Introduction The first patent law of April 10, 1790 authorized the Secretary of State, the Secretary of War, and the Attorney General, or any two of them to issue patents. On February 21, 1793, Congress repealed the Act of 1790, and authorized the granting of patents on the registration plan whereby patents were issued on request upon the filing of a sworn application that the invention described therein merited protection. The registration system remained in effect until 1836 when Congress passed an Act providing for a system of granting patents after examination. The Act of 1836 established the Patent Office. In 1870, Congress passed the first trademark law and assigned it to the Patent Office to administer. The Patent Office was a bureau of the Department of State from 1836 until 1849, a bureau of the Department of Interior from 1849 until 1926, and a bureau of the Department of Commerce from 1926 through the current date. Thomas Jefferson was the Secretary of State in 1790, and an original member of the "board" which granted patents between 1790 and 1793. Jefferson's special interest in the patent system caused the administration of the patent laws to first repose in the Department of State. The transfer of the Patent Office to the Department of Interior occurred when that agency was first established. When the Department of Commerce and Labor was established in 1903, consideration was given to transferring the Patent Office there. This finally occurred in 1926 pursuant to a presidential executive order. The quasi-judicial function of the Patent and Trademark Office (PTO) has no relation to the responsibilities of the Departments of State, Interior, or Commerce. The Secretaries of these agencies have never had any authority to control the legal decisions made by the PTO. While the substance of the work of the PTO has always been totally independent, the Departments of State, Interior and Commerce have always exercised control over the finances and procedures by which this work is accomplished. For more than a century, this anomalous situation has been criticized as a cause of PTO operational deficiencies. As a counter weight to the difficulties engendered by the operational subordination of the PTO to the Departments of State, Interior, and Commerce, the Office enjoyed a special relationship with the Congress until recent times. At the time of Act of 1836, both the Senate and House of Representatives established a standing Committee on Patents. These committees were responsible for the oversight of the patent and trademark laws and the Patent Office. On a number of occasions, members of the committees served as Commissioner of Patents subsequent to service in Congress. In 1948, the Committees on Patents were abolished and their jurisdiction was transferred to the Committees on the Judiciary which have jurisdiction over a multitude of significant laws, executive branch agencies, and the federal judiciary to oversee. Without question, the demise of the Committees on Patents significantly diminished the direct relationship between Congress and the PTO much to the detriment of the PTO. Resolutions of the Association Resolution One: GOVERNMENT CORPORATION STATUS FOR THE PTO RESOLVED, that the American Intellectual Property Law Association favors establishing the United States Patent and Trademark Office as a government corporation, independent from the Department of Commerce. Resolution Two: PRIVATE-SECTOR ADVISORY COMMITTEE RESOLVED, that the American Intellectual Property Law Association favors the creation by statute of a permanent, user-fee funded advisory committee, composed of persons from the private sector knowledgeable in U.S. patent and trademark laws, which shall have the following responsibilities: (a) analyze the effectiveness of the administration of the patent and trademark laws by United States Patent and Trademark Office (PTO); (b) consult with and otherwise advise the PTO on its policies and programs which affect the administration of the patent and trademark laws so as to increase the efficiency and effectiveness of such policies and programs; (c) report to the President of the United States and to the United States Congress, on an annual basis, an evaluation of the operation of the PTO, including fiscal matters, and any recommendations for improving such operations or amending the laws of the United States, or the regulations implementing such laws, to the extent the amendments would directly affect such operations; (d) undertake studies or investigations, evaluate proposals, or develop information relating to the PTO, including fiscal matters, at the request of the President of the United States or the United States Congress, and report the results thereof with dispatch; and (e) establish and oversee the work of a professional staff of the committee, which shall be responsible for assisting it in the discharge of its responsibilities. Resolution Three: BORROWING AUTHORITY RESOLVED, that, in the event the funding of capital and other extraordinary (a) to purchase assets and hold such assets for the exclusive benefit of the (b) to borrow money up to a statutory limit for the purpose of acquiring such (c) to guarantee the payment of the principal and interest from any such SPECIFICALLY, favors that the PTO itself be empowered to act as such a borrowing authority, at such time as the PTO is established as a government corporation. Summary of Recommendations The emergence of a totally user-funded United States Patent and Trademark Office (PTO) has exquisitely heightened longstanding concerns users of the patent system over the quality and cost-effectiveness of its patent operation. The principal concern is the inability of the PTO to make urgently needed, cost-effective enhancements in the quality of patent examining operations. Specific areas of concern include the patent examining corps (the recruitment of qualified candidates and their training, supervision, and retention), clerical operations (the basic competence of the PTO supporting staff and the dire need for drastic improvements in performance), technological resources (most urgently and specifically, the fate of the deeply troubled, very expensive Automated Patent System or "APS"), and facilities (alternatives to the high and rapidly escalating cost of tenancy at the Crystal City offices of the PTO). In addition to cost and quality concerns of users of the patent system are the new set of financing problems emerging from the complete user funding of the PTO. One is rigidity. The PTO must now accurately estimate fee income and carefully manage its expenditures within the confines of actual fee income received. Another is cost-effectiveness. The PTO must urgently revisit all its resource allocation decisions based on general revenue funding to determine appropriateness of an activity or service given the limited ability to derive revenues from further increases in fees. A final one relates to adequate provision for capital expenditures. The PTO must be able to proceed with major capital expenditures, such as the Automated Patent System deployment, without untenably adjusting fees upwards to raise capital costs in a single or several year time frame which has no relation to the life of the capital assets. Sitting atop the financial and operational problems is the fact that the current goals and priorities of the PTO are inconsistent with the needs of users of the patent system and the American public. While inventors need and expect quality performance from the patent examining corps, the stated goal of the PTO is rather to issue patents as rapidly as possible. Quality programs receive lip service while meeting production quotas and goals receive funding. While patenting costs are a serious and growing concern, PTO costs have increased more than 3,500% in the past decade in a period during which the workload increased 60%. Applying for and receiving a patent costs more in government fees in the U.S. than in any country in the world. While the need of U.S. industry for patent information, particularly regarding advances in foreign technology, has never been greater, the focus of the $800 million PTO information dissemination program is focused on serving the needs of PTO employees first and the public someday in the future. There is no reason to believe that absent institutional reform the PTO will be responsive to the needs of the public in the future, even though users must now pay 100% of the costs of the PTO operation. There is also no reason to believe that PTO perfor mance will improve without reform. In fact the long history of the PTO, the conclusions of those who have studied PTO problems, and the experiences of many who have served as the Commissioner all demonstrate ample reason to conclude the opposite. As a partial response to these problems, the AIPLA recommends three fundamental changes in PTO financing and governance, the keystone of which is the creation of an independent government corporation to replace the current agency. In brief, AIPLA proposes accomplishing the following: Resolution One: GOVERNMENT CORPORATION STATUS FOR THE PTO RESOLVED, that the American Intellectual Property Law Association favors The government corporation structure has evolved within the executive branch of the federal government over the past forty years in large measure in response to the need to effectively administer government programs funded by user fees rather than annual appropriations. Programs, such as the PTO, must provide services in response to demands which it cannot control, much like private business enterprises. If the PTO is to operate in a business-like manner, it needs management, operating and financial flexibility it does not and cannot possess as a part of the Department of Commerce. Indeed, the flexibility to respond to market forces in a cost effective and efficient manner is the fundamental purpose of the government corporation and the clear weakness of the PTO operation. As a government corporation, subject to the oversight of Congress, and with the benefit of informed advice from a private sector advisory committee, the PTO could at last make meaningful inroads into longstanding difficulties in delivering optimal quality patent and trademark examination in a cost-effective manner. Upgrading the performance of the PTO would provide substantial benefits to the American business community. Resolution Two: PRIVATE-SECTOR ADVISORY COMMITTEE RESOLVED, that the American Intellectual Property Law Association favors (a) analyze the effectiveness of the administration of the patent and (b) consult with and otherwise advise the PTO on its policies and programs |