On Tuesday, May 21, 2013, Jeffery Lewis, who is the President of the American Intellectual Property Law Association (AIPLA), sent a letter to Sylvia Matthews Burwell, who is the Director of the Office of Management and Budget (OMB). In this letter Lewis, speaking on behalf of the AIPLA and its 15,000 members, challenged the legal interpretation of the budget cuts the Obama Administration says are required of the USPTO thanks to sequestration.
In the letter Lewis points out that the USPTO is at a critical point in the implementation of the America Invents Act (AIA), and this significant reduction in USPTO funding is based on an erroneous legal interpretation. Lewis also points out that the cut in funding to the USPTO is contrary to the promises made at the time the AIA was passed.
Those of us who followed the AIA debate and passage knew that it would only be a matter of time before the government reneged on its assurances that the USPTO would be allowed to keep 100% of the fees it collected. Senator Tom Coburn (R-OK) championed an amendment that ultimately failed, which would put into the Statute the requirement that 100% of fees collected be allowed to be used by the USPTO. That was rejected by Republican House leaders, who in turn promised in a letter that they would still provide 100% funding. A promise in a letter is, of course, worthless in Washington, DC.
Without it being written into the law it was merely an assurance without any obligation. The unfortunate reality is our leaders — on both sides of the aisle — make grandiose promises and then never follow through. Broken promises are cheaper than a dime a dozen in Washington, DC. So without protection for the USPTO written into the law it was only a matter of time before inadequate funding of the USPTO became an issue again. Fee diversion (i.e., confiscating money paid to the USPTO by customers) has a long history that spans at least two decades and three different Presidents, although for a brief time during the Bush Administration it did cease thanks to the efforts of then Director Jon Dudas.
So here we are again. We knew it would happen, but few probably predicted it would happen so soon.
In any event, here are some of the highlights of the AIPLA letter to OMB:
“The USPTO has already made known some of the negative impacts which sequestration will have on its work, and any delay in these improvements represents a major step back from the commitment of the Administration to the AIA and a fundamental challenge to the innovation and job creation these improvements represent.”
“[T]o help fund the new programs and initiatives of the AIA, Section 11 included a 15% surcharge on patent fees, and Section 10 granted the USPTO the authority to set the fees for patent and trademark services. A new patent fee schedule, which included increases for numerous patent services, went into effect on March 19, 2013. Support for these fee increases by AIPLA and others in the user community were based on the understanding that the funds would be available solely to the USPTO…”
“We also believe that the interpretation of the sequestration statute by the Office of Management and Budget (OMB) as it applies to the USPTO is inaccurate and will have a compounding impact on the USPTO’s operations for FY 2013 and into the future.”
“[W]e have serious doubts that the USPTO is lawfully subject to sequestration in the first place because it is funded through fee collections, not through government spending.”
“We believe that [the procedures being applied] restricts the spending authority of fee funded agencies and impacts them asymmetrically and unfairly relative to non-fee funded bodies.”
“President Obama recognized the vital need for resources at the USPTO both when he signed the AIA in September 2011, and when he released his budget for FY 2014 on April 10, 2013… OMB’s apparent reinterpretation of sequestration’s impact on the USPTO runs counter to that goal, counter to the agreement underlying the adoption of the AIA and the Administration’s strong support for it, and will send the wrong message about the Administration’s support of the innovation community.”