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How Dumb Does The Patent Office Think We Are? Just End Fee Diversion Now!

If Jimmy McMillan knew about fee diversion, I bet he'd say "The Fees Are Too Damn High!"

If Congress gets one thing right this year, let it be Sen. Tom Coburn’s proposed amendment to S.23 to put an end to fee diversion–the practice of diverting patent examination fees into the government’s general fund.  In fact, the fee diversion provisions should probably be the only part of the reform bill to pass, at least for now. (More on that later this week).

Meanwhile, the patent office is either conspiring with Congress to swindle us out of even more money, or at the very least thinks that we’re all incredibly stupid. More on that after the break.

First, Sen. Coburn’s comments are nicely summarized by PatentDocs:

Senator Coburn asserted that there was a “contract with America” that patent fees were collected to pay for patent examination, and that “if an American pays a fee he should get what he pays for” and not for funding other aspects or parts of the government.

Via Judiciary Committee Votes on Patent Reform Bill from PatentDocs.org

The Senator has it exactly right, and this should hardly be controversial.  Consider the “problem” of large increases in the number of patent applications. When fees collected by the patent office are diverted from the agency, their budget remains more or less flat, while more work is coming through the door.  In every other business, more customers means more revenue, allowing employers to higher more staff and invest in improved infrastructure to handle the new workload. Fee diversion prohibits this and essentially turns the patent office into a profit center for the US government.

Filings go up, Fees go up ... funding doesn't. A recipe for disaster.

The graphic to the right, found at this older PatentlyO post, represents the increase in patent applications filed between 1995 and 2009.  Congress essentially created the backlog by stripping the patent office’s ability to adjust its staffing and practices to accommodate the rising application rate. Of course the patent office has a solution to end the backlog, but unless fee diversion ends, it won’t accomplish a damn thing.

Nicely summarized at TacticalIP, the patent office hopes to convince us that its “three track” proposal will fix the backlog once and for all. The plan is really quite simple. Most applications will fit into “track two” which is basically examination in the normal queue as it exists today at the patent office.  Track three offers the ability to voluntarily delay examination for up to 2 and a half years.

But the mischievous “track one” is where the fallacy is exposed.  For an additional $4800,* the patent office will put your application into the “express lane” which carries a goal of a first office action (a decision on whether your claims are patentable, unpatentable and the reasons why) within four months, and final disposition within a year.

Naturally, this would come at the expense of “track two” applications, pushing the delay for those who can’t afford the additional fee. And if it is wildly successful (an influx of “track one” applications), how could the patent office meet these time commitments without hiring more staff? And it can’t use the excess fees to hire more staff unless Congress agrees to stop diverting funds into the black hole general fund!

Unless Congress ends fee diversion, the backlog will perpetuate, Examiners will have less time to devote to each application. Less time equates to inconsistent results, where applications are granted, or not based on relatively arbitrary reasons. Meritorious applications could be erroneously held up, while undeserving applications are inexplicably granted. Sure, they might make the right decision some, or even most of the time … but there’s no guarantee.

This may be the reason why the Innovation Alliance is reserving judgment on S.23:

“Key to USPTO’s efforts to tackle the backlog is a change in the law to prohibit any further diversion of USPTO fees to other uses.  We wholeheartedly support Senator Coburn’s efforts in this regard and will work hard to pass his fee diversion amendment into law.  Ending fee diversion is an issue that unites virtually all stakeholders on all sides of the patent debate.

via Innovation Alliance Reserves Judgment on S. 23, Continues to Urge Focus on USPTO Funding and Efficiency.

Former Chief Judge Paul Michel and current President of International Federation of Professional and Technical Engineers Gregory Junemann have sent a letter to the Senate pointing out that the current legislation will only increase the backlog.

And just to it top off, the hypocrisy of the so-called Coalition for Patent Fairness comes out in earnest as they refer to S.23 as “a step in the right direction,” despite its obvious ill effects on the backlog.  Notably, fee diversion is nowhere to be found in their list of proposed reforms.

*Under the current plan, everyone would pay $4000, regardless of status. If the patent office gets cooperation from Congress, they plan to charge $4800 to large entities and $2000 to small entities and individuals.

The rent is too damn high!



7 thoughts on “How Dumb Does The Patent Office Think We Are? Just End Fee Diversion Now!

  1. There is no question that fee diversion needs to end . In addition to stopping fee diversion all the diverted funds plus interest should be returned to the agency.

    Unfortunately the patent office has become increasingly politicized and routinely carries water for big corporate interests. Obama’s administration has carried on as usual, confirming in spades that Ralph Nader was right.

    The problem is that both the Coalition for Patent Piracy & Fairness and the Coalition for 21st Patent Deform & HARMonization want to disadvantage small entities. They are desperate to return to the good old days where the venue of their choice invalidated every patent held by a small entity which was infringed.

    Placement an IBM stooge in charge of the USPTO has only continued these inequities.

    The proposed tired pricing schedule will inherently disadvantage small entities by allowing deep pocketed large entities to further delay small entity patent applications by cutting ahead in line. This is anti-competitive and fundamentally unethical.

    Remember that the USPTO also suggested that small entity inventors should abandon one invention to get a timely response on another. Why wasn’t IBM subjected to this?

    Also, keep in mind that the USPTO has made a point of giving an invention promoter front and center stage at independent inventor events and that party is promoting none other than IBM’s Patent Deform agenda. What a strange coincidence.

    What we need is a patent office which discharges their duties impartially and in a timely manner for everyone. We need patentability decisions before publication and we need injunctive relief when a company is found to have infringed.

    Ronald J. Riley,

    President – http://www.PIAUSA.org – RJR at PIAUSA.org

    Other Affiliations:
    Executive Director – http://www.InventorEd.org – RJR at InvEd.org
    Senior Fellow – http://www.PatentPolicy.org
    President – Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (202) 318-1595 – 9 am to 9 pm EST.

    Posted by Ronald J Riley | February 9, 2011, 6:23 am
  2. The Coburn amendment (or a similar provision ending or limiting fee diversion) is essential to revival of the patent office. There is no way that the USPTO can get itself on firm footing any time very soon, unless the legislature stops raiding its revenue. All other patent reform issues pale in comparison.

    Posted by patent litigation | February 15, 2011, 1:01 am


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