Patent Pending... and Pending... and Pending

Why so Long?

Everyone we spoke with agrees that the major problem boils down to the PTO lacking sufficient resources to deal efficiently with a flood of applications—now more than 400,000 filings per year and rising. Intellectual-property litigator Thomas Hamlin, a partner with Robins Kaplan Miller & Ciresi, LLP, in Minneapolis, expresses the consensus view: “The PTO is grossly underfunded, and there’s no advocate out there saying, ‘Let’s give more money to a federal agency.’”

The PTO actually is self-funding, drawing its budget (about $1.7 billion in fiscal 2006) from congressionally approved charges to patent and trademark applicants—filing fees, approval fees, and patent-maintenance fees. If the PTO is underfunded, an obvious remedy is to raise its fees, as Congress did most recently in fiscal 2004. But higher fees address the problem only if the PTO actually gets to keep the money. In that regard, Congress itself historically has been the PTO’s great handicap.

This is due to “fee diversion,” Congress’ long-time practice of dipping into PTO funds to use them for other purposes. Since 1990, according to the Intellectual Property Owners Association, $750 million in PTO user fees have been diverted to other government uses—almost $100 million in 2004 alone.

Though the problem has lessened for the past two years, the consensus in intellectual-property circles is that a first major step toward solving the PTO’s problems would be to end the practice of fee diversion permanently. Proposals to do so, including a provision sponsored by Minnesota Senator Norm Coleman, are under consideration (as of Fall 2006) in the House and Senate, but similar initiatives have died in Congress over the years.

Until the possibility of fee diversion is eliminated permanently, it will remain difficult for the PTO to plan and manage its resources    effectively, suggests trademark attorney Barbara Grahn, a partner with the Oppenheimer Wolff & Donnelly, LLP, law firm in Minneapolis. She says the average time to first office action for trademark applications stands at about six months—less horrific than the average for patents, but still too long. The PTO is more than willing to try to speed things up, she says, but figuring out how to do so is tough when you don’t know from year to year whether Congress will decide to snatch $100 million from your budget.

“The commissioner for trademarks has noted that because Congress isn’t diverting fees in the current budget cycle, they will be able to hire more people,” Grahn says. “That’s fine until they have to fire those people [when diversion next rears its head].”