The U.S. Patent & Trademark Office has two big problems - precarious funding and a massive backlog of patent applications. Both were the focus of members of the House Judiciary Committee at an oversight hearing today.
"The agency may not even have the money to cover extra costs, while the patent backlog builds up and months turn into years," said committee chair John Conyers (D-Mich.).
Rep. Lamar Smith (R-Texas) added, "Observers estimate that more than $700 million has been diverted from PTO coffers since 1991 – funds that could have been put to good use by the agency.”
The current backlog of patent applications stands at 700,000. But PTO Director David Kappos reported that the agency’s goal is to reduce the average time to first action on a patent to 10 months by 2014 and reduce total average pendency for patent applications to 20 months by 2015.
To do so, the PTO needs examiners to review the applications – a process which Patent Office Professional Association President Robert Budens described as “a labor-intensive job – mentally and physically.”
Due to budget constraints, the agency in FY2010 has already lost 127 patent examiners and replaced only nine. In total, the PTO projects that 300 examiners will quit this year, to be replaced by 250.
However, Kappos said the PTO hopes to hire 1,000 examiners during FY 2011 – 2012. Despite the current skeleton staff, the PTO projects it will collect between $146 and $232 million more in fees this year than projected in its budget. But the agency can’t just keep the money – they need to get supplemental authorization from Congress. In some prior years, Congress has diverted excess PTO income to unrelated programs.
Such fee diversion has long been a sore spot for PTO customers.
“The applicant and patent holder communities are likely to expect their fees to be directed at supporting the services they receive, not some other government programs – in particular given the current financial hardships of the USPTO,” testified Damon Matteo, chairman of the Patent Public Advisory Committee.
The president’s budget calls for bumping up agency funding to $2.322 billion, of which $2.01 billion will come from application fees. The $224 million shortfall would be covered by an interim fee increase.
The budget also proposes legislation that would give the PTO fee setting authority “to better align the fees with the actual cost” of the services, said Kappos.
On the trademark side, Sutherland Asbill & Brennan counsel James Johnson Jr., a member of the Trademark Public Advisory Committee, noted “anecdotal reports that the unauthorized practice of law in trademark matters and filings before the office may be a problem.”
In response to a question from Conyers, Kappos said the PTO was looking into the matter, and pointed out that the “issue was first raised by trademark examiners. We’re now doing fact-finding to determine what actions need to be taken.”