Budget Cuts From Sequestration Threaten Patent Office Operations

Last month, Anthony Scardino, Chief Financial Officer of the U.S. Patent and Trademark Office, announced huge spending cuts due to Congress’ sequestration of government funds. But why would the government sequester the funds of an agency that pays for its own operations from fees paid voluntary by applicants for patents and trademarks?

The budget cuts amount to about $240 million, which include an already anticipated $65 million in spending cuts because patent and trademark fees have been lower than expected. The $176 million in cuts due to sequestration were the biggest piece of the pie, including a $28 million reduction in the planned hiring of patent examiners to reduce the horrendous backlog of patent applications awaiting action. The inevitable result will be a degradation of Patent Office services.

But why should the USPTO be spared from across-the-board budget cuts imposed on other government agencies?

The U.S. Patent and Trademark is one of the rare government agencies that actually turns a profit, not only in covering its own expenses with the revenues it generates, but also with the value of the products it generates. The patents and trademarks the USPTO issues provide the incentive for companies to invest in technologies that save lives, change lives and provide job opportunities. In fact, patents give small technology companies the edge they need to break into markets dominated by entrenched, and risk-averse, behemoth corporations.

The Patent Office has made great progress in the past 5 years to correct many of its widely-known ailments, like reducing the number of marginal patents and reducing the time between filing and a first action. If Congress insists on maintaining the sequestration cuts, it will amount to a very discouraging step backwards for the USPTO. Besides holding up the introduction of new technologies, the cuts will frustrate the improvements in the hiring and training of competent patent professionals to keep the Patent Office moving forward.

For another take on about the recent budget cuts imposed on the already stressed-out PTO, check out this recent article in Law360.