Patent Fee Bill Will Harm Small Business without Conyers-Kaptur Amendment, Patent Professional Association Says.

Business Editors/Political Writers

ARLINGTON, Va.--(BUSINESS WIRE)--Feb. 23, 2004

Many small businesses will be irreparably harmed if Congress adopts the pending U.S. Patent and Trademark Office Fee Modernization Act (H.R. 1561). This bill establishes a new search fee and gives the USPTO the unlimited ability to raise those search fees without congressional approval, according to the Patent Office Professional Association (POPA), an organization representing USPTO patent examiners. A floor vote is expected in the House of Representatives within the next two weeks.

Under H.R. 1561, small business patent filing fees would double, from about $375 to $750. "And that's the administration's low-ball cost," said POPA President Ronald Stern. "Why establish a separate search fee and make it easy to raise? Because the administration wants to outsource the search, which will inefficiently duplicate efforts and jack up costs way beyond the means of many small businesses."

The USPTO has estimated that by 2008 the agency would spend approximately $376 million on outsourcing searches. This is over $800 per application - more than the current basic filing fee. Small businesses would get no discount on these charges under H.R. 1561, even though small entities have been entitled to a 50 percent reduction in filing fees for the past 20 years.

A proposed amendment to the bill from Reps. John Conyers (D-Mich.) and Marcy Kaptur (D-Ohio) would retain the small business fee discount and keep the bill's provisions for eliminating fee diversion. It would also maintain the requirement for congressional approval to raise fees and would strike the separation of search and examination.

"Outsourcing the search means you pay more and get less," said Stern. Under outsourcing, both the USPTO examiner and a private sector searcher

will have to read and understand a patent application, and read and understand the prior art, an unnecessary duplication of effort. Examiners are highly trained specialists working in narrow fields. Private sector searchers, who generally are not as specialized and must cover wider fields, cannot efficiently search the many narrow fields of USPTO examiners. These inefficiencies mean higher costs.

The 2004 price list from Thomson Derwent, one of the world's largest search firms and the most likely private contractor for USPTO searches, itemizes charges from $410-$640 for the initial search hour and from $100-$640 for each additional hour. The USPTO currently pays $50-$75 per hour for searches by U.S. patent examiners.

Thomson Derwent maintains offices worldwide. Employees in its offices in China, Japan, Korea or Singapore could perform U.S. patent searches. This raises conflict of interest concerns. "Can we trust a foreign citizen to make a full-faith effort to search for evidence that will deny a U.S. patent to a company from his or her own country?" asked Stern. "Searching, like examination, is an inherently governmental function that determines U.S. property rights. Outsourcing the search to foreign nationals will abrogate our control of American property rights."

All USPTO patent examiners, by law, are U.S. citizens who may not own patents in order to prevent a conflict of interest. Thomson, on the other hand, owns a number of patents through its many subsidiaries, including Derwent, Westlaw, and Dialog.

To see the Thomson Derwent 2004 Search Price List, go to: http://thomsonderwent.com/media/productpdfs/searchservice04.pdf