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CONTACT: Amy Smorodin
December 20 , 2005
(202) 289-8928

Corporate Structuring Could Benefit PTO
Singleton Weighs the Pros and Cons of Restructuring Approaches

WASHINGTON D.C. - Organizational restructuring to mirror that of private sector corporations could improve efficiency, accountability and introduce market incentives into the US Patent and Trademark Office, explains Solveig Singleton in "Should the Patent Office be an Independent Corporation? Pros and Cons," a new Progress on Point released today. Singleton, Senior Adjunct Fellow at The Progress & Freedom Foundation, analyzes three options for restructuring and discusses the benefits and drawbacks for each approach.

While acknowledging that the US patent system is working well, as illustrated by the healthy state of research and development, Singleton is concerned that reputation for poor patent quality will necessitate organizational changes in the Patent Office. "The idea behind restructuring the patent office as an independent corporate entity is to try to capture some of the efficiencies of private corporations," explains the author. The author believes the historical ineffectiveness of incremental actions could warrant calls for a more dramatic restructuring.

In her paper, Singleton identifies three different models of restructuring: incorporation, privatization and full privatization. Incorporation, which would establish "a corporation owned by the government akin to the Post Office," would allow for budgetary independence, transparency, and employee compensation based on market rates. But Singleton doubts that it would bring added accountability. Privatization, which would establish a private corporation with a government-sanctioned monopoly, or full privatization, allowing private firms to compete in auditing patent applications, goes further in introducing market forces and accountability. But there is an overriding concern that privatization would create conflicts of interests and favoritism towards regular clients of the firms. The author believes that both of these issues could be addressed through strict oversight and rule enforcement.

Singleton also assesses experiments with patent office restructuring in Europe. Full privatization of the U.K. patent system under Margaret Thatcher was ultimately rejected in favor of the incorporation model. While improvements are noted, It is unclear whether the changes helped to improve patent quality. Switzerland's reform of its patent system resulted in a dramatic increase in response times and improvements in overall service. But It is hard to cite Switzerland as successfully restructured patent system because of their relatively small work load.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation