On Fast Track, Patent Office Run Over By Budget Deal

As LEXVIVO previously reported, the United States Patent and Trademark Office ("USPTO") entered 2011 by proposing several significant reforms designed to improve the efficiency and quality of the patent application process.  Included in these proposed changes were a new fast-track patent pathway and new satellite Patent Offices.  The Federal budget compromise recently agreed between Congress and President Obama, the Full-Year Continuing Appropriations Act, 2011 (Pub. Law 112-10), brings this brief patent office perestroika to a halt.  Here is an email USPTO Director David Kappos sent to his employees last week:

As you may know, the FY 2011 budget was signed by the president on April 15, 2011 and contains the USPTO’s appropriation through the end of this fiscal year, September 30, 2011. With the enactment of the Full-Year Continuing Appropriations Act, 2011 (Pub. Law 112-10), USPTO spending authority for FY 2011 has been limited to $2.09 billion. In view of the funding cuts reflected in the final budget and affecting the U.S. government as a whole, we will be unable to expend the additional $85-100 million in fees that we will be collecting during this fiscal year—funds that we had anticipated being able to use to fund operations this year.

In short, the Continuing Appropriations Act for FY 2011 does not allow us to maintain spending at the levels planned for this year. Further, I am mindful of the fact that we may very well be operating at the FY 2011 level for the foreseeable future. As a result, we have had to make some difficult decisions in order to ensure the responsible stewardship of the agency. It is against that backdrop that I must reluctantly announce, effective immediately, that:

• All overtime is suspended until further notice;

• Hiring—both for new positions and for backfills—is frozen for the rest of the year unless an exemption is given by the Office of the Under Secretary;

• Funding for employee training will be limited to mandatory training for the remainder of the year;

• Funding for contracting of Patent Cooperation Treaty (PCT) search is significantly reduced;

• The opening of the planned Nationwide Workforce satellite office in Detroit and any consideration of other satellite locations are postponed until further notice;

• Only limited funding will be available for mission-critical IT capital investments;

• The Track One expedited patent examination program, scheduled to go into effect on May 4, 2011, is postponed until further notice.

In addition, all business units will be required to reduce all other non-compensation-related expenses, including travel, conferences and contracts.

Trademark activities are unaffected and will maintain normal operations.

I want each of you to know that we have not come by these decisions easily. I recognize that these measures will place additional burdens on your offices, your staff, and your ability to carry out the agency’s mission. However, I believe that they are absolutely necessary to ensuring that the agency can continue to operate through the remainder of this fiscal year and into FY 2012.

I thank you for continuing cooperation and patience, and I appreciate your dedication and service during this challenging time.

David Kappos

Under Secretary of Commerce for Intellectual Property and Director of the USPTO

Ironically, the USPTO does not contribute materially to the Federal deficit.  Instead, it is financially self-supporting, covering its operations through the collection of fees from patent and trademark applicants.  However, Congress has traditionally appropriated these fees for other governmental purposes, leaving the USPTO continually short of money to pay for improvements, such as skilled new patent examiners to help alleviate the huge backlog of patent applications.  In an age of austerity, the USPTO might be celebrated as a governmental exemplar of financial self-sufficiency.  Instead, it continues to act as a piggy bank continually filled by inventors, only to be raided by Congress.  It is difficult to see how this strategy benefits technological innovation.

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