PTO user fee diversions to end after FY 1998 under budget agreement, Sen. Hatch reports.

PTO USER FEE SURCHARGE TO END AFTER FY 1998 UNDER BUDGET AGREEMENT reached between congressional Republicans and the White House, Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) reported at a May 7 hearing on his Omnibus Patent Act of 1997 (S 507). "I have been working with the Chairman of the Senate Budget Committee, Sen. [Pete] Domenici [R-N.M.] to make certain that the surcharge is not extended," Hatch said. "I am happy to say that the budget agreement announced last week envisions an end to the surcharge after fiscal year 1998, and I will continue to be vigilant to ensure that does not change."

As a result, S 507 does not address the use of Patent & Trademark Office user fees for general deficit reduction, Hatch said. "I believe it is dealt with more effectively in another manner." House patent legislation passed April 23 (HR 400) directs that all fees collected by PTO be directed solely to agency activities ("The Tan Sheet" April 28, p. 19).

At the May 7 Senate hearing, Judiciary Committee ranking Democrat Patrick Leahy (Vt.) asked PTO Commissioner Bruce Lehman about the impact of a continued diversion of funds for deficit reduction. Lehman projected that "pendency under current budgetary assumptions will rise by the year 2002 to 48 months from the current 20 months. That is over a doubling of pendency."

"When HR 400 was being considered in the House, the Administration lent its support for the bill after it was amended to provide for an under secretary of commerce for intellectual property," Hatch noted. "If we amended [S 507] similarly, would the Administration be able to support this bill?" Lehman answered that "if we amended it similarly, I believe, yes, we would be able to support it." He added that the Clinton Administration wants "to work to improve the bill in the Senate and, presumably, in conference at some point."

Lehman expressed opposition to an amendment to HR 400 introduced by Rep. Marcy Kaptur (D-Ohio) and approved by the House, which would exempt small businesses, independent inventors and universities from the bill's patent publication provisions. "If the Kaptur amendment remains in the bill, we would have to make a judgment in the end as to whether or not that required a veto," Lehman warned.

A bifurcated system with different publication rules for small inventors "is going to pose a very large administrative burden on us," Lehman contended. He added that the bill's proposal to publish all patent applications 18 months after filing is partly an effort to block "submarine" patents, which are intentionally hidden and delayed in an effort to profit from future patent litigation. "Most submarine patent applicants are individual inventors," Lehman asserted.

Sen. Jon Kyl (R-Ariz.) indicated support for the approach taken in the Kaptur amendment. "I urge you to appreciate the fact that you may have to face the question of supporting the legislation with the Kaptur language in it, or coming up with some other voluntary system that enables the small inventor" to decide whether his or her application should be published prior to patent approval, Kyl told Lehman.