IP Law Bulletin

May 17, 2011

The recent federal budget compromise will cut approximately $100,000,000 from the fees collected by the United States Patent and Trademark Office (USPTO) and divert that money to other federal programs. The cuts result from a budget provision that limits USPTO spending to $2.09 billion for the 2011 fiscal year, despite expected fee collections of about $2.19 billion for the same period.  

In response to the funding cuts, USPTO Director David Kappos announced that the expedited patent examination program and the opening of the Detroit satellite office would be indefinitely postponed. The cuts will also directly affect the examination corps as Director Kappos also instituted a hiring freeze and announced cuts to overtime, training, and expenses. Funding for the outsourcing of Patent Cooperation Treaty (PCT) searches will also be substantially reduced.  

The budget cuts are also likely to have some effect on USPTO Patent Commissioner Robert Stoll’s goal to issue an Office Action within 10 months of patent application filing and the interim goal that every application filed on or before June 7, 2009 should at least have received an initial Office Action by September 30, 2011. In February, Stoll announced an initiative called “Clearing the Oldest Patent Applications” (COPA) to achieve these goals. COPA is designed to address the backlog of the oldest unexamined applications, i.e, those that have been waiting at least 16 months for a first Office Action. COPA allows Examiner workloads to be rebalanced by sharing resources both within and across Technology Centers by identifying technological overlaps between art units and allowing Technology Centers to match backlog applications to available resources. Despite the funding cuts, the COPA initiative remains in place and has apparently had an impact on these older applications. For example, at the end of February 2011, there were 233,780 applications that fell within the scope of COPA. By the end of March 2011, that number had been reduced by 36,197 applications to 197,583.   

Although COPA is helpful to address the backlog of older applications by refocusing attention on unexamined cases, the short term effect is to direct attention away from other in-process applications. As a result, the Patent Office may be slower in responding to an Request for Continued Examination (RCE) or other submissions in pending applications. These slower response times for pending applications may also be further exacerbated by $100,000,000 diverted from the USPTO’s fee collections.  

The current patent reform legislation pending in the U.S. House of Representatives would effectively put an end to fee diversion. The House Judiciary Committee voted in favor of the House bill (H.R. 1249) on April 14, 2011, and it may be up for a full vote when Congress returns in May. If this legislation becomes law, the USPTO will be in a better position to meet its strategic objectives.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.