• June 14, 2011

    In the midst of new objections from some Republican members of Congress to a patent reform bill recently approved by the House Judiciary Committee, ACS has released a new Issue Brief on the measure at issue in the bill, “Short Term Pain for Long Term Gain: Why Congress Should Stop Diverting U.S. Patent and Trademark Office User Fees.”

    In the Issue Brief, American Continental Group, Inc. Partner Marla Page Grossman explains the importance of ending fee diversion, a practice in which funds paid by patent and trademark applicants are diverted to other programs and agencies “entirely unrelated to the [U.S. Patent and Trademark Office],” significantly slowing down the approval process and thwarting innovation.

    A provision to end fee diversion is contained in the America Invents Act, which was passed by the Senate and approved by the House Judiciary Committee with broad bipartisan support. But the provision encountered new opposition just last week, when House Appropriations Chairman Harold Rogers and House Budget Chairman Paul Ryan sent a letter to House Judiciary Chairman Lamar Smith opposing the fee diversion provision because it would hand “the Congressional power of the purse” to the Obama administration.

    In the days that followed, “[i]t was Republican leaders who fired back,” Grossman explains, with Rep. Lamar Smith responding that “contrary to putting the USPTO on auto-pilot, H.R. 1249 would actually promote accountability and transparency, creating more channels for oversight than currently exist,” and Sen. Tom Coburn asserting, “[w]e cannot have true patent reform without ending fee diversion and providing the PTO with a permanent, consistent source of funding” and that the “power of the purse does not provide Congress authority of non-taxpayer funds.”

    The Chamber of Commerce also expressed public support for the fee diversion provision this week, and more than 150 companies, schools and groups, including GE and Apple, submitted a letter reiterating the necessity of this provision.

    In her Issue Brief, Grossman explains the importance of encouraging innovation through the patent system to spur needed economic growth, demonstrates the inefficiency and unfairness that comes from diverting patent fees paid by users, and presents a number of ways in which the USPTO could maintain control of their own fees, the best of which “is incorporated in this Congress‘s patent reform bills.”

    She concludes:

    USPTO fee diversion must stop, and must be stopped now, to ensure that the USPTO can engage in the stable, long-term planning necessary for the issuance of timely, high-quality patents. The best legislative solutions will necessitate congressional appropriators prioritizing U.S. innovation, jobs and the economy over “inside the Beltway” politics. But good policies often come with painful politics. If Congress can handle a little pain in the short term, the nation will likely be rewarded with a more efficient USPTO and national prosperity over the long term.

    Read Grossman’s Issue Brief here and read a previous guest post by Grossman on this issue here.

  • June 3, 2011

    Venture Capitalist Fred Wilson at AVC citing Lodsys’ legal threats to independent developers says “software patents should not exit,” because they “are a tax on innovation.”

    Lodsys, a patent holding firm, has been threatening independent developers of apps for Apple using technology provided by Apple with lawsuits unless they purchase licenses for doing so from Lodsys. The patent firm has garnered some “significant negative feedback from the general public feedback regarding its actions,” according Darrell Etherington at Gigaom.

    Wilson, however, says the “mess around Lodsys patents should be a wake up call to everyone involved in the patent business (government bureaucrats, legislators, lawyers, investors, entrepreneurs, etc) that the system is totally broken and we can’t continue to on like this.”

    He continues:

    The whole point of these app ecosystems is that a ‘developer in a garage’ can get into business with these platforms. But these ‘developers in a garage’ can’t afford lawyers to represent themselves in a fight with a patent troll.

    Thinkprogress’s Matthew Yglesias brought Wilson’s “great little post,” to this blog’s attention, adding his own thought as to why this type of patent mess can occur.

  • April 8, 2011
    Guest Post

    By Marla Grossman, a partner at American Continental Group.

    The Obama Administration’s emphasis on stimulating the U.S. economy and creating U.S. jobs, as well as the increasing recognition from Congress that a strong patent system is critical to an innovation-friendly government, has made it more important than ever for Congress to pass a permanent legislative solution to the damaging practice of taxing innovation by diverting user fees away from the U.S. Patent and Trademark Office (USPTO). Such a solution is part of the patent reform bill recently passed in the Senate, S.23, and is also part of the patent reform bill introduced by the House last week, H.R. 1249.

    The USPTO is the federal agency that processes patent and trademark applications, disseminates patent and trademark information, and administers the laws relating to patents and trademarks.

    Since 1990, the USPTO has been entirely funded through the payment of patent and trademark application and user fees; before 1990, taxpayers supported the operations of the USPTO. However, with the passage of the Omnibus Reconciliation Act of 1990 (OBRA), taxpayer support was eliminated. OBRA imposed a significant fee increase on America’s inventors in order to replace the taxpayer support the USPTO was, until that point, receiving. The fees paid by users of the patent and trademark systems are referred to as “USPTO user fees.” The revenues generated by this fee are collected by the USPTO and then transferred into a general Treasury account. The USPTO is required to request that the Congressional Appropriations Committees allow the agency to use the revenues in the account.