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Fee Diversion

Posted Thursday, August 4, 2011 by Mike Gibbons

As previously discussed here, the United States is currently revising its patent law. While the upcoming change with the most impact to inventors is unquestionably the shift to a “First to File” patent system, a number of other modifications are on the way.

One provision which has passed the Senate but not the House relates to “fee diversion” from the United States Patent and Trademark Office (“PTO”). The PTO is one of the few federal agencies that is self-sufficient. That is, incoming fees for filing, searching, and otherwise processing patent applications completely provide the funding for agency operations. In fact, the PTO typically operates at a surplus, providing a nice pot of money for the U.S. government to tap for other budgetary needs.

This practice, called “fee diversion,” actually impacts the PTO in that its staffing levels are not optimal. Consider that it takes, on average, three years to receive a patent from the time an application is filed. Today, an application will sit in a queue awaiting a first look from an examiner for quite a while. The PTO has said that if they had more examiners available to review applications, inventors could expect the average three-year timeframe to decrease. However, without complete oversight of their funding, the PTO is unable to staff the examination corps with an eye towards reducing the average pendency of applications.

The Senate version of patent reform, bill S.23, which passed this past spring, included a mandate to end the practice of fee diversion. That is, Congress would no longer be able to redirect funds received by the PTO from inventors to other government agencies. But the House version, HR 1249, permits fee diversion to continue. This is a difference between the bills which will need to be resolved by a Congressional conference committee before patent reform can be presented to the President for signature.

While other aspects of the patent reform bills in Congress may impact inventors differently, an end to fee diversion is a desirable change. Inventors, innovators, patent practitioners and anyone who is a believer in protection of intellectual property rights should all agree that quicker handling of patent applications by the PTO would be for the best. An end to fee diversion as a centerpiece of the current patent reform effort in Congress will be a significant benefit.

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