Obama's Call For Innovation Stifled by Patent Office Backlog

President Obama delivered his State of the Union address Tuesday night, calling for a new era of American innovation. Behind him are VP Joe Biden and Speaker of the House John Boehner
AP

In his State of the Union, President Obama challenged America's scientists and engineers to "out-innovate" global competition.

But America's ability to drive economic growth and job creation through innovation is currently hampered by an enormous backlog at the U.S. Patent and Trademark Office .

The Patent and Trademark Office grants patents and registers trademarks needed to secure investment capital, build companies, and bring new products and services to the marketplace. But according to data from the Patent Office, there is currently a backlog of 1.2 million patents, over 700,000 which have never even been opened.

The PTO mostly supports highly paid white-collar jobs in innovation intensive sectors like computers, electronics and chemicals. The PTO estimates that it currently takes 35 months to get an answer on a patent application.

According to the Department of Commerce, 76% of venture capital investors consider patents when making funding decisions, so entrepreneurs may have difficulty getting money to start a business if they are still waiting for their patent.

The Department of Commerce estimates these lost opportunities cost the U.S. economy billions of dollars every year.

In his State of the Union address Tuesday night, Obama told the nation that, "No country has more successful companies or grants more patents to inventors and entrepreneurs."

At left, watch a CBS Evening News report on how the patent backlog frustrates inventors. (or read the story here).

But, that could soon change as Thomson Reuters predicts that China will outpace the United States in patent filings this year. The PTO says it is completely self-funded through fees they collect, but Congress diverts a portion of the PTO's profits and will not allow the PTO to set their own fees.

On Tuesday the head of the PTO, David J.Kappos, addressed a House subcommittee and urged Congress to pass thePresident's FY 2011 Budget Request, which would allow PTO to spend all the fees they collect and also impose a 15% surcharge on patent fees.

In his testimony Kappos emphasized how "[I]intellectual property will play a key role in driving our economic growth and renewal."

There has been some progress made in reducing the backlog since Kappos arrived in August 2009. According to data released by the PTO in January 2009, the patent backlog was 764,000 and by the end of FY 2010 it had been reduced to708,535.

Yesterday Senate Judiciary Committee Chairman Patrick Leahy reintroduced a proposed Patent Reform law that he says "will both speed the application process and, at the same time, improve patent quality."

The Innovation Alliance, which represents innovators, patent owners and stakeholders from a diverse range of industries, said, "[P]olicymakers should first address the serious and complex funding and administrative issues at the USPTO that gave rise to the backlog."