intelligence.  The creativity of the species performs the equivalent of alchemy, conjuring vast wealth out of silicon and thin air, and the patent system is a key to this alchemy, the mechanism for nurturing both creativity and the investment needed to transform ideas into tangible reality.

But knowledge builds on knowledge, so the mix must be right.  Narrow the protection too much and innovation is discouraged.  Over-broaden it and innovation drowns in a morass of conflicting claims, uncertainty, and transaction costs.

Blessedly, most big corporate players are both producers of patents and users of patents held by others, which gives them incentives to get the balance right.  It is a rare situation in Washington -- businesses so uncertain where their interests lie that they are willing to seriously consider acting on principle.

Also blessedly, there is consensus on fundamentals – that patent protection is a good thing, and that the basic standards of novelty, non-obviousness, and utility are the right ones.

The problems are of two types:  speed and quality.  PTO head James Rogan notes that 350,000 applications will come in this year to join a backlog of  408,000 awaiting the attention of 3,400 examiners.  Pendency is about 24 months.  Every step is grindingly cumbersome.  Congress diverts PTO fee receipts to the general treasury.  Rogan is pushing hard for money and for support for a strategic plan that will parlay money and administrative reform to overhaul the process by, among other things, converting from paper to electronics and making searches more efficient.

The quality issues are more complicated.  They go beyond the occasional satiric example, such as a lawyer’s patent on his son’s sideways “method of swinging on a swing,” or a recently-abandoned IBM patent on reservations for restroom use on airplanes.  Bad patents, once exposed, can cause precipitous declines in a company’s market cap, and a recent Congressional committee witness estimated that 30 percent of all patents may overlap with other patents, which means that somebody has nothing.

Money, digitization, and restructuring can do much for quality, too, but substantive reforms are also needed.  Q. Todd Dickinson, who preceded Rogan, started more intensive scrutiny of patents in novel areas, such as business methods, and Rogan wants to expand the effort.  Creation of a system to allow reexamination of already-issued patents is needed.  And, as patent guru Greg Aharonian keeps preaching, existing law creates disincentives for applicants to undertake thorough searches for prior art that might cut against novelty or non-obviousness.  This, too, needs changing.  Closer international cooperation is also in train.