Private Sector Publishers are Essential to the Quality and Integrity of the US Patent and Trademark System

The US patent and trademark system depends on the dissemination of value-added information.  Such dissemination can best be achieved by a public-private partnership that takes advantage of the core strengths of private sector publishers.  A competitive private sector patent and trademark information industry complemented by the US Patent and Trademark Office (USPTO) provides the optimal approach for meeting the broad range of user needs—from specialists to the general public. The following principles are critical to ensuring the highest quality and integrity of the US patent and trademark system. 

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We believe the following principles are critical to ensuring the highest quality and integrity of the US patent and trademark system: 

  1. USPTO Policies Should Encourage a Diversity of Sources for Patent Information

  2. The USPTO’s Funding Allocations Should Give the Highest Priority to Improving the Quality and Efficiency of Internal Operations

  3. Congress and the USPTO Should Recognize That Functionality Is Value, and Functionality Costs

  4. The USPTO’s Policies Should Create an Environment for Maximizing Competition among Private Sector Patent and Trademark Information Providers

  5. The USPTO’s Policies Should Be Informed by Competition Law and Antitrust Law Principles of Fair Competition

USPTO Policies Should Encourage a Diversity of Sources for Patent Information

It is common sense that one should not rely on a single source of information, and that “truth” or the “most accurate information” is best derived from a marketplace of ideas with a multiplicity of sources. US law embraces such thinking, and Federal statute provides that Federal government agencies shall ensure public access to an agency's public information by “encouraging a diversity of public and private sources for information based on government public information.”  (44 USC 3506(d)(1)(A)).  The statute's enforcement vehicle, OMB Circular A-130, provides that in determining how and whether to disseminate information, agencies will: “[t]ake advantage of all dissemination channels, Federal and nonfederal, including State governments, libraries, and private sector entities, in discharging agency information dissemination activities.”

The concept of "a diversity of sources" has special applicability to patent information. Each area of technology benefits from different types of search tools to achieve optimal results. There are many types of uses of patent information, and there are many types of users in addition to those who conduct searches for patentability, infringement, validity, etc.  Such users include researchers, business intelligence analysts, financial analysts and technology specialists.   If there is only one source--the USPTO--all of this diversity is lost. And yet, this is what can happen if the USPTO does not consciously take into account this principle when they are making decisions about free patent services.

Perhaps the greatest advantage of a diversity of sources is that it maximizes dissemination and enables patent information to reach places where it would otherwise not be used; thus helping to realize one of the major policy goals of the patent system.

The USPTO’s Funding Allocations Should Give the Highest Priority to Improving the Quality and Efficiency of Internal Operations

The USPTO should focus on and give highest priority to funding decisions to improve internal operations. Information services cost money, and if the USPTO’s limited funds are spent on providing free services to the public, these funds have to be subtracted from those available to support top USPTO priorities such as improving the quality of patents and decreasing the patent application backlog.  Of course, the USPTO has public responsibilities, and publishing and providing basic access to patents and high quality raw data are broadly recognized as such. But, this does not necessarily include providing free access to value-added services that go beyond the basic public responsibilities, especially if the USPTO can be using its resources to improve the quality of the raw patent and trademark data.

Congress and the USPTO Should Recognize That Functionality Is Value, and Functionality Costs

Added functionality--added value--is really at the heart of what private sector patent information services do. It represents the results of their investment in both dollar and human capital in a given year. It is a never-ending process.  Adding value can add considerable costs to a patent office's budget, and since applicants and grantees are paying for patent offices, added value can translate into added costs to inventors.

Here is where a solid private-public partnership can provide optimal results for meeting the broad range of user needs.  For example, when the USPTO was planning to expand its website service to include full-text searching, the Coalition for Patent and Trademark Information Dissemination (“Coalition”) and the USPTO management had an extensive dialogue regarding functionality. Coalition member companies identified and ranked critical functionalities and the effect the introduction of particular functions by the USPTO would have on private sector services. The USPTO also conducted analyses of the costs of each function. It was generally agreed that the private sector plays an important role in addressing USPTO objectives.  Moreover, there was a strong positive correlation between high costs to the USPTO and functions that Coalition member companies considered to be problematic for the USPTO to provide because of the cost and the negative impact on private business.  As such, the USPTO was sensitive to the negative impact it would have on vendors from aggressive and expensive enhancements of their public search systems. Considering that the USPTO is funded by users of the agency, decisions on appropriate functionality can sometimes be made based on costs alone.

The USPTO’s Policies Should Create an Environment for Maximizing Competition among Private Sector Patent and Trademark Information Providers

Maximizing competition requires creating, not destroying, incentives for investment. No rational investor will risk capital where the plans of a patent office are not known, or where there is not reasonable certainty that fair and open competition will prevail. This means open competition among private sector companies in a marketplace and fair competition with a patent office or its proxy. Fairness implies that a patent office is not overreaching in the added value it is providing free. If a patent office takes steps to directly compete with private sector companies, a market distortion is created and this can lead to destruction of the marketplace. 

The USPTO’s Policies Should Be Informed by Competition Law and Antitrust Law Principles of Fair Competition

The impact patent office policies and services can have on the patent information marketplace is well illustrated by doctrines from antitrust and competition law.  Two concepts --"essential facility" and "predatory pricing"--are especially relevant. Where an entity is the single source of a given product or a given type of information, American antitrust law refers to this as an "essential facility," and competition law includes the same concept. Although it is a federal agency, the USPTO is, in effect, an essential facility. As such, it should reflect on the obligations it would be under if it were a private entity with such power, be aware of the reasons why the concept emerged in antitrust law and use antitrust and competition law to inform its own decision making. Competition and antitrust law also address situations, referred to as predatory pricing, where market power is used to underprice products or services in the short run with the intent or effect of harming competition and thereby creating long-term market power. The law attempts to correct the abuses that can result from this power of predation. These practices have been found to be illegal because of the destructive effects on a competitive marketplace. However, the effect on the patent or trademark information marketplace can be similarly destructive if it involves underpriced--i.e., free--services from the USPTO.  In such cases, the competitive harm would take the form of reducing sources of private innovation, but the long-term harm to the public from diminished innovation could be very substantial. Thus, we recommend that the known impacts of such activities be one of the considerations applied in USPTO decision making.