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Bowing to years of pressure from the intellectual property community, Congress has come up with compromise legislation that will end the diversion of patent and trademark fees to other government programs. The House Judiciary and Appropriations Committees reached an agreement late Tuesday to amend the U.S. Patent and Trademark Office fee bill, H.R. 1561. The bill now specifies that if the PTO collects fees in excess of the amount Congress appropriates to the agency in a given fiscal year, the excess will be deposited in a special fee reserve fund to be set up in the Treasury Department. The bill also calls for the PTO director to issue a rebate to individuals who have paid user fees through the year if the director decides the reserve fund has sufficient money. The legislation now heads to the House floor, where it is expected to pass. Congress has diverted money from PTO coffers to pay for other federal programs since the agency became fully fee funded in fiscal 1991. In the last 12 years more than $650 million has been diverted from the agency. Intellectual property advocates have fought the practice, arguing it prevents the agency from hiring additional patent examiners and expanding its resources. “We support this proposal,” said Herbert Wamsley, executive director of the Intellectual Property Owners Association. “We think it’s very significant because it’s the first time the appropriators have agreed to end diversion.” The IPO had lobbied intensely for passage of the fee bill, which would have permanently eliminated fee diversion and removed Congress from the PTO funding process. The compromise, Wamsley said, “gives appropriators what they want: the ability to continue to have oversight over the PTO.” Others in the IP bar are also lauding the agreement. “It’s an unusual but creative way to solve the problem,” said former PTO Director Q. Todd Dickinson, a partner at Howrey Simon Arnold & White. The Bush administration also supports ending fee diversion. The president’s proposed budget for fiscal 2005 called for the PTO to keep all fees it raises next year. The budget anticipates that the agency will collect $1.53 billion in 2005, reflecting a 15 to 25 percent increase in user fees mandated by H.R. 1561.

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