Federal Circuit Judge Urges Congress to Repay the US Patent Office to Preserve American Economic Security

Paul R. Michel is the Chief Judge of the United States Court of Appeals for the Federal Circuit ("CAFC").  The CAFC is the court of exclusive jurisdiction of all patent cases that are appealed from federal district courts from across the country.  In a speech delivered to the Patent Examiners at the US Patent and Trademark Office ("USPTO") in Alexandria, Virginia last month, Judge Michel urged Congress to repay the $900 million that has been diverted away from the fees collected by the USPTO since 1982.  The figure recommended was actually $1 Billion.  The full text of Judge Michel's speech can be found here.

American economic security is being threatened by an outflow of jobs, talent, technology and production.  We must boost invention and make new products Americans and the rest of the world will need, want and buy.  The answer is to provide faster, sounder and clearer patents, plus faster, stronger enforcement.  Such improvements can be made if we improve the USPTO and the Federal Courts.  Patents have been the main engine of economic growth and technological progress since 1790 when the First Congress passed the first Patent Act.

Among the problems identified are:

• Delay: in some technologies it is taking 4-6 years to get a patent and the product life-cycle may be shorter than that.  The gears of the USPTO seem to almost be seized up.
• Antiquated technology:  It is ironic that the government entity that examines state of the art technology is using 30 year old computer technology.
• Backlogs:  There are over 700,000 patent applications that sit unread in a warehouse in Alexandria, Virginia, often for years.  Almost 400,000 new applications are being filed each year, which adds to the backlog.
• Employee turnover: Most examiners leave after only 3 years for better pay and working conditions in the private industry.  The average experience level of the 6,000 examiners has fallen to only about 3 years, but it takes that long to become experienced and competent.  Inexperienced examiners harm the system by rejecting claims that should be allowed and allowing claims that should be rejected.
• Fee diversion:  Since 1982 Congress has diverted over $900 Million from the USPTO.  Even this fiscal year, Congress will not allow the USPTO to keep the fees that it collects from inventors and patent owners.  An estimated $150-250 million will be diverted from the USPTO to other government programs.  

The solution proposed is to:

• Provide a one-time capital investment of $1 billion.  In view of what has already been diverted, such an investment by congress would be a repayment of money already taken from fees that have been collected by the USPTO.
• Guarantee that Congress will stop diverting fees away from the USPTO. 
• Hire thousands of additional patent examiners.
• Provide salary increases to retain experienced examiners.
• Modernize the 30 year old computer system.
• Increase space to house the additional patent examiners.
• Open satellite offices in major cities such as Houston and Detroit.
• Hire unemployed engineers who are already experienced in patent matters.
• Exclude scientists and engineers from the restrictive General Pay Schedule so that the pay can be increased for examiners to be more competitive with private industry.
• The Director should be given greater authority to give earlier examination to patent applications in promising new technologies and individual applications for pioneering inventions.

Judge Michel closes by saying that it is time for Congress to "prime the pump" -- only then can private investment take over.  This is perhaps the best and perhaps only way to increase innovation and reverse competitive decline in America.  It could restore us as the technology leader of the world, increase private and public revenues and stock value and create millions of new jobs.