Reps. John Conyers (D – Michigan) and Lamar Smith (R – Texas), the chairman and ranking Republican on the House Judiciary Committee, are trying to resolve the problems of patent pendency and the current revenue shortfall at the United States Patent and Trademark Office (“PTO”).  “Pendency” is the time from filing a patent application until the time of receiving the first office action.  The last time we checked, the average pendency was 29 months and rising.  This long delay in reviewing patent applications is tied to the large number of applications filed every year, inadequate PTO information technology resources, inadequate numbers of experienced patent examiners and turnover in the examiner corps.  As with all things, many of these problems can be resolved by money.

The “Patent and Trademark Office Funding Stabilization Act of 2010”, introduced on May 18, 2010 addresses the revenue issues by (a) giving fee-setting authority to the PTO and (b) by preventing Congress from diverting patent fees.  The PTO would have authority to set fees to cover its costs and to keep those fees in a revolving account until the monies are expended.  The fees collected by the PTO would be off limits to Congress.  The bill would create a temporary 15% surcharge on PTO fees to counter the current revenue shortfall due to the drop in patent filings.  The bill also would create a new category of applicant – the “micro entity,” which would be entitled to a 75% discount in filing and certain other fees.

The power of the purse is a major management tool of Congress.  In the past, Congress has been loath to allow any agency to control its own funding.  One danger in giving an agency control of its own funding is that the agency is a monopoly that has no incentive to control its own costs.  The bill includes several management and oversight tools to prevent the PTO from running amok with excess fees. The provisions of the bill are relatively non-controversial; however, passage of the funding bill will remove a reason for moving forward with the larger Patent Reform Act of 2009.

— Robert J. Yarbrough, Esq.