A Public-Private Partnership Provides the Optimal Approach for Consumers of Patent Information

By Marla Grossman, Partner, American Continental Group

The U.S. 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 and government. Specifically, a competitive private sector patent and trademark information industry complemented by the U.S. 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 U.S. patent and trademark system.

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 the most accurate information addressing the broadest variety of needs is best derived from a marketplace of ideas with a multiplicity of sources. U.S. 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 responsibilities." President Obama reinforced this message in the recent “Memorandum for the Heads of Executive Departments and Agencies on the subject of Transparency and Open Government”: “Executive departments and agencies should … cooperate among themselves, across all levels of Government, and with nonprofit organizations, businesses, and individuals in the private sector.”

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 consumers will suffer. And yet, this is what can happen if the USPTO does not consciously take into account this principle when they are making decisions about what patent services it is going to provide and at what cost.

Perhaps the greatest advantage of a diversity of sources is that it maximizes dissemination and enables tailored patent information to reach more people, thus helping to realize one of the major policy goals of the patent system.

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 dollars 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 those customers of the patent office’s system.

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 by 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 under-price products or services with the 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 information marketplace can be similarly destructive if it involves under-priced--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.  The known impacts of such activities should be one of the considerations applied in USPTO decision making.

Conclusion

The USPTO should avoid anti-competitive activities that would erode the open competitive market that is the driving force for private sector innovation and broad high-quality access to patent and trademark information. By recognizing the importance of a healthy patent and trademark information marketplace and ensuring a thriving private sector of information providers, the government’s objectives of transparency and a well-informed public will be achieved, and consumers will be the beneficiaries of a more robust, diversified marketplace.