Report: Patent office should become federal corporation

The Patent and Trademark Office should become a government corporation headed by a CEO with strong business experience, according to a yet-to-be-released report from the National Academy of Public Administration.

In a report summary obtained by National Journal's Technology Daily, NAPA recommends incorporating PTO as the best way to improve its performance. The tech industry advocates PTO reforms designed to speed patent awards and improve the quality of submissions.

"As a self-sustaining federal entity that performs a direct service for fee-paying customers, [the patent office] needs to be able to function like a business and report to Congress and the administration with a bottom-line set of financial statements," the memorandum said.

The CEO position should take the place of a board of directors, NAPA said, and an "advisory board could provide stakeholder input" from people interested in patent policy.

A PTO spokesman had no comment on the recommendation but said an official response will be included in the final report when it is released in the near future.

Incorporating the agency is not a new idea. Rep. Howard Coble, R-N.C., unsuccessfully introduced legislation in 1997 to do just that. The measure was defeated by small inventors when it was attached to a larger bill they did not support.

The American Intellectual Property Law Association (AIPLA) supports incorporating PTO. "We believe that allowing the PTO to function as a government corporation would greatly enhance the ability of the office to retain fee revenues to process their work," AIPLA Director Mike Kirk said.

Historically, PTO has had to remit to federal coffers all of the fees it collects from patent applications. Congress has redirected much of that money to other agencies even as the backlog in processing applications has grown.

The NAPA report endorses the end to such fee diversion. PTO "needs to continue to have access to the fees it collects without fiscal-year limitation so that it may achieve efficiencies with steady stream funding and improve its ability to hire and retain the ... workers critical to its mission," the memo said.

Turnover among patent examiners is high. Most leave the agency within three to five years. With such high attrition, seasoned examiners must be pulled off cases to train new workers, Kirk said.

A bill to let the agency keep its fees -- which amounted to about $800 million over the last 12 years -- was introduced earlier this year. But the future of the measure, H.R. 2791, is in doubt because appropriators are unwilling to forgo their revenue stream, industry officials said.

The NAPA report also recommends instituting a "post-grant review" system to allow objectors to new patents to state their cases outside the court system.