One of the first provisions of the Leahy-Smith America Invents Act to take effect was the 15% surcharge on most USPTO user fees that the USPTO started collecting on September 26, 2011. As I wrote previously, the USPTO has not been able to spend any of the extra fees collected in the last few days of the fiscal year that ended September 30, 2011, and will not be able to spend any of the additional fees it is collecting now unless and until Congress increases its appropriations.

Last week, the Intellectual Property Owners Association (IPO) published numbers that drive home the extent of the fee diversion problem, and illustrate how patent reform is exacerbating the situation. Before patent reform was enacted, the USPTO had been on track to lose $70 to $100 million. However, because so many patent applicants paid fees "early" to avoid the new surcharge, the USPTO ended up collecting over $200 million more than it was authorized to spend. That means patent and trademark applicants paid over $200 million in fees that, instead of going to fund USPTO functions, went into the United States treasury's general fund.

The gap between fees collected and USPTO spending authority will continue to grow unless Congress puts an end to fee diversion. Although the Leahy-Smith America Invents Act includes provisions that require all USPTO fees collected in excess of its appropriations to be held in a "reserve" fund, there does not appear to be any requirement that Congress actually permit the USPTO to spend the monies in that fund. With talk of continuing resolutions to fund government agencies at existing levels and proposals of accross the board budget cuts for the new federal budget, it is hard to be optimistic about the USPTO's future spend authority.

Congress must realize that its historic work to reform the U.S. patent system will be for naught if the USPTO is not adequately funded. The USPTO cannot be expected to carry out the new demands of patent reform unless it has access to all of the fees that applicants are paying to prosecute and maintain their patents.