IP Legislation Wish List for 2017

  Introduction to Intellectual Property System

A little more than two weeks before the events of Friday’s presidential inauguration, there was a transfer of power of a different kind. The 115th Congress was sworn in on January 3, 2017. After the traditional photo ops (complete with non-traditional dabbing), both chambers got down to the business of proposing and debating laws. 

While Congressional and White House priorities are currently understandably higher in other areas of public policy, the nation’s intellectual property system is an important engine of economic growth that should not be ignored.

USPTO and Fee Diversion

At a time when the new administration has promised a federal hiring freeze and is trying to cut funding for agencies dependent on taxpayer money, the United States Patent & Trademark Office -- the nation’s innovation agency -- is a rare federal agency that is actually a “profit” center. 

Not only does the fee-funded USPTO not utilize taxpayer money, but it often runs at a surplus. And therein lies the problem -- despite efforts to stop this practice, intellectual property user fees in excess of the USPTO’s actual operating costs often continue to be diverted from the agency’s coffers to fund shortfalls in other parts of the federal government.

Back in September 2005, I characterized USPTO fee diversion as a “tax on innovation” in my draft of Congressman Howard Berman’s (then the Ranking Member of the House IP Subcommittee) opening remarks for the USPTO Oversight Hearing. I phrased it that way in order to gain common ground with the Republicans on the subcommittee, and yet some things never change. 

Here we are more than 11 years later, and not only does the GOP still tend to focus on tax cuts, but we still don’t have a permanent solution to the problem of fee diversion.

Below is a chart from the Intellectual Property Owners Association (IPO), a trade association comprised mostly of in-house counsel, private practice intellectual property attorneys, and intellectual property owners. It shows that in the five years from 2010-2014, a total of $409.8 million in USPTO user fees have been diverted. 

Incidentally, even though the America Invents Act (AIA) included measures intended to diminish (although not eliminate) fee diversion, the year in which it took effect (2011) saw the greatest sum ever diverted -- $209 million. I said it in 2005, and I’ll say it again -- USPTO fee diversion continues to be a tax on innovation, and unless we see a permanent solution, USPTO efficiency and effectiveness will continue to be hampered.

Role of the USPTO Director

That’s what I’d like to see come from the 115th Congress in the intellectual property field. But what about other players? What’s on their IP legislative wish list?

Likely the first intellectual property priority for the 115th Congress will be to fill the role of Undersecretary of Commerce for Intellectual Property and Director of the United States Patent & Trademark Office, a position more commonly known as “USPTO Director.”

According to Politico, Congressman Darrell Issa (R-CA), the chair of the House Judiciary Committee Subcommittee on Courts, Intellectual Property, and the Internet during the 114th Congress (current subcommittee assignments are yet to be announced) and holder of 37 patents of his own, wants President Trump to keep Michelle K. Lee in this role. 

Lee, a former Deputy General Counsel for Google, who was appointed in by President Obama in 2014, is the first female Director of the USPTO (or its predecessor the Patent Office) in its more than two century history, and holds widespread bipartisan support. 

Just last week during a breakfast meeting for tech industry organizations, Rep. Issa called her “one of the great things to come out of the Obama era." Given Issa’s key role in shaping IP policy, it seems likely that bipartisanship may rule the day when it comes to filling this position. But will this be the extent of bipartisanship in this administration? Time will tell.

Conclusion

The 115th Congress is expected to propose significant changes in the area of intellectual property. The USPTO's role and its fee diversion issue are key areas of focus. The appointment of the USPTO Director and the IP legislative wish list are also anticipated to be addressed.