USPTO’s Future Budget

Fee-Retention Unlikely: The Senate and House of Representatives have each passed patent reform measures, and the two bills are remarkably similar. The arguably greatest difference between the two is that the Senate Bill (S. 23) includes a substantial guarantee that the USPTO will be able to actually spend the money that it collects in user-fees. The House Bill (H.R. 1249) does not include that guarantee. At this point, it appears most likely that the House Bill will be accepted in the Senate and that the PTO will be left without any budgetary protections from the congressional appropriations process.

Revenue is Revenue: Without the statutory limit, federal appropriators do not care that the USPTO is fee-funded and not taxpayer-funded. Rather, patent office fees, corporate income taxes, capital gains taxes, and personal income taxes all go into the same category of “government revenue” that can then be allocated as Congress and the President see fit.

Prior Cuts: In April 2011, a mid-year appropriations bill stripped approximately $100 million of USPTO collected fees and diverted that money to other federal programs – an approximate 10% cut in funding for the remainder of FY2011.

More Cuts on their Way?: As FY2012 approaches, it is likely that the USPTO will again feel the pinch from the most recent debt ceiling compromise and the resulting Budget Control Act of 2011. The new statute does not identify where cuts will occur, but does indicate that $21 billion will be cut from the FY2012 budget (that begins October 1, 2011) with additional cuts coming as early as December 2011. In all likelihood, some of the cuts will come from the USPTO.

Cutting from a Larger Pie: The silver lining for the USPTO is that the FY2012 budget proposed by President Obama includes a $600 million increase in spending for the USPTO – raising the budget to $2.7 billion. A 10% cut by appropriators from the budgeted amount would still leave the PTO with a $300 million increase from FY2011. It is not clear, however, that the appropriations process will use the budget proposal as the baseline.

Spending its Fees: Although Congress does not normally allow the USPTO to spend all of the fees that it collects, the USPTO is generally bound to never spend more than it collects. In other words, the PTO’s actual spending is bound by the amount that it collects in fees. The only way that the agency will be able to collect its budgeted $2.7 billion is through significant fee increases. Currently, the PTO does not generally have the authority to increase fees. However, the House Bill does provide the PTO with authority to set fees in order to meet its budgeted spending.

30 thoughts on “USPTO’s Future Budget

  1. The PTO has completely cut overtime. We have a bonus, but it requires you to work at 110% as opposed to 95%, and it is only for 5% of your salary. So, that’s 15% more work for 5% more pay. They have other bonuses for doing 115%-130% of what is asked of you, but their compensation is even worse compared to the work required. I personally have to work overtime to get more work done, so I always claim the overtime. As a result of Congress stealing 100M from the PTO budget overtime is gone and I am making about $20k less this year. This means I am also turning in a lot less work. I am completing about 6 less non-final actions per month, which is about 36 less non-finals in the past 6 months. If you want the PTO to move more cases, you have to convince the government to give them the money to pay Examiner’s to do work.

    Most of my friends are moving out of the state and working from home because they cannot afford a decent living in the DC area. They are in Delaware, PA, NC, SC, Florida. With their salaries cut, and houses still going for $600k, you cannot support a family on the PTO salary. We have not got a cost of living increase in a year now, and will not get one next year either and for the past 6 years or so we only got 2% while the rest of the govt got around 4% because management screwed us over. I am tired of seeing my salary eroded and being asked to do more work for less money. The cost of everything is going up, our pay is going down just like the rest of the country. Yet, there is demand for our service and a huge backlog, the government just won’t pay us to do the work. If we grant more patents we can help encourage economic growth. But again, the govt won’t pay us.

  2. Watching the making of this particular piece of legislative sausage called “patent reform” has proven particularly unpleasant. The bill would never have received the support that it has, if ending fee diversion hadn’t been a part of the original deal. If fee diversion remains, the bill will be nothing but a major gift to mega-corporations. Par for the course, I suppose … but nonetheless disappointing.

  3. And who finances politics and thereby controls the politicians?

    “You and me” — I don’t think so

  4. External increase (more money in) + internal no change (same money out) = CHA CHING.

    The only problem with this CHA CHING is that the Office does not actually benefit so that it can improve its ability to do the work. The CHA CHING is skimmed to the government and is really just an innovation tax.

  5. And by the way, there are increased fees for excess claims (not high enough, I think), but the examiner is not allotted any more time, which is in my opinion fraudulent. Charging for the extra cost of claims when there is no extra cost (okay, maybe we have to print some more), does not seem fair.

  6. I agree. There is nothing like doing international classification to see that it wouldn’t help things. Sometimes, for a US subclass there are 2 or 3 international subclasses. But sometimes it’s the opposite. Nothing like merging a few overgrown US subclasses into one gigantic IPC subclass.

  7. “10-16 hours for a first action.”

    Obviously, the length of time should depend on any number of different factors, from technology, to length of specification, to number of references cited in an IDS, but most particularly to the number of claims.

    I don’t fully understand why the time for a first action should not be adjusted accordingly, and the filing/search/examination fees also be correspondingly adjusted.

    Just for example, if the filing fees for claims were to double every time one passed a multiple of 20, we would rarely see applications exceeding 100 claims, let alone those behemoths having 1000.

    Does anyone know why common sense is impossible in the government?

  8. Well if it passes, you know who not to vote for. Get the message out! Then every single small entity and small Law firm needs to continue to get the message out. Isn’t there someone out there that wants 20 minutes on 60 minutes?

  9. “The Senate and House of Representatives have each passed patent reform measures, and the two bills are remarkably similar”

    Sure, both gut the patent system making it a sport of kings so large firms can steal at will from smaller ones.

    “patent reform”

    Just because they call it “reform” doesn’t mean it is.

    The patent bill is nothing less than another monumental federal giveaway for banks, huge multinationals, and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated the bill will help them steal our inventions. Who are the supporters of this bill working for??

    Patent reform is a fraud on America. This bill will not do what they claim it will. What it will do is help large multinational corporations maintain their monopolies by robbing and killing their small entity and startup competitors (so it will do exactly what the large multinationals paid for) and with them the jobs they would have created. The bill will make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. Yet small entities create the lion’s share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs. Those wishing to help in the fight to defeat this bill should contact us as below.

    Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors.

    Please see link to truereform.piausa.org for a different/opposing view on patent reform.
    link to docs.piausa.org

  10. grumble grumble,

    Blaming Boehner is as off as blaming Obama.

    Try to think for yourself and realize that the entire sphere of politics is to blame.

    And who is responsible for the politics?

    You and me, my friend, you and me.

  11. “Why should examiners use a classification system since KSR makes it obvious that any items that can be strung together that touch upon the same solution are fair game?”

    I doubt, when they are doing their keyword searches, there is a field for “common solution.” The “common solution” is something they make up with a sentence at the end of their analysis.

  12. Given all the negative aspects of the near completed legislation, why in the world is the AIPLA still supporting this?

    This just adds to the already overburdened training needs of the USPTO and provides no tangible benefit to the US economy as a whole.

  13. Failing to maintain the classification system is another example of how the U.S. in the past 20 or so years has taken the easy short-term approach of neglecting infrastructure expenses and upkeep.

    Another “gift” for the next generation of Americans.

  14. Man f the CPC. Thing sucks more than J. Jamison.

    “The Europeans have already done 50% of the work”

    OMIGOSH! 50 whole percent? Gee, that should make the costs of doing the rest of the work somewhere in the range of a billion or so eh?

    “It’s a big world out there, the US system isn’t the only system or even the best sometimes.”

    Well of course not, we’ve not been updating it. If they’d do the thing properly then it could very well be the foremost classification quite easily.

    “Of course, this whole unified classification system will only work if the USPTO spends a ton of time retraining everyone to use the new system properly. I’m not doubling down on that…”

    And if they magically made it not blow. I’m not doubling down on that either. Fact is, the European system is in nearly as bad shape as ours is.

    And besides, soon teenagers are going to tear down their whole continent. Wonder what they’re going to do then?

  15. That’s why we’re ditching the US Classification system in 2013 and going to the CPC. The Europeans have already done 50% of the work and put US patents in all the tiny little detailed ECLA subs we’ll be relabeling CPC subs. It’s too bad US examiners can’t search ECLA and have never been properly taught IPC. It’s a big world out there, the US system isn’t the only system or even the best sometimes.

    Of course, this whole unified classification system will only work if the USPTO spends a ton of time retraining everyone to use the new system properly. I’m not doubling down on that…

  16. Indeed, even I find myself nearly ready in many cases to switch to an entirely word search through some specific subs. The classes are getting too large. Nobody has the will to force work on the classification system. Perhaps also there is a funding issue as well although each AU could handle it’s own with minimal funding and at least do a bang up job on the worst subs.

    I told you guys a couple of years ago that Margaret told me the expected cost of reupping the classification system and it was some hundred million or nearly a billion. That’s a lot of change.

  17. Alun, have you looks at the size of classes these days? The class system has been neglected (because they don’t want to pay examiners to work on the class system rather than examining) and as result most subclasses have between 1,000 and 3,000 patents in each subclass.

    This makes the classification system useless for examiners, and that’s not even considering that the initial classification has been outsourced to people who don’t have a clue where the applications should be.

  18. Why should examiners use a classification system since KSR makes it obvious that any items that can be strung together that touch upon the same solution are fair game?

    The power of word search makes classification systems obsolete.

  19. Examiners don’t seem to use the classification system much anymore, which accounts for some of the dross they cite.

  20. Ah, the miracles of baseline budgeting.

    when is a cut actually an increase? When you’re using baseline budgeting.

    CAVEAT: In this case though, to perform one of the enumbarated powers of the federal govn’t, it’s actually a good thing.

  21. Even before patent reform there was consensus that in order to raise quality more time should be given to examiners, which can only be accomplished through hiring more examiners or letting the backlog skyrocket. Patent reform or not, quality improvements will only come through increased budget. Primary examiners are given anywhere between 10 and 16 hours for a first action (hard to tell nowadays). It is very hard to expect quality with such little time, particularly since classification has been in disarray for the most dynamic technologies (and classification also costs money, not to mention that it should not be given to contractors that perform no examination).

    But if I pay an increased fee for increased examination cost only to see that diverted elsewhere, then obviously that is something to be very angry about.

  22. Let’s see – pay more, get less, do nothing about the quality of what you get, get it slower, don’t even really get it when you do (post grant redtape) and oh-by-the-way, here are a few special bonuses for Big Businesses and Banks….

    But let’s still call it “patent reform.”

    Sick B_astards.

  23. Currently, the PTO does not generally have the authority to increase fees. However, the House Bill does provide the PTO with authority to set fees in order to meet its budgeted spending.

    It would be incredibly stxxxxpxt for the PTO to not increase its fees.

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