[Congressional Record (Bound Edition), Volume 156 (2010), Part 6]
[Extensions of Remarks]
[Pages 8525-8526]
[From the U.S. Government Publishing Office, www.gpo.gov]




 INTRODUCTION OF PATENT AND TRADEMARK OFFICE FUNDING STABILIZATION ACT 
                                OF 2010

                                 ______
                                 

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                         Tuesday, May 18, 2010

  Mr. CONYERS. Madam Speaker, today we seek to do the right thing for 
our nation's inventors and innovative businesses--provide the United 
States Patent and Trademark Office, USPTO, with the resources for 
reliable and sustainable funding. This bill does this by giving the 
USPTO fee-setting authority, providing the USPTO with the authority to 
impose a 15 percent temporary surcharge for all of the USPTO's fees, 
and preventing fees that the USPTO collects from being diverted away 
from the agency for unrelated government programs. I strongly support 
this bill because it would help the USPTO hire additional examiners, 
help reduce the backlog of patent applications, and improve patent 
quality.
  The USPTO is in the midst of a crisis. According to the Commerce 
Department's own figures, the number of unexamined patents has 
ballooned to over 750,000. Moreover, the pendency time for a final 
disposition is 35 months--not counting appeals. Yet, despite it taking 
longer for the USPTO to do examination, many experts believe that the 
quality of patents has actually declined in recent years. Increased 
backlogs and poor patent quality affect not only the agency, they hurt 
American innovation, and delay our economic and jobs recovery.
  While I support the current patent reform negotiations between the 
House and Senate, this bill will help to immediately begin to address 
the fiscal problems of the USPTO. I am still fully supportive of a 
larger patent reform effort and look forward to working with our Senate 
colleagues to bridge the gaps between the current House and Senate 
versions of reform. We are working with the Senate and have been 
engaged in discussions to make changes to their bill to improve patent 
quality and decrease the backlog. We want to continue to work with the 
Senate on the patent reform bill to get the best proposal. Our members 
in the House and their staffs have been working to resolve the 
differences between the House and Senate bills to address the needs of 
the innovation community. We remain open and willing to have a 
continuing dialogue with our colleagues in the Senate.
  The USPTO does not take money from taxpayers. It is fully funded by 
user fees and generates revenues from those fees. Unfortunately, fees 
have been diverted to other uses, and this has made it difficult for 
the USPTO to hire and retain qualified examiners and address patent 
backlog issues.
  Acknowledging these challenges, the USPTO has developed a number of 
initiatives to address its backlog and quality issues. These 
initiatives include giving patent examiners more time to do a quality 
examination of patent applications, targeted hiring of experienced 
professionals to become patent examiners, restructuring the incentives 
framework for examiners, and upgrading and improving the agency's 
information technology resources.
  Together, these initiatives are expected to substantially improve 
quality and lower the backlog. However, these programs cannot be 
achieved without adequate funding, which the USPTO currently does not 
have.
  Most of the fees the USPTO currently collects are statutorily set, 
and the fees are collected by the USPTO and deposited in the federal 
treasury. According to the Intellectual Properties Owners Association, 
IPO, $737 million in fees collected between 1991 and 2004 were never 
transferred back to the USPTO and instead remained in the general 
treasury fund for purposes unrelated to intellectual property. As an 
agency within the Department of Commerce, the USPTO is subject to the 
appropriations process and collected fees must be transferred back to 
the USPTO through a yearly appropriation.
  It is time for Congress to stop the bleeding and step in. I have 
worked in a bipartisan manner in the past to solve the problem of fee 
diversion. The USPTO's problems are not out there on Wall Street or in 
the Gulf of Mexico, they are right here on our doorstep. People lose 
jobs when technology does not make it to the market. These are problems 
that are in our power to fix, and that we must fix, and that can be 
traced directly to the current fee structure which is cumbersome, 
reactionary, and at times arbitrary.
  This bill requires the USPTO to consult with its stakeholder Public 
Advisory Committees before publishing a proposed fee change. It also 
requires a 45-day public comment period. And, to ensure continued close 
congressional oversight, it also includes a separate 45-day 
congressional comment period before fee changes can be implemented. 
Lastly, the bill will sunset this new authority in 10 years, giving 
Congress an opportunity to evaluate how well this grant of authority 
worked and whether it should be continued.
  The anti-diversion and 15 percent surcharge language in the bill will 
help the Patent and Trademark Office address its pressing short-term 
budgetary needs. The provisions in this bill will go a long way to 
correct the USPTO's fiscal and infrastructure problems. Without 
stability the USPTO cannot hire examiners, upgrade IT systems, or 
institute important operational initiatives that are critical to the 
PTO's vitality. To remain strong in the increasingly competitive global 
market, the U.S. must have an efficient and effective patent office. 
This bill is one step to ensure the U.S. remains a technological leader 
now and going forward into the future.
  Under the current system, fees often do not correspond to the 
realities of the USPTO's operations or needs. For example, under the 
current structure, patent applicants pay only about one-third of the 
costs associated with examination, regardless of whether the patent is 
granted. Fees are thus out of alignment in terms of what applicants pay 
and what they cost the office. Not only is this arguably not fair to 
successful patentees, it is inefficient.
  Back-end fees are notoriously hard to predict, especially in an 
economic downturn. Thus, the agency gets stuck with budgets that do not 
correspond to its front-end services. The result is that the USPTO's 
hands are tied, and the agency cannot pursue much-needed modernization 
and improvements. Accordingly, pendency and quality worsen.
  For those who wish to wait for a more comprehensive patent reform 
bill, I say this: we cannot afford to wait. The provisions of this bill 
are necessary to make sure that the USPTO has adequate funding, and we 
recognize the hurdles that lie ahead as we advance these provisions. We 
plan to work with the Appropriations Committee and the Congressional 
Budget Office to address any concerns they may have with this 
legislation. Without action USPTO fees are likely to be diverted, and 
we must pass this bill to correct this problem that has been going on 
for far too long. Nothing is more critical to the health of the USPTO 
than to have the sort of long-term budget stability that this bill will 
provide.

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