This month the Commerce Department’s U.S. Patent and Trademark Office (USPTO) announced its new “Three Track” program, which allows for patent applicants to choose the speed with which their application is processed.  Acknowledging the key role that intellectual property plays in promoting innovation and entrepreneurship, U.S. Commerce Secretary Gary Locke said, “This new system will bring the most valuable patents, as determined by inventors, to market faster and will help shrink the backlog by catering to the business needs of America’s inventors.”

According to the U.S. Small Business Administration, small businesses create the bulk of private-sector jobs and produce about 13 times more patents than large firms.  However, in recent years, patents produced by independent inventors―who are more likely to be linked with smaller firms and businesses―have declined.  A number of experts in the field surmise that this is because the cost of applying for a patent has become too expensive for many.  In addition, they point out that start-ups in particular are caught in a bit of a catch-22―investors are less likely to take a risk on a product that does not have patent protection, while at the same time smaller innovators are unable to afford a patent without funding.   Until now, the USPTO has processed patents on a first-come, first-serve basis for the most part at a base fee of $1,090. 

Although “Track One” of the new program will allow for the prioritized examination of a patent within 12 months of its filing date, it comes with an even greater price tag.  In fact, the proposed fee associated with this expedited option is $4,000 plus publication fees of $430, which covers the full cost of resources necessary to prevent the delay of other, non-prioritized applications that must also move forward.  Despite the USPTO’s assurance that discounts of as much as 50% will be offered to smaller entities who file under “Track One,” a number of patent-industry experts fear the new initiative may do more harm than good.

In addition to the higher cost being a potential deterrent for many smaller innovators, a number of patent industry insiders fear that the current patent backlog will not be rectified with this new approach.  In fact, they assert that fast-tracking applications for a fee will only increase costs and will not cut processing times.  In response, the patent office says it plans to limit the number of fast-track applicants to 10,000 in the first year, assuming that about 10% to 20% of filers will choose to pay the extra fee.  In addition, the USPTO also announced new efforts to eliminate the “tail” of backlog applications that were more than 16 months old at the start of the current fiscal year, which is an important first step in the agency’s efforts to streamline the overall patent application process.

As changes are made to foster innovation, much of America’s global competitiveness rests on the ability of government leaders to get it right and soon if last year is any indication of where things are headed.  Between 2009 and 2010, the U.S. continued to lead the world in the number of overall patents filed; however, its total percentage versus a number of other countries took quite a plunge, according to the World Intellectual Property Organization (WIPO).  China, in fourth place overall, had the largest percentage increase in patents last year with a 56% gain.  Likewise, the percent of filings in Japan, Germany, Korea and India rose markedly, while the number of overall U.S. patents declined for the same time period. 

In his recent remarks at the Innovation Alliance Conference in Washington, D.C., David Kappos, Under Secretary for Intellectual Property and the USPTO’s Director said, “Our history has been driven by innovation.  And our economic security continues to depend upon our ability to innovate…the key to economic success lies increasingly in innovative product and service development, and in intellectual property protection…”  He further recognized that “timely and high-quality patents are critical to small businesses, which create two out of every three American jobs.” 

According to the Harvard Business Review as cited by Kappos in his speech, the USPTO is potentially the “biggest job creator you never heard of.”  Given our country's need to rebuild from the recent recession and boost employment, as well as maintain our competitive edge globally, facilitating the patent application process at every level while simultaneously reducing the current backlog is undoubtedly one of the smartest moves we can make.