US Senate Votes to Leave Patent Office Underfunded for 2010

By Mike Drummond
December 15, 2009

Congress convened in a rare session last Sunday. On that sleepy news day, the U.S. Senate passed an appropriations bill leaving the U.S. Patent and Trademark Office funding for 2010 essentially the same as 2009. President Obama should send this bill back. The USPTO is solely funded through fees. But Congress controls the purse strings. The USPTO has fewer examiners now than it did at the start of this year. The agency faces a $200 million budget shortfall. It’s instituted a hiring freeze and can’t pay for needed IT upgrades. Why Congress would leave the USPTO underfunded to the tune of $200 million – particularly during a time of nascent national economic recovery – is vexing.

Worse, the bill omitted language that would have allowed the USPTO to realize up to $100 million more if actual 2010 fees exceed estimates. Excess revenue would be diverted to the Treasury. Diverted. To. The. Treasury. My reaction was a head-slapping WTF!

The late Bob Rines and other IP warriors fought fierce battles against fee diversions years ago. While they lost their legal tussle, they prevailed when the government ended those diversions. Allowing fee diversions to resume – should it come to that – when the USPTO faces so many challenges is a wholly misguided reversal of previous policy.

I met with USPTO head David Kappos earlier last month. He made a compelling case that his office should be allowed to set (read: raise) fees and institute certain policies without Congressional approval. Innovation happens at light speed. Waiting for an act of Congress to raise fees and deliberate on agency policy hamstrings the USPTO and by extension innovation, Kappos argued. I agree.

He needs to raise fees to hire more examiners. He needs more examiners to tackle the persistent backlog of patent applications and, more pressing, pendency. The number of pending applications was 735,961 in 2009, a drop from an all-time high of 771,529 in fiscal year 2008. Yet it’s not a concrete trend and it likely has very little to do with increased efficiencies at the USPTO.

More applicants than ever are abandoning applications, according to the 2009 Performance and Accountability Report, issued mid-November. What it doesn’t show is why. Many likely are bailing because of frustrating, costly delays. It now takes on average 34.6 months to get a patent, compared with 29.1 months in 2005.

Kappos is instituting sound policies to address the backlog. I like his proposal to fast-track patents for independent inventors and small entities, provided they abandon one of their less-pressing applications. I appreciate the argument that no one should be compelled to abandon a viable patent application for the chance at jumping to the head of the line. But it’s voluntary. On this score, he’s demonstrating greater concern for his constituency than the previous regime.

His other fast-track initiative for eco-friendly patent applications is another winner. Likewise, Kappos has improved relations with USPTO union workers, is overseeing a Lean Six Sigma Process Improvement Program, and seeks to continue telework and other efficiencies, including sharing certain examination work with foreign patent offices to reduce redundancies.

Kappos is doing his part to help rehab the troubled USPTO. Too bad Congress is leaving him twisting in the wind.

The Author

Mike Drummond

Mike Drummond

Warning & Disclaimer: The pages, articles and comments on 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 Read more.

Discuss this

There are currently 14 Comments comments.

  1. American Cowboy December 16, 2009 10:15 am

    Fee Diversion = Special Tax on Innovation.

  2. The Mad Prosecutor December 16, 2009 10:25 am

    Can’t say I agree with the overall tone of the piece. Sorry, PTO, learn to do less with more. Only government agencies (i.e., those outside the “real world”) think just because they “need” something they are entitled to it.

    Go tell your boss you “need” a pay raise of 10%. Present graphs, presentations, papers, etc., pointing out you don’t have enough money to pay for all the things you “need.” Because, once you present that information, there’s no question that you are entitled to that raise, right? I mean, after all, if you need it, you need it.

    The PTO doesn’t need better IT – somehow Examiners were able to search shoes and come up with better OAs. Unless the computer search system has degraded such that it actually will work more slowly at the end of fiscal 2010 than it did at the beginning of fiscal 2009, guess what? You don’t need more for IT! When times are tough, no gravy for the turkey!

    Less Examiners? Seems like there should be more money for the ones who are there.

    Obviously I have no figures, but I highly doubt the abandonment rate is rising because of the 6 month difference between 2005 and 2009.

    Kappos should use fear to motivate Examiners to reduce the backlog. The weakest performer in each art unit should be fired every six months.

  3. Mike D. December 16, 2009 10:48 am

    Mad Prosecutor,
    You don’t think the USPTO is entitled to the fees it generates? You can’t possibly think it’s OK for fees to be diverted to the Treasury, do you?

  4. OldTimer December 16, 2009 11:48 am

    >> I met with USPTO head David Kappos earlier last month. He made a compelling case that his office should be allowed to set (read: raise) fees and institute certain policies without Congressional approval. Innovation happens at light speed. Waiting for an act of Congress to raise fees and deliberate on agency policy hamstrings the USPTO and by extension innovation, Kappos argued. I agree.

    Read it and weep, Tafas. This will be a complete disaster, a Trojan Horse for getting from Congress what they lost in court. Before you buy into this, read Arti Rai’s articles on turning the PTO into an “innovation regulator” agency. Anyone with any significant experience at dealing with the PTO can not support this. This is bad policy.

    >> More applicants than ever are abandoning applications, according to the 2009 Performance and Accountability Report, issued mid-November. What it doesn’t show is why. Many likely are bailing because of frustrating, costly delays.

    No, they are abandoning their applications because the underlying change in substantive patent law, particularly KSR, Bilsky, and eBay, have rendered vast swaths of patents and pending applications worthless. My clients, large tech companies, are dumping cases in droves. This will likely accelerate in 2010 and continue indefinitely. They now view the patent system as largely useless, and sadly they are probably correct.

    All the backlog and duration issues will work themselves out in due course. New patent filings dropped in 2009 as did the backlog. Both of these trends will continue in 2010, and probably in subsequent years too as less sophisticated applicants figure out what my clients already have–that not much is patentable after KSR and Bilsky, and whatever they manage to get through the PTO will be shot down in the courts. Read the Fuzzysharp case Gene covered yesterday for a taste of what is coming at us.

    The patent boom which started in the ’80s is busting under the weight of anti-patent case law from an inhospitable court system. Kappos’ management issue will be determining how to deal with decline, not growth, in the PTO.

  5. Gene Quinn December 16, 2009 7:28 pm

    Mad Prosecutor-

    All I can say is WOW! It seems you have an extremely naive view of the world, and particularly patent prosecution.

    Virtually everyone seems to agree that paying more fees is fine if it actually goes to the USPTO to do a better job, speed up the process and actually issue patents.

    Your view of IT wreaks of someone who knows nothing about computers, and doesn’t understand that the Patent Office has an electronic filing system and state of the art computer systems can streamline processes. It is not just about searching. The PTO computer system is state of the art 10 or 15 years ago. How much can anyone accomplish using machines and systems like that? It is ridiculous for anyone to suggest the PTO doesn’t need an upgrade.


  6. Dale B. Halling December 17, 2009 11:19 am

    Old timer,

    I agree with you about the trend in patent law. All you need to do is look at the number of patents issued in 1970s and 1930s. Note that these were two wonderful periods in American economic history – one that we are likely to repeat.

    Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” For preview of the book see Now available on Amazon.

  7. The Mad Prosecutor December 17, 2009 12:49 pm

    Thank you, Gene, but I don’t consider myself naive.

    I’ve had extensive BIGLAW, boutique, and corporate IP/Patent experience (AMLAW 100 firms, IP department at perhaps the single largest corporation in the world, etc.).

    I think those who hold the contrary opinion are naive – as long as the Patent Office thinks that “all they need” to do their job is “a little bit more,” the PTO will never accomplish anything. The PTO’s attitude has worsened particularly over the last 7 or 8 years. When they embrace a paradigm shift of trying to do more with what they have, or (perish the thought) with less, then they will accomplish something.

  8. Dale B. Halling December 17, 2009 1:13 pm

    Mad Prosecutor,

    It is not surprising the PTO did worse in the last 7-8 years since John Dudas thought nothing should be patentable and the examiner’s were afraid of their own shadows.

    The best way to increase productivity of the PTO is to break it into branches around the country. Nevertheless, a patent system is a Consititutional function that Congress has not adequately funded. This is a clear violation of every inventor’s due process right under the 5th amendment.

  9. Gene Quinn December 17, 2009 8:17 pm

    Mad Prosecutor-

    Do enlighten us please. Did your law firm rely on a computer system that was outdated by a decade or more? Did your firm have any computer systems in place to manage docketing, scheduling, electronic files? Did they update those computer systems periodically to make the work of attorneys more efficient and streamlined?

    Obviously, you know nothing about computers or running a business enterprise. Only someone without any meaningful business or legal experience would be arrogant enough to say the Patent Office should be able to operate in 2010 with computer systems that were state of the art in 1995.


  10. Mr. Xaminer December 19, 2009 7:46 pm

    I agree with Gene about “The Mad Prosecutor” being naive. Furthermore, Mad Prosecutor seems to love tooting his own horn, but I can see he’s merely a clueless, arrogant IP attorney. The PTO doesn’t need “a little more of this and that”, we need A LOT MORE AND a list of logical wholesale changes related to how we examine and process applications. As an examiner who works with various IP attorneys around the country, I can say some do not seem to “get it” and some do. Mad Prosecutor has his head in the sand. While I may disagree with Gene on several issues from time to time, at least his posts and his IP Watchdog site as a whole are credible and realistic. Mad Prosecutor, spare us all and do not post anymore comments until you at least get out of the 1960s and into this decade.

  11. Dale B. Halling December 20, 2009 11:25 am

    Mr. Xaminer,

    I would like to get your feedback on the idea of splitting the PTO in multiple braches around the country. It is suggested that this would increase examiner retention and increase the political pressure for fully funding the PTO. Thoughts?

  12. Mr. Xaminer December 21, 2009 6:06 pm

    Mr. Halling,

    In theory, having regional PTO branches around the country would lead to examiner retention and/or increased morale. As far as increasing political pressure for increased PTO funding, the case really is already there (i.e. a healthy patent system would definitely aid a substantial economic recovery).
    The logical and less expensive solution to having regional PTO examiners is to amend the current law (which is supposedly in the works) to no longer require teleworking or “hoteling” examiners to report two days per bi-week to the PTO campus in Alexandria, VA. I actually am a “hoteler” and now live far from the D.C. area but still must report to the PTO campus two trips per month on my own dollar. If this requirement is relaxed, then many additional examiners (especially younger examiners) would move to all four corners of the US. The expanded telework program would be much less expensive than having to build or rent out additional office space around the country. Many examiners are not from the DC area (like myself) and prefer not to live there. Increased funding for examining and merely amending the telework law would do wonders for the PTO. Examiner retention is very crucial at the PTO, especially during the current hiring freeze. For example, any examiner who leaves the office as of now is NOT being replaced due to “budgetary constraints” so it just worsens the situation.