Patent office inefficiencies hamper competition, experts say

Inefficiencies in the federal government's process for granting intellectual property rights for new inventions is a major factor contributing to concerns over whether the patent system stifles competition, a panel of experts said Tuesday.

During the first day of a two-day conference convened by the Federal Trade Commission and the Justice Department on intellectual property and antitrust issues, patent experts from industry, academia and the consumer protection sectors highlighted growing problems with the quality of patents issued by the Patent and Trademark Office.

Ill-qualified patents can lead to antitrust problems, particularly in the information technology field where a minor innovation exclusive to one firm can lead to its domination in a market sector, panelists said. In order to halt potential anti-competition problems stemming from patents, policy makers should address the way those patents are issued.

Panelists cited court cases where federal judges render patents invalid because PTO examiners fail to find "prior art" before issuing a patent for an invention that may not be new.

One panelist said the PTO "is less rigorous" in its examination of patent applications than counterparts in the European Union or Japan.

Still, some panelists said factors beyond the PTO's control have impaired the agency's ability to achieve its mission. For example, the number of applications has outpaced PTO staff, and a lack of resources has hampered the agency's recruitment efforts.

"While I believe the U.S. PTO can do a better job conferring the quality of its work, I have not seen sufficient evidence to suggest that overall quality of patents issued by the office are poor," said Ronald Myrick, chief patent counsel for General Electric. He pointed to Congress for its consistent failure to fully fund the PTO and provide it with necessary resources and incentives to improve the quality of its work, a theme echoed by other panelists.

Though key lawmakers from both parties support legislation that would guarantee the PTO could keep the fees it charges for processing patent and trademark applications, Makan Delrahim, chief minority counsel of the Senate Judiciary Committee, said the bottleneck for the issue rests with congressional appropriators.

Appropriators often divert agency funds to balance the deficits in other areas. PTO fees are one source from which they can pull extra cash, he said.

But Brian Kahin, director of the Center for Information Policy at the University of Maryland, expressed skepticsm over the need to add to the PTO's budget to boost its staff or technology. He argued the agency relies on the wrong metrics to drive its performance.

"Intellectual property is far too critical to be left to an agency that styles and conducts itself as an advocate and measures its effectiveness on how ex parte applicants judge it and how many patents it grants," he said, suggesting instead that there is a role for the FTC and the Justice Department to oversee some of the PTO's process.

Despite their criticisms of the agency's process, many of the panelists applauded the efforts of PTO Director James Rogan to modernize the agency's filing systems and provide better incentives to obtain skilled examiners.