Independence is Bliss? The Idea of an Independent U.S. Patent and Trademark Office

Will there ever be an independent Patent Office? Although the idea has been floated for years without gaining traction, some see a brief mention in the FY2018 Budget Resolution, released by the House Budget Committee earlier this fall, as a sign.

In an inconspicuous location on page 50 of the 63 page Resolution appears the statement “[e]stablish the U.S. Patent and Trademark Office as an independent agency.” No other mention of the proposal, timeline, implementation steps or the like is given. The section appears under the larger heading “Eliminating Waste and Duplication,” where the Resolution’s authors had this to say about the Commerce Department in general: “The federal regulatory regime of the previous administration allowed the rulemaking process to protect established corporate actors, to the detriment of innovative small businesses…. Our budget supports the recent Presidential directives established by the Trump Administration to combat the regulatory burden placed on manufacturers and streamline the permitting review and approval processes…. The Department of Commerce and its various agencies and programs are rife with waste, abuse and duplication.” Still, many commentators were quick to point out that this is hardly the first time the proposal of an independent PTO has been floated, and that the idea received serious consideration during the discussion surrounding the 1999 American Inventor’s Protection Act.

It’s worth keeping in mind that the USPTO is one of the few federal agencies that actually makes a profit from its operations, versus the majority of other U.S. federal agencies which require taxpayer dollars to carry out their delegated functions. Currently, the PTO collects filing fees from applicants for patents and trademarks, as well as additional fees for many other services, which fees cover the operations of the PTO, including its Trademark Trial and Appeal Board (TTAB) and Patent Trial and Appeal Board (PTAB), and then some. Historically, however, the federal government has diverted excess fees collected by the PTO away from that Office and into unrelated government programs – some estimates put the figure at more than one billion dollars diverted from the PTO since the early 1990s alone. In 2011, a Patent and Trademark Fee Reserve Fund was created to hold all patent and trademark fees collected by the PTO, with all allocations from the Reserve Fund to be determined by Congress under the PTO’s annual appropriation amount.

Needless to say, many on the ground foresee strong efforts by Congress and the broader Commerce Department to resist the establishment of the PTO as a separate agency. The potential plan has both pros and cons. To begin with, it’s not at all clear that establishing the PTO as an independent agency would alter the PTO’s budget allocation, or the practice of Congress in requisitioning funds collected by the PTO for programs unrelated to the prosecution and administration of patent and trademark applications. If such fee diversion was curtailed, however, many practitioners would see this as a positive, allowing the PTO to invest more money into programs to improve the speed of patent and trademark prosecution and/or the quality of issued U.S. patents and trademarks, or even to lower the fees collected from applicants. One other positive, possible impact is the potential for the PTO to avoid some of the red tape that comes with its position under the arm of the Commerce Department. Also, separation of the PTO as an independent agency may allow the PTO’s Director to have a more forceful voice at the table where policy decisions are made, rather than being subsumed under the wing of the Commerce Department. Many members of the intellectual property community in the U.S. see this as a positive, given that those directly responsible for the operations of the USPTO have a more focused and realistic view of the issues faced by patent and trademark applicants and practitioners.

Overall, however, the PTO currently enjoys a meaningful amount of autonomy as compared to other government agencies, and so in the relatively unlikely event that the proposal to make it an independent agency gets off the ground, the eventual changes may not be all that significant or short term. Patent and trademark applicants should not make, or expect, any sudden moves based on this development.