Monday, November 26, 2007

Should a patent application cost $50,000 before lawyer fees?

Today Patent TrollTracker linked to Tim Wilson, who has been blogging about raising large entity fees to $50,000 as a way of improving the USPTO and reducing patent "troll" cases in the IT industry.

It is not at all clear what percentage of the enforcement actions by non-practicing entities are being brought using patents formerly belonging to large entities. While large entity applicants do file the majority of patent applications, typically large entities hold onto their portfolios as assets for cross licensing, and likely would not want their names associated with enforcement actions of this type.

Further, many small entity applicants want to become large entity applicants someday. When they reach that crossover point, if they have to choose between filing 10X fewer applications or paying 10X more to keep filing at the same rate, they are going to file fewer cases, putting them at a real IP disadvantage with respect to both small entity applicants and larger entity applicants. From an innovation policy perspective, this does not seem to be reasonable.

Finally, knowing how legal budgets are formed in traditional large entity applicants, raising fees in this way would encourage far more litigation and aggressive licensing. IP departments exist fundamentally to protect the core business and enable new businesses. If fees were actually raised in this manner, law departments would be charged with finding new revenue streams to cover the fee increase and not let the company's inventions go unprotected. This too, does not seem to be a goal of the author.

While traditionally raising prices lowers quantity, this does not seem to be a situation where doing so would achieve the desired results.


Tim Wilson said...

I agree that it is not a perfect solution, but the $50,000 fee is really designed to relieve the USPTO from having to process 413,000 patent applications next year. Of course, no human process can do that well, so we either reduce the number of applications filed, or we accept low quality patents. I vote for the reduction in number and an increase in quality.

Erin-Michael Gill said...

Sorry Tim - I just can't buy the premise that "no human process can do that well".

With all the six-sigmaesque, process improvement type systems out there, there should be a way, without reducing quality or decreasing examiner time, to enable the 5000+ or so USPTO examiners to average 3 "new" cases per bi-week.

Actually, let me think about that a bit more and blog a proposal tomorrow.