INTELLECTUAL PROPERTY OWNERS, INC. monopoly service provider. Like most federal agencies, the PTO does not have a reputation for innovation in providing services to users. If the PTO were given the flexibility of a Merck & Co. or a United Parcel Service, the PTO's users and the national economy would benefit. For example, the Commissioner should have authority to establish a flexible personnel system for the PTO consistent with principles of fairness, due process, and merit systems. The Commissioner should have authority to fix the rate of compensation of PTO employees at rates higher than regular government salary schedules for executives, scientists, engineers, and other employees who are in short supply example, patent examiners in the field of biotechnology. - for As a user-fee-funded institution, the PTO corporation should be exempt from government-wide personnel and spending ceilings that are imposed from time to time to conserve public funds. Fortune 500 The PTO should have the flexibility enjoyed by private companies and state and local governments to contract for services. companies increasingly are contracting for a variety of support services such as mail room operations, copying work, data entry, computer-support services, and accounting.2 Infusion of competition into government agencies is one of the keys to making government efficient, effective and responsive. With adequate operating flexibility, the Commissioner could utilize a variety of approaches for introducing Competition can be achieved by requiring multiple private contractors to compete with one another, by requiring private contractors to compete competition into the PTO bureaucracy. 2 "Small Companies Thrive by Taking Over Some Specialized Tasks for Big Concerns, Wall Street Journal, page B1, Sept. 11, 1991. ་་ INTELLECTUAL PROPERTY OWNERS, INC. with in-house operations, and by permitting customers to choose among competing services. With increased flexibility to manage and restructure PTO operations, we believe many ways can be found to improve operations. PTO An essential ingredient for providing operating flexibility to the is to eliminate unnecessary layers of government managers and reviewers and to decentralize decisionmaking. To this end, the PTO must be made independent of the Commerce Department. Numerous former Commissioners of Patents and Trademarks have supported separation from Commerce. Commerce Department management of the PTO slows down decisionmaking and results in policy decisions being made by people who have no understanding of the needs of PTO users. Former Commissioner C. Marshall Dann had this to say in Congressional testimony in 1980: The Department of Commerce often impeded our efforts and Many of the problems resulted simply from having additional Clearance with the Department did not ordinarily mean the INTELLECTUAL PROPERTY OWNERS, INC. reporting to him who first had to review the matter at issue. urgency. We do not in any way intend to be critical of the current Secretary of Commerce or any former Secretaries. Commerce has had some exceptionally able leaders. Nevertheless, we cannot achieve a "lean and mean" PTO unless we eliminate unnecessary layers of management. Commerce has countless unnecessary layers. From my own experience as Commissioner, I feel very strongly that there is no compromise on this The PTO corporation must be an independent agency. point. Statutory Advisory Committee of Users A PTO corporation must include a statutory advisory committee whose members would be appointed by the President, perhaps with the advice and consent of the Senate. The members would be drawn from users of the PTO. Such a committee would guarantee a strong voice for users in the operation of the PTO. The committee should have the ability to control its own agenda, have access to information about PTO operations, and have staff support to carry out its functions. The committee should have statutory responsibility to recommend to the President individuals who should be considered for appointment to the post of Commissioner of Patent and Trademarks. The committee also should have responsibility by statute to recommend to the President the removal of the Commissioner of Patent and Trademarks. The advisory committee should provide annual reports to the President and to the Congress on the policies, goals, performance, budget and user fees of the PTO, and should INTELLECTUAL PROPERTY OWNERS, INC. advise the Commissioner on these matters. The committee could have subcommittees to advise on issues unique to patents or to trademarks, or separate advisory committees could be established for patents and trademarks. it has now The reports of the advisory committee would help Congress oversee the PTO corporation. Congress should retain the controls over the PTO legislative, oversight, and authorization authority of the Judiciary Committees and appropriations authority of the Appropriations and have control over the borrowing authority of the PTO Committees corporation. Operating flexibility and authority for the PTO, of course, must be accompanied by accountability. PTO users have a strong interest in helping oversee the PTO and can be depended upon to insist on efficiency and effectiveness of Office operations. The structure we recommend would enable users to work in partnership with the Congress, the President, and the Office of Management and Budget to ensure accountability of the PTO for its operations. With the benefit of regular reports from the advisory committee representing patent and trademark users, Congress would be well positioned to provide broad policy guidance to the President and the Commissioner through legislation and control of financial affairs. Restoration of Public Funding for PTO Until the enactment of the Budget Reconciliation Act of 1990, the Patent and Trademark Office was receiving about $100 million a year in support from general tax revenues. The Reconciliation Act effected a 69 INTELLECTUAL PROPERTY OWNERS, INC. percent increase in patent fees and cut public funding to nearly zero. For fiscal year 1993, the Administration is recommending no public funding for the PTO. IPO urges restoration of substantial public funding. It is sound public policy to use taxpayer funding to support operations of the PTO that do not directly benefit patent and trademark applicants and other paying customers of the PTO. Operations of the PTO that deserve public funding include automation, public information activities, public search facilities, depository library programs, legislative and international activities, and the like. Such operations are primarily of benefit to the public at large. They promote dissemination of technological information, encourage innovation and investment, and improve patent and trademark laws and treaties for the benefit of the country as a whole. A draft report by the Commerce Department's Advisory Commission on Patent Law Reform dated April 27, 1992, recommends public funding for such operations. Congress also should provide public funds to cover the 50-percent discount in patent fees that current law requires for independent inventors, small businesses, and universities. The discount for these "small entities" costs about $50 million a year. Since 1990, when public funding was eliminated, large businesses have been paying not only the full cost of the processing of their own patent applications, but also an extra $50 million to subsidize the small entities. This is a grossly unfair tax on innovation by large companies. IPO supports continuation of the small entity discount, but urges that it be paid with public funds. Public funding for a portion of PTO operations is not inconsistent |