From the May 2003 issue of Entrepreneur

As the U.S. Patent and Trademark Office (USPTO) celebrates its 200th birthday this year, it also faces the gravest predicament in its history. Put simply, the office can no longer keep pace with the burgeoning number of patent applications it is currently receiving.

In the 1980s, the USPTO received about 150,000 applications per year; over the past decade, it has averaged nearly 300,000 applications annually, as the growth of the Internet has led to a spike in patents and inventors have begun patenting incremental improvements. The office now has a backlog of more than 300,000 applications, generally considered the most complicated legal documents in the world. While in the 1980s the average amount of time between filing for and receiving a patent was roughly 18 months, the average has risen to 26 months. Brigid Quinn of the Patent Office has admitted the USPTO is "an agency in crisis."

As a result, entrepreneurs, who must shell out thousands of dollars for patent attorneys before filing, are forced to wait far longer than they should have to before their patents are accepted--crucial time that could be used to recoup start-up costs. What's more, until the patent is approved, other companies can poach the technology. In the long term, the office's slowness may stifle U.S. innovation as inventors become frustrated with the process.

Ronald J. Riley, a prolific inventor known for his work on electrified monorail systems, is one such frustrated guy. "On one of my monorail control board inventions, it took three years to get a response to the patent application," Riley says. "The office just stonewalled me as I bugged them over and over to find out what was happening. During that time, the USPTO's slowness made it impossible for me to protect this idea. One of the companies I had sold some control boards to while I was waiting for the patent copied my board design, and there wasn't much I could do about it. I lost at least $100,000 due to the sloth of the Patent Office."

There are several reasons the Patent Office has fallen so far behind. Most notably, says Andy Gibbs, president of Patentcafe.com, a Web site for inventors, over the past five years Congress has diverted more than $800 million in funds earmarked for the USPTO to other parts of the government. Consequently, the USPTO has been unable to retain enough qualified new patent examiners (whose salaries start at around $30,000) or to move to a computerized filing system. Yes, applications are still stored on paper at the Patent Records Office. "The office has embarked on reforms to go paperless several times, only to have their money cut," says Gibbs. "The U.S. is falling behind--many patent offices in Europe and Asia have gone paperless."

In the long run, inventors and patent specialists see several potential solutions. The USPTO has proposed raising fees for patent applications, an idea that angers entrepreneurs. "The Patent Office is totally screwed up, and they're trying to shift the responsibility for fixing it to inventors," says Riley. "What's the logic in that?" Gibbs and other inventors have suggested farming out some of the USPTO's responsibilities to private companies and even to qualified examiners from other countries, such as Canada. The idea is not that far-fetched: Britain already outsources some of its patent work to the Netherlands.

But there is some hope. Congress will most likely decide the office's future and may boost funding, because America's economic dominance increasingly relies on developing its ideas, explains Harvard Business School professor Josh Lerner. And new USPTO commissioner James E. Rogan, a former congressman from California, enjoys a good working relationship with Capitol Hill.

What's more, Rogan has formulated a long-term plan for reforming the USPTO, a plan that combines increased funding, better use of technology and some privatization. Those measures promise to slash the amount of time it takes to consider a patent application by half.