Cash-strapped Patent and Trademark Office awaits new leadership

Agency faces a backlog of more than 750,000 applications.

The Obama administration's selection of a Patent and Trademark Office director cannot come soon enough, according to officials inside the agency. They cite serious cash-flow problems, internal cutbacks and a downturn in the number of applications filed and patents granted amid continued U.S. economic gloom. "We need a new director just as soon as we can get one," Patent Office Professional Association President Robert Budens said Monday.

While the administration and Commerce Department, which houses PTO, have been tight-lipped about the appointment, sources say Commerce Secretary Gary Locke is involved and an announcement could come in the next week or two. Oft-mentioned prospects for the job include Q. Todd Dickinson, who ran the office under former President Bill Clinton, Silicon Valley attorney Jim Pooley and IBM Vice President David Kappos. During his March confirmation hearing, Locke vowed not to let urgent issues like the 2010 census crowd out topics like improving the patent office's productivity. The agency faces a backlog of more than 750,000 applications.

Original patent filings are down to fiscal 2004-fiscal 2005 levels, and preliminary numbers for two of the office's other main sources of revenue -- maintenance fees and late fees -- are also said to have dipped. Maintenance and late fees that stem from approved patents cover almost half of the agency's patent fee income, Budens said, but in recent years, the agency has tried to improve patent quality by approving fewer applications. That has pushed the allowance rate down from 65 percent to about 40 percent, which in turn means less in fees paid to the agency.

If fee collection trends continue, PTO will take in $100 million below its projected year-end amount, according to a memo sent to employees Monday.

The PTO, which has been on track since 2007 to bring on 1,200 patent examiners per year over five years, recently instituted a hiring freeze for virtually all of the agency's divisions, Budens said. Before the stoppage, the agency had signed on about 500 examiners and had extended more than 100 offers to potential new hires. Officials have curtailed bonuses for all noncontractual awards, which affected those who do not belong to bargaining units, and they have slashed paid overtime for examiners starting this week.

Additionally, the patent office ceased its law school tuition reimbursement program, which Budens said represents a $5 million annual expenditure. The PTO has told employees that furloughs and layoffs would be a last resort. The office has also significantly slowed its $250 million per year plan to install servers and energy-efficient equipment. The existing system has not been upgraded in almost a decade, and Budens said some are worried the agency's IT network is "hanging on by bubble gum and bailing wire."