The USPTO Regularly Turns A Profit But Is Still Forced To Suffer Through Every Sequestration And Shutdown

from the sympathy-for-the-USPTO-somewhat-of-an-anomaly-itself dept

The US government is now shut down, thanks to both parties’ inability to see a national budget as anything more than a partisan battleground, sniping at each others’ pet funding for weeks on end without reaching a compromise. A number of gutless spending cuts were proposed, fought over and rejected, with very little forward progress being made.

This shutdown hits certain agencies harder than others. National parks, health services, immigration and housing (among others) are being closed while intelligence agencies (along with any agency that “provides for national security”) have been greenlighted for business as usual. Fans of IP will be happy to hear that the USPTO will be staying open, at least for the next month or so, thanks to a reserve fee surplus.

In the event of a general government shutdown on October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for approximately four weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we will be able to operate in this capacity during a general government shutdown. We will provide an update as more definitive information becomes available.

Should we exhaust these reserve funds before a general government shutdown comes to an end, USPTO would shut down at that time, although a very small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions.

Say what you will about the office’s track record of granting trademark and patent protection to some very dubious applicants, but the USPTO does some things few other government agencies can claim: 1.) operate on its collected fees and 2.) turn a profit.

As it technically shouldn’t require a budget allocation to operate, it seems odd that it should have to shut down at all. Arguments were made by the American Intellectual Property Law Association earlier this year that it shouldn’t be part of the sequester, thanks to its ability to fund itself with collected fees.

“[W]e have serious doubts that the USPTO is lawfully subject to sequestration in the first place because it is funded through fee collections, not through government spending.”

“We believe that [the procedures being applied] restricts the spending authority of fee funded agencies and impacts them asymmetrically and unfairly relative to non-fee funded bodies.”

So, the USPTO is still a budget line and as such, is subject to the same treatment as other entities in these appropriations bills. Consequently, it will be shutting down along with the rest of the government if the shutdown outlasts its reserve. The other factor that plays into this strange situation is the fact that the reserve fees it’s using to fund the next four weeks aren’t safe from the rest of the government, which has shown a propensity for dipping into the USPTO’s profits repeatedly over the past 20+ years.

Fee diversion (i.e., confiscating money paid to the USPTO by customers) has a long history that spans at least two decades and three different Presidents, although for a brief time during the Bush Administration it did cease thanks to the efforts of then Director Jon Dudas.

More details here.

Since 1991, about $1 billion in user fees have been withheld from the USPTO as a result of the practice of diverting user fees – collected from patent and trademark applicants – away from the Office to unrelated government programs. The America Invents Act, signed into law on September 16, 2011, created a “reserve account” in the U.S. Treasury to hold the fees collected by the USPTO that exceed its annual appropriation. The law instructs the USPTO to look to appropriations acts for instructions on how to access the money. The FY 2012 appropriations bill did include instructions for the USPTO on how to access money in the reserve fund, however such language must be reinserted each future appropriations bill. Therefore, the reserve account alone will not stop diversion and a more permanent fix is needed.

To that end, Rep. Mike Honda has submitted a bill to protect the reserve fees from being diverted to cover shortfalls elsewhere or fund new spending. But, much like the budget itself, it’s currently languishing in the House, not having moved forward since June 28th.

The entire office (of nearly 12,000 employees) won’t be shut down, though. Critical systems will be maintained in order to protect two mostly-imaginary things that the government holds near and dear: intellectual property rights and national security.

The excepted employees will ensure the functionality of processes and systems minimally necessary for the preservation of patent rights, to allow compliance with statutory provisions that cannot be waived, and avoid disclosures of information that would be detrimental to the national security.

Additionally, the excepted employees will ensure the functionality of processes and systems minimally necessary to preserve trademark rights. Preventing the public from accessing the USPTO’s electronic filing and payments systems may result in the complete or partial loss of intellectual property. Therefore, in order to prevent the loss of valuable intellectual property, these systems should remain open during any closure of the USPTO.

While I have (along with others) expressed some deep disappointment and incredulity at the agency’s actions, the fact remains that it’s a governmental anomaly. It turns a profit. And its reward for making money is being made to suffer through sequestration and shutdowns and have its surplus (which could keep it operating through both events) drained by opportunistic legislators who assume a penny saved is a penny better spent.

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Comments on “The USPTO Regularly Turns A Profit But Is Still Forced To Suffer Through Every Sequestration And Shutdown”

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37 Comments
bshock says:

Please don't be a false-equivalence twit

“thanks to both parties’ inability to see a national budget as anything more than a partisan battleground”

Right. So I guess if someone puts a gun to my head and tells me to hand over all of my cash, I guess I share the responsibility for getting us both into this unfortunate situation.

I suppose if you were on the jury for a rape trial, you’d have to be the one to point out that the woman was just asking for it — look at the way she was dressed.

Funny how playing the false equivalence card makes some people feel so wise, particularly since such false equivalence is usually based on poor facts and poor thinking.

Gwiz (profile) says:

Re: Please don't be a false-equivalence twit

So I guess if someone puts a gun to my head and tells me to hand over all of my cash, I guess I share the responsibility for getting us both into this unfortunate situation.

I’m not really wanting to get into a partisan debate here (mainly because they are pointless and fruitless), but I am curious as to which side you are considering the “gun welder” and which side is “the victim” in this debacle.

Anonymous Coward says:

Re: Re: Please don't be a false-equivalence twit

IMHO the perp is Congress, and the victim is the General Public.

But in regards to this story, if they’re operating on a surplus then maybe they could use some of that cash to, I dunno, maybe HIRE some more people so we don’t end up with all these garbage patents?

Anonymous Coward says:

The fact that the USPTO does turn a profit isn’t a good thing, in fact it’s a terrible thing. If it collects user fees, then the internal goal of the USPTO is to push through as many applicants as possible to get more fees. The result is what we’ve seen from the agency: a focus on approving as many applications as possible with little regard to quality. The fact that it’s making such a profit should be held against it.

Ninja (profile) says:

Re: Re:

It’s happening with S?o Paulo’s Govt as a whole. Places that shouldn’t be turning a profit or cutting expenses are being forced into this thought. The environmental agency is a good example. The benefits of an environmental monitoring program cannot be measured in simple financial data but rather in a more systemic process of thought. How does this monitoring networks benefit the citizenry? A good example would be several municipalities building wastewater treatment facilities which is improving water quality overall and providing more resources for human consumption (unfortunately we fucked up our water resources badly).

Govt outfits should not turn profits. They should, at most, break even. The population already pays taxes for those services so the budget they receive should not be counted as cost but rather as revenue. What needs to be addressed and monitored is how efficiently that revenue is spent so it can be adjusted accordingly. And even that monitoring must be well focused.

Anonymous Coward says:

no wonder US companies and industries act like this. the government is leading by example! if you want something, dont make or take any compromise or anything less than what went on to the table originally. the entertainment industries are a perfect example. give them something they ask for, only to find it was a lead in to something else. that continues to lead into other things but there is never any concessions given or any compromise on what the final aim is.

Anonymous Coward says:

Re: Re:

Right, what happened is that the Republicans cared more about crippling Obamacare than passing the budget, and Obama cared more about not crippling Obamacare than passing the budget. End result: no budget, government shuts down.

You’d think one side or the other would’ve been willing to compromise to keep the government from shutting down, but apparently we’re ruled by petulant manchildren who take their ball and go home if they don’t get everything they want, consequences be damned.

Rapnel (profile) says:

Re: Re: Re: Re:

I find it a bit of a stretch and an oversimplification, to say the least, that simply because one side or individual won any election that all desires of the winners be signed, stamped and delivered.

There is, apparently, a large mass of voters that vote defensively against what they perceive is the greater evil. No?

Your argument doesn’t hold up as an argument as you are, basically, just swinging your lollipop of an opinion around wondering who would like a lick.

(e.g. completely overlooking the tea-party surge into congress flips your basic premise on its head, thus: shutdown. Hello?)

I didn’t vote for the current president but who the fuck in their remotely right mind actually wanted that other guy? Like bad isn’t bad enough or something.

OneSeraph (profile) says:

Re: Re: Re:

O.K.
The fact is the affordable heath care act (Obamacare) is not a bill, it’s the law. It was passed by both the house and the senate. Next it faced a Supreme Court challenge. The Supreme court ratified the law (Obamacare). Then the republican party ran a candidate (Mitt Romney) in the last presidential campaign who swore to get rid of the affordable health care act (ObamaCare). Romney lost the election by millions of popular votes and a landslide in the electoral collage.

That means the American people didn’t want to get rid of the affordable health care act (Obamacare). It also means that the republican party like it or not is blackmailing the American people (who already voted twice and affirmed twice the affordable care act(Obamacare). Basically the republicans in the house have put ideology in front of country. By willfully shutting down the government they have done tangible harm to American citizens.

We should not allow these radicals to cause any more harm to the American people. First they try to subvert the will of the people. When that fails they use what power they have to bring direct harm to American families. There is a word to describe the sort of scum that would do that. The word is traitor. That’s right “traitors”; every one of them should get the punishment reserved for traitors to the flag.

I for one am tiered of these so called conservatives cloaking themselves in the flag, while stabbing the American people in the back. We sent them to Washington to govern, to do the day to day business of running the government. The current republican house of representatives has not only failed to do the basic business of running the government through inaction. By action they are intentionally bringing real harm to millions of Americans.

Signed, Real Conservative

Niall (profile) says:

Re: Re: Re: Re:

I saw it interestingly put another way: Imagine everything was reversed, and the Dems were (minority) House controllers and were absolutely determined to force through gun control against ‘the elected will of the people’ by using every dirty trick and blackmail opportunity having failed over 40 times using normal legislative means.

Even as a gun control advocate I’d see that as a pretty stupid, dick move.

As someone else pointed out, it’s not about (actual) liberty or war or the overall economy. It’s about insurance, only insurance! It’s about actively denying people access to (affordable/any) healthcare, it’s about stopping anything a particular president does, no matter what, and it’s about ignoring the democratic structures that are held up so religiously by the tea party in their other holy babble, the Constitution.

John Fenderson (profile) says:

Re: Re: Re:

Your characterization is misleading.

The shutdown is entirely due to petulance on the part of a subset of Republicans. There is an established, democratic, and accepted way of getting rid of Obamacare: repeal the law — it’s Congress who made it law in the first palce, after all. If the votes aren’t there to do that, then that’s the the way the cookie crumbles. You address that by making your case better so that you can convert some of the votes.

What you don’t do is hold something essential, like the functioning of government, hostage to try and force your whim no matter what. That’s undemocratic, unamerican, petulant and immature.

I’m not very happy with Obama, but I’m behind him 100% in not giving in to these scumbags on this. If he does, it’s the end of effective representative government, as these people will just continue to use these types of tactics to force their will on everyone.

Obama’s not being petulant. He’s standing up to dangerous bullies.

Anonymous Coward says:

The IRS is in a similar situation

The IRS is in a similar situation with sequester and budget cuts.

CBO (congressional budget office) studies have shown that every dollar the government gives the IRS returns $10 from the IRS being able to collect back taxes and prosecute tax cheats.

Sure at some point if you keep giving the IRS more money you’ll get diminishing returns. But year after year, despite constantly changing and even more complex tax laws, the IRS has consistently had it’s budget SLASHED, despite that actually costing the Federal Government, and the rest of us tax paying Americans more.

Today the IRS’s budget is 18% smaller then it was a decade ago, while the US’s population has only grown by tens of millions. This smaller operating budget means the IRS has had to do things like cut out some safeguards, which helped cause the most recent IRS scandals, because you know, safeguards are normally put in place for a reason.

Fentex says:

Shutdown

thanks to both parties’ inability to see a national budget as anything more than a partisan battleground,

This is inaccurate and such faux attempts at balance in reporting is inappropriate – the Republican party is clearly responsible, this is not a bipartisan event – and pretending it is misleading and failing to clearly report facts thus undermining citizens ability to respond at the polls.

Brazenly anonymous says:

Re: Shutdown

Question, do you honestly believe that the democratic party would not have done this in a similar but reversed situation?

Sure, they might not have thought of it, but if they did, would they outright reject the option?

Do not be fooled by partisan politics. When something actually matters, like when our rights are infringed or the government takes corrupt action to hand out massive sums of money to lobbyists, the parties stand united. United against the people.

Niall (profile) says:

Re: Re: Shutdown

I’m pretty sure there have been plenty of times that they could have, and haven’t. I’m pretty sure the last shutdown was forced by the Rethuglicans as well.

Regardless of if the Dems ‘might’ do this – the Republicans have. And if it works, it destroys what’s left of your country’s representative democracy and turns it into a banana republic. Because as sure as eggs is eggs, the Rethuglicans will use this every time they are in a legislative minority, and if the Dems try it back (and you would so deserve that) they will moan to high heaven about the ‘unfairness’ and ‘undemocratic’ nature of the tactic.

Frankly, unless you fix the insane nature of your political system (yearly votes on a budget that can close the government without hurting the politicians directly, the ability to gerrymander so easily, idiotic filibuster possibilities) you will constantly be subject to the tyranny of the insane.

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