House Bill Would Exempt PTO From Cuts Forced by Sequestration

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By Tony Dutra  

Silicon Valley congressmen introduced a bill (H.R. 2582) in the House of Representatives on June 28 that would exempt the Patent and Trademark Office from budget cuts imposed by the March 1 federal government sequestration.

The “Patents and Trademarks Encourage New Technology Jobs Act,” or PATENT Jobs Act, would give the PTO access to all the funds it collects from applicants and owners of patents and trademarks.

The agency is expected to lose access to $148 million in collected fees in fiscal year 2013 and, unless the bill becomes law, the agency may be forced to make even more difficult budget cuts in FY 2014.

“USPTO is funded entirely by fees paid to the agency, making it fundamentally different than other government spending,” said Rep. Mike Honda (D-Calif.) said in a press release. “Congress intended for these fees to be used solely to carry out USPTO's operations, not the government at large.”

Reps. Zoe Lofgren (D-Calif.) and Anna G. Eshoo (D-Calif.) are cosponsors. The three representatives have a specific concern: sequestration threatens plans to open a Silicon Valley satellite office.

Sequestration Has Hit PTO

The PTO acknowledged the effects of the sequester at the May 16 quarterly meeting of the Patent Public Advisory Committee at PTO headquarters in Alexandria, Va.

The Office of Management and Budget had determined that the PTO's collected fees were not exempt from sequestration, and consequently 8.6 percent of the revenues the PTO collects in FY 2013 are subject to sequester. Under current projections for fee collections in FY 2013, that comes out to $148 million.

Anthony P. Scardino, the PTO's chief financial officer, said at that meeting that “sequestration hit March 1,” and through Sept. 30, at least, the office would scale back its information technology upgrade plans “significantly,” virtually eliminate travel, stop the hiring of most support personnel, and limit examiner hiring.

Silicon Valley Satellite Office at Risk

As the PPAC meeting attendees discussed cuts in budgeting for fiscal year 2014 if sequestration continued, Scardino noted that plans for opening four satellite offices--including one in Silicon Valley--might have to be curtailed.

“We're continuing to do what limited things we can do without spending money,” he said. He acknowledged that the PTO is statutorily required under the America Invents Act to open the offices by Sept. 16, 2014, but he said that remains a goal only “assuming the money is available.”

In the June 28 press release, Eshoo said, “These cuts will exacerbate the patent backlog and stifle efforts to connect Silicon Valley innovators with a satellite patent office.” And Honda added, “Our bill will prevent the application of sequestration to USPTO fee revenue so that the Silicon Valley office can open as scheduled.”

Lofgren made a broader point about the value of the PTO, but ultimately she tied it to the availability of satellite offices as well.

“Our bill is very simple and reaffirms a long held belief that inventors who pay fees should receive speedy services and patents for their inventions,” she said. “The services and speed these new offices offer can make the difference for products to go from the drawing board to the marketplace faster, benefiting all of us with the growth and job creation that come with it.”

Retroactive Effect Unclear

The bill is short and its main provision reads:  

Notwithstanding the presidential order issued on March 1, 2013, under section 251A of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 901a), on and after the date of the enactment of this Act, the budgetary resources sequestered under such order with respect to the United States Patent and Trademark Office shall be available for obligation for the same purpose and in the same manner as if such order had not been issued.  



It is unclear from that wording if the bill would free up the portion of the $148 million that would have been withheld from March 1 to the date of enactment--if it happens this fiscal year. On the one hand, “on and after the date of the enactment of this Act” appears to say nothing about funds previously withheld. On the other, “as if such order had not been issued” seems to have retroactive effect.

According to the June 28 press release, “The PATENT Jobs Act would enable USPTO to access the fee revenue sequestered in Fiscal Year 2013, which would otherwise sit unused and untouchable, and would add USPTO to the list of agencies exempt from sequestration orders.”

A representative of Honda's office confirmed the intent of the bill is that the full $148 million would be returned to the PTO “just as if the sequestration had never taken place.”

“This is not a new budgetary concept,” the sponsors said in the press release. “Congress has recognized the uniqueness of user-fee-funded agencies in the past, exempting them from sequestration in the Statutory Pay-As-You-Go Act of 2010.”

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