USPTO gets $3.6 billion in President’s FY 2018 budget, avoids fee diversion

By Gene Quinn
May 23, 2017

Earlier today President Donald Trump released his proposed FY 2018 budget under the title A New Foundation for American Greatness. A quick review of the budget and supporting Commerce Department Appendix suggests the United States Patent and Trademark Office (USPTO) has received everything it requested, and will not suffer the indignity of fee diversion if the President’s FY 2018 budget were to pass Congress.

A request for confirmation and comment from the USPTO was redirected to the Commerce Department. The Commerce Department said only that Secretary of Commerce Wilbur Ross will soon be issuing a statement and will testify in front of a House Committee on Thursday regarding the budget.

The President’s Message on FY 2018 Budget

“This Budget’s defining ambition is to unleash the dreams of the American people,” President Trump wrote in the Budget Message of the President accompanying the release of the FY 2018 budget. “This requires laying a new foundation for American Greatness.”

“Through streamlined Government, we will drive an economic boom that raises incomes and expands job opportunities for all Americans,” President Trump explained. “Faster economic growth, coupled with fiscal restraint, will enable us to fully fund our national priorities, balance our budget, and start to pay down our national debt.”

While the President’s budget increases defense spending by $52 million in FY 2018, the budget includes a blueprint that will realize “$3.6 trillion in spending reductions over 10 years, the most ever proposed by any President in a Budget.”

Commerce Department Appendix

While the Commerce Department will see a nearly 16% budget reduction compared to FY 2017, it appears as if the United States Patent and Trademark Office (USPTO) will receive everything requested under the President’s FY 2018 budget. Although not apparent from the FY 2018 budget document itself, which does not use the word “patent” anywhere, the Commerce Department Appendix details the FY 2018 budget for the USPTO as proposed by President Trump (see pages 199-200).

Relative to the USPTO the Commerce Department Appendix explains that under President Trump’s FY 2018 budget the USPTO will receive $3,586,193,000 from fees collected and to be available until expended. This appropriation would result in $0 being provided to the USPTO from the general fund of the United States. Any fees collected by the USPTO in excess of that amount would be deposited into the Patent and Trademark Fee Reserve Fund and remain available until expended. There does not appear to be any mention of any fee diversion anywhere, which would mean the USPTO has dodged the fee diversion hands of an often greedy federal government who over the last 30 years has frequently diverted user fees to other purposes. See Fees Withheld from USPTO 1991-2014.

The Commerce Department Appendix to the FY 2018 budget reads in relevant part:

For necessary expenses of the United States Patent and Trademark Office (USPTO) provided for by law, including defense of suits instituted against the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, $3,586,193,000, to remain available until expended: Provided, That the sum herein appropriated from the general fund shall be reduced as offsetting collections of fees and surcharges assessed and collected by the USPTO under any law are received during fiscal year 2018, so as to result in a fiscal year 2018 appropriation from the general fund estimated at $0: Provided further, That during fiscal year 2018, should the total amount of such offsetting collections be less than $3,586,193,000 this amount shall be reduced accordingly: Provided further, That any amount received in excess of $3,586,193,000 in fiscal year 2018 and deposited in the Patent and Trademark Fee Reserve Fund shall remain available until expended: Provided further, That the Director of USPTO shall submit a notification to reprogram funds to the Committees on Appropriations of the House of Representatives and the Senate for any amounts made available by the preceding proviso and such notification shall be treated as a reprogramming under section 505 of this Act and shall not be available for obligation or expenditure except in compliance with the procedures set forth in that section: Provided further, That any amounts reprogrammed in accordance with the preceding proviso shall be transferred to the United States Patent and Trademark Office “Salaries and Expenses” account: Provided further, That from amounts provided herein, not to exceed $900 shall be made available in fiscal year 2018 for official reception and representation expenses: Provided further, That in fiscal year 2018 from the amounts made available for “Salaries and Expenses” for the USPTO, the amounts necessary to pay (1) the difference between the percentage of basic pay contributed by the USPTO and employees under section 8334(a) of title 5, United States Code, and the normal cost percentage (as defined by section 8331(17) of that title) as provided by the Office of Personnel Management (OPM) for USPTO’s specific use, of basic pay, of employees subject to subchapter III of chapter 83 of that title, and (2) the present value of the otherwise unfunded accruing costs, as determined by OPM for USPTO’s specific use of post-retirement life insurance and post-retirement health benefits coverage for all USPTO employees who are enrolled in Federal Employees Health Benefits (FEHB) and Federal Employees Group Life Insurance (FEGLI), shall be transferred to the Civil Service Retirement and Disability Fund, the FEGLI Fund, and the Employees FEHB Fund, as appropriate, and shall be available for the authorized purposes of those accounts: Provided further, That any differences between the present value factors published in OPM’s yearly 300 series benefit letters and the factors that OPM provides for USPTO’s specific use shall be recognized as an imputed cost on USPTO’s financial statements, where applicable: Provided further, That within the amounts appropriated, $2,000,000 shall be transferred to the “Office of Inspector General” account for activities associated with carrying out investigations and audits related to the USPTO.

The Commerce Department Appendix to the President’s FY 2018 budget explains that the USPTO will specifically use the funding for examining patent applications and granting patents, as well as USPTO efforts to address abusive patent litigation practices. The relating to patents the Commerce Department Appendix says:

Requested funding for 2018 will be used for examining patent applications and granting patents. USPTO will continue its aggressive patent pendency reduction agenda to reduce overall pendency and backlog; continue to enhance patent quality; ensure optimal information technology service delivery to all users; improve appeal and post-grant processes; and improve intellectual property protections worldwide. The Budget supports USPTO’s administrative efforts to address abusive patent litigation practices and repeats the President’s call for Congress to enact legislation that promotes greater transparency in the U.S. patent system and prevents frivolous lawsuits that stifle innovation.

Relating to trademark operations the Appendix says:

The 2018 Budget provides resources for examining trademark applications; registering trademarks; maintaining high trademark quality; ensuring optimal information technology service delivery to all users; and improving trademark practices worldwide.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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 10 Comments comments. Join the discussion.

  1. IPdude May 23, 2017 4:41 pm

    Great! Gives Lee an opportunity to misappropriate more funds to the PTAB for more beheadings. Can we get a new director already?

  2. Patent Investor May 23, 2017 6:02 pm

    I headed straight to the comment section to ask about the whereabouts of the New Director.

  3. angry dude May 23, 2017 9:55 pm

    who cares ?

  4. JPM May 23, 2017 10:29 pm

    Looks like Michelle Lee will be using this money to finance the PTAB so that more patents will be killed.

    Lee needs to go and the PTAB needs to be shutdown. When is Wilbur Ross going to get rid of the Obama administrations version of the USPTO?

  5. patent leather May 23, 2017 11:32 pm

    Gene, many thanks for this timely article. I’ve been wondering (and have been a bit worried) about the USPTO budget.

  6. B May 23, 2017 11:40 pm

    Respectfully, JPM, the PTAB doesn’t need to be shut down. What it needs is competent APJs instead of the idiot Kelly Girls (apologies to that honored temp agency) that issue stupidity on a daily basis.

    True story – the PTAB recently affirmed a 101 rejection under the theory that the claims are abstract merely because they can be performed by a generic computer. Asked for a rehearing en banc and was refused by The Grande PTAB Muckity-Muck. As bad as that is, it’s not the worst decision I’ve seen from them in the last year.

  7. Night Writer May 24, 2017 1:15 pm

    @6 B — pretty sure they hire for people that are anti-patent. Don’t sound pro-patent in the job interview or you are out. At least that was how it was.

  8. B May 24, 2017 1:58 pm

    “pretty sure they hire for people that are anti-patent. Don’t sound pro-patent in the job interview or you are out. At least that was how it was.”

    I’ll take your word for it – mostly because it explains the PTAB’s incompetency

  9. Eric Berend May 25, 2017 5:24 am

    “…, continue to enhance patent quality,…”

    Is all anyone needs to know.

    That and the retention of Ms. Lee as Director, under unprecedented circumstances.

    The taxpayer’s funds used for the USPTO as well as fees collected directly from patent applicants, will CONTINUE to be used to fund the war against inventors and small patenting entities.

  10. The_Truth May 28, 2017 12:24 am

    “The taxpayer’s funds used for the USPTO as well as fees collected directly from patent applicants, will CONTINUE to be used to fund the war against inventors and small patenting entities.”

    The patent office is entirely self funded from applicant and patent maintenance fees. The patent office doesn’t use taxpayer funds.

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