Six years ago when most foreign countries were cross-checking their trademarks and copyrights by computer, the U.S. Patent and Trademark Office was taking two years for each of the 100,000 patents and 60,000 trademarks it handled each year - manually. So in 1980, Congress ordered the PTO to automate. The PTO blew it. It started with trademarks, and the estimated total cost of automating rose 570%, from $6 million in 1982 to $40 million last year. It bought inadequate computers and software four minutes slower than the average manual search, the General Accounting Office reported last years [Forbes, 17 June 1985].
Trying to save money, the PTO created another patent mess. In effect, it exchanged a copyright on its own data with two foreign firms for a trademark database. It further proposed user fees of $70 per hour - including $30 in royalties to the foreign suppliers. The House, irate, responded by passing a bill prohibiting user fees for either patent or trademark searches. The White House and the Senate, which support such fees, read that as an attack on all user charges, so the bill is snarled in conference.
The PTO, part of the Department of Commerce, fared no better with automating patent searches. The GAO has just issued a second scathing report, charging that Commerce's 18-year cost-plus-fixed-fee contract with Virginia's Planning Research Corporation violates federal procurement rules. The PTO also omitted costs, inaccurately claimed expected benefits and failed to monitor the contractor effectively, the GAO charges. Estimated costs for automating patents rose from $289 million in 1984 (when PRC was hired) to $448 million now. And the system is still at least two years off, the GAO adds. It wants Secretary of Commerce Malcolm Baldrige to stop funding the project until it has been reassessed.
John Toups, chairman of PRC, counters with a stiff "we believe the automated patent system is state-of-the-art and very cost effective". He expects the project to continue.
Industry is outraged. Patent Office user fees have already risen 32%, from $83 million in 1983 to $109 million last year. "Fees should be based on the service you get", says Michael Blommer, head of the American Intellectual Property Law Association, whose corporate clients pay the fees. "But the Administration is overcharging to acquire a system that won't be available for public use until the 1990s.".