Guest Post by Joff Wild – Editor of IAM Magazine and the IAM Blog.
The decline in patent flings and consequent fall in income causing the US Patent and Trademark Office so many worries has been extensively chronicled on PatentlyO, as well as many other US-based blogs and IP news sites. What seems to have received far less attention is that what is currently happening in the US is part of a worldwide phenomenon. The simple fact is that, to a greater or lesser extent, the USPTO's experience is being replicated in just about every other major patent office you can think of.
Take the other two offices of the Trilateral Authorities, for example. At the JPO, the most recent publicly available figures – which cover the six months until the end of March 2009 – show a decline in first filings of 6%. At the EPO, meanwhile, the very latest numbers, which I got today from the office's Controller, Ciarán McGinley, show a first filings fall of 8% so far for 2009. And just like the USPTO, the EPO has introduced a freeze on the recruitment of new examiners.
The story is similar, if not worse, elsewhere. In Korea, applications were down 9% in the first quarter of this year; in France the figure stands at minus 5%. The UK, Australia and Denmark are just three countries in which things are so bad patent office staff have actually been laid off. On the international front, World Intellectual Property Organization Director-General Francis Gurry told delegates at the Trading Ideas conference in Singapore last week that use of the PCT is down 5% compared to this time in 2008 (applications from the US have fallen by a massive 14%, by the way).
In fact, the one major economy which currently seems to be bucking the trend is China. In Singapore, Gurry told delegates that PCT applications with a Chinese origin are up 19% in 2009. At the same event, the head of the Chinese State Intellectual Property Office, Tian Lipu, stated that it had seen a 12% rise in filings in the year to the end of June, including a 23% rise from domestic applicants. For the first time ever in China, invention patent grants made to local applicants now exceed those made to foreign entities.
SIPO currently employs just over 6,100 staff and is actively seeking to bring in more examiners. It will have to. Currently, just 1% of Chinese companies use the country's patent system. Can you imagine the applications the office will have to deal with if that figure merely doubled to 2%? As an aside – any patent prosecution service provider in the world that does not already have a serious Chinese element to its offering (at least in terms of being able to access and understand Chinese prior art) is doing its clients a tremendous disservice.
Anyway, given what is happening globally (China excepted), those seeking to pin the USPTO's income and backlog problems solely or mainly on decisions taken at the office are not seeing the bigger picture. The same trends are being experienced across the world. This suggests to me that some of the solutions that the USPTO under David Kappos may put into place to tackle the difficulties it faces in these areas may also be similar to those introduced elsewhere.
Kappos is a well-known figure internationally and is familiar with the challenges that granting authorities face. Senior officials I have spoken to in both Europe and Asia welcome his potential appointment precisely because there will be no need for any learning on the job. This means that he can hit the ground running in discussions on issues such as reform of the PCT and procedural and substantive patent harmonisation.
In recent years, Kappos has spent a good deal of time in Europe and has expressed his admiration for the EPO's Scenarios for the Future project. This involved research-based scenario construction which was centred on different hypotheses as to how the world may have developed both economically and politically by 2020. The scenarios were then used as launch pads for discussion as to how the patent system may have to evolve to take account of wider change.
One result of the Scenarios project was a document, approved by the EPO's Administrative Council at the end of 2007, entitled Future Workload. There is no doubt that Kappos will also be familiar with this and its suggestion that in order to ensure patent quality and a reduction of the backlog the EPO faces, patent applicants should do more up-front work and pay more money to access a system that will make it harder than ever before to secure patent rights. During his appearance before the Senate Judiciary Committee last week Kappos spoke of the importance of reducing the USPTO backlog and talked about reworking the office's fee structure.
In 2007, EPO president Alison Brimelow told me that the office loses 30% of applicants once the search results and the preliminary opinion have been delivered; while of the 70% that remain, another 30% drop out before the end of the application process. She went on: “The fees that these people have paid do not cover the cost of the work that has been done at the office. I have nothing against what they are doing, but it is not compatible with our current funding model.” Basically, she explained, the office survives on maintenance fees, not those related to applications. As the length of the average patent's life declines, and the office consequently collects fewer maintenance payments, so there is increasing pressure on income. While not proposing a solution, Brimelow posed a question that left little doubt as to what she thought: “Should all applicants pay what it costs for the office to do the work that they request?" I wonder if David Kappos is thinking the same kind of thing.