National Public Radio’s Marketplace ran a piece this morning on the patent provisions of the appropriations bill.  NPR focused on the bill’s promise of additional funds for the hiring of new Examiners and used that as an entree for a critique of the current patent system.  Too bad NPR missed the hot issue of fee diversion.

The patent fees story starts at about the 4:30 mark in the audio file on the linked page.

This month’s Wired Magazine came with a free CD.  No, its not an America Online CD.  Its an audio CD packed with 16 tracks carrying licenses from the Creative Commons allowing you to freely share and sample the music.

The article that accompanies the CD is an excellent introduction to the licensing system provided by the Creative Commons.  If you haven’t learned about the "some rights reserved" approach offered by the CC licenses, this article is a quick way to get up to speed.

And the music is great.  My favorite (currently) is Wadidyusay by Zap Mama.

The omnibus appropriations bill is likely to be signed by the President and become effective in mid-December.  Unless an unlikely success is achieved in last-minute attempts to amend the provisions affecting the Patent and Trademark Office, the current form of these provisions will become the law of the land.  This post presents an outline of the major themes of these provisions…which go way beyond mere fee increases.

1.  Fee increases.  This is no surprise — the bill includes a broad-based (affecting many aspects of patent prosecution and maintenance) and significant (read on…) increase in fees.  All persons who file and prosecute patent applications in the United States needs to conduct an analysis of their current and projected portfolios to determine the full impact of the bill.

While the fee increases are broad-based, some areas are hit harder than others.  For example, the cost of an appeal, from start to finish, more than doubles under the appropriations bill.  The fees for filing an appeal and taking it through oral hearing skyrocket to $2000.00.  This could absorb a significant portion of a patent budget if the appeal process is a primary component of your overall prosecution strategy.

2.  Establishment of a Multitrack Fee System.  For the first time, patent applicants must now pay filing, search and examination fees.  Each of these fees must be paid upon filing of an application.  So, it can be said that the new "filing fee" includes all three of these fees.  And the increase in the "filing fee" is significant — over 25% for large entities.

The 21st Century Strategic Plan, created by the Patent and Trademark Office, discusses a market-driven examination system that "permits applicants to have freedom of choice in the processing of their applications."  The break-out of separate search and examination fees appears to be a step in this direction, and makes you wonder if procedural changes are far behind (e.g., filing of a Request for Examination).

3.  Fee Refunds.  The bill authorizes the Director to promulgate regulations providing for the refund of the search fee in two situations: 

• where an applicant files a written declaration of express abandonment before an examination is made
• where an applicant provides a search report that meets the conditions prescribed by the Director

What is a qualified search report?  I speculate that a regulatory definition is likely to include a report from a foreign patent office and is not likely to include a ‘report’ from the applicant.  Time (and the Federal Register) will tell us the answer.

4.  Outsourcing of Prior Art Searches.  The outsourcing of searches is a major component of the 21st Century Strategic Plan and the bill includes provisions to initiate the program.  Congress was very cautious with this program, however, writing several key protections into the bill.  For example, the bill requires that the Director conduct a pilot study of limited time and scope to ensure appropriate quality of external searches.  Dual layers of reports (the Director and the Patent Public Advisory Committee) must be submitted to Congress on the pilot study, and the bill includes a suicide provision that allows Congress to easily kill the program by passage of a separate law.

Also, the outsourcing provisions ensure that, when and if commercial entities are used for prior art searches, only US companies and US citizens are used.  It seems the patent fee bill is also a jobs protection bill.

5.  Incentive to File Patent Applications Electronically.  The bill includes, for the first time, an economic incentive to file applications electronically — but the incentive is extremely narrow in scope, applying only to small entities and nonprovisional applications.

Under the bill, small entities will get a 75% discount (compared to 50%) on the filing fee (note — this only applies to the true filing fee, and does not apply to the search and examination fees) for a nonprovisional application.  This amounts to a savings of $75.00.  Is this enough of an incentive to increase usage of the electronic filing system?  Considering the relative costs of the entire prosecution system, the savings does not appear to be significant, but time will tell.  Interestingly, the cost of filing a nonprovisional application, including the electronic filing discount, still exceeds the old small entity filing fee.

Congress recently passed an omnibus appropriations bill that includes a watered-down version of the Patent and Trademark Fee Modernization Act (see this prior post).  Importantly, the PTO provisions in the appropriations bill include the significant fee increases, but do not include the controversial anti-fee diversion provisions.

The intellectual property community is quite disappointed in this result, as the Fee Modernization Act enjoyed wide support despite the significant fee increases.  It seems the promise of PTO reform and improvement, which the PTO claims would be achieved once fee diversion ends, is so attractive that the fee increases became secondary.

Normally, appropriations bills are difficult to amend considering their broad scope.  But a development this morning may have opened a window of opportunity.

The 3500-page appropriations bill also contains a controversial provision that apparently allows committee chairmen to review individual tax returns.  This morning, Congressional leaders made an agreement as to how to remove this provision.  According to this article, Congress will hold onto the appropriations bill until December 6, at which time a vote will be held to remove this provision.

So, the bill is on hold until December 6.  Does this create a narrow window of opportunity regarding the PTO fee provisions?  Anyone want to bet the IP lobbyists are busy over the Thanksgiving holiday?

The popular media often writes about and discusses intellectual property issues.  I sometimes cringe at things they write and say, and wonder why they don’t consult with someone prior to publishing their work.

Two of my pet peeves follow:

1.  "The patent on…."

How many times have you heard the phrase "He has THE patent on the so-and-so…"?  While someone or some entity may have a patent on an invention, anyone who has ever performed a clearance investigation will tell you that this phrase is misleading.  Some products are covered by many patents.  This phrase may have been accurate more frequently during earlier times, but as we approach issuance of the seven millionth US patent, it is misleading and often incorrect.

2.  Trademarked/Trademarking

When discussing the filing of a federal trademark application, the media often says something like "He is trademarking his name…"  (Paris Hilton recently made such news…)

Not true, and, again, somewhat misleading.  When filing a federal application, the applicant is seeking to register their mark, not create the mark.

American Lawyer Media’s law.com is currently featuring an article I wrote about the recent legislative activity that affects the fee structure of the Patent and Trademark Office.

Congress Patently Out of Step as USPTO
Modernizes is currently on the law.com homepage, and will remain in the site’s IP Law Practice Center.

The lame duck 108th Congress passed the omnibus appropriations bill (H.R. 4818) over the weekend.  The bill funds government agencies for the next fiscal year (which has already begun), and includes major changes to the fee system of the United States Patent and Trademark Office.  In classic sausage-making legislation, Congress ripped some provisions from the Patent and Trademark Fee Modernization Act (H.R. 1561) and dumped the remainder into the Appropriations bill.

The result…a spicy little gem of a sausage that includes broad-based and significant PTO fee increases (IPO estimates that the bill increases fees by an average of 15 to 25 percent) and a restructuring of patent fees.  Under the bill, extra fees are incurred for excess specification pages and separate fees are charged for filing and examination.  All fees are payable on filing, but are Requests for Examinations far behind?

This treatment of the Modernization Act is generally bad news.  The Act enjoyed broad support by PTO stakeholders despite its significant fee increases.  Why?  Because the Act was supposed to end the diversion of PTO fees to other government programs, and PTO has promised that patent quality and pendency will improve once diversion ends.  Unfortunately, the appropriations bill includes the fee increases but does not end fee diversion.

There is good news, though.  Under the bill, small entities will get a 75% reduction in fees when an application is filed electronically, and the Director can conduct a pilot study evaluating the outsourcing of prior art searches.  There might even be more good news…I’m still reviewing the bill….

Congress is hoping to wrap things up soon, and the appropriations bills are clearly the focus of the lame-duck 108th.  The appropriations bill for Commerce, Justice and State (CJS) includes funding for operations of the Patent and Trademark Office, but recent versions do not include the anti-fee diversion provisions that the Office was hoping to get passed this year and with this Congress.

Perhaps now, with the anti-fee diversion provisions seemingly off the table, the most interesting aspect of the fabled Patent and Trademark Fee Modernization Act of 2003 (and 2004, and…) is the fate of various procedural provisions.  For example, the Act originally established a multi-track examination process for patent applications, and also allowed for outsourcing of patent prior art searches.

Will these and other provisions remain in the final bill?  Time will tell.  Perhaps we’ll know today…

If they do, they’re likely to become law because inclusion in an appropriations bill makes amendment of specific provisions difficult.

I am now working with American Lawyer Media’s law.com as a special contributor of articles focused on intellectual property and technology law issues.

Law.com is a legal news and information network that connects legal professionals to more than 20 award-winning national and regional legal publications online, including The American Lawyer, The National Law Journal, New York Law Journal and Legal Times. In addition, through Law.com’s linked information sites, legal professionals can track developments in their practice specialties in the site’s Practice Centers.

I will be making regular contributions to the Intellectual Property and Business Law Practice Centers.

The Polish government yesterday stated that it cannot support the controversial European Patentability of Computer-Implemented Inventions Directive [.pdf; draft].  According to this article, the move by the Poles has the potential to kill the Directive.  Apparently, the Polish government will support a directive that makes it clear that

"computer-implemented inventions" are patentable, so long as software is excluded.

So, what is a "computer-implemented invention" (CII)?  The draft Directive defines the term as:

any invention the performance of which involves the use of a computer, computer-network or other programmable apparatus and having one or more prima facie novel features which are realised wholly or partly by means of a computer program or computer programs

According to Patents4innovation, a CII is "[a]ny invention which is implemented using software as a component…."

The patentability of software is, of course, the hot controversy in European intellectual property law.  The Directive, and the politics surrounding it, are likely to continue to evolve…