By Kevin Bogardus - 06/13/11 11:59 PM EDT
A coalition of tech firms, pharmaceutical companies, universities and unions is trying to keep a long-awaited patent reform bill from being derailed by claims that part of it is unconstitutional.
About 150 organizations signed a letter sent Monday to House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) asking them to protect a provision that has stirred opposition from powerful House Republicans.
The letter argues the provision, found under Section 22 of the bill, is necessary and can stop “a hidden tax on innovation” and a “job-stifling patent application backlog.”
“Section 22 is necessary because over the last two decades more than $875 million in user fees has been redirected to other governmental purposes in what amounts to a hidden tax on innovation,” the letter states. “Absent a statutory mechanism to prevent future fee diversion, as we have seen all too often in previous years, the existing and new responsibilities vested in the PTO will suffer, the ability of the PTO to plan long-term and build the agency our innovation economy demands will be frustrated, and the job-stifling patent application backlog will continue.”
The patent office has been reliant on Congress for funding. Supporters of the reform bill say that arrangement has led to delays for inventors and argue the PTO needs to control its own stream of revenue.
Prominent trade groups like the U.S. Chamber of Commerce and the National Association of Manufacturers signed the letter, as did brand-name companies like Intel and Pfizer. A number of labor groups also signed on, including the United Steelworkers and the National Treasury Employees Union.
The patent legislation was first introduced in 2005 and is close to passage after years of lobbying and committee work. The Senate approved the bill earlier this year.
But if the user fee provision is axed from the legislation, K Street backing for patent reform could crumble.
“If Section 22 came out of the bill, it could potentially kill it,” said Tim Tardibono, public policy director for CONNECT, a San Diego nonprofit group that helps startup tech companies.
“I think you would see all these companies and trade associations changing their position on the bill and coming out against it,” said Tardibono, who supports keeping the fee provision as it is in the bill.
Two prominent House GOP chairmen — Reps. Hal Rogers (Ky.) of the Appropriations Committee and Paul Ryan (Wis.) of the Budget Committee — raised constitutional concerns with the legislation last week, saying it could weaken congressional oversight of the patent office.
In a June 6 letter to Rep. Lamar Smith (R-Texas), chairman of the House Judiciary Committee, the two lawmakers said the provision would “hand the congressional ‘power of the purse’ — bestowed in the Constitution — to the Obama White House, and essentially eliminate the ability of Congress to perform substantive oversight of the PTO.”
They suggest that the provision “be deleted or otherwise be modified prior to floor consideration in order to strengthen oversight of this important agency, and to ensure American citizens are getting the most from every dollar.”
That was followed by a June 8 memo from David Addington, the Heritage Foundation’s vice president of domestic and economic policy, also opposing the provision. Addington, former Vice President Cheney’s one-time chief of staff, said the measure would give the patent office too much autonomy.
“In an era of federal government overspending and overborrowing, the last thing Congress should do is turn over to a federal agency the decision on how much the agency can spend,” Addington said in his memo.
Supporters of the patent reform bill dismiss those arguments, saying there is plenty of oversight for the patent office, including sending an annual spending plan to appropriators.
“We need every stimulus we can get, and this is a very good piece of legislation that can stimulate the economy,” said Gary Griswold, chairman emeritus of the Coalition for Patent Fairness and formerly 3M Co.’s chief intellectual property counsel.
“People expect those fees put the PTO to work to work the patent system,” Griswold said. “If those applications get examined and become patents, there is a decent percentage of them that will turn into job-creating businesses.”
This article was updated on June 20 to clarify CONNECT's position on the patent bill.