2009 top underreported technology stories:9. Patent Office to inventors: See you in 2013
Think it's tough getting Apple to approve your iPhone app? Just try and get approval or a patent in the United States. It now takes nearly three years to find out if the U.S. Patent Office will give you the thumbs-up.
Maybe you'll never file a patent yourself, but patents equal innovation. An industry that can't protect its intellectual property by patenting it is less innovative, less dynamic, and less able to create capital and jobs.
The warning symptoms: The U.S. Patent Office is underfunded and overburdened, awards in patent lawsuits have become astronomical, and the cost of defending claims against a patent has soared.
Last year, nearly 500,000 applications were filed with the U.S. Patent Office, adding to a backlog of about 1.2 million. The agency has a budget of about $1.9 billion, all of it raised via application fees. Not only has Congress declined to give the office more resources, it treats it like a piggy bank, diverting the money it takes in to other uses. And by all accounts, the patent office is embarrassingly burdened with second- or third-rate technology, another factor slowing down the approval process.
Maybe the quality of patent applications has gone down, or maybe the system is suffering from an unexplained blip, but in fiscal 2008, the Patent Office's Board of Patent Appeals approved only 44 percent of patents that came before it -- down from 66 percent five years ago and 71 percent at the start of the decade.
Meanwhile, patent litigation costs can run as high as $5 million in cases where potential damages exceed $25 million, according to the American Intellectual Property Law Association. "As the costs of litigation increase, the stakes for companies are getting higher and higher," says Bijal Vakil, an intellectual property attorney with the firm of White & Case.
Before 1990, only one patent damage award passed the $100 million mark. Since that time, huge verdicts in patent cases have become increasingly common, with at least five topping $500 million, Vakil says.
At the same, lawsuits waged by "nonpracticing entities," less politely known as patent trolls or patent hoarders, have increased sharply, while overall patent litigation is down, according to Patent Freedom, a Web site that tracks troll activity.