Patent Office Delays Reforms

Because of a shortfall in funding, the U.S. Patent & Trademark Office (PTO) says it has been forced to put plans for an expedited patent examination process and the opening of its first regional office on an indefinite hold.

The 2011 budget resolution passed by Congress in mid-April caps PTO spending authority at $2.1 billion, well below the $2.3 billion it had sought, and about $100 million less than the agency expects to collect in application fees during the current fiscal year.

Congress reallocated the $100 million in "surplus income" to the Treasury Department's general fund to help pay for other government programs.

PTO Director David Kappos responded to the budget cut by postponing the scheduled May 4 launch of a pilot program to guarantee examination within one year of patent applications filed by those who pay a premium for the service (C&EN, April 18, page 26) He also halted the opening of a PTO satellite office in Detroit, Mich., that was scheduled for later this year.

"We have not come by these decisions lightly," Kappos said in a statement. "I recognize that these measures will create new challenges for our ability to carry out our agency's mission, but we will continue seeking innovative ways to do more with less."

In other steps, PTO will implement a hiring freeze, reduce employee training, eliminate overtime pay and scale back IT modernization projects, Kappos added.

PTO does not receive any taxpayer money and is fully funded by the fees it collects from patent and trademark applicants. But revenue generated above the office's budget authority cannot be spent without the approval of Congress. Since 1990, lawmakers have taken more than $900 million from the agency. Legislation currently under consideration in Congress would end this fee diversion (C&EN, April 25, page 11).

"The ability of PTO to do an efficient and reliable job depends on these funds, none of which comes from Treasury or has any impact on reducing overall government spending," says Q. Todd Dickinson, executive director of the American Intellectual Property Law Association, a national bar association of patent lawyers.

Kappos had planned to increase hiring and offer expedited examinations to deal with a backlog of more than 700,000 applications. The agency has said that reducing the backlog and providing patent protection to new inventions will help create U.S. jobs.

Patent applicants will likely suffer as a result of the cut in PTO's budget, says Roque El-Hayek, patent counsel at the Boston law firm Wolf, Greenfield & Sacks. "The hiring freeze and elimination of overtime will certainly further increase the application backlog and will delay prosecution," he tells C&EN. "The reduction in employee training might also negatively affect the quality of patent examination."