As Predicted, Congress Ready to Divert More Fees from USPTO

By Gene Quinn on September 21, 2011

The ink is hardly dry on the America Invents Act and Congress is already about to take money from the United States Patent and Trademark Office in violation of the promise of Congressman Rogers, who chairs the House Appropriations Committee.

It isn’t exactly a newflash to announce that Washington, D.C. is dysfunctional, anyone paying attention over the past few years has long since come to that conclusion.  Thus, it is hardly breaking news to report that Congress is on the verge of passing a Continuing Resolution rather than actually doing their job and passing a budget for fiscal year 2012.  Why do today what is required of you to fulfill the responsibilities of your job when you can just kick the can down the road?  Of course, by so doing Congress will embark upon a path that will divert some $600 million from the USPTO during FY 2012.

As explained by a letter to Speaker John Boehner from the Coalition for 21st Century Patent Reform:

The fees under the America Invents Act will generate approximately $600 million in fee revenues in FY 2012 above FY 2011.  Unless an anomaly is included in the CR, the USPTO will lose $50 million each month the CR is in effect.  The problem is that during the 7 weeks of the CR, the USPTO is held to a spending rate based on last year’s appropriations — this rate ignores that the USPTO will be collecting significantly more in fees to support the implementation of the Act.  Seven weeks is not an insignificant amount of time during an already very tight implementation schedule.

Of course, it could be added that the increased fees that go into effect on September 26, 2011, will simply be a 15% national innovation tax.  So as you and your clients write those checks for that additional 15% surcharge rest assured that your funds will be egregiously wasted by a government bureaucracy that just weeks ago promised otherwise.  But we all knew that the promise wasn’t worth anything.  The Coburn Amendment was right there with plain and simple language, putting an end to fee diversion once and for all and it couldn’t pass Congress.

Herb Wamsley, Executive Director of IPO, put his finger squarely on the issue in his letter to Speaker Boehner:

In reality it costs taxpayers nothing to give the PTO access to its fees in the continuing resolution, but failure to provide the PTO an “anomaly” will not only delay the creation of desperately needed investment incentives and jobs but also undermine the trust that PTO stakeholders put in Congress when they supported the House-passed bill because of the commitments made by House leaders.

Go Herb!

I must admit that I really didn’t put any particular trust in any politicians and I full well expected fee diversion to continue.  If I am being truthful, however, I didn’t expect fee diversion to take place in FY 2012.  I thought the promises made were to direct and too many important stakeholders were involved (many of whom are big donors) to have Congress retreat so quickly.  Like those who placed trust in Congress to do the right thing, and those like me who just thought they would forestall doing the wrong thing, have been duped.  But did anyone assume that the promises given would be broken within days of the Act being signed by President Obama?  Even Tony Soprano would admire the intestinal fortitude it would take to embrace such two-faced thievery!

As the Innovation Alliance said best in a letter to Speaker Boehner, Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell:

[W]e are deeply concerned to learn that the CR does not contain the promised language.  We strongly believe that for the reforms to work as intended, the promised language ending fee diversion must be included in all bills making appropriations for the USPTO.  Without that language, the USPTO will not be able to discharge the new responsibilities vested in it by the America Invents Act, the ability of the USPTO to plan long-term and build the agency our innovation economy demands will be frustrated, and the job-stifling patent application backlog will continue.

It is nearly comical to hear politicians talk about job creation, making empty promises that they will focus 100% of their energy on the economy and creating jobs.  If they can’t even allow 100% of the user fees paid by stakeholders in the patent process to be collected AND spent by the United States Patent and Trademark Office how seriously can they be taken?  An end to fee diversion would undeniably create jobs because the USPTO could instantly hire more patent examiners, Administrative Law Judges and clerical staff.  They could invest in IT infrastructure, which would benefit those companies getting the contracts.  And they would process patent applications in a relevant time frame, giving entrepreneurs and small businesses the assets they need to protect fledgling technologies and raise critical funds to expand businesses and grow, which would also create jobs.

Why not start calling plays from the play book made up of plays that have succeeded in the past?  When President Reagan was faced with a recession one of his key initiatives was to turn around the Patent Office, and it worked.  By the end of President Reagan’s second term average pendency of patent applications was down to just over 18 months.  It can be done, but we need political leaders who actually have a backbone, which is sadly asking too much these days.

UPDATE: The House of Representatives unexpectedly failed to pass a short term CR to keep the government running past September 30, 2011.  See Reuters. The measure was defeated 195 to 230.  Already speculation about a government shutdown is rampant.  I don’t expect a government shutdown, but I do expect things to get a lot more interesting.  Those in favor of the USPTO keeping 100% of their fees need to remain vigilant. (at 6:03pm ET) 

The Author

Gene Quinn

Gene Quinn is a patent attorney and the founder of IPWatchdog.com. He is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman & Malek.

Gene’s particular specialty as a patent attorney is in the area of strategic patent consulting, patent application drafting and patent prosecution. He has worked with independent inventors and start-up businesses in a variety of different technology fields, but specializes in software, systems and electronics.

is admitted to practice law in New Hampshire, is a Registered Patent Attorney licensed to practice before the United States Patent Office and is also admitted to practice before the United States Court of Appeals for the Federal Circuit.

Gene is a graduate of Franklin Pierce Law Center and holds both a J.D. and an LL.M. Prior to law school he graduated from Rutgers University with a B.S. in Electrical Engineering.

You can contact Gene via e-mail.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments.

  1. john white September 21, 2011 11:38 pm

    This is Charlie Brown and Lucy and the football….again. Here’s the money….no wait…..it isn’t. It is disgusting that this level of absolute lying is tolerated. It is a sham, it was a sham, it will be a sham. The fees the PTO collects are an innovation tax that bears no relation what-so-ever to the conduct of the PTO. Was that way, is that way, will be that way. The House totally scammed the Senate. Game over. Senate, you are a bunch of unwitting dupes. And, so are we.

  2. EG September 22, 2011 7:12 am

    Gene,

    Why does this not surprise me (and should not surprise anyone else)? I believe ABSOLUTELY NOTHING said by the “insane asylum for the helpless” (that’s what Mark Twain called Congress). Once they do the “walk” I may finally believe the “talk.”

  3. American Cowboy September 22, 2011 10:11 am

    Gene, the AIA should be renamed the “Protect your inventions with Trade Secrets Act.’
    1. It adds more burdens to the PTO without funding, so that pendency will increase further, making patents less attractive as an option.
    2. It gives those who would attack patents additional ways to do so.
    3. It encourages best modes to be hidden and kept as trade secrets since there is no downside.
    4. It gives commercial operations that are protected by trade secrets the right to continue even if a patent issues later that the commercial operations would infringe.

    There are probably others, too, but that is this morning’s recollections.

  4. Joe September 22, 2011 10:38 am

    If you live in House Appropriations Chairman Harold Rogers (R-KY) or Budget Chairman Paul Ryan’s (R-WI) districts, call them and ask them why they vehemently opposed the Coburn amendment and threatened to kill the bill on the floor by raising a procedural point of order.

  5. Blind Dogma September 22, 2011 11:17 am

    Pay more, get less, wait longer, achieve more risk, and reward secret free-riders…

    The best that money could buy from Congress.

  6. Stan E. Delo September 28, 2011 3:28 pm

    BD-
    Unfortunately probably true in some senses. The backlog will probably blossom, since Congress has added several burdens on the USPTO, and has provided no way to pay for it that I am aware of. In fact quite the opposite since the Coburn amendment was Removed? from the eventual AIA that was recently signed into law. I find it very unfortunate that Bob Stoll and the energizer Director Kappos should be denied the funding to do their jobs properly. Millions of jobs locked up in the backlog, and now Congress is already seeking to remove about half a Billion out of their budget for 2012?

    Please don’t forget to submit some comments about the implementation of the AIA, which is very easy to do, and Bob and David would probably really appreciate your opinions in the matter. http://www.uspto.gov/patents/law/comments/aia_implementation.jsp

    Sorry, but you will not be allowed to be incognito.

    My comment only took about 3 days to appear, and I plan a few more in my own particular areas of concern.

    Best regards,
    Stan~