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The U.S. government’s temporary funding bill signed by President Barack Obama on Dec. 21 is likely to cost the U.S. Patent and Trademark Office hundreds of millions of dollars in the current fiscal year, according to intellectual property trade groups. The temporary funding bill keeps the government, including the PTO, running through March 4 at last year’s funding levels. The Intellectual Property Owners Association (IPO) estimates that the bill will cost the PTO about $200 million in the current fiscal year, which ends on Sept. 30, 2011. Some of that loss stems from the delay of a planned 15% surcharge on many patent fees. The fee hikes won’t kick in until a 2011 spending bill takes effect. “The uncertainty for manufacturers over who owns rights in technology that is caused by the huge backlog of unexamined patent applications is costing manufacturing jobs,” said IPO Executive Director Herb Wamsley, in a statement. “House and Senate appropriators and their staffs tried to help the USPTO, but unfortunately they were thwarted by larger political issues,” he stated. The PTO ended up with a $2.016 billion budget in fiscal year 2010. It started with $1.887 billion, but a supplemental appropriation allowed the agency to keep an additional $129 million in fees collected. Earlier this month, PTO director David Kappos pegged the patent application backlog at 710,000. PTO spokeswoman Jennifer Rankin Byrne said the agency wouldn’t comment on the temporary budget. The budget extension is “death by a thousand cuts,” said Q. Todd Dickinson, executive director of the American Intellectual Property Law Association (AIPLA). The PTO would have gotten its temporary fee hike and full access to the proceeds in either of two budget bills that didn’t make it to Obama’s desk, an omnibus budget bill and a year-long temporary on continuing budget called an anomaly, Dickinson said. “This is the worst possible outcome,” he said. To have the budget hamstring the office is “hugely disappointing,” Dickinson said. He expects that the PTO will need to slow down hiring, cut overtime and delay information technology programs. “Those are really hard decisions all because Congress couldn’t pass an appropriations bill.” The fact that many incoming members of Congress ran on a fiscal austerity program will be a major challenge in efforts to boost PTO funding, he added. “We need to make sure they understand that while there are plenty of programs that ought to be looked at for potential cuts, the PTO needs the expanded fee revenue to improve it’s quality and reduce its backlog,” Dickinson said. “That will be an uphill education effort, particularly for new members.” The PTO asked for $2.322 billion in fiscal year 2011. The proposed budget includes $2.098 billion in fee collections and $224 million from a proposed interim fee hike. In September, Kappos estimated that his proposed budget would pay for 1,000 patent examiners each year during fiscal year 2011 and fiscal year 2012. The IPO has supported the agency’s efforts for a temporary fee hike to alleviate chronic funding problems. A House bill that would give the PTO the authority to institute a 15% temporary fee hike and the authority to permanently set fees languished after a quick referral to the House Judiciary Committee. The Patent and Trademark Office Funding Stabilization Act of 2010 was introduced on May 18. The IPO opposes giving the PTO permanent fee-setting authority. AIPLA supports it as a long as there’s a permanent end to the practice of diverting PTO fees to other government programs, Dickinson said. For AIPLA, “those two are linked,” he said. Sheri Qualters can be contacted at [email protected] .

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