[House Report 108-431]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 108-431
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PROVIDING FOR CONSIDERATION OF H.R. 1561, UNITED STATES PATENT AND
TRADEMARK FEE MODERNIZATION ACT OF 2003
_______
March 2, 2004.--Referred to the House Calendar and ordered to be
printed
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Mr. Linder, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 547]
The Committee on Rules, having had under consideration
House Resolution 547, by a record vote of 8 to 1, reports the
same to the House with the recommendation that the resolution
be adopted.
SUMMARY OF PROVISIONS OF THE RESOLUTION
The resolution provides for consideration of H.R. 1561, the
United States Patent and Trademark Fee Modernization Act of
2003, under a structured rule. The rule provides one hour of
general debate equally divided and controlled by the chairman
and ranking minority member of the Committee on the Judiciary.
The rule provides that the amendment in the nature of a
substitute recommended by the Committee on the Judiciary now
printed in the bill shall be considered as an original bill for
the purpose of amendment, and shall be considered as read. The
rule waives all points of order against the Committee amendment
in the nature of a substitute.
The rule makes in order only those amendments to the
Committee amendment in the nature of a substitute which are
printed in this report, and provides that those amendments may
be offered only in the order printed in this report, may be
offered only by a Member designated in this report, shall be
considered as read, shall be debatable for the time specified
in this report equally divided and controlled by the proponent
and an opponent, shall not be subject to amendment, and shall
not be subject to a demand for division of the question in the
House or in the Committee of the Whole. The rule waives all
points of order against the amendments printed in this report.
Finally, the rule provides one motion to recommit with or
without instructions.
COMMITTEE VOTES
Pursuant to clause 3(b) of House rule XIII the results of
each record vote on an amendment or motion to report, together
with the names of those voting for and against, are printed
below:
Rules Committee record vote No. 223
Date: March 2, 2004.
Measure: H.R. 1561, U.S. Patent and Trademark Fee
Modernization Act of 2003.
Motion by: Mr. Linder.
Summary of motion: To report the resolution.
Results: Agreed to 8 to 1.
Vote by Members: Linder--Yea; Pryce--Yea; Diaz-Balart--Yea;
Hastings (WA)--Yea; Myrick--Yea; Sessions--Yea; McGovern--Yea;
Hastings (FL)--Nay; Dreier--Yea.
SUMMARY OF AMENDMENTS MADE IN ORDER UNDER THE RULE
(Summaries derived from information provided by amendment
sponsors.)
1. Sensenbrenner: The amendment creates a ``refund''
program to eliminate the potential incentive for diverting PTO
revenue to non-PTO programs. If fee collections in a given
fiscal year exceed the amount appropriated to the agency, the
excess or overage shall be deposited in a PTO ``Reserve Fund.''
At the end of the fiscal year the Director determines if there
are sufficient funds to make payments to persons who paid fees
during that year. The Director is empowered to determine which
recipients qualify and in what amounts, except that the
payments in aggregate must equal the amount of revenue in the
Reserve Fund during that fiscal year, less the cost of
administering the program. The amendment changes the basic
effective date from October 1, 2003, to October 1, 2004, or the
date of enactment, whichever is later.
Under existing law, the Director may raise most fees based
on the CPI. The amendment supplements this authority by
allowing the Director to raise fees based on the CPI for ``
processing, services, or materials relating to patents not
specified'' in the fee schedule. Recovery of these
administrative costs will help the agency with its funding
shortfall.
The bill as reported contains a pilot program to determine
the efficacy of allowing commercial entities to perform the
search function, thereby relieving the agency of the burden and
freeing up examiners to do other work. The amendment specifies
that participation in the pilot program will be restricted to
American businesses and American citizens.
The amendment limits the Director's discretion to prescribe
the search fee for commercial entities. For the first three
years, he may not establish a fee in excess of $500 (or less in
some cases) and for the next three years this figure may not
increase by more than 20% annually.
Finally, in furtherance of the ongoing modernization
efforts at PTO, the Director shall reduce the filing fee for
any small entity, independent inventor, or nonprofit
organization by 75% provided those so qualified file their
applications electronically. (20 minutes)
2. Manzullo: The amendment: (1) establishes an inflation-
adjusted freeze on all fees for micro-entities defined as firms
or independent inventors with up to 15 employees and net worth
not exceeding $2 million (without regard to bona fide pensions
and similar retirement accounts); (2) makes the traditional
small entity 50% discount under Patent Law applicable to search
fees for intermediate small entities defined as having between
16 and 500 employees and a net worth not exceeding $7 million;
this category also establishes a cap on outsourced patent
search fees at $500, equal to the cap established by the bill
on search fees performed by the PTO in-house; and (3) includes
a certification requirement, in addition to the certification
on each PTO application as to small entity fee eligibility,
preventing large entities from qualifying for the small entity
discount illegitimately. (20 minutes)
3. Jackson-Lee: Requires that a substantial number of the
outsource contracts be awarded to: (1) American businesses, and
(2) small, minority-owned businesses, or businesses owned by
women. (20 minutes)
TEXT OF AMENDMENTS MADE IN ORDER UNDER THE RULE
1. An Amendment To Be Offered by Representative Sensenbrenner of
Wisconsin, or His Designee, Debatable for 20 Minutes
Strike section 5 and insert the following:
SEC. 5. PATENT AND TRADEMARK FUNDING.
Section 42(c) of title 35, United States Code, is amended--
(1) by striking ``(c)'' and inserting ``(c)(1)''; and
(2) by adding at the end the following new paragraph:
``(2) There is established in the Treasury a Patent and
Trademark Fee Reserve Fund. If fee collections by the Patent
and Trademark Office for a fiscal year exceed the amount
appropriated to the Office for that fiscal year, fees collected
in excess of the appropriated amount shall be deposited in the
Patent and Trademark Fee Reserve Fund. After the end of each
fiscal year, the Director shall make a finding as to whether
the fees collected for that fiscal year exceed the amount
appropriated to the Patent and Trademark Office for that fiscal
year. If the amount collected exceeds the amount appropriated,
the Director shall, if the Director determines that there are
sufficient funds in the Reserve Fund, make payments from the
Reserve Fund to persons who paid patent or trademark fees
during that fiscal year. The Director shall by regulation
determine which persons receive such payments and the amount of
such payments, except that such payments in the aggregate shall
equal the amount of funds deposited in the Reserve Fund during
that fiscal year, less the cost of administering the provisions
of this paragraph.''.
In section 6(a), strike ``Except as'' and all that follows
through the end of the sentence and insert ``Except as
otherwise provided in this Act and this section, this Act and
the amendments made by this Act shall take effect on October 1,
2004, or on the date of the enactment of this Act, whichever
occurs later.''.
Page 12, strike lines 17 through 20 and insert the following:
(d) Adjustments.--
(1) In general.--Section 41(f) of title 35, United
States Code, shall apply to the fees established under
the amendments made by this section, beginning in
fiscal year 2005.
(2) Conforming amendment.--Effective October 1, 2004,
section 41(f) of title 35, United States Code, is
amended by striking ``(a) and (b)'' and inserting
``(a), (b), and (d)''.
Page 11, add the following after line 24:
``(F) If the requirements of subparagraph (E) are
met, the Director shall require that any search by a
qualified search authority that is a commercial entity
is conducted in the United States by persons that--
``(i) if individuals, are United States
citizens; and
``(ii) if business concerns, are organized
under the laws of the United States or any
State and employ United States citizens to
perform the searches.
Page 12, insert the following after line 16 and redesignate
the succeeding subsections accordingly:
(d) Fees for Small Entities.--Section 41(h) of title 35,
United States Code, is amended--
(1) in paragraph (1), by striking ``Fees'' and
inserting ``Subject to paragraph (3), fees''; and
(2) by adding at the end the following new paragraph:
``(3) The fee charged under subsection (a)(1)(A) shall be
reduced by 75 percent with respect to its application to any
entity to which paragraph (1) applies, if the application is
filed by electronic means as prescribed by the Director.''.
Page 8, line 3, add the following after the period: ``For the
3-year period beginning on October 1, 2004, the fee for a
search by a qualified search authority of a patent application
described in clause (i), (iv), or (v) of subparagraph (B) may
not exceed $500, of a patent application described in clause
(ii) of subparagraph (B) may not exceed $100, and of a patent
application described in clause (iii) of subparagraph (B) may
not exceed $300. The Director may not increase any such fee by
more than 20 percent in each of the next 3 1-year periods.''.
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2. An Amendment To Be Offered by Representative Manzullo of Illinois,
or His Designee, Debatable for 20 Minutes
Page 12, insert the following after line 16 and redesignate
the succeeding subsections accordingly:
(d) Fees for Small Entities.--Section 41(h) of title 35,
United States Code, is amended by adding at the end the
following new paragraphs:
``(3)(A) The fees and surcharges in effect on February 10,
2004, under paragraphs (1) and (2) for entities described in
subparagraph (D) shall remain in effect for such entities after
that date, subject to subparagraph (B). The fees charged under
subsection (d) shall be reduced by 50 percent for entities
described in subparagraph (D), and shall remain in effect for
such entities after that date, subject to subparagraph (B).
``(B) A fee or surcharge to which subparagraph (A) applies
may be adjusted on October 1, 2009, and on October 1 of each
5th year thereafter, to reflect any fluctuations during the
preceding 5-year period in the Consumer Price Index, as
determined by the Secretary of Commerce. Changes of less than 1
percent may be ignored.
``(C) No fee or surcharge under this section may be imposed
on any entity described in subparagraph (D) after February 10,
2004, for any purpose other than the purposes for which fees
and surcharges under this section are in effect with respect to
such entity on that date.
``(D) An entity is described in this subparagraph if it is--
``(i) an individual whose net worth does not exceed
$2,000,000 (calculated by subtracting personal
liabilities from personal assets, without regard to
pension, 401(k), or similar retirement accounts); or
``(ii) an owner of an unincorporated business, or any
partnership, corporation, association, unit of local
government, or organization, the net worth of which
does not exceed $2,000,000 (calculated by subtracting
the liabilities of the entity from its assets, without
regard to pension, 401(k), or similar retirement
accounts), and which has no more than 15 employees.
``(4)(A) With respect to any entity described in subparagraph
(B), the fees under subsections (a), (b), and (d) shall be
reduced by 50 percent, and not more than $500 may be charged
for a search by a qualified search authority of a patent
application by such an entity.
``(B) An entity is described in this subparagraph if it is
not covered by paragraph (3)(D) and is--
``(i) an individual whose net worth does not exceed
$7,000,000 (calculated by subtracting personal
liabilities from personal assets); or
``(ii) an owner of an unincorporated business, or any
partnership, corporation, association, unit of local
government, or organization, the net worth of which
does not exceed $7,000,000 (calculated by subtracting
the liabilities of the entity from its assets), and
which has no more than 500 employees.
``(5) Paragraph (3) or (4) applies to an entity only if the
entity certifies to the Director its eligibility under such
paragraph.
``(6) Paragraphs (1) and (2) apply to entities described in
paragraph (1) that are not covered by paragraph (3)(D) or
(4)(B).''.
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3. An Amendment To Be Offered by Representative Jackson-Lee of Texas,
or Her Designee, Debatable for 20 Minutes
Page 11, add the following after line 24:
``(F) If the requirements of subparagraph (E) are
met, the Director shall ensure that a substantial
number of searches by qualified search authorities that
are commercial entities are conducted by persons that--
``(i) if individuals, are United States
citizens; and
``(ii) if business concerns, are organized
under the laws of the United States or any
State, or are small business concerns,
minority-owned business concerns, or business
concerns that are owned by women.