[Congressional Record Volume 143, Number 17 (Tuesday, February 11, 1997)]
[Extensions of Remarks]
[Page E201]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          PATENT AND TRADEMARK OFFICE SURCHARGE EXTENSION ACT

                                 ______
                                 

                           HON. HOWARD COBLE

                           of north carolina

                    in the house of representatives

                       Tuesday, February 11, 1997

  Mr. COBLE. Mr. Speaker, today, I am pleased to introduce a bill which 
responds to an aspect of the budget proposed by the administration last 
Thursday and to congressional practice over the past 6 fiscal years. 
The administration's budget proposal would divert $92 million in fiscal 
year 1998 from the U.S. Patent and Trademark Office, which receives no 
taxpayer dollars, to other tax-funded areas of the Government. In 1999, 
the administration proposes that $119 million be diverted. In fiscal 
year 1997, Congress diverted $54 million, a significant increase over 
previous diversions. This legislation would correct this serious and 
growing problem, without harming the budget, so that the PTO can 
continue to be the engine that fuels the creation of competitive 
American technology.
  Last month, Representatives Goodlatte, Conyers, Lofgren, and I 
introduced H.R. 400, the 21st Century Patent System Improvement Act, a 
bipartisan bill which will make critical reforms to our Nation's patent 
laws and to the PTO for America's high-technology industries. However, 
unless we move quickly to preserve and stabilize the finances of the 
PTO, these improvements and the patent system itself will be in 
jeopardy.
  The Patent and Trademark Office is funded totally through the payment 
of application and user fees. Taxpayer support for the operations of 
the Office was eliminated in 1990 with the passage of the Omnibus 
Budget Reconciliation Act. The act imposed a massive fee increase--
referred to as a ``surcharge''--on America's inventors and industry in 
order to replace taxpayer support the Office was then receiving. The 
revenues generated by this surcharge, $119 million, which constitute 
approximately 20 percent of the PTO's operating budget, are placed into 
a surcharge account. The PTO is required to request of the 
Appropriations Committees that they be allowed to use these surcharge 
revenues in this account to support the 20 percent of its operations 
these revenues represent. It was anticipated in 1990 that Congress 
would routinely grant the PTO permission to use the surcharge revenue 
since it was generated originally from fees paid by users of the patent 
and trademark systems to support the cost of those systems.

  Unfortunately, experience has shown us that the user fees paid into 
the surcharge account have become a target of opportunity to fund 
other, unrelated, taxpayer-funded Government programs. The temptation 
to use the surcharge, and thus a significant portion of the operating 
budget of the PTO, has proven increasingly irresistible, to the 
detriment and sound functioning of our Nation's patent and trademark 
systems. Beginning with the diversion of $8 million in 1992, Congress 
has increasingly redirected a larger share of the surcharge revenue, 
reaching a record level of $54 million in the current year. In total, 
over the past 6 fiscal years, over $142 million has been diverted from 
the PTO.
  This, of course, has had a debilitating impact on the Patent and 
Trademark Office. The effort to reclassify the patent search file to 
keep it current with developing technologies had to be eliminated. The 
efforts to provide technological training for patent examiners and to 
expose them to the latest developments in their fields has been 
reduced. The support of legal training for patent examiners has been 
cut 50 percent. One of the most promising cost-saving steps 
contemplated by the PTO, allowing applicants to file their applications 
electronically, has been postponed indefinitely. Since the diversion of 
$54 million this year, the Office has been forced to reduce the hiring 
of patent examiners 50 percent at a time when patent application 
filings are increasing by nearly 10 percent annually. In the budget 
delivered to this body by the administration last Thursday, the 
President is proposing that we continue to increase these diversions in 
the amount of $92 million in fiscal year 1998 and $119 million, the 
amount of the entire surcharge, in each of the succeeding years through 
fiscal year 2002. In anticipation of this denial of user fees, the PTO 
has canceled totally all plans for hiring patent examiners this year 
because it would not have sufficient funds to pay for them next year. 
We cannot afford to allow this dismantling of our patent system to 
occur.

  The legislation I am introducing today is revenue neutral. It does 
not increase an expenditure of taxpayer revenues which would increase 
the deficit. It would merely permit the PTO to use all of the patent 
and trademark fees it receives to examine patent and trademark 
applications, to grant patents and to register trademarks. It does this 
by placing the fees generated by the surcharge mandated by the Omnibus 
Budget Reconciliation Act of 1990 into the same category as the other 
user fees paid by patent and trademark applicants. Specifically, it 
would characterize these fees as ``offsetting collections'' rather than 
``offsetting receipts'' so that all of the fees collected could be used 
for the purposes for which they were paid.
  We must stop this unwarranted tax on innovation. Our Patent and 
Trademark Office cannot operate effectively on 80 percent of its 
operating budget--all of which is paid for not by you and me, but by 
the applicants who use it. I look forward to working with all 
interested parties to reverse this potential decline in the services 
offered by the PTO. In this increasingly competitive world, the 
economic survival of the United States will be dependent upon high 
technology products and services. We cannot allow the pillar upon which 
our competitiveness in the global economy rests to be destroyed.

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