PublishedMarch 27, 2018

Fee-Setting Reauthorization Bill Introduced In Senate

Just a billSenator Coons has long been interested in strengthening patents.  While some of his efforts, like the STRONGER Patents Act, would actually harm the U.S.’s innovation economy by strengthening patents at the expense of innovation, his latest bill is different.

Last week, Senator Coons (along with Senator Hatch) introduced the Building Innovation Growth through Data for Intellectual Property Act, or “BIG Data for IP Act.”  The bill has two main features—extending the Patent Office’s fee-setting authority, and requiring the Office to produce a report on its IT infrastructure, a plan for modernizing that infrastructure, and a report on the use of advanced data science techniques to improve the examination process.

Fee-Setting Authority Matters

Prior to the America Invents Act, the Patent Office didn’t actually set its own fees.  Instead, Congress set them. This meant that, even though the Patent Office is supposed to fund its operations through the fees it collects, they couldn’t change those fees to reflect changing costs or to fund needed infrastructure—they had to wait for Congress to do it for them.  That’s not an ideal situation.

But it’s actually worse than that.  The Patent Office now collects enough, overall, to fund its own operations—but the fees for a given action don’t necessarily reflect the cost of that action.  In particular, the fee for examining a patent is actually significantly lower than the cost of examination, with the shortfall made up for by issuance and renewal fees (which are significantly more expensive than the cost of issue or renewal.)

Lack Of Authority Leads To Bad Patents

This creates a perverse incentive.  It turns out, when the Patent Office runs into budget constraints, it becomes more likely to grant patents, leading to an increase in patent grants that never should have been granted.  That’s the only way the Office can fund its own operations.

Without the ability to set its own fees, the Office is even more likely to run into this situation.  And the fee-setting authority granted by the America Invents Act expires this year. Sen. Coons’ bill would provide a ten-year reauthorization of fee-setting authority, allowing the Patent Office to avoid situations which would tend to cause it to grant invalid patents.

While a long-term solution should include changing the fee structure to remove issuance fees and have examination fees that actually cover the cost of examination, renewing fee-setting authority is a key step in the process.

Big Data For High-Quality Patents

The second section of the bill, requesting reports from the Patent Office on IT infrastructure and the use of data science, is less critical, but still useful.  The IT infrastructure at the Patent Office is old. In 2015, a power surge knocked out the computers used for patent application filing.  They were down for a week because replacement parts were not readily available.  The Patent Office needs to modernize its infrastructure and a report on plans to do so would be useful.  (Of course, without the ability to set and collect the necessary amount of fees, the plan can’t be implemented.)

The final portion of the bill, reporting on the use of data science like machine learning and big data to improve the patent examination process, is also useful.  Using big data tools like Google BigQuery, Patent Progress has been able to show that the Alice decision affects a very small proportion of patent applications and that so-called “IPR off-ramp” procedures are already available, if patentees want to use them.

If a patent lawyer can produce this kind of insight in a limited timespan using these kinds of tools, a trained data scientist with support from the Patent Office should be able to provide real insights into improving patent examination.  And improved patent examination, in turn, leads to fewer low-quality patents issuing, fewer inter partes reviews to challenge low-quality patents after issue, and less abusive patent litigation.


Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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