"To enhance the vitality and overall operation of the nation's patent system, federal officials should take decisive steps to increase the system's flexibility, openness, and reliability," states the NRC report.
Faced with a vertible blizzard of daily paperwork, a backlog of 500,000 patent applications and approximately 300,000 new applications a year, the USPTO is facing an overload, the NRC states, which could potentially pose a threat to the decision-making process when it comes to the quality of patent examination.
As a result, the NRS points out the cost of acquiring patents, securing licenses to access patented technology, and contesting alleged infringements in court are "rising rapidly."
While the NRC is not recommending a major overhaul, the nonprofit agency stated that the "economic and legal transitions have strained the system in recent decades, making clear the need for change."
As part of a seven-step process, the NRC is recomending more funding for workforce and technology improvements at the USPTO, hiring new patent examiners, creating a more open system for challenging questionable patents, and the development of more examination guidelines for new technologies.
The report also urges the PTO to more "strenuously observe" the statutory requirement known as the "non-obviousness standard," which says that in order to qualify for a patent, an invention cannot be obvious to a person of ordinary skill in a given area.
"The roles and benefits of patents vary greatly from one technology or industry to another, but there has been little systematic investigation of the differences," the NRC stated.
The NRC is also calling on Congress to consider legislation that would create an "open review procedure" for third parties to challenge recently issued patents before the USPTO's administrative patent judges, who would resolve questions about a given patent's validity.
"If administrative judges handled these validity questions, then federal district courts could focus on patent infringement issues," states the NRC. "While this measure would help reduce court costs, its chief benefits would be more rigorous application of high standards in the issuing of patents and quicker resolution of disputes."
The NRC was created by Congress in 1916 for the sole purpose of providing information to the U.S. government on issues pertaining to science, health and technology policy. The NRC is part of the National Academies, which also comprises the National Academy of Sciences, National Academy of Engineering and Institute of Medicine.
Earlier this month, the Federal Trade Commission sponsored a conference on patent system reform that brought together government officials, business representatives, scholars, lawyers, and leading members of the patent community to discuss patent reform.
A spokesperson told XBiz that the NRC study and research being done by the FTC on the current state of the USPTO have nothing to do with each other, and that the NRC study was not a congressional mandate, but instead was funded by the study's numerous sponsors, which included the Andrew W. Mellon Foundation, the Center for the Public Domain, NASA, the Department of Commerce, Pharmacia Corp., Merck & Co. Inc., Procter & Gamble Co., and IBM.
The FTC conference came on the heels of an October report released by the FTC that outlined ten recommendations for helping the USPTO run more smoothly and efficiently with regard to maintaining fair and proper balance of competition, patent law and policy.
“Patents can protect innovators and incentivize innovation," said FTC Commissioner Mozelle W. Thompson. "However, inappropriately granted patents can have the opposite effect by stifling competition and innovation. The end result may harm consumers by depriving them of new or higher-quality products."
According to the NRC, the sponsors of the study will review recommendations made by the NRC before determining the next step.