Anyone who relies on network news for an impression of Washington gets a shallow view of what actually goes on down on the lower floors of the federal government. Every day you will see reporters standing on the lawn at the White House and on Capitol Hill. Less often you'll see reports from the Pentagon, State, Justice, the Fed, the Supreme Court, and a few other places. But you won't hear much about dozens of other government agencies.
It's too bad, because Washington has a remarkable collection of federal agencies whose scientific, technical, and intellectual bent stretches beyond run-of-the-mill bureaucracy to something akin to what you'd encounter in a major university. Consider the local landscape: the National Institutes of Health, NASA's Goddard Space Flight Center, the National Science Foundation, the Beltsville Agricultural Research Center, the Census Bureau, the National Weather Service, the Library of Congress, the Food and Drug Administration, the National Institute of Standards and Technology, and the Naval Research Laboratory as well as parts of the Central Intelligence Agency and the National Security Agency.
All this is one reason Washington–where politicians, lawyers, and journalists are usually seen as the quintessential figures–is also filled with engineers, economists, demographers, computer experts, physicists, chemists, biologists, medical researchers, mathematicians, and other specialists. And it's one reason Washington has the best-educated population of any metropolitan area in the country and ranks with such university-rich areas as Boston and San Francisco in the number of PhDs.
One of the oldest, largest, and increasingly important of these overlooked federal agencies is the US Patent and Trademark Office. It has been in existence since 1790–a decade before the capital moved from Philadelphia to Washington. Nearly all of its 6,500 employees work in the Crystal City area of Arlington, occupying a rabbit warren of offices scattered among 18 high-rise buildings. It has issued just over 6.5 million patents and continues approving them at a rate of more than 650 a week–all of which are supported by so much paperwork that the overflow is sent off to warehouses elsewhere in suburban Virginia and to storage caves in Pennsylvania.
Decisions made here on which inventions get patent protection reverberate through the economy, helping determine the fate of businesses and affecting what products you may buy. "Anything under the sun that is made by man" may be patented, according to law, and every invention imaginable has passed through the patent office, from perpetual-motion machines to bird diapers to innovations that made possible entire industries. Through the doors of the patent office have come Eli Whitney (cotton gin), Samuel F.B. Morse (telegraph), Alexander Graham Bell (telephone), Cyrus McCormick (grain reaper), the Wright brothers (airplane), John Deere (plow improvements), George Washington Carver (peanut products), Charles Goodyear (rubber processing), and many others.
Q. Todd Dickinson, the director of the Patent and Trademark Office, keeps near his desk a model of Thomas Edison's incandescent electric lamp, which was granted patent no. 223,898 in 1880. Edison, the patron saint of American invention, still holds the most patents (1,093) ever granted to one person.
Just as Edison's ingenuity harnessed electricity and spawned the movie and recording industries a century ago, we're in the midst of another wave of innovation. It's happening in cyberspace and molecular medicine–those mystic venues of the New Economy where information and ideas have replaced land, raw materials, and factories as the basis of wealth. These ideas, intangible assets known as "intellectual property," accounted for nearly two-thirds of the value of the country's top manufacturing companies in 1992, according to the Brookings Institution–up from 38 percent a decade earlier. In the Washington area–with its growing private sector based on information technology in Northern Virginia and biotechnology in suburban Maryland–the trend is even more pronounced.
No wonder intellectual property has become such an important and controversial topic, with much of the administrative and political action concentrated here in Washington. It's a subject that covers not only patents and trademarks. Copyright laws protecting books, music, movies, photographs, and other art are administered by the Copyright Office of the Library of Congress. And much of the registration of Internet domain names continues to be handled by Network Solutions of Herndon, though it now has competition from other registration companies. Trade secrets, like the famous formula for Coca-Cola, are protected by state laws.
It is here too where Congress tinkers with the laws governing these topics and where powerful lobbies including the Motion Pictures Association of America, the Recording Industry Association of America, the American Intellectual Property Owners Association, and drug and entertainment companies work furiously to protect their interests. The influence of Disney, whose copyright on Mickey Mouse was due to expire in 2003, was one reason Congress in 1998 extended the copyright protection from 50 to 70 years following a creator's death–enough to keep Mickey profitably out of the public domain until 2023.
Washington also is the center of intellectual-property law. About 250 law firms have specialized practices in this field, some as part of full-service firms and others that do nothing but patent, trademark, and copyright law; the largest specialized firm–Finnegan, Henderson, Farabow, Garrett & Dunner–has about 160 lawyers. Washington also is the seat of a specialized federal appeals court that concentrates exclusively on patent cases.
Golden Ideas
There's a moment in the film The Graduate when the awkward young man played by Dustin Hoffman is taken aside at a cocktail party to hear the advice of a businessman about where the smart money is headed. One word is sufficient, the man says: "Plastics."
That may have been true in 1967, but it's not much of an exaggeration to say that the word today is "patents." A modern-day gold rush is under way in which those who strike it rich are those who come up with ideas that can be patented and marketed. For some start-ups, especially in biotechnology, ideas are their main assets and the key factor in attracting venture capital.
Signs of this knowledge-based gold rush are everywhere. The patent office issued 169,153 patents in 1999, nearly double the number a dozen years ago, and many companies now rely on patents as part of their corporate strategy and a major source of revenue. Dell Computer has taken out its most valuable patents not on its computers but on many of the manufacturing, distribution, and marketing techniques it uses to deliver customized machines quickly to consumers.
Universities, which once stuck to the ivory tower, are patenting every new thing that comes of their laboratories and reaping millions of dollars a year in licensing fees. In 1998, the most active was the University of California System, which got 395 new patents, followed by MIT, Texas, Cal Tech, Wisconsin, Stanford, Johns Hopkins, the University of Pennsylvania, Cornell, and Michigan State. Federal agencies also are more aggressive than ever about filing for patents, with NIH, NASA, the Navy, the Army, the Air Force, and the Agriculture and Energy departments leading the way.
More companies are engaged in "patent mining," the process of searching through their patent portfolios to see if any might earn royalties in licensing agreements with other companies. A new book, Rembrandts in the Attic, published by Harvard Business School Press, touts this strategy, and one of its authors, a former patent attorney named Kevin Rivette, has started a consulting business to help companies conduct searches. British Telecom, which recently conducted a search of its patent inventory, discovered it owned a US patent on the "hyperlink" technology commonly used on the Internet; it promptly sent a letter to 17 major Internet service providers demanding royalties, though in most cases the matter remains unresolved.
Licensing fees, which allow one company to use a patent owned by another, are reaching the level of serious money. These revenues are up to more than $100 billion a year, from $15 billion a decade ago. Patent income at IBM, whose portfolio of patents is the world's largest, has reached $1 billion a year. There also are "patent bazaars" on the Internet, where companies have posted patents they have available for licensing or sale; one of them, Yet2.com, involves such big companies as 3M, Boeing, Dow, DuPont, Honeywell, and Toyota and features secure chat rooms for online negotiations.
Patents are so valuable that there's been a big increase in the number of lawsuits charging "infringement," the term used when someone is caught stealing an idea patented by someone else. Cases handled by the federal patent appeals court here over the past couple of years have included disputes over rights to a certain kind of groove in the sole of an athletic shoe, a potato-chip packaging machine, a caulking-gun cartridge sold by Wal-Mart, a fishing reel sold by Orvis, and the packaging used for snacks produced by Oscar Mayer. In a hotly contested case, the University of Rochester has sued the drug manufacturer G.D. Searle, charging that its best-selling pain killer Celebrex, used by millions of arthritis sufferers, infringes on research conducted at the university.
"Patent factories," which are created solely to brainstorm patentable ideas, are springing up. They are not entirely new–Thomas Edison's laboratory in Menlo Park, New Jersey, and enterprises like Bell Labs (now Lucent Technologies) did something similar–though these latest patent incubators tend to concentrate on computer-based inventions. The most successful is Walker Digital, started by former marketing man Jay Walker, which has about 50 people sitting around coming up with ideas. So far it has received patents on about 66 innovations and has another 400 patents pending.
One idea–allowing consumers to post online a price they'd be willing to pay for airline tickets, hotel rooms, and other travel services–was spun off as Priceline.com. Another patented idea, dubbed "upselling," involves offering customers at fast-food outlets a little extra (say a small drink) for whatever change they'd otherwise be getting back–a technique that already has raised sales a few percentage points in outlets where it's being tested.
Temple of Ingenuity
Abraham Lincoln, the only president to get an invention patented, summed up why patents are such an important aspect of business and technology. What they do, he said, is add "the fuel of interest to the fire of genius." They accomplish this by way of a tradeoff: An inventor agrees to make public in detail how his invention works in exchange for a government-sanctioned monopoly on his idea for 20 years. That's considered enough incentive to stimulate inventors to feats of creativity–an old theory first used in the Italian city-states of the 15th century and spelled out in the US Constitution.
Contrary to romantic notions of the solitary inventor laboring in his garage, more than 90 percent of US patents are granted to large companies. IBM was the leader in 1999, with 2,756 patents, followed by NEC, Canon, Samsung, Sony, Toshiba, Fujitsu, Motorola, Lucent Technologies, and Mitsubishi. About 45 percent of US patents that year went to foreign companies and individuals, led by the Japanese, with 32,515, and the Germans, with 9,896. Each country in the industrialized world has its own patent system, which offers protection only within its borders, though free trade is moving the world toward a more uniform system.
Among the inventors outside corporate and university labs are several types. Some work at inventing full-time, making a living by patenting lots of ideas and living off royalties–one of the most famous being the late Jerome Lemelson, a man who held more than 500 patents on everything from dart games to video camcorders. Other inventors hold one or two patents, which may have been inspired by a problem encountered in their work or around the house. Lincoln, who had run aground while traveling Midwestern rivers, got his patent on "a device for buoying vessels across shoals."
The Washington area has an active inventors organization. Its members have dreamed up everything from bolts that change color when they are properly tightened to exercise machines for practicing kayaking in your living room. One of the region's most publicized inventors is Robert Kearns, a Maryland man who won nearly $30 million from automakers in the 1990s over his claim to inventing the intermittent windshield wiper. In earlier days, the city's best-known inventors were Alexander Graham Bell and rocket scientist Robert Goddard.
Even when inventions are patented, fewer than 5 percent ever make it to market, says Dick Apley, who heads a program for independent inventors at the patent office. Apley says novice inventors are easy prey for scam artists, who put out ads promising they will get inventions patented and marketed, collect hefty fees up front, then don't deliver.
The patent office uses three criteria in deciding whether an invention is worthy of a patent. It has to be "nonobvious" to a skilled practitioner in its field. It has to be "novel." And it must have some "utility." Deciding whether an invention measures up falls to about 3,200 patent examiners. All have training in engineering, the sciences, or law, and about 450 have PhDs.
About two-thirds of patent applications are approved–the average wait is about two years. The approvals are granted after an examiner has made a search of "prior art" to make sure no previous inventor has thought of the same thing. The search involves going through the patent office's own vast storehouse of records as well as thousands of externally produced technical journals, electronic databases, and other sources. All patents and trademarks are online at www.uspto.gov.
Though most patent examination is routine, it does have it moments. Dick Apley remembers one day in 1976 when he began examining a patent application that eventually revolutionized an entire sport: It came from an inventor named Howard Head and sought a patent on the world's first oversize tennis racket.
Each examiner is assigned to one of more than 450 specialized classes, themselves divided into about 150,000 subclasses, which represent a mind-boggling array of machines, processes, manufactured articles, and compositions of matter. Designs–of everything from athletic shoes and cars to chairs and computers–are patentable too. Just a few of the classes offer a sense of what's involved: bridges, harness, surgical techniques, exercise devices, superconductors, flexible bags, firearms, fertilizers, locks, button-making, musical instruments, ammunition and explosives, farriery, fire extinguishers, brakes, bottles and jars, perfumes, whips, fences, amusement devices, television, bee culture, foundation garments, robots, dentistry, undertaking.
One examiner does nothing but review toothbrushes, there is a whole subclass devoted to ruling on the novelty of the dimples on golf balls, and there's heavy competition to develop new disposable diapers. Nearly every year patents are issued on new versions of the wheel and the mousetrap.
Over the past two centuries, the patent office has occupied nearly half a dozen Washington-area sites. It was housed at first in a building near the White House that also contained offices for the State Department. Later the agency had four rooms in Blodgett's Hotel on E Street before moving in 1836 into its own neoclassical temple on F Street, now home to the Smithsonian's National Museum of American Art and National Portrait Gallery. During the 19th century, the patent office suffered two disastrous fires that destroyed many early drawings and models, which were required with patent applications until 1870. In 1925, the agency was transferred from the Interior Department to Commerce and moved into the Federal Triangle. Since 1965 it has been in Crystal City, though it will move into a new complex on the southern edge of Alexandria in 2003.
The first patent, in 1790, involved a process for making soap, and since then the patent office has seen wave after wave of invention. At the turn of the last century, dozens of patent applications involved refinements to the bicycle. Often a single invention has triggered hundreds of related patents and the creation of huge new industries. The telegraph, the telephone, electric power, the automobile, the airplane, radio, television, plastics, spacecraft, and the computer all have had this sort of impact.
Most inventions are far less monumental. Patents have been issued on three-legged pantyhose (a pair and a spare if you have a run), a revolving table to take advantage of centrifugal force during childbirth, adhesive "bellybuttons" that give a pierced look with no pain, edible golf tees made of candy, targets for urinals, and from the pre-toilet-tissue era, a printer's ink for newspaper infused with hemorrhoidal medication.
Patent applications for perpetual-motion machines, the Holy Grail of many inventors, are still submitted from time to time–they're the only applications that the patent office still insists must include a working model. So far, none has met the test of time.
Who Owns Shopping?
In the early days of the personal computer nobody sought patents on software. To do so ran against the ethos of geek culture, whose motto was "information wants to be free." And the patent office would have turned down the applications anyway on the grounds that software was more on the order of an abstract idea than a machine. Microsoft owned no patents as late as 1985.
Some people sought copyright protection instead. But in 1981 the door to patenting of software was opened by a US Supreme Court decision, which allowed a patent on a rubber-manufacturing process that had software as a component. The patent office soon added more computer experts to its staff of examiners, revised its policies, and began issuing patents on software.
The biggest turning point came in 1998 before a federal appeals court, in a case where State Street Bank of Boston was accused of infringing on a patent for a computerized system of investing mutual funds. By upholding the validity of the patent–which fell into a class known as "business methods" patents–the court set off a scramble among makers of similar software to seek patent protection. Applications in this field rose rapidly, though they're still a small portion of the patent office's workload, says John Love, its top manager in this field. The number of patents issued last year was just over 700, more than six times the number in 1995. Among the most active applicants were Pitney-Bowes, IBM, Fujitsu, Hitachi, Sharp, NCR, Casio, Citibank, and Microsoft.
These patents allow companies to claim ownership for 20 years of all sorts of techniques used in e-commerce and other aspects of the Internet, and that has made them controversial. Everywhere you look–online shopping, downloading music, advertising displays, the screening of junk mail–there's now a patent holder with the legal right to keep competitors from using certain software or pay royalties.
Besides demands for such royalties, there's been a flurry of patent-infringement lawsuits. Priceline.com has claimed that Microsoft's Expedia.com travel site is infringing on a Priceline patent for name-your-price selling on the Web. And two professors at MIT have sued Ask Jeeves over patents they hold on handling questions in natural language.
The best-known suit involves the two largest online booksellers, Amazon.com and Barnes & Noble.com. Amazon, which owns a patent on the "single-click" method of placing an order, went to court late last year charging that Barnes & Noble was illegally using the same method. A judge in Seattle granted Amazon an injunction, forcing Barnes & Noble to add a redundant second click to its Web site until the case is resolved.
These business-methods patents have many critics. Gregory Aharonian, who runs the Internet Patent News Service, has made them a cause célèbre, publishing a list every year of business-methods patents he considers ridiculous. One example: a patent on indexing gift certificates to inflation. Aharonian and others believe many of these patents cover techniques that are too obvious, that are already in use, and that wouldn't be patentable if they weren't computer-based. Giving companies exclusive rights to them threatens to impede innovation by destroying a tradition of sharing among software developers and to increase royalty costs that will be passed along to consumers.
The patent office has taken notice. It has announced an effort to consult more with software developers, hire more examiners, increase their training, and subject patents to a second layer of review. But there's been no slowdown in business-methods patents issued.
From Genes to Cures
Last March 14th was one of those wild days for John Doll, the head of the patent-office division that examines applications in biotechnology. At the White House, President Bill Clinton and British Prime Minister Tony Blair issued a joint statement about the effort to decipher the human genome, which reporters mistakenly interpreted to mean that neither of their countries would continue to issue patents on human genes. By that afternoon, stocks of biotechnology companies, including some in Montgomery County, had lost billions of dollars in value. By evening, when Doll went home, his wife had heard so much of the news on CNN that she asked him whether he still had a job.
She needn't have worried. Everyone was soon reassured that genes would continue to be patentable. But for Doll and for everyone in the biotech industry, it was a reminder of how much money rides on which companies lay claim first to parts of the genetic code.
The two big players in gene mapping are headquartered a few miles apart in Montgomery County–Celera Genomics Group, a private company, and a public consortium called the Human Genome Project, which is supported by the National Institutes of Health and a British trust. Three months after the Clinton-Blair statement, Celera and the Human Genome Project announced that they had completed mapping the human genome, a dazzling scientific achievement expected to have profound effects on the future of medicine and health care. Because genetic flaws are thought to be involved in some 4,000 diseases–including cystic fibrosis, obesity, and cancer–the genome map and the research that will flow from it are expected to lead to powerful new diagnostic tools and drug treatments.
The potential market for such products is so vast that it is easy to understand why biotech companies and universities are rushing to claim patents on specific genes. Whether a company develops drugs and diagnostic tests itself or commands royalties from others, billions of dollars are at stake. More than 1,000 human genes have been patented thus far, with thousands more the subject of patent applications.
Although many people are surprised that living things (or parts of living things) can be patented, this has been going on for decades. In the 19th century, substances or processes that occurred naturally were not considerable eligible for patents. But that began to change in 1930, when hybrid plants–seed corn, roses, apple trees, and the like–were deemed patentable. Later on, patents were extended to substances such as human-growth hormone isolated from pituitary glands and human insulin synthesized in the laboratory using recombinant DNA technology. Although the hybrid plants and these medical products involve biological processes, Doll says, they were patentable because they were created by human intervention.
Another step in this evolution occurred in 1980, when the US Supreme Court ruled in favor of patenting a bacterium that had been genetically engineered to devour oil. As genetic research continued to advance, a patent was granted on an animal for the first time–a mouse genetically altered by scientists at Harvard to make it unusually susceptible to cancer and thus useful in research.
Today many items from the biological world are patented. The genetically engineered corn that caused such an alarm when it got into taco shells earlier this year is patented, along with cotton, soybeans, rice, and other commodities, with such companies as Monsanto and DuPont leading the way. Duke University holds patents on genes that are thought to be related to Alzheimer's, and a company called Myriad Genetics has a patent on two genes involved in breast cancer and markets a test to detect it.
When the rush to patent human genes began in the 1990s, many of the claims were speculative. The role a given gene played in human disease–and thus its value in developing diagnostic tests and drugs–was often unknown, so companies staked claims to large numbers of genes hoping research later on would lead to a marketplace bonanza.
For a time, the patent office, which requires that patentable items have utility, allowed biotech companies to make a boilerplate claim that nearly all genes they sought to patent would be useful in producing protein supplement for livestock or pet food. But the dog-food dodge no longer prevails. Last year, reacting to criticism that it had set the bar too low, the patent office issued new rules requiring that genes must have a "specific, substantial, and credible" use before a patent will be issued.
One of the most active companies in gene-related patenting is Rockville-based Human Genome Sciences, which has accumulated 153 patents since 1996 and has many more pending.Already one of the genes patented by Human Genome Sciences has proved useful in AIDS research, and others are thought to offer links to drug treatments for osteoporosis, arthritis, and lupus. Celera, which concentrated at first on mapping the genome, is moving into gene patenting too.
Biotech executives like William Hazeltine, the CEO of Human Genome Sciences, argue that the 20 years of exclusive rights it gets by patenting genes are critical to drug development. The promise of profits on new drugs from the government-sanctioned monopoly allows a company to attract the millions of dollars from investors needed to do the long and arduous research required.
Critics of gene patenting have a different take, likening it to allowing someone to copyright letters in the alphabet. They argue that scientists are becoming less willing to share their work, that patents discourage outsiders from pursuing leads on new drugs, and that they will increase costs to consumers. Seth Shulman, the author of a new book called Owning the Future, argues that it would be better to make genes unpatentable–declaring the human genome a "natural sanctuary" as we have the moon or the oceans. Such a change in policy would require action by Congress or federal courts, and the prospect seems unlikely.
The Patent and Trademark Office, meanwhile, chugs along as it has for more than two centuries, its hundreds of examiners opening the mail each day to take a look at what human ingenuity has wrought. The Hula Hoop, the bagel cutter, and the Slinky–they all make you wonder "Why didn't I think of that?"
It's an old story, says Todd Dickinson, the patent office's chief executive: "We're ground zero for the notion that anyone can succeed with a great idea."
Don't Mess With the Green Giant
The marketplace is saturated with trademarks–names, logos, phrases, and other identifications that companies use to capture attention. Every day the average person encounters about 1,500 trademarks, though the number jumps to 30,000 if you go to a supermarket.
Unlike patents, which last just 20 years, trademarks can be renewed forever with the US Patent and Trademark Office if they are still in use. And some have been around for a long time–Nabisco's Cream of Wheat logo and Pabst Milwaukee Blue Ribbon Beer celebrated their 100th anniversaries this year. Altogether, nearly a million trademarks are active.
The most common variety of trademark covers the name and logo of a company, organization, product, or service. Nike and its swoosh, the Jolly Green Giant, the brand on Lee jeans, and Mad magazine's Alfred E. Neuman are among the examples. Advertising slogans commonly have trademarks too–from Ford's "Quality is Job 1" to Morton Salt's "When It Rains It Pours." One wrinkle in trademark law allows products of different types to have the same name as long as they aren't easily confused, which explains why you can find both Cadillac pet food and Cadillac cars.
You also may get trademark protection for less-obvious forms of identification. A distinctive shape–like that of a Coca-Cola bottle or a Hershey's Kiss–qualifies. Some sounds, such as the roar of MGM's lion and NBC's chimes, are registered; so is the architecture and interior decoration of places like McDonald's. John Deere's combination of bright green and yellow is among trademarked colors, as is the pink used by Owens Corning in its insulation products.
Because trademarks are so valuable, companies go to great lengths to remind the media and others that they are registered and should begin with an uppercase letter. Lots of products that started out with trademarked names have slipped into our language without trademark protection. Among them: aspirin, escalator, thermos, cornflakes, kerosene, lanolin, trampoline, linoleum, shredded wheat, and yo-yo.
