According to Mike Drummond, a contributor to “The Conversation,” a Harvard Business Review blog, there were 5 percent fewer pending patent applications in 2009 in the United States than in 2008. And according to BusinessWeek.com, this is “only the second time in the last 25 years (that) patent applications fell overall in the year ended Sept. 30.”
Drummond said the decrease is not surprising due to the economic downturn.
It is, however, worrisome to business and innovation experts concerned about America’s competitiveness. Indeed, there is reason to worry, as, according to BusinessWeek.com, “for the first time in 2009, non-Americans were granted more U.S. patents than resident inventors, accounting for 50.7 percent of new grants.”
Experts, like the researchers at the National Academies of Science, say that patents are essential for innovation. And the more patents a nation has, the greater its ability to compete.
According to iptoday.com, the U.S. Navy was replaced as the global government leader in number and value of patents granted in 2009 by South Korea’s Electronics and Telecommunications Research Institute. (Only five of the top 10 patent holders in government were U.S. agencies.)
Is this because the creative and inventive minds that would be filing patents are leaving the United States? And is it a sign that innovation is leaving the United States with them?
Not necessarily, although that is argued as a reason the United States is losing its innovation edge.
BusinessWeek.com’s Michael Arndt, for instance, said “patent volume isn’t the best innovation gauge,” on the “NEXT: Innovation Tools & Trends” blog in November.
“In a scorecard in November’s Intellectual Property Today, the Patent Board publish(ed) five more ways to put a value on patent portfolios, including citations by other patent seekers, innovation cycle time and age,” he said.
Furthermore, on Monday, Arndt wrote on “NEXT” that “the drop in patent activity may also signal that companies are getting smarter about what they do with their intellectual property (IP).”
It used to be that high-tech companies wanted “as many patents as possible to stake claims and defend their IP. The thinking was that the patents might hinder competitors or at least require them to pay royalties to license patented tech.” Today, these companies are being sued not only by competitors, but also by “companies that exist only to acquire patents and then seek to extract money from big companies for infringing on them. The more patents you hold, the more likely one of these companies will sue you.”
Cisco, for instance, has dropped from filing 1,000 applications a year to filing 700 applications for “breakthroughs in market adjacencies or the most critical inventions.”
Additionally, it seems the United States is losing its patents edge because of needed reforms within the U.S. Patent and Trademark Office (USPTO).
Indeed, in its 2007 report “Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future,” the National Academies said the United States needed to “enhance intellectual-property protection for the 21st-century global economy to ensure that systems for protecting patents and other forms of intellectual property underlie the emerging knowledge economy but allow research to enhance innovation.”
Two years later, this doesn’t appear to have happened.
In fact, according to Drummond, the USPTO is facing a backlog in patent applications, which was caused by a $200 million budget shortfall.
“More applicants than ever are abandoning applications … many likely are bailing because of mounting delays. I’m hearing all too often that capital-starved startups are unable to secure funding because they can’t get a timely patent issued.
“It now takes on average 34.6 months to get a patent, compared with 29.1 months in 2005. That trendline doesn’t look promising.”
The backlog, Drummond said, is a greater threat to innovation than the decrease in applications.
“For the USPTO, fewer patent filings are actually a godsend. The backlog, however, is evil. ‘Every patent application that we sit on is an American job not being created,’ (USPTO Director David) Kappos told (Drummond). ‘It’s a product that’s not going to market. It’s someone’s life that’s not being saved. It’s growth for our country that’s not being delivered.’”
– Kathie
What do you think? Is the IP problem caused by the people or the process?
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