USPTO Plans Could Kill Small Business Innovation

bizwriter writes "If protecting inventions is at the heart of high tech competitiveness, plans afoot at the US Patent and Trademark Office (USPTO) will critically wound small companies. The agency's notorious 750,000 patent application backlog has long been the subject of heavy criticism. One of the key tools the USPTO wants to use is to raise fees so high as to directly reduce 40 percent of the backlog. That would mean setting filing and maintenance rates so high as to make it economically difficult, if not impossible, for many small companies to adequately protect their innovations, leaving large corporations even more in control of technology than they are now."

Comments

Stupid system

[Anonymous Coward]

Why not keep the basic cost the same but increase it by 20% for every additional patent filed in a year?

Re:Stupid system

[TheRaven64]

If there's nothing wrong with a small company owning a few patents, there's nothing wrong with a large one owning a lot of them. Why not tackle the real problem though? Lots of patents is not necessarily a bad thing, lots of bad patents is the problem. You don't want to discourage filing innovative patents[1], you want to discourage filing junk. Introduce these rules:

• If a patent is overturned in court, you pay a statutory $10,000 fine, plus the legal fees of the person who sues you.
• If you are found to have filed the patent in bad faith (i.e. knowing that there was prior art) then this becomes wilful abuse of the patent system and the fine goes up to $100,000.
• If a patent is found to be invalid, you must refund all license fees collected on it, plus 50%. This is a statutory penalty and may not be disclaimed by contract.
• Anyone has standing to sue for an invalid patent, but the loser pays the legal fees of both parties.
• Companies have a one-year amnesty after these rules are introduced to retract patents that they discover to be invalid as a result of internal auditing. No fines are incurred for patents that are disowned during this period.

Make it dangerous to collect bad patents, and you'll see a big drop-off in patent applications.

[1] Assuming, of course, that you think patents are a good way of encouraging innovation. If you don't, then use abolish the patent office and be done with it.

Re:Stupid system

[Moryath]

The problem is you're relying on the courts, which take YEARS to properly rule (and get through appeals) on a patent claim.

The secondary problem is that the BIG companies have found a way around the system with what they term "patent slamming"; they file everything they can send, no matter how stupid, 4-5 times apiece, knowing that the overwhelmed USPTO examiners are more likely to mistakenly approve the patents if they don't have the time to properly analyze them for non-obviousness and prior art.

For example, take Wizards of the Coast's patents concerning "trading card games." Nothing in their patent was non-obvious, and every game mechanic they pointed to is predated by a number of prior arts, up to and including the quintessential Hoyle's Rules of Games, first edition published in goddamn 1742. In a reasonable and non-overwhelmed USPTO, there's no way that patent could ever have passed, but not only did it pass, it gave WOTC a virtual monopoly in an area they had no business gaining one.

And getting back to the courts - remember, in order to sue, even if "loser pays", you have to have the money to front to your lawyers to see the lawsuit prevail. Which means you've got to have fucking deep pockets, to pay a lawyer for 4-5 years or more and process all the paperwork slamming and other shyster tactics that the big guys are going to throw at you.

I'd rather see companies completely blocked from patent slamming. Require the companies to be allowed only so many patents per year, make them pick the ones they REALLY want to protect, and that's that.

"Could" is too soft a word

[Taco Cowboy]

It isn't "could kill small business", rather, the whole thing has turned into "Designed to kill all innovators that don't have big backers".

It's the system, man.

The elites want total control. The patent system is but a small part of their game plan.

Re:"Could" is too soft a word

[PopeRatzo]

It isn't "could kill small business", rather, the whole thing has turned into "Designed to kill all innovators that don't have big backers".

Whoa there, podna,

The current patent fees top out at about $800 with the basic filing fee for small entities being $82 (if you file electronically, which I assume an "innovator" will be able to figure out).

So you're telling me that even if they triple this amount to $246 that it's going to "kill all innovators that don't have big backers"? You're telling me that some "innovator" out there can invent something that's worth protecting but can't scrape together two hundred and fifty bucks? (assuming they triple the fees)

Shit, if all it takes to "kill innovation" or "kill small business" is to set the bar at a couple of hundred dollars, then our system is in bigger trouble than I thought.

Re:"Could" is too soft a word

[DarkKnightRadick]

The submission clearly states that it wants to raise fees so high as to actually discourage patent applications.

So we're not talking just triple, or quadruple. It could be 10x or even higher.

-1 Troll

[Dachannien]

Small entity inventors already get 50% off most USPTO fees, and USPTO Director Kappos has suggested creating a "micro-entity" inventor class for whom the fees would have an even smaller impact relative to that for large entities.

What's more, the backlog hurts small entity inventors much more than it does large entities. Small entity inventors are much more likely to rely on venture capital funding, and many VC outfits are unwilling to put money down without some patent protection on the table. If a small entity inventor has to wait for 3+ years to get that protection, they may end up folding before the patent issues. On the other hand, a large entity inventor has lots of stuff going on, and relies on its other business to keep things moving while they wait for their patents to issue, so the backlog has a much smaller impact on them.

Solving the backlog problem is ultimately going to require hiring more examiners, and that costs money. For an agency that is entirely fee-funded, being able to set those fees at appropriate levels is necessary to ensure that patents are issued in a timely fashion.

Re: -1 Troll

[Weezul]

Yes, more patent examiners helps considerably, but so does fewer patentable domains, i.e. eliminate patents on business methods, software, look-and-feel, life forms, etc.

Patent lawyers already cost way more than patent fees. If large entities pay more for their lawyers, why not declare that patent fees should match the cost of the patent lawyers, but leave the minimum fee alone.

Or you might simply make the patent fees progressive in the examiner's time. In particular, if many people contested your patent, the fees will sky rocket.

There should also be an upkeep or property tax on owning all intellectual property with rates that were progressive based upon the number of patents the entity holds.

Don't Panic

[dplentini]

I think it's too early to panic. Having practiced before the USPTO for over 20 years, I've seen many times how the small inventor lobby works its magic to protect the small filers. In fact, I was disappointed that the article didn't even mention the two-tier fee system, providing smaller fees for small businesses, that's been in place for many years now. The PTO needs lots of fixes, but I agree that somethings need to change with the fee structure. Large companies can game the system by flooding the system with new applications, re-filing to wear down examiners, and taking frivolous appeals. Wise changes to the fee structures, which take into account these sorts of tactics, as well as increasing maintenance fees to discourage "wait and see" litigation, will be helpful to the small guy. Hopefully the PTO will show some wisdom.

Re:Raising Fees is NOT the answer

[CaptBubba]

New technology costs $$$, which the USPTO does not have. The Patent Office's budget is pretty much 1:1 based on the fees it collects, except when congress wants to siphon off some cash to spend on something else. Hundreds of millions of dollars were siphoned off in the 90's, leaving the Patent office with a massive backlog at least in part because it couldn't keep enough people or the correct equipment to keep up with the applications.

What would be nice is a tiered system, instead of the current Big/Small entity fee system now in place (small entity fees are 1/2 those of the large companies). Tie fees to the number of applications or patents you have. That way those responsible for the backlog pay more, while the small company with 2 patents doesn't get priced out.

The system ain't stupid

[Taco Cowboy]

... as it is designed so that the not-so-wealthy don't get to patent anything.

That poor guy may end up having to sell his invention to the wealthy elites, and the elites can then patent the thing and rake in much much much more $$$ with it.

And btw, it is happening.

Or fix it-get rid of software and business patents

[tomhudson]

Exactly. doubling the fees won't stop a large business - 10x the fees still won't do anything, since even that represents only a small portion of the cost to them - but to the little guy, it's a knife in the neck.

Easier fix - get rid of software and business method patents. "Oh, but we can't do that - we'd have so little work to do that we'd have to lay off people!"

Re:Give the companies a choice

[Stormwatch]

In other words, you're suggesting the complete elimination of patents.

Which would not be a bad idea at all, mind you...

Why not charge per year

[jolyonr]

2 year protection = normal price
5 year protection = three times normal price
10 year protection = ten times normal price
20 year protection = fifty times normal price

Re:Raising Fees is NOT the answer

[gbjbaanb]

Unfortunately, the # of patents idea wouldn;t necessarily work. Big companies have lots of accountants who would just start up a subsidiary company and let them file their first patent. So Microsoft would still have millions of patents, but they'd be held by a thousand sub companies. They'd probably end up paying less than mom n pop innovators inc.

Still, charging for crap patent applications is a good idea - that'd shift the cost burden to 3rd party lawyers who'd charge you to ensure your application wasn't crappy. The patent office could then start to give such pre-verified applications a less rigourous overview (like they do currently with all patents :)

Yes, that's dangerous... Microsoft lawyers inc would pre-verify a patent on glass panes used to provide visibility of operating system function for human interaction.

The only way to proplerly solve the issue is to better define what a patent is. Say "software or software algorithms of any kind are not patentable items" would rip that backlog to shreds. And save business innovation as well, which would be nice.

Re:Or fix it-get rid of software and business pate

[aurispector]

Considering that small business is the engine of job growth and innovation, this is the dumbest idea to come out of USPTO ever. Imagine the world today if Apple, HP, and Microsoft were all prevented from flourishing. The internet would not exist, mainframes would still be king, silicon valley would not exist. Real innovation almost never comes from existing large companies.

Re:Or fix it-get rid of software and business pate

[dgatwood]

Actually, high enough fees will have an impact on large businesses, but only if they are truly high enough to make it impossible for small businesses. Fortunately, there is a third choice.

A much better pricing scheme would be one that forces companies of all sizes to prioritize their patent filings and only file the ones that matter. I propose that the base filing fee be tiered based on the number of non-expired patents the company holds or has pending:

• 0-9 patents: $10 per filing.
• 10-49 patents: $100 per filing.
• 50-99 patents: $500 per filing. This is almost double the current fee.
• 100-499 patents: $1,000 per filing.
• 500-999 patents: $5,000 per filing.
• 1,000-9,999 patents: $10,000 per filing.
• 10,000 patents or more: $100,000 per filing.

This would significantly reduce the number of crap patents. Right now, small entities get a lower filing fee, but that doesn't completely solve the problem, either. It just encourages small businesses to file too many patents. What matters is not how big the business is, but rather how many patents the business files.