U.S. Patent Office Branches Out

Last September, President Barack Obama signed into law the Leahy-Smith America Invents Act (H.R. 1249), legislation that promises to bring about the most significant overhaul of the U.S. patent system since the early 1950s.

Although it’s far too early to tell how much the enacted reforms will actually bolster innovation, the law already began making waves before the ink was dry on the President’s signature. Specifically, a provision in the statute directing the U.S. Patent & Trademark Office (PTO) to establish at least three satellite branches around the country set off a scramble among members of Congress who want to claim one of the new offices for their state or district.

Lawmakers from California to Massachusetts are vying for the regional offices, believing that each will create hundreds of high-paying jobs, generate millions of dollars in economic activity, and attract technology companies, law offices, and other ancillary businesses.

PTO had already announced plans in December 2010 to put the first satellite office in Detroit. But the opening was put on hold when Congress cut the agency’s funding early last year. Current plans call for the Motor City field office to open no later than July 2012 at a location just east of downtown.

The Elijah J. McCoy Satellite Office, named after the famous African American inventor who some say inspired the phrase “the real McCoy,” will begin as a relatively small outpost. It’s expected to employ 100 people in its first year, including many patent examiners.

Sen. Debbie A. Stabenow (D-Mich.), who sponsored the measure to name the facility after McCoy, says proximity to advanced-battery and automobile manufacturers makes Detroit a logical location for the branch office.

“Our state is first in the nation in clean energy patents, and Michigan is home to groundbreaking research in agriculture, advanced batteries, and new auto technologies,” Stabenow says. “So Detroit is a great choice for the nation’s first satellite patent office.”

PTO considered many factors before selecting Detroit, according to David J. Kappos, the agency’s director. The historic home of the U.S. auto industry fulfilled a number of criteria, he explains, such as having a high percentage of scientists and engineers in the workforce, providing access to major research institutions, and having significant numbers of patent agents and attorneys in the area.

Creating satellite offices is part of a broad effort to speed up the nearly three-year-long patent application process, which encourages face-to-face meetings between inventors and agency examiners.

The America Invents Act mandates a number of reforms, including allowing the patent office to keep more of the fees it collects from applicants so it can have more revenue at its disposal—enough to move forward with the satellite office project.

Section 23 of the act authorizes “three or more” satellite patent offices to be established by 2014. The law further directs PTO to “ensure geographic diversity” in the site selection, and orders the agency to “consider the availability of scientific and technically knowledgeable personnel in the region.”

Decentralizing the patent examination process was “inevitable,” says Kendrew H. Colton, a partner at Fitch, Even, Tabin & Flannery, a Chicago-based intellectual property (IP) law firm. Regional branches, he points out, will make the patent office “more accessible to folks outside the Washington, D.C., arena.”

The key objective, Colton adds, will be to locate satellite offices “where you have access to a highly skilled, highly educated workforce that you can hire and retain. They have to be trained, and they need experience. And you want to retain as many of the good ones as you can. You can’t have high turnover.”

PTO currently employs more than 10,000 people, including 6,650 examiners, at its headquarters in the Washington suburb of Alexandria, Va. The agency plans to hire up to 1,500 new examiners this year as it continues to whittle down a huge stack of pending applications. Some 650,000 patent applications are awaiting review, down from more than 764,000 in January 2009.

The backlog is due in part to extensive turnover among the office’s professional staff. The average examiner is employed by PTO for “approximately three years, which is just the amount of time required to become a proficient examiner,” the Center for American Progress, a Washington, D.C., think tank, said in a 2009 report.

Patent examiners, who are engineers, chemists, or other technical degree holders, often leave for more lucrative jobs in the private sector. And there is a limited pool of technically sophisticated applicants willing to relocate to Northern Virginia.

Satellite offices will allow PTO to hire more patent examiners and seek out additional technical expertise in locations across the country, Kappos says. “We are expanding our operation outside of the Washington metropolitan area as part of an ongoing effort to recruit and retain the nation’s top professionals,” he remarks.

The agency intends to establish at least two more satellite offices in the next three years, provided funding remains available, according to Kappos. In selecting those locations, PTO is “committed to conducting a transparent process based on objective criteria, and with input from stakeholders around the country,” he says.

However, it appears that politics will be a major factor in the decision. “The main issue here, as it always is, is money,” says Timothy J. Maier, founding partner of Maier & Maier, an IP law firm located next to PTO’s campus in Alexandria. “Congressmen and various interest groups are all acutely aware of the economic advantages of a local patent office.”

“Ohio offers the advantages of a large state—world-class universities, brilliant labor pool, and innovators—coupled with Midwestern values and work ethic,” four members of the state’s congressional delegation say in a recent letter to Kappos. “Ohio is a natural fit for the expanded PTO operations.”

The bipartisan group—Sens. Sherrod C. Brown (D) and Robert J. Portman (R) and Reps. Steve Stivers (R) and Patrick J. Tiberi (R)—notes in its pitch that Ohio is the birthplace of perhaps America’s most prolific inventor, Thomas A. Edison, and a pair of aviation legends, the Wright brothers.

In addition to Ohio, California, Texas, Colorado, and New Mexico are among the states making pushes for a satellite office. “While each state is publicly touting how it best fits the America Invents Act criteria, it would be naive to think there is not behind-the-scenes jockeying going on for these extremely valuable offices,” Maier says.

Colorado’s two Democratic senators—Michael F. Bennet and Mark Udall—sponsored the amendment to the America Invents Act that requires creation of the regional offices, and they have been relentlessly advocating on behalf of the Rocky Mountain state.

In December, Bennet began calling on Coloradans to send letters of support for a patent office in the Denver area. In late January, Bennet’s staff helped organize a trip to Washington for Colorado business leaders, who presented a 266-page report to PTO officials with economic data, workforce statistics, and educational information.

“In Colorado, PTO could tap into a world-class workforce that boasts more than 13,000 skilled scientists and technology workers,” Bennet says. “We are the second most educated state in the nation, and are among the top 10 states for adults with degrees in science or engineering.”

California’s two senators and its large delegation in the House of Representatives have been trying to persuade Kappos to locate one of the branches in Silicon Valley or elsewhere in the Golden State.

“Bringing a satellite office to California close to our multitude of innovations and inventors is good for business and will further California’s worldwide reputation as a hub of technological innovation,” the bipartisan group says in a letter to Kappos.

California’s patent production stands well above the pack, the lawmakers note. In 2011, California received 30,750 patents, representing 25.4% of the 121,261 patents granted in the U.S. for the year. The next closest state was Texas with 8,045, followed by New York with 7,842.

“We are hopeful that having a satellite office in California will make it easier and less expensive for the state’s inventors to go through the patent application process,” the delegation says.

Central Texas would also be a good fit for a regional patent office, say four congressmen from the Austin area. The state capital has “a diverse portfolio of technology assets and a prolific innovation community” that is well suited to help PTO reduce its backlog of patent applications, according to Reps. Lloyd Doggett (D), John R. Carter (R), Michael T. McCaul (R) and Lamar S. Smith (R).

In their letter to Kappos, the lawmakers note that central Texas “is home to many major technology corporations” and is IBM’s top global site for patents. They also cite the area’s academic research sector, led by the University of Texas, as a potential partner “as PTO seeks to enhance public engagement.”

Politics, no doubt, will influence the selection process, says Colton, who is a past-chair and current executive committee member of the American Chemical Society’s Division of Chemistry & the Law. “It will have a political overlay to it, no matter what the law says,” he remarks. “But hopefully, Director Kappos will evaluate that and make decisions in the context of what makes the best sense going forward beyond the present or a future election cycle.”

Ultimately, Colton adds, the benchmark issue for Kappos will be to set up satellite offices where PTO “can hire and retain skilled professionals who can actually examine patent applications and who want to work for the patent office.”

PTO is expected to announce a location for the second regional office by early 2013, and the third will likely be chosen later that year. But with each job-creating hub expected to become a business magnet, observers note, awarding such a political plum to a city in a battleground state during a presidential election year isn’t out of the question.