Fight over patent fee diversion drags on

The annual appropriations fight over the federal government's practice of diverting fees it charges patent holders to fund general government operations is off to a colorful and quirky start this year.

Oral arguments for the four-year dispute over whether a court should proceed were scheduled for early Friday afternoon in a federal claims court. The plaintiffs in the case are Heath Hoglund, a patent lawyer working out of Puerto Rico, and Robert Rines, a well-known inventor and founder of a prestigious specialty law school. They charge that Congress acted unconstitutionally when it increased and diverted patent filing fees to fatten the coffers of other government agencies.

In particular, the two attorneys are seeking to file a class-action lawsuit against the government on behalf of all patent holders. They want to permanently stop Congress from diverting the patent filing fees. In their initial complaint, the lawyers reiterate many arguments that technology industry lobbyists have been making for years.

They say the practice of "fee diversion" is pushing the Patent and Trademark Office to a point of operational crisis. The attorneys argue that patent holders are harmed because the length of time that it now takes to receive a patent discourages inventors from participating in the process.

"Increasing patent pendency harms inventors because a patent in hand is needed to attract investment capital," wrote the attorneys in their most recent April brief.

The attorneys, who were scheduled to present their case in front of the federal claims court Friday afternoon, want Judge Bohdan Futey to rule that the case should go forward. Justice Department attorneys have argued that the suit should be dismissed, saying the Constitution's Commerce Clause enables Congress to regulate interstate commerce.

In part, the case has been delayed while the judge awaited the outcome of the Supreme Court's decision in Eldred v. Ashcroft. The court issued an opinion in January 2003 affirming Congress' power to extend copyright terms retroactively, and said it had not overstepped it constitutional authority.

The attorneys argue that Congress' power to enact patent fees is limited by the power granted under the Constitution's patent clause, and that the diversion of the fees to fund unrelated aspects of government activities "do not in any rational way promote the progress of useful arts by securing an inventor's rights."

Patent attorneys following the case are bemused.

"It's bizarre, but it may have some merit," said one attorney on background who has attended previous oral arguments on the case. He noted that Rines was making more of an emotional case than a legal one. Rines owns more than 80 patents.

The American Intellectual Property Law Association filed a friend-of-the-court brief last September. The association urged the judge to decide that fee diversion does not "promote the progress of the science and the useful arts."