Yesterday Senate Majority Leader Harry Reid (D-NV) filed cloture on the motion to proceed to H.R.1249, the Patent Reform bill passed by the House of Representatives by a vote of 304 – 117 on June 23, 2011. By unanimous consent, the cloture vote for H.R. 1249 will occur on Tuesday, September 6, 2011.
What is cloture? Cloture is the only procedure by which the Senate can vote to place a time limit on consideration of a bill or other matter, and thereby overcome a filibuster. Under the cloture rule (Rule XXII), the Senate may limit consideration of a pending matter to 30 additional hours, but only by vote of three-fifths of the full Senate, normally 60 votes. Without 60 votes cloture fails and debate continues. Unfortunately for those who would like to see patent reform derailed, the fact that there was unanimous consent in the Senate for a cloture vote almost certainly suggests that there will be at least 60 votes to end debate on H.R. 1249, which will bring it to a vote, likely sometime later in the week of September 6.
The handwriting is on the wall. It does not appear as if there is an appetite in the Senate for a fight, which means that the Senate will capitulate to the House view of patent reform, which made the Senate version, S. 23, substantially worse.
Let’s be honest. This is NOT patent reform, it is patent change. The ONLY thing that could in any way be characterized as patent reform is the so-called Coburn Amendment, which was part of what passed the Senate by a vote of 95-5, and which would have given the United States Patent and Trademark Office access to 100% of the fees they collect for services promised. The House removed that language, making the USPTO continue to get its funding at the pleasure of appropriators. So the USPTO will get to keep 100% of the fees they collect provided that is not inconsistent with appropriations bills. Not inconsistent? This is the same place where we have been, which has lead $800 million siphoned off from the USPTO since 1992.
For those who are skeptical, here is what former Congressional Budget Office Director Douglas Holtz-Eakin had to say about fee diversion in a letter he sent to Senator Reid and Senator Mitch McConnell (R-KY):
The United States Patent and Trademark Office (USPTO) is entirely funded by user fees. At present USPTO has significant financial needs to address shortfalls in serving its users, and both H.R. 1249 and S. 23 greatly expand the responsibilities of the agency. In these circumstances, it is not surprising that analysts, USPTO stakeholders, and policymakers have expressed a desire to ensure that any such fees not be siphoned off to general revenue. That is, the agency should at least be authorized to spend all of the fees that it collects, subject to Congressional oversight.
H.R. 1249′s anti-fee diversion language would not guarantee that fees paid by USPTO users would be dedicated for use by USPTO. In short, the USPTO would not be authorized to spend the fees it collects nor does the measure ensure that fees will not be diverted elsewhere. Although H.R. 1249 sets up a Patent and Trademark Fee Reserve Fund at the Treasury Department, the Reserve Fund would not hold actual monies, but would simply hold IOUs. As with other “Reserve” and “Trust” funds in the Federal Government, the funds could used for general government spending. USPTO would not have access to the “excess fees” deposited into the Fund apart from the annual Congressional appropriations process. Hence, despite the budgetary aparatus, there would be no effective difference from current law.
As you are aware, the current appropriateions law has allowed Congress to divert more than $800 million of user fees paid to the USPTO to other general revenue purposes. The establishment of the Patent and Trademark Fee Reserve Fund in H.R. 1249 would be ineffective in stopping the diversion of fees from USPTO.
In comparison, the Senate bill creates a USPTO Public Enterprise Fund at the Treasury Department, which would receive all fees paid to the USPTO and which would be available to USPTO when needed. The funds would not be funneled through the Congressional appropriations process and would, therefore, not be exposed to the threat of being diverted to general government spending.
In other words, all the Senate would have to do is demand what they rightfully added to S. 23. Capitulation to the House will continue to allow for siphoning off of user fees.
I must be a wild-eyed optimist because the capitulation of the Senate, although I have been hearing that was likely for weeks, still surprises me. It surprises me because of the near sibling-like rivalry between the House and Senate, and the fact that the House bill is a bad bill. It also surprises me because after carefully watching what transpired in the Senate to get S. 23 passed, I don’t think H.R. 1249 would have passed the Senate back in February when the Senate went first. Nearly up to the last minute I was hearing from multiple, reliable and knowledgeable sources that there would be no end to fee diversion in S. 23. Then all of the sudden it appeared — because without the addition the bill wasn’t likely to pass. That was the enormous spoon full of sugar that let the medicine go down. So the 95-5 vote in the Senate seemed misleading given the delicate compromised reached to assure passage. Up until fee diversion was necessary as a sweetener I kept hearing that Senators were saying: “Government money is government money.” So the fact that the Patent Office is a fee for service enterprise obviously was escaping senior leaders in the Senate, but not Senator Tom Coburn (R-OK) who rallied support for an end to fee diversion.
The capitulation of the Senate also surprises me a little because immediately prior to passage in the House, Senator Coburn, the champion in the Senate of the provisions that would end the practice of fee diversion, issued the following press release:
“For too long tomorrow’s inventions have been stymied by today’s incompetence in government. It is outrageous for Congress to take fees paid by Americans for a specific service and spend those dollars on other programs. Since 1992, Congress has pilfered nearly $1 billion in user fees dedicated to the Patent and Trademark Office and spent those dollars elsewhere. As a result, we have 700,000 patents waiting for a first review that, if approved, could help get our economy moving again,” Dr. Coburn said.
“The Senate voted to end this egregious practice by a margin of 95 to 5 when it passed legislation this March that included an amendment I offered to end fee diversion once and for all. The House, unfortunately, decided to water down this language and allow the Appropriations Committee to control this account. Unfortunately, the Appropriations Committee has a poor record of managing such accounts responsibly and honestly in this area and others. For instance, the Appropriations Committee has stolen billions from the Crime Victims’ Fund and other funds,” Dr. Coburn said. “There is no reason to believe they won’t continue to do the same with the patent account.”
This seemed to suggest Senator Coburn was posturing for a fight when H.R. 1249 bounced back to the Senate. That, however, does not seem as if it will transpire.
The inclusion of prior user rights in H.R. 1249 is very bad for the patent system, and the only thing that would have been “reform,” namely the adequate funding of the USPTO, has been removed. Patent reform just shouldn’t be passed without the USPTO keeping 100% of the fees it collects so it can actually deliver the services it promises in a timely manner. Without an end to fee diversion what remains is either bad or neutral, so if I were in Congress I wouldn’t vote for the bill, but it seems as if the train has left the station.
Government money is NOT government money, it is OUR money. The United States government acts as if they decide what money we are allowed to keep. Taxes are our payment to the government from a portion of OUR money. We pay to enable a government to do for us what we cannot do for ourselves. Government does not control our individual finances, although they seem to think they do. The fact that Congress thinks they can confiscate user fees and direct them to whatever purpose they want while the USPTO is bled dry is beyond appalling. Government money is NOT government money, and the fact that any elected official could have the view, much less articulate that view, demonstrates why our economy and country are in the position we find ourselves.- - - - - - - - - -
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Posted in: Congress, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Reform, Patents, USPTO
About the Author
Gene Quinn is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.