Obama to Announce Restructuring of Department of Commerce

By Gene Quinn
January 13, 2012

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.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. 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 8 Comments comments.

  1. American Cowboy January 13, 2012 1:50 pm

    Pardon my cynicism, but this sounds like a gargantuan waste of time and money. The money will go for new signs and letterhead, as the old names get discarded and fancy new ones get thought up. The time will go to the political infighting and turf battles as bureaucrats scramble to be winners and not losers in the reshuffling.

    Same kind of falderal that acccompanied the establishment of the Department of Homeland Security, with no real benefit to the citizens.

  2. Mike W. January 13, 2012 1:55 pm

    fyi – Well, I guess under this proposal the Dept of Commerce would essentially be gone – consumed by the NEW to-be-named SUPER Department… http://www.whitehouse.gov/the-press-office/2012/01/13/government-reorganization-fact-sheet

  3. Blind Dogma January 13, 2012 2:37 pm

    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.

    The real difference is the (illegal) tax revenue source that the fees cahrged above the service provided itself provides.

    because there is most decidedly a political angle at work.

    Aint that the truth !

  4. jodi January 14, 2012 6:15 pm

    It would be both sneaky and a tragedy if during the reshuffling they lumped a money-losing agency in with the USPTO and used part of inventors fee’s to cover the costs of the money losing-agency Or, used USPTO personnel to perform services for the money-losing agency (say HR or accounting).

    ah heck, other than the USPTO – they’re all money-losing anyways, sigh – maybe I’m just stating the obvious.

  5. Jeff G January 15, 2012 11:23 pm

    Impressive Spidey-senses Gene. I hear there is an opening on Broadway. Seriously though, I agree that it is quite curious that someone would have written that into the law.

  6. MBT January 16, 2012 7:35 am

    Mike W – looks like rearranging the deck chairs to me. They did a “reorganization” at the Patent Office in 1998 or 1999 when I was there. Lent a whole new meaning to the word. They changed all the art unit numbers, moved offices around (I moved from the 12th floor to the 9th floor, my husband moved to the 10th floor, and they placed the design group in with the plant art unit (go figure!), moved a few SPEs around…). For the life of me, I still can’t figure out the benefit other than somebody being able to say they reorganized. I can’t imagine the cost in moving, updating the website, etc. A few examiners changed art units and they tried to put together some super art unit that did some specialized technology that I can’t even remember at this point – it fell apart fairly quickly. It seems the Commerce Dept. “reorganization” would be the same thing. About the only thing it will do is erase corporate memory and Obama’s choice to head the agency will be the first of everything – the first “New Commerce” Secretary. The founding Secretary, if applicable, the first [woman, African-American, Native American, Asian American, …], the first to set up XYZ program, etc…. The cost involved will have to be monumental.

  7. BLT January 17, 2012 1:36 pm

    From a cash machine perspective, seems the executive branch need only move the cash machine Patent Office under whatever department they “congressionally” want to fund/favor (The new Department of Health Care/Citizenship?) and, with the strength of someone who’s got radioactive blood, that department will receive wealth and fame via the influx of cash from the Patent Office. As for Patent Office, wealth and fame they’ve ignored— Action is their reward. Impressive Spidey-senses Gene.

  8. Blind Dogma January 17, 2012 7:11 pm

    With great power comes great…

    Oh wait, this is the government.