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.