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USPTO Plans Could Kill Small Business Innovation 175

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."
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USPTO Plans Could Kill Small Business Innovation

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  • Stupid system (Score:3, Interesting)

    by Anonymous Coward on Saturday May 08, 2010 @09:16AM (#32138002)

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

    • because that would make sense
    • by Taco Cowboy ( 5327 ) on Saturday May 08, 2010 @09:48AM (#32138190) Journal

      ... 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.

    • Re:Stupid system (Score:5, Insightful)

      by TheRaven64 ( 641858 ) on Saturday May 08, 2010 @10:05AM (#32138310) Journal
      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 (Score:5, Interesting)

        by Moryath ( 553296 ) on Saturday May 08, 2010 @10:27AM (#32138444)

        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.

      • > If a patent is overturned in court, you pay a statutory $10,000 fine, plus the
        > legal fees of the person who sues you.

        I'd adjust that to reduce litigation. If the patent is overturned in court, I'd add an additional penalty for the time between the initial suit and the time it's resolved. The additional penalties can be waived if the patent is retracted unconditionally, and the matter is settled out of court. No out of court settlement would allow waiver of the burden of legal fees, no out of court

        • > If you are found to have filed the patent in bad faith (i.e. knowing > that there was prior art) then this becomes willful abuse of the patent > system and the fine goes up to $100,000. And an additional payment to the person who filed the suit. > 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. Agreed if found to be a bad faith patent. Limit to the license fees themse

      • Your plan might sound solid to the naive public. But I can come up counter-plan in less than a minute:

        If I were a large and rich patent troll or if I want to take away the "innovative" patents held by you the real poor business / individual, I can do (a) hire better lawyers than yours -- chance are mine is already among the best and you can barely afford any lawyer -- good or bad; (b) create numerous shelf companies -- in Nevada or any low fee state, just to save a few dollar for my luxurious trip to Baham

      • 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.

        The problem with this one is that it discourages looking for prior art: People will notice that if you look for it, and find it, then you can't file, but if you don't look for it, then you can file and put the onus (except for the $10k in your previous point) on the PTO to find the prior art.

        I'm not sure what a good solution would be. The goal is good: self-select inventions that aren't patentable so that the PTO can concentrate only on the ones that have merit, or seem like they have merit.

      • I think a lot of the abuse could be cleared up by forcing the patent to declare the problem to be solved (which most patents do to some extent anyway), and then having the patent office publish the problem to be solved without the solution. If somebody else submits substantially the same solution to the patent office within a reasonable timeframe (a month or 6 weeks or so), well then the patent's proposed solution isn't really non-obvious, now, is it?

        Once the system gets rolling and gets a lot of partici

      • A potential $100,000 fine just for filing a bad patent would stop most small businesses or independent inventors from filing at all, even if the patent was valid -- it's way too much risk. I certainly don't have $100,000 lying around.

        Ultimately, it's the patent offices' job to determine if patents are valid or not. The applicant ought to do due diligence to check if their idea is original, but realistically it's not possible to know every invention that has ever been thought of in the whole history of t

    • Limit the USPTO to issuing 365 patents a year. It has to choose the best patent each day from the pile of applications.

      That would make the patents truly valuable and stop the rest of this nonsense.

    • by Thing 1 ( 178996 )
      I find it rather sad that the summary categorizes "large companies" and "small companies" as being differently affected by this. The sad part is that "the average citizen" was not part of this comparison; I own a patent, and paid about $4,000 total to achieve it, and this means that my next one might not be worth obtaining.
  • Using modern technology to search for prior art quickly and having a $100 penalty for submitting prior art probably would do more to fix the system than any amount of raising the fees.

    • by CaptBubba ( 696284 ) on Saturday May 08, 2010 @09:28AM (#32138094)

      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.

      • by gbjbaanb ( 229885 ) on Saturday May 08, 2010 @10:10AM (#32138336)

        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.

    • The fine should be the greater of $10,000 or *two* times whatever profits are incurred by the patent. Having a $100 fine for crappy patents is not enough to encourage *anyone* to not file them.

  • -1 Troll (Score:5, Insightful)

    by Dachannien ( 617929 ) on Saturday May 08, 2010 @09:23AM (#32138056)

    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: (Score:2, Informative)

      Great, even worse news for the poor little guy. You think it is bad for small businesses, it is terrible for an independent inventor. Patents are becoming more expensive and harder to get every day, better for big companies that apply for ten thousand-a hundred thousand patents a year, meanwhile I have to construct elaborate contracts with a company before I can even show them what I have, at fear of losing everything. One hell of a messed up system.

    • Re: -1 Troll (Score:4, Insightful)

      by Weezul ( 52464 ) on Saturday May 08, 2010 @10:31AM (#32138466)

      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.


        Read through the comments to make sure I wouldn't repost this.

        Don't increase the barrier to entry, lower the demand for patenting.

    • >>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.


      Also, I have nothing against raising fees to whatever it actually costs the USPTO to process an application.

      In general, I think gov't fees should be set this way. If they charge less, then it encourages overfiling. If they charge more (i.e. outrageous corporate fees i

  • Why not let people choose whether to be protected *with* patents, or to be protected *from* patents.
    So big companies can file patents and sue each other; small companies who choose not to file can neither sue, nor be sued.

    • In other words, you're suggesting the complete elimination of patents. If companies can simply opt out of being sued for patent infringement, then a patent has no value.

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

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

        • Agreed. Any extreme is not good, but the system leads itself to the extreme every time. It sucks, and none of the suggestions I see so far are any good either, nor would fix the problem. Get rid of the crap. Sure, it would not a perfect system then (nothing ever is), but I think it would be better than what we have now. Of course, not if you are a lawyer . . .
        • If there were no patents, what would be the incentive for innovation? Why would a company spend millions of dollars on developing a drug, only to have another company that paid nothing for the drug development sell it for a lower price? This is the purpose of patents -- to allow an inventor to recoup the cost of research and development by granting an exclusive license for use of the invention. Eliminating all patents would mean eliminating much invention. Where companies did invent innovative products, the
          • This is a common misperception. There's plenty of incentive for innovation, regardless of whether patent protection is available. Patents are supposed to provide incentive to make the innovations public knowledge. It's a bargain in which the public gains the knowledge in exchange for granting the sort of monopoly the inventors would supposedly have if they'd kept their invention secret AND no one else could figure out how to duplicate their work within the next 17 years. Somehow, the interpretation has

      • Given the way patents are currently abused to protect from competition instead of protection of innovation, I doubt the damage would be severe. At the very least in the area of software and software procedures, abandoning patents would certainly spur innovation rather than stiffle it.

  • Don't Panic (Score:5, Insightful)

    by dplentini ( 1334979 ) on Saturday May 08, 2010 @09:26AM (#32138076)
    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.
    • Interesting post. Excuse my ignorance; can you expand on what "wait and see litigation" means?

    • by Zordak ( 123132 )

      The thing is, the fee structure would have to change significantly to influence large business tactics. Whether you're small or large, the attorney fees you pay are way bigger than the filing fees. I just don't see this making that big a difference for the huge guys like Microsoft and IBM. But it will hurt universities, where a lot of legitimate innovation takes place, because they tend to be more fee sensitive.

      I think the better way to deal with the pendency is to just dispose of applications earlier.

    • As a small entity (individual) with a few granted patents and several pending, here's what I'd do:

      - Keep the small entity fees as-is; they are not onerous. But make them applicable to an individual only without any assignee. The small entity fee only applies to the inventor.

      - All other patent filings are considered large entity. If you have an assignee at application time then you pay higher fees. How high? Twenty times the price. In other words, if the company owns it from the start, they are g

  • The vast majority of patents, and therefore the vast majority of patent fees, are paid by large entities. I suspect they're the ones most opposed to any increase, because it will hit companies that file 10,000 patents much harder than companies that file 1 patent. But nice job hiding behind concern for small business.

    • And the vast majority of cost in filing a patent is not in the filing fee. You are naive.

      • by Trepidity ( 597 )

        Indeed, but that points even strongly towards my conclusion, because for a small business, the filing fee is small compared to the lawyer fees, so they won't much care about an increase in filing fees. But for a large company that already has a lawyer on retainer anyway, an increase filing fees times 10,000 might matter, so I could see why they would want to drum up opposition.

        • Because making filing a patent cost as much as as house is really going help the independent inventor.

      • But it will be after this change. Who knows how much patent fees need to increase to stifle patent application by 40%? Increase by 100%? 200%?

        • It would take more than that to make a huge multinational blink, but I'm sure they'd love a reduction in the patent arms race. Patent attorneys are expensive, most patents don't generate any licensing revenue. Do you think they're going to cry when filing becomes cost prohibitive for their smaller competitors?

    • Most large entities are filing enough applications that an increase in filing fees (if it really makes a dent in their IP expenses compared to attorney-related expenses) will simply result in filing fewer "crapplications". Large entities that manage large IP portfolios tend to file patent applications on every little thing they do, and lots of those things are pretty much worthless as patents.

  • To the size of the company.
    • Re: (Score:3, Informative)

      by Xuranova ( 160813 )

      Can you say "wholly owned subsidiary"?

  • I have several patents in my name, filed by my employer. With the business climate the way it is (which is to say, globally flat to slightly rising revenue, improving profits and a rise in stock price because of a constant decline in costs), we're being scrutinized on the patents we do file. If the costs go up even more, we'll file for fewer of them. There's already mounting pressure to keep ideas as "trade secrets".

  • by jolyonr ( 560227 ) on Saturday May 08, 2010 @10:02AM (#32138286) Homepage

    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

    • by Bob9113 ( 14996 )

      Love it. I would tend toward allowing optional renewal on an exponential scale.

      First two years: $1000 (prototyping)
      Next three years: $10,000 (initial market exploration)
      Next five years: $100,000 (expansion to adjacent markets)
      Next five years: $1,000,000 (you should be making real money by now if it is worthy of patent)

      Then an additional x10 for each additional five years up to whatever limit we find reasonable.

      That way the indie doesn't have to sell his soul to the vulture capitalists to get the front cash;

    • Re: (Score:3, Informative)

      by sir_eccles ( 1235902 )

      You should really look at what the current maintenance fees are before making stupid statements as there appears to be prior art on a sliding scale that increases as time progresses. []

  • Companies can still protect themselves to a degree via documenting even if they don't file. If it ever goes to court a small company is at such a disadvantage anyway because of the cost that I think this isn't really that big a deal.

    One thing it would change is that small companies with cool IP but no sales look less interesting as acquisition targets.

  • This actually will hurt the little guys and make sure that only mega corps can own the world.
    I think a better way would be to assign the fee AFTER the patten goes through. Basically, if a patent is found to erroneous or false in some way, the fee would be EXTREMELY high. This would be encourage less crap patents and make sure people do a patent search before trying to patent their crap.
    Finally, the fees for the approved patents can be based on the company's yearly revenue weighted against the market value o

    • by sqlrob ( 173498 )

      There's a problem with the after fees, but in the other way. If the PTO makes money off of calling something bad, why would they ever call something good?

  • Instead of raising fees to lower the application rate, how about raising the bar for patents to be genuinely useful, innovative and non-obvious.

    So there are fewer of these: []

  • Currently, the patent office is required to review prior art submissions from outside parties for 60 days. The
    patent is visible in the system for 60 days, and then they can throw your notice of prior art in the garbage.

    2 months is not a lot of time. If they want to reduce the backlog, then crowdsource the problem. Open that
    duration up. Even create some incentives to get people to read the patent applications. A little education
    on what constitues prior art. Maybe even a hall of fame which says, "

  • I'd say that about covers it.

    A system designed to protect the small inventor puts itself out of reach of the pocket book of the small inventor.

    Being small is being, uh, dis-incentivized.

    The positive feedback loop will take care of crushing the small inventor into a thin red paste under the soles of gummint and big corporations.

  • Move it back to individuals only and a prohibition of patent transfer, and it seems like you've solved half the problem.
    • by Improv ( 2467 )

      I like this idea. Ideally we'd also have it be noninheritable, last 20 years, revert to public domain 5 years after death, and have royalties paid to the patent office (or general us government) during those 5 years.

      I dislike that patents exist at all, but this might be a reasonable comprimise.

  • 1. regular patents. put the fees up all you want. make them harder to get.
    2. defensive only patents. can only be brought out when you (or a "partner" are being sued for some reason.) low to no fees, fast tracked ahead of regular patents in the grant process, easier to get.


  • The USPTO has (decades ago) lost all sense of what patents are even for. They are NOT for recognizing who invented something (first). Instead, they are for granting exclusive rights to an invention, for a period of time, in exchange for having the invention made available in the first place. Patents actually take away the rights of inventors who happen to not be first. This is considered an acceptable tradeoff when the public gets to have (most) inventions that would otherwise have not been available.


  • If protecting inventions is at the heart of high tech competitiveness, plans underfoot at the US Patent and Trademark Office (USPTO) will critically wound small companies.

    Luckily, protecting inventions is not at the heart of competitiveness. Patents are, by nature, a short-term monopoly on a technology. They are anti-competitive. Their intent was to spur risky innovation, and we can argue about whether or not that works in a low-barrier-to-entry market like software, but reducing patents can only increase

  • Vote for me (Score:3, Insightful)

    by paiute ( 550198 ) on Saturday May 08, 2010 @12:26PM (#32139376)

    Here's what we do:
    1. Create a new class of patent examiners who work from home. Vet and enlist a huge number of available experts to examine patents and be paid per examination. The USPTO could send an application right out to ten people conversant with any exotic field and get quick decisions.
    2. Make patent applications free. Make renewal of granted patents increasingly more expensive with each passing year, so profitable patents are maintained and unprofitable ones are abandoned.

  • Alarmist much? (Score:3, Interesting)

    by drew30319 ( 828970 ) on Saturday May 08, 2010 @01:49PM (#32140054) Homepage Journal
    Obviously something is wrong with me because I'm not new here but I *did* read the article.

    From the article: "Put bluntly, the USPTO would raise patent application and maintenance fees to such a level that massive numbers of applications will never be filed in the first place."

    There is *nothing* to support this. The USPTO has already implemented a number of measures to shorten the patent approval process. I know of at least two specific programs that are in a variety of beta / roll-out modes. One is a fast track program for patents previously approved in foreign countries and the other is the Accelerated Examination (AE) program for those that are willing to do additional work up front and willing to limit the number of claims. The AE program has had approval rates as high as 80% and require a final disposition within 12 months!

    I'm not a lawyer but am considering becoming a patent attorney and am currently finishing my second year of law school. There may be many points of contention with USPTO actions but I don't believe that they will be raising fees to the extent imagined by the doom-n-gloom author of the linked article. Frankly, if that somehow *did* occur it would likely be held to be invalid as a due process issue under the Constitution.

    For those who may not be aware: the USPTO is largely self-funding and is one of the few (the only?) government bodies that has historically been able to run without additional funding. In fact since 1991 they have had $700 million diverted from their coffers. This is likely the reason behind their request to have greater control over the fees that they receive; by being able to retain surplus funds it gives them the flexibility to do things like increase hiring when the rest of the government is in a hiring freeze.
    • Re: (Score:3, Interesting)

      by j1m+5n0w ( 749199 )
      Thanks for your insight, I too thought the article was a bit over-the-top. Even supposing that the USPTO does raise fees, the article took at as a foregone conclusion that they would raise them across the board. The patent process already has cheaper fees for individuals and small businesses, and there's no reason to assume they wouldn't continue and/or expand that. I'm in favor of higher fees, if it means we get higher quality patents and prices don't go up for small organizations.
  • plans are afoot, plans are under way, plans are not underfoot.

  • Why not just have a system where publishing the description of an invention automatically patents it? If there's any dispute, let the civil courts handle it.

    This way, we don't need a massive and slow bureaucracy -- the government only gets involved when there is a claim of infringement. It seems to work OK for copyright (and by OK, I mean it's a total clusterfuck, but at least you don't need to convince some "copyright clerk" at the copyright office that your work is original before you publish it). Of c

  • To complete they should add subscription fees and a facility whereby inventors who do not wish to patent their inventions can for a very cheap fee file their "prior art" (without any kind of inspection).

    Very quickly you only have patents being filed that people genuinely and seriously plan to exploit and require protection. Nobody would file any old crap because it might just enable them to sue a competitor for unwittingly copying their "invention" by basically having implemented the natural solution to a

  • I bet disallowing all software and business method “patents” kills off 90% of the patents in the blink of an eye.
    I’d also retroactively void all such “patents” that already “exist”.

    There. Done.

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