Squelching Innovation

Patents are the currency of innovation, David Kappos likes to say. And in an economy reliant on new ideas, that's money in the bank.

But the U.S. Patent and Trademark Office, which Kappos leads, is a failed organization — utterly incapable of efficiently examining patent applications. When Kappos came aboard as director nine months ago, he found a computer system hopelessly antiquated, a backward incentive system for patent examiners and a budget frequently pilfered in congressional raids.

Kappos believes millions of jobs are at stake when good ideas can't get protected, the Journal Sentinel's John Schmid reports.

"Hundreds of thousands of groundbreaking innovations that are sitting on the shelf literally waiting to be examined — jobs not being created, lifesaving drugs not going to the marketplace, companies not being funded, businesses not being formed — there's really not any good news in any of this," Kappos said at a trade show recently.

It now takes, on average, 34 months for the office to make decisions on patentable ideas. The Journal Sentinel reported last August that the office had a backlog of 1.2 million patents, 700,000 of which have not even had a preliminary look.

Kappos has improved productivity at the office and made its work more transparent.

But he'll need a hand from Congress to make further progress. The office needs a bigger budget, control over rate-setting and Congress to keep its hands off Patent Office money.

A patent reform bill working its way through Congress would give the office rate-setting authority, which would help the office adjust rates to the actual cost of examination. This change alone could significantly reduce the backlog.

President Barack Obama has proposed a big budget bump as well, up about 23 percent from its 2010 budget.

But Congress needs to do at least one thing more: stop raiding Patent Office funds. A Journal Sentinel investigation last year found that Congress had repeatedly diverted funds from the office from 1992 through 2004, which crippled its ability to keep up with applications. Just last December, lawmakers were up to their old tricks once again. In a last-minute budget change, they added a spending ceiling on the Patent Office, costing the office about $100 million.

Kappos seems to have correctly identified the problems at the Patent Office. Whether Congress is willing to fix them is another matter. For the sake of innovation and job creation, it must.

REPRINTED FROM THE MILWAUKEE JOURNAL SENTINEL.

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