Senate Acts to Prevent USPTO Furlough or RIF

Last night the United States Senate passed a bill that authorizes the United States Patent and Trademark Office to shift funds between different USPTO accounts in order to avoid the Patent Office having to furlough or terminate patent examiners.  Under the Senate bill the USPTO would be able to shift funds from the Trademark side of the building, which is in the green, to the Patent side of the building, which is substantially in the red.  As I have been explaining for many months, the Patent Office budget is in shambles, and is only getting worse.  The Patent Office has seen a sharp drop in patent revenues in the last six months, and while there are many who will blame the economy, the truth is that budget problems would have been experienced even without an economic downturn, although the PTO budget has turned into a nightmare because the economic downturn has certainly had an impact, and not a helpful impact at that.  The truth, however, is that the Patent Office obtains an overwhelming amount of its funding from patent maintenance fees (I have been told it approaches 70% of Patent revenue) and with the patent allowance rate declining for years thanks to second pair of eyes review, the Patent Office has had the unfortunate circumstance of having to use double the resources to fuel two separate reviews of all applications, while at the same time cutting off future maintenance fee payments because patents were not issuing.

As you can see from the chart below, which was created by the USPTO itself, in about 2004 the patent allowance rate started to drop at an alarming rate.

In 2005, the Patent Office decided that the second pair of eyes review was going so well in the business method field that it would be applied across the board to all applications.  This meant that starting in 2005 all patent applications that were deemed allowable had to be reviewed twice.  It is no wonder that the backlog got out of control because the Patent Office was forcing itself to do twice the work on every allowable application, which not surprisingly resulted in fewer applications becoming patents.  It is also not surprising that maintenance fees would suffer.  In order to keep a patent current for the full term it is allowed to exist under the law, patent owners must make three separate payments to the Patent Office.  These maintenance fee payments are due at 3.5, 7.5 and 11.5 years after a patent issues.  So we the Patent Office is starting to feel significant downward pressure in maintenance fee collections, and this problem is only going to get worse for at least the next decade.  So even without an economic downturn, through mismanagement the Patent Office has created its own budget problems, which were easy to predict, which I and others did predict, and which for some reason seem to have come as a surprise to the Patent Office.  Go figure!

The only way to rationalize the blind eye turned by the Patent Office is because like so many they believed the economy would only go up and up, and there would be no bubble.  Just like a ponzi scheme can exist for a while in a strong and growing economy, this PTO head in the sand mentality could have gone on for at least a while longer had the economy continued to be strong.  As we certainly all know, that isn’t the case and now the Patent Office is in severe trouble!

The magnitude of the problems faced by the USPTO are overwhelming.  While those who rail against patents complain that patents last for too long, they are simply misinformed and flat out wrong.  The overwhelming majority of patents do not enjoy the full term that the law allows because maintenance fees are not paid.  Every week the Patent Office announces hundreds, or even thousands, of patents that fall into the public domain because of failure to make maintenance fee payments.  Only those patents that are the most commercially relevant are the ones that last the full term, and those are the exact innovations we ought to be encouraging, not complaining about.  If the patent system is suppose to foster innovation is it ridiculous to complain about patents lasting the full term, because few do and those are the inventions that foster innovation and benefit society most.  But I digress.

Below is a portion of the patent fees table available through  This shows how much maintenance fees cost at the various intervals.

The first column represents the full fee, and the second column represents the fee that must be paid by “small entities,” which are individuals, non-profits, universities and companies with 500 or fewer employees.

Maintenance fees add up quickly, and in the natural course of business even during a strong economy there are choices made by all patent owners with respect to whether it makes sense to keep a patent current or allow it to fall into the public domain.  Most will pay the first maintenance fee, but from there forward the decision is much more difficult when the invention covered in the patent is not living up to expectations.  Add to this the belt-tightening that goes on during a recession and this is why the Patent Office is in such dire straights at the moment.

A furlough or reduction in force would be very bad for the patent system, especially in light of the patent application backlog, which was created in significant part due to the resource intensive two reviews the Patent Office mandated for every allowable patent application.  Thankfully the Senate has taken important first steps to correcting problems at the Patent Office.  The bill passed last night would allow the Patent side of the Office to temporarily borrow funds from the Trademark side of the Office, which currently enjoys a $60 million surplus. This is not the first time that such an intra-Office borrowing has occurred within the walls of the USPTO.  In both 1999 and 2005 the Trademark side of the building borrowed from the Patent side.  Unfortunately, existing laws prevent the Patent side of the building from ever borrowing from the Trademark coffers.  This bill would suspend this restriction to the extent necessary to allow PTO to avoid furloughing or terminating patent examiners. All funds would have to be paid back to by September 30, 2011, and the borrowing authority itself will terminate on June 30, 2010.

Hopefully this bill will speed its way through Congress and immediately get signed by President Obama.  This is crisis time for the Patent Office and this is likely only going to be the first time Congress and the President will need to step in.  My hope is that eventually our leaders will see the wisdom of funding the Patent Office to a point where it can actually fulfill its Constitutional mandate.  More examiners will be needed, those present will need to be retained, work-flow will need to improve and patents will need to start being granted.  Without a cohesive plan innovation will not be the solution to getting us out of this recession, and that would all but certainly mean a recession that is unnecessarily prolonged.


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Join the Discussion

24 comments so far.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 3, 2009 11:06 am


    At first I tended to agree with you about 6, 6k, 6000, etc. I actually banned him/her from commenting here because when I would post information aimed at independent inventors and entrepreneurs he would comment with what was objectively incorrect legal advice and then claim his/her superior status as a patent examiner made him more qualified. He would tell inventors that they don’t need lawyers, lawyers are the problem and they should just file themselves and let the examiner write claims for them because examiners are far superior at doing that compared with lowly lawyers. I tolerate opposing views, but do not tolerate inaccurate and/or bad legal advice.

    16 year examiner’s comments were getting trapped in spam, and I couldn’t figure out why. Then when he started calling me “dude” it started to make sense. It would seem that 16 year’s messages originate from the same location as did 6k’s messages.

    I police the comments as much as I can, but once you have one comment that is approved your comments go straight through without screening (except in cases where you use a banned character string, which is why “assessment” was causing problems for some a while back, or have a hyperlink, then I have to manually approve). So, I set to spam those who like making threats, use profanity, make incorrect legal statements and pass them as qualified legal advice and those who are belligerent and try and remain completely anonymous.

    I realize this is censorship, but I am not about to let this site be taken over like some of the other blog out there that are simply unreadable because of the nonsense spewed in comments.


  • [Avatar for Gene Quinn]
    Gene Quinn
    July 3, 2009 10:57 am

    Mr. Xaminer-

    I agree with everything you say. I do not think it is politically feasible to have examiners laid off or terminated. I understand what it is like to worry about your job. In my first law job I saw the firm I was with struggling and making cuts and everyone was afraid. I wish the PTO didn’t have to go through this. It is unnecessary, counter-productive and harms the US economy and innovation.

    I think it is encouraging that Congress authorized the borrowing from the Trademark Office. I think there are some in Congress that do get it, and now they have all to some extent been informed. That should be a good thing. With a small fraction of stimulus money Congress could set up the PTO to meaningfully participate in economic recovery.

    I promise to keep writing about this and work my contacts to get this issue in front of decision makers and policy makers. What you could do that would help is encourage examiners who share your view to post comments here and elsewhere regarding your fears and your ideas for making a better Patent Office and better patent process.


  • [Avatar for Noise above Law]
    Noise above Law
    July 3, 2009 10:47 am


    I realize that the rantings of the individual who calls himself Examiner 6k, 6, 6k, or 6000 are so pervasively idiotic that even seeing “6” and “examiner” in the same line brings to mind the image of a fool and a fool’s prattling, but the prattling that you responded to above belongs to a different examiner. “16 year examiner” is not likely “Examiner 6k”. 6, while equally ignorant, glories more in his ignorance.

    “They spend an extra day searching for the best art and make an air-tight rejection? ” – Hilarious. If only this were so. Rather, we have months to years and ill-founded rejection after ill-founded rejection, stubborn ill-founded rejction appealed and replaced with an equally bad ill-founded rejection. “16 year examiner”, you might actually pay attention to the body of the complaints before denying culpability. Then again, looking at the facts before you is not a strength, eh?

  • [Avatar for Mr. Xaminer]
    Mr. Xaminer
    July 2, 2009 11:19 pm

    As an examiner I’m extremely frightened about the possibility of getting laid off. I actually think that the PTO could be a little wiser in how they manage their budget, but nevertheless, they need to not only keep all examiners, but reinstate overtime to get more applications examined. Overtime is the best “bang for the buck” in getting applications examined. I expect overtime would be reinstated before the PTO would actually hire any new examiners again. What we have now is the ‘perfect storm’ as a result of the bad economy being swirled into the PTO’s own self-made budget crisis and backlog. It’s the PTO’s primary function to move patent applications effectively and expeditiously, yet the huge backlog and dire finances symbolize the PTO is failing at its duty. If the day comes in which the PTO must furlough examiners, the patent system will begin to unravel. The current backlog is already hindering further ingenuity and economic investment in this country and is only going to become worse if the manpower is not in place to examine the backlog of patent applications. There is really only ONE fix for the PTO’s current crisis. Congress must step in and completely bail out the PTO financially and passing legislation to siphon from the trademark budget WILL NOT BE EVEN CLOSE TO ENOUGH. A newly renovated budget structure and improvements in the way the PTO examines applications is the path for a successful patent system, but MARK MY WORDS….If the PTO becomes in a situation to necessarily furlough or completely terminate examiners, the U.S. patent system will completely crumble as a consequence!! I pray congress will see this and act before it’s too late. Do you think they will Gene?

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 2, 2009 09:23 pm

    Examiner 6k-

    1. If you don’t realize there are vindictive examiners then you don’t get around much. Lets try and keep it real. Examiners are decision makers and smart attorneys do not do anything to piss examiners off, and they give in so as to not rock the boat. It is cheaper for the client to file an RCE than to appeal, so examiners get to make all kinds of rejection mistakes with little or no review and unless an applicant is willing to spend many thousands of dollars on an appeal and wait a couple years you give into examiners looking for an RCE so they can get an extra clearance for no work.

    2. “Claims miraculously allowable after filing an RCE: How in the world does this hurt a small company? What is it a few grand extra and a few more months?” — They shouldn’t have to pay the extortion of an RCE and more attorneys fees to get claims the examiner should have issued without an RCE. I’m sure you get that.

    3. “7-10 years – no way you can blame second pair of eyes on that. I have those cases. Those cases have nothing in them. ” — Do you ever see what is allowed? You should check the weekly issuances, they are good reading and show that every week applications that were pending for 7 to 10 years actually issue.

    4. “Dude, most “advancement of innovation” is in stuff like diapers, automobiles, oil refining, food preservation and other non-glamorous arts.” — It is truly a pity that there are examiners with this mentality.

    5. “It is not in the best economic interest of the country to bend the patent system to help the small tech start-ups over the big businesses.” — Not asking for you all to bend, just do your job, which is to issue patents. Like we have discussed in the past, when you were calling yourself “6k”, the law says you issue unless there is a justifiable reason not to issue.

    6. “Out of control pendency – even if caused 100% by John Doll him self by edict – is not a cause for a business to fail. Rather it was a plan (or dream) of a business, a business which as never materialized.” — You need to tell that to all those companies who lose funding because you in the PTO are holding their innovations hostage, playing quota games and acting like you know everything.


  • [Avatar for 16 year examiner]
    16 year examiner
    July 2, 2009 07:17 pm

    Vindictive examiner have tremendous power? Retribution? How so? They spend an extra day searching for the best art and make an air-tight rejection? Is that so horrible? Or do you mean they’ll make a bogus rejection? If an attorney makes a complaint (valid or not) I remember him as a complainer and make sure I don’t give him something to complain about. Single complaints are expected on occasion- repeat complaints from the same attorney raises a red flag. Your clients are entitled to proper rejections from the office, irrespective of any slings and arrows of a vengenful examiner.

    Worried about upsetting the examiner? We aren’t babies.

    Claims miraculously allowable after filing an RCE: How in the world does this hurt a small company? What is it a few grand extra and a few more months? This destroys companies? Moreover, this gaming of the system has been going on since I got here – then they were CPA’s rather than RCE’s. I was trained by a gamer. The policies of John Doll et al had nothing to do with it or making it worse – as far as I can tell.

    I see now what you are saying. I don’t think you mean to say John Doll et al’s policis damaged any small companies. Rather some people had business plans which hinged on obtaining a patent. And because of John Doll, the plan was not implimentable. Or that the founders were foolish enough to invest time and money on the assumption they would get a patent by a particular date. Well in that sense, yeah they are destroying business. But most people would not consider it to be an actual business that was actually desroyed.

    Our backlog is well-publicized. Anyone who is surprised to find themselves in limbo waiting for a first office action is to blame for being surprised (i.e. spending money prior to it being prudent to do so). Its like building a business in a flood plain, you can’t blame the rain for the business’s destruction. The bad planning was the cause of the destruction. More philosophically, it was never a business – it was only a pipe dream. Likewise a business that expects to get a patent within two years of filing is not a business – it is pipe dream. It is based on a dream that patent can be obtained in an impossible time frame.

    4, 5, 6 years? Ok so the second pair of eyes could be blamed for that. What would it be without that? 3-5? 2-4? Wouldn’t some of the purported failed/limboed companies have failed anyways?

    7-10 years – no way you can blame second pair of eyes on that. I have those cases. Those cases have nothing in them. They just keep refiling and refiling. Any business that is hurt by those cases is due to hiring inept patent attorneys not the PTO.

    Your comment regarding big tech companies made me laugh. Tech/telecom makes up about 22% of the S&P 500 (i.e. the 500 biggest publically traded companies). Even if all of those want a higher bar, your initial statement of “all” big companies wanting it remains unsubstantiated. Dude, most “advancement of innovation” is in stuff like diapers, automobiles, oil refining, food preservation and other non-glamorous arts. It comes from big companies that have big bucks to do lots of research.

    It is not in the best economic interest of the country to bend the patent system to help the small tech start-ups over the big businesses. The idea of David slaying Goliath is nice but it isn’t as common as people like to believe.

    Out of control pendency – even if caused 100% by John Doll him self by edict – is not a cause for a business to fail. Rather it was a plan (or dream) of a business, a business which as never materialized.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 2, 2009 01:29 pm

    16 year examiner-

    I agree with you to some extent with respect to why patents are not granted. The one thing that you are missing, however, is that many patent attorneys file RCEs because it is the path of least resistance, doesn’t upset the examiner and actually plays into those who are manipulating the quota system. You would be surprised how many “non-allowable” claims miraculously become allowable after an RCE is filed. I am not saying all examiners play these games, but it is far more than the number that hard working examiners who respect the system think it is.

    The most important change that Commissioner Focarino talked to me about was the creation of a Patent Ombudsman. The reason patent attorneys tolerate bad office actions is because if you complain then at least some examiners take it out on you and that only hurts the client. So yes, we could do better, but until you realize the tremendous power that some vindictive examiners possess it is likely hard for you to understand why we do what we do. If there were an Ombudsman that could be approached and who would make sure there was no retribution that would lead to a much better working relationship and less tolerance of the many unnecessary RCEs that we put up with to help examiners meet their quota.

    There are a litany of examples of small businesses being damaged or outright killed by what has been going on at the PTO. We represent a number of clients that cannot raise money because there is no patent, and still others that have had licensing inquiries from major US companies and it goes no where until a patent issues. So they are in limbo, they cannot raise capital and they cannot sell or license the invention. This is caused by out of control pendency, which is in part caused by second pair of eyes and more directly Quality Review. Many examiners simply do not issue patents any more, or very few, out of fear of it hurting their review. Examiners for the most part are not trying to exceed their goals and get awards. This hurts everyone, but is particularly crippling for small businesses who are the engine that drives the US economy. So all you have to do is look around at all those applications that have been pending for 4, 5 or 6 years without a first office action, and the applications laying around without final resolution for 7, 8, 9 or 10 years. There are plenty of them and that is doing real damage to the US economy. If the PTO hadn’t caused so many problems for itself our economy would be in far better shape even with the lack of leadership and regulatory oversight that we hear about every day in the news.

    With respect to big companies wanting a low bar for non-obviousness, that is simply not the case. Throughout the tech sector, in particular, they want to make it harder, not easier, to get patents. Do some searching online and you will see many anti-patent stances taken by major tech companies, and this gets used by the anti-patent crowd to say “see, even they think patents are too easy to get.” This completely misses the point. Large tech is in league with the anti-patent crowd because that will help them insulate their dominant position. Without the ability for start-ups to receive patents they will never be able to challenge the US mega-companies who enjoy dominance, and that is not good for the advancement of innovation, and not good for the economy.


  • [Avatar for 16 year examiner]
    16 year examiner
    July 2, 2009 11:52 am


    Yes I too would like to see the damage – any damage. My point of view is that when a patent is not grated, it was because 1) the invention was not novel, 2) it was obvious, 3) it was not enable, and/or 4) the examiner gave lousy office actions, but the attorney was a lousy advocate for their client and failed to demand a proper office action. The attorney, rather than demand proper office actions, prefer to complain to clients about the examiner and suggest the expensive solution of file RCEs.

    I guess when they get a bad steak at a steak house, rather than complain to the chef, they order the chicken and hope it is better than the steak. That, or they order another steak.

    Most of us – just like chefs – want to do a good job. We really do. And we also want the slackers among us to be fired. If an examiner is grossly inept, attorneys have a moral duty to inform the SPE or group director, and not just file an RCE and hope for things to get better.
    In other words: my point of viewis that if a startup goes belly-up from having to file many RCEs it is because of a poor attorney or because there is no invention in the application. John Doll et al had little to do with it.

    I would like to see at least one real example where a small company was damaged by Doll et al (or second pair of eyes).

    And to your question: no I never wondered that. My impression is many big companies want a low bar for non-obviousness – for example big pharma.

  • [Avatar for Noise above Law]
    Noise above Law
    July 2, 2009 06:51 am

    As I posted on Patently-O:

    …Playing around with the numbers provided for the USPTO daily intake versus what was expected provides some rather shocking projections. Let’s just say the the Congressional action so far is a small drop in a staggering bucket of red.

    If the Office revenues continue to drop at a similar rate of decline during the second half of the year as has happened in the first half, the emergency action on the behalf of Congress will seem quite meaningless to the necessity of furloughs or even down right layoffs.

    Consider: even with all of the cutbacks in programs, overtime and the ilk, the Office needed emergency funding in the first half of the year that saw a 14.7% miss on revenue (137.8 million calculated from an estimated 802.3 million versus a projected 940.1 million). The bailout loan to be repaid being roughly half of the miss seems a bit inconsequential if the boat isn’t turned around IMMEDIATELY.

    If the rate of revenue drop continues at the SAME PACE, the miss will widen in the second half to a 27.5% miss, or a 21.2% miss for the full year (402.9 million calculated from an estimated 1,500 million versus a projected 1,903 million). The required end of year bailout, assuming no more cuts would need to be 6 times as much already given, or five times more if the current bailout is for upcoming needs rather than current needs.

    IF the rate of revenue drop doesn’t accelerate.

    IF Congress is willing to provide all of these funds.

    How deep would the cuts go if Congress says “no more”? How deep if Congress ponies up half?

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 1, 2009 10:11 pm

    16 year examiner-

    I wish you could see the damage that Doll et al have caused for start-ups and small businesses. If you want to focus on corporate America that is fine, but not allowing patents for the engine that drives our economy (i.e., small businesses) is like cutting off your nose to spite your face.

    With respect to your lawsuits comment, I have to tell you that you are 100% wrong. Large companies do not sue each other over patents. What all of this has done is solidify large companies and make it impossible for small companies and small businesses to get patents, which are frequently used as a shield. Having a patent is like having a nuclear weapon. When you have one the other side needs to think cautiously about how to proceed. Without patents a small business is nothing but a target, and it might as well be hunting season.

    Don’t you ever wonder why all the big companies want to make it harder to get patents? They want it harder for innovations to be awarded patent protection that they might ultimately have to pay for when they steal.


  • [Avatar for 16 year examiner]
    16 year examiner
    July 1, 2009 09:28 pm

    Doll has been the best thing that has happened to the business world in a long time. Due to the second pair of eyes (though imperfect) there are a lot fewer lousy patents being issued. And thus fewer lawsuits (as compared what would have been). Yeah, second pairs of eyes has caused stress for some examiners – but they were the one’s not finding good art, construeing claims poorly, thinking non-critically, not giving a damn, or whatever. Most examiners adjusted just fine to the second pair of eyes.

    Finally corporate America is also adjusting to second pair of eyes. The recession is forcing them to decide whether it is prudent to spend money so lavishly on patents – especially when they generally only get rejections. The old system of throwing enough money and time at any application will yield a patent no longer works. They will have to actually make a decisions on when to file and when not to.

    Starbucks now has to choose their corners carefully. GM now has to choose carefully which models to make. Chevron now has to choose carefully where to put a new drilling rig. And IP departments will have to choose carefully which applications to file. It is the way the world is now. I don’t see corporate America ever going back to throwing money at corners, cars, oil bores or patents. We will have better cars, more productive oil wells, and better patents. I’m not so sure about the coffee thing.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 1, 2009 07:46 pm

    Another Examiner (and any other examiners out there) –

    OK, perhaps I do not have a correct view of what second pair of eyes is, means or what it entails. I would love to be able to talk to someone, or multiple folks, to get a better understanding. I am happy to do it off the record, or even anonymously. I would like to be able to write an authoritative post explaining what it entails, what effect it has had on slowing the process, whether it turns allowable into not allowable, etc. My understanding is that in the business method area it does exactly that. Nevertheless, I think it would be helpful for the patent bar to know more about what it is, etc. Confidences are always respected, as I think you all see in my writing. I have sources and never use their names unless they give me express permission, and even then I keep it to myself. Not trying to cause anyone trouble.

    I agree with you, bad actors on a plurality of sides makes for real problems.

    Is there any general characterization that applies to the truly bad, incomplete or poorly written applications you all see? I am not looking for anything specific, but a general direction. Are they filed by large firms, small firms, solos, tied to invention submission companies, all of the above?

    What would make it easier for you all to do your job? What could an applicant provide, what do you look for? What do you see missing that you would like to see?

    I agree that everyone is at least partly responsible. I do believe with 100% of my heart and being that the CAFC is most at fault though. If they would just listen to the PTO regarding Rule 56 so much could be accomplished because then the PTO could require more information and the information would not work to undercut the right you are obtaining. I would love for the CAFC to come to their sense (I know… not going to happen) or Congress to legislate Rule 56. Then open, frank and fair discussions could be expected and even demanded. You guys would get far more candid information (I think) if prosecution history were sealed, or at least informal communications were sealed and only opened when there has been a showing of inequitable conduct (and my definition of that is fraud in the traditional sense).



  • [Avatar for Old Examiner]
    Old Examiner
    July 1, 2009 02:56 pm

    I don’t believe the second pair of eyes review is responsible for the marked decrease in the allowance rate. IMHO, when Dudas assumed leadership of the Office, there became a push to increase patent quality. Quality review started to bounce more cases. Many examiners became nervous that their cases would be bounced and affect their yearly rating. The fewer cases allowed by an examiner, the greater a single returned case affects one’s rating. New examiners, who now probably constitute a majority of the examining corps, were instilled with the mindset that very little is patentable. Attorneys don’t necessarily want to appeal a case, so many RCEs are filed, prolonging prosecution. A vicious spiral ensued. Hence, down goes the allowance rate.

    As far as second eyes, at least in my Art Unit, this is usually no more than a cursory review of a case issued/signed by a Primary Examiner. Unless something really jumps out at the reviewer relating to patentability, the review really only sorts out formal matters or minor 35 USC 112 issues and doesn’t preclude allowance.

  • [Avatar for Another Examiner]
    Another Examiner
    July 1, 2009 02:55 pm

    Gene, I think your article is quite interesting. However, touching on what “A mere Exmr” was saying, as well as your response, I think that the “second pair of eyes” has very little to do with the overall problem. I agree that the Patent Office should be criticized for allowing “stupid” patents – but this is exactly the reason why second pair of eyes is necessary. And the reality is that the second review of allowances does not take nearly the time it took to get the application to allowance, because the second review is done by very experienced personnel. It does not cost much time or money, but it does result in higher quality patents being issued. The Patent Office does not distinguish between “stupid patents” and “stupid inventions,” nor does the Patent Office reject true innovations as you suggested, although I am sure this is how the public views it. The PTO is only concerned with whether or not the claims are in condition for allowance based on the prior art (as well as 101, 112, etc. obviously). If they are, a patent will issue (although I certainly concede that it is far more complicated a process than that). Indeed, it is in everybody’s best interest to do so – it is why we are here.

    As far as the applications themselves are concerned, over the years there has been a noticeable decline in the quality of the applications submitted, for a host of different reasons (many attorneys I know have made statements to that end). While this is in no way a sole factor in the decline of allowances (as discussed, second pair of eyes is probably the main factor) or the difficulty of obtaining a patent (the CAFC is probably the main factor), it is certainly a factor. Throughout prosecution of the cases, I understand that there are a lot of unreasonable Examiners out there, but there are at least an equal amount of unreasonable attorneys. So if you get unreasonable individuals on both sides, prosecuting a poorly drafted application, the application is doomed from the start.

    Now, as other comments touched on, the Federal Circuit does create a lot of the confusion regarding patentability. But in regard to 101 and other hot issues, it is not just the attorneys that are bound by the courts. The Patent Office has had to make many adjustments based on rulings in cases such as KSR and Bilsky; which has created the same confusion and frustration among Examiners that the public has experienced. Not to mention that it has also required extra training of the entire Examining corps, which costs time and and money. So I certainly agree that some reform is necessary there.

    Finally, I would like to comment on Samuel Palms remarks. It should be noted that “demoting” managers will not save any money because regardless of whether or not you are a manager, your GS level, and therefore your pay, would stay the same. And the work that they do now is revenue generating when you look at it objectively – as I will discuss below. At this point in time, it would be nearly impossible for directors, SPEs, TQAS, or any of these managers to take on 40 hous of examining and 40 hours of management. Although the number of managers may appear high to some, even with this “high” number, managers are inundated with work. Their jobs are absolutely critical to the output of work from the Office, so even if they are not doing examining per se, their impact is revenue generating. Every action that is sent out by a junior Examiner, as well as some of the actions sent out by primary Examiners (potentially hundreds of actions per biweek), are reviewed by SPEs – which is a job function that comes on top of all the managerial duties. TQAS are responsible for the quality review of hundreds of actions put out by thousands of Examiners. And the examples go on. It is not reasonable, nor beneficial to “demote” these individuals into the examing corps.

    All of that said, I certainly acknowledge the the PTO needs reform. It is an extremely complicated situatiom that everyone is in. I think it is the responsibility of everyone – the CAFC, attorneys and applicants, as well as the PTO – to reform procedures, increase efficiency, and foster innovation as the patent system was originally designed to do. Thanks again for the article and the conversation. It is in part through forums like this that progress can be made.

    – D

  • [Avatar for javid amini]
    javid amini
    July 1, 2009 11:07 am

    I believe transferring funds from one account to another account or printing it, would not be a vise long term solution. The problem we are facing is a global problem. I believe USPTO may have the solution. The solution would be involved a good innovation that is associated with an “Energy”, per se. E.g., see what happened in mid-1990s. A similar motivation or encouragement may boost the economy not only in USA but also globally. Let’s put our thoughts together to motivate future inventors for filing more applications in that area.

  • [Avatar for Curious]
    June 30, 2009 10:33 am

    What can be done to resolve the issue? Are you suggesting that there is a move towards no longer ‘using a second pair of eyes review’?

    How is the Patent side planning on paying off the loan from the Trademark side?

    Thank you for the article.

  • [Avatar for Jervis Bowles]
    Jervis Bowles
    June 30, 2009 07:42 am

    With regard to keeping ones recoerd of there invention. the whole thing about first to invent, and not
    first to file. Well if an applicant must keep a notebook of there invention, Such an applicant should
    make sure when doing so should buy a binding notebook with the bar-code number on either of
    its covers and secure the reciept which has date, and time, and the bar-code number.

  • [Avatar for Gene Quinn]
    Gene Quinn
    June 29, 2009 01:35 pm

    A mere Exmr-

    I agree with you in part, and have to disagree in part (I think).

    The PTO should not be in a damned if you do and damned if you don’t scenario. That is unfair and unacceptable. The trouble is that rather than stand up and explain to critics, some in Congress, the media and elsewhere blame the PTO.

    Having said that, there are some really stupid patents that have been issued over the years. My personal favorite is transferring matter faster than the speed of light by ripping a hole in the space-time continuum. That should have been rejected under 101, and under 112. Not only is this impossible, there was no explanation of where to find the space-time continuum, how to rip a hole and how not to fall through yourself. This is but one example of the nonsense, and I think we can all agree that any examiner should have been able to fashion a rejection rather than issue there. There is a difference between stupid patents and stupid inventions, and the PTO should be criticized for the former, not the later.

    Having any rule that weeds out true innovation to prevent craziness does not make good policy, particularly when there continues to be craziness. I think we would all rather the occasional stupid patent rather than rejecting things that are true innovations.

    There are definitely things applicants and attorneys can do, and the PTO should require them once the Congress requires the Federal Circuit to acknowledge the law and apply PTO rules, particularly with respect to inequitable conduct. So much of what attorneys do is guided by the misapplication of the law by the Federal Circuit. Once the Federal Circuit is reigned in then we can and should discuss how attorneys can help the PTO by providing more and better information. Right now if you do that the patent you obtain will be worthless, even if the invention is worth something.

    Perhaps I am not disagreeing with you at all here. I think right now patent attorneys are least to blame, the Federal Circuit most to blame, Congress turning their head the other way. The PTO is in a bind because patent attorneys need to react to the Federal Circuit and that, unfortunately, means little help from us. The PTO gets screwed.


  • [Avatar for A mere Exmr]
    A mere Exmr
    June 29, 2009 01:11 pm

    There is a catch-22 developing with this issue. When allowances go up, the PTO is criticized for allowing patents that should not be allowed, or for allowing weak patents. In response to this negative criticism, the PTO reduces allowances, institutes a second pair of eyes and is then criticized for “mismanagement” on this basis. I agree some internal changes need to be made to strike this balance, but it is not fair to put the PTO in a “damned if you do, damned if you don’t” scenario.

    The nature of the patent system is that only a few percent of patents are “worth their weight in gold” so to speak. The vast majority of patents turn out not to be as valuable as the cost to prosecute them. I find it hard to blame this solely on the PTO’s “mismanagement”. There are many things that applicants and attorneys can do to prepare patent applications that compact prosecution, increase the time to allowance and improve the value of protection on a patent. To assume the PTO should shoulder this responsibility alone is not reasonable.

  • [Avatar for Samuel Palms.]
    Samuel Palms.
    June 29, 2009 11:38 am

    It is great that the Senate will save the PTO. However, the Senate should require the PTO to reform its current practice. Currently, there is too many managers in the PTO. When I say managers it includes (directors/SPEs/TQAS/WQAS/Subject Matter Experts/SPRE/OPLA…..).

    Here is the problem, most of them are GS-15 or higher, which is at least $130,000 in salary. All these positions do not generate revenue (they don’t examine applications in anyway). Furthermore, micromanagement only hinders those who actually generate revenues (examiners).

    The PTO created a new TC2400 in 2008 to add more management instead of reducing it (unbelievable). If this continues the $80 million, will not save any layoffs. And, if the layoffs is by seniority, then the Examiner who actually generates the revenue will be fired first, while the managers who don’t generate revenue continue to hold the positions.

    The Senate should require the following:
    1) DEMOTE some managers to Primary Examiners. Have a peer review, a confidential survey of examiners the manager is supervising and ask them about the manager’s effectiveness. Demote the lower ranked managers to primary. Reason for surveying examiners is because (1) the have to deal with the manager on a daily basis and (2) to avoid politics/favoritism.

    2) Require those not demoted to have production/examining function component. For example, spend 40 hrs in bi-week examining and the other 40 hrs doing other duties. So, atleast they generate partial revenue.

    Here is an estimate:
    A) Assume you demote 10 managers per TC (each TC has more than 100 managers).
    B) 10 X $130,000 (minimum salary for a manager) = $1,300,000 per TC.
    C) With 9 TCs the number comes out to a whopping $11,700,000. Keep in mind this is low ball estimate.

    These are modest measures and none of these employees are fired. Unlike, a private corporation where managers would have layed off in the first round of layoffs. It is nice to have management positions, but it is even nicer to have jobs.

    References: TYPE IN 0576

  • [Avatar for Gene Quinn]
    Gene Quinn
    June 26, 2009 07:49 pm

    New Hire-

    I do not have any particular personal information on this from within the PTO. Talk of furloughs came up in early spring, and that was simply not true then, and I doubt it is true now. The reality, however, is that the PTO needs more money and things continue to get worse. While much of this was created by Dudas and Doll, the point remains that the PTO will need significant assistance from Congress. My take is that whatever needs to be done between now and the end of the fiscal year will be done so no furloughs and terminations take place. The political backlash of that would be enormous, so I can’t see that happening.

    My sources have always told me throughout this that the trouble was bad for FY 2009 and potentially worse in FY 2010, but for FY 2010 there would be advance planning. Current problems caught the PTO off guard (from what I hear) and with Congress getting looped in I suspect we will see funding addressed to take care of the PTO in FY 2010.

    I continue to watch what is going on, and will keep you posted.


  • [Avatar for New Hire]
    New Hire
    June 26, 2009 07:31 pm

    Gene, I know you have a number of contacts inside the PTO. What is your take on the likelihood of furloughs/RIFs in the next few years? I worry that this fix is just going to delay the inevitable for a year or two.

  • [Avatar for Examiner #9]
    Examiner #9
    June 26, 2009 03:35 pm

    I’d have to say I disagree with you Old timer. As most of the defeceit from the patent office is coming from companies not renewing their maintenance fees. In fact the Patent office pays out more money to exam an application than it takes in ( this is offset by maintenance fees).

    In any case the patent office won’t be forced to layoff examiners because as soon as tech companies start hiring again expect a mass exodus and we will be back to constantly hiring new examiners model. Yes, I agree there wil be a hike in fees and probably a hike in allowances.

  • [Avatar for OldTimer]
    June 26, 2009 01:58 pm


    These are all good points, but I am afraid that these measure are just fingers in the dike. Patent filings will continue to drop and maintenance fees will continue to be dropped until and unless Congress intervenes to reverse the damage done by KSR, and Bilsky on the patentability side of the practice, and of cases like eBay and LG Electronics on the enforcement side. In the big picture, we’ve gone from a patent system in which patents were relatively quick and easy to obtain and could be enforced with a degree of certainty to a patent system in which patents are much harder to obtain and enforcement is much, much less certain. In short, every legal and economic incentive in the game has been reversed from a pro-patent stance to an anti-patent stance (and all by judicial fiat–who would have thought that the Federal Circuit would turn out to be such a nightmare!). And if the value-based damages provisions of the patent reform bill pass then you can turn out the lights at the PTO.

    I’ll make some bold predictions: utility patent application filings will fall by 20%-30% from the peak of approximately 500k applicatons/year, patent holders will continue to dump issued patents in mass quantities by not paying maintenance fees, as a result the PTO will suffer a revenue decline of approximately 30% (which they will attempt to address by implementing massive fee hikes), and will be forced to reduce Examiner head count by at least 20%. This is all baked in the cake now.

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