Patent Office Plans Reforms Aimed at E-Commerce

SAN FRANCISCO (04/03/2000) - The U.S. Patent and Trademark Office (PTO) last week announced plans to improve the quality of its much-criticized Web patent reviews and to virtually split from its parent agency, the U.S. Department of Commerce.

In a presentation to members of the San Francisco Intellectual Property Law Association here, PTO Director Q. Todd Dickinson said the agency will become a "performance-based organization."

That means the revenue-generating agency will act more like a business, with managerial flexibility and control over its budget, hiring and procurement.

However, Dickinson said, the agency still faces a budget crunch that won't improve this year. He said one-third of the PTO's $1.2 billion revenue from filing and processing fees currently gets appropriated to other agencies. "The practice is limiting our ability to hire examiners," he said. "The appropriation process negatively affects our work. The situation must be fixed."

A bill introduced in Congress last month might help. HR 4034, introduced by Rep. Howard Coble, a Republican from North Carolina, and already passed by one subcommittee, would let the PTO keep all the fees it collects.

Dickinson also outlined the PTO's plan for additional layers of review before granting patents for automated business methods. The PTO has been criticized for granting broad patents on e-commerce techniques such as Inc.'s 1-Click ordering process.

"Patenting of e-commerce technology has become controversial," acknowledged Dickinson. He added that the controversy centers on the perception that business methods can't be patented and that the PTO is understaffed and undereducated when it comes to high-tech issues.

Office Won't be Abolished

"No one is calling for abolition of the PTO," said Harris Miller, president of the Information Technology Association of America, a trade group in Arlington, Virginia. But he said the patent review process is flawed and has yielded "fairly significant cases" of questionable patents.

Gregory Aharonian, the publisher of the "PatNews" electronic newsletter and a critic of the PTO, called Dickinson's plan "a farce."

In order to function as a business, Aharonian said, the PTO would first need competition, which it doesn't have. Second, it would need to be able to accurately gauge customer satisfaction.

Although the PTO regularly cites surveys showing high satisfaction among patent applicants, Aharonian said the PTO's true customer base is businesses and individuals who must compete with patent holders.

Pamela Banner, a Washington patent lawyer, said the changes in the patent process are "generally a good thing. They aren't earth-shattering, but they add more review, which is good."

She said the prospect of the PTO getting to keep all its fees is an essential element of reform. "This siphoning of funds is ridiculous," she said.

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