TEXT OF STORY
MARK AUSTIN THOMAS: The federal agency responsible for handing out patents says it's, well, reinvented itself. The patent office is releasing information this morning on how many patents it issued this year. But what the numbers mean, really depends on who you ask. Janet Babin reports from the Marketplace Innovations Desk at North Carolina Public Radio.
JANET BABIN: U.S. Patent and Trademark Office director Jon Dudas says 2006 was a record-breaking year for the agency.
JON DUDAS: While we had more patent applications that we've had in history, we've also had actually the highest quality, the lowest error rate that we've had in recorded history, and we also saw the lowest number of patent applications approved.
About 54 percent of all U.S. patent applications were approved this year. That's down from 70 percent just 3 years ago.
Patents are supposed to spur innovation. They offer an inventor a financial incentive: You bring your good idea to the marketplace, and the U.S. government will let only you use it for a set amount of time.
But when too many inventors get the green light, prices can go up unjustifiably. Businesses get lost in legal limbo, trying to prove they're not ripping off junk patent holders.
U.C. Berkeley professor Pam Samuelson says most of the time, companies just settle. They end up paying royalties for bogus patents.
PAM SAMUELSON: That's actually a tax on all of us, right? We pay higher prices for the products and services that we deal with because people are paying off patent holders when those patents shouldn't have issued in the first place.
The case of the plastic leaf bag has become the poster child for critics of the U.S. patent system.
You've probably seen them in front yards around Halloween, filled with leaves: orange trash bags that have pumpkins printed on them.
Yea, there's a patent for those jack-o-lantern leaf bags. The patent court ruled that it wasn't obvious for an inventor to combine a plastic bag with a pumpkin face.
Harvard Professor and patent system critic Josh Lerner:
JOSH LERNER: To me, I guess I don't really see that as a flash of genius, or something that somebody who's skilled in the arts of plastic bag design would really see as this innovative kind of breakthrough.
But Jon Dudas with the patent ofice says you can't blame his patent examiners for that one. His office agreed with Lerner.
JON DUDAS: Our examiner said listen, that's obvious you can take a leaf bag and put a face on it and the court actually came back and said, well it's not exactly obvious, no one really taught how you could do that.
The problem, says Dudas is the standard the court uses when deciding whether a patent is obvious.
Sometimes examiners can only reject an application when there's written proof that someone else already thought up the idea. That requirement can force patent examiners to check their common sense before coming to work.
But fair warning to those thinking up a pumpkin leaf bag redux: The patent standard could change next year. The U.S. Supreme Court is mulling over a case that could reset the boundaries of what's considered obvious when it comes to getting a patent.
I'm Janet Babin for Marketplace.