House Republicans Oppose Adequately Funded Patent Office

Congressman Paul Ryan

In a rather stunning development, key Republican leaders in the House of Representatives are opposing an adequately funded Patent Office.  Indeed, the opposition to appropriate funding for the United States Patent and Trademark Office is becoming a political matter, and the language used to describe the issues suggests that Republicans seem to believe they can score points against the Obama Administration by opposing USPTO funding.

In a letter sent to Congressman Lamar Smith (R-TX), two key Republican Chairmen are opposing the USPTO funding mechanisms currently in place in H.R. 1249, which mirror those passed by the Senate earlier this year.  Congressman Paul Ryan (R-WI), who is Chair of the House Budget Committee, was joined by Congressman Harold Rogers (R-KY), who is Chair of the House Committee on Appropriations, opposing provisions that would allow the Patent and Trademark Office to keep the user fees it collects, which are payment for services to be rendered.

I am a Republican and I like Congressman Ryan, but Ryan and his allies are dead wrong.  I am totally and completely disgusted.

Congressmen Ryan and Rogers wrote:

We strongly oppose this proposed shift of billions in discretionary funding and fee collections to mandatory spending.  Putting the PTO funding on auto-pilot is a move in exactly the wrong direction, given the new Republican majority’s commitment to restraining spending, improving accountability and transparency, and reducing the nation’s unparalleled deficits and debt.

Placing PTO spending on mandatory auto-pilot as outlined in H.R. 1249 would also hand Congressional “power of the purse” — bestowed in the Constitution — to the Obama White House, and essential eliminate the ability of Congress to perform substantive oversight of the PTO.

To perform substantive oversight?  What a novel idea!  Too bad that Congressman Ryan, Congressman Rogers and all of their colleagues on both sides of the aisle abdicated that oversight responsibility for so many years.  It is the past mistakes of the U.S. Patent and Trademark Office, which are directly responsible for the mess the Office finds itself in now.  Had Congress actually been engaging in oversight of any sort how much could have been prevented?  A lot.

Let’s just call it like it really is, shall we?

Where was Congress when the Patent Office decided that every patent application deemed to have allowable claims should be re-reviewed prior to issuing a patent?  The so-called “second pair of eyes” review created an enormous backlog, stifling patents with allowable subject matter, starving start-up businesses of valuable assets and preventing the creation of innovative technology-based jobs.

Where was Congress when the Patent Office decided that the best way to keep electronic records was to save each and every individual page as a separate image file?  Does that make sense to anyone?  Even members of Congress could have figured that out if they actually looked at what was going on.  Indeed, this is one of the more absurd decisions ever made by any entity, and is even embarrassing by government bureaucracy standards.

Where was Congress when the Patent Office decided to implement the claims and continuations rules in 2007, which were in direct contradiction to the patent laws passed by Congress?  No one seemed to care much at all that the Agency was embarking on a path that would make it more difficult to obtain full and complete protection on those innovations that were most commercially successful.  Thanks to a small group of industry players (i.e., GlaxoSmithKline and independent inventor Dr. Tafas) and their supporters this regulatory harikiri was stopped.  Congress sat idly by.

Where was Congress when the Patent Office created the early electronic filing systems that didn’t interface with the back end systems of the Office, requiring the electronic file to be printed by the Patent Office and then scanned back into the back end system?  Didn’t anyone think about actually creating a system that would allow what was submitted to automatically be passed to the back end system?  The worst part is the Patent Office had the audacity to call this a “paperless system.”  Paperless from exactly what perspective?

I could go on and on and on.  If Congress is going to demand authority to oversee the Patent and Trademark Office shouldn’t they actually oversee the Patent and Trademark Office?  The truth is the Congress has never exercised oversight authority in what any objective observer would call a real way.

The intellectual dishonesty at work is also staggering.  Republicans in Arizona and many throughout the country argue that Arizona has a right to protect its own borders and engage in activity that at least arguably infringes upon the federal governments right to regulate immigration.  The argument is made that by failing to act the United States government has abdicated its responsibility, which seems a fair way to characterize Congressional refusal to handle the immigration issue.  Yet at the same time, and in a different context, House Republicans are arguing they have the right and responsibility to oversee the Patent Office and that shouldn’t be tread upon.  For crying out loud, do you realize the duplicity?  If you want to oversee the Patent Office fine, but for crying out loud do something to oversee the Patent Office before you moan about losing the right to oversee the Patent Office.  This is akin to a 3 year old child not wanting a toy until his brother or sister wants the toy and then throwing a tantrum because they have lost the toy.

Of course, what I have said so far misses several important points.  First, nothing in H.R. 1249 or S. 23 (which already passed the Senate) would make it impossible for Congress to oversee the Patent Office.  Congress would still have oversight powers and responsibilities, the fees paid by users of the USPTO would just now actually go to running the USPTO as opposed to school lunches or something else completely unrelated to the purpose of the fee.  In fact, the only thing patent reform funding provisions would do is say that the money collected by the Patent Office in the form of fees, which are for services to be later rendered during the patent process, get to be spent by the Patent Office to actually deliver the services they are promising to deliver when they accept the payment of the fee.  Not exactly a radical idea really.  Furthermore, the fees could not be set higher than is necessary to allow the Patent Office to cover costs.

Moreover, despite the fact that Congressmen Ryan and Rogers would like this to be about the Obama Administration to score points against the Democrat machinery, the fact is that Senator Tom Coburn (R-OK) is the one who championed the amendment in the Senate that would give the Patent Office the ability to keep the fees it collects.  Senator Coburn is known as “Senator No” for his staunch fiscally conservative stance on virtually all issues.  So if you are willing to let facts influence your viewpoint there is absolutely no way that Patent Office funding within patent reform can be an issue upon which Republicans can beat up Democrats.  It was a leading fiscally conservative Republican in the Senate who brought the USPTO funding issue out of obscurity and to the top of the agenda.

Further still, the so-called giving up of appropriating authority in violation of the requirements of the Constitution (i.e., Congress holds the power of the purse) is at best a disingenuous head-fake.  Congress itself would be voting to authorize the Patent and Trademark Office to keep the fees it collects, so Congress would not be abdicating its power of the purse, just setting priorities in advance that would allow the Patent and Trademark Office to keep the fees it collects.  Further, they would have the ability to review and regulate the fees to make sure the fees are not unnecessarily high, and Congress would still be able to review to make sure that USPTO fees are actually going to pay for reasonable and necessary USPTO expenditures.  Exactly how is that an abdication of power?

Joining the House Republicans to push for a removal of the PTO funding measures from H.R. 1249 is David Addington of Heritage Foundation, who earlier today wrote:

As patent reform legislation continues to work its way through the legislative process, Congress should keep and exercise its appropriations power to decide on USPTO spending. Patent reform legislation should allow the U.S. Patent and Trademark Office to spend funds only “[t]o the extent and in the amounts provided in advance in appropriations Acts.” In an era of federal government overspending and overborrowing, the last thing Congress should do is turn over to a federal agency the decision on how much the agency can spend.

Overspending and overborrowing?  Do you think the Mr. Addington knows that the Patent Office is self sufficient and not a single dime of taxpayer money is used to fund its operation?  Yes, the borrowing issue is enormous.  Eventually the United States is going to have to live within its means or we are going to go bankrupt, that is the reality; whether that reality is ready to be admitted to or realized is another issue for another day.  What is clear, however, is that absolute no borrowing is being done to support the Patent Office.  Every year the Patent Office collects more than what Congress allows them to keep, so those who are the users of the United States Patent and Trademark Office pay a national innovation tax, while at the same time the USPTO is starved for the resources it needs the backlog continues to grow.  This further compounds the problem, prevents start-up companies from acquiring the patent assets they so desperately need to obtain funding from investors and stymies job creation.

The challenges to patent reform are heating up and gaining steam.  The reality is that patent reform efforts would have long ago been dead unless the Senate added provisions that allow the Patent Office to keep the fees it collects to reinvest in running the agency.  Everyone in the industry agrees with complete unanimity that the Patent Office should keep the fees paid to deliver the work promised.  There is some disagreement about whether the Patent Office should set the fees themselves, but everyone agrees that to have an adequately funded Patent Office the Patent Office needs to keep the fees it collects.  The funding of the Patent Office is an enormous spoon full of sugar to make the other reforms, which are really just changes not reforms, are enacted.

Patent reform is unpalatable to everyone, largely for different reasons. No one is getting everything they really want, and most lobbying efforts have long since converted themselves into making sure that nothing truly terrible is enacted, with “truly terrible” being defined differently by the various interest groups.  There are some thorny issues that remain with H.R. 1249, primarily surrounding those areas where H.R. 1249 is not identical to the very delicate balance struck by the Senate in S. 23.  If the House takes out USPTO funding from H.R. 1249 there will be no patent reform, it is just that simple.  There is no guarantee that patent reform will occur even with keeping USPTO funding provisions, but there is at least still a chance.

The Patent and Trademark Office needs more money.  Their annual budget is on the order of about $2 billion, but this year is likely to collect $300 to $400 million more than was appropriated.  Being denied those funds doesn’t change the fact that they have to do the work eventually, it just means they cannot hire enough people to do the work and cannot update the IT systems that are comically bad due to numerous bad decisions made during the Bush Administration.

So exactly why would we want to inadequately fund the Patent Office if not a single dime of taxpayer money is on the line?  The cynical answer is so that they can score political points.  The really cynical answer is because they know that adequately funding the Patent Office will lead to more business investment that will lead to job creation, which Republicans can’t have if they are to beat President Obama.  The most correct answer, however, is almost certainly that Congressional appropriators don’t like losing power to micromanage dollars; the fact that political points are to be scored is likely just a bonus. Keeping power to micromanage would be fine if they would just do what so clearly is required.  Fund the USPTO and actually cease the abdication of oversight responsibility.  Of course, that is likely asking too much from any politician.  So I come full circle. I am totally and completely disgusted.