Forget the Obama's Stimulus. Forget the Bush Tax Cuts. Increased Funding for the USPTO Could Fix Our Broken Economy.

By Rob Abb *

While the Obama administration’s Stimulus package and the expiring Bush tax cuts dominate the news, Congress recently and quietly passed a very important bill with bipartisan support.  In August, President Obama signed into law P.L. 111-224, increasing funding for the United States Patent and Trademark Office (USPTO).  Specifically, the bill authorized the USPTO to keep and spend $129 million extra in fees that it is projected to collect in the 2010 Fiscal Year.

The USPTO is now projecting that it will collect close to $200 million dollars more than the $1.887 billion it was already appropriated for 2010.  With passage of this new bill, instead of diverting that money to other governmental agencies, the USPTO will be able to keep $129 million more to help the agency sift through its backlogged patent applications.  The agency plans to use the money to hire new examiners, pay for more examiner overtime, and update IT systems.

This is a significant step in creating a more equitable funding scheme for the agency.  In recent years, funding for the USPTO has been linked directly to the amount of money it collects from user fees.  This practice subjected the budget to the rise and fall of the economy.  So, for example, when the economy was booming, the office could hire new staff and install new IT equipment.  However, when the economy collapses, the user fees might fall with it and leave the office with an infrastructure that it cannot support.  Conversely, desperate companies may file more patents with the office in a collapse and further strain its resources.

The problem with this system is that the USPTO cannot save user fees to use when the economy slows down.  Instead, any extra user fees the office collects were diverted to other parts of the government.  Between 1991 and 2004, over $700 million of USPTO fees were diverted, spurring some to dub the fee diversion as a “tax on innovation.”  However, passage of P.L. 111-223 ensures that the USPTO will get to keep more than half of its extra user fees this year.

Perhaps what is most astonishing about this bill is that it was passed on a voice vote in the House and then passed the Senate with unanimous approval.  In this climate of polarization in Washington and political entrenchment building towards the November elections, it is almost difficult to believe that $129 million dollars could be appropriated with bipartisan support.  Considering the nearly unanimous Republican opposition to most of President Obama’s policy initiatives, it seemed even less likely the bill would get unanimous support after President Obama sent a letter to Speaker Pelosi urging Congress to pass the bill.

Why the bipartisan support? In an article entitled “Inventing Our Way Out of Joblessness,” former chief judge of the United States Court of Appeals for the Federal Circuit Paul R. Michel and the CEO of a technology miniaturization firm Henry R. Nothhaft estimated that a fully functioning patent office would create as many as 2.25 million new jobs by 2013. It should be noted, however, that to get the patent office running at that level of efficiency, the authors suggest a onetime influx of $1 billion to the agency.

Though $1 billion dollars may sound like a lot of money, if that’s what it takes to reenergize the patent office and bring it into the 21st century, it might be worth the investment. Based on the authors’ assessment of a 2008 study, the Berkeley Patent Survey, each patent issued by the USPTO is associated with 3 to 10 new jobs.

So the real question is, with unemployment nearing 10% and the USPTO’s potential to create jobs, how can we afford not to fund it?   

 

 

 

*Rob Abb is a second-year law student at Wake Forest University School of Law and is President of the International Law Society.  He holds a Bachelor of Arts and Science in Political Science and Asian Studies from the University of Michigan.  Upon graduation in 2012, Mr. Abb plans to practice international law.