House panel approves user-fee plan for patents, trademarks

A House Judiciary subcommittee on Thursday approved bipartisan legislation that would increase the user fees that the Patent and Trademark Office collects and prevent congressional appropriators from diverting any PTO fee revenue to unrelated programs.

"Fee diversion is both regrettable and counterproductive," said Rep. Lamar Smith, R-Texas, who is chairman of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property. "It needs to be addressed."

The Patent and Trademark Fee Modernization Act of 2003 (H.R. 1561), would implement the PTO's revised business plan to "transform the agency's operations," Smith said. That plan would raise various fees by an average of roughly 15 percent, generating an additional $201 million in annual revenue for the agency.

Smith called the new fee schedule a "first step" toward improving patent and trademark quality and reducing application backlogs.

Agency officials have yet to examine roughly 400,000 pending patent and trademark applications, and they expect about 300,000 more applications this year, according to Rep. Howard Berman, D-Calif., ramnking member of the subcommittee. Berman said it takes an average of two years for PTO to rule on applications.

"There is a relationship between the operations of this office and innovation in this country," Berman said. "We need to do something quite dramatic to maintain quality, shorten pendency and achieve the technology goals that we all share." Pendency is the time required to review applications.

Berman called the bill a "vital step toward securing our patent system," and said it would send a strong message to congressional appropriators to "keep away from PTO funds."

The language preventing PTO revenues from being diverted to other programs was added to the bill Thursday, in an amendment co-sponsored by Smith and Berman. Approved by voice vote, the language would require all PTO funds to be credited to a PTO account within the Treasury Department and authorize the PTO director to use all fee revenue for agency operations.

"We can no longer afford to let fee revenue be diverted from PTO," Smith said. "American jobs and profits hang in the balance."

Rep. William Delahunt, D-Mass., said the legislation would provide a significant boost to U.S. innovation and the nation's future economic prosperity. But he urged Smith to press for GOP leaders' support in ending the practice of fee diversion.

"Otherwise, this carefully crafted legislation will be of no avail," Delahunt said.