[House Report 109-372]
[From the U.S. Government Publishing Office]
109th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 109-372
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UNITED STATES PATENT AND TRADEMARK FEE MODERNIZATION ACT OF 2005
_______
February 8, 2006.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 2791]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 2791) to amend title 35, United States Code, with respect
to patent fees, and for other purposes, having considered the
same, reports favorably thereon without amendment and
recommends that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 7
Committee Consideration.......................................... 7
Vote of the Committee............................................ 7
Committee Oversight Findings..................................... 7
New Budget Authority and Tax Expenditures........................ 8
Congressional Budget Office Cost Estimate........................ 8
Performance Goals and Objectives................................. 12
Constitutional Authority Statement............................... 12
Section-by-Section Analysis and Discussion....................... 12
Changes in Existing Law Made by the Bill, as Reported............ 18
Markup Transcript................................................ 34
Purpose and Summary
The primary purpose of H.R. 2791, the ``United States
Patent and Trademark Fee Modernization Act of 2005,'' is to
make permanent a new fee schedule that funds the operations of
the U.S. Patent and Trademark Office (USPTO).\1\ This
legislation also prevents future ``diversion'' of USPTO funds
to programs unrelated to the agency. H.R. 2791 is substantially
similar to H.R. 1561, which was introduced during the 108th
Congress and passed the House by a rollcall vote of 379-28.\2\
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\1\ The fee schedule is set forth in Title VIII of division B of
the Consolidated Appropriations Act, 2005 (35 U.S.C. Sec. 41 note; Pub.
L. No. 108-447; 118 Stat. 2924).
\2\ H.R. 1561, 108th Cong., 1st Sess. (2003) (Rep. Smith (TX),
sponsor). The floor vote occurred on March 3, 2004.
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Permanent enactment of the fee schedule is a necessary
precursor to implementation of other administrative changes set
forth in the USPTO's ``Strategic Business Plan'' (The Plan).
The Plan was developed pursuant to a congressional mandate
eventually codified in the ``21st Century Department of Justice
Appropriations Authorization Act.'' \3\ It is designed to
implement reforms that will enhance patent and trademark
quality and reduce application pendency and backlogs at the
agency.
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\3\ Pub. L. No. 107-273, Sec. Sec. 13101-13104.
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Additionally, given that the USPTO is completely funded
through the imposition of user fees, the ongoing appropriations
practice of diverting a percentage of fee revenue to non-USPTO
use is of great concern to Congress, inventors, and trademark
filers. Representatives of the ``user'' community have stated
that their members are not opposed to reasonable fee increases
as reflected in Pub. L. No. 108-447, but are concerned that the
unused agency revenue will be diverted to non-agency use.
Section 5 of H.R. 2791 adresses this ``anti-diversion''
sentiment by creating a ``refund'' program to eliminate the
potential incentive for diversion.
Background and Need for the Legislation
REVISED 21ST CENTURY STRATEGIC PLAN
In General. The ``21st Century Department of Justice
Appropriations Authorization Act'' required the USPTO to
develop a 5-year strategic plan to address problems regarding
quality, pendency, and delays in implementing a fully
electronic patent environment at the agency. Congress
specifically directed the USPTO to identify corrective measures
other than hiring more examiners, and to implement electronic
processing for patents by FY 2004.
Since June 2002, the USPTO revised its plan in response to
suggestions from Congress and the user community.\4\ In its now
revised Plan, the agency has addressed these issues and
identified goals and initiatives that are largely supported by
the major trade associations that represent patent and
trademark filers.\5\ While the agency has demonstrated a
commitment to embrace top-to-bottom reform consistent with
congressional mandates, it is equally clear that USPTO requires
additional revenue to implement these changes. As former USPTO
Director James Rogan noted:
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\4\ See The U.S. Patent and Trademark Office: Fee Schedule
Adjustment and Agency Reform: Oversight Hearing Before the Subcomm. on
Courts, the Internet, and Intellectual Property of the House Comm. on
the Judiciary, 107th Cong., 2nd Sess., Final Print Serial No. 92
(2002). A transcript of this hearing may also be accessed at the
Committee website: www.house.gov/judiciary/courts.
\5\ Letter from Carl B. Feldbaum, President, Biotechnology Industry
Organization, to the Honorable Mitchell E. Daniels, Jr., Director,
Office of Management and Budget (November 25, 2002); joint letter from
Ronald E. Myrick, President, American Intellectual Property Law
Association; John K. Williamson, President, Intellectual Property
Owners Association; and Nils Victor Montan, President, International
Trademark Association, to Director Daniels (November 22, 2002); letter
from Mark T. Banner, Chair, and Charles P. Baker, Immediate Past Chair,
Section of Intellectual Property Law, the American Bar Association, to
Director Daniels (November 22, 2002). It should be noted, however, that
the signatories qualified their support of the fee increases and other
changes upon the Administration ``effectively [addressing] the issue of
diversion'' (Myrick, Williamson, Montan, Banner, and Baker) or
``[taking] steps to stop diversion'' (Feldbaum).
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In a related matter, the Honorable Donald Evans, Secretary of
Commerce, testified at a March 6, 2003, hearing before the Subcommittee
on Commerce, Justice, State and Judiciary of the House Committee on
Appropriations. According to a USPTO news release dated March 7, 2003,
the Secretary stated that ``the Department is working to eliminate the
practice of using [agency] revenues for unrelated Federal programs.''
[Implementation of the revised Strategic Plan] hinges
on passage of [a new fee schedule that will generate
greater revenue]. Without the ability to hire and train
new examiners and also improve infrastructure, our
hands will be tied. . . . The consequences of failing
to enact the fee bill and giving the [USPTO] access to
those fees will mean quality and pendency will continue
to significantly suffer. We will be unable to hire
needed examiners, and over 140,000 patents will not be
issued over the next 5 years. The inventory of
unexamined patent applications will skyrocket to a
backlog of over one-million applications by 2008--more
than double the current amount--and pendency (as
measured from the time of filing) will jump to over 40
months average in the next few years. This would
represent the highest pendency rate in decades.\6\
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\6\ H.R. 1561, the ``Patent and Trademark Fee Modernization Act of
2003'' hearing before the Subcomm. on Courts, the Internet, and
Intellectual Property of the House Comm. on the Judiciary, 108th Cong.,
1st Sess. (written testimony of the Honorable James E. Rogan, Under
Secretary of Commerce for Intellectual Property and Director of the
USPTO).
In addition to these basic fees, the revised Plan contains
other recommendations that would create new or higher fees
based on the complexity of a submitted application. For
example, applications with drawings and specifications that
exceed 100 pages are subject to a $250 fee for each additional
block of 50 pages, while applications that feature four or more
independent claims or more than 20 total claims would be
subject to higher fees. These new or higher fees reflect the
administrative reality that larger and more complex
applications are more time-consuming for the agency to process.
Other Highlights. The full text of the original Plan
exceeds 300 pages. In a 17-page summary, which may be accessed
at the USPTO website (www.uspto.gov), the agency indicates,
among other things, that it is pursuing or wishes to pursue the
following high-profile changes as part of the revised version:
--LOut-sourcing of search function. The functions of
searching and examination would be split, which would
include ``out-sourcing'' some search duties to private
firms. (Pursuant to Sec. 2(c) of H.R. 2791, however,
the practice of out-sourcing the search function must
initially be limited to a pilot project);
--LCertification of USPTO employees. USPTO workers
would be subject to a more extensive employee review
and certification process;
--LBilateral and Multilateral Trade Agreements. More
trade agreements would be negotiated to ``facilitate
global convergence of patent standards;'' and
--LRamping-up of paperless operations. Changes would be
made to expedite the comprehensive implementation of an
electronic communications system.
The Committee on the Judiciary will continue its oversight
of USPTO operations throughout the 109th Congress. This will
include conducting any necessary oversight hearings and
responding to appropriate legislative requests that will assist
the agency in its efforts to reduce pendency and backlogs and
to improve patent and trademark quality consistent with the
directives set forth in Sec. Sec. 13101-13104 of the ``21st
Century Department of Justice Appropriations Authorization
Act.''
USPTO FUNDING DIVERSION HISTORY
Amid funding scarcity in 1982, Congress dramatically
increased fees associated with obtaining and maintaining
trademark registrations and patents to recover the costs of
processing patent and trademark applications. By 1990,
approximately 80 percent of USPTO operations were funded
through user fees. In an effort to reduce public expenditures
and the national debt, Congress enacted the Omnibus Budget
Reconciliation Act (OBRA), which, among other things,
transformed the USPTO into a wholly fee-supported agency. To
compensate for the remaining taxpayer revenue that would be
withdrawn, OBRA imposed a massive statutory patent fee increase
(referred to as a ``surcharge'') on American inventors for a 5-
year period.
As part of this budget agreement, a scoring system was
adopted to ensure that savings would be accurately tracked
through the appropriations process. To this end, Congress
mandated that the income from the surcharge be deposited into a
specially-created surcharge fund in the Treasury. Unlike other
fees collected by USPTO, those in the surcharge fund counted
against the expenditure cap of the appropriators. This meant
that every dollar not spent from the surcharge fund would
enable the appropriators to spend another taxpayer dollar to
underwrite a different (non-USPTO) initiative.
Initially, Congress appropriated the total amount deposited
in the fund to USPTO. After only 1 year, however, Congress
began to withhold a portion of the amount deposited in the
surcharge fund annually so that it could funnel additional
money to other programs. Compounding the problem, Congress
extended the OBRA surcharge provisions for an additional 3
years to take further advantage of the arrangement and later
increased the statutory fees to compensate for the lapse of the
surcharge after it expired at the end of fiscal year 1998.
By denying USPTO the ability to spend fee revenue in the
same fiscal year in which it collects the revenue, the
appropriators may spend an equivalent amount on some other
program without exceeding their budget caps. Although the money
is technically available to USPTO the following year, it has
already been spent. The legislative response to this funding
problem has been to increase the amount of fee collections
unavailable to USPTO in each succeeding fiscal year. As a
result, more than $700 million has been diverted from USPTO
over the past 11 fiscal years.
USPTO FUNDING DIVERSION: PREVIOUS JUDICIARY COMMITTEE ACTION
Previous attempts by the House Judiciary Committee's
Subcommittee on Courts, the Internet, and Intellectual Property
to end fee diversion have been met with little success. During
the 106th Congress, Rep. Coble offered an amendment to the
House version of the Commerce-Justice-State appropriations
vehicle \7\ to restore nearly $134 million in USPTO funding for
Fiscal Year 2001 by reducing the budgets for three other
programs in the bill by an identical amount. Despite a 2\1/2\-
hour debate on the amendment, it ultimately failed by a
substantial margin (145-223).
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\7\ H.R. 4690, 106th Cong., 2nd Sess. (2000).
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In the succeeding Congress, the Subcommittee reviewed, as
part of a USPTO oversight hearing, measures that would have:
(1) cut the appropriators out of the USPTO funding process
directly; \8\ and (2) created a new point of order against any
House bill to deny the agency full funding.\9\ Due to
indications that these measures did not have the general
support of Congress, no further action was taken.
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\8\ H.R. 740, 107th Cong., 1st Sess. (2001) (Rep. Coble, sponsor).
Note that H.R. 4034, the precursor bill to H.R. 740, was reported by
Committee on the Judiciary and placed on the Union Calendar during the
106th Congress. Its consideration was ultimately denied as a result of
opposition from the appropriators.
\9\ H. Res. 110, 107th Cong., 1st Sess. (2001) (Representative
Howard Berman, sponsor).
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During the 108th Congress, the House passed H.R. 1561,
which adjusted the old (pre-December 8, 2004) fee schedule by
raising fees an average of 15 percent. The bill also created a
mechanism to remit unspent fee revenue to USPTO users, a pilot
program to gauge the efficacy of out-sourcing the examiner
``search'' function, and miscellaneous protections for small
businesses and ``independent inventors.'' As noted, H.R. 2791
is based on the contents of H.R. 1561.
ADMINISTRATION AND COMMITTEE BUDGET SUBMISSIONS
FOR FISCAL YEAR 2006
The Committee proposes to authorize the USPTO to collect
and spend $1,703,300,000, subject to appropriation acts, from
fee collections in FY 2006 to cover operating expenses,
including the payment of retirement benefits for employees.
This amount is derived from user fees paid by patent and
trademark applicants or from fees for other services provided
by USPTO. It reflects a conservative estimate of a minimum 5
percent increase in patent application filings above the prior
year. No taxpayer funds are expected or recommended.
The Administration has requested $1,703,300,000 for USPTO
operations in FY 2006, derived from offsetting collections
assessed and collected pursuant to 15 U.S.C. Sec. 1113
(trademarks) and 35 U.S.C. Sec. Sec. 41 and 376 (patents).
In its submission, Judiciary Committee members emphasized
that they strongly support the full-funding of USPTO and the
elimination of any incentive to use agency revenues for non-
USPTO purposes. All revenue generated under the new fee
schedule, adopted as part of the Consolidated Appropriations
Act of 2005, is necessary to implement the USPTO 21st Century
Strategic Business Plan, including proposed quality
initiatives, e-government initiatives, and enhanced patent
processing.
The Committee on the Judiciary has pledged to work with the
House Leadership and the Committee on Appropriations to end the
practice of user-fee diversion without compromising the ability
of the Committee on Appropriations to conduct oversight of
USPTO activities.
The relevant appropriations vehicle funding USPTO in the
109th Congress is H.R. 2862, which the House passed on June 16,
2005. The Senate passed its own version on September 15, 2005,
under the same bill number. Both drafts include ``full''
funding for USPTO in Fiscal Year 2006, consistent with the
House Judiciary request of $1,703,300,000.
Because of other differences between the two drafts, a
House-Senate conference was convened. It produced Conference
Report 109-272 that includes $1,683,086,000 for agency
operations in Fiscal Year 2006. The House approved this measure
on November 9, 2005, by a rollcall vote of 379-19. The Senate
approved this measure on November 16, 2005 by a vote of 94-5
and President Bush signed it into law on November 22, 2005.\10\
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\10\ Pub. L. No. 109-108.
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Hearings
The House Committee on the Judiciary held no hearings on
H.R. 2791.
Committee Consideration
On June 28, 2005, the Subcommittee on Courts, the Internet,
and Intellectual Property met in open session and ordered
favorably reported the bill H.R. 2791, by voice vote, a quorum
being present. On November 9, 2005, the Committee met in open
session and ordered favorably reported the bill H.R. 2791, by
voice vote, a quorum being present.
Vote of the Committee
In compliance with clause 3(b) of Rule XIII of the Rules of
the House of Representatives, the Committee notes that there
were no recorded votes during the Committee consideration of
H.R. 2791.
Committee Oversight Findings
In compliance with clause 3(c)(1) of Rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of Rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of Rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of Rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 2791, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under the section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, December 5, 2005.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2791, the United
States Patent and Trademark Fee Modernization Act of 2005.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Melissa Z.
Petersen (for Federal costs), who can be reached at 226-2860,
Sarah Puro (for the state and local impact), who can be reached
at 225-3220, and Paige Piper/Bach (for the private-sector
impact), who can be reached at 226-2940.
Sincerely,
Douglas Holtz-Eakin.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 2791--United States Patent and Trademark Fee Modernization Act of
2005.
SUMMARY
H.R. 2791 would permanently increase the fees that the
Patent and Trademark Office (PTO) collects for activities
related to the processing and filing of patent and trademark
applications. Under current law, a temporary fee increase
expires at the end of fiscal year 2006. In addition, H.R. 2791
would require the Director of the PTO to refund fees paid by
those seeking services from the PTO that are in excess (if any)
of the amounts appropriated for the PTO each year. Those fees
are recorded in the budget as offsetting collections credited
against discretionary appropriations.
Under the bill, CBO estimates that PTO fees would increase
by 15 percent a year starting in fiscal year 2007 compared to
fees that will be collected under current law. The bill would
not affect the fee rates assessed in fiscal year 2006. Assuming
appropriation of all fees collected by the PTO, CBO estimates
that implementing H.R. 2791 would decrease PTO's net spending
subject to appropriation by about $43 million in 2007 and $54
million over the 2007-2010 period due to the lag in time
between when PTO fees are collected and spent. CBO estimates
that enacting the bill would increase direct spending by $52
million in 2007 for refunding PTO fees to those who will pay
fees in 2006 in excess of the amount appropriated. Enacting the
bill would not affect revenues.
H.R. 2791 would impose both intergovernmental and private-
sector mandates, as defined in the Unfunded Mandates Reform Act
(UMRA), on patent and trademark applicants. CBO estimates that
the costs of the intergovernmental mandates would not exceed
the threshold ($62 million in 2005, adjusted annually for
inflation) established in that act. CBO cannot determine
whether the costs of the mandate would exceed the annual
threshold for private-sector entities established in UMRA ($123
million in 2005, adjusted annually for inflation), because UMRA
does not specify how CBO should measure the costs of extending
an existing mandate. Depending on how they are measured, the
costs to the private sector could exceed the threshold.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 2791 is shown in the
following table. The costs of this legislation fall within
budget function 370 (commerce and housing credit).
By Fiscal Year, in Millions of Dollars
------------------------------------------------------------------------
2006 2007 2008 2009 2010
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CHANGES IN SPENDING SUBJECT TO APPROPRIATION\1\
Increase in PTO Fees Under H.R. 2791
Estimated Authorization Level 0 -240 -255 -270 -285
Estimated Outlays 0 -240 -255 -270 -285
Increase in PTO Spending Under H.R.
2791
Estimated Authorization Level 0 240 255 270 285
Estimated Outlays 0 197 250 267 282
Net Change in PTO Spending Under H.R.
2791
Estimated Authorization Level 0 0 0 0 0
Estimated Outlays 0 -43 -5 -3 -3
CHANGES IN DIRECT SPENDING
Refunded PTO Fees
Estimated Budget Authority 0 52 0 0 0
Estimated Outlays 0 52 0 0 0
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1. For 2006, the PTO received a gross appropriation of $1,683 million,
and CBO estimates that amount will be offset by $1,735 million in fee
collections.
BASIS OF ESTIMATE
Under current law, the PTO is authorized to collect fees
from the public for specific activities related to processing
applications for patents and trademarks. The agency assesses
and collects fees for a number of different activities, and the
rate for each is set in law. The collection and spending of
those fees are subject to provisions in annual appropriation
acts, and the fees are recorded in the budget as offsets to the
discretionary spending of the PTO. CBO estimates that the
agency will collect a total of about $1,735 million in fees in
2006, which will offset $1,683 million of appropriated funding
for that year, resulting in an estimated net appropriation of -
$52 million.
H.R. 2791 would change the fees that the PTO charges for
activities relating to processing applications for patents and
trademarks. The bill also would require that any fees collected
by the PTO but not appropriated for PTO operating expenses be
refunded (on a proportional basis) to those who paid the fees.
Assuming that all amounts collected by the agency are
appropriated for its use, CBO estimates that the bill would
decrease spending subject to appropriation by $43 million in
2007 and $54 million over the 2007-2010 period due to the lag
in the time between when PTO fees are collected and spent. CBO
estimates that enacting H.R. 2791 would increase direct
spending by $52 million in 2007 for refunding PTO fees that
will be collected during 2006. Enacting the bill would not
affect revenues.
Spending Subject to Appropriation
Beginning in 2005, the fee rates that the PTO charges for
activities related to patent and trademark applications were
temporarily increased. Under current law, those increased fee
rates will expire at the end of 2006. H.R. 2791 would
permanently extend the fee increase. For example, under current
law, the fee the PTO charges for issuing an original patent
(other than design or plant patents) is $1,400 in 2006 but will
decrease to $1,300 starting in 2007. Under H.R. 2791, that rate
would remain at $1,400. Rates are set in law for several dozen
categories of fees that support funding of the PTO, but the
collection of fees is contingent on appropriation action.
Based on the historical demand for PTO services, CBO
estimates that the amount collected under the current PTO fee
structure will decrease from $1,735 million in 2006 to $1,600
million in 2007 because of the expiring fee rates. After
accounting for the higher fee rates under H.R. 2791, CBO
estimates that PTO fees would increase by about 15 percent
starting in 2007 compared with the fee rates that will apply
under current law. Relative to the collections that would occur
under current law, CBO estimates that implementing the bill
would increase fees collected by the PTO by $240 million in
2007 and about $1 billion over the 2007-2010 period.
CBO estimates that the PTO's collections under current law,
together with the additional collections resulting from the
increased fee rates under the bill, would be $1,840 million in
2007 and would total $7,925 million over the 2007-2010 period.
By comparison, the agency collected $1,504 million in 2005, and
CBO estimates that it will collect $1,735 million in 2006.
Net discretionary spending for the PTO in 2007 and later
years depends on future appropriation acts. Future
appropriation acts could provide the PTO with more or less
spending authority than the agency receives from fee
collections. If H.R. 2791 is enacted, however, future
appropriation acts that provide less funding for the PTO than
the agency's actual fee collections would result in an
expenditure to refund the fees not appropriated to PTO. This
expenditure would occur in the subsequent fiscal year and would
be considered an advance appropriation.
Direct Spending
H.R. 2791 would direct the PTO to refund a proportionate
share of the fees that are not appropriated for the PTO's
operating expenses to those who paid the fees in each fiscal
year. In general, patent and trademark fee collections cover
the PTO's operating expenses. The 2006 appropriation act for
the PTO, however, places a limit on the amount of fee
collections that the agency can spend. Of the $1,735 million in
PTO fees that CBO estimates will be collected in 2006, the act
allows the PTO to spend about $1,683 million, resulting in an
estimated net appropriation of -$52 million for that year.
Under the bill, the refund would apply to fee collections
in excess of appropriated spending for each year starting with
fiscal year 2005. For 2005, actual fee collections almost fully
offset appropriated spending. (Actual collections were about
$1,504 million and the 2005 appropriation act provided $1,509
million). For that reason, CBO estimates that enacting H.R.
2791 would not result in a refund for 2005.
For 2006, CBO estimates that PTO fee collections will
exceed funding provided in the 2006 appropriation act by $52
million. Under H.R. 2791, the PTO would be required to refund
the excess fee collections to those who paid fees during 2006.
CBO estimates that enacting H.R. 2791 would increase direct
spending in 2007 by $52 million for refunding the fees.
INTERGOVERNMENTAL AND PRIVATE SECTOR IMPACT
H.R. 2791 would impose both intergovernmental and private-
sector mandates, as defined in UMRA, on patent and trademark
applicants. CBO estimates that the costs of the
intergovernmental mandates would not exceed the threshold ($62
million in 2005, adjusted annually for inflation) established
in that act. CBO cannot determine whether the costs of the
mandate would exceed the annual threshold for private-sector
entities established in UMRA ($123 million in 2005, adjusted
annually for inflation) because UMRA does not specify how CBO
should measure the costs of extending an existing mandate.
Depending on how they are measured, the costs to the private
sector could exceed the threshold.
The requirement to pay patent and trademark fees is a
mandate because the Federal Government controls the trademark
and patent systems, and no reasonable alternatives to the
systems exist. Under current law, temporary fee increases will
expire at the end of fiscal year 2006. The bill would
permanently increase the fees that the Patent and Trademark
Office would collect starting in fiscal year 2007.
In the case of a mandate that has not yet expired, UMRA
does not specify whether CBO should measure the cost of the
extension relative to the mandate's current costs or assume
that the mandate will expire and that it must measure the costs
of the mandate's extension as if the requirement were new.
Measured against the costs that would be incurred if current
law remains in place and the PTO fees decline, the total costs
of extending this mandate would be $240 million in 2007 and
rise to $285 million in 2010, with 1 percent to 2 percent of
those costs accruing to intergovernmental entities. Measured
that way, the cost of the mandate would exceed the annual
threshold for the private sector as defined in UMRA. By
contrast, measured against the fees in place for fiscal year
2006, the mandate would impose no additional costs because the
fees under the bill would not differ from those currently in
effect. Measured either way, the costs to intergovernmental
entities would be small.
In addition, if fee collections for a fiscal year exceed
the amount appropriated to the PTO for that year, the bill
would require the Director of the PTO to make payments to
entities who paid PTO fees during that fiscal year. For fiscal
year 2006, based on the appropriation of $1,683 million for the
PTO and the CBO estimate of $1,735 million for fees collected,
CBO estimates that the bill would provide for refund payments
of $52 million, with most of those payments going to the
private sector. For other years, the total amount of payments
refunded, if any, under this provision would depend on the
level of future appropriations.
ESTIMATE PREPARED BY:
Federal Costs: Melissa Z. Petersen (226-2860)
Impact on State, Local, and Tribal Governments: Sarah Puro
(225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-2940)
ESTIMATE APPROVED BY:
Peter H. Fontaine
Deputy Assistant Director for Budget Analysis
Performance Goals and Objectives
H.R. 2791 will allow the USPTO to reduce application
backlogs and pendency without compromising patent quality. This
general goal is consistent with the agency's ``Strategic Plan''
and related Congressional directives since the 107th Congress
regarding agency operations. The Committee will monitor
progress by the USPTO in this regard, especially concerning the
hiring of new examiners and retention of experienced examiners.
The Committee also believes that enactment of H.R. 2791 will
help to spur greater use of electronic filing by applicants.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, Sec. 8 of the Constitution.
Section-by-Section Analysis and Discussion
Sec. 1. Short Title. Section 1 sets forth the short title
of the bill, the ``United States Patent and Trademark Office
Fee Modernization Act of 2005.''
Sec. 2. Fees for Patent Services. Section 2 prescribes the
dollar amounts for certain corresponding ``general'' patent and
patent application fees set forth in 35 U.S.C. Sec. 41(a) and
(b). Section 2 also provides for the establishment of a search
fee under 35 U.S.C. Sec. 41(d). Section 41 now specifies a
search fee (subsection (d)(1)) and an examination fee
(subsection (a)(3)) that are separate from the filing fee
(subsection (a)(1)).
Section 41(a)(1) sets out the filing fees for applications
filed under Sec. 111 of the patent code (original or reissue)
and the basic national fee for Patent Cooperation Treaty (PCT)
international applications (filed under the treaty defined in
Sec. 351(a) of the patent code) entering the national stage
under Sec. 371 of the patent code. Under Sec. 41(a)(1), the
filing fees for applications filed under Sec. 111 are as
follows: (1) the filing fee for an application for an original
patent, except for design, plant, or provisional applications,
is $300; (2) the filing fee for an application for an original
plant patent is $200; (3) the filing fee for an application for
an original design patent is $200; (4) the filing fee for a
provisional application is $200; and (5) the filing fee for an
application for the reissue of a patent is $300. Under
Sec. 41(a)(1), the basic national fee for any PCT international
application entering the national stage under Sec. 371 is $300.
Under Sec. 41(a)(1)(G), there is an additional fee for any
application whose specification and drawings, excluding any
sequence listing or computer program listing filed in an
electronic medium as prescribed by the Director, exceeds 100
sheets of paper (or equivalent as prescribed by the Director if
filed in an electronic medium). The additional fee under
Sec. 41(a)(1)(G) is $250 for each additional 50 sheets of paper
(or equivalent as prescribed by the Director if filed in an
electronic medium, excluding any sequence listing or computer
program listing) or fraction thereof. Sequence listings or
computer program listings filed in an electronic medium as
prescribed by the Director are excluded to encourage applicants
to file any sequence listing or computer program listing in the
appropriate electronic medium.
Section 41(a)(2) sets out the excess claims fees for each
independent claim in excess of 3 and for each claim (whether
dependent or independent) in excess of 20, and the fee for an
application containing a multiple dependent claim. The excess
claims fees required by Sec. 41(a)(2) are due at the time of
presentation of the claim for which payment is required
(whether on filing or at a later time) in the application or
reexamination proceeding.
Under Sec. 41(a)(2)(A), the excess claims fee for each
claim in independent form in excess of 3 is $200. Under
Sec. 41(a)(2)(B), the excess claims fee for each claim (whether
dependent or independent) in excess of 20 is $50. Under
Sec. 41(a)(2)(C), the fee for each application containing a
multiple dependent claim is $360.
Section 41(a)(3) sets out the examination fees for all
applications (except for provisional applications), including
PCT international applications entering the national stage
under Sec. 371. The examination fee for each application for an
original patent, except for a design, plant, or international
application, is $200. The examination fee for each original
design patent is $130. The examination fee for each original
plant patent is $160. The examination fee for the national
stage of an international application is $200. And, the
examination fee for each reissue application is $600. The
examination fees for patent applications are set at amounts
that do not recover the USPTO's costs of examining patent
applications. The USPTO's costs of examining applications are
subsidized by issue and maintenance fees under
Sec. Sec. 41(a)(4) and 41(b)).
Under Sec. 41(a)(3), the provisions of Sec. 111(a)(3) for
payment of the fee for filing the application apply to the
payment of the examination fee specified in Sec. 41(a)(3) with
respect to an application filed under Sec. 111(a), and the
provisions of Sec. 371(d) for the payment of the national fee
apply to the payment of the examination fee specified in
Sec. 41(a)(3) with respect to a PCT international application
entering the national stage under Sec. 371. Thus, the
examination fee is due on filing for an application filed under
Sec. 111(a) or on commencement of the national stage for a PCT
international application. The examination fee, however, may be
paid at a later time if paid within such period and under such
conditions (including payment of a surcharge) as may be
prescribed by the Director.
Section 41(a)(3) provides that the Director may prescribe
regulations to provide a refund of any part of the examination
fee specified in Sec. 41(a)(3) for any applicant who files a
written declaration of express abandonment as prescribed by the
Director before an examination has been made of the application
under Sec. 131. Under the former patent fee structure, an
applicant who after paying the filing fee had determined that
it was not worthwhile to proceed with the application had no
motivation to terminate the application process prior to
receiving a first Office action by the USPTO because the entire
filing fee was a sunk cost under that fee structure. Under the
revised patent fee structure, such an applicant will be
motivated to terminate the application process before an
examination of the application under Sec. 131 because the
applicant may obtain a refund of the examination fee under
Sec. 41(a)(3) (as well as the search fee under Sec. 41(d)(1)),
less any portion retained by the USPTO, if the applicant
terminates the application process by filing a written
declaration of express abandonment as prescribed by the
Director before an examination (including any search) has been
made of the application under Sec. 131. This provision
authorizes the USPTO to fix (based upon when an application is
expected to be taken up for search and examination) a time by
which a written declaration of express abandonment must be
filed for an application to obtain such a refund, and develop
procedures for informing applicants of when this time will
occur.
The revised patent fee structure will permit the applicant
to use the period between the filing date of an application and
when the application is about to be taken up for action by the
examiner to determine whether the invention claimed in the
application has sufficient commercial viability to make it
worthwhile to proceed with search and examination. The
applicant may decide to terminate the application process
because the invention does not have sufficient commercial
viability by filing a written declaration of express
abandonment as prescribed by the Director before an examination
(including any search) has been made of the application under
Sec. 131 (to obtain any refund provided for by the regulations
prescribed by the Director). This would abandon the application
and obviate the need for the USPTO to proceed with the
examination of the patent application.
Section 41(a)(4) sets out the fees for issuing a patent.
Under Sec. 41(a)(4), the fee for issuing each original patent,
except for design or plant patents, is $1,400; the fee for
issuing each original design patent is $800; the fee for
issuing each original plant patent is $1,100; and the fee for
issuing each reissue patent is $1,400.
Section 41(a)(5) sets out the fee due upon filing a
disclaimer under Sec. 253 of the patent code in a patent or a
patent application, which is $130.
Section 41(a)(6) sets out the appeal fees. Under
Sec. 41(a)(6), the fee due upon filing an appeal from the
examiner to the Board of Patent Appeals and Interferences is
$500, the fee due upon filing a brief in support of the appeal
is an additional $500, and the fee due for requesting an oral
hearing in the appeal before the Board of Patent Appeals and
Interferences is an additional $1,000.
Section 41(a)(7) sets out the fees due upon filing a
petition to revive an abandoned application or to accept a
delayed response by the patent owner in a reexamination
proceeding, which is $1,500, unless the petition is filed under
Sec. 133 or Sec. 151 of the patent code, in which case the fee
is $500.
Section 41(a)(8) sets out the fees due upon filing a
petition for 1-month extensions of time. Under Sec. 41(a)(8),
the fee for filing the first 1-month petition is $120; the fee
for filing the second 1-month petition is $330; and the fee for
filing the third or each subsequent 1-month petition is $570.
Section 41(b) sets out the fee for maintaining in force a
patent based on applications filed on or after December 12,
1980. Under Sec. 41(b), the maintenance fee due at 3 years and
6 months after grant is $900; the maintenance fee due 7 years
and 6 months after grant is $2,300; and the maintenance fee due
11 years and 6 months after grant is $3,800. Section 41(b) also
provides that unless payment of the applicable maintenance fee
is received in the USPTO on or before the date on which the fee
is due or within a grace period of 6 months thereafter, the
patent will expire as of the end of such grace period, that the
Director may require the payment of a surcharge as a condition
of accepting within such 6-month grace period the payment of an
applicable maintenance fee, and that no fee may be established
for maintaining a design or plant patent in force.
Section 41(d)(1) provides that the Director will establish
fees for requesting a search of an application for a patent
(except for provisional applications), including PCT
international applications entering the national stage under
Sec. 371. The search fees established under Sec. 41(d)(1) are
to be set so as to recover an amount not to exceed the
estimated average cost to the USPTO of searching applications
for patent either by acquiring a search report from a qualified
search authority, or by causing a search by Office personnel to
be made, of each application for a patent. The USPTO is
expected to test the concept of exploitation of search reports
obtained from qualified search contractors during examination
to determine whether such a procedure is a feasible means of
addressing the USPTO increasing patent workload. It is expected
that exploitation of search reports obtained from qualified
search contractors during examination will be tested and
piloted in a step-by-step process to ensure proof of concept
prior to any full implementation of such a practice.
Section 41(d)(1)(A) provides that for purposes of
determining the fees to be established under Sec. 41(d)(1), the
cost to the USPTO of causing a search to be made of an
application by USPTO personnel is deemed to be the transitional
search fee set forth in section 5 of this Act: (1) $500 for
each application for an original patent, except for a design,
plant, or international application; (2) $100 for each
application for an original design patent; (3) $300 for each
application for an original plant patent; (4) $500 for each
national stage of an international application; and (4) $500
for each application for the reissue of a patent. This
provision is designed to simplify the process of determining
the search fee under Sec. 41(d)(1).
Under Sec. 41(d)(1)(B), the provisions of Sec. 111(a)(3)
for payment of the fee for filing the application apply to the
payment of the search fee specified in Sec. 41(d)(1) with
respect to an application filed under Sec. 111(a), and the
provisions of Sec. 371(d) for the payment of the national fee
apply to the payment of the search fee specified in
Sec. 41(d)(1) with respect to a PCT international application
entering the national stage under Sec. 371.
Under Sec. 41(d)(1)(C), the Director may, by regulation,
provide for a refund of any part of the search fee specified in
Sec. 41(d)(1) for any applicant who files a written declaration
of express abandonment as prescribed by the Director before an
examination has been made of the application under Sec. 131, as
well as for any applicant who provides a search report that
meets the conditions prescribed by the Director (as discussed
above).
Finally, Sec. 41(d)(1)(E) addresses the ability of the
Director to ``out-source'' the performance of the search
function to commercial entities. Empowering the USPTO Director
to initiate a program to out-source the search function is part
of a larger effort to make USPTO a modern, productive, and
efficient Federal agency. The agency, Congress, and the user
groups whose members pay for USPTO services all want to improve
USPTO operations. The Committee believes that the agency would
not condone the wholesale use of out-sourcing if the practice
proved detrimental to its operations. Congress--and the
Committee in particular--would never abandon its oversight
responsibilities and permit such an occurrence. The user
groups, which endorse the Strategic Plan and are not opposed to
pilot-tested out-sourcing, will also offer critical commentary
when necessary.
While permitting the Director to initiate limited out-
sourcing activity, Sec. 41(d)(1)(E) places exacting constraints
on its use. It permits the Director to conduct a pilot program
within an 18-month period to determine if commercial entities
can perform the search function by producing accurate results
that meet or exceed current USPTO standards. At the conclusion
of the program, the Director must then submit a report on the
results to the Patent Public Advisory Committee, an independent
entity that evaluates USPTO operations on a biannual basis, as
well as to the Congress. The report must address a number of
detailed criteria, such as methodology, cost, and productivity,
for evaluation by the Advisory Committee and Congress. The
Advisory Committee must then submit its own report to the
Director and Congress as to the merits of out-sourcing relative
to USPTO standards. Once the Advisory Committee report is
completed, Congress will have an entire year if it desires to
limit or prohibit the wholesale out-sourcing of searches.
Sec. 3. Adjustment of Trademark Fees. Section 3 provides
that the fee under Sec. 31(a) of the Trademark Act of 1946 (15
U.S.C. Sec. 1113(a)) for filing an electronic application for
the registration of a trademark shall be $325. If the trademark
application filing is done on paper the fee shall be $375.
Section 3 also provides that the Director may reduce the $325
fee for filing an application for the registration of a
trademark in an electronic form prescribed by the Director to
$275 for any applicant who also prosecutes the application
through electronic means under such conditions as may be
prescribed by the Director. Section 3 also provides that
beginning in fiscal year 2004, the provisions of the second and
third sentence of Sec. 31(a) of the Trademark Act of 1946 shall
apply to the fees for filing an application for the
registration of a trademark established under this section.
Thus, the fees for filing an application for the registration
of a trademark established under section 3 may be adjusted once
each year (beginning on October 1, 2003) to reflect, in the
aggregate, any fluctuations occurring during the preceding
twelve months in the Consumer Price Index, as determined by the
Secretary of Labor.
Sec. 4. Correction of Erroneous Naming of Officer. Section
4 corrects a clerical error in the Intellectual Property and
High Technology Technical Amendments Act of 2002 (Title III,
Subtitle B, of Public Law 107-273 (116 Stat. 1758)).
Specifically, section 4 amends Sec. 13203 of Public Law 107-273
to make the Deputy Director (and not the ``Deputy
Commissioner'') of the USPTO a member of the Board of Patent
Appeals and Interferences and the Trademark Trial and Appeal
Board, as was the intended result of Sec. 13203(a) of Public
Law 107-273 (see H.R. Conf. Rep. No. 107-685, at 220 (2002)).
Sec. 5. Patent and Trademark Office Funding. Section 5
creates a ``refund'' program to eliminate the potential
incentive for diverting USPTO revenue to non-USPTO programs.
Briefly, if fee collections in a given fiscal year exceed the
amount appropriated to the agency, the excess or overage shall
be deposited in a USPTO ``Reserve Fund.'' At the end of the
fiscal year the Director determines if there are sufficient
funds to make payments to persons who paid fees during that
year. The Director is empowered to determine which recipients
qualify and in what amounts, except that the payments in
aggregate must equal the amount of revenue in the Reserve Fund
during that fiscal year, less the cost of administering the
program.
Sec. 6. Repeal of Patent and Trademark Fee Provisions of
the Consolidated Appropriations Act, 2005. Section 6 repeals
the provisions of the Consolidated Appropriations Act from the
108th Congress that authorized the new (current) fee schedule,
which will otherwise expire in 18 months. Moreover, the current
provisions do not address out-sourcing, small business
concerns, and the refund mechanism as the text of H.R. 2791
does.
Sec. 7. Effective Date, Applicability, and Transitional
Provision. Consistent with section 6, section 7 of the bill
states that, except as otherwise provided, H.R. 2791 and the
amendments to it shall take effect as of December 8, 2004; in
other words, on the same date that the Consolidated
Appropriations Act of 2005 took effect.
Section 7 also provides that the amendments made by section
2 apply to all patents, whenever granted, and to all patent
applications pending on or filed after the effective date of
this Act. Since applications pending before the effective date
of this Act paid filing or basic national fees based upon
former Sec. 41(a), section 7 also provides that the filing,
examination, and search fees specified in Sec. Sec. 41(a)(1),
41(a)(3), and 41(d)(1), respectively (and the refund provisions
of Sec. Sec. 41(a)(3), and 41(d)(1)), apply only to all
applications for patent filed under Sec. 111(a) on or after the
effective date of this Act, and to all PCT international
applications entering the national stage after compliance with
Sec. 371 on or after the effective date of this Act, except
that the provisional application filing fee specified in
Sec. 41(a)(1)(D) applies to all provisional applications for
which the filing fee specified in Sec. 41 was not paid before
the effective date of this Act. Section 7 also provides that
the excess claims fees specified in Sec. 41(a)(2) (and its
refund provisions) apply only to the extent that the number of
claims in independent form, after giving effect to any
cancellation of claims, is in excess of the number of claims in
independent form for which the excess claims fee specified in
Sec. 41 was paid before the effective date of this Act, and
that the number of total claims (whether independent or
dependent), again after giving effect to any cancellation of
claims, is in excess of the number of total claims (whether
independent or dependent) for which the excess claims fee
specified in Sec. 41 was paid before the effective date of this
Act.
Section 7 also provides that the amendments made by section
3 shall apply to all applications for the registration of a
trademark and classes added to an existing trademark
application filed after the effective date of this Act. The
last sentence of Sec. 31(a) will pertain to the trademark fees
established herein. That sentence states that: ``No fee
established under this section shall take effect until at least
30 days after the notice of the fee has been published in the
Federal Register and in the Official Gazette of the United
States Patent and Trademark Office.''
Section 7 also provides a transitional provision concerning
the search fees established under Sec. 41(d). Section 7
establishes a transitional search fee of: (1) $500 for the
search of each application for an original patent, except for a
design, plant, provisional, or international application; (2)
$160 for the search of each application for an original design
patent; (3) $300 for the search of each application for an
original plant patent; (4) $500 for the national stage of an
international application; and (5) $500 for the search of each
application for the reissue of a patent. Section 7 also
provides that the provisions of Sec. 111(a)(3) for payment of
the fee for filing the application apply to the payment of the
transitional search fees specified in section 7 with respect to
an application filed under Sec. 111(a), and that the provisions
of Sec. 371(d) for payment of the national fee apply to the
payment of the transitional search fees specified in section 6
with respect to a PCT international application. Section 7 also
provides that the Director may, by regulation, provide for a
refund of any part of the transitional search fees specified in
section 7 for any applicant who files a written declaration of
express abandonment as prescribed by the Director before an
examination has been made of the application under Sec. 131 of
the patent code, as well as for any applicant who provides a
search report that meets the conditions prescribed by the
Director (as discussed above).
Sec. 8. Definition. Section 8 clarifies that the term
``Director'' means the Under Secretary of Commerce for
Intellectual Property and Director of the United States Patent
and Trademark Office.
Sec. 9. Clerical Amendment. Section 9 aligns the text of
Subsection (c) of Sec. 311 of title 35, United States Code,
with that of subsection (a) of Sec. 311.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of Rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
TITLE 35, UNITED STATES CODE
* * * * * * *
CHAPTER 4--PATENT FEES; FUNDING; SEARCH SYSTEMS
* * * * * * *
Sec. 41. Patent fees; patent and trademark search systems
[(a) The Director shall charge the following fees:
[(1)(A) On filing each application for an original
patent, except in design or plant cases, $690.
[(B) In addition, on filing or on presentation at
any other time, $78 for each claim in independent form
which is in excess of 3, $18 for each claim (whether
independent or dependent) which is in excess of 20, and
$260 for each application containing a multiple
dependent claim.
[(C) On filing each provisional application for an
original patent, $150.
[(2) For issuing each original or reissue patent,
except in design or plant cases, $1,210.
[(3) In design and plant cases--
[(A) on filing each design application,
$310;
[(B) on filing each plant application,
$480;
[(C) on issuing each design patent, $430;
and
[(D) on issuing each plant patent, $580.
[(4)(A) On filing each application for the reissue
of a patent, $690.
[(B) In addition, on filing or on presentation at
any other time, $78 for each claim in independent form
which is in excess of the number of independent claims
of the original patent, and $18 for each claim (whether
independent or dependent) which is in excess of 20 and
also in excess of the number of claims of the original
patent.
[(5) On filing each disclaimer, $110.
[(6)(A) On filing an appeal from the examiner to
the Board of Patent Appeals and Interferences, $300.
[(B) In addition, on filing a brief in support of
the appeal, $300, and on requesting an oral hearing in
the appeal before the Board of Patent Appeals and
Interferences, $260.
[(7) On filing each petition for the revival of an
unintentionally abandoned application for a patent, for
the unintentionally delayed payment of the fee for
issuing each patent, or for an unintentionally delayed
response by the patent owner in any reexamination
proceeding, $1,210, unless the petition is filed under
section 133 or 151 of this title, in which case the fee
shall be $110.
[(8) For petitions for 1-month extensions of time
to take actions required by the Director in an
application--
[(A) on filing a first petition, $110;
[(B) on filing a second petition, $270; and
[(C) on filing a third petition or
subsequent petition, $490.
[(9) Basic national fee for an international
application where the Patent and Trademark Office was
the International Preliminary Examining Authority and
the International Searching Authority, $670.
[(10) Basic national fee for an international
application where the Patent and Trademark Office was
the International Searching Authority but not the
International Preliminary Examining Authority, $690.
[(11) Basic national fee for an international
application where the Patent and Trademark Office was
neither the International Searching Authority nor the
International Preliminary Examining Authority, $970.
[(12) Basic national fee for an international
application where the international preliminary
examination fee has been paid to the Patent and
Trademark Office, and the international preliminary
examination report states that the provisions of
Article 33(2), (3), and (4) of the Patent Cooperation
Treaty have been satisfied for all claims in the
application entering the national stage, $96.
[(13) For filing or later presentation of each
independent claim in the national stage of an
international application in excess of 3, $78.
[(14) For filing or later presentation of each
claim (whether independent or dependent) in a national
stage of an international application in excess of 20,
$18.
[(15) For each national stage of an international
application containing a multiple dependent claim,
$260.
For the purpose of computing fees, a multiple dependent claim
referred to in section 112 of this title or any claim depending
therefrom shall be considered as separate dependent claims in
accordance with the number of claims to which reference is
made. Errors in payment of the additional fees may be rectified
in accordance with regulations of the Director.
[(b) The Director shall charge the following fees for
maintaining in force all patents based on applications filed on
or after December 12, 1980:
[(1) 3 years and 6 months after grant, $830.
[(2) 7 years and 6 months after grant, $1,900.
[(3) 11 years and 6 months after grant, $2,910.
Unless payment of the applicable maintenance fee is received in
the Patent and Trademark Office on or before the date the fee
is due or within a grace period of 6 months thereafter, the
patent will expire as of the end of such grace period. The
Director may require the payment of a surcharge as a condition
of accepting within such 6-month grace period the payment of an
applicable maintenance fee. No fee may be established for
maintaining a design or plant patent in force.]
(a) General Fees.--The Director shall charge the following
fees:
(1) Filing and basic national fees.--
(A) On filing each application for an
original patent, except for design, plant, or
provisional applications, $300.
(B) On filing each application for an
original design patent, $200.
(C) On filing each application for an
original plant patent, $200.
(D) On filing each provisional application
for an original patent, $200.
(E) On filing each application for the
reissue of a patent, $300.
(F) The basic national fee for each
international application filed under the
treaty defined in section 351(a) of this title
entering the national stage under section 371
of this title, $300.
(G) In addition, excluding any sequence
listing or computer program listing filed in an
electronic medium as prescribed by the
Director, for any application the specification
and drawings of which exceed 100 sheets of
paper (or equivalent as prescribed by the
Director if filed in an electronic medium),
$250 for each additional 50 sheets of paper (or
equivalent as prescribed by the Director if
filed in an electronic medium) or fraction
thereof.
(2) Excess claims fees.--In addition to the fee
specified in paragraph (1)--
(A) on filing or on presentation at any
other time, $200 for each claim in independent
form in excess of 3;
(B) on filing or on presentation at any
other time, $50 for each claim (whether
dependent or independent) in excess of 20; and
(C) for each application containing a
multiple dependent claim, $360.
For the purpose of computing fees under this paragraph,
a multiple dependent claim referred to in section 112
of this title or any claim depending therefrom shall be
considered as separate dependent claims in accordance
with the number of claims to which reference is made.
The Director may by regulation provide for a refund of
any part of the fee specified in this paragraph for any
claim that is canceled before an examination on the
merits, as prescribed by the Director, has been made of
the application under section 131 of this title. Errors
in payment of the additional fees under this paragraph
may be rectified in accordance with regulations
prescribed by the Director.
(3) Examination fees.--
(A) For examination of each application for
an original patent, except for design, plant,
provisional, or international applications,
$200.
(B) For examination of each application for
an original design patent, $130.
(C) For examination of each application for
an original plant patent, $160.
(D) For examination of the national stage
of each international application, $200.
(E) For examination of each application for
the reissue of a patent, $600.
The provisions of section 111(a)(3) of this title
relating to the payment of the fee for filing the
application shall apply to the payment of the fee
specified in this paragraph with respect to an
application filed under section 111(a) of this title.
The provisions of section 371(d) of this title relating
to the payment of the national fee shall apply to the
payment of the fee specified in this paragraph with
respect to an international application. The Director
may by regulation provide for a refund of any part of
the fee specified in this paragraph for any applicant
who files a written declaration of express abandonment
as prescribed by the Director before an examination has
been made of the application under section 131 of this
title, and for any applicant who provides a search
report that meets the conditions prescribed by the
Director.
(4) Issue fees.--
(A) For issuing each original patent,
except for design or plant patents, $1,400.
(B) For issuing each original design
patent, $800.
(C) For issuing each original plant patent,
$1,100.
(D) For issuing each reissue patent,
$1,400.
(5) Disclaimer fee.--On filing each disclaimer,
$130.
(6) Appeal fees.--
(A) On filing an appeal from the examiner
to the Board of Patent Appeals and
Interferences, $500.
(B) In addition, on filing a brief in
support of the appeal, $500, and on requesting
an oral hearing in the appeal before the Board
of Patent Appeals and Interferences, $1,000.
(7) Revival fees.--On filing each petition for the
revival of an unintentionally abandoned application for
a patent, for the unintentionally delayed payment of
the fee for issuing each patent, or for an
unintentionally delayed response by the patent owner in
any reexamination proceeding, $1,500, unless the
petition is filed under section 133 or 151 of this
title, in which case the fee shall be $500.
(8) Extension fees.--For petitions for 1-month
extensions of time to take actions required by the
Director in an application--
(A) on filing a first petition, $120;
(B) on filing a second petition, $330; and
(C) on filing a third or subsequent
petition, $570.
(b) Maintenance Fees.--The Director shall charge the
following fees for maintaining in force all patents based on
applications filed on or after December 12, 1980:
(1) 3 years and 6 months after grant, $900.
(2) 7 years and 6 months after grant, $2,300.
(3) 11 years and 6 months after grant, $3,800.
Unless payment of the applicable maintenance fee is received in
the United States Patent and Trademark Office on or before the
date the fee is due or within a grace period of 6 months
thereafter, the patent will expire as of the end of such grace
period. The Director may require the payment of a surcharge as
a condition of accepting within such 6-month grace period the
payment of an applicable maintenance fee. No fee may be
established for maintaining a design or plant patent in force.
[(c)(1)] (c) Late Payment of Fees.--(1) The Director may
accept the payment of any maintenance fee required by
subsection (b) of this section which is made within twenty-four
months after the six-month grace period if the delay is shown
to the satisfaction of the Director to have been unintentional,
or at any time after the six-month grace period if the delay is
shown to the satisfaction of the Director to have been
unavoidable. The Director may require the payment of a
surcharge as a condition of accepting payment of any
maintenance fee after the six-month grace period. If the
Director accepts payment of a maintenance fee after the six-
month grace period, the patent shall be considered as not
having expired at the end of the grace period.
* * * * * * *
[(d) The Director shall establish fees for all other
processing, services, or materials relating to patents not
specified in this section to recover the estimated average cost
to the Office of such processing, services, or materials,
except that the Director shall charge the following fees for
the following services:
[(1) For recording a document affecting title, $40
per property.
[(2) For each photocopy, $.25 per page.
[(3) For each black and white copy of a patent, $3.
The yearly fee for providing a library specified in section 13
of this title with uncertified printed copies of the
specifications and drawings for all patents in that year shall
be $50.]
(d) Patent Search and Other Fees.--
(1) Patent search fees.--(A) The Director shall
charge a fee for the search of each application for a
patent, except for provisional applications. The
Director shall establish the fees charged under this
paragraph to recover an amount not to exceed the
estimated average cost to the Office of searching
applications for patent either by acquiring a search
report from a qualified search authority, or by causing
a search by Office personnel to be made, of each
application for patent. For the 3-year period beginning
on December 8, 2004, the fee for a search by a
qualified search authority of a patent application
described in clause (i), (iv), or (v) of subparagraph
(B) may not exceed $500, of a patent application
described in clause (ii) of subparagraph (B) may not
exceed $100, and of a patent application described in
clause (iii) of subparagraph (B) may not exceed $300.
The Director may not increase any such fee by more than
20 percent in each of the next 3 1-year periods, and
the Director may not increase any such fee thereafter.
(B) For purposes of determining the fees to be
established under this paragraph, the cost to the
Office of causing a search of an application to be made
by Office personnel shall be deemed to be--
(i) $500 for each application for an
original patent, except for design, plant,
provisional, or international applications;
(ii) $100 for each application for an
original design patent;
(iii) $300 for each application for an
original plant patent;
(iv) $500 for the national stage of each
international application; and
(v) $500 for each application for the
reissue of a patent.
(C) The provisions of section 111(a)(3) of this
title relating to the payment of the fee for filing the
application shall apply to the payment of the fee
specified in this paragraph with respect to an
application filed under section 111(a) of this title.
The provisions of section 371(d) of this title relating
to the payment of the national fee shall apply to the
payment of the fee specified in this paragraph with
respect to an international application.
(D) The Director may by regulation provide for a
refund of any part of the fee specified in this
paragraph for any applicant who files a written
declaration of express abandonment as prescribed by the
Director before an examination has been made of the
application under section 131 of this title, and for
any applicant who provides a search report that meets
the conditions prescribed by the Director.
(E) For purposes of subparagraph (A), a ``qualified
search authority'' may not include a commercial entity
unless--
(i) the Director conducts a pilot program
of limited scope, conducted over a period of
not more than 18 months, which demonstrates
that searches by commercial entities of the
available prior art relating to the subject
matter of inventions claimed in patent
applications--
(I) are accurate; and
(II) meet or exceed the standards
of searches conducted by and used by
the Patent and Trademark Office during
the patent examination process;
(ii) the Director submits a report on the
results of the pilot program to the Congress
and the Patent Public Advisory Committee that
includes--
(I) a description of the scope and
duration of the pilot program;
(II) the identity of each
commercial entity participating in the
pilot program;
(III) an explanation of the
methodology used to evaluate the
accuracy and quality of the search
reports; and
(IV) an assessment of the effects
that the pilot program, as compared to
searches conducted by the Patent and
Trademark Office, had and will have
on--
(aa) patentability
determinations;
(bb) productivity of the
Patent and Trademark Office;
(cc) costs to the Patent
and Trademark Office;
(dd) costs to patent
applicants; and
(ee) other relevant
factors;
(iii) the Patent Public Advisory Committee
reviews and analyzes the Director's report
under clause (ii) and the results of the pilot
program and submits a separate report on its
analysis to the Director and the Congress that
includes--
(I) an independent evaluation of
the effects that the pilot program, as
compared to searches conducted by the
Patent and Trademark Office, had and
will have on the factors set forth in
clause (ii)(IV); and
(II) an analysis of the
reasonableness, appropriateness, and
effectiveness of the methods used in
the pilot program to make the
evaluations required under clause
(ii)(IV); and
(iv) the Congress does not, during the 1-
year period beginning on the date on which the
Patent Public Advisory Committee submits its
report to the Congress under clause (iii),
enact a law prohibiting searches by commercial
entities of the available prior art relating to
the subject matter of inventions claimed in
patent applications.
(F) The Director shall require that any search by a
qualified search authority that is a commercial entity
is conducted in the United States by persons that--
(i) if individuals, are United States
citizens; and
(ii) if business concerns, are organized
under the laws of the United States or any
State and employ United States citizens to
perform the searches.
(G) A search of an application that is the subject
of a secrecy order under section 181 or otherwise
involves classified information may only be conducted
by Office personnel.
(H) A qualified search authority that is a
commercial entity may not conduct a search of a patent
application if the entity has any direct or indirect
financial interest in any patent or in any pending or
imminent application for patent filed or to be filed in
the Patent and Trademark Office.
(2) Other fees.--The Director shall establish fees
for all other processing, services, or materials
relating to patents not specified in this section to
recover the estimated average cost to the Office of
such processing, services, or materials, except that
the Director shall charge the following fees for the
following services:
(A) For recording a document affecting
title, $40 per property.
(B) For each photocopy, $.25 per page.
(C) For each black and white copy of a
patent, $3.
The yearly fee for providing a library specified in
section 12 of this title with uncertified printed
copies of the specifications and drawings for all
patents in that year shall be $50.
[(e)] (e) Waivers of Certain Fees.--The Director may waive
the payment of any fee for any service or material related to
patents in connection with an occasional or incidental request
made by a department or agency of the Government, or any
officer thereof. The Director may provide any applicant issued
a notice under section 132 of this title with a copy of the
specifications and drawings for all patents referred to in that
notice without charge.
[(f)] (f) Adjustments in Fees.--The fees established in
subsections [(a) and (b)] (a), (b), and (d) of this section may
be adjusted by the Director on October 1, 1992, and every year
thereafter, to reflect any fluctuations occurring during the
previous 12 months in the Consumer Price Index, as determined
by the Secretary of Labor. Changes of less than 1 per centum
may be ignored.
[(g)] (g) Effective Dates of Fees.--No fee established by
the Director under this section shall take effect until at
least 30 days after notice of the fee has been published in the
Federal Register and in the Official Gazette of the Patent and
Trademark Office.
[(h)(1) Fees charged under subsection (a) or (b)] (h)
Reductions in Fees for Certain Entities.--(1) Subject to
paragraph (3), fees charged under subsections (a), (b), and
(d)(1) shall be reduced by 50 percent with respect to their
application to any small business concern as defined under
section 3 of the Small Business Act, and to any independent
inventor or nonprofit organization as defined in regulations
issued by the Director.
* * * * * * *
(3) The fee charged under subsection (a)(1)(A) shall be
reduced by 75 percent with respect to its application to any
entity to which paragraph (1) applies, if the application is
filed by electronic means as prescribed by the Director.
[(i)(1)] (i) Search Systems.--(1) The Director shall
maintain, for use by the public, paper, microform, or
electronic collections of United States patents, foreign patent
documents, and United States trademark registrations arranged
to permit search for and retrieval of information. The Director
may not impose fees directly for the use of such collections,
or for the use of the public patent or trademark search rooms
or libraries.
* * * * * * *
Sec. 42. Patent and Trademark Office funding
(a) * * *
* * * * * * *
[(c)] (c)(1) To the extent and in the amounts provided in
advance in appropriations Acts, fees authorized in this title
or any other Act to be charged or established by the Director
shall be collected by and shall be available to the Director to
carry out the activities of the Patent and Trademark Office.
All fees available to the Director under section 31 of the
Trademark Act of 1946 shall be used only for the processing of
trademark registrations and for other activities, services, and
materials relating to trademarks and to cover a proportionate
share of the administrative costs of the Patent and Trademark
Office.
(2) There is established in the Treasury a Patent and
Trademark Fee Reserve Fund. If fee collections by the Patent
and Trademark Office for a fiscal year exceed the amount
appropriated to the Office for that fiscal year, fees collected
in excess of the appropriated amount shall be deposited in the
Patent and Trademark Fee Reserve Fund. After the end of each
fiscal year, the Director shall make a finding as to whether
the fees collected for that fiscal year exceed the amount
appropriated to the Patent and Trademark Office for that fiscal
year. If the amount collected exceeds the amount appropriated,
the Director shall, if the Director determines that there are
sufficient funds in the Reserve Fund, make payments from the
Reserve Fund to persons who paid patent or trademark fees
during that fiscal year. The Director shall by regulation
determine which persons receive such payments and the amount of
such payments, except that such payments in the aggregate shall
equal the amount of funds deposited in the Reserve Fund during
that fiscal year, less the cost of administering the provisions
of this paragraph.
* * * * * * *
PART II--PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS
* * * * * * *
CHAPTER 11--APPLICATION FOR PATENT
Sec. 119. Benefit of earlier filing date; right of priority
(a) * * *
* * * * * * *
(e)(1) * * *
(2) A provisional application filed under section 111(b) of
this title may not be relied upon in any proceeding in the
Patent and Trademark Office unless the fee set forth in
[subparagraph (A) or (C) of] section 41(a)(1) of this title has
been paid.
* * * * * * *
PART III--PATENTS AND PROTECTION OF PATENT RIGHTS
* * * * * * *
CHAPTER 31--OPTIONAL INTER PARTES REEXAMINATION PROCEDURES
* * * * * * *
Sec. 311. Request for inter partes reexamination
(a) * * *
* * * * * * *
(c) Copy.--The Director promptly shall send a copy of the
request to the owner of record of the patent.
* * * * * * *
----------
SECTION 13203 OF THE 21ST CENTURY DEPARTMENT OF JUSTICE APPROPRIATIONS
AUTHORIZATION ACT
SEC. 13203. PATENT AND TRADEMARK EFFICIENCY ACT AMENDMENTS.
(a) Deputy [Commissioner] Director.--
(1) Section 17(b) of the Act of July 5, 1946
(commonly referred to as the ``Trademark Act of 1946'')
(15 U.S.C. 1067(b)), is amended by inserting ``the
Deputy [Commissioner] Director,'' after
``[Commissioner] Director,''.
(2) Section 6(a) of title 35, United States Code,
is amended by inserting ``the Deputy [Commissioner]
Director,'' after ``[Commissioner] Director,''.
* * * * * * *
----------
TITLE VIII OF DIVISION B OF THE CONSOLIDATED APPROPRIATIONS ACT, 2005
[TITLE VIII--PATENT AND TRADEMARK FEES
[SEC. 801. FEES FOR PATENT SERVICES.
[(a) General Patent Fees.--During fiscal years 2005 and
2006, subsection (a) of section 41 of title 35, United States
Code, shall be administered as though that subsection reads as
follows:
[``(a) General Fees.--The Director shall charge the
following fees:
[``(1) Filing and basic national fees.--
[``(A) On filing each application for an
original patent, except for design, plant, or
provisional applications, $300.
[``(B) On filing each application for an
original design patent, $200.
[``(C) On filing each application for an
original plant patent, $200.
[``(D) On filing each provisional
application for an original patent, $200.
[``(E) On filing each application for the
reissue of a patent, $300.
[``(F) The basic national fee for each
international application filed under the
treaty defined in section 351(a) of this title
entering the national stage under section 371
of this title, $300.
[``(G) In addition, excluding any sequence
listing or computer program listing filed in an
electronic medium as prescribed by the
Director, for any application the specification
and drawings of which exceed 100 sheets of
paper (or equivalent as prescribed by the
Director if filed in an electronic medium),
$250 for each additional 50 sheets of paper (or
equivalent as prescribed by the Director if
filed in an electronic medium) or fraction
thereof.
[``(2) Excess claims fees.--In addition to the fee
specified in paragraph (1)--
[``(A) on filing or on presentation at any
other time, $200 for each claim in independent
form in excess of 3;
[``(B) on filing or on presentation at any
other time, $50 for each claim (whether
dependent or independent) in excess of 20; and
[``(C) for each application containing a
multiple dependent claim, $360.
For the purpose of computing fees under this paragraph,
a multiple dependent claim referred to in section 112
of this title or any claim depending therefrom shall be
considered as separate dependent claims in accordance
with the number of claims to which reference is made.
The Director may by regulation provide for a refund of
any part of the fee specified in this paragraph for any
claim that is canceled before an examination on the
merits, as prescribed by the Director, has been made of
the application under section 131 of this title. Errors
in payment of the additional fees under this paragraph
may be rectified in accordance with regulations
prescribed by the Director.
[``(3) Examination fees.--
[``(A) For examination of each application
for an original patent, except for design,
plant, provisional, or international
applications, $200.
[``(B) For examination of each application
for an original design patent, $130.
[``(C) For examination of each application
for an original plant patent, $160.
[``(D) For examination of the national
stage of each international application, $200.
[``(E) For examination of each application
for the reissue of a patent, $600.
The provisions of section 111(a) of this title
relating to the payment of the fee for filing the
application shall apply to the payment of the fee
specified in this paragraph with respect to an
application filed under section 111(a) of this title.
The provisions of section 371(d) of this title relating
to the payment of the national fee shall apply to the
payment of the fee specified in this paragraph with
respect to an international application.
[``(4) Issue fees.--
[``(A) For issuing each original patent,
except for design or plant patents, $1,400.
[``(B) For issuing each original design
patent, $800.
[``(C) For issuing each original plant
patent, $1,100.
[``(D) For issuing each reissue patent,
$1,400.
[``(5) Disclaimer fee.--On filing each disclaimer,
$130.
[``(6) Appeal fees.--
[``(A) On filing an appeal from the
examiner to the Board of Patent Appeals and
Interferences, $500.
[``(B) In addition, on filing a brief in
support of the appeal, $500, and on requesting
an oral hearing in the appeal before the Board
of Patent Appeals and Interferences, $1,000.
[``(7) Revival fees.--On filing each petition for
the revival of an unintentionally abandoned application
for a patent, for the unintentionally delayed payment
of the fee for issuing each patent, or for an
unintentionally delayed response by the patent owner in
any reexamination proceeding, $1,500, unless the
petition is filed under section 133 or 151 of this
title, in which case the fee shall be $500.
[``(8) Extension fees.--For petitions for 1-month
extensions of time to take actions required by the
Director in an application--
[``(A) on filing a first petition, $120;
[``(B) on filing a second petition, $330;
and
[``(C) on filing a third or subsequent
petition, $570.''.
[(b) Patent Maintenance Fees.--During fiscal years 2005 and
2006, subsection (b) of section 41 of title 35, United States
Code, shall be administered as though that subsection reads as
follows:
[``(b) Maintenance Fees.--The Director shall charge the
following fees for maintaining in force all patents based on
applications filed on or after December 12, 1980:
[``(1) 3 years and 6 months after grant, $900.
[``(2) 7 years and 6 months after grant, $2,300.
[``(3) 11 years and 6 months after grant, $3,800.
Unless payment of the applicable maintenance fee is received in
the United States Patent and Trademark Office on or before the
date the fee is due or within a grace period of 6 months
thereafter, the patent will expire as of the end of such grace
period. The Director may require the payment of a surcharge as
a condition of accepting within such 6-month grace period the
payment of an applicable maintenance fee. No fee may be
established for maintaining a design or plant patent in
force.''.
[(c) Patent Search Fees.--During fiscal years 2005 and
2006, subsection (d) of section 41 of title 35, United States
Code, shall be administered as though that subsection reads as
follows:
[``(d) Patent Search and Other Fees.--
[``(1) Patent search fees.--
[``(A) The Director shall charge a fee for
the search of each application for a patent,
except for provisional applications. The
Director shall establish the fees charged under
this paragraph to recover an amount not to
exceed the estimated average cost to the Office
of searching applications for patent either by
acquiring a search report from a qualified
search authority, or by causing a search by
Office personnel to be made, of each
application for patent. For the 3-year period
beginning on the date of enactment of this Act,
the fee for a search by a qualified search
authority of a patent application described in
clause (i), (iv), or (v) of subparagraph (B)
may not exceed $500, of a patent application
described in clause (ii) of subparagraph (B)
may not exceed $100, and of a patent
application described in clause (iii) of
subparagraph (B) may not exceed $300. The
Director may not increase any such fee by more
than 20 percent in each of the next three 1-
year periods, and the Director may not increase
any such fee thereafter.
[``(B) For purposes of determining the fees
to be established under this paragraph, the
cost to the Office of causing a search of an
application to be made by Office personnel
shall be deemed to be--
[``(i) $500 for each application
for an original patent, except for
design, plant, provisional, or
international applications;
[``(ii) $100 for each application
for an original design patent;
[``(iii) $300 for each application
for an original plant patent;
[``(iv) $500 for the national stage
of each international application; and
[``(v) $500 for each application
for the reissue of a patent.
[``(C) The provisions of section 111(a)(3)
of this title relating to the payment of the
fee for filing the application shall apply to
the payment of the fee specified in this
paragraph with respect to an application filed
under section 111(a) of this title. The
provisions of section 371(d) of this title
relating to the payment of the national fee
shall apply to the payment of the fee specified
in this paragraph with respect to an
international application.
[``(D) The Director may by regulation
provide for a refund of any part of the fee
specified in this paragraph for any applicant
who files a written declaration of express
abandonment as prescribed by the Director
before an examination has been made of the
application under section 131 of this title,
and for any applicant who provides a search
report that meets the conditions prescribed by
the Director.
[``(E) For purposes of subparagraph (A), a
`qualified search authority' may not include a
commercial entity unless--
[``(i) the Director conducts a
pilot program of limited scope,
conducted over a period of not more
than 18 months, which demonstrates that
searches by commercial entities of the
available prior art relating to the
subject matter of inventions claimed in
patent applications--
[``(I) are accurate; and
[``(II) meet or exceed the
standards of searches conducted
by and used by the Patent and
Trademark Office during the
patent examination process;
[``(ii) the Director submits a
report on the results of the pilot
program to Congress and the Patent
Public Advisory Committee that
includes--
[``(I) a description of the
scope and duration of the pilot
program;
[``(II) the identity of
each commercial entity
participating in the pilot
program;
[``(III) an explanation of
the methodology used to
evaluate the accuracy and
quality of the search reports;
and
[``(IV) an assessment of
the effects that the pilot
program, as compared to
searches conducted by the
Patent and Trademark Office,
had and will have on--
[``(aa)
patentability
determinations;
[``(bb)
productivity of the
Patent and Trademark
Office;
[``(cc) costs to
the Patent and
Trademark Office;
[``(dd) costs to
patent applicants; and
[``(ee) other
relevant factors;
[``(iii) the Patent Public Advisory
Committee reviews and analyzes the
Director's report under clause (ii) and
the results of the pilot program and
submits a separate report on its
analysis to the Director and the
Congress that includes--
[``(I) an independent
evaluation of the effects that
the pilot program, as compared
to searches conducted by the
Patent and Trademark Office,
had and will have on the
factors set forth in clause
(ii)(IV); and
[``(II) an analysis of the
reasonableness,
appropriateness, and
effectiveness of the methods
used in the pilot program to
make the evaluations required
under clause (ii)(IV); and
[``(iv) Congress does not, during
the 1-year period beginning on the date
on which the Patent Public Advisory
Committee submits its report to the
Congress under clause (iii), enact a
law prohibiting searches by commercial
entities of the available prior art
relating to the subject matter of
inventions claimed in patent
applications.
[``(F) The Director shall require that any
search by a qualified search authority that is
a commercial entity is conducted in the United
States by persons that--
[``(i) if individuals, are United
States citizens; and
[``(ii) if business concerns, are
organized under the laws of the United
States or any State and employ United
States citizens to perform the
searches.
[``(G) A search of an application that is
the subject of a secrecy order under section
181 or otherwise involves classified
information may only be conducted by Office
personnel.
[``(H) A qualified search authority that is
a commercial entity may not conduct a search of
a patent application if the entity has any
direct or indirect financial interest in any
patent or in any pending or imminent
application for patent filed or to be filed in
the Patent and Trademark Office.
[``(2) Other fees.--The Director shall establish
fees for all other processing, services, or materials
relating to patents not specified in this section to
recover the estimated average cost to the Office of
such processing, services, or materials, except that
the Director shall charge the following fees for the
following services:
[``(A) For recording a document affecting
title, $40 per property.
[``(B) For each photocopy, $.25 per page.
[``(C) For each black and white copy of a
patent, $3.
The yearly fee for providing a library specified in
section 12 of this title with uncertified printed
copies of the specifications and drawings for all
patents in that year shall be $50.''.
[(d) Adjustments.--During fiscal years 2005 and 2006,
subsection (f) of section 41 of title 35, United States Code,
shall apply to the fees established under this section.
[(e) Fees For Small Entities.--During fiscal years 2005 and
2006, subsection (h) of section 41 of title 35, United States
Code, shall be administered as though that subsection is
amended--
[(1) in paragraph (1), by striking ``Fees charged
under subsection (a) or (b)'' and inserting ``Subject
to paragraph (3), fees charged under subsections (a),
(b), and (d)(1)''; and
[(2) by adding at the end the following new
paragraph:
[``(3) The fee charged under subsection (a)(1)(A)
shall be reduced by 75 percent with respect to its
application to any entity to which paragraph (1)
applies, if the application is filed by electronic
means as prescribed by the Director.''.
[SEC. 802. ADJUSTMENT OF TRADEMARK FEES.
[(a) Fee For Filing Application.--During fiscal years 2005
and 2006, under such conditions as may be prescribed by the
Director, the fee under section 31(a) of the Trademark Act of
1946 (15 U.S.C. 1113(a)) for: (1) the filing of a paper
application for the registration of a trademark shall be $375;
(2) the filing of an electronic application shall be $325; and
(3) the filing of an electronic application meeting certain
additional requirements prescribed by the Director shall be
$275. During fiscal years 2005 and 2006, the provisions of the
second and third sentences of section 31(a) of the Trademark
Act of 1946 shall apply to the fees established under this
section.
[(b) Reference to Trademark Act of 1946.--For purposes of
this section, the ``Trademark Act of 1946'' refers to the Act
entitled ``An Act to provide for the registration and
protection of trademarks used in commerce, to carry out the
provisions of certain international conventions, and for other
purposes.'', approved July 5, 1946 (15 U.S.C. 1051 et seq.).
[SEC. 803. EFFECTIVE DATE, APPLICABILITY, AND TRANSITIONAL PROVISION.
[(a) Effective Date.--Except as otherwise provided in this
title (including this section), the provisions of this title
shall take effect on the date of the enactment of this Act and
shall apply only with respect to the remaining portion of
fiscal year 2005 and fiscal year 2006.
[(b) Applicability.--
[(1)(A) Except as provided in subparagraphs (B) and
(C), the provisions of section 801 shall apply to all
patents, whenever granted, and to all patent
applications pending on or filed after the effective
date set forth in subsection (a) of this section.
[(B)(i) Except as provided in clause (ii),
subsections (a)(1) and (3) and (d)(1) of section 41 of
title 35, United States Code, as administered as
provided in this title, shall apply only to--
[(I) applications for patents filed under
section 111 of title 35, United States Code, on
or after the effective date set forth in
subsection (a) of this section, and
[(II) international applications entering
the national stage under section 371 of title
35, United States Code, for which the basic
national fee specified in section 41 of title
35, United States Code, was not paid before the
effective date set forth in subsection (a) of
this section.
[(ii) Section 41(a)(1)(D) of title 35, United
States Code, as administered as provided in this title,
shall apply only to applications for patent filed under
section 111(b) of title 35, United States Code, before,
on, or after the effective date set forth in subsection
(a) of this section in which the filing fee specified
in section 41 of title 35, United States Code, was not
paid before the effective date set forth in subsection
(a) of this section.
[(C) Section 41(a)(2) of title 35, United States
Code, as administered as provided in this title, shall
apply only to the extent that the number of excess
claims, after giving effect to any cancellation of
claims, is in excess of the number of claims for which
the excess claims fee specified in section 41 of title
35, United States Code, was paid before the effective
date set forth in subsection (a) of this section.
[(2) The provisions of section 802 shall apply to
all applications for the registration of a trademark
filed or amended on or after the effective date set
forth in subsection (a) of this section.
[(c) Transitional Provisions.--
[(1) Search fees.--During fiscal years 2005 and
2006, the Director shall charge--
[(A) for the search of each application for
an original patent, except for design, plant,
provisional, or international application,
$500;
[(B) for the search of each application for
an original design patent, $100;
[(C) for the search of each application for
an original plant patent, $300;
[(D) for the search of the national stage
of each international application, $500; and
[(E) for the search of each application for
the reissue of a patent, $500.
[(2) Timing of fees.--The provisions of section
111(a)(3) of title 35, United States Code, relating to
the payment of the fee for filing the application shall
apply to the payment of the fee specified in paragraph
(1) with respect to an application filed under section
111(a) of title 35, United States Code. The provisions
of section 371(d) of title 35, United States Code,
relating to the payment of the national fee shall apply
to the payment of the fee specified in paragraph (1)
with respect to an international application.
[SEC. 804. DEFINITION.
[In this title, the term ``Director'' means the Under
Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.]
Markup Transcript
BUSINESS MEETING
WEDNESDAY, NOVEMBER 9, 2005
House of Representatives,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m., in
Room 2141, Rayburn House Office Building, the Honorable F.
James Sensenbrenner, Jr. (Chairman of the Committee) presiding.
Chairman Sensenbrenner. The Committee will come to order.
[Intervening business.]
Chairman Sensenbrenner. The next item on the agenda is the
adoption of H.R. 2791, the ``United States Patent and Trademark
Fee Modernization Act of 2005.'' The Chair recognizes the
gentleman from Texas, Mr. Smith, the Chairman of the
Subcommittee on Courts, the Internet, and Intellectual
Property, for a motion.
Mr. Smith. Mr. Chairman, the Subcommittee on the Courts,
the Internet, and Intellectual Property reports favorably the
bill H.R. 2791 and moves its favorable recommendation to the
House.
Chairman Sensenbrenner. Without objection, the bill will be
considered as read and open for amendment at any point.
[The bill, H.R. 2791, follows:]
Chairman Sensenbrenner. The Chair recognizes the gentleman
from Texas, Mr. Smith, to strike the last word.
Mr. Smith. Mr. Chairman, I move to strike the last word.
Chairman Sensenbrenner. The gentleman's recognized.
Mr. Smith. Mr. Chairman, the Patent and Trademark Fee
Modernization Act of 2005 enables the Patent and Trademark
Office to implement its revised Strategic Business Plan by
making permanent a new fee schedule enacted last year that will
generate extra revenue for the agency.
This is a crucial step toward improving patent and
trademark quality while reducing application backlogs and
pendency at the agency.
These goals are critical to the health of cutting-edge
industries and our economy. Americans lead the world in the
production and export of intellectual property and related
goods and services.
Time is money in the intellectual property world. If the
PTO cannot issue quality patents and trademarks in a timely
manner, then inventors and trademark filers are the losers.
Through the granting of patents and registration of
trademarks, the PTO affects the vitality of businesses and
entrepreneurs, paving the way for investment capital and
research and development. Intellectual property-based
industries represent the largest single sector of the U.S.
economy. Approximately 50 percent of U.S. exports now depend on
some form of IP protection.
The downside to the increasing importance of intellectual
property protection is that the PTO is staggering under an
increasingly complex and massive workload.
Patent pendency--the amount of time a patent application is
pending before a patent is issued--now averages over 2 years.
Without fundamental changes in the way the PTO operates,
average pendency in these issues will likely double to 6 to 8
years.
Moreover, the backlog of applications awaiting a first
review by an examiner will grow from the current level of
475,000 to over a million. These delays pose a threat to
American businesses and entrepreneurs. The nature of technology
and the nature of the marketplace make these delays
unacceptable and unsustainable.
In order to fund the initiatives set forth in the strategic
plan, we must make the new fee schedule permanent. The proposed
fee changes accurately reflect the PTO's cost of doing business
and will benefit PTO's customers by reducing application filing
fees and allowing applicants to evaluate the commercial value
of their inventions and recover the cost of search and
examination as the situation warrants.
Most importantly, the new fee structure will enable the PTO
to reduce pendency time, improve quality and customer service
through electronic processing, and gain greater enforcement of
intellectual property rights abroad. For example, the
additional revenue provided by the fee bill will allow the PTO
to hire an additional 2,900 patent examiners and move to the
full electronic processing of patent and trademark
applications.
The only difference between H.R. 2791 and H.R. 1561, the
fee bill from the 108th Congress, is that the effective date
has been changed to supersede the corresponding provisions in
the omnibus appropriations act.
Mr. Chairman, the House passed H.R. 1561 last year by a
vote of 379-28. For our purposes, this is a bipartisan and non-
controversial measure that benefits our high-tech economy.
I hope my colleagues support the bill, and, Mr. Chairman, I
yield back the balance of my time.
Chairman Sensenbrenner. The gentlewoman from California is
recognized for 5 minutes.
Ms. Lofgren. Mr. Chairman, I am pleased to be a cosponsor
of this bill, and I'm also happy that the bill was reported
favorably by voice vote from the Subcommittee on Courts,
Internet, and Intellectual Property. As the Chairman has
mentioned, this is basically the same bill as last year except
with the dates changed. We had a great vote in the House.
Unfortunately, the Senate did not follow along, so we need to
start this process over again.
As the Chairman has mentioned, pendency is a terrible
problem in the Patent Office. In fact, with pendencies of 2
years or more, the pendency exceeds product cycle dates. This
is a terrible situation for American technology and innovation,
and in order to fully fund the 21st century strategic plan, we
need to adopt this bill.
As the Committee may know, over the past 11 fiscal years,
over $700 million in patent fees have been diverted to other
projects. In the past, we've discussed this as kind of a
special tax on innovation, and what this bill does I think is
quite clever. In Section 5 of the bill, it designates that the
funds, all of the patent fees will be used for Patent Office
projects. And should that not occur, the fees will be rebated
to the patent applicants, removing any incentive that
appropriators might have to try and divert the fees.
We have strong bipartisan support for this measure. I am
pleased that we're starting again in the House, and I am
looking forward to working with my colleague, the Chairman, in
trying to get the Senate to see the wisdom of our approach to
this. It is very important to our country that the measure make
it all the way to the President's desk for his signature. And I
yield----
Mr. Conyers. Would the gentlelady yield?
Ms. Lofgren. I would yield.
Mr. Conyers. Thank you. I just wanted to add that the
measure before us requires that contractor employees conducting
searches must all be citizens, and in addition, we're
prohibiting contractors from having any financial interest in
any patent application, which mimics the statutory provision
that prevents PTO employees from submitting their own
applications. And I support the position of the gentlelady from
California that we all support the legislation.
Thank you.
Ms. Lofgren. And I yield back. Thank you.
Chairman Sensenbrenner. Without objection, all Members may
include opening statements in the record at this point.
Are there any amendments?
Mr. King. Mr. Chairman?
Chairman Sensenbrenner. The gentleman from Iowa, Mr. King,
for what purpose do you----
Mr. King. Move to strike the last word.
Chairman Sensenbrenner. The gentleman is recognized for 5
minutes.
Mr. King. Thank you, Mr. Chairman.
I want to thank Subcommittee Chairman Smith for bringing
this legislation. I want to acknowledge at the beginning that
the knowledge base on his Subcommittee is far greater than the
knowledge base that I'm speaking from here today. I'm going to
support this bill out of Committee, and just for the record, I
wanted to register a couple of concerns, and one is that
because of the fee structure, I am concerned that individual
entrepreneurs may have more difficulty than they've had in the
past, and I trust that that's been considered in this analysis.
And the question of--since we have about $200 billion in
intellectual property that's pirated or stolen from United
States entrepreneurs, the question of does this make that
information more available or less available to those pirates
is another one of the issues that I'm concerned about.
So, on balance, I think this is a good bill, but I do have
my reservations, and I appreciate the opportunity to speak on
it, and I yield the balance of my time.
Chairman Sensenbrenner. Are there any amendments to the
bill? Are there any amendments to the bill?
[No response.]
Chairman Sensenbrenner. Hearing none, a reporting quorum is
present. The question occurs on the motion to report the bill
H.R. 2791 favorably. All in favor, say aye? Opposed, no?
The ayes appear to have it. The ayes have it. The motion to
report favorably is agreed to. Without objection, the staff is
directed to make any technical and conforming changes, and all
Members will be given 2 days as provided by the rules in which
to submit additional, dissenting, supplemental, or minority
views.
[Intervening business.]
This concludes the business for which this markup was
called. The Chair thanks everybody for dealing with these
matters expeditiously, and without objection, the Committee
stands adjourned.
[Whereupon, at 11:37 a.m., the Committee was adjourned.]