Commerce’s shared services scheme will put US patent system at risk

The U.S. government has a bad history of taking money from the USPTO.  Since 1991, $1 billion has been skimmed from the office’s budget during the appropriations process and diverted to unrelated agencies.  This isn’t taxpayer money, but fees paid to the USPTO by patent and trademark applicants (i.e., inventors and brand owners). 

Fee diversion has often delayed infrastructure improvements, contributed to patent and trademark backlogs, and lowered the quality of issued patents.  Time and again, IP associations have argued for legislation to prohibit such “reallocations” of USPTO funds to no avail.  Although the Leahy-Smith America Invents Act purported to provide safeguards against this practice, there is no guarantee that the USPTO’s self-funded budget will remain its own.  In fact, in 2013, $147.7 million was withheld when OMB subjected the agency to sequestration based on a faulty interpretation of the law.

{mosads}Now, a new diversion scheme might be on the horizon:  a Department of Commerce “Shared Services initiative” announced to the Patent Public Advisory Committee in August, 2015.  Its stated intention is to streamline IT and other functions across Commerce.  Details remain scarce, but apparently it would target “mission enabling services,” including Human Resources, Financial Management, Information Technology, and Acquisition.

The goal is admirable—it makes sense to increase efficiencies across agencies with similar needs.  But the USPTO is distinct from other Commerce agencies in that it:

·         Is one of few fully self-funded U.S. government agencies—the user fees that sustain the USPTO must remain under the USPTO Director’s control and be employed solely to operate the country’s intellectual property system; 

·         Has unique hiring needs and skill requirements—patent examiners especially require highly technical knowledge, skills, and abilities that the USPTO is best positioned to evaluate; 

·         Has IT unique needs critical to patent and trademark examination; and

·         Has been investing in modernizing its IT system since 2008 and has implemented a “global dossier” information sharing system—an initiative like this would divert attention from both efforts. 

As one of the larger Commerce agencies, the USPTO will undoubtedly shoulder a hefty percentage of the cost of a shared services plan.  Developing a shared IT platform across 13 agencies could cost tens of millions of dollars.  Such a major project on top of improvements the USPTO has already made to its existing IT platforms could create major inefficiencies and waste.  Likewise, requiring the USPTO to purchase services from other agencies could increase costs for the USPTO, as could forcing it to provide services to other agencies for less than cost.  A new model for human resources support could threaten the USPTO’s position as one of the top agencies to work for in the federal government. 

Of course, we don’t know how the initiative will be implemented, because we haven’t heard very much about it.  But the initiative could undermine the administration’s desire to become the world leader in innovation and STEM fields.  The White House “Strategy for American Innovation” released in October, 2015, recognizes the need to “empower a broad range of innovators to help solve the nation’s pressing challenges.”  Making the USPTO inefficient and more expensive for users by forcing it to participate in a shared services model would weaken incentives to innovate in the fields singled out by the Strategy.

Diverting USPTO user fees is never justifiable, even when the USPTO is running a surplus, but it is not running a surplus now.  Patent filings have leveled off, patent costs are high, and there is too much patent litigation.  If fees are diverted to support an unworkable shared services initiative, the USPTO will have to increase fees.  Every extra dollar users pay could be a dollar that otherwise would have been spent on research, development, and commercialization.

In my farewell remarks before retiring from Intellectual Property Owners Association, I said it is up to the IP community to educate government and the public about what is best for a robust innovation system.  It is my job and that of others in the IP community, as guardians of the patent system, to educate those who don’t understand the crucial role of the patent system in innovation.  

Taking money away from the USPTO is a terrible idea.  Commerce must allow the USPTO to opt out of any aspect of the Shared Services initiative that would harm the USPTO.  The country’s reputation as a leader in innovation depends on it. 

Wamsley retired on Dec. 31 as executive director of Intellectual Property Owners Association in Washington, DC.  He held the post for 32 years.  Opinions expressed here are his own.