Patent, Trademark & Copyright : Law Office of Kloss, Stenger & LoTempio

On June 23, 2011, the House of Representatives overwhelmingly voted 304-117 to pass H.R. 1249, a bill sponsored by House Judiciary Committee Chairman Lamar Smith (R-Texas), also known as the America Invents Act, to overhaul to U.S. patent law so as to encourage innovation, job creation and economic growth.
 

“Today’s vote is a victory for America’s innovators and job creators who rely on our patent system to develop new products and grow their businesses. The America Invents Act is the most significant jobs creation bill passed by Congress this year. No longer will American inventors be forced to protect the technologies of today with the tools of the past. H.R. 1249 brings our patent system into the 21st century, reducing frivolous litigation while creating a faster and more efficient process for the approval of patents.                       Chairman Lamar Smith (R-Texas)

Much-needed reforms to our patent system are long overdue. The last major patent reform was nearly 60 years ago. Some of the changes the America Invents Act proposes:

• a first-inventor-to-file standard for patent approval,


• patent office keeps all the fees it generates,


• creates a post-grant review system to weed out bad patents, and


• helps the Patent and Trademark Office (PTO) address the backlog of patent applications.

The House of Representatives bill diverges from the Senate version of patent reform, so the bill will not go to the desk of President Obama just yet. Now the Senate will be asked to agree with the changes made by the House of Representatives, will this game of tag never end? It's amazing that any complex bill ever makes it into law. That's probably why this bill has been hanging around for what seems like forever.

I guess the big question is whether or not Senator Patrick Leahy (D-VT) and Congressman Lamar Smith (R-TX), the respective champions of the bills in the Senate and House will compromise on language that can pass both the House and the Senate.

There are so many divergent opinions and interest groups pushing for one side or the other it seems unlikely that it will happen anytime soon.

Upon passage of the America Invents Act in the House of Representatives David Kappos, Under Secretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office, issued the following statement:

We are encouraged by the statements of so many Members of Congress calling for the USPTO to have full access to all of its fee collections. We are particularly thankful to Chairman Rogers for his commitment to ensure that the USPTO has full access to its fees when fee collections exceed Congress’ annual appropriation for USPTO. Full funding of the USPTO is necessary for the USPTO to successfully implement this legislation and to more effectively perform its core mission.

We are hopeful that this critical legislation can move expeditiously toward final passage and enactment.

One major difference between the House and Senate bills is how they open the door to the overburdened patent office keeping all the fees it generates. All sides agree the office needs help given it faces a backlog of at least 700,000 applications and it takes on average three years to grant a patent.

The director certainly wishes the bill becomes law so that the USPTO can have full access to the mountain of money it collects for filing fees. Certainly if they could use that money to hire more examiners the backlog could be reduced. It's almost like the national debt! Even with reform is it possible they can ever reduce it to a manageable number?

There are more than 6000 patent examiners trying to stick their fingers in the holes of the dam. If the USPTO could hire many more examiners perhaps the backlog could be reduced to a reasonable number. What if patent applicants did not have to wait three years for approval? I guess the question is "if inventors didn't have to wait so long for their patents to be granted would that alone increase productivity, jobs and efficiency in society?" Can it be accomplished through patent reform?

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The United States Patent and Trademark Office (USPTO) granted an all-time high 219,614 United States utility patents in 2010 – up 31 percent over 2009. All but one of the companies in the Top 50 are up from 2009, most shattering records and many posting double-digit percentage gains.

IBM continues to hold down the #1 patent rankings position, which it has done for 18 consecutive years, with a record 5,896 patents, up 20 percent from 4,914 in 2009. IBM is the first company to Break 5,000-Patent Mark in a Single Year.

IBM’s 2010 patent total nearly quadrupled Hewlett-Packard’s and exceeded the combined issuances of Microsoft, Hewlett-Packard, Oracle, EMC, and Google. More than 7,000 IBM inventors residing in 46 different U.S. states and 29 countries generated the company's record-breaking 2010 patent tally.

IFI CLAIMS® Patent Services, a division of Fairview Research, compiled a ranking of global companies awarded the most U.S. patents in 2010.

I spoke with Darlene Slaughter, general manager of IFI CLAIMS Patent Services and she said that they provide statistical data to perform preliminary patent searching, infringement searches or freedom to operate searches." With that information companies can:

• Determine which companies are key players in a particular technology
• Identify strategic partners
• Gain an insider's view of a competitor's patenting activity
• Review the number of new patents in each category for the past year
• Track patenting trends across industries

Darlene Slaughter, reiterated that protecting innovation through the patent office is not slowing down

"Companies with the most patents focus on their IP and believe that protecting the innovation through patent is important in maintaining an edge on its competition."

Is this increase in patent grants a sign that innovation is not slowed by recession? Or is it a sign that United States Patent and Trademark Office is becoming more efficient at prosecuting patent applications and the increased number of patent examiners are reducing the back log of patent applications?

I think the increased number of patent grants can be directly tied to the number of applications filed.

In his Director's Forum: David Kappos' Public Blog the USPTO director posted that "Improving Key Patent Processes and Sub-processes" is the big reason for the increased patent grants and he quotes a couple remarkable numbers:

For the year 2010 the USPTO Technology Center Technical Support Staff of 274 legal instrument examiners and legal document review clerks:

• Entered more than 2.9 million documents;
• Verified more than 264,000 allowed patent applications;
• Reviewed and counted over 2,300,000 office actions; and
• Processed more than 257,000 new patent applications.

These stats represented all-time records for the USPTO, reflecting all-time record workflow through the Agency including interviews conducted, office actions processed, notices of allowance, and final rejections. David Kappos

The bottom line is that the United States patent office has been swamped with a rising flood of applications over the past 20 years:

• 174,711 applications were filed in 1990 and 100,975 patents were issued.
• 478,649 applications were filed In 2010 and 219,614 applications were issued.
• The 1990 gap between patent applications filed versus issued patents was 73,736 
• The 2010 gap has grown to 259,035.

Okay we know it is not humanly possible for 6,000 examiners to keep up with the 721,831 backlog of patent applications... but have the examiners increased their ability to process applications?

Dennis D. Crouch of Patently-O Blog posted a chart comparing the yearly number of patents issued per examiner over the course of the past decade. Dennis points out that apart from the “2007-2009 period where the grant rate dropped so precipitously” this chart does not suggest that the examiners are any more efficient today of disposing patents than they were in previous years.

So I would guess that the only solution to decreasing the backlog of patent applications is to hire more examiners.

John Schmid of the Milwaukee Journal Sentinel reports that despite efforts to improve, U.S. patent approvals are moving slower. And because of the huge backlog and the fact that the US publishes entire patent applications online 18 months after they are filed, “That puts American ingenuity up for grabs, free to anyone with an Internet connection.” In the article he quotes Paul Michel, recently retired chief justice of the United States Court of Appeals for the Federal Circuit, as saying

"In China, there are thousands of engineers who don't work in laboratories inventing new technologies. "They sit in computer rooms reading U.S. patent applications on the Internet. And they can use the technology anywhere in the world, including in America, for free.

But even with all the suppoed deficiencies of the United States Patent and Trademark Office, foreign and US corporations want to protect their innovations and have filed a record number of applications this year.

And as a result US companies own about half and the rest of the world owns the other half of the granted patents this past year. (see chart below World Wide Ownership of US Patents 2010)

Top-50 US Patent Assignees in 2010 (As reported by IFI)

1. International Business Machines Corp 5896
2. Samsung Electronics Co Ltd (Korea) 4551
3. Microsoft Corp 3094
4. Canon K K (Japan) 2552
5. Panasonic Corp (Japan) 2482
6. Toshiba Corp (Japan) 2246
7. Sony Corp (Japan) 2150
8. Intel Corp 1653
9. LG Electronics Inc (Korea) 1490
10. Hewlett-Packard Development Co L P 1480
11. Hitachi Ltd (Japan) 1460
12. Seiko Epson Corp (Japan) 1443
13. Hon Hai Precision Industry Co Ltd (Taiwan) 1438
14. Fujitsu Ltd (Japan) 1296
15. General Electric Co 1225
16. Ricoh Co Ltd (Japan) 1200
17. Cisco Technology Inc 1115
18. Honda Motor Co Ltd (Japan) 1050
19. Fujifilm Corp (Japan) 1041
20. Hynix Semiconductor Inc (Japan) 973
21. Broadcom Corp 958
22. GM Global Technology Operations Inc 942
23. Micron Technology Inc 917
24. Siemens AG (Germany) 873
25. Xerox Corp 858
26. Denso Corp (Japan) 853
27. Texas Instruments Inc 829
28. Honeywell International Inc 824
29. Sharp K K (Japan) 818
30. Toyota Jidosha K K (Japan) 802
31. Infineon Technologies AG (Germany) 774
32. Brother Kogyo K K (Germany) 771
33. Nokia AB Oy (Finland) 760
34. Silverbrook Research Pty Ltd (Australia) 752
35. LG Display Co Ltd (Korea) 738
36. Semiconductor Energy Laboratory Co Ltd (Japan) 734
37. Mitsubishi Denki K K (Japan) 700
38. Koninklijke Philips Electronics N V (Netherlands) 685
39. NEC Corp (Japan) 680
40. Boeing Co 662
41. Qualcomm Inc 657
42. SAP AG (Germany) 649
43. Oracle America Inc/Sun Microsystems Inc* 646
44. Bosch, Robert GmbH (Germany) 593
45. Fuji Xerox Co Ltd (Japan) 574
46. Apple Inc 563
47. Du Pont de Nemours, E I & Co 509
48. Sanyo Electric Co Ltd (Japan) 504
49. 3M Innovative Properties Co 496
50. Freescale Semiconductor Inc 494

*Sun Microsystems changed name to Oracle.

Do you think an increase in the amount of patents equates to an increase of productivity? Will that translate into bigger profits at the stock market? Here are the biggest percentage gainers on the 2010's Top 50 Companies Awarded a Patent List:

1. Apple, +94%
2. Qualcomm, +84%
3. NEC, +74%
4. SAP, +70 %
5. GM Global Technology, +68%
6. Hynix Semiconductor, +65%
7. Silverbrook Research, +58%
8. 3M Innovative Properties, +53%
9. Toyota, +50%
10. Brother, +45%
11. Hon Hai Precision Industry, +44%
12. LG Electronics, +40%

In 2010, American-headquartered companies collectively recaptured a lead on the total number of U.S. patent grants (just over 50%) after losing out slightly to foreign companies for the previous two years. In 2009, American firms received less than a majority at 49 percent. Here is a chart showing the ownership percentage number of patents awarded by country.

Market Sectors with the Heaviest New Patent Activity

• Multiplex Communications (US class 370) 3.3 %
• Solid-State Devices and Transistors (US class 257) 3.1 %
• Semiconductors (US class 438) 2.72 %
• Data Processing and File Management (US class 707) 2 %
• Computers and Processing Systems (US class 709) 2 %
• Drug Compositions (US class 514) 2.1 2 %
• Biotechnology (US classes 435 and 530) 2%

 IFI's full report, which offers comprehensive 2010 patent information on more than 2,000 companies, can be accessed online through IFI's Patent Intelligence & Technology Report, available on its website in a free-trial version.

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The 15th Annual Independent Inventors Conference, co-sponsored by the United States Patent Trademark Office (USPTO), and Invent Now® will be held in Alexandria, VA at the US Patent and Trademark Office campus on November 4 - 5, 2010.

A pre-conference workshop (November 3, 2010 from 5pm – 7pm) is included with your registration for anyone interested in learning patent basics and how they protect inventions. This workshop is for beginners and is a good foundation for the conference.

Presenters will include:

• Under Secretary of Commerce for Intellectual Property and Director of the US Patent and Trademark Office, David Kappos,
• Commissioner for Patents, Robert L. Stoll,
• National Inventors Hall of Fame® Inductee, Art Fry, co-inventor of Post-It® Notes, and
• George A. Peters, Jr. inventor of The Mitt®.

Registration is now open for this 2-day event. The fee is $120 per person for both days. The registration fee includes all sessions and presentations, morning and afternoon refreshments, lunch for both days and a networking reception Thursday evening. The networking reception is sponsored by the Intellectual Property Owners Association (IPO).

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The official United States Patent and Trademark Office (USPTO) Facebook page promises to deliver the latest USPTO news, photos and videos.

Through Facebook the USPTO will directly connect with the public and the intellectual property community.

According to David Kappos the USPTO’s Facebook page is meant provide

“a place where users can tell US what YOU think. Users are encouraged to comment on our posts and tell us what you “like” and “dislike” about to the USPTO."

The Invent Blog reported that under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos said:

“Technology has profoundly impacted the way we all consume information and communicate with one another... “I’m confident our Facebook presence will complement the USPTO Web site as a means of communicating and connecting with the public and our stakeholders in the intellectual property community.

With more than 400 million people on Facebook, we knew it was an important place for us to be.”

USPTO Director David Kappos welcomes Facebook users with the following message:

Welcome to the USPTO’s page on Facebook! We're excited to be launching this forum to communicate with you and share the latest news from the USPTO. We know thousands of innovators, members of the intellectual property practice community, and USPTO employees are active on Facebook, so we’re pleased to be able to bring information and updates to you here...

Check back here daily, as we will be providing regular updates including press releases and other news, details on upcoming events, speeches, updates from my blog, photos, video, fun facts and more. Just like checking your Facebook page, we hope visiting our page will become part of your daily routine.

The USPTO’s Facebook page is a supplemental page to the official USPTO web page. It makes you think, doesn't everyone need a Facebook page? I enjoy connecting  with over 1000 long lost friends from the good ole days at my  Vincent LoTempio facebook page and I launched a page for my law office at Kloss, Stenger & LoTempio, although  I have to admit there has not been much action there. But I love this social networking. Everyone is getting involved.

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The Patent Reform Act of 2010 was recently made public in the form of an (“Amendment to S. 515”). Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) spoke at an Executive Business meeting (webcast) February 25, 2010 about this amendment to the patent reform act.

Leahy stated, “When Senator Orrin Hatch (R-Utah) and I started this process several Congresses ago, along with Congress members  John Conyers Jr.,  Howard L. Berman, Lamar Smith and others in the House, we wanted to improve patent quality and the operations at the PTO, and address runaway damage awards that were harming innovation. We are close to a compromise that will address these issues. No one will think this a perfect bill, but we are close to a comprehensive patent reform bill that benefits all corners of the patent community.”

The 2010 amendment of the "Patent Reform Act" proposes a number of so-called improvements that are the subject of other LoTempioLaw blog posts (See the list below). This post is directed at the proposed change regarding First-Inventor-to-File.

First-Inventor-to-File

The proposed change does not call for a “First To File” system as some people mistakenly believe; it proposes a “First Inventor To File” system. Remember you cannot file a patent application in either system unless you are the inventor. Because two people can independently invent the same thing at different times there may be a race to the patent office by two inventors.

The current US system awards a patent to the inventor who is the first to invent regardless of whether the application was the first to be filed in the patent office for that invention. The new system will reward the inventor who wins the race to the USPTO and files the first application.

In the current US system, when two inventors seek a patent on the same invention the fact finder must determine who invented it first (it doesn’t matter who filled it first). The proposed “First Inventor To File” system will minimize Issues such as

• whether an inventor “abandoned, suppressed, or concealed” the invention
• “when was first conception,”
• “when was actual reduction to practice” and 
• “if the inventor used reasonable diligence coming to the patent office with the invention”

People now question if a first-inventor-to-file system is put in place will big business always beat the independent inventor to the patent office to file a patent application? Under Secretary of Commerce and USPTO Director David Kappos, says that there is a big misconception regarding “First Inventor To File.”

With the “First Inventor To File” system there is no risk of business beating the independent inventor to the patent office to file a patent application because the interloper is not an inventor. All filers have to sign an oath and declaration under penalty of criminal sanctions.“This leaves only the issue of simultaneous, non-collaborative invention—what we call interferences. The chances that a patent will be subject to interference based on a first to invent claim—that’s our current system—is .01%. In 2007—the most recent year for which we have statistics. The total number of interference cases for all applicants of all sizes that were decided based on a priority claim was seven! Of those seven decisions, only one involved a small or medium sized entity, and not a single one was won by an independent inventor who was the second to file. That means we already essentially have a first inventor to file system.”

Is this a naive view of the world? Or will non-inventors race to the office to file applications and basically say, hey prove I didn’t invent this invention. Will more litigation result because of this proposed change in the patent law? Or will the independent inventor just lose out on his/her invention because they won't have the wherewithal to fight it out in court even if he/she is the only true inventor?

The Professional Inventors Alliance USA viewpoint is that this provision will not guarantee that the actual inventor will be granted the patent.

"It creates conditions for very poor prior art, which is the existing knowledge of a similar innovation known to the general public. It burdens examiners with questionable applications by non-inventors. It creates a new malpractice liability for patent practitioners who may not beat another party to the patent office, thereby increasing the potential for litigation.

Kappos thinks the benefits will be reaped in the cost savings when filling internationally,

"... all other countries in the world use a “First Inventor to File” system. The change in the Patent Reform Bill will streamline the process for you to acquire patent rights and reduce your costs in seeking rights outside of the United States as you consider entering the global marketplace. This change will make it easier for you to “go global” with your invention."

Personally, I think this argument is much to do about nothing. I haven't heard many inventors consciously say I know it is a "first inventor system" so I don't care if somebody else files before me. I think that even with the system as it is now, inventors still believe that it's vitally important to be the first to file. Being the first to file always has its advantages. Even the patent office recognizes a patent application as a "constructive reduction to practice." I'm sure that if inventor observes an application pending in the United States Patent and Trademark Office for their invention he/she is less likely to go forward and file a second in line application regardless as to whether it's a “First Inventor to File” or a "First Inventor to Invent" system.

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What inventors need to know…

Inventors Eye is a new electronic publication by the United States Patent and Trademark Office for and about America’s independent and small entity inventor community.

Inventors can find information about working with the USPTO; events, organizations and meetings of interest to the community; issues that impact independent and small entity inventors; and stories about successful inventors.

 The first issue had a few great articles and links under the titles Advice, Events and Network:

• Patent Reform: An Open Letter to the Independent Inventor and Small Business Communities from Under Secretary of Commerce and USPTO Director David Kappos
• Protect Your Innovation: Avoid Scams, By Ronald Jaicks : Office of the Solicitor
• Spark of Genius: The Spiral Eye Needle, By John Calvert: Inventors Assistance Center
• Advice:     Do Your Homework
• Events:     Where Independent Inventors Meet
• Network:  Organizations for Inventors

Inventors Eye will appear every other month on the USPTO web page. 

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