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Running the U.S. Patent and Trademark Office, says Director James Rogan, “could have been the easiest job in the federal government.” Travel the world. Attend conferences in Switzerland. Give a lot of after-dinner speeches. “Do my two, three years . . . set myself up to become a lobbyist, and make no controversial changes,” Rogan says, sounding almost wistful. Instead, the former U.S. representative from California has the intellectual property world in an uproar with a bold — some would say radical — plan calling for the biggest operational changes in the PTO’s 200-year history. Virtually every IP interest group has objected to aspects of the plan, which calls for sharp, even punitive, increases in user fees, outsourcing a major portion of the patent examiners’ jobs, and a new system that would let applicants choose to postpone examination of their inventions. Some individual patent lawyers have spoken out even more strongly. “It’s a disaster,” says Gregory Maier, a name partner at IP boutique Oblon, Spivak, McClelland, Maier & Neustadt. “It throws out the baby and keeps the bath water.” But Rogan shrugs off the criticism. “My wife says I’m just not happy in Washington unless I’m getting people mad at me,” he explains. If so, these must be joyful times indeed. Still, despite their misgivings, four of the leading IP interest groups joined forces on Oct. 24 to offer a somewhat tepid letter of endorsement to Office of Management and Budget head Mitchell Daniels Jr. “While we have reservations about certain aspects of the details of the plan, we share fully the goals that the plan seeks to achieve,” wrote the leaders of the American Intellectual Property Law Association, the Intellectual Property Owners Association, the Biotechnology Industry Organization, and the International Trademark Association. The missive was not born from a sudden change of heart, but rather a recognition that as the OMB draws up the president’s FY 2004 budget, the PTO is likely to have its funding slashed unless the administration sees some evidence that PTO users will back the plan. “We’re not at war with the PTO. We’re their friends,” says American Intellectual Property Law Association Executive Director Michael Kirk, who drafted the letter. At AIPLA’s annual meeting in the District on Oct. 18, he explained to members that the “OMB recognizes how little support the strategic plan received. . . . But if the PTO gets a low [budget] mark from OMB, we’re stuck with it in FY 2004.” Rogan’s “21st Century Strategic Plan” comes at a time when the PTO is under siege. The agency faces a backlog of 400,000 patent applications, and the average time it takes to get a patent stands at more than two years. At this rate, pendency will increase to three or four years within the decade. The applications themselves have become increasingly long and complex, and concerns about patent quality abound. Meanwhile, appropriators in Congress continue to divert millions in fees paid by PTO users to fund unrelated projects, offering harsh criticism of the agency to justify the grab. “PTO management has not been sufficiently innovative,” wrote Senate appropriators in their budget report language last year. “PTO management chose to remain wedded to an archaic patent process and attempted to hire its way out of its workload problems.” A POLITICIAN SEEKING SUPPORT When Rogan assumed office almost a year ago, he had a choice: go for a few easy fixes and ignore the underlying problems, or do something. In good conscience, he says, he felt compelled to act. If he didn’t, he says, “I’d be dumping tremendous problems on my successor. Every year we delay, it will get worse and worse.” Still, such a revolutionary agenda was hardly what the IP bar expected from Rogan, whose prior legal expertise lay in prosecuting murders, not patents. A two-term congressman and one of the House managers in the impeachment trial of President Bill Clinton, Rogan is the first PTO leader in memory who has not been an IP specialist. At the time of his confirmation, many IP leaders saw this as an asset. As Herbert Wamsley, executive director of the Intellectual Property Owners Association, put it then, “We think [Rogan's] background will be helpful, including his congressional experience, his understanding of government funding, and his relationships with the Senate and House Appropriations committees.” Ironically, it seems the plan’s biggest failing has been political. At a July hearing of the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property, where representatives of AIPLA, the International Trademark Association, the IP section of the American Bar Association, and the patent examiners union testified, the plan’s lack of support was unmistakable. “While we applaud the commitment and effort that has gone into this proposal and we endorse some elements of it,” said then-ABA Intellectual Property Law Section Chair Charles Baker of New York’s Fitzpatrick, Cella, Harper & Scinto, “we cannot endorse the final product as a whole. It suffers from a number of flaws, both in conceptualization and in individual components.” Acknowledges Rogan: “Members of Congress said [to me], ‘The plan looks great. It’s forward-looking. It’s aggressive. We just can’t find anyone to support it.’ “ The House intellectual property subcommittee chairman, Howard Coble (R-N.C.), with whom Rogan enjoys a warm relationship, has yet to introduce — let alone sponsor — legislation submitted by the PTO to increase fees, the first step in implementing the plan. In his heart of hearts, Rogan says he believes the original plan, which was drafted by a core group of longtime PTO professionals, could save the agency. But that doesn’t mean he’s wedded to it. “I’m willing to negotiate on any area that makes sense to the operation of the office and still allows us to have a strategic plan that lets us do the job,” he says. Sources close to the negotiations say the PTO has already backed off on aspects of the fee proposal that triggered the most ire. Originally, the PTO wanted to increase fees by almost 70 percent for what was deemed an “average” application — less than 50 pages long, with three or fewer independent claims and 20 or fewer total claims. Longer applications, which are more difficult to examine, would cost even more. Rogan has described this as moving from a “one size fits all” approach to one where fees more accurately reflect the cost of examination. Even with the hike, getting a patent in the United States would still be significantly cheaper than in Japan or Europe, and the PTO would use the money to hire more examiners and develop an electronic patent application filing system. COST AND PUNISHMENT Intellectual property groups, in principle, agree this sounds reasonable. What they object to are rapidly escalating penalties for applications of excessive length. Such penalties, Rogan admitted to Congress this summer, are “meant to be punitive, not to collect revenue [and] to discourage behavior that is crippling our ability to provide a quality and timely patent.” As an example, Rogan cited a patent application from an oil company with 5,100 claims, 17 of which were granted. But under the proposed system of penalties, that application would go from costing a few thousand dollars to many millions, says Kirk of AIPLA. Furthermore, in certain industries, lengthy applications are a necessity. For example, BIO, the biotech industry organization, points out that members must often submit patent applications that require hundreds, if not thousands, of pages of nucleic acid or amino acid sequence listings. Similar issues arise with computer software applications, says Pillsbury Winthrop partner Steven Moore, where “you really need multiple claims if you want to protect the invention.” The other problem with raising fees, from the users’ point of view, is that there is no guarantee the PTO will even get the money. That’s because for the past 11 years, Congress has skimmed off hundreds of millions in PTO user fees. AIPLA plans to put forward an alternate bill, most likely in the next session of Congress, that would provide for a more modest increase in fees and adjust the penalties for longer applications. The bill would also attempt to cap user fee diversion by making the new fee revenue untouchable and limiting the percentage of base revenue that can be appropriated. One of the most radical features of the plan is still on the table — that the PTO turn to the private sector for searches of prior art, or documents that prove or disprove an invention’s novelty. This would reduce the workload of the PTO’s in-house examiners, who could concentrate on determining whether the proposed invention will actually work and what claims will be allowed. The biggest benefit of such a scheme is that it would allow the PTO to do more work with fewer examiners, but Rogan sees another virtue as well. “Any outside source in the world working under a free market business model can do anything faster, better, and cheaper than the U.S. government,” he says, sounding like the stalwart Republican he is. “That’s my general overview of the private sector versus the government to run a business.” Patent applicants would foot the bill for the prior art search, although it is unclear if they would hire the searching firm directly or use the PTO as a pass-through organization. The PTO would also rely on prior art searches performed by qualified patent offices in other countries, where available, and those submitted under the Patent Cooperation Treaty. The strongest opposition to the proposal comes from the examiners union. “We think it’s dreadfully unwise,” says Ronald Stern, head of the Patent Office Professional Association. Stern notes that examiners become experts in their subject area by performing searches and that bringing in someone else to do it will increase inefficiency and reduce quality. “If the PTO cannot control the quality of its employees, what chance do they have of controlling the quality of outside firms?” he asks. Deferred examination of patent applications is another sticking point. The PTO proposes offering applicants who are uncertain of an invention’s market value the option of delaying review for 18 months. The agency estimates that 10 percent of those who opt for delay will ultimately withdraw their application. This would save PTO examiners the bother of looking at thousands of applications each year. But IP groups are skeptical of the plan. They question how it is in the public’s interest to increase the period of uncertainty over what, if anything, is patentable. While the 300-plus page plan also contains many noncontroversial elements, such as new initiatives on quality review and training, it seems clear that overall consensus remains elusive. “It was hoped Rogan would be a new, savvy leader for the PTO,” says Maier of Oblon, Spivak. “He certainly wants to do something to radically change the position of the Patent Office, but the 21st Century Plan as it issued certainly did not accomplish that goal.”

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