^{Democracy & Technology Blog} Bill to end “Innovation Tax” advances

Patent applicants have contributed over $750 million to government programs that have nothing to do with processing patent applications. “It’s a tax on innovation,” observes Rep. Zoe Lofgren (D-CA). She’s right.

H.R. 2791, approved yesterday by the House Judiciary Committee, would reduce patent fees and increase the Patent & Trademark Office’s budget. PTO will be able to hire 2,900 more examiners and move to fully electronic processing of patent applications, said Rep. Lamar Smith (R-TX). These reforms will hopefully reduce the amount of time it takes PTO to process patent applications — now 25 months and expected to increase to 45 months by 2008 if nothing is done, according to testimony on behalf of the Intellectual Property Owners Association.
User fees such as the patent application fee are a tax collector’s delight. They free up general revenues for less popular programs and obscure the true cost of government. They start out laudably as a way to finance quality improvements. Then they are increased ostensibly to ensure stable funding for a program’s basic needs. Next, they are increased to generate additional revenue for unrelated purposes. When that is not enough, lawmakers reduce the portion available to the program that generated the user fee. User fees are an insidious tax, and the only downside of H.R. 2791 — which will promote efficiency and benefit taxpayers — is that it does not apply government-wide.
Additional funding may help PTO deliver a quality product more efficiently. Only time will tell. Every bureaucracy asks for more funding and the ones lucky to get it usually use it to subsidize their weaknesses. One thing’s for sure: Additional funding for PTO should not be used by lawmakers as a substitute for serious consideration and action on more fundamental patent reforms, controversial though they may be. Although many innovators believe the current patent system works well for them, significant issues have been raised, such as the meaningfulness of third party participation, the patentability of business processes and obvious advances in software, and the destructive role of profiteers who have little if any interest in innovation. The committee which approved H.R. 2791 is also considering patent reform legislation. That effort appears to be going nowhere.