The USPTO Solution? Obama Looking for Deficit Neutral, Traditional Republican Ideas to Build Compromise

President Obama at press conference, Nov. 3, 2010

In the election yesterday the Republicans scored an enormous victory in the United States House of Representatives, gains of a still unknown number in the United States Senate, and gains in Governors’ races as well as State House and State Senate chambers across the country.  Earlier this afternoon, at 1:00 pm Eastern Time, President Barack Obama held a press conference to discuss the election and answer questions.  At times during this news conference it seemed that he was in denial, not wanting to acknowledge that Americans could have potentially repudiated his policies, and at times he also seemed conciliatory and willing to work with Republicans.  President Obama even accepted blame for the frustration of voters with respect to the progress on the economy.

There was one exchange between he and Chip Reid, White House Correspondent for CBS News, that had to do with the difference between spending and investment, and which touched upon the importance of continuing to foster research and development and not taking a back seat to China.  President Obama said he is also willing to listen to ideas to stimulate job growth that Republicans have historically supported and that are deficit neutral.  Well Mr. President, if you are serious I have the answer for you, and it wouldn’t take more than a $1 billion up front payment and the passage of a bill that is a single sentence long.  The solution lies with the United States Patent and Trademark Office.

Before I get into my proposed solution, which has been historically supported by Republicans and is deficit neutral, below is the full exchange between Chip Reid and President Obama, which emphasis added:

Chip Reid (CBS News): Thank you Mr. President. Republicans say more than anything else this election was about spending. They say it will be when hell freezes over that they will accept anything remotely like a Stimulus Bill or any kind of proposals you have out there to stimulate job growth through spending. Do you accept the fact that any kind of spending to create jobs is dead at this point, and if so, what else can government do to create jobs, which is the number one issue?

President Obama: Well, I think there is going to be an important question for Democrats and Republicans. I think the American people are absolutely concerned about spending and debt and deficits, and I am going to have a Deficit Commission that is putting forward its ideas. It’s a bipartisan group that includes Republican and Democrat Members of Congress and hopefully they were able to arrive at some consensus on areas where we can eliminate programs that don’t work, cut back on government spending that is inefficient, can streamline government, but isn’t cutting into the core investments that are going to make sure we are a competitive economy that is growing and providing opportunity for years to come.  So the question that I think my Republican friends, and me and Democratic leaders, is going to have to answer is: what are our priorities; what do we care about? And that is going to be a tough debate because there are some tough choices here.

We already had a big deficit that I inherited and that has been made worse because of the recession. As we bring it down I want to make sure that we are not cutting into education that is going to help define whether or not we can compete around the world. I don’t think we should be cutting back on research and development because if we can develop new technologies in areas like clean energy that could make all the difference in terms of job creation here at home. I think the proposal I put forth in terms of infrastructure is one that historically we have had bipartisan agreement about, and we should be able to agree now that it makes no sense for China to have better rail systems than us and Singapore having better airports than us. We just learned that China now has the fastest supercomputer on earth. That used to be us. They are making investments because they know that those investments will pay off over the long term.

So in these budget discussions the key is to be able to distinguish between stuff that isn’t adding to our growth, isn’t an investment in our future and those things that are absolutely necessary for us to be able to increase job growth in the future as well. Now, the single most important thing I think we need to do economically, and this is something that has to be done during the lame duck session, is making sure that taxes don’t go up on middle class families next year. So we have some work to do on that front to make sure that families aren’t seeing a higher tax burden, which will automatically happen if Congress doesn’t act, but also making sure that business provisions that historically we have extended each year, for example that provide tax breaks for companies that are investing here in the United States in research and development, that those are extended.  I think it makes sense for us to extend unemployment insurance, because there are still a lot of folks out there hurting. So there are some things we can do right now that will help sustain the recovery and advance it, even as we are also sitting down and figuring out over the next several years what kinds of budget cuts we can make that are intelligent, that are smart, that won’t be undermining our recover, but that will in fact be encouraging job growth.

Chip Reid (CBS News): Those things that you just called investments they call wasteful spending and they say its dead on arrival. It sounds like without their support you can’t get any of it through.

President Obama: What is absolutely true is that without any Republican support on anything, then it’s going to be hard to get things done. But I am not going to anticipate that they’re not going to support anything. I think that part of the message sent to Republicans was we want to see stronger job growth in this country, and if there are good ideas about putting people to work that traditionally have garnered Republican support, and that don’t add to the deficit, then my hope is and expectation is that something they’re willing to have a serious conversation about. When it comes to, for example, the proposal we put forward to accelerate depreciation for business, so that if they’re building a plant or investing in new equipment next year that they can take a complete write-off next year, have a huge tax break next year, and that would encourage a lot of businesses to get off the sideline. That’s not historically considered a liberal idea, that’s actually an idea that business groups and Republicans have supported for a very long time. So, again, the question is going to be: do we all come to the table with an open mind and say to ourselves — what do we think will make a difference for the American people. That’s how we are going to be judged over the next couple of years.

Perhaps President Obama was asking for a deficit neutral answer that has historically be supported by Republicans because he didn’t think that one existed, but giving the President the benefit of the doubt allow me to offer this solution: return the money to the United States Patent and Trademark Office that has been siphoned off over the past 18 years, about $1 billion, and let the Office keep the revenue it generates in terms of fees paid by users.  There is a completely deficit neutral approach because it merely repays the under-the-table, off-the-books national innovation tax that has been levied against innovators for the past 18 years without ever having an up or down vote on the matter, and since the USPTO is unlike every other government body and offers a fee for service there will be no impact whatsoever on the budget.  The inventors, companies and universities who use the services of the Patent Office pay for them.

The current problems of the Patent Office can be directly traced back to 1992 when Congress started siphoning off money.  The way this has traditionally been accomplished is by passing a budget that gives the USPTO the money they estimate they will generate in terms of fees.  By granting a specific number in the budget if the USPTO generates more money then the USPTO cannot keep it, although they are burdened by the additional work, so the USPTO will ultimately have to do the work for free, which obviously is not something that any viable and going concern can engage in long term.  So the siphoning off of money is done in quite and Congress can say with a straight face that they gave the USPTO everything it asked for at the beginning of the year.

This siphoning nonsense is like a business forecasting sales of $1,000,000 and then having orders totally $1,250,000 and having to refuse to accept payment for the final $250,000 because that was over and above their beginning of the year estimate.  So they deliver the orders and have to make up the extra $250,000 in other ways.  The way the Patent Office has chosen to do that over the years is to cut back on examiner time, not hire patent examiners and the result has been an astronomical growth in the number of pending applications, which threatens the fabric of the patent system and is preventing high-tech small businesses and start-ups from receiving the assets they can translate into investor funding; capital necessary to expand and hire.

Luckily, support for the Patent and Trademark Office has traditionally been supported by Republicans.  In fact, the Administration that is revered in Republican circles is the Administration of President Reagan, and President Reagan inherited a terribly dysfunctional Patent Office and spent 8 years and more than a little political capital to turn the Office around, achieve 18 month average pendency and initiate special rules to facilitate the growth and adoption of certain technologies that were at the time viewed as critical for American high-tech dominance.  So in addition to being deficit neutral, the most revered Republican President of the last 50 years was aggressively on board with respect to fixing the Patent Office.

Now, in order to explain what needs to be done in terms that even a politician can understand — figure out how much money was siphoned off from the USPTO, which is about $1 billion, and repay it so the Patent Office can reinvest in its infrastructure.  While there are no shovel ready projects due to environmental regulations, this $1 billion would within months transform the Patent Office into a state of the art entity, which would streamline the application process, and allow for faster determinations that are consistent between similarly situated innovators (more on that soon).  Then you pass the following bill to amend Title 35 of the U.S. code:

The United States Patent and Trademark Office shall be entitled to keep all of the fees it collects.

Sadly, the likelihood this will happen is probably zero.  President Obama probably doesn’t mean he will listen to ideas any more than he meant it when he said it over and over and over again over the past two years.  The Republicans will, as Chip Reid suggests, likely see returning the siphoned funds as “new spending” and not authorize it, and both parties will likely see the Patent and Trademark Office as revenue generating rather than revenue neutral.  I hope I’m wrong, but history would suggest otherwise.  Depressing, isn’t it?