Patent lather

Entrepreneur, June, 1997 by Janean Chun

In a material and psychological blow to inventors, President Clinton recently proposed to take $92 million out of the U.S. Patent and Trademark Office's (PTO) surcharge income of $119 million. Many believe the budget cut will result in delays in patent approvals and an increase in the fees charged to maintain patents over a 20-year period.

This reappropriation of funds will hamper automation efforts, contends Lisa-Joy Zgorski of the PTO, who says, "It's clear that, in the face of these cuts, patent pendency will increase."

And yet the damage comes not just in the injury but also in the insult. In 1991, Congress set up the PTO to be a self-supporting government agency and raised patent application fees by 69 percent to cover operating costs and improve services for inventors. Over the past few years, however, inventors have watched as the office's so-called surplus funds have been diverted to Commerce State Justice programs or used by Congress in an attempt to balance the federal budget. "These problems should be funded by taxpayers' money," says Robert Lougher, founder of the Inventors Awareness Group in Westfield, Massachusetts. "But they're financed by a small segment of our society: the inventor."

In essence, "people are paying taxes as individuals and corporations and then paying taxes when they file patent applications," says Joanne Hayes-Rines, president of the United Inventors Association of the USA. "[Members of Congress] could be honest and say there's a tax on patent applications, but they're not that honest."

Industry insiders feel the PTO can scarcely afford to see that money dispersed. With the number of patent applications growing by 10 percent every year, certain time-saving PTO programs are desperately needed, maintains Lougher.

Independent inventors are perhaps the hardest hit by the cuts. "Every time the government does this, the PTO is forced to raise its fees, and the ones hurt the most are the small, independent inventors," says Lougher. "The PTO has priced itself out of range for many inventors."

While the PTO budget cut is not completely new - Congress diverted $54 million of the $115 million in the PTO's surcharge fund last year - the dig is that this latest, more severe proposal was handed down by Clinton himself. "The most important element in the president's [agenda] is to balance the federal budget," says Zgorski, "and therefore we'll grin and bear it."

Inventors' advocates are not as easily soothed. "The concept of covert double taxing would anger anybody," says Hayes-Rines, who urges inventors to write to their Congressional representatives and to align themselves with an organization that will keep them informed about the issues. "Inventors are easy [targets] because they're not part of a [formalized] group."

Lougher sees this as an injustice Americans should not permit. "Our economy is based on new products and new technologies, many of which come from the independent inventor," says Lougher. "If you interrupt that process, we're going to have fewer new products. Everyone [will feel] it down the line."