Monday, September 20, 2004

FOR SHAME: Senate agrees to hike USPTO fees and decides to continue fee diversion within the USPTO. The AIPLA reports it this way:

A Periodic Notification of AIPLA Activities and Current Developments
in Intellectual Property Law

September 16, 2004

Senate Bill Would Fund PTO for One Year Without Stopping Fee Diversion

The Senate Appropriations Committee on September 15, 2004, approved the fiscal year 2005 Commerce, Justice, State, the Judiciary, and Related Agencies Appropriations bill (S. 2809). The Senate bill includes a version of the PTO fee increase legislation that passed the House, amended to apply for only one year and to drop the anti-diversion compromise that was struck in the House.

Last March, the House passed fee legislation (H.R. 1561) with fee increases to provide the PTO with the revenues needed for its 21st Century Strategic Plan. The fee increases were tied to the processing complexity of the application filed. Although the bill was reported by the House Judiciary Committee with a provision to take the PTO "off budget," it was passed with a compromise provision to end diversion by establishing a system for rebating user fees when PTO fee revenues exceed appropriations for a given year. Last April, the Senate Judiciary Committee approved H.R. 1561 exactly as it was passed by the House.

The Senate appropriators did not buy into the House compromise. The fee provisions incorporated into S. 2809 call for most of the fee increases in H.R. 1561 (although each relevant provision includes language to limit the increases to FY 2005). However, the Senate bill drops the rebate system that would have deposited fee revenues in excess of the appropriation into a trust fund from which the PTO would rebate fees at the end of the fiscal year.

Besides the elimination of the fee rebate system, other differences between the Senate and House fee provisions include the following:

  • The Senate bill drops a House provision to permit the Director to refund part of the application fee if a declaration of express abandonment was filed before examination.
  • Both bills designate separate filing, search and examination fees that are payable upon filing, and both would permit outsourcing of searches by "a qualified search authority". However, the Senate bill drops the House provisions requiring the PTO to conduct a pilot project on the reliability of outsourced searches.
  • The Senate bill drops the requirement that the PTO and the Small Business Administration study and report on the effect of patent fees on the ability of small entity inventors to file patent applications.

As for the appropriation provisions themselves, the differences are as
S. 2809 H.R. 4754
Appropriates $1,336,000,000 $1,314,000,000
Fee incr. rev. 208,754,000 218,754,000
Total $1,564,754,000 $1,533,407,000

In addition, the Senate bill places great emphasis on the protection of U.S. intellectual property overseas. S. 2809 earmarks $20,000,000 of the total PTO appropriation for "initiatives" to protect U.S. intellectual property overseas, presumably in support of the PTO Office of External
Affairs. The report on the legislation includes language no doubt endorsed by Senator Judd Gregg (R-N.H.): "Within the amount made available for the USPTO, $990,000 is for a grant to the Whittemore School of Business [of the University of New Hampshire] for an intellectual property rights pilot project."

The legislation also provides for the first time an appropriation ($20,000,000) for the National Intellectual Property Law Enforcement Coordination Council (NIPLECC), an interagency body created in 1999 to coordinate domestic and international intellectual property law enforcement. To head up NIPLECC, it creates a new Coordinator for International Intellectual Property Enforcement, a presidential appointee to whom the co-chairs of would NIPLECC report. Of the funds appropriated to NIPLECC, $5,000,000 must be transferred to the Office of the U.S. Trade Representative to establish a position of Chief Negotiator of Intellectual Property Enforcement, and $1,000,000 must be transferred to the State Department to support a new Office of International Intellectual Property Protection and Enforcement.

The House appropriations bill includes no direct references to overseas IP enforcement, but includes several explicit provisions on PTO manpower, setting floor levels for hiring patent and trademark examiners and ceiling levels for staffing the Office of General Counsel. Also included in the House bill and missing from the Senate bill are prohibitions against: (1) PTO employees accepting payment or reimbursement for attending conferences or meetings from an entity representing persons subject to regulation by the PTO unless the entity; and (2) the use of funds "to issue patents on claims directed to or encompassing a human organism."

AIPLA and the Intellectual Property Owners Assoc. addressed a letter to the Senate appropriators about S. 2809 prior to the markup of the bill: "Let us be very clear: we absolutely oppose any fee increase without legislation to ensure that all user fees will either be available to the U.S. Patent and Trademark office (PTO) or returned to PTO users." The ABA Governmental Affairs Office has written to Senators Orrin Hatch (R-Utah) and Patrick Leahy (D-Vt) urging their opposition to the fee provisions of S. 2809.

Senator Hatch and Senator Arlen Specter (R-Pa.) addressed a September 10, 2004, letter to the appropriators, seeking "language that achieves our goal of ending fee diversion but also preserves the jurisdiction and prerogatives of the Appropriation Committee and budget process to determine the PTO's annual appropriation."

-- This is, plainly put, garbage.

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