Thomas Jefferson Symposium on Patent ADR & Litigation

I am writing from San Diego, California this morning.  I am sitting in an auditorium at Qualcomm, where the Thomas Jefferson School of Law is holding a symposium titled Improving Patent Adjudication Through ADR and Federal Court Reform.  This is a special event for me personally because not only am I a speaker, but I also inspired the research project started by the Alternative Patent Dispute Resolution Project (APDRP) at Thomas Jefferson School of Law, which lead to this symposium.  When I returned to Franklin Pierce Law Center in 1997 to obtain a Master of Laws (LL.M.) I had to engage in meaningful and unique research and prepare a thesis, which was then a degree requirement.  My thesis article Using Alternative Dispute Resolution to Resolve Patent Litigation: A Survey of Patent Litigators, included empirical research on patent application filings, patent litigation cases brought and a survey of patent litigators, to attempt to understand a litigators perception of the use of mediation and arbitration.  The students and faculty at Thomas Jefferson School of Law have worked to update this research and identify what, if any, changes have occurred.  I am anxious to hear the results of this research they have conducted.  I am on the last panel this afternoon, at about 4pm Pacific Time, and that is when the updated survey results will be presented, so look for me to write about that more next week.

The symposium is already off to a great start.  The opening panel is largely setting the table for the remainder of the panels and presentations.  Fred C. Hernandez, of Mintz Levin Cohn Ferris Glovsky and Popeo, P.C., lead off giving an overview of the patent process from the practitioner’s perspective.  He was followed by Bob Spar, who spoke of the patent process from the perspective of the Patent Office.  Bob is the former (now retired) Director of the Office of Legal Administration at the United States Patent Office. 

During Bob’s presentation he made some interesting observations about the internal workings of the Patent Office.  For example, Bob explained that the cost to the Patent Office for each application prosecuted is approximately $4,000.  At the same time, the cost of an application is typically about $1,000.  Even with the additional fees that are paid by the applicants during prosecution it can easily be seen that the Patent Office is losing money on every application examined, and that is even worse when the applicant qualifies for small entity status.  I realize that the Patent Office is not in the business of “making money,” but the USPTO gets its budget from user fees. 

Unfortunately for the Patent Office, the lion share of the revenues come from maintenance fees, but with the allowance rate  decreasing over the last few years to the point where the allowance rate is now 42%, that will significantly impact the amount of money the Patent Office can bring in through maintenance fees.  Bob also had some very interesting statistics, explaining that 31.7% of applications in FY 2008 were RCEs and continuations.  We didn’t get too much into detail on that point, but I will certainly pursue that with Bob and others over the coming weeks.  I suspect that number is so high because of failed quality review efforts, examiners afraid to issue any patents and applicants forced to file continuations and RCEs to keep applications alive rather than simply giving up.  Bob also explained that an allowance rate that is below 45% “is way too low; it is just ridiculous.”  Amen to that!

There just are not any maintenance fee revenues for applications that were finally rejected and did not result in an issued patent.  I would have thought that the management within the Patent Office would have figured that out at some point years ago, but much like those who thought the housing market would always increase, it seems that the Patent Office believed applications filed would always increase, and have been caught off guard by the decrease in applications so far this year.

So far everyone is talking about the claims and continuations rules and patent reform, which I suspect will dominate the conversation throughout the day, and will be weaved into just about every panel presentation whether the subject the panel is talking about allows for it neatly or not.  When you get a room full of people who love talking about patent law, and you have such hot issues occurring within the industry, it is understandable.  Lets face it, when we all go home and talk to our family and friends most of them don’t find it at all interesting to talk about the backlog of cases, the low allowance rate, whether the Senate really understands the patent reform bill they are considering, etc. etc.  So this symposium comes at a great time.  Lots of things to talk about, and many if not all of the big ticket patent issues in the industry impact litigation and, therefore, also impact alternative dispute resolution and settlement. 

I am happy to be here, looking forward to a great day and a great program, and being in Southern California is just a bonus!