Obama Transition Team Member Is No Fan of the U.S. Patent System

Yesterday, it was reported by Condé Nast Portfolio that President elect Barack Obama is setting up agency review teams for his transition to the White House. The teams will be responsible for reviewing all the major U.S. government departments, advise the Obama administration on policy prior to inauguration day, and keep the new administration's nominees prepped and informed as they make their way through the confirmation process in Congress.

One of the team members is Reed Hundt, who was Bill Clinton's FCC Chair from 1993 through 1997. Hundt is slated to work on the agency review team in charge of international trade and economics agencies. Since his stint at the FCC, he has taught at Yale and written several books about information politics and U.S.-China economic relations.

Here is what Hundt had to say in an op-ed piece in Forbes magazine on Janury 30, 2006:

America's patent system is a mess . . . The U.S. ought to chuck this 18th-century relic and start all over again. Here's what the ideal system would look like.

First, we should slash the number of patents granted each year by 90%. In 2004 the U.S. Patent &Trademark Office issued 165,000 patents. Sixteen thousand is more like an optimal number. This should be easy to accomplish because most technology should not be patentable.

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Second, we need to spend more money on the system. The budget of the U.S. Patent & Trademark Office is $1.5 billion. That ought to be tripled to $4.5 billion . . . We don't want grossly overworked professionals trying to figure out whether specific algorithms used to refresh the pixels on a computer monitor screen ought to be patented.

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Third, we should introduce an element of privatization into this public system. Firms ought to be able to pay for fast-track patent approval and for the ability to challenge a patent after it's been issued. Currently it can cost hundreds of thousands of dollars to file and prosecute a patent application. For a set dollar amount--say, $500,000--a firm ought to be able to buy a guarantee that its patent application will be reviewed and accepted or rejected within one year. The average application now takes 29 months to be processed.

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Fourth, all patent case awards should be forward looking and linked to lost sales. In other words, plaintiffs who win patent-infringement challenges should be able to enjoin only future competition. They shouldn't reap rewards from past violations . . . If we can radically revamp our patent system, we'll be much more effective at the international bargaining table. We have a horribly expensive system, with huge backlogs and a daunting litigation risk. No wonder the Chinese don't want to adopt it. Let's get rid of it and start from scratch.

Read Hundt's op-ed in its entirety here.