Lawmakers pan patent fee plan, urge agency reforms

Echoing industry sentiments, a group of bipartisan House lawmakers on Thursday blasted the Bush administration's proposal to divert funds raised from a new fee on patent and trademark applications.

Members of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property weighed concerns over President Bush's fiscal 2003 budget for the Patent and Trademark Office. The budget would create a one-year surcharge on the fees that patent and trademark applicants pay, increase patent fees by 19 percent and trademark fees by 10 percent. Only $162 million of the $207 million raised from the surcharge would be allocated to the PTO.

"The idea that we would up the fees to divert them is very offensive to me," said California Democrat Zoe Lofgren. "Really what this is, is a tax."

Industry experts said they could support fee increases but only if those charges result in full funding of the PTO and if the office issued a well-defined, five-year plan on how it would reduce the backlog of applications and improve patent quality. The current process to review a patent application takes approximately 26 months.

"The five-year has not shown us this compelling need [to raise fees]. ... We would be prepared to support an increase in fees for a five-year plan that provides the quality, timeliness and electronic processing goals that we have," said Michael Kirk, executive director of the American Intellectual Property Law Association.

The PTO's five-year business plan, a requirement of a previous budget, was developed before the installation of James Rogan as director of the PTO. Rogan said he supports the goals of the plan to reduce patent pendency, or the time it takes to issue patents, and to improve the office's efficiency.

He added that he has commenced an "aggressive" campaign to review PTO's procedures and ensure that resources "are fully devoted to mission-critical tasks." The proposed business plan seeks to maintain the patent review rate at 26 months by 2006, curbing a projected rate of 38 months.

Colleen Kelley, president of the National Treasury Employees Union, noted that the "situation is much improved" on the trademark side of PTO, but she added that new laws would require additional resources and could threaten the achievement the office has made.

Kirk said PTO still should make major changes. For example, he called for a relaxation of the law that prevents PTO from paying patent and trademark examiners competitive salaries.

"The most important thing of all is to deal effectively with the funding issues," Kirk said. "As long as the funding has to go through [the Office of Management and Budget] and [the] Commerce [Department], I see no end of diversion and no real opportunity for the PTO to improve itself."

Rogan said some "fundamental changes" in operations may be required, and those changes would need the blessing of the administration and Congress, and may involve better cooperation with other countries. He said he would share his findings, as well as potential changes recommended by an internal PTO task force, with Congress, possibly within the next month.

Panelists stressed that the office's ultimate goal should be improving the quality of patents.