WRAL Tech Wire

Patent Fees: Misappropriation by Any Other Name Smells Just as Rotten

Editor's note: Kevin Flynn works with the Daniels, Daniels & Verdonik law firm where he specializes in intellectual property and patent issues.I am asking that you do the following: Tell your Congressman, that you want his or her support on passing HR 1561: USPTO Fee Modernization Act of 2003, but only if the bill continues to have an end of fee diversion.

Let the Congressman know that you feel that it is important that the PTO be adequately funded and you find it offensive that Congress has diverted $650 million dollars in user fees from the PTO for use in other programs.

Background

Now that my agenda is out on the table, here are the reasons that I am asking for your help.

We have a window of opportunity to stop the practice of diverting funds from the PTO to other uses within the Federal budget.

Some may think that this is a non-issue. Some may think this sounds analogous to the efforts by every business and government agency to make tough budgetary decisions which include revising budgets to reallocate funds. Thus, some may think that I am just whining to make sure that my favorite agency gets a bigger slice of the budget pie.

That analogy is wrong, because it assumes that the money started in one budget pie. Very few people know that the PTO is a 100% user funded agency. (Just fees from users, no tax money from general revenue flows into the PTO.) So this is not a run of the mill reallocation of the slivers of budget pie for one big pot of money, this is taking money from other people just because the money is unguarded.

There is a more appropriate analogy...misappropriate of trust funds.

I am an attorney and one of the quickest ways to get disciplined or disbarred is to take money entrusted to the attorney by a client and use it for some other purpose. Even mingling the money with other general funds of the law firm is a sanctionable offense. Law firms are very careful about setting up trust funds to ensure trust money is not mingled or misallocated.

Thus, while lawyers get punished for misallocating client funds, Congress is currently allowed to dip into the user fees given to the PTO for use by the PTO. However, misappropriation of funds by whatever name still smells just as rotten.

According to the AIPLA (American Intellectual Property Law Association) , the aggregate amount of money siphoned from the fund of pure user fees over the last decade exceeds $650 million dollars. Not surprisingly, the amounts siphoned in the most recent years dwarf the initial fee diversions. While those in Washington tend to think in billion dollar increments, $650 million is a large amount of money for a relatively small agency within the Commerce Department. (2003 FY Budget of 1.334 billion dollars)

The net result of this siphoning of funds has slowed the ability of the PTO to modernize its systems and to hire and retain people with advanced technical skills. Please remember that the PTO is the agency that acts to balance the need to provide incentives to individuals and corporations to perform research and obtain patents while simultaneously acting as the gate keeper to prevent overly broad or poorly defined patent claims from becoming a nuisance and a drain on our economy.

As a patent attorney, I am well aware that the PTO needs to improve. In some critical technology areas, a patent application can sit in queue for three years before someone gives it a substantive examination. As an attorney for small start-ups, I am really annoyed that my clients are being hit with an unfair tax in order to pay for programs totally unrelated to the patent or trademark process.

H.R. 1561 and the End of Fee Diversion

The AIPLA recently sent out an alert to ask people to immediately contact their Congressman in the House. A bill is pending (H.R. 1561) which would increase various patent or trademark fees by 15 to 25%. This bill has the support of the AIPLA, the IPO (Intellectual Property Owners Association) and the American Bar Association . The bill has their support because it contains a provision to end "fee diversion". These organizations realize that the PTO can never be properly funded until Congress stops raiding the PTO coffers for general funds.

Please contact your Congressman by phone, fax, or email. (Mail will be too late since there is a substantial delay to irradiate the mail to kill anthrax). Ask them to get this bill up for a vote. If only patent attorneys call, there won't be enough calls to sway Congressmen. But if those who work for companies that seek patents call their Congressman, and those who care about promoting innovation in this country call their Congressman, there should be enough call volume to get results. The patent system affects us all.

Congress has grown accustomed to diverting PTO funds that were collected and saved for one purpose merely because it is easier to grab these funds out of the spot light than to ask for higher taxes or to recommend specific cuts in other government programs. We all share an interest in ending the process of grabbing funds in this way as the practice is as corrosive to public trust in government as it is to maintaining Congressional discipline in fiscal matters.

Tell your Congressman that you want his or her support on passing HR 1561 USPTO Fee Modernization Act of 2003, but only if the bill continues to have an end of fee diversion. Your Congressman needs to know that you want the PTO to be adequately funded and you find it offensive that Congress has diverted $650 million dollars in user fees from the PTO for use in other programs.

Feel free to let me know if you have contacted your Congressman so that I know whether anyone cares. Kflynn@d2vlaw.com.