Lawmaker says PTO reform is 'critical' to tech firms

Reform at the Patent and Trademark Office is "critical to the health of high-tech industries," a key House subcommittee chairman said at a Monday biotechnology conference.

Rep. Lamar Smith, R-Texas, who chairs the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, said he is committed to PTO reform that leads to job creation and a higher standard of living. He said he would "soon schedule a hearing on patent quality improvement [and] introduce legislation to include patent quality."

"The three major battle cries of PTO reform are quality, pendency and e-filing," added Michael Kirk, executive director of the American Intellectual Property Law Association (AIPLA). "PTO on all fronts is in a crisis situation."

The quality issue, Kirk said, stems from companies constantly being threatened with potentially harmful legislation. Pendency, or the wait time for a patent application to be processed, has "grown to nearly an all-time high," he said-from 18 months in 1989 to the current wait of approximately 26 months. At that rate, the wait in 2008 will be 45 months, he predicted.

Kirk said the rate of electronic applications for trademarks is at 55 percent but at a mere 1 percent for patents. Even those that are e-filed eventually are converted to paper filings, he said.

Kirk blames the problems on Congress' practice, since 1992, of withholding fees that the PTO collects from applicants. He said $658 million in PTO user fees have been diverted in the last decade. "Appropriators blame the PTO, stating it has not shown that increased funding would decrease the time it takes to receive a patent," he said.

Bills currently before Congress to combat such fee diversion include one, H.R. 1561, that would raise various fees by about 15 percent, generating an additional $201 million in revenue for the agency. Appropriators could not divert any of those fees.

"It's hard to expect user groups to support an increase in fees without some corresponding assurance that the fee diversion will be phased out," Smith said, adding that the end result of debate over such legislation is "more likely to be some sort of negotiated compromise. ... The reason we put the language in is to get the maximum amount of leverage."

"The user community is going to strongly support this bill," Kirk said. "We are prepared at this point to enlist all 14,000 members of the AIPLA to contact their members [of Congress] to support this legislation." He added that if language preventing diversion of the new fees is stricken, "we will certainly do everything in our power to kill this legislation."

Smith also discussed the practice of giving states immunity in federal court from monetary damages for infringement of intellectual property. Earlier this month, he introduced a bill to combat the practice.

"If states are going to take advantage of intellectual property laws for their own benefit, they should be willing to enforce the laws for the benefit of others," he said.