WEB PATENT NEWS - January, 2004

by Robert M. Hunter, Registered Patent Agent

News about patents, licensing and seed capital sources for inventors and innovating organizations.


I. FEDERAL TRADE COMMISSION PROPOSES CONGRESS WEAKEN U.S. PATENT SYSTEM - Learn about the attempt by the FTC to tilt the balance of power in the U.S. patent system away from independent inventors, small businesses and universities and toward large corporations.

II. INTERNATIONAL PATENT APPLICATION PROCEDURES (AND FEES) CHANGE - Find out about recent changes in the Patent Cooperation Treaty (PCT) process and associated fees.


The Federal Trade Commission (FTC) and the U.S. Department of Justice are calling for Congress to enact legislation that would make it easier to prove a patent is invalid, thus upsetting a fine balance between the interests of large corporations and small entities that has been worked out over time.

If the FTC gets its way with Congress, the burden of proof required to invalidate a U.S. patent would be reduced from a "clear and convincing evidence" standard to a "preponderance of the evidence" standard. As proof that overly broad patents are harming America, the report singled out a patent issued in 1895 (that's only 109 years ago if you are counting) covering the concept of "putting a gasoline engine on the chassis to make a car" that gave Henry Ford and others heartburn before its claims were narrowed by a court.

(Editor's Note: The American Intellectual Property Law Association (AIPLA), a national intellectual property bar association of more than 14,000 members, has issued a report that strongly opposes this change "as flawed and unnecessary." The report also opposes or suggests that safeguards be added to the other changes proposed by the FTC.)

The FTC report (p. 8) correctly points out that "the PTO is underfunded, and PTO patent examiners all too often do not have sufficient time to evaluate patent applications fully." But instead of demanding that the USPTO be adequately funded (by not transferring patent fee income into the general fund, but rather allowing the USPTO to spend what it collects in fees on examining patent applications, a problem that is not even mentioned), the FTC takes an "off with their heads" approach more consistent with Alice in Wonderland than in developing public policy. The FTC approach is not to hire more examiners (more federal employees, yikes!) and train them to be more effective, but rather to suggest that we as a society throw up our hands and admit that high-quality patent examination is impossible. This approach spells the end of a very effective patent system.

The FTC report notes that numbers of "patent applications have doubled in the last twelve years and are increasing as about 10% per year" and that "hearing participants unanimously held the view that the PTO does not receive sufficient funding for its responsibilities." It notes that defenders of the current standard argue that "a finding of patent validity by a neutral government agency using a knowledgeable examiner justifies placing a heavy burden on those challenge a patent's validity" but disagrees with that position (p. 10). Speaking out of the other side of its mouth, the FTC "strongly recommends that the PTO receive funds sufficient to enable it to ensure quality patent review" which, of course, would eliminate the need to gut the U.S. patent system in the ways it proposes (p. 13). (I would suggest we get a patent examiner in here to straighten out this circular reasoning.)

In addition to proposing that the evidence standard be changed, the FTC is proposing other changes designed to make it more difficult to obtain a U.S. patent. One change would create a new administrative procedure to allow post-grant review of and opposition to issued patents. This change, which would allow small entity patentees to be harassed by large corporations on a continuous basis, has also been proposed by the USPTO and is discussed in my July 2003 newsletter.

As if the above proposals were not bad enough, the FTC also repeats the recent USPTO proposal that legislation be enacted to require publication of all patent applications 18 months after filing. Small entities have successfully fought such a change because of the advantages it gives to large corporations who can "patent around" an embryonic innovation that is disclosed prematurely, as was discussed in my July 2003 newsletter.

The FTC report does not mention that more than 80 percent of business method patents, a type of patent that often receives bad press, are rejected by the USPTO. Neither does it acknowledge that patenting an invention is an expensive, drawn-out process (and getting more so), that almost always produces a reasonable result. The process contains safeguards that exert a constant pressure toward the granting of patents containing narrower claims. If, for example, an applicant and an examiner disagree about the scope of the claims, an appeal is made (for a fee) to a panel of very experienced examiners, whose decision is final, unless the applicant asks a court to review the decision, which is an even more expensive process. Under these conditions, why would any government want to weaken patents that are the result of thousands or tens of thousands of dollars of investment and many years (often 3+) of effort? By the way, the above changes will reportedly also be proposed in an upcoming report by the Department of Justice.

Only vigilance by independent inventors, small business and universities is likely to stem the radical changes being proposed in a U.S. patent system that history has shown in the best in the world. The way things are going, however, you can expect these changes to be part of some future massive appropriations bill that contains sufficient pork to persuade members of Congress to look the other way. It will happen unless you take the time to educate your Representative and Senators about the dangers inherent in them.


A number of changes to Patent Cooperation Treaty (PCT) regulations became effective on January 1, 2004, that have significantly changed the international patent application process. Learn how these changes might influence your patent strategy.

How the international patent application process worked under the old rules was described in my April, 2003 newsletter. To refresh your memory, the process involved the filing of a Request form and fee plus your international application (description, claims, drawings and abstract) with a Receiving Office. That filing would trigger the performance of an international search by an International Search Authority (ISA) which produced an international search report (under the Chapter I procedure of the PCT) and, optionally, the later filing of a Demand form and fee to trigger the performance of an international preliminary examination (under the Chapter II procedure of the PCT). The international preliminary examination process produced first a written opinion (typically in response to an amendment of the claims filed with the demand) and then an international preliminary examination report (typically in response to a second amendment of the claims in response to the written opinion). Under those rules, filing a Demand for preliminary examination was not required in order to delay national filings (in almost all countries) for 30/31 months from your priority date. (Your priority date is the date you filed the first provisional or nonprovisional patent application upon which you are relying to establish priority of invention.) While this saved applicants' money in the short term, not receiving any feedback on the patentability of their inventions (other than the international search results) during the entire 30/31 month period was considered a disadvantage.

Under the new rules, the written opinion that used to be prepared in response to the filing of the Demand form has now been added to the Chapter I procedure. So, now, in return for filing a Request form and fee, both a search report and a preliminary and non-binding (on the member countries) written opinion will be issued by the International Bureau on behalf of the ISA. As before, the written opinion will indicate whether the claimed invention appears to be novel, to involve an inventive step and to be industrially applicable. If a Demand form and fee are not timely filed, the written opinion will form the basis of an "International Preliminary Report on Patentability (Chapter I of the Patent Cooperation Treaty)" or IPRP.

If the applicant wants a chance to amend the claims, a Demand form and fee must be filed with an amendment/argument within the later of (1) three months from issuance of the international search report or (2) twenty-two months from the priority date. If a Demand is filed, further written opinions (if necessary) and an international preliminary examination report will be prepared by the International Preliminary Examination Authority, will consider the amendments/arguments of the applicant and be titled the International Preliminary Report on Patentability (Chapter II of the Patent Cooperation Treaty)". This report will usually be mailed to the applicant within 28 months of the priority date.

A second significant change in the rules is that applicants automatically obtain all-inclusive coverage of all designations available under the PCT. Thus, now an international patent application is an application for all kinds of protection as well as an application for both national and regional patent protection. (Of course, the applicant will eventually have to file national and regional applications to obtain that protection, because an international patent application still will not issue as a patent.) A consequence of this change is that the inventors must be named in the international application, something that used to be required only if the U.S. was designated (indicating that filing a national application in the U.S. was planned). A consequence of this change (note how changes ripple through a bureaucracy), only one of the applicants need sign the Request form (but he must be one that is entitled to file an application with the selected Receiving Office).

Why, might you ask, are the patent offices of the world being so nice? The answer is: so they can charge you more money up front. Apparently, too many applicants were deciding not to file a Demand, reducing the fees being generated, and that is just not acceptable!

So, the fee system has been "simplified," eliminating the separate "basic" fee and "designation" fees, and replacing them with a single "international filing fee." Under the new rules, the international filing fee (for an application that does not exceed 30 sheets of paper in length) is currently $2,472 (in 2004), if no search was previously conducted by the USPTO and a certified copy of one priority document is required. Before the change, filing the same international application would have cost $1,807 in USPTO fees, thank you very much. The Chapter I supplemental search fee (if more than one invention deemed to have been claimed in the application) has increased from $210 to $1,000 (in 2004) per additional invention and the Chapter II supplemental examination fee has increased from $140 to $600 (in 2004) per additional invention, thereby admittedly (and unfortunately) closing two major loopholes in the PCT fee structure.

In another move toward harmonizing the patent systems of the world with the needs of multinational corporations and others with access to lots of investment capital, the cost of obtaining international patent protection just went up. For those of you who want to play in the international marketplace, however, seeking patent protection via the "PCT route" is still "the only way to go."


Robert M. (Bob) Hunter, Ph.D.
Licensed Professional Engineer
Registered Patent Agent
65-1116 Hoku'ula Rd.
P.O. Box 2709
Kamuela, HI 96743
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fax (808) 885-4114
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