California sings a siren song for the U.S. Patent Office

California is among a growing number of states – at least 20 at current count – competing fiercely for the chance to house one of at least two new federal offices that will employ, at best, 125 people.

Why the heavy breathing over a handful of new offices whose job total barely dents California’s 2.1 million unemployed workers?

Because they’re satellite branches of the United States Patent and Trademark Office – the first to be opened since the Patent Act of 1790 and Thomas Jefferson’s stint as one of the nation’s first patent commissioners.

A regional patent office gives a state bragging rights and acts as a magnet to attract other businesses.    

Jefferson would likely approve of the creation of the three regional offices authorized by the America Invents Act signed by Pres. Obama in September.

A gifted inventor himself, Jefferson was a vocal critic of the lengthy amount of time it took to approve a patent. One of the chief reasons for the new offices is to reduce a backlog of 671,409 applications and average processing time of almost three years.

Even the patent office admits its processing delay can be a drag on the economy.

“Small businesses are incredibly important to job creation. On the tech side and with entrepreneurs a lot of times they’ll use the patent system to validate their idea when they go into the marketplace to seek capital. A patent delayed in the backlog has a real effect on that company’s ability to raise capital, do more R&D and invest in their business infrastructure,” said Azam Khan, deputy chief of staff at the Patent and Trademark office and the coordinator of the search for new office locations.

“Large businesses make major financial decisions based on the strength or perceived weakness of their patent portfolios. More clarity over what they own and what they don’t own with respect to their intellectual property portfolio allows U.S. companies to operate faster and on a more strategic level.”

But neither the new jobs nor the expedited patent processing are the chief reasons California wants one of the offices located here.

“Innovation has been the tent pole that’s held up our economy for decades. We’re a state that excels at testing new ideas, a place you want to come to start something and having a patent office here reinforces those values in a very visible and substantive way,” said Lt. Gov. Gavin Newsom, who has made securing a patent office for California one of his top priorities, traveling twice to Washington, D.C., to personally pitch California’s merits.

California’s two senators and 48 members of its 53-person congressional delegation – not a frequent model of bipartisanship – sent a letter in November to David Kappos, the director of the patent office, which concluded:

“Bringing a satellite office to California close to our multitude of innovations and inventors is good for business and will further California’s worldwide reputation as a hub of technological innovation.”

Among California’s competition is Colorado, Florida, Louisiana, New Mexico, North Carolina, Ohio, Texas and Washington state.

Colorado’s two senators – Mark Udall and Michael Bennet – carried the amendment to the Americans Invent Act requiring creation of the satellite offices and have been relentless in their boostering on behalf of the Centennial State.

New Mexico Rep. Ben Lujan voted against America Invents but signed a letter in October urging a regional office be opened in the Land of Enchantment.

Khan says individuals and organizations from at least 20 states have contacted the office and he expects that number to increase.

Nov. 29 was the first day of the official 60-day public comment period on where to open future offices.

The patent office, headquartered in Alexandria, Va., has already announced one new office will be located in Detroit.

If the decision on siting the two remaining offices were based solely on volume, California would win hands down.

In 2010, California received over 30,000 patents, 25 percent of the total patents issued in the United States. The next closest state was New York with 8,095.

Of the 2.3 million patents of United States origin, California holds 446,523, nearly 20 percent of the total.

San Jose and San Francisco ranked first and second nationally in 2009 for their level of patenting activity generating 250 patents per 1,000 employees and 100 patents per 1,000 employees, respectively.

While Newsom won’t say where he’d prefer California’s patent office be located, the strong suspicion would be his hometown of San Francisco is first choice.

Rep. Zoe Lofgren, a San Jose Democrat, is more overt about her preference.

“California leads every other state in patent applications and the hub of this innovation is in Silicon Valley. In 2009, the region was the source of nearly 50 percent of the state’s patents and 12 percent of all U.S. patents,” Lofgren told Capitol Weekly.

“Putting a patent office in Silicon Valley is common sense and will make it easier and less expensive for innovators.”

Khan acknowledges that face-to-face or telephone interviews between examiners and applicants expedite processing.   

In April, Silicon Valley businesses made their case directly to Kappos at a meeting in Santa Clara hosted by Joint Venture and the Silicon Valley Leadership Group.

The presidents of the two groups, Russell Hancock and Carl Guardino, outlined some of their arguments in an April 6 opinion piece that can be found on sfgate.com.

“For the federal government, it’s a win because it enables the office to draw on Silicon Valley’s unmatched talent pool, made up of savvy scientists, engineers and attorneys. This means the new patent officials will more readily understand the technical material they are reviewing and that should increase processing significantly.”

They also stress California’s proximity to Asia.

“Most applications are filed by two or more inventors and many Asian colleagues co-apply with California inventors, accounting for nearly half of all U.S. patents being issued today.”
Japan was granted 46,978 patents in 2010, according to patent office statistics.

Groups in Los Angeles and San Diego are also touting the appeal of their areas.

While the number of patent filers, the number of research universities and the cost-of-living are weighed in deciding office location, a key factor is the ability to hire and retain skilled patent examiners, a point stressed several times by Khan.

“This is not only about outreach to our application community, our customers, it’s to improve our recruitment and retention of top quality patent examiners,” Khan said.

“Anything you can consider, the full scope of scientific research going on in the United States comes before this office. Molecular biology to rocket science. Clean technology to hardware for computers. Software. Nano technology, to name a few.”

It’s unclear when a final decision on future office sites will be made. The Detroit office is scheduled to open in the second half of 2012.

It’s also unclear what impact a presidential election year might have on assessing the merits of various states.

Colorado, for example, is a swing state. California isn’t.

Newsom is heartened by the agreement between the state’s Democratic and GOP lawmakers on the importance of securing a patent
office for the Golden State.

“If we do this together we have evidence we can do other things together. But we have to make sure we don’t blow it.”