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September 2001
Vol. 4, No. 9, pp 51–52, 54.
patents and property
The patent machine
In go applications, out come patents or rejections, but what’s inside?

opening artThe stability of industry and innovation in the United States depends on intellectual property protection, and the U.S. Patent and Trademark Office (USPTO) plays a major role. But how is this government entity organized? How does it deal with the immense task of evaluating patents and trademarks?

Commerce and the director
Today, the USPTO is part of the U.S. Department of Commerce; but in the past, the office fell under different jurisdictions such as the State Department and the Department of the Interior. The office has grown from its humble beginnings with 3 people and no official office in 1790, to more than 6000 employees in 2000, with 2.4 million square feet of office space in 18 buildings in Crystal City, VA (across the Potomac from Washington, DC).

In addition to the dramatic growth, Congress recently passed legislation (part of the American Inventors Protection Act of 1999) giving the office more managerial freedom by converting it into a performance-based organization. This is the second such conversion within the federal government; the U.S. Department of Education’s Office of Student Financial Assistance changed into a performance-based organization in 1998. As a result of the USPTO’s conversion, top management has been promoted and receives bonuses for meeting goals, and the organization has greater freedom in hiring personnel and purchasing supplies and services.

The change in status has raised the position of the top member of the USPTO from a deputy undersecretary to an undersecretary in the Department of Commerce (official title: Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office). The director has always been a political appointee; however, this position is now the only politically appointed post at the office, which reduces the impact of changing administrations (see box, "Not just patents").

As a political appointee, the director may often have interests that are the opposite of both the administration and Congress. The office is completely funded by patent and trademark fees; however, each year the administration and Congress appropriate only a portion of these fees to the next year’s USPTO budget, using the balance to fund other government projects. For 2001, the office’s estimated revenue was $1.2 billion, of which the Clinton administration proposed skimming $117 million for other federal programs. The House voted to take away $900 million, but the final Senate budget returned it to the administration’s level of $117 million. This issue is extremely contentious; some see this as a tax on innovation because fees go to support other federal programs rather than improving the patent process. Others cite the errors of mismanagement and spiraling costs at the U.S. Post Office as a lesson against letting a government agency keep its own books.

The director oversees the six offices whose functions define the USPTO. Most people do not realize that the USPTO has many other functions besides its patent and trademark divisions (e.g., one office handles disputes while three others deal with business and support functions).

A patent is an agreement with the government that an inventor will have exclusive rights to an invention in exchange for disclosing how it works. The Commissioner for Patents controls the lion’s share of the USPTO; with more than 3000 examiners, this section has roughly half the staff of the entire office’s 6128 employees (in 2000). Like the USPTO, the patent division is separated into support and primary sections, which are shown here with their subgroups (as of July 2001):

  • Deputy Commissioner for Patent Operations

    Patent Examining Groups

  • Deputy Commissioner for Patent Resources and Planning

      Office of Initial Patent Examination
      Office of Patent Publication
      Patent Cooperation Treaty Office

  • Deputy Commissioner for Patent Examination Policy

      International Liaison Staff
      Manual of Patent Examining Procedures Staff
      Office of Petitions
      Office of Patent Legal Administration
      Office of Patent Cooperation Treaty Legal Administration

  • Office of Patent Programs Control

The Office of Patent Programs Control reviews patent examination quality and reports the findings to improve the process. The Office of the Deputy Commissioner for Patent Examination Policy handles two primary policy areas. First, it communicates with foreign patent offices about the Patent Cooperation Treaty. This treaty is an agreement that allows inventors in different countries to seek patent protection in other member countries and attempts to streamline this process. The Patent Examination Policy Office also maintains and updates the Manual of Patent Examining Procedures. This mammoth manual is a guide to every detail of how patent applications are treated. It is available online at http://patents.ame.nd.edu/mpep/; printed out, it measures roughly 10 1/2 in. thick (a little light reading).

Patent applications
What happens when an inventor, or an inventor’s lawyer, sends in a patent application? The application is handled in the beginning and at the end by departments under the Deputy Commissioner for Patents Resources and Planning. This office handles the immense filing and tracking system that is a task of the USPTO. The Office of Initial Patent Examination dates the patent applications, sorts them into broad subject areas, and sends them to the Patent Examining Groups. After they are examined and granted, patents are published by the Office of Patent Publication. Publishing patents recently became more work for the office because the United States has decided to publish patent applications 18 months after they are filed, just like other countries. The United States typically kept applications confidential until they were granted; however, this is no longer the case, and this issue continues to be debated.

Patent examining groups
Between the receipt of applications and their publication, patents are, of course, examined. The 3000 or so patent examiners are organized by subject or technology area, because no one examiner could have expertise in all types of applications.

Examiners (usually 10–15 of them) work together on closely related subjects in small groups called art units. Several (usually not more than six) related art units are organized into work groups, and several work groups covering a wide technology area are grouped into a technology center.

For example, if an application for a new gene chip is filed, the Office of Initial Patent Examination will receive the application and decide to which one of the following six technology centers to send the patent.

  • 1600 Biotechnology, Organic Chemistry
  • 1700 Chemical and Materials Engineering
  • 2700 Communications and Information Processing
  • 2800 Semiconductors, Electrical and Optical Systems and Components
  • 3600 Transportation, Construction, Agriculture, National Security and License and Review
  • 3700/2900 Mechanical Engineering, Manufacturing, and Products and Designs

Obviously, the Biotechnology and Organic Chemistry technology center would be the best choice. This center would then classify the application and give it to the appropriate art unit. Art unit 1655 handles “assays involving nucleic acids” and so would most likely get this case.

Art units
Art units are the building blocks of the patent examination system. Each art unit is led by a supervisory patent examiner and contains 10–15 primary and assistant examiners. Primary examiners have at least 5 years of experience at the USPTO and have signatory authority; they can grant or reject patents. Assistant examiners have less patent examining experience and therefore must have their examinations reviewed and signed by a primary examiner before applications can be granted or rejected. Assistant examiners take approximately 5 1/2 years to become primaries, and they face two 6-month review periods, during which their work is scrutinized.

What do examiners do? Examiners, whether primary or assistant, perform the following steps when an application is given to them: read and understand the patent, search prior art (previous patents, databases, and journals) to determine if this is a new invention, and examine the claim based on the law (basically, is it novel, nonobvious, and useful?). The examiner then sends a letter to the applicant stating any objections found during the examination. The applicant can then talk with the examiner about solutions and send an amendment that hopefully answers the examiner’s objections. If it does, the examiner allows the patent; if not, the application is rejected.

The USPTO continues to adapt to the demands of reviewing the latest technology. The exponential increase in the number of patent applications and the growth of new fields, such as biotechnology and business methods, will place continued pressure on the USPTO to carefully evaluate and upgrade the “patent machine”. With more than 6 million patents to date, and 175,000 granted just last year, the USPTO shows us that we have a tremendous wealth of ideas.

Further reading

Michael Felton is an assistant editor of Modern Drug Discovery. Send your comments or questions regarding this article to mdd@acs.org or the Editorial Office by fax at 202-776-8166 or by post at 1155 16th Street, NW; Washington, DC 20036.

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