Senate plans to move House patent bill

Senate Democrats say the patent reform bill is part of their agenda to create jobs. But several companies and trade associations have argued that the House bill does nothing to end fee diversion, and that ending fee diversion is the best way to create jobs because it could end the several-year wait most patent applicants face at the USPTO.

Ironically, the Senate-approved bill, S. 23, contains what most agree is language that would end fee diversion. The sponsor of that language, Sen. Tom Coburn (R-Okla.), argued in June that Congress needs to accept the Senate bill for that reason.

"It is outrageous for Congress to take fees paid by Americans for a specific service and spend those dollars on other programs," he said. "Since 1992, Congress has pilfered nearly $1 billion in user fees dedicated to the Patent and Trademark Office and spent those dollars elsewhere. As a result, we have 700,000 patents waiting for a first review that, if approved, could help get our economy moving again."

House Appropriations Committee Chairman Hal Rogers (R-Ky.) earlier this year released a letter aimed at assuring members of Congress that fee diversion would stop if the House bill were approved. Under the House bill, any collection of patent fees that exceed the USPTO's congressional appropriation would be held in a "reserve fund" for later use.

But Coburn and industry groups do not accept Rogers's assurances. Coburn said there is no reason to accept Rogers's explanation because House appropriations have "stolen" reserved funds before.

"Unfortunately, the Appropriations Committee has a poor record of managing such accounts responsibly and honestly in this area and others," Coburn said. "For instance, the Appropriations Committee has stolen billions from the Crime Victims' Fund and other funds. There is no reason to believe they won't continue to do the same with the patent account."

The Intellectual Property Owners Association (IPO) agrees that the House bill will still allow fee diversion. That group has pointed out that Rogers stated in 2000 that fee diversion was already solved, but that Congress has withheld millions of dollars from the USPTO without ever releasing it.

Despite this view, Jennifer Hing, a spokesperson for Rogers, argued today that the bill requires that Congress only use patent fees for the USPTO. She also said there has been no significant fee diversion over the last ten years, during which when USPTO collected $253 million in fees.

"The total provided to the PTO in in the same time period through Appropriations was $247 million -- a difference of only $6 million," she said.

Supporters of the Senate bill will likely face a difficult task in September in denying cloture on the House-passed bill. Aside from Reid, Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) has pressed the Senate to approve the House bill rather than hold a House-Senate conference committee.

More broadly, the House bill would move the U.S. from a first-to-invent system to a first-inventor-to-file system, a change that would move the U.S. closer to the patent system used by the rest of the world. These changes and others have led many groups to support the House bill, even IPO, despite the language on fee diversion.

The House bill also includes controversial language allowing the USPTO to re-examine certain business method patents.