Washington Editor

WASHINGTON - The House passed legislation this week that would allow the U.S. Patent and Trademark Office to keep money it generates through the application user-fee program rather than having to share it with other government offices.

Authored by Rep. Lamar Smith (R-Texas), the U.S. Patent and Trademark Fee Modernization Act of 2003 (HR1561) passed in a 379-28 vote Wednesday. Keeping user-fee money within agency walls would allow the Arlington, Va.-based department to implement its five-year strategic plan that emphasizes greater use of electronic initiatives and examiner recruiting, hiring and training, the U.S. Patent and Trademark Office (USPTO) said.

All told, with the extra money the agency believes it could hire 2,900 new patent examiners who would help the agency get through its backlog of applications.

Currently, it takes about two years to review an application, Smith said on the House floor Wednesday. "Without new examiners, agency delays will soon reach three to four years," he said.

Patent terms are generally 20 years from the date the application is filed. In previous testimony before a House subcommittee, James Rogan, former Patent Trademark Office director, said the application backlog could reach in excess of 1 million by 2008 (about double the current amount), if the office cannot get access to user fees needed to hire more people.

If the bill does not become law, Smith said, 140,000 patents would not be issued over the next five years. "That's 140,000 missed economic opportunities for the American people," he said.

During the past decade, the USPTO, which is part of the Department of Commerce, has lost $750 million in fees diverted to other government programs, Smith said. The USPTO does not receive taxpayer funding, rather it is supported by fees, which generate about $1 billion per year.

In a prepared statement, Carl Feldbaum, president of the Biotechnology Industry Organization, said, "In an industry comprised largely of small, start-up companies that have not yet brought a product to market, patents are vital in attracting the necessary investment capital to sustain biomedical research.

"Without quality intellectual property rights, many biotech companies would cease to exist. Passing HR1561 will provide the necessary user fees to the USPTO so that it can continue to issue the strong, enforceable patents that underpin the biotech industry," Feldbaum said.

Approval of the legislation would allow the USPTO to impose its hiked filing fees, which are part of the strategic plan. The current fee is $750 per application, compared to a proposed fee of $1,000. The proposed fee includes a search fee and an examination fee.

While most of the House supported the legislation, a few lawmakers were concerned about higher fees impacting the pockets of small businesses.

As proposed by Rep. James Sensenbrenner (R-Wis.), under the legislation, small businesses, independent inventors and nonprofit organizations would pay 25 percent of the filing fee, provided those qualified file applications electronically.

Also, the Sensenbrenner language applies a 50 percent reduction on the search fee for all small businesses.

In late 2001, the House passed similar legislation that would have allowed the USPTO to keep its user fees. (See BioWorld Today, Aug. 9, 2002.)