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Lawmakers: Hands off patent fees

The U.S. House of Representatives overwhelmingly approves legislation aimed at boosting the effectiveness of the Patent and Trademark Office; the measure now goes to the Senate.

The U.S. House of Representatives approved on Wednesday legislation that would prevent lawmakers from directing patent fees away from the Patent and Trademark Office toward the general fund and other unrelated areas. The landmark bill could set new ground rules for budget-making in Congress.

The measure, which passed 379 to 28, is now headed for the Senate. Innovators and high-tech trade groups view H.R. 1561 as critical to relieving the overburdened Patent and Trademark Office, which has seen hundreds of millions of dollars in fees siphoned off to other government concerns over the past decade.

"This is a major achievement by the House. This is the first time any legislation has passed that eliminates the diversion of fees to unrelated government programs," said Herbert Wamsley, executive director of the Intellectual Property Owners Association. "Between 1992 to 2003, the number of patent filings have doubled per year. During that same time, more than $700 million in patent fees were diverted."

House approval of the proposed law comes amid mounting criticism of the office and its patent approval process, with numerous complaints of lax reviews and questionable patent grants. Among the patents routinely held up for ridicule are a method for swinging a swing from side to side and a method for making a crustless peanut butter sandwich.

The issue became a hot one for the software industry in the late 1990s after court approval of new rules allowing patents for computer programs and business methods. The agency has been hammered over charges that it handed out numerous patents under the new rules without conducting sufficient "prior art" investigations aimed at determining the originality of proposed inventions.

Diverted funds may have contributed to the problem by limiting the agency's investments in developing comprehensive technology databases to assist in patent reviews.

The patent office, which is expected to have an annual budget of $1.3 billion in fiscal 2005, will get a windfall of more than $200 million if patent fees are allowed to remain within the agency, Wamsley said.

"That $200 million is a key component to the PTO's 21st century strategic plan," Wamsley noted. "It makes the difference between keeping up with the number of patent applications coming in the door and gaining ground. It will take a few years to eliminate the backlog."

Companies such as Hewlett-Packard and IBM are prime examples of companies that are striving to drive their patent numbers to greater heights. HP, for example, is looking to a source of revenue by creating a separate business around its intellectual property.

The number of patents filed is expected to grow 5 percent next year. And without the more than $200 million in fees, the average time to process patent applications would slip to three to four years, said Congressman Lamar Smith, who authored the bill, in addressing the House speaker.

"If this fee bill does not become law, it is estimated that 140,000 patents will not be issued over the next five years. That's 140,000 missed economic opportunities for the American people," said Smith, R-Texas.