Patent Reform and the President-Elect: A Closer Look

Wealth of Ideas Newsletter, December 2008

In our pre-election issue of Wealth of Ideas (November 2008), we compared technology platforms of both John McCain and Barack Obama with regard to their ideas on patent reform and patent protection—both here in the US and around the world.

Now that Obama has emerged victorious and his cabinet is almost completely filled, what more do we know about his plans for patent reform?

Obama’s transition website – www.change.gov – features his technology policy unchanged from his campaign website, www.barackobama.com. No new clues there.

But we do know that Obama has chosen Reed Hundt, who was President Clinton’s FCC Chair from 1993 through 1997, to work on his agency review team in charge of international trade and economics agencies. Hundt had some interesting ideas about the US patent system and patent reform, as put forth in an editorial he wrote for Forbes.com in January 2006. Some of the highlights from that article (all quotes are Hundt’s, emphasis ours):

• “We should slash the number of patents granted each year by 90%. In 2004 the U.S. Patent &Trademark Office issued 165,000 patents. Sixteen thousand is more like an optimal number. This should be easy to accomplish because most technology should not be patentable.”

• “We need to spend more money on the system. The budget of the U.S. Patent & Trademark Office is $1.5 billion. That [budget] ought to be tripled to $4.5 billion.

• “We should introduce an element of privatization into this public system. Firms ought to be able to pay for fast-track patent approval and for the ability to challenge a patent after it's been issued. Currently it can cost hundreds of thousands of dollars to file and prosecute a patent application. For a set dollar amount--say, $500,000--a firm ought to be able to buy a guarantee that its patent application will be reviewed and accepted or rejected within one year. The average application now takes 29 months to be processed.”

Hundt is correct that many worthless patents are issued every year (though there will be fewer in the wake of the landmark Bilski decision,, which put a stop to business method patents not related to a device). He’s also right that the USPTO is overworked, overwhelmed and understaffed, and that the process of getting a patent is lengthy and arduous. But we see a lot here that should trouble both inventors and taxpayers.

Hundt’s editorial was written in 2006, before the nation’s economic woes began in earnest – but how much can we realistically increase the USPTO budget? Where will the money come from? And if the number of patents is decreased by 90%, do we still have to triple the budget?

More troubling for small businesses and inventors are Hundt’s ideas on introducing a dramatically low cap on patent issuance and allowing big companies to pay for preferential treatment and “fast-track patent approval.” Is this a “change we can believe in?”

Obama takes office on January 20, 2009, and he and the 111th Congress will doubtless have several economic fires to put out before moving on to something as complex as patent reform. We will continue to monitor the issues and report on patent reform developments here in Wealth of Ideas and also on our Wealth of Ideas Blog.

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