FC: National Ass'n of Manufacturers replies to Patent Office post

[Declan McCullagh <declan () well com>]

[David knows this, but to be clear: I did not write the cluebot.com story, 
though I found it interesting enough to forward. Vergil, a cluebot.com 
contributor, is the author. Cluebot.com is one of the newest and (IMHO) 
most interesting technology and politics sites. --Declan]

**********

From: David Peyton <DPEYTON () nam org>
To: "'declan () well com'" <declan () well com>
Subject: RE: Has the U.S. Patent Office really reformed?
Date: Thu, 22 Mar 2001 17:53:29 -0500

Declan - continue to appreciate your diligence and fecundity in reporting.
Some things to be aware of in the business methods patents area that your
story did not reflect:

1) Coverage of the U.S. patent statute is intentionally just about
all-encompassing (1951 report history has the famous phrase "anything under
the sun" conceived of by human imagination that meets the standards of
novelty, utility, and obviousness).  Thus, it's misleading to speak of the
PTO's "habit" of granting business methods patents, as if it were some kind
of bad habit, instead of being a practice under the statue confirmed by a
much-watched court case (State Street). Anyone who doesn't like inclusion in
the patent system for some subject area carries a heavy burden of showing
why there should be a carve-out.  The presumption is not in favor of
exclusion but of inclusion, given the long history of the patent system and
laws plus all the difficulties of maintaining a boundary when you have a
carve-out.

With one-click, for example, there's no question in the world about utility
-- only about novelty and non-obviousness.  Novelty takes you straight to a
search for prior art as with any other application -- and yes, that's harder
in computing technology than in chemistry, but we've known that for years.
Can nonobviousness be a close call?  Yes, it can, but Congress codified the
upshot of the old case law on this matter (going back to the eraser on a
pencil case, where a court disallowed a patent granted on the earlier
grounds of novelty and utility only) in 1951 to clarify the hurdle the
applicant must clear.  No one has made any convincing case that
nonobviousness is either trickier to apply, or less valuable as a screening
tool, in BMPs than anywhere else.

2) The PTO is doing about all it can under current circumstances to improve
matters in 705, business methods proper.  The addition of an extra layer of
review has reduced issuances in this subject area.  The approval or granting
rate is now *below* the Office's overall average. Indeed, the Office has
moved examiners from other areas into this one to improve staffing.

3) The Number One Thing to be done by people concerned about BMPs is to stop
the withholding of fees -- no taxes are involved -- paid by applicants and
patent-holders to the PTO.  Little known is that Congress has milked the
agency as a cash cow over the last decade to the tune of $600M.  At the same
time, the agency's performance in timeliness has deteriorated.  Ten years
ago, you could typically get a patent in 18 months.  Now it's 25 months.
When the agency is deprived of part of the cash flow that its huge work load
generates -- more than 300,000 patent applications annually -- it's
inevitable that quality will suffer at some point as well.  For now, the PTO
has alleviated the pain in BMPs by imposing a bit more pain in some other
areas.  At a recent workshop on BMPs, a PTO official stated that they would
hire 20 or 30 more examiners in the BMP area -- if they only had the money.

It appears that the Bush Administration's forthcoming detailed budget will
continue the practice of the last couple of Clinton budgets of withholding a
substantial amount of fees.  However, this practice originated with, and has
been maintained by, the House Appropriations Committee.  Last year, the
House-passed appropriations bill would have withheld $295M from the PTO,
against an estimated $1.15B in fee collections.  The Senate committee bill
(which never went to a vote on the floor) restored 90% of the money.
However, the conference committee settled at withholding of $164M.  How
would your organization be doing if it had revenues siphoned off like this
for a decade while faced with a booming workload?

So the place to go is the House Appropriations Committee to convey that
1)the PTO does not make some kind of "profit", 2) withholding money does
indeed cause bad effects in the IT marketplace, indeed, the whole economy,
that people care about, and 3) milking the cash cow must stop.  Anyone who
wants to know more can contact me at the NAM.

Declan, would appreciate your passing this on.

David Peyton
Director, Technology Policy
National Association of Manufacturers
1331 Pennsylvania Ave., NW #600
Washington, DC  20004-1790
(202) 637-3147, -3182F
(703) 966-3564 cell
dpeyton () nam org
www.nam.org



-----Original Message-----
From: Declan McCullagh [mailto:declan () well com]
Sent: Wednesday, March 21, 2001 3:15 PM
To: politech () politechbot com
Subject: FC: Has the U.S. Patent Office really reformed?




http://www.cluebot.com/article.pl?sid=01/03/21/1817201

   Has the U.S. Patent Office Really Reformed?
   posted by vergil on Wednesday March 21, @12:50PM
   from the extraordinary-claim-needs-extraordinary-proof dept.

   According to a brief article in today's Wall Street Journal
   entitled "Fewer Patents on Methods Get Clearance," the
   U.S. PTO "has drastically reduced the pace of issuing controversial
   business-method patents, by setting up bureaucratic roadblocks that
   have angered some information-technology investors." Is this claim
   significant? Has the U.S. government truly reformed its habit of
   granting patents to business methods? I think the answer's "No" for
   two reasons.
[...]




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