WASHINGTON -- The red folders are everywhere at the U.S. Patent and Trademark Office. Inside are patent applications, stacked on examiners' desks, pushed by the cartload along the underground hallways of the buildings, filed away by the thousands.
The patent backlog is easy to see at the agency's five-building campus in Alexandria, Va. Inventors wait on average 31 months for a patent decision as examiners slog through 675,000 pending applications, a number that is expected to hit a record 800,000 by year-end.
U.S. patents are worth waiting for. They offer the world's strongest legal protection of intellectual property and easiest enforcement of claims. And they're cheaper to get and keep than patents in Europe or Japan.
Lengthy delays between applying and getting a patent means companies that market innovations without patents are vulnerable to copycats or legal challenges or may lose competitive advantages if they wait. Plans to hire and train more staff and laws aimed at reducing patent infringement lawsuits won't eliminate the backlog, experts say.
The Supreme Court on Monday ruled in two patent cases. The justices sided with Microsoft Corp. (Nasdaq: MSFT), which had been sued by AT&T (NYSE: T) for infringing on U.S.-patented technology overseas; and said a federal appeals court overreached in upholding a patent for adjustable gas pedals that did not exhibit any real innovation.
Companies file overly broad applications because "they want to try and get as much as they can from the get-go," said patent examiner Brandon Hoffman.
The government's first action on applications is a rejection 83 percent of the time, and it's mainly because the initial filings are overly broad, PTO officials say.
"Most patent attorneys will tell you they get a funny feeling if they don't receive an initial rejection," said Dennis Crouch, a visiting professor at Boston University Law School and the founder of a widely read patent law blog. "They feel like they left something on the table and probably could've gotten more."
International Business Machine Corp.'s (NYSE: IBM) application for a secure "smart card" production method was originally filed Oct. 10, 2000, and crossed Hoffman's desk for the first time in March 2004. From his windowless office, Hoffman said he waded through a 10-page description before getting to the four lines that detailed IBM's proposed innovation.
The 25-part claim on the patent IBM received required two pages to describe and was awarded in January following archive searches, roughly seven rejections and subsequent application amendments from the company. The patent is for 20 years, plus 834 days to compensate for processing delays. As is typical for the process, the two inventors named on IBM's original application aren't at the company any longer, said company spokesman Steven Malkiewicz.
Smaller firms say they see a double standard in how large companies with big legal staffs file patent applications. Protesting loudly over the explosion of costly and time-consuming patent litigation in recent years, the large companies are the same ones that flood the PTO with overreaching applications they know will be rejected, said Bryan Lord, a founding member of the Innovation Alliance, a trade group for small businesses lobbying against proposed reform legislation recently introduced in both houses of Congress.
Not so, said IBM spokesman Steven Malkiewicz, who points to a better-than 90 percent success rate for IBM patents. The company has been awarded 33,000 U.S. patents since 1995, leading the annual list of total approvals during that 12-year period.
"The way to address the backlog is to fully fund the PTO and to work on innovative solutions like community patent review," Malkiewicz wrote in an April 24 e-mail.
The PTO plans to increase the number of examiners by 50 percent to roughly 7,500 within a few years, but hiring alone isn't the solution, officials say.
Technology giants, including IBM and Microsoft, endorse the sweeping reform legislation that seeks to reduce the filing of willful infringement lawsuits by making it harder for patent holders to prove their innovation has been illegally copied. And they are key players in a peer-review pilot set to start in June aimed at speeding the process and improving patent quality.
PTO Commissioner John Doll said the approval process should be customized to address the different needs of different industries. For example, drug companies may not need a patent rushed through since they also are waiting for Food and Drug Administration approval before they can go to market. Electronics firms, on the other hand, are in an industry defined by speed and innovation. They could opt for an accelerated exam, in which a response is promised within one year if initial applications are more detailed. The PTO launched a small program of this type last year.
A 32-year agency veteran who began his career straight out of college, Doll's passion for his work is evident. His business card reads "Alchemy and Sorcery Commissioner for Patents" and he has a Staples Inc. (Nasdaq: SPLS) "easy button" on the door of his office. He said he's proud that the agency's error rate dropped to 3.5 percent last year from 5.5 percent just a few years ago.
"We're deadly serious about quality and deadly serious about efficiency," Doll said.
Still, the backlog and all those red folders make it appear unlikely the agency will meet its pledge to be paperless by the end of the year. PTO officials say the paperwork in the folders soon will be electronic, yet some companies are skeptical of the agency's ability to be speedier.
Dean Klein, vice president of market development at computer memory chip maker Micron Technology Inc. (NYSE: NU), has received more than 200 patents and has another 60 patent applications in the pipeline. He admits he gets "a surge of adrenaline" every time another one gets approved for his Boise, Idaho-based company.
"As long as people are reviewing applications, I don't know that we'll ever get rid of the backlog," Klein said.