WASHINGTON Drop in patents causes concern

Businesses are showing less enthusiasm for new ideas.
LOS ANGELES TIMES
WASHINGTON -- The number of applications for U.S. patents is barely growing, raising concern that a falloff in innovation may hurt the nation's economy.
Patent applications -- a key predictor of compelling new products in the pipeline -- had been growing at double-digit rates since the mid-1990s. But in fiscal 2002, which ended Sept. 30, the number of patent applications was about 350,000, just a 1.4 percent increase over the roughly 345,000 applications filed in fiscal 2001.
Patents grant inventors special property rights that give them legal protection to profit from their ideas. A surge in patents helped fuel business productivity gains and rapid economic growth in the late 1990s, especially in the technology sector.
But now, experts worry that business is showing diminished enthusiasm for dreaming up new ideas -- and that could undermine the nation's already anemic economic recovery.
R & amp;D spending
U.S. companies will increase research and development spending by just 3.2 percent this year, according to a study by the nonprofit research foundation Battelle Memorial Institute and R & amp;D Magazine. In 2000, when the "new economy" was humming, businesses boosted their R & amp;D budgets by 10.8 percent.
"There is not a lot of money floating around for R & amp;D to spur innovation," said Rob Enderle, a technology analyst for Santa Clara, Calif., research firm Giga Information Group. "That's why a lot of financial forecasts put the economic recovery as far out as 2004."
Experts don't believe that the country is on the verge of a long-term creative blackout. Rather, they say patent applications may simply be undergoing a periodic lull, returning to the patterns of the 1960s and 1970s, when applications grew more slowly than the economy or the population as a whole.
What's more, there remains in the system a backlog of 420,000 patent applications from previous years.
Nevertheless, the meager growth in new applications worries James E. Rogan, a former congressman from California who now leads the U.S. Patent and Trademark Office.
"The slowdown concerns us," Rogan said. "We aren't sure why" it's happening.
Auto industry
The lack of big advances in automobiles is one reason drivers are less prone to trade in their vehicles. Drivers now hold on to their cars an average of nine years, compared with 7.6 years in 1990, according to Ward's Communications, a publishing firm in Southfield, Mich.
Many compelling features -- such as power steering, climate control systems, catalytic converters and anti-lock brakes -- were conceived decades ago and haven't been matched by comparable breakthroughs in recent years, experts say.
"Engineers are now just tweaking stuff, like adding electronics" to existing mechanical functions, said Richard A. Lentinello, an automotive historian and executive editor of Hemmings Motor News in Bennington, Vt. "The whole idea of creating new engineering marvels has just gone downhill -- at least until we create a car that can levitate."
Patent applications began a steady, 15-year climb in the mid-1980s, when the federal courts allowed inventors to patent not only new products but also the processes for distributing and selling them.
Among the flood of so-called business-method patents acquired in the wake of the court rulings were Amazon.com Inc.'s controversial "one-click" shopping system and Priceline.com Inc.'s patent for "reverse auctions" on the Web.
Longer reviews
But after a public outcry that such inventions were simple variations of existing technology, the patent office has been subjecting business-method applications to stricter scrutiny. The more extensive reviews have lengthened the already slow process of evaluating patent applications.
Some analysts argue that when it comes to patents, it's quality, not quantity, that matters.
"These low-quality patents discourage innovation," said James Bessen, visiting scholar at the Massachusetts Institute of Technology whose research shows that software R & amp;D fell in the wake of court decisions in the 1980s that extended patent protection.
"The patent office now has very little incentive to reject patents" because the government earns lucrative renewal fees from successful patent applicants, he said. But, he added, that hurts the economy and innovation in the long run because patent holders with marginal innovations often use their property rights to thwart real breakthroughs by new inventors.