Potential changes to patent reform bill put K Street's support to the test

Advocacy groups are looking over possible changes to a patent reform bill, with some threatening to withdraw their support for the long-awaited legislation.

The sticking point is a provision that addresses the fees charged by the U.S. Patent and Trademark Office (PTO).

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Under the Senate-passed version of the patent bill, the PTO would keep the fees it collects. Supporters say that arrangement would provide the agency with a steady stream of funding that it could use to reduce its backlog of patent applications. 

Some Republicans in the House have come out against the provision, known as Section 22, arguing that it would free the patent office from congressional oversight of its budget. 

Brian Pomper, executive director of the Innovation Alliance — a coalition of companies including Qualcomm Inc. and Digimarc Corp. that has lobbied to reform the patent system — said changes to that provision could bring down the legislation.

“The Innovation Alliance is greatly disappointed by reports that some in the House of Representatives have chosen to remove language from Section 22 that would have permanently ended fee diversion. In its stead is language that amounts to a promise to end fee diversion in the future, a promise that has repeatedly been broken in the past,” Pomper said in a statement.

Supporters of patent reform charge that Congress has too often underfunded the patent office, even as the agency collects fees that are shifted elsewhere in the government, known as “fee diversion.” 

“Given the alteration of Section 22, the Innovation Alliance has no choice but to vigorously oppose the America Invents Act. We will work with our allies both on and off the Hill to ensure that any patent bill that becomes law ends fee diversion permanently,” Pomper said.

A House Appropriations Committee aide said negotiations are ongoing to find a compromise on the contentious provision.

“Negotiations continue on compromise language that would allow the bill to come to the floor and address the Appropriations Committee’s concerns,” the aide said.

Several sources familiar with the bill described the compromise under discussion as setting up a new reserve fund for the patent office. Once the agency’s fees climbed above its funding limit, set by Congress, lawmakers would step in and appropriate the excess fees to the patent office under the reserve fund for its use.

Even as lawmakers look for a compromise, more than 50 people from various coalitions and trade groups are making the rounds on Capitol Hill this week to drum up support for the bill. The House is expected to vote on it soon. 

Unlike the Innovation Alliance, other groups were more positive about the potential compromise.

John Vaughan, executive vice president of the Association of American Universities, said he hadn’t “seen anything in writing” but said what has been described to him could help change the patent system for the better.

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“It seems to me an arrangement that does a nice job of preserving appropriator authority but handles the excess fees that will reserve them for the exclusive use of the PTO and prevent fee diversion,” Vaughan said.

Others are waiting to review the new language before they decide whether to support the bill.

“We have to see the compromise language before we weigh in publicly on it,” said Dan Holler, communications director for Heritage Action for America.

On June 10, the nonprofit group, affiliated with conservative think tank Heritage Foundation, sent out a key-vote alert that it opposed the legislation with the original fee provision. The group has raised constitutional concerns with the fee provision, saying it undermines Congress’s power of the purse.

House Budget Committee Chairman Paul Ryan (R-Wis.) and Appropriations Chairman Hal Rogers (R-Ky.) have expressed similar concerns.

The House Rules Committee is expected to hold a hearing on the bill Tuesday. The legislation will likely move to the House floor after that.

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