Starting with Senate consideration of the so-called patent “reform” bill, Congress’s talk about jobs is sure to feature Washington’s trademarked hype.
A Washington jobs debate is itself a misnomer. Washington does not create jobs. We the People create jobs. One step Congress can take, however, is to eliminate the innovation tax — fee diversion — in the patent-reform bill the Senate hopes to pass this week.
Fee diversion is the practice of congressional appropriators’ diverting fees that innovators and entrepreneurs pay when applying for patents and trademarks to other government programs. Unfortunately, fee diversion is an arcane injustice that does not capture the public’s imagination as easily as outrages like Bridges to Nowhere, stimulus turtle tunnels, and shrimp on a treadmill. Still, fee diversion is no less offensive.
Fee diversion saps the lifeblood of the American economy — innovation and invention — in order to subsidize the desire of career politicians and appropriators in Congress to avoid hard choices. Fee diversion operates like a tax on innovation, because it requires entrepreneurs to spend more money and time on activities than they would otherwise if patent fees remained fees. And we know that if Congress wants to produce less of something — in this case, jobs and innovation — tax it.
The Patent and Trademark Office operates on fees paid when inventors file for patents and trademarks. The office receives no general-revenue funds. Unfortunately, since 1992 Congress has pilfered nearly $1 billion in user fees dedicated to the Patent and Trademark Office and spent those dollars elsewhere. This year, Congress will steal about $80 million from the fund. As a result we have 700,000 patents waiting for a first review that, if approved, could help get our economy moving again. If the PTO had been allowed to keep its money, it could have hired more staff and upgraded its technology, allowing the innovations this country needs to reach the marketplace more quickly.
Politicians, of course, say they want to do the opposite of taxing innovation and robbing from entrepreneurs. They say they want to help create jobs. Doing so, however, will require letting go of bad habits. Appropriators like to skim money off the patent office, and many other offices and funds, because it is easier to skim than to save and actually cut spending.
The Senate has already voted to end fee diversion, by a margin of 95 to 5. That version of the bill the Senate passed included my amendment that sets up a new revolving fund at the Treasury in which user fees that are paid to the Patent and Trademark Office for a patent or a trademark go directly into the revolving fund for the office to use to cover its operating expenses. Congress would no longer have the ability to take those fees and divert them to other programs; fee diversion would be ended once and for all — no more games, no more gimmicks. My amendment was also in the bill that was passed by the House Judiciary Committee by a vote of 32 to 3.
Unfortunately, the House gutted my amendment after negotiations with the House Appropriations Committee. The appropriators are insisting, of course, that they have no intention of diverting fees. History suggests they are not to be trusted. They promised to end this practice in the past and kept doing it.
The appropriators’ real argument comes down to turf and tradition. This is just the way it’s always been done, they argue. Yet, doing things as they’ve always been done isn’t good enough anymore. This bill is not the best we can do. It is the path of least resistance. Taking the path of least resistance has led to our unsustainable debt and credit downgrade. If leaders in both parties continue to be afraid of rolling the appropriators and ending this indefensible practice, sooner or later they will find themselves rolled by voters.
Nevertheless, I intend to give Senate appropriators the chance to back up that claim by voting on my amendment to end fee diversion. If my amendment fails, I will do everything in my power to slow the bill and highlight this egregious tax on innovation.
If politicians in Washington want to be taken seriously in the jobs debate, ending a practice that steals from job creators would be a good first step. Congress should fix the patent bill immediately and restore my language ending fee diversion. If Congress does not make this fix, President Obama should veto it. Otherwise, he will be complicit in a scheme that is rigged to rob the very people we say we want to help — America’s job creators.
You don't need to be a weatherman to tell which way the wind is blowin'.
Reply to this commentLinkReport AbuseThank heavens we elected Tea Party Republicans who will change how Congress always done things.
Mark my words, if they can't give up little traditions like this do you really thing an all GOP elected government will make big changes such as repeal Obamacare or reform entitlements?
Me either. This is no different than the broken windows theory of policing, but neither party has a majority who wants to address our broken windows Congress.
Reply to this commentLinkReport Abuse"As a result we have 700,000 patents waiting for a first review that, if approved, could help get our economy moving again." Actually, what America needs right now are fewer patents granted (not more) as the result of more careful consideration (not a speeded up patent process). America, and its climate of innovation, is drowning in bogus patents, too quickly granted, not representing actual innovations, chilling competition, and much too hard to challenge. Coburn's statement is a mixture of utter hogwash and a fundamental misunderstanding of how the American economy works, including the impact of patent and intellectual property rights on economy. A cynic might say that the bill currently under consideration by Congress is a reward to large Fortune 500 corporations (major donors to the political parties) and their internal patent mills.
America's patent system is in dire need of major reform; everything from the patent office to the current system (and expense) of litigating patent disputes, including the high cost of challenging bogus patents. However, the patent reform bill currently up for consideration by Congress does not address any of the fundamental problems with the patent system.
Most informed observers recognize that one of the most serious problems with the patent system are business method patents and software patents, which are abominations that are chilling innovation, particularly innovation by startups and small businesses. The courts have refused to carve back on these patents and have instead punted the problem to Congress, which has done and continues to do nothing about the problem.
Informed observers also recognize that patents are too hurriedly granted under the current system, often without firmly establishing that the patents represent true innovation. Speeding up the patent process and emphasizing the creation of hundreds of thousands or millions of new patents hardly addresses these problems. It will only make the problems worse.
Nor is it at all clear that expediting patent creation will have any positive impact on job creation. Indeed, the creation of technology monopolies, which is what a patent represents, is just as, if not more likely to hinder competition.
Sadly, Congress, like in so many other areas, is way out of its depth here, and through its interference, will only make matters worse. Shame on Senator Coburn. He should know better.
Reply to this commentLinkReport AbuseThank you Senator Coburn for your mostly lonely rage against the machine. It is interesting how easily one can tell the difference between a politicians who's main goal is keeping their jobs, those on the Appropriations Committee, and those (a rarity) who aren't, you.
I hope you win this small but important battle, and I will be contacting every member on Appropriations asking them to do the right thing, not the self-interested political thing.
Would you agree the much bigger battle our businesses have, and our overall economy in the US, is the stealing of our patents and technology by China, both in our face and covertly? When are we going to start playing hardball instead of pretending we have fair Free Trade, and being NICE!
I understand it is not the Presidents nature to be tough and confrontational, but neither has it been from our past presidents when it comes to China. We treat them with kit gloves, they stab us in the back every chance they get.
The only powerful country in the free world is in a desperate competition for the survival of our economy, the life blood of our ability to protect that free world. We are behaving as if we are dealing with other nice, reasonable, and democratic free people. The Republican right has shown they can be hard headed when need. The Democratic left have always naively believed in the best nature of people and nations. They will do nothing to enforce FAIR trade. When can we expect our only refuse, Republicans, to begin to take on this autocratic economy eating monster?
Thank you for your honorable service. I wish you would stay, but fear you are too honorable not to keep your word. I hope you stay involved in NGOs after you leave office. We have no where enough honor left in that huge, feckless, self-serving behemoth in Washington.
Reply to this commentLinkReport AbuseI'd bet (good money, even) that an enormous fraction of those 700,000 patents circling the airport in holding pattern are the absolute garbage of software patents. The patent system has turned from a system of protecting innovation into one of enriching the lawyers, trolls, and entrenching the megacorportions (who then go on to enrich the lawyers suing each other endlessly).
There is no way the australopithecines who populate congress will reform this morass, though, any bill that purports to do so will almost certainly make the mess worse.
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