We enjoyed a delicious 2007 Pinot Noir from Joseph Carr Wines over the holiday. The beautifully simple instructions on the back label – share – have a Creative Commons feel to them, don’t you think?

We complied, sharing with friends. And after a couple few glasses, I found myself wishing for an easy way to make perfect copies of the creation. No luck.

Acting Director John Doll reported the lower filing rate in March…and indicated that the Office had stopped hiring Patent Examiners as a result.

The impact of the shortfall didn’t stop at a hiring freeze, though. The Office warned of furloughs and lowered bonuses, reportedly eliminating some. A source has even indicated that the Office adjusted air conditioning schedules in an attempt to save money.

At the end of the summer, the situation appeared so grim that the Office went to Congress and asked permission to move a$60-70M surplus from the trademark side over to the patent side (yes, an act of Congress is needed).  Congress acted swiftly, and President Obama signed the transfer into law on August 7, 2009.

The urgency of the situation seemed to pass, and operations continued at new ‘adjusted’ levels.

Then, shortly after closing the books on fiscal year 2009, the Office issued its 2009 Performance and Accountability Report. In it, the Office notes that actual fee collections for 2009 totaled $1.874B. As a result, the Office was left with a final appropriation level of $1.874B despite having an approved budget of $2.010B.

So there’s the shortfall. The crunch.

In these circumstances, I would have expected the Office to have spent every penny available to it, making difficult choices along the way. I’m not entirely sure that this happened, though. The following table, reproduced from page 45 of the Report, seems to indicate that $118M was left on the table.

I don’t see that management specifically addressed these monies in the Report, and do not know the status of these funds. I suspect they may be lost to fee diversion – a very odd result considering the overall budget shortfall –  since they were not spent during the year in which they were collected. The status indicator “Unobligated Balance, Available” might suggest that the Office will have access to these funds in 2010…but it’s not entirely clear.

FY2009 was certainly full of challenges and I think it’s a bit much to expect the Office to have incurred expenses that neatly matched fee collections, particularly considering the drastic cost-cutting measures that had to be implemented in the final months of the year.  That said, missing it “by that much” would be acceptable. Missing the mark by $118M, though, isn’t.

A review of Stanford’s IP Litigation Clearinghouse revealed a sharp decline in patent infringement filings in 2008.

According to this National Law Journal article, new infringement suits fell by 8% in 2008 as compared to 2007. The last five months of the year saw a 23% decrease over the same period in 2007.

The cause for the drop?

“Several patent litigators attributed the decrease to clients clamping down on legal costs associated with some patent cases, which tend to be more costly than standard lawsuits. But other factors could have contributed to the decline, including a general shift from federal district court to filing patent cases before the U.S. International Trade Commission (ITC), as well as longer times to trial in some of the nation’s traditionally busiest districts, the Central District of California and the Eastern District of Texas.”

Hmmm…something tells me they they missed one – the new found difficulty in hearing the words “valid and infringed.”

2. Adam Smith – (patent) Lessons from the Depression

Bruce MacEwen expands on the McKinsey Quarterly’s Innovation Lessons from the 1930s.

The McKinsey subtitle – “History suggests that even the deepest downturns can create huge opportunities for companies with money and ideas.”

Bruce adds: “Not only may your competitors be battening down the hatches, but investment assets (talent, primarily) may be cheaper than they have been for a long time.”

3. TechDirt – The cultural gulf between lawyers and technologists on patent law

The author notes his observations on the differing views between patent attorneys and technologists on patent law, following last week’s Brookings Institution conference on “The Limits of Abstract Patents in an Intangible Economy.”

“I was struck by the dramatic differences between the views of lawyers on the one hand (who made up the majority of the panelists and audience members) and the handful of technologists on the other….[P]atent attorneys and law professors who write about patent law are overwhelmingly in favor of patents on software, and prefer to argue about how to fine-tune patent law to get fewer “bad” software patents without invalidating the “good” ones. In contrast, a lot of computer programmers simply wish the patent system would leave them alone.”

…

“As a consequence, the two communities have radically different views of how well the patent system is working. The lawyers certainly acknowledge that there’s a problem, but they seem to find it incomprehensible that there could be a major American industry that’s better off without patent protections. Techies understand that patents are not an important part of the software industry, and so they’re much more likely to say that their industry would be better off without them.”

4. Quality v. quantity debate and the rise of Asian companies in list of top US patent earners – Japanese system emphasizes quantity over quality

Last week’s report from IFI on the top us patent recipients generated a lot of buzz for its observation that “the scales of patent-quantity supremacy may be shifting away from corporate America in favor of companies overseas, especially to those in Asia.”

The cause for the shift? Foreign companies garnered 51% of new patents in 2008, meaning American companies grabbed less than half.

This BusinessWeek article suspects there’s more to it than just numbers, though:

The problem with the Japanese system is that it emphasizes quantity over quality. Figuring out a patent’s value can be tricky because it can take years to turn a good idea into a winning product. So the solution in Japan has been simply to give a bonus for every little incremental invention. And why submit one solid patent when you can get more money for filing five? The result: There’s more of an incentive to file a lot of patents than to come up with one that’s hard for rivals to copy (plus a few tweaks to discourage a court battle).

If American companies continue to react to recent caselaw pressures by focusing on quality over quantity, it seems likely that this “shift” is likely to continue.

5. The Obama administration immediately adopts a wide-open robots.txt file

On Tuesday, President Obama sent a swift technological signal that he’s serious when saying “transparency and the rule of law will be the touchstones of this presidency.” What did he do? The new whitehouse.gov website seemed to appear even as Chief Justice Roberts and then-(President? Senator?) Obama were wrestling with the oath, and with it came a brand new, wide-open, 2-line permissive robots.txt file that invites search engine bots everywhere to enter the site, and crawl and index everything (save one directory). The new file replaced a 2400-line restrictive robots.txt file used by the Bush administration.

In the patent world, this sends an immediate signal to the PTO, which currently uses the restrictive style on servers housing BPAI decisions.

BTW, I liked this find so much, I wrote a full post about it.

This find came to me from @gahlord via @nipper on Twitter.

A review of Stanford’s IP Litigation Clearinghouse revealed a sharp decline in patent infringement filings in 2008.

According to this National Law Journal article, new infringement suits fell by 8% in 2008 as compared to 2007. The last five months of the year saw a 23% decrease over the same period in 2007.

The cause for the drop?

“Several patent litigators attributed the decrease to clients clamping down on legal costs associated with some patent cases, which tend to be more costly than standard lawsuits. But other factors could have contributed to the decline, including a general shift from federal district court to filing patent cases before the U.S. International Trade Commission (ITC), as well as longer times to trial in some of the nation’s traditionally busiest districts, the Central District of California and the Eastern District of Texas.”

Hmmm…something tells me they they missed one – the new found difficulty in hearing the words “valid and infringed.”

2. Adam Smith – (patent) Lessons from the Depression

Bruce MacEwen expands on the McKinsey Quarterly’s Innovation Lessons from the 1930s.

The McKinsey subtitle – “History suggests that even the deepest downturns can create huge opportunities for companies with money and ideas.”

Bruce adds: “Not only may your competitors be battening down the hatches, but investment assets (talent, primarily) may be cheaper than they have been for a long time.”

3. TechDirt – The cultural gulf between lawyers and technologists on patent law

The author notes his observations on the differing views between patent attorneys and technologists on patent law, following last week’s Brookings Institution conference on “The Limits of Abstract Patents in an Intangible Economy.”

“I was struck by the dramatic differences between the views of lawyers on the one hand (who made up the majority of the panelists and audience members) and the handful of technologists on the other….[P]atent attorneys and law professors who write about patent law are overwhelmingly in favor of patents on software, and prefer to argue about how to fine-tune patent law to get fewer “bad” software patents without invalidating the “good” ones. In contrast, a lot of computer programmers simply wish the patent system would leave them alone.”

…

“As a consequence, the two communities have radically different views of how well the patent system is working. The lawyers certainly acknowledge that there’s a problem, but they seem to find it incomprehensible that there could be a major American industry that’s better off without patent protections. Techies understand that patents are not an important part of the software industry, and so they’re much more likely to say that their industry would be better off without them.”

4. Quality v. quantity debate and the rise of Asian companies in list of top US patent earners – Japanese system emphasizes quantity over quality

Last week’s report from IFI on the top us patent recipients generated a lot of buzz for its observation that “the scales of patent-quantity supremacy may be shifting away from corporate America in favor of companies overseas, especially to those in Asia.”

The cause for the shift? Foreign companies garnered 51% of new patents in 2008, meaning American companies grabbed less than half.

This BusinessWeek article suspects there’s more to it than just numbers, though:

The problem with the Japanese system is that it emphasizes quantity over quality. Figuring out a patent’s value can be tricky because it can take years to turn a good idea into a winning product. So the solution in Japan has been simply to give a bonus for every little incremental invention. And why submit one solid patent when you can get more money for filing five? The result: There’s more of an incentive to file a lot of patents than to come up with one that’s hard for rivals to copy (plus a few tweaks to discourage a court battle).

If American companies continue to react to recent caselaw pressures by focusing on quality over quantity, it seems likely that this “shift” is likely to continue.

5. The Obama administration immediately adopts a wide-open robots.txt file

On Tuesday, President Obama sent a swift technological signal that he’s serious when saying “transparency and the rule of law will be the touchstones of this presidency.” What did he do? The new whitehouse.gov website seemed to appear even as Chief Justice Roberts and then-(President? Senator?) Obama were wrestling with the oath, and with it came a brand new, wide-open, 2-line permissive robots.txt file that invites search engine bots everywhere to enter the site, and crawl and index everything (save one directory). The new file replaced a 2400-line restrictive robots.txt file used by the Bush administration.

In the patent world, this sends an immediate signal to the PTO, which currently uses the restrictive style on servers housing BPAI decisions.

BTW, I liked this find so much, I wrote a full post about it.

This find came to me from @gahlord via @nipper on Twitter.

HP is focused on quality, breadth of coverage, and alignment with business goals.  IBM continues to focus on quantity:

“H-P has been focusing on “the quality of the patents that we seek, as opposed to the quantity,” Mr. Light said. As a result, he added, H-P is seeking broad patents that relate directly to its main businesses, avoiding the costs of filing patents that may relate to more specific processes.”

I see this as part of a bigger trend.  As it becomes more difficult to get patents allowed, companies will likely begin sharpening the focus of their patenting efforts on higher quality inventions and disclosures.

(Frustrated with WSJ subscription policies for online content? Read this CNet article on the HP/IBM contrast instead.)

2. Quality v. Quantity in the Tech Daily Dose article on patent rankings

Another indication of a developing trend favoring quality over quantity?

“American companies garnered a minority share of the total number of corporate U.S. patents last year, it’s important not to confuse quantity with quality,” IFI’s Darlene Slaughter said in a press release.

3. Pfizer sheds 800 scientists in preparation for expiration of patent covering Lipitor

Is the BigPharma patent cliff starting to reveal itself (remember last week’s ‘Most Interesting’ – Big Pharma apparently stands to lose patent protection on drugs with annual sales of $140 Billion by 2016)? Is the cliff being used as a scapegoat for other things?

4. Patent litigation – should we be in this business?

Jackie Hutter of the Hutter Group IP strategy consultancy has a great post on her IP Asset Maximizer blog about a simple way to reduce expenses and improve business outcomes of patent litigation. The solution – divorce the emotion from the issue and focus on one simple question – Should we be in this business?

1. Dennis Crouch on BPAI Appeal Statistics: The Plummeting Reversal Rate

Dennis continues his empirical dissection of the Patent and Trademark Office.  In this post, he explains that the Board’s reversal rate (the percentage of cases where the Examiner rejections are completely reversed) has been cut in half (from 40% to 20%) over the last four years. He also demonstrates the significant growth in the number of appeals filed  – and the number pending – that has occured over the last several years.

2. Big Pharma’s looming patent cliff

As if its struggles in the ongoing patent reform battle weren’t enough, Big Pharma apparently stands to lose patent protection on drugs with annual sales of $140 Billion by 2016. In the wake of Dystar and KSR, silly tricks like creating grape flavored chewy tablets aren’t likely to solve the problem, either. That, of course, would simply be adding fins.

Big Pharma apparently sees the writing on the wall, recognizing that true innovation is the solution: “While reformulation strategies may be effective at staving off generic competition in the short term, ultimately manufacturers need to develop truly novel drugs in order to maintain franchise and portfolio revenues in the face of generic competition….”

3. Oprah’s Book Club sued for patent infringement

I admit it…the headline hooked me. I’m sure it will grab you, too.

I can hear it now: “Next, on today’s Oprah – Patent trolls, Dr. Oz and Nate Berkus – which of these three do I hate?”

4. The resignation of Jon Dudas

It appears that Jon Dudas might have announced, internally, his resignation as Director of the Patent and Trademark Office. While completely expected, this is interesting because it appears to eliminate the remote possibility the he would stay on board until a new Director is appointed, confirmed, and on the job.

But even more interesting are the comments on Dennis’ original post. We’ll have to wait, though, for the most interesting side of this story – where is he headed?

When is Mr. Dudas’ last day on the job? It appears that he’ll call it quits when W. does – January 20th.

Read more about Ryan’s story in this Stuff article.

In all seriousness, we have seen a few hints about the direction in which patent reform will move once the 110th Congress signs its name to the growing log of the issue. Senator Leahy, the incoming chair of the Judiciary Committee, recently gave indications that the patent reform agenda will include efforts “to increase access to essential medicines throughout the world.”

According to Leahy:

“We can help struggling families in developing nations, while improving US relations with large segments of the world’s population…The current global health crisis is one of the great callings of our time. Whether it is the Avian Flu, AIDS, SARS, West Nile Virus, or the approaching menace of multi-drug resistant bacteria, we need to recognize that the health of those half-way around the world now influences our security and affects our lives here in the United States….I want the work of the Judiciary Committee to be a catalyst to help make life-saving medicines more readily available around the world.”

He leaves no doubt that he views patent reform as part of his agenda on “access to essential medicines,” stating that he intends “to redouble efforts to re-examine our patent laws in the hope that by making thoughtful and practical changes we can greatly increase access to essential medicines throughout the world.”

Certainly, that’s a whole new direction for patent reform in the United States. It sounds a lot like the debates that occurred in India as that country struggled to become fully TRIPs-compliant.

Read the full article on Leahy’s comments at Intellectual Property Watch.

Judge Newman: “Is the government’s position that…Congress could appropriate the entire income [of the Patent and Trademark Office]…and allow the backlog to continue to increase in the…Office if, in fact, [that's] what Congress decided to do?”

Government counsel: “Yes, your Honor. It’s our position that Congress’ legislation is not limited by the preamble’s promotion language on which the Appellant relies.”