Patent and Trademark Office seeks OK to spend higher fee income

The U.S. Patent and Trademark Office is urging Congress to increase its funding for fiscal 2010 in light of new projections that the agency said shows it will receive in excess of $100 million more from patent fees than it estimated in September.

Appropriators used the September projection of $1.887 billion to set the agency's fiscal 2010 spending level.

"Absent further congressional action, the USPTO will not be able to expend this fee income to address its urgent fiscal needs," Patent and Trademark Office Director David Kappos wrote in a Monday letter to House and Senate appropriators.

He added that, unlike past years, appropriators removed language from the fiscal 2010 spending bill that allowed the agency to spend up to $100 million more in fees than the set spending level.

Despite the projected increase in fees, Kappos warned that the dire fiscal problems the agency faced last year when it was forced to "cut spending sharply" will likely carry over into 2010.

He said unless the agency receives more funds, it will be forced to operate on a "bare-bones budget" that would allow it to replace only a small percentage of the 500 patent examiners expected to leave this year.

But lawmakers may not be swayed by Kappos' warnings. The PTO fee projections have been overly optimistic in recent years, which has led to other programs funded by the Commerce-Justice-Science Appropriations bill to be shortchanged, a congressional source said.

In fact, House and Senate appropriators chided the agency, which is funded by fees, for using a budget process that does not adequately plan for economic downturns when fees may be less than anticipated.

"USPTO's financial situation in fiscal year 2009, while anomalous, may be repeated again. The decision to rely solely on fee income has removed USPTO from the safety net of the appropriations process and has placed it at the mercy of the economy; it has allowed USPTO to build a boom-time infrastructure that it cannot support in an economic downturn," according to the Commerce-Justice-Science fiscal 2010 Appropriations conference report.

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