• Proposal to establish USPTO as independent agency meets with mixed response
  • Proponents point to more efficient office free of bureaucratic shackles
  • DC insider predicts opposition from Congress and Department of Commerce

The House Budget Committee has published a proposal aimed at curbing excessive government spending, with an independent USPTO included amongst its recommendations. One trademark expert told World Trademark Review that such a move would end the current “archaic” relationship between the USPTO and Department of Commerce (DOC). However, there is a feeling on the ground in DC that both Congress and the DOC will resist efforts to reduce their oversight of the agency.

Building a Better America - A Plan For Fiscal Responsibility outlines a path through which “the federal government’s excessive spending” can be curtailed, with House Budget Committee chair Diane Black writing: “Some will disagree with our budget, but the status quo is unacceptable. Our budget is one of sustainability, smaller government, stronger national security, and greater freedom for individuals. The status quo is unsustainable spending, higher deficits and debt, higher taxes, bigger government, and more federal control over the lives of Americans.”

The proposal therefore covers spending related to healthcare, the military, the role of state and local governments and welfare reform. Towards the end of the document, in a section titled ‘reducing improper payments’, comes proposals to eliminate overlap and consolidate necessary department of commerce functions into other departments, arguing that “The Department of Commerce and its various agencies and programs are rife with waste, abuse, and duplication”. In this section there is a one line mention of the USPTO – specifically the proposal to “establish the US Patent and Trademark Office as an independent agency”.

There are two aspects worth exploring at this juncture – whether establishing the office as an independent agency will help prevent “waste and abuse”, and whether it is in the interests of the trademark (and wider IP) community.

On the former, the office has previously come under fire from the Office of the Inspector General on both hiring practices, alleged waste and mismanagement at the Patent Trial and Appeal Board and reports of teleworkers falsely reporting time and attendance. However, James L Bikoff, partner at Smith, Gambrell & Russell, told World Trademark Review: “We had a case where an examiner was billing time and actually out playing golf but there are abuses in almost every federal agency where you have examiners working from home. I don’t think it really goes to the question of whether there should be a separation. I don’t personally think that continuing under the DOC will stop abuse any more than going independent would.”

What, then, to the pros and cons of an independent agency? In this respect, the suggestions has received a mixed response. Kerry Timbers, partner and co-chair of litigation at Sunstein, Kann Murphy & Timbers, agrees that – in terms of waste and abuse – the budget document “is not at all clear how establishing the USPTO as a separate agency addresses any of these concerns”, but adds: “The real story here isn’t what was said, but what wasn’t: what is the proposal for funding of the USPTO, including diversion of revenues collected by this uniquely self-funded government program? Given that the key goal of the Republican budget overall is to cut spending and reduce the deficit by a hefty $6.5 trillion, the hidden agenda is probably a significant reduction in funding to the USPTO in the form of diversion of USPTO fees to other government programs at unprecedented levels, and/or the significant lowering of USPTO fees which are primarily paid by businesses. If that is the case, there is little doubt the USPTO would have a much harder time performing its core mission. Such a penny-wise, pound-foolish ‘solution’ would undoubtedly be bad for the business community and the economy.”

However, Bikoff regards the proposal as a positive one, expanding: “I think having an independent PTO is important because having it under the DOC is somewhat archaic. It’s a huge sprawling agency with many departments and offices that are somewhat duplicative with other agencies. So I do think it would be a positive step. The USPTO is big enough that it should be on its own and be able to avoid a lot of the bureaucratic red tape it encounters these days. It would improve the USPTO’s ability to improve operations and deal with any problems it encounters in its own agency without having this DOC ball and chain attached.”

Bikoff adds that this suggestion also echoes proposals to make the Copyright Office independent and divorce it from the Library of Congress – a move he similarly supports. Conceptually, he sees the potential benefits of one single IP office, but acknowledges that this is unlikely to happen: “There have been suggestions of a US patent, trademark and copyright office, where all the functions are brought under one roof, with one director of IP. I don’t disagree with the concept but it may be more difficult as you are taking two agencies with different groups heading them, and different budgets, and trying to merge them into one organisation.”

Of the two scenarios, then, an independent USPTO is more likely. One positive is that it may, dependent on the detail, provide the agency with an opportunity to end the practice of fee diversion – something that has previously been called for by those within the office. While the agency’s FY18 budget does not propose fee diversion, a move to prevent future diversion would be welcomed by practitioners.

Of course, this is all dependent on the proposal gaining political support – something that the commentators we spoke to expressed doubt over. One DC insider, who wished to remain anonymous, told us that, while independence would greatly increase the operational flexibility of the USPTO, the proposal is not likely to get broad traction in Congress, as it would ultimately mean that the chamber has less control overs the agency’s activities. Similarly, we were told, the Department of Commerce would likely resist efforts to remove the USPTO from under its wing.

Bikoff echoes this sentiment, noting: “The Department of Commerce wouldn’t miss having the PTO separated from an administrative perspective but may from a political perspective. It’s DC after all and there are a lot of egos involved. So it wouldn’t surprise me if the Department of Commerce tried to oppose it.”

It is early stages for the bill and the sense on the ground in DC is that the push for independence will meet with opposition. Practitioners should not place any money on an independent USPTO becoming a reality in the near term…