Judge Paul Michel, soon to be retiring Chief Judge of the US Court of Appeals for the Federal Circuit, presented to patent examiners last month a speech entitled Fellow Citizens: Be on Guard.

He cautioned the group that American economic security is currently threatened by "the outflow of jobs, talent, technology and production" and advised that the solution lies in the US being able to "boost invention and make new products our people and the world will need, want and buy."

Michel cites the need for increased investment in innovation to combat the loss of "our international lead in technology and our global competitiveness." In his speech, though, he states the he believes public financing to support these needed initiative will be largely unavailable because of "the cost of two, concurrent and continuing wars and a decade of fiscal mismanagement" which has saddled the US with "huge annual debt payments and annual budget deficits of hundreds of billions of dollars."

With public funds not available and decreased tax revenues driven by the current recession, Michel emphasized that private investment is required to make up the short-fall. In order to incent private investment in US innovation, he believes that confidence in a return on investment is essential and that this can be accomplished via "faster, sounder and clearer patents, plus faster, stronger enforcement."

In addition to criticizing the government's current deficit spending status, Michel called to question the ability to decide this important issue, saying, "The founders, better than today's political leaders, understood the central importance of patents to national prosperity and economic growth."

New jobs to enfranchise the unemployed and grow the labor force will, he predicts, follow an influx of private investment, as will retention by the US of the technologically talented, such as foreign students studying at our universities who could return home as well as US researchers who are taking their expertise with them to countries such as China where R&D facilities are burgeoning.

While critiquing top leaders' ability to deal with this issue, Michel also addresses areas of weakness in the current patent system such as: "First and foremost: delay... [B]ecause the patent office has been underfunded and losing ground." He added that "the patent system is failing primarily because the patent office is failing. In a word, it is dysfunctional. Over 700,000 applications sit unread in a warehouse..."

To address these and other ills at the patent office, Michel proposed the immediate and substantial investment of $1 billion as well as pushing Congress to "guarantee the PTO will keep all fees" citing that "since 1992, Congress diverted over 900 million dollars in patent fees to other uses." He went on to inform the audience of patent examiners that "This fiscal year, Congress, once again, will not allow the office to keep all the fees it expects to collect; an estimated $150-250 million will go elsewhere." Putting an end once and for all to this "fee diversion", says Michel, "is necessary to reviving the PTO."

While critical of Congress, he mentioned PTO Director Kappos in a favorable light, saying that while "other innovations are also needed; most have already been started by the current director, David Kappos" but Michel cautions that without the much-needed infusion of funds he suggests, "even his very sound leadership initiatives cannot produce the needed results." Michel goes on to say "In fact, despite his initiatives, the workforce is still declining... just when it needs more examiners, it has fewer."

Other recommendations the retiring Chief Judge makes for Congress to improve the ailing PTO include:

Clarify the Director's authority to give earlier examination to patent applications in certain promising new technologies and individual applications for pioneer inventions discard the first-in first-examined system to prevent prioritization of applications with little if any commercial value or those lacking technological merit let the PTO open satellite offices hire unemployed engineers who are already experienced IP professionals Congress should raise pay levels for scientists and engineers in the patent office.

In closing, he called on Congress to "prime the pump" of the PTO to encourage private investors to invest in the America's patent system. Michel said that "this is the best and perhaps only way to increase and reverse competitive decline... With so clear a strategy," he said, "we need not hesitate to act."


To see the full text of Chief Judge Michel's Speech Fellow Citizens: Be On Guard.