USPTO Says Hold Everything on Fast Tracking

It appears the expected $40M in related fees is not going to be able to fund the proposed Fast Track  (Track One) at USPTO; the plug has been pulled a week from its proposed start. The budget crisis at the agency appears to be severe, according to Director David Kappos. So not only will Track One not be implemented, the current pace of reducing the 700,000 applications backlog will be slowed. Here are excerpts of Kappos memo to the agency:

As you may know, the FY 2011 budget was signed by the president on April 15, 2011 and contains the USPTO’s appropriation through the end of this fiscal year, September 30, 2011.

With the enactment of the Full-Year Continuing Appropriations Act, 2011 (Pub. Law 112-10), USPTO spending authority for FY 2011 has been limited to $2.09 billion. In view of the funding cuts reflected in the final budget and affecting the U.S. government as a whole, we will be unable to expend the additional $85-100 million in fees that we will be collecting during this fiscal year—funds that we had anticipated being able to use to fund operations this year.

In short, the Continuing Appropriations Act for FY 2011 does not allow us to maintain spending at the levels planned for this year. Further, I am mindful of the fact that we may very well be operating at the FY 2011 level for the foreseeable future. As a result, we have had to make some difficult decisions in order to ensure the responsible stewardship of the agency. It is against that backdrop that I must reluctantly announce, effective immediately, that:

• All overtime is suspended until further notice;

• Hiring—both for new positions and for backfills—is frozen for the rest of the year unless an exemption is given by the Office of the Under Secretary;

• Funding for employee training will be limited to mandatory training for the remainder of the year;

• Funding for contracting of Patent Cooperation Treaty (PCT) search is significantly reduced;

• The opening of the planned Nationwide Workforce satellite office in Detroit and any consideration of other satellite locations are postponed until further notice;

• Only limited funding will be available for mission-critical IT capital investments;

• The Track One expedited patent examination program, scheduled to go into effect on May 4, 2011, is postponed until further notice.

In addition, all business units will be required to reduce all other non-compensation-related expenses, including travel, conferences and contracts.

Trademark activities are unaffected and will maintain normal operations.

I want each of you to know that we have not come by these decisions easily. I recognize that these measures will place additional burdens on your offices, your staff, and your ability to carry out the agency’s mission. However, I believe that they are absolutely necessary to ensuring that the agency can continue to operate through the remainder of this fiscal year and into FY 2012.

I thank you for continuing cooperation and patience, and I appreciate your dedication and service during this challenging time.

David Kappos Under Secretary of Commerce for Intellectual Property and Director of the USPTO

Everyone has their pet projects. The not-in-my-backyard attitude is prevalent, as it has been historically. However, if GNP growth is dependent upon continual innovation, and if patent prosecution is a critical part of value creation, how is this severe funding reduction not contrary to national interests?

Let's take it out of the scale of the U.S. for a second to get some perspective on this problem.  What happens to innovation when patent applications are not acted upon in a timely way?  Two days ago, on World Intellectual Property Day, a relatively obscure speech in Venezuela outlined the painful cause and effect.  Ivonne Gonçalves de Schwartz, general director of Clarke, Modet & Cº Venezuela, a leading Spanish intellectual property group, reported no patents (zero) have been granted in any area in Venezuela in the past five years.  As a result, "Sure enough, less than half the patents that used to be applied for in 2005 are being requested now; inventors' interest has diminished." 

B.F. Skinner would be so proud.  Take away the rewards and the behavior diminishes. Is innovation the behavior we really want to diminish?