The Wall Street Journal is reporting that President Obama will today announce a proposal that would merge six agencies that focus on trade and commerce into one new department. Apparently the belief is that the restructuring will make it easier for businesses to navigate government bureaucracy. Notwithstanding, the proposed restructuring may better be thought of as a reshuffling since it seems that the plan would only save several billion dollars over 10 years. Thus, the real savings and streamlining may be minimal and likely won’t make the bureaucracy any more friendly unless regulations are minimized, but that is another topic for another day.

The Obama government restructuring plan is of particular importance within the patent community because it will affect the Commerce Department as well as five smaller agencies. As soon as I heard that my Spidey-senses started tingling. Wasn’t there something in the the Leahy-Smith America Invents Act (AIA) that applied only so long as the United States Patent and Trademark Office remained an agency within the Department of Commerce? Sure enough, there is. The new fee setting authority vested in the USPTO is contingent upon the Patent and Trademark Office remaining within the Department of Commerce.

Section 10 of the Leahy-Smith America Invents Act says in part:

(a) FEE SETTING.— (1) IN GENERAL.—The Director may set or adjust by rule any fee established, authorized, or charged under title 35, United States Code, or the Trademark Act of 1946 (15 U.S.C. 1051 et seq.), for any services performed by or materials furnished by, the Office, subject to paragraph (2).

(2) FEES TO RECOVER COSTS.—Fees may be set or adjusted under paragraph (1) only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees) and trademarks (in the case of trademark fees), including administrative costs of the Office with respect to such patent or trademark fees (as the case may be).

Thus, the USPTO has new fee setting authority, provided fees are commensurate with the cost of services provided.

The Director of the Patent Office only retains this new power for so long as the USPTO remains housed within the Department of Commerce.  The AIA says, also in section 10:

(f) RETENTION OF AUTHORITY.—The Director retains the authority under subsection (a) to set or adjust fees only during such period as the Patent and Trademark Office remains an agency within the Department of Commerce.

When I first read this conditional grant of authority I wondered what was going on.  Sure, over the past several decades there has been talk from time to time about eliminating the Department of Commerce and reorganizing its functions into various other agencies, but why put this as a condition for fee setting authority?  Clearly that provision was placed there by someone for some reason.

As I typically do, I started asking around.  Why would this be contained within the AIA?  No one really had a good answer, but I was hearing from sources that whenever discussion of the future of the Department of Commerce comes up the focus turns quickly to what you do with the Patent Office, which many insiders have told me is considered the “crown jewel” of the Department of Commerce.  There is certainly no doubt that the rich history of the Patent Office and its enormous prominence within the early U.S. government makes the USPTO unlike virtually any other sub-agency.

As President Obama’s proposal unfolds we will get more details and have a better picture of how any restructuring that affects the Department of Commerce will impact the USPTO.  In the meantime it is worth keeping in mind that the Obama restructuring proposal is uncertain at best, with substantial reason to doubt that it will be able to gain traction.  This is in no small part due to the fact that President Obama will ask Congress to grant him fast track permission to restructure, which would mean that Congress would not be able to make amendments but rather would have to vote up or down on the entirety of the proposal.

Without Congress giving President Obama fast track authority there is no realistic chance that restructuring could be accomplished before the November elections.  Timing is important to consider because there is most decidedly a political angle at work.  In the high stakes world of DC political gamesmanship and posturing, a restructuring of the federal government, even if it is just a reshuffling, would likely pay dividends for the President in his reelection efforts.

If President Obama can consolidate agencies and allow 1,000 to 2,000 jobs to be cut through attrition that would be spun during the election as demonstrating that he is favor of smaller government, thereby tapping into much of the sentiment of Independent voters and Republicans, although it is hard to see how President Obama could attract any meaningful numbers of Republican votes.  Independent votes will be critical and will decide who wins in November 2012.

If a restructuring does occur, however, and the Department of Commerce is involved, the future of fee setting authority for the USPTO may rest on whether the Department of Commerce remains or whether a wholly new agency is created, under a different banner, to wrap together all the various trade and commerce related activities.  It will also be interesting to see what becomes of the USPTO.