Outcry Over Patent Office Cuts

The American Bar Association and other legal groups are urging the Obama Administration to exempt the U.S. Patent & Trademark Office (PTO) from the congressionally mandated, automatic spending cuts also known as ­sequestration.

Patent attorneys—who have their own businesses to worry about—warn that the budget cuts will undermine efforts by PTO to accelerate and improve the process for reviewing patent applications.

The reduction in funding “is likely to seriously impair” PTO’s ability to modernize its operations and provide services that support the nation’s inventors, writes Thomas M. Susman, director of the American Bar Association’s governmental affairs office, in a May 20 letter to the White House Office of Management & Budget.

Unlike most federal agencies, PTO is entirely funded by the fees it collects from patent owners and applicants. As a result, Congress sets PTO’s annual budget at the amount the agency estimates it will collect in a given fiscal year. No taxpayer funds are involved. Under sequestration, which began in March, the patent office will be forced to cut 5%, or about $148 million, from its nearly $3 billion fiscal 2013 budget. Agency officials have not given many specifics as to how they will allot the sequestration cuts but have said they will “limit all expenditures, including hiring, travel, training, and information technology modernization projects.”

Not allowing the office to keep all of the revenue it generates will substantially slow, if not shut down, plans to hire more examiners to tackle a backlog of pending patent applications and to improve the agency’s outdated infrastructure, Susman writes.

Several other organizations, including the American Intellectual Property Law Association and the Intellectual Property Owners Association, have also asked the White House to reconsider the application of sequestration to PTO funding.