By Dennis Crouch
Many agencies within the Federal Government are suffering under sequestration that effectively cuts budgets by about 5% for the rest of the fiscal year. In March, I reported that the USPTO would not be forced to cut its spending because the collected fee revenues were already under budget. It seems that result is not sitting well with other federal agencies who would prefer to see more equal suffering. Under orders from the White House, it appears that the USPTO will now be forced to reduce its spending – essentially using fee revenues as the base from which to cut.
Robert Budens sent around an email raising some alarm regarding USPTO funding. Budens heads the USPTO employee union POPA. Budens writes:
About a week or so ago POPA started hearing rumors that the White House Office of Management and Budget (OMB) was attempting to mess with USPTO funding by requiring that our sequestration hit be taken off of our fee income rather than our appropriated budget level. I also heard that USPTO management had been put under a "gag order" not to discuss these changes until approved by OMB and Commerce. The rumors also suggested that the sequestered fees would not go into our AIA reserve fund for later availability, but would in fact, not be available for USPTO use, i.e., our fees are going to be diverted once again, barely a month after full implementation of the AIA that was supposed to prevent fee diversion!
In discussions with AIPLA, IPO and others, I learned that they had also heard such rumors and that none of us were getting any information out of USPTO management. To date and despite numerous inquiries from POPA, USPTO management has still not discussed this issue, all but confirming the gag order.
I believe other recent developments have all but confirmed those rumors and I wanted to update you because OMB's interpretation of the impact of sequestration on the USPTO will have significant impacts.
Today, the OCIO notified its staff of an $80M cut to the OCIO budget. [DDC Note: Office of the Chief Information Officer] This will result in layoffs of a number of USPTO contractors and significant delays in the development of the Patents-End-To-End project (PE2E) and upgrades to PALM — both critical IT projects. Obviously this is not good news, but I suspect it is evidence that OMB's sequestration decision is being implemented. And yesterday, you all should have seen the Memorandum from the ADCs regarding changes to overtime in the Examining Corps. Again, more evidence that the rumors are true.
The USPTO's fee income is currently below projected levels. In other words, we are already operating in a sequester environment by virtue of our reduced fee income. It is incomprehensible to me why the White House would then pile on us by taking such a negative interpretation of sequester on the USPTO. This is about as short sighted as anything I can think of. Our fee income represents filed patent applications that will need to be examined. To now take away those fees while leaving the USPTO with the work to do is counterproductive.
In his letter, Budens mentions the AIA reserve fund that is now codified in 35 U.S.C. § 42. The law establishes a "Patent and Trademark Fee Reserve Fund" within the US Treasury.
If fee collections by the Patent and Trademark Office for a fiscal year exceed the amount appropriated to the Office for that fiscal year, fees collected in excess of the appropriated amount shall be deposited in the Patent and Trademark Fee Reserve Fund. To the extent and in the amounts provided in appropriations Acts, amounts in the Fund shall be made available until expended only for obligation and expenditure by the Office in accordance with paragraph.
As Budens suggests, it does not appear that this provision would be effective against the budget cuts outlined above because they are coming from either executive fiat or the cap set in the Budget Resolution – neither of which changes the amount appropriated.
Depending upon how it is calculated, the USPTO may be facing about $140 million in cuts for the remaining 5½ months of FY2013.