IP Law Daily, AGENCY NEWS: Senators ask Commerce Secretary Ross to preserve USPTO independence, (Jul 10, 2017)

By Cheryl Beise, J.D.

Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) and member Chris Koons (D-Del), who also co-chair the Congressional Trademark Caucus, have asked Secretary of Commerce Wilbur Ross to explain how the Commerce Department’s implementation of a cost-saving shared services initiative will affect the U.S. Patent and Trademark Office. In a July 7 letter, the senators expressed concern that the USPTO’s participation in the initiative could jeopardize the agency’s operational independence and cannibalize its funds in violation of statutory protections.

In 2016, the Commerce Department began implementing an "Enterprise Services" initiative to build a common infrastructure for human resource, information technology, financial management, and procurement services for the dozen or so bureaus and offices that fall under the Commerce Department umbrella. According to Enterprise Services Executive Director Glen Davidson, the initiative is expected to enhance customer experience, improve performance management, strengthen mission focus, and reduce operating costs over time due to economies of scale, scope, and geography.

"We support the Department of Commerce’s (Commerce) overall goals of finding cost savings and reducing duplicative government spending," the senators said. However, the senators point out that "the USPTO is unique among Commerce’s bureaus" in that it is entirely funded by user fees, in exchange for statutory protections ensuring that "collected USPTO fees remain in service of the mission of the agency." The senators seek assurances that the USPTO’s independent control of its operations and budget will not be compromised by the initiative and that fees collected by users of USPTO services will not be used to support other agencies.

35 U.S.C. § 1 provides that the USPTO Director "shall retain responsibility for decisions regarding the management and administration of its operations." Regarding fees collected by patent applicants, 35 U.S.C. § 42(c)(3)(A) provides that "[a]ny fees that are collected under this title, and any surcharges on such fees, may only be used for expenses of the Office relating to the processing of patent applications and for other activities, services, and materials relating to patents and to cover a proportionate share of the administrative costs of the Office" (emphasis added). Section 42(c)(3)(B) provides and equivalent limitation for trademark applications.

There are other good reasons for the USPTO to "maintain its independence and have its own, separate services in many—if not in all—of these areas," according to the senators. For example, the USPTO must be free to make the long-term investments in new IT needed to keep up with innovation. The Office also must have the flexibility to hire and maintain specialized personnel and scientifically-trained patent examiners.

The senators have posed several questions regarding the nature and extent of the USPTO’s funding of and participation in the Enterprise Services initiative. They have asked Secretary Ross to provide responses, along with supporting documents, by July 20.

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