Politics can be a revolving door of jargon. This year sequestration popped out the door. What's that you ask? It refers to the mandatory 5% federal budget cuts being implemented this fiscal year.
Now sequestration is at the PTO's door. In Welcome Back Fee Diversion: USPTO Likely to Begin Sending Collected Fees Back to Treasury and USPTO Budget Cuts Professor Dennis Crouch reports the USPTO says it faces "substantial budget uncertainty" in sequestration. Based on this and statements by the head of the USPTO employee union, Professor Crouch says "reading between the lines, the answer is: yes, the PTO will be cutting its spending and turning-over user-fees to the treasury rather than using that money to examine patents or trademarks."
However, it's unclear how sequestration leads to Congress diverting PTO fee to unrelated programs. 35 USC 42 of the America Invents Act (AIA) states any collected fees may only be used for expenses of the Office relating to the processing of patent applications and to cover administrative costs. It also requires if fee collections exceed the amount appropriated to the Office in a given fiscal year, the excess fees shall be deposited in the Patent and Trademark Fee Reserve Fund. Beside the language of 35 USC 42, Congress would have a tricky PR job if it diverts PTO user fees, while stating it supports the patent system. This makes fee diversion seem unlikely while the USPTO implements budget cuts.
Even if sequestration leads to fee diversion, it is unclear it will impact the operation of the USPTO. Professor Crouch notes sequestration is a miniscule part of the USPTO's budget (e.g, $2B in FY 2010 to $3B in FY 2013). Small impact or big, sequestration should not open the door to fee diversion.
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