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Patent Reform: High Stakes for Small Biz

Letting patent applicants speed up or delay examinations could help small businesses if fees don't put the fast-track reviews out of reach

Ben Cappiello thinks he has a better way to make intrauterine contraceptive devices. He's hoping to patent his idea, but when his application gets to the U.S. Patent and Trademark Office in October, it will land at the bottom of a stack of more than 700,000 others. Cappiello can expect to wait nearly three years for a ruling, which could make it harder to raise money. Venture capitalists are wary when "there are still a lot of question marks about your intellectual property," he says.

The Patent Office concedes the system is broken and is proposing changes that would give applicants more control over the timing of the process. One shift would let applicants pay more to jump to the front of the queue, guaranteeing a decision within a year. "We are currently operating the most senseless system of delayed and delinquent examination imaginable," David Kappos, the patent agency's director, said at a public hearing on the proposal in July. He hopes to have the plan in place next summer. Congress will have to approve some of the changes.

The Patent Office says the fee for fast-track review would be "substantial," though it hasn't yet announced a price. The average patent application fee under the current system costs $1,000, Kappos says, though small businesses and individuals get a 50percent discount. (That's not counting attorneys' fees of $10,000 or more.) Kappos says smaller companies could get a similar discount on the price of fast-track examinations.

Not all applicants want a speedy review. The new system also would give entrepreneurs the option to put off examination for up to 30 months. That would let companies avoid paying the full fee when they file to patent early-stage ideas that might never reach the market, because the bulk of the fees are due at the end of the process. (If a patent is granted, the protection is retroactive to the date of the filing.) Small businesses have expressed interest in both the fast-track option and the potential to delay review, says Kate Reichert, assistant chief counsel at the Small Business Administration Office of Advocacy.

"If a small business has a patent and its business is going to be based on that patent," she says, "it would be very, very helpful to get that processed quickly."

The bottom line: Letting patent applicants speed up or delay examinations could help small businesses if fees don't put the fast-track reviews out of reach.

Tozzi covers small business for Decker is a reporter for Bloomberg News.

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