Categorized | USPTO, regulation

The practitioner maintenance fee and the promise that should not have been made

Posted on20 November 2008. Tags: , ,

In the surprise final rule that gave birth to the new (and terribly-named) Practitioner Maintenance Fee, the Patent and Trademark Office promised us that the fees it collects through the new rule won’t be diverted for other purposes:

Comment 2: A large number of comments, citing past history, raised concern that annual practitioner maintenance fee payments would be diverted, and therefore opposed the annual practitioner maintenance fee on the basis that the fees would not be used to operate the roster maintenance process, including the disciplinary system.

Response: The USPTO has operated with full access to fee collections for the past four years. Annual practitioner maintenance fees collected under section 11.8(d) will be used to support maintenance of the roster of registered attorneys and agents, including the disciplinary system.

That’s reassuring, considering the extent to which PTO funds have been diverted to other causes in the past ($422.5 million diverted since 1992).  But is it a promise the Office can rightfully make?

Clearly it isn’t.  Sure the Office currently has full access to the fees it collects.  But, that could be a temporary situation.  Congress has never provided a permanent end to fee diversion (the current fix is the latest temporary fix), and something tells me Congress will be looking for new sources of cash in the coming months.

And the Office knows this.  Indeed, it wasn’t that long ago that the Department of Justice, with Associate Counsel from the Patent and Trademark Office sitting alongside, argued in Figuerora v. United States that Congress could divert all patent fees to other, non-patent purposes if it chose to do so.  Judge Newman’s direct question on this point during oral argument, and government counsel’s response, is illustrative:

Judge Newman – “Is the government’s position that…Congress could appropriate the entire [patent fee] income…and allow the backlog to continue to increase in the patent office if, in fact, [that's] what Congress decided to do?”

Government counsel: “Yes, your Honor. It’s our position that Congress’ legislation is not limited by the preamble’s promotion language on which the Appellant relies.”

The promise that Practitioner Maintenance Fee monies will be used to support OED activities is, simply put, one that the Office cannot make.  It might be true next year, and the year after, but fee diversion will always remain a possibility until Congress implements a permanent fix.

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Comments

  • Dana Colarulli
    # posted on 11.20.08 at 1:07 pm

    Matt, it’s true that statement doesn’t give IP users much comfort. And, in fact, in the years you cited where diversion occured, IPO has argued that the diversion was closer to $750 M (as comparied to what was cited in the Figuerora case). Congressional legislation is the only way to permenantly end fee diversion. While multiple bills have been introduced in recent years to legislatively end PTO fee diversion — both apart from and incorporated in patent reform efforts, none have succeeded. The Senate Patent Reform bill (S.1145) which will likely be reintroduced in the 111th Congress includes one such provision (sec. 15) that could effectively end diversion. Proposals to convert the USPTO to a quasi-government corporation (likely a very unpopular idea today in the wake of Freddie and Fannie) has also been discussed as an option and was supported by a 2005 Study by the National Academy of Public Administration. In the wake of past legislative efforts, the 111th Congress presents a new opportunity to make the case to address this problem.

    Also, for those interested, an archive of materials produced by IPO on this issue (included our chart showing diversion by year) can be found at http://www.ipo.org/actioncenter.

  • J. Matthew Buchanan
    # posted on 11.20.08 at 2:14 pm

    Dana -

    Thanks for the detailed comment. IPO’s continued efforts on the diversion issue should be appreciated by every patent stakeholder, no matter their view on the various reform issues.

    We all look to the 111th Congress with hope on this issue, but I fear that the current broader financial picture and the ever-expanding ‘bailout’ might make the concept of a permanent end to fee diversion less palatable.

    For those that don’t know, Dana is Government Relations and Legislative Counsel for the Intellectual Property Owner’s Association. He has been a key player in the various patent reform and fee diversion legislative efforts over the last several years.

    Matt

  • Dana Colarulli
    # posted on 11.21.08 at 10:24 pm

    Thanks Matt. Actually, I was upgraded to “Director” a while back (longer time in office = fancier titles :) ). I’m afraid you’re right given the finacial picture, althougth we continue to hope that some fix might be possible with whatever substantive patent reform may move forward in the 111th. It is one issue that most of the user community favors (unlike damages, etc.).

    Also, thanks for your blog. It one that I check in on pretty frequently and includes good information.

  • J. Matthew Buchanan
    # posted on 11.24.08 at 1:08 pm

    Congratulations Dana! Something tells me “Director” is more than just a fancy title!

    I hold out a small amount of hope that the 111th Congress will put the divisive patent reform issues on the backburner while advancing those on which most stakeholders agree…including a permanent end to fee diversion.

    Thanks for the kind note on the blog, too. I hope you find the rest of the site helpful and informative as well. Please let me know if you ever have any questions or comments on content, organization, or any other aspect of the site.

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