US Congress Poised to Implement National Innovation Tax

Earlier this week Mike Drummond, the Editor in Chief of Inventors Digest, authored an article titled US Senate Votes to Leave Patent Office Underfunded for 2010.  In this article Drummond explained that over the weekend, while no one was paying attention, the Senate voted to leave USPTO funding at the same level in 2010 as it was in 2009, which is bad enough because the Patent Office desperately needs more resources in order to tackle the problems left over by the previous regime.  Worse, the Senate vote would re-institute fee diversion, which means that if the Patent Office were to collect revenues over and above the amount allocated by Congress those additional fees would not be able to be used by the Patent Office to improve operations, or even for just handling the increased work generated by additional filings.  Rather, fees received over and above the allocated amount would be stripped from the Patent Office and diverted into the General Treasury account.  That is plain and simple a National Innovation Tax, and it is an enormously bad idea.

Failure to properly fund the US Patent Office is madness, absolutely ridiculous and borders on insane.  At a time when the US economy continues to struggle, has reported unemployment rate of 10% and there are worries about another dip due to commercial foreclosures, now is not the time to institute a tax on innovation.  Now is the time to unleash American innovation and fund the USPTO to the point necessary to rapidly turn patent applications into assets, which would prompt the trillions of dollars sitting on the sidelines to enter the market and launch the next great US economic expansion.  The Capitol Building and Congressional Offices must be home to the largest population of intellectually challenged individuals in the world!

According to Sharon Barner, the Deputy Director of the USPTO:

We look forward to working with Congress to put the USPTO on a sustainable funding model. We currently are operating on a budget that makes it very difficult to attack our application backlog and reduce pendency.

Talk about understating the problem!  I could never work at the Patent Office because there is absolutely no way that I would be able to keep it together and be as professional as Barner.  She states the situation with the skill of an experienced diplomat, and for that she has to be commended and greatly respected.  Of course, I am not under the same political constraints as Barner, so allow me to to put this into terms that even Members of Congress can understand —  WAKE UP!  You all talk a good game in front of the cameras and are extremely complimentary when speaking about American innovation being the backbone of the US economy.  Well, it is time for you in Congress to grow a backbone, get a clue and cease standing in the way of economic recovery!

Our leaders in DC are spending money we don’t have for things we don’t need, and which have no realistic chance of turning around the US economy.  I would say that our leaders in Washington are spending like drunken sailors, but that would be an insult to and unnecessarily critical of drunken sailors!  Even a drunk sailor cannot spend money after money runs out!  Yet, our leaders are raising the debt limit, burdening the economy with new regulations and obligations and there does not seem to be an end in sight.  We are now talking about spending in terms of multiple trillions of dollars, debt in terms of dozens of trillions of dollars and the one agency within the federal government that can actually create wealth and be the engine the drives the US economy is being nickle and dimed.  Those in Congress who do not support an adequately funded Patent Office should be ashamed of themselves, and we should be embarrassed that they represent us.  It doesn’t take a rocket scientist to realize that the patent and innovation policy of the US is standing in the way, and the successes of American innovators are in spite of, not because of, patent and innovation policy.

The Patent Office is losing 40-50 examiners a month and they cannot hire replacements because of the budget shortfall.  Barner is 100% correct.  The USPTO is operating with a budget that is making it very difficult to address the enormous backlog and patent pendency problems left over from the Dudas/Doll era.  While Congress and the Federal Reserve are spending multiple trillions and flooding the market with money, they are forcing the Patent Office to operate on what everyone agrees is unacceptably low funding given the task at hand.  Then on top of that Congress is going to divert fees and impose a national innovation tax?

The Patent Office is a unique arm of the federal government.  It is user fee driven, meaning that those who seek a patent pay a fee for the work done by the Patent Office.  USPTO Director David Kappos has talked about raising fees to bring in more revenue so new examiners can be hired, overtime authorized and the Office can roll up its sleeves and get to work issuing patents and priming the well of the US tech sector.  I think Kappos is correct when he says that users of the Patent Office are overwhelmingly willing to pay more in fees if it means better, quicker service.  No one is going to want to pay more fees if those additional fees go to pay for other government programs while the USPTO continues to operate under-staffed and with an IT system that is state of the art 1990!  The Patent Office needs MORE funding, and taking in more work and diverting fees would result in a net loss for the Patent Office — more work without benefit of additional fees.  Doing more with less is great in theory, but doesn’t work in the real world.

From what I hear, the USPTO is sending a revised 2010 budget estimate to Capitol Hill next week, so perhaps there is still time for Congress to do the right thing.  The fact that they have to take another swing at it is extremely discouraging.  It shows that the majority of those in Congress simply do not understand basic business or how the US economy operates.  The don’t understand that a patent system that operates exceptionally slow is a drag on the US economy.  Luckily, there are those in the Department of Commerce (specifically Secretary of Commerce Gary Locke) and high ranking people at the USPTO (specifically Kappos and Barner) who do understand what is at stake.  I sure hope they prevail.

As for what Congress SHOULD do, it is simple.  Double the USPTO budget and stand back, or preferably don’t just stand back, but rather go on vacation or retreat to some small island where there are no phones and no means to communicate with the rest of the world.  Let the folks who know what they are doing do what they are supposed to do, which is examine patent applications quickly, issue patents with all due speed and thereby put assets in the hands of individuals and companies.  It is a fairly simple plan really.  Just do what you do best, which is spend, and then disappear so you don’t screw it up!  I think even Members of Congress should be able to handle that, don’t you?


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6 comments so far.

  • [Avatar for Robert K S]
    Robert K S
    December 21, 2009 02:28 pm

    Well, this is certainly the opposite of what needs to be happening.

  • [Avatar for Michael Feigin, Patent Attorney]
    Michael Feigin, Patent Attorney
    December 21, 2009 11:32 am

    Meh. This is predictable. Congress’s priorities are so far out of whack and the way they spend money defies any common sense other than the common sense of spending whatever they can on their districts. They rarely cut anything bloated.

  • [Avatar for Gena777]
    December 20, 2009 08:22 pm

    The above anti-Congress rants reminded me about a recent Gallup poll whose numbers showed that Americans think more highly of car salesmen than of members of Congress. A quote from Air America:
    “To give you an idea of the depth of mistrust, bankers (yes bankers) were seen as more honest and ethical than Congress–by a margin of 22 points. Lawyers, ironically, clobbered lawmakers by 15 points; stockbrokers by 9 points. Even car salesmen narrowly avoided the dubious title of “least trustworthy profession” by 4 points.
    In fact, 55 percent of Americans saw members of Congress as having either low or very low ethical standards. Only a scant 9 percent felt that lawmakers are trustworthy, also the lowest on record.”
    USPTO underfunding certainly does not bode well for those of us in patent law. Let’s keep our fingers crossed.

  • [Avatar for Captain]
    December 19, 2009 05:31 pm

    Since the country will be falling into a hyperinflationary death spiral next year, I think the funding of the patent office will be the least thing on people’s minds.

    Oh well, America was fun while it lasted.

  • [Avatar for EG]
    December 18, 2009 12:05 pm

    With Congress and especially the Senate focused on the 2000 page Health Care bill (which no one likely knows what’s in it), I’m not surprised that the PTO was left underfunded by Congress in 2010, and that Congress (again) reneged on its promise to not divert fees. Frankly, what Congress promises is completely meaningless to its members (or at least most of them). I can’t wait for the 2010 elections, as the American public is fed up with the current shenanigans in Congress and is likely to vote quite a few of these incumbets out, many of whom are not friends of American small business or American innovation.

  • [Avatar for Bob M]
    Bob M
    December 17, 2009 11:38 pm

    I like your analysis and observations. I believe many, certainly not all, people in government positions are more interested in securing their position and obtaining benefits than in assisting the people whom their agency or organization was designed to help. In otherwords, the beaurocracy protects and expands itself which stifles individual initiative and creativity. We are so burden down with the administrative agency system in this country that it is hard for small business innovations to survive, let alone flourish.

    I enjoyed your good humored approach.

    Thanks – Bob M