19–006

108TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 108–241

UNITED STATES PATENT AND TRADEMARK FEE 

MODERNIZATION ACT OF 2003

JULY 25, 2003.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. SENSENBRENNER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany H.R. 1561] 

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 1561) to amend title 35, United States Code, with respect to 

patent fees, and for other purposes, having considered the same, 

reports favorably thereon with an amendment and recommends 

that the bill as amended do pass.

CONTENTS 

Page 

The Amendment ...................................................................................................... 1

Purpose and Summary ............................................................................................ 6

Background and Need for the Legislation ............................................................. 6

Hearings ................................................................................................................... 10

Committee Consideration ........................................................................................ 11

Vote of the Committee ............................................................................................. 11

Committee Oversight Findings ............................................................................... 11

New Budget Authority and Tax Expenditures ...................................................... 11

Congressional Budget Office Cost Estimate .......................................................... 11

Performance Goals and Objectives ......................................................................... 14

Constitutional Authority Statement ...................................................................... 14

Section-by-Section Analysis and Discussion .......................................................... 14

Changes in Existing Law Made by the Bill, as Reported ..................................... 20

Markup Transcript .................................................................................................. 29

The amendment is as follows: 

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘United States Patent and Trademark Fee Modernization Act of 2003’’. 

2

SEC. 2. FEES FOR PATENT SERVICES. 

(a) GENERAL PATENT FEES.—Section 41(a) of title 35, United States Code, is 

amended to read as follows: ‘‘(a) GENERAL FEES.—The Director shall charge the following fees: ‘‘(1) FILING AND BASIC NATIONAL FEES.— ‘‘(A) On filing each application for an original patent, except for design, plant, or provisional applications, $300. ‘‘(B) On filing each application for an original design patent, $200. 

‘‘(C) On filing each application for an original plant patent, $200. 

‘‘(D) On filing each provisional application for an original patent, $200. 

‘‘(E) On filing each application for the reissue of a patent, $300. 

‘‘(F) The basic national fee for each international application filed under 

the treaty defined in section 351(a) of this title entering the national stage 

under section 371 of this title, $300. ‘‘(G) In addition, excluding any sequence listing or computer program listing filed in an electronic medium as prescribed by the Director, for any application the specification and drawings of which exceed 100 sheets of paper 

(or equivalent as prescribed by the Director if filed in an electronic medium), $250 for each additional 50 sheets of paper (or equivalent as prescribed by the Director if filed in an electronic medium) or fraction thereof. ‘‘(2) EXCESS CLAIMS FEES.—In addition to the fee specified in paragraph (1)—

‘‘(A) on filing or on presentation at any other time, $200 for each claim 

in independent form in excess of 3; 

‘‘(B) on filing or on presentation at any other time, $50 for each claim 

(whether dependent or independent) in excess of 20; and 

‘‘(C) for each application containing a multiple dependent claim, $360. 

For the purpose of computing fees under this paragraph, a multiple dependent 

claim referred to in section 112 of this title or any claim depending therefrom 

shall be considered as separate dependent claims in accordance with the number of claims to which reference is made. The Director may by regulation provide for a refund of any part of the fee specified in this paragraph for any claim 

that is canceled before an examination on the merits, as prescribed by the Director, has been made of the application under section 131 of this title. Errors 

in payment of the additional fees under this paragraph may be rectified in accordance with regulations prescribed by the Director. 

‘‘(3) EXAMINATION FEES.—

‘‘(A) For examination of each application for an original patent, except for 

design, plant, provisional, or international applications, $200. 

‘‘(B) For examination of each application for an original design patent, 

$130. 

‘‘(C) For examination of each application for an original plant patent, 

$160. 

‘‘(D) For examination of the national stage of each international application, $200. 

‘‘(E) For examination of each application for the reissue of a patent, $600. 

The provisions of section 111(a)(3) of this title relating to the payment of the 

fee for filing the application shall apply to the payment of the fee specified in 

this paragraph with respect to an application filed under section 111(a) of this 

title. The provisions of section 371(d) of this title relating to the payment of the 

national fee shall apply to the payment of the fee specified in this paragraph 

with respect to an international application. The Director may by regulation 

provide for a refund of any part of the fee specified in this paragraph for any 

applicant who files a written declaration of express abandonment as prescribed 

by the Director before an examination has been made of the application under 

section 131 of this title, and for any applicant who provides a search report that 

meets the conditions prescribed by the Director. 

‘‘(4) ISSUE FEES.—

‘‘(A) For issuing each original patent, except for design or plant patents, 

$1,400. 

‘‘(B) For issuing each original design patent, $800. 

‘‘(C) For issuing each original plant patent, $1,100. 

‘‘(D) For issuing each reissue patent, $1,400. 

‘‘(5) DISCLAIMER FEE.—On filing each disclaimer, $130. 

‘‘(6) APPEAL FEES.—

‘‘(A) On filing an appeal from the examiner to the Board of Patent Appeals and Interferences, $500. 

‘‘(B) In addition, on filing a brief in support of the appeal, $500, and on 

requesting an oral hearing in the appeal before the Board of Patent Appeals 

and Interferences, $1,000. 

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‘‘(7) REVIVAL FEES.—On filing each petition for the revival of an unintentionally abandoned application for a patent, for the unintentionally delayed payment of the fee for issuing each patent, or for an unintentionally delayed response by the patent owner in any reexamination proceeding, $1,500, unless the 

petition is filed under section 133 or 151 of this title, in which case the fee shall 

be $500. ‘‘(8) EXTENSION FEES.—For petitions for 1-month extensions of time to take 

actions required by the Director in an application— ‘‘(A) on filing a first petition, $120; 

‘‘(B) on filing a second petition, $330; and 

‘‘(C) on filing a third or subsequent petition, $570.’’. (b) PATENT MAINTENANCE FEES.—Section 41(b) of title 35, United States Code, is 

amended to read as follows: ‘‘(b) MAINTENANCE FEES.—The Director shall charge the following fees for maintaining in force all patents based on applications filed on or after December 12, 

1980: ‘‘(1) 3 years and 6 months after grant, $900. 

‘‘(2) 7 years and 6 months after grant, $2,300. 

‘‘(3) 11 years and 6 months after grant, $3,800. 

Unless payment of the applicable maintenance fee is received in the United States 

Patent and Trademark Office on or before the date the fee is due or within a grace 

period of 6 months thereafter, the patent will expire as of the end of such grace period. The Director may require the payment of a surcharge as a condition of accepting within such 6-month grace period the payment of an applicable maintenance fee. 

No fee may be established for maintaining a design or plant patent in force.’’. 

(c) PATENT SEARCH FEES.—Section 41(d) of title 35, United States Code, is amended to read as follows: 

‘‘(d) PATENT SEARCH AND OTHER FEES.—

‘‘(1) PATENT SEARCH FEES.—(A) The Director shall charge a fee for the search 

of each application for a patent, except for provisional applications. The Director 

shall establish the fees charged under this paragraph to recover an amount not 

to exceed the estimated average cost to the Office of searching applications for 

patent either by acquiring a search report from a qualified search authority, or 

by causing a search by Office personnel to be made, of each application for patent. 

‘‘(B) For purposes of determining the fees to be established under this paragraph, the cost to the Office of causing a search of an application to be made 

by Office personnel shall be deemed to be—

‘‘(i) $500 for each application for an original patent, except for design, 

plant, provisional, or international applications; 

‘‘(ii) $100 for each application for an original design patent; 

‘‘(iii) $300 for each application for an original plant patent; 

‘‘(iv) $500 for the national stage of each international application; and 

‘‘(v) $500 for each application for the reissue of a patent. 

‘‘(C) The provisions of section 111(a)(3) of this title relating to the payment 

of the fee for filing the application shall apply to the payment of the fee specified in this paragraph with respect to an application filed under section 111(a) 

of this title. The provisions of section 371(d) of this title relating to the payment 

of the national fee shall apply to the payment of the fee specified in this paragraph with respect to an international application. 

‘‘(D) The Director may by regulation provide for a refund of any part of the 

fee specified in this paragraph for any applicant who files a written declaration 

of express abandonment as prescribed by the Director before an examination 

has been made of the application under section 131 of this title, and for any 

applicant who provides a search report that meets the conditions prescribed by 

the Director.

‘‘(E) For purposes of subparagraph (A), a ‘qualified search authority’ may not 

include a commercial entity unless—

‘‘(i) the Director conducts a pilot program of limited scope, conducted over 

a period of not more than 18 months, which demonstrates that searches by 

commercial entities of the available prior art relating to the subject matter 

of inventions claimed in patent applications—

‘‘(I) are accurate; and 

‘‘(II) meet or exceed the standards of searches conducted by and used 

by the Patent and Trademark Office during the patent examination 

process; 

‘‘(ii) the Director submits a report on the results of the pilot program to 

the Congress and the Patent Public Advisory Committee that includes—

‘‘(I) a description of the scope and duration of the pilot program; 

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‘‘(II) the identity of each commercial entity participating in the pilot 

program; 

‘‘(III) an explanation of the methodology used to evaluate the accuracy and quality of the search reports; 

‘‘(IV) an assessment of the effects that the pilot program, as compared to searches conducted by the Patent and Trademark Office, had 

and will have on—

‘‘(aa) patentability determinations: 

‘‘(bb) productivity of the Patent and Trademark Office; 

‘‘(cc) costs to the Patent and Trademark Office; 

‘‘(dd) costs to patent applicants; and 

‘‘(ee) other relevant factors; 

‘‘(iii) the Patent Public Advisory Committee reviews and analyzes the Director’s report under clause (ii) and the results of the pilot program and 

submits a separate report on its analysis to the Director and the Congress 

that includes—

‘‘(I) an independent evaluation of the effects that the pilot program, 

as compared to searches conducted by the Patent and Trademark Office, had and will have on the factors set forth in clause (ii)(IV); and 

‘‘(II) an analysis of the reasonableness, appropriateness, and effectiveness of the methods used in the pilot program to make the evaluations required under clause (ii)(IV); and 

‘‘(iv) the Congress does not, during the 1-year period beginning on the 

date on which the Patent Public Advisory Committee submits its report to 

the Congress under clause (iii), enact a law prohibiting searches by commercial entities of the available prior art relating to the subject matter of 

inventions claimed in patent applications. 

‘‘(2) OTHER FEES.—The Director shall establish fees for all other processing, 

services, or materials relating to patents not specified in this section to recover 

the estimated average cost to the Office of such processing, services, or materials, except that the Director shall charge the following fees for the following 

services: 

‘‘(A) For recording a document affecting title, $40 per property. 

‘‘(B) For each photocopy, $.25 per page. 

‘‘(C) For each black and white copy of a patent, $3. 

The yearly fee for providing a library specified in section 12 of this title with 

uncertified printed copies of the specifications and drawings for all patents in 

that year shall be $50.’’. 

(d) ADJUSTMENTS.—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. 

(e) CONFORMING AMENDMENTS.—

(1) Section 41 of title 35, United States Code, is amended—

(A) in subsection (c), by striking ‘‘(c)(1)’’ and inserting ‘‘(c) LATE PAYMENT

OF FEES.—(1)’’; 

(B) in subsection (e), by striking ‘‘(e)’’ and inserting ‘‘(e) WAIVERS OF CERTAIN FEES.—’’; 

(C) in subsection (f), by striking ‘‘(f)’’ and inserting ‘‘(f) ADJUSTMENTS IN

FEES.—’’; 

(D) in subsection (g), by striking ‘‘(g)’’ and inserting ‘‘(g) EFFECTIVE DATES

OF FEES.—’’; 

(E) in subsection (h), by striking ‘‘(h)(1)’’ and inserting ‘‘(h) REDUCTIONS

IN FEES FOR CERTAIN ENTITIES.—(1)’’; and 

(F) in subsection (i), by striking ‘‘(i)(1)’’ and inserting ‘‘(i) SEARCH SYSTEMS.—(1)’’. 

(2) Section 119(e)(2) of title 35, United States Code, is amended by striking 

‘‘subparagraph (A) or (C) of’’. 

SEC. 3. ADJUSTMENT OF TRADEMARK FEES. 

(a) FEE FOR FILING APPLICATION.—The fee under section 31(a) of the Trademark 

Act of 1946 (15 U.S.C. 1113(a)) for filing an electronic application for the registration of a trademark shall be $325. If the trademark application is filed on paper, 

the fee shall be $375. The Director may reduce the fee for filing an electronic application for the registration of a trademark to $275 for any applicant who prosecutes 

the application through electronic means under such conditions as may be prescribed by the Director. Beginning in fiscal year 2005, the provisions of the second 

and third sentences of section 31(a) of the Trademark Act of 1946 shall apply to the 

fees established under this section. 

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(b) REFERENCE TO TRADEMARK ACT OF 1946.—For purposes of this section, the ‘‘Trademark Act of 1946’’ refers to the Act entitled ‘‘An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions 

of certain international conventions, and for other purposes.’’, approved July 5, 1946 

(15 U.S.C. 1051 et seq.). 

SEC. 4. CORRECTION OF ERRONEOUS NAMING OF OFFICER. 

(a) CORRECTION.—Section 13203(a) of the 21st Century Department of Justice Appropriations Authorization Act (Public Law 107–273; 116 Stat. 1902) is amended— (1) in the subsection heading, by striking ‘‘COMMISSIONER’’ and inserting ‘‘DI- RECTOR’’; and 

(2) in paragraphs (1) and (2), by striking ‘‘Commissioner’’ each place it appears and inserting ‘‘Director’’. 

(b) EFFECTIVE DATE.—The amendments made by subsection (a) shall be effective 

as of the date of the enactment of Public Law 107–273. 

SEC. 5. PATENT AND TRADEMARK OFFICE FUNDING. 

Section 42 of title 35, United States Code, is amended—

(1) in subsection (b), by striking ‘‘Appropriation’’; and 

(2) in subsection (c), in the first sentence—

(A) by striking ‘‘To the extent’’ and all that follows through ‘‘fees’’ and inserting ‘‘Fees’’; and 

(B) by striking ‘‘shall be collected by and shall be available to the Director’’ and inserting ‘‘shall be collected by the Director and shall be available 

until expended’’. 

SEC. 6. EFFECTIVE DATE, APPLICABILITY, AND TRANSITIONAL PROVISION. 

(a) EFFECTIVE DATE.—Except as provided in section 4 and this section, this Act 

and the amendments made by this Act shall take effect on October 1, 2003, or the 

date of the enactment of this Act, whichever is later. 

(b) APPLICABILITY.—

(1)(A) Except as provided in subparagraphs (B) and (C), the amendments 

made by section 2 shall apply to all patents, whenever granted, and to all patent applications pending on or filed after the effective date set forth in subsection (a) of this section. 

(B)(i) Except as provided in clause (ii), sections 41(a)(1), 41(a)(3), and 41(d)(1) 

of title 35, United States Code, as amended by this Act, shall apply only to—

(I) applications for patents filed under section 111(a) of title 35, United 

States Code, on or after the effective date set forth in subsection (a) of this 

section, and 

(II) international applications entering the national stage under section 

371 of title 35, United States Code, for which the basic national fee specified in section 41 of title 35, United States Code, was not paid before the 

effective date set forth in subsection (a) of this section. 

(ii) Section 41(a)(1)(D) of title 35, United States Code as amended by this Act, 

shall apply only to applications for patent filed under section 111(b) of title 35, 

United States Code, before, on, or after the effective date set forth in subsection 

(a) of this section in which the filing fee specified in section 41 of title 35, 

United States Code, was not paid before the effective date set forth in subsection (a) of this section. 

(C) Section 41(a)(2) of title 35, United States Code, as amended by this Act, 

shall apply only to the extent that the number of excess claims, after giving effect to any cancellation of claims, is in excess of the number of claims for which 

the excess claims fee specified in section 41 of title 35, United States Code, was 

paid before the effective date set forth in subsection (a) of this section. 

(2) The amendments made by section 3 shall apply to all applications for the 

registration of a trademark filed or amended on or after the effective date set 

forth in subsection (a) of this section. 

(c) TRANSITIONAL PROVISIONS.—

(1) SEARCH FEES.—During the period beginning on the effective date set forth 

in subsection (a) of this section and ending on the date on which the Director 

establishes search fees under the authority provided in section 41(d)(1) of title 

35, United States Code, the Director shall charge—

(A) for the search of each application for an original patent, except for 

design, plant, provisional, or international application, $500; 

(B) for the search of each application for an original design patent, $100; 

(C) for the search of each application for an original plant patent, $300; 

(D) for the search of the national stage of each international application, 

$500; and 

(E) for the search of each application for the reissue of a patent, $500. 

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1Pub. L. 107–685, §§ 13101–13104. 

(2) TIMING OF FEES.—The provisions of section 111(a)(3) of title 35, United 

States Code, relating to the payment of the fee for filing the application shall 

apply to the payment of the fee specified in paragraph (1) with respect to an 

application filed under section 111(a) of title 35, United States Code. The provisions of section 371(d) of title 35, United States Code, relating to the payment 

of the national fee shall apply to the payment of the fee specified in paragraph 

(1) with respect to an international application. 

(3) REFUNDS.—The Director may by regulation provide for a refund of any 

part of the fee specified in paragraph (1) for any applicant who files a written 

declaration of express abandonment as prescribed by the Director before an examination has been made of the application under section 131 of title 35, 

United States Code, and for any applicant who provides a search report that 

meets the conditions prescribed by the Director. 

(d) EXISTING APPROPRIATIONS.—The provisions of any appropriation Act that 

make amounts available pursuant to section 42(c) of title 35, United States Code, 

and are in effect on the effective date set forth in subsection (a) shall cease to be 

effective on that effective date. 

SEC. 7. DEFINITION. 

In this Act, the term ‘‘Director’’ means the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. 

SEC. 8. CLERICAL AMENDMENT. 

Subsection (c) of section 311 of title 35, United States Code, is amended by aligning the text with the text of subsection (a) of such section.

PURPOSE AND SUMMARY

The primary purpose of H.R. 1561 is to readjust the fee schedule 

that funds the operations of the U.S. Patent and Trademark Office 

(PTO), thereby generating an additional $201 million in fiscal year 

2004 revenue for agency use. The legislation also prevents future 

‘‘diversion’’ of PTO funds to programs unrelated to the agency. 

The Honorable James E. Rogan, Director of the PTO, insists that 

enactment of the fee schedule is a necessary precursor to implementation of other administrative changes set forth in the agency’s 

‘‘Strategic Business Plan.’’ The Plan was developed pursuant to a 

congressional mandate eventually codified in the ‘‘21st Century Department of Justice Appropriations Authorization Act.’’ 1 The Plan 

is designed to implement reforms that will enhance patent and 

trademark quality and reduce application pendency and backlogs 

at the agency. 

Additionally, given that the PTO is completely funded through 

the imposition of user fees, the ongoing appropriations practice of 

diverting a percentage of fee revenue to non-PTO use is of great 

concern to Committee members, inventors, and trademark filers. 

Representatives of the user community have stated that their 

members are not opposed to reasonable fee increases, but are concerned that the appropriators will divert much of the extra revenue 

to non-agency use. Section 5 of H.R. 1561 acknowledges this ‘‘antidiversion’’ sentiment by empowering the Director to collect and 

draw upon all of the fee revenue that the agency raises in a given 

fiscal year until expended. 

BACKGROUND AND NEED FOR THE LEGISLATION

REVISED 21ST CENTURY STRATEGIC PLAN

In General. As noted, Public Law 107–685 required the PTO to 

develop a five-year Strategic Plan to address problems regarding 

7

2See The U.S. Patent and Trademark Office: Fee Schedule Adjustment and Agency Reform: 

Oversight Hearing Before the Subcomm. on Courts, the Internet, and Intellectual Property of 

the House Comm. on the Judiciary, 107th Cong., 2nd Sess., Final Print Serial No. 92 (2002). 

The transcript may also be accessed at the Committee website: www.house.gov/judiciary/courts. 3Letter from Carl B. Feldbaum, President, Biotechnology Industry Organization, to the Honorable Mitchell E. Daniels, Jr., Director, Office of Management and Budget (November 25, 2002); 

joint letter from Ronald E. Myrick, President, American Intellectual Property Law Association, 

John K. Williamson, President, Intellectual Property Owners Association, and Nils Victor 

Montan, President, International Trademark Association, to Director Daniels (November 22, 

2002); letter from Mark T. Banner, Chair, and Charles P. Baker, Immediate Past Chair, Section 

of Intellectual Property Law, the American Bar Association, to Director Daniels (November 22, 

2002). It should be noted, however, that the signatories qualified their support of the fee increases and other changes upon the Administration ‘‘effectively [addressing] the issue of diversion’’ (Myrick, Williamson, Montan, Banner, and Baker) or ‘‘[taking] steps to stop diversion’’ (Feldbaum). 

In a related matter, the Honorable Donald Evans, Secretary of Commerce, testified at a March 

6, 2003, hearing before the Subcommittee on Commerce, Justice, State and Judiciary of the 

House Committee on Appropriations. According to a PTO news release dated March 7, the Secretary stated that ‘‘the Department is working to eliminate the practice of using [agency] revenues for unrelated federal programs.’’ 4 H.R. 1561, the ‘‘Patent and Trademark Fee Modernization Act of 2003’’: Hearing Before the 

Subcomm. on Courts, the Internet, and Intellectual Property of the House Comm. on the Judiciary, 108th Cong., 1st Sess. (written testimony of the Honorable James E. Rogan, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark 

Office).

quality, pendency, and delays in implementing a fully electronic 

patent environment at the agency. Congress specifically directed 

the PTO to identify corrective measures other than hiring more examiners and to implement electronic processing for patents by FY 

2004. 

Since June 2002, the PTO has revised its Strategic Plan in response to comments from Congress and the user community.2 In its 

now revised Plan, the agency has addressed these issues and identified goals and initiatives that are largely supported by the major 

trade associations which represent patent and trademark filers.3

While the agency has demonstrated a commitment to embrace topto-bottom reform consistent with congressional mandates, it is 

equally clear that PTO requires additional revenue to implement 

these changes. As Director Rogan has noted: 

[Implementation of the revised Strategic Plan] hinges on 

passage of [H.R. 1561]. Without the ability to hire and 

train new examiners and also improve infrastructure, our 

hands will be tied * * *. The consequences of failing to 

enact the fee bill and giving the [PTO] access to those fees 

will mean quality and pendency will continue to significantly suffer. We will be unable to hire needed examiners, 

and over 140,000 patents will not issue over the next five 

years. The inventory of unexamined patent applications 

will skyrocket to a backlog of over one-million applications 

by 2008—more than double the current amount—and 

pendency (as measured from the time of filing) will jump 

to over 40 months average in the next few years. This 

would represent the highest pendency rate in decades.4

SUMMARY OF BASIC FEE SCHEDULE CHANGES 

Current fee Revised proposed fee 

Patent Large Entity: 

Filing ....................................................................................................................................... $750 $300 

Search ..................................................................................................................................... NA 1 500

Examination ............................................................................................................................ NA 1 200

8

SUMMARY OF BASIC FEE SCHEDULE CHANGES—Continued

Current fee Revised proposed fee 

Pre-Grant Publication ............................................................................................................. 300 300

Issue ....................................................................................................................................... 1,300 1,400

Maintenance (1st Stage) ........................................................................................................ 890 900

Maintenance (2nd Stage) ....................................................................................................... 2,050 2,300

Maintenance (3rd Stage) ........................................................................................................ 3,150 3,800

Total ................................................................................................................................... 8,440 9,700

Patent Small Entity: 

Filing ....................................................................................................................................... 375 150

Search ..................................................................................................................................... NA 1 500

Examination ............................................................................................................................ NA 1 100

Pre-Grant Publication ............................................................................................................. 300 300

Issue ....................................................................................................................................... 650 700

Maintenance (1st Stage) ........................................................................................................ 445 450

Maintenance (2nd Stage) ....................................................................................................... 1,025 1,150

Maintenance (3rd Stage) ........................................................................................................ 1,575 2,500

Total ................................................................................................................................... 4,370 5,250

Trademark: 

Application (Paper) ................................................................................................................. 335 375

Application (Electronic) .......................................................................................................... NA 325

Application (Expedited) ........................................................................................................... NA 275

1 Refundable in part depending upon stage of express abandonment. 

In addition to these basic fees, the revised Plan contains other 

recommendations that would create new or higher fees based on 

the complexity of a submitted application. For example, applications with drawings and specifications that exceed 100 pages are 

subject to a $250 fee for each additional block of 50 pages, while 

applications which feature four or more independent claims or 

more than 20 total claims would be subject to higher fees. These 

new or higher fees reflect the administrative reality that larger and 

more complex applications are more time-consuming for the agency 

to process. 

Other Highlights. The full text of the original Plan exceeds 300 

pages. In a 17-page summary, which may be accessed at the PTO 

website (www.uspto.gov), the agency indicates, among other things, 

that it wishes to pursue the following high-profile changes as part 

of the revised version: 

Out-sourcing of search function. The functions of searching and 

examination would be split, which would include ‘‘out-sourcing’’ some search duties to private firms. (Representative Lamar Smith, 

Chairman of the Committee’s Subcommittee on Courts, the Internet, and Intellectual Property, offered a relevant amendment on behalf of himself and Representative Howard Berman during the 

May 22, 2003, Subcommittee markup of H.R. 1561. Pursuant to the 

Smith-Berman amendment, the practice of out-sourcing the search 

function must initially be limited to a pilot project.) 

Certification of PTO employees. PTO workers would be subject to 

a more extensive employee review and certification process. 

Bilateral and Multilateral Trade Agreements. More trade agreements would be negotiated to ‘‘facilitate global convergence of patent standards.’’

9

Ramping-up of paperless operations. Changes would be made to 

expedite the comprehensive implementation of an electronic communications system. 

The Committee will continue to monitor PTO operations throughout the 108th Congress. This will include conducting any necessary 

oversight hearings and responding to appropriate legislative requests that will assist the agency in its efforts to reduce pendency 

and backlogs and to improve patent and trademark quality consistent with the directives set forth in Public Law 107–685. 

PTO FUNDING DIVERSION: A HISTORY

Amid funding scarcity in 1982, Congress dramatically increased 

fees associated with obtaining and maintaining trademark registrations and patents to recover the costs of processing patent and 

trademark applications. By 1990, approximately 80% of PTO operations were funded through user fees. In an effort to reduce public 

expenditures and the national debt, Congress enacted the Omnibus 

Budget Reconciliation Act (OBRA), which, among other things, 

transformed the PTO into a wholly fee-supported agency. To compensate for the remaining taxpayer revenue that would be withdrawn, OBRA imposed a massive statutory patent fee increase (referred to as a ‘‘surcharge’’) on American inventors for a five-year 

period. 

As part of this budget agreement, a scoring system was adopted 

to ensure that savings would be accurately tracked through the appropriations process. To this end, Congress mandated that the income from the surcharge be deposited into a specially-created surcharge fund in the Treasury. Unlike other fees collected by PTO, 

those in the surcharge fund counted against the expenditure cap 

for the purposes of appropriations. This meant that every dollar not 

spent from the surcharge fund would enable the appropriations of 

another taxpayer dollar to underwrite a different (non-PTO) initiative. 

Initially, Congress appropriated the total amount deposited in 

the fund to PTO. After only one year, however, Congress began to 

withhold a portion of the amount deposited in the surcharge fund 

annually so that it could funnel additional money to other programs. Compounding the problem, Congress extended the OBRA 

surcharge provisions for an additional three years to take further 

advantage of the arrangement and later increased the statutory 

fees to compensate for the lapse of the surcharge after it expired 

at the end of fiscal year 1998. 

By denying PTO the ability to spend fee revenue in the same fiscal year in which it collects the revenue, an equivalent amount 

may be appropriated to some other program without exceeding 

their budget caps. Although the money is technically available to 

PTO the following year, it has already been spent. The legislative 

response to this funding problem has been to increase the amount 

of fee collections unavailable to PTO in each succeeding fiscal year. 

As a result, more than $700 million has been diverted from PTO 

over the past 11 fiscal years. 

PTO FUNDING DIVERSION: PREVIOUS SUBCOMMITTEE RESPONSES

Previous attempts by the Subcommittee on Courts, the Internet, 

and Intellectual Property to end fee diversion have met with little 

10

5 H.R. 4690, 106th Cong., 2nd Sess. (2000). 

6 H.R. 740, 107th Cong., 1st Sess. (2001) (Representative Howard Coble, sponsor). But note 

that H.R. 4034, the precursor bill to H.R. 740, was reported by Committee and placed on the 

Union Calendar during the 106th Congress. It was not considered because of opposition by the 

Appropriations Committee. 7 H. Res. 110, 107th Cong., 1st Sess. (2001) (Representative Howard Berman, sponsor).

success. During the 106th Congress, Representative Howard Coble 

offered an amendment to the House version of the Commerce-Justice-State appropriations vehicle 5 to restore nearly $134 million in 

PTO funding for Fiscal Year 2001 by reducing the budgets for three 

other programs in the bill by an identical amount. Despite a 21⁄2- hour debate on the amendment, it ultimately failed by a substantial margin (145–223). 

In the succeeding Congress, the Subcommittee reviewed as part 

of a PTO oversight hearing measures that would have: (1) removed 

PTO funding from the appropriations process 6 and (2) created a 

new point of order against any House bill to deny the agency full 

funding.7 The general consensus among Subcommittee members 

and industry representatives at the time was that neither bill stood 

a good chance of being enacted, so no further action was taken. 

ADMINISTRATION AND COMMITTEE BUDGET SUBMISSIONS FOR FISCAL

YEAR 2004

The Administration has requested $1,404,130,000 for PTO operations in FY 2004, derived from offsetting collections assessed and 

collected pursuant to 15 U.S.C. § 1113 (trademarks) and 35 U.S.C. 

§ 41 and § 376 (patents). To generate this revenue, the Administration recommends that Congress amend these statutes by implementing the fee modernization legislation under consideration here 

and certain legislative components of the revised Strategic Plan. 

The new fees are estimated to raise an additional $201 million, 

which represents roughly a 15% increase above existing rates. 

The Administration argues that increased fees are essential for 

the PTO to make necessary investments in personnel and systems 

that support the Strategic Plan. At the same time, however, approximately $100 million of the revenue would be diverted for 

homeland security and other general treasury purposes. This is approximately a 50% decrease from last year’s amount of diverted 

fees. 

The Committee on the Judiciary recommended in its views-andestimates submission to the Committee on the Budget that the 

PTO receive 100% of its projected fee income in FY 2004. Among 

other things, this additional funding will help to expedite implementation of the revised Strategic Plan. The Committee therefore 

submitted a higher recommendation ($1,500,000,000) than that set 

forth in the President’s budget in light of the ongoing diversion of 

PTO funds. In its submission, the Committee noted its concern that 

the full amount of current year fee collections generated by user 

fee-paid requests for products and services has not been made 

available to the PTO, and thereby adversely affected delivery of 

services paid for by applicants. 

HEARINGS

The Committee’s Subcommittee on Courts, the Internet, and Intellectual Property held a hearing on H.R. 1561 on April 3, 2003. 

11

Testimony was received from the Patent and Trademark Office, Director, James E. Rogan, and representatives of two user groups, 

and the president of a patent examiner’s union. 

COMMITTEE CONSIDERATION

On May 22, 2003, the Subcommittee on Courts, the Internet, and 

Intellectual Property met in open session and ordered favorably reported the bill H.R. 1561, with an amendment, by voice vote, a 

quorum being present. On July 9, 2003, the Committee met in open 

session and ordered favorably reported the bill H.R. 1561, with an 

amendment, by voice vote, a quorum being present. 

VOTE OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee notes that there were no 

recorded votes during the Committee consideration of H.R. 1561. 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee reports that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 1561, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974:

JULY 23, 2003. 

Hon. JAMES SENSENBRENNER, Jr., 

Chairman, Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1561, the United States 

Patent and Trademark Fee Modernization Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. the CBO staff contact is Melissa E. Zimmerman. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN, 

Director. 

Enclosure. 

12

H.R. 1561—United States Patent and Trademark Fee Modernization Act of 2003

Summary: H.R. 1561 would increase the fees that the Patent and 

Trademark Office (PTO) collects for activities related to the processing and filing of patent and trademark applications. The bill 

also would grant the PTO permanent authority to collect and spend 

those fees. Under current law, the collection and spending of those 

fees is subject to provisions in appropriation acts. 

CBO estimates that enacting the bill would result in a net decrease in direct spending of about $58 million in 2004, about $140 

million over the 2004–2008 period, and about $220 million over the 

2004–2013 period. 

Enacting H.R. 1561 also could reduce the future need for appropriated funds for the agency’s operating expenses; however, in recent years, the net appropriation to the PTO (including offsetting 

collections from fees) has been negative. For example, in 2003 the 

net PTO appropriation is estimated to be ¥$48 million. 

H.R. 1561 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on state, local, or tribal governments. H.R. 1561 would impose 

private-sector mandates as defined in UMRA on patent and trademark applicants. Based on information provided by the PTO, CBO 

expects that the direct costs of complying with those mandates 

would exceed the annual threshold established by UMRA ($117 

million in 2003, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 1561 is shown in the following table. The costs 

of this legislation fall within budget function 370 (commerce and 

housing credit).

By fiscal year, in millions of dollars—

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CHANGES IN DIRECT SPENDING 1

Reclassification of PTO fees: 

Estimated budget authority ................... ¥1.3 ¥1.4 ¥1.4 ¥1.5 ¥1.6 ¥1.7 ¥1.7 ¥1.8 ¥1.9 ¥2.0

Estimated outlays ................................... ¥1.3 ¥1.4 ¥1.4 ¥1.5 ¥1.6 ¥1.7 ¥1.7 ¥1.8 ¥1.9 ¥2.0

Increase in PTO fees under H.R. 1561: 

Estimated budget authority ................... ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.3 ¥0.3 ¥0.3

Estimated outlays ................................... ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.3 ¥0.3 ¥0.3

Total PTO fees under H.R. 1561: 

Estimated budget authority ................... ¥1.5 ¥1.6 ¥1.7 ¥1.7 ¥1.8 ¥1.9 ¥2.0 ¥2.1 ¥2.2 ¥2.3

Estimated outlays ................................... ¥1.5 ¥1.6 ¥1.7 ¥1.7 ¥1.8 ¥1.9 ¥2.0 ¥2.1 ¥2.2 ¥2.3

Spending of PTO fees: 

Estimated budget authority ................... 1.5 1.6 1.7 1.7 1.8 1.9 2.0 2.1 2.2 2.3

Estimated outlays ................................... 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.1 2.2

Net changes in direct spending under H.R. 

1561: 

Estimated budget authority ................... 0 0 0 0 0 0 0 0 0 0

Estimated outlays ................................... ¥0.1 * * * * * * * * *

1 Enactment of H.R. 1561 also could lead to changes in discretionary spending if the Congress chose to eliminate future appropriations to 

the PTO in annual appropriation acts. In recent years, net appropriations to the PTO have been negative because appropriation acts have limited the agency’s spending to a level below annual fee collections.

Notes: 

*=Savings of less than $50 million. 

Details may not sum to totals due to rounding. 

Basis of estimate: Under current law, the PTO is authorized to 

collect fees for activities related to processing applications for patents and trademarks. The agency assesses and collects fees for a 

number of different activities, and the rate for each is set in law. 

13

The collection and spending of those fees are subject to provisions 

in annual appropriations acts, and the fees are recorded in the 

budget as offsets to the discretionary spending of the PTO. CBO estimates that the agency will collect a total of about $1.2 billion in 

fees in 2003.

In general, those fee collections cover the PTO’s operating expenses. However, the 2003 appropriation act for the PTO placed a 

limit on the amount of fee collections that the agency could spend. 

Of the estimated $1.2 billion in fees that will be collected in 2003, 

the act allowed the PTO to spend $1.1 billion. (The Congress also 

allowed the agency to spend $167 million from fees collected in 

prior fiscal years, resulting in a gross appropriation for the PTO of 

$1.2 million and an estimated net appropriation of ¥$48 million 

for 2003.) 

Changes in direct spending 

H.R. 1561 would have two effects on the PTO’s collections. First, 

the bill would authorize the PTO to collect and spend the fees without further appropriation action. Because the PTO’s collection and 

spending of fees would no longer be controlled by the availability 

of appropriated funds, the bill would make all of the fees available 

to the agency for spending. Second, the bill would restructure and, 

in many cases, increase the fee rates that the PTO charges for activities related to patent and trademark applications. For example, 

the bill would increase the fee the PTO charges for issuing an original patent (other than design or plant patents) from $1,300 to 

$1,400, and also would create a new fee for trademark applications 

that are filed electronically. 

Based on historical experience, CBO estimates that the amount 

collected under the current PTO fee structure will increase by 

about 5 percent a year. After accounting for the increased fee rates 

under the bill, CBO estimates that PTO fees would increase by 

about 14 percent in 2004 compared to the fee rates that will apply 

under current law. CBO estimates that enacting the bill would increase fees collected by the PTO by $192 million in 2004, about $1 

billion over the 2004–2008 period, and about $2.3 billion over the 

2004–2013 period. 

CBO estimates that the PTO’s collections under current law, together with the additional collections resulting from the increased 

fee rates under the bill, would be about $1.5 billion in 2004, about 

$8.3 billion over the 2004–2008 period, and about $18.7 billion over 

the 2004–2013 period. Under the bill, spending would no longer be 

controlled by annual appropriations, so the total amount of fee collections in each year would be available for the agency to spend. 

CBO estimates that enacting the bill would increase direct spending by about $1.4 billion in 2004, about $8.1 billion over the 2004–

2008 period, and about $18.4 billion over the 2004–2013 period. Because this spending would be offset by fee collections, CBO estimates that the net decrease in direct spending under H.R. 1561 

would be $58 million in 2004, about $140 million over the 2004–

2008 period, and about $220 million over the 2004–2013 period. 

Spending subject to appropriation 

The bill could eliminate potential discretionary savings resulting 

from the PTO collecting more fees than it spends. In 2003, for exVerDate jul 14 2003 05:00 Jul 29, 2003 Jkt 019006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6602 E:\HR\OC\HR241.XXX HR241
14

ample, CBO expects that total fee collections will be about $1.2 billion. For that year, the PTO’s appropriation was about $48 million 

less than those fee collections. Net discretionary spending for the 

PTO in 2004 and beyond depends on future appropriations acts. 

Estimated impact on state, local, and tribal governments: H.R. 

1561 contains no intergovernmental mandates as defined in UMRA 

and would impose no costs on state, local, or tribal governments. 

Estimated impact on the private sector: H.R. 1561 would impose 

private-sector mandates as defined in UMRA on patent and trademark applicants. Patent and trademark fees are private-sector 

mandates because the federal government controls the trademark 

and patent systems and no reasonable alternatives to the systems 

exist. The bill would increase fees and establish new fees for certain patent and trademark services. At the same time, the bill 

would reduce certain filing fees for patents and fees for electronic 

applications to register trademarks. Based on information from the 

PTO, CBO estimates that the aggregate direct cost of those mandates would range from about $190 million in 2004 to about $225 

million in 2008 and would exceed the annual threshold established 

by UMRA ($117 million in 2003, adjusted annually for inflation) in 

each of the next five years. 

Estimate prepared by: Federal costs: Melissa E. Zimmerman; impact on state, local, and tribal governments: Sarah Puro; impact on 

the private sector: Paige Piper/Bach. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.

PERFORMANCE GOALS AND OBJECTIVES

In compliance with, clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives the Committee notes that H.R. 1561 provides significant new funding to the Patent and Trademark Office. 

The Committee expects that the Patent and Trademark Office will 

use that funding in accordance with its Revised Strategic Plan. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8, of the Constitution. 

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

Sec. 1. Short Title. Section One sets forth the short title of the 

bill, the ‘‘United States Patent and Trademark Office Fee Modernization Act of 2003.’’

Sec. 2. Fees for Patent Services. Section Two prescribes the dollar 

amounts for certain corresponding general patent and patent application fees set forth in 35 U.S.C. § 41(a) and (b). Section Two also 

provides for the establishment of a search fee under § 41(d). Section 

41 now specifies a search fee (subsection (d)(1)) and an examination 

fee (subsection (a)(3)) that are separate from the filing fee (subsection (a)(1)). 

Section 41(a)(1) sets out the filing fees for applications filed 

under § 111 of the Patent Code (original or reissue) and the basic 

national fee for Patent Cooperation Treaty (PCT) international applications (filed under the treaty defined in § 351(a) of the Patent 

15

Code) entering the national stage under § 371 of the Patent Code. 

Under § 41(a)(1), the filing fees for applications filed under § 111 

are as follows: (1) the filing fee for an application for an original 

patent, except for design, plant, or provisional applications, is $300; 

(2) the filing fee for an application for an original plant patent is 

$200; (3) the filing fee for an application for an original design patent is $200; (4) the filing fee for a provisional application is $200; 

and (5) the filing fee for an application for the reissue of a patent 

is $300. Under § 41(a)(1), the basic national fee for any PCT international application entering the national stage under § 371 is 

$300. 

Under § 41(a)(1)(G), there is an additional fee for any application 

whose specification and drawings, excluding any sequence listing or 

computer program listing filed in an electronic medium as prescribed by the Director, exceed 100 sheets of paper (or equivalent 

as prescribed by the Director if filed in an electronic medium). The 

additional fee under § 41(a)(1)(G) is $250 for each additional 50 

sheets of paper (or equivalent as prescribed by the Director if filed 

in an electronic medium, excluding any sequence listing or computer program listing) or fraction thereof. Sequence listings or computer program listings filed in an electronic medium as prescribed 

by the Director are excluded to encourage applicants to file any sequence listing or computer program listing in the appropriate electronic medium. 

Section 41(a)(2) sets out the excess claims fees for each independent claim in excess of 3 and for each claim (whether dependent 

or independent) in excess of 20, and the fee for an application containing a multiple dependent claim. The excess claims fees required by § 41(a)(2) are due at the time of presentation of the claim 

for which payment is required (whether on filing or at a later time) 

in the application or reexamination proceeding. 

Under § 41(a)(2)(A), the excess claims fee for each claim in independent form in excess of 3 is $200. Under § 41(a)(2)(B), the excess 

claims fee for each claim (whether dependent or independent) in 

excess of 20 is $50. Under § 41(a)(2)(C), the fee for each application 

containing a multiple dependent claim is $360. 

Section 41(a)(3) sets out the examination fees for all applications 

(except for provisional applications), including PCT international 

applications entering the national stage under § 371. The examination fee for each application for an original patent, except for a design, plant, or international application, is $200. The examination 

fee for each original design patent is $130. The examination fee for 

each original plant patent is $160. The examination fee for the national stage of an international application is $200. And, the examination fee for each reissue application is $600. The examination 

fees for patent applications are set at amounts that do not recover 

the USPTO’s costs of examining patent applications. The USPTO’s 

costs of examining applications are subsidized by issue and maintenance fees under §§ 41(a)(4) and 41(b). 

Under § 41(a)(3), the provisions of § 111(a)(3) for payment of the 

fee for filing the application apply to the payment of the examination fee specified in § 41(a)(3) with respect to an application filed 

under § 111(a), and the provisions of § 371(d) for the payment of the 

national fee apply to the payment of the examination fee specified 

in § 41(a)(3) with respect to a PCT international application enterVerDate jul 14 2003 02:08 Jul 29, 2003 Jkt 019006 PO 00000 Frm 00015 Fmt 6659 Sfmt 6602 E:\HR\OC\HR241.XXX HR241
16

ing the national stage under § 371. Thus, the examination fee is 

due on filing for an application filed under § 111(a) or on commencement of the national stage for a PCT international application. The examination fee, however, may be paid at a later time if 

paid within such period and under such conditions (including payment of a surcharge) as may be prescribed by the Director. 

Section 41(a)(3) provides that the Director may prescribe regulations to provide a refund of any part of the examination fee specified in § 41(a)(3) for any applicant who files a written declaration 

of express abandonment as prescribed by the Director before an examination has been made of the application under § 131. Under the 

former patent fee structure, an applicant who after paying the filing fee had determined that it was not worthwhile to proceed with 

the application had no motivation to terminate the application 

process prior to receiving a first Office action by the USPTO because the entire filing fee was a sunk cost under that fee structure. 

Under the revised patent fee structure, such an applicant will be 

motivated to terminate the application process before an examination of the application under § 131 because the applicant may obtain a refund of the examination fee under § 41(a)(3) (as well as the 

search fee under § 41(d)(1)), less any portion retained by the 

USPTO, if the applicant terminates the application process by filing a written declaration of express abandonment as prescribed by 

the Director before an examination (including any search) has been 

made of the application under § 131. This provision authorizes the 

USPTO to fix (based upon when an application is expected to be 

taken up for search and examination) a time by which a written 

declaration of express abandonment must be filed for an application to obtain such a refund, and develop procedures for informing 

applicants of when this time will occur. 

The revised patent fee structure will permit the applicant to use 

the period between the filing date of an application and when the 

application is about to be taken up for action by the examiner to 

determine whether the invention claimed in the application has 

sufficient commercial viability to make it worthwhile to proceed 

with search and examination. The applicant may decide to terminate the application process because the invention does not have 

sufficient commercial viability by filing a written declaration of express abandonment as prescribed by the Director before an examination (including any search) has been made of the application 

under § 131 (to obtain any refund provided for by the regulations 

prescribed by the Director). This would abandon the application 

and obviate the need for the USPTO to proceed with the examination of the patent application. 

Section 41(a)(4) sets out the fees for issuing a patent. Under 

§ 41(a)(4), the fee for issuing each original patent, except for design 

or plant patents, is $1,400; the fee for issuing each original design 

patent is $800; the fee for issuing each original plant patent is 

$1,100; and the fee for issuing each reissue patent is $1,400. 

Section 41(a)(5) sets out the fee due upon filing a disclaimer 

under section 253 of the Patent Code in a patent or a patent application, which is $130. 

Section 41(a)(6) sets out the appeal fees. Under § 41(a)(6), the fee 

due upon filing an appeal from the examiner to the Board of Patent 

Appeals and Interferences is $500, the fee due upon filing a brief 

17

in support of the appeal is an additional $500, and the fee due for 

requesting an oral hearing in the appeal before the Board of Patent 

Appeals and Interferences is an additional $1,000. 

Section 41(a)(7) sets out the fees due upon filing a petition to revive an abandoned application or to accept a delayed response by 

the patent owner in a reexamination proceeding, which is $1,500, 

unless the petition is filed under § 133 or § 151 of the Patent Code, 

in which case the fee is $500. 

Section 41(a)(8) sets out the fees due upon filing a petition for 

one-month extensions of time. Under § 41(a)(8), the fee for filing the first one-month petition is $120; the fee for filing the second 

one-month petition is $330; and the fee for filing the third or each 

subsequent one-month petition is $570. 

Section 41(b) sets out the fee for maintaining in force a patent 

based on applications filed on or after December 12, 1980. Under 

§ 41(b), the maintenance fee due at 3 years and 6 months after 

grant is $900; the maintenance fee due 7 years and 6 months after 

grant is $2,300; and the maintenance fee due 11 years and 6 

months after grant is $3,800. Section 41(b) also provides that unless payment of the applicable maintenance fee is received in the 

USPTO on or before the date on which the fee is due or within a 

grace period of 6 months thereafter, the patent will expire as of the 

end of such grace period, that the Director may require the payment of a surcharge as a condition of accepting within such 6-

month grace period the payment of an applicable maintenance fee, 

and that no fee may be established for maintaining a design or 

plant patent in force.

Section 41(d)(1) provides that the Director will establish fees for 

requesting a search of an application for a patent (except for provisional applications), including PCT international applications entering the national stage under § 371. The search fees established 

under § 41(d)(1) are to be set so as to recover an amount not to exceed the estimated average cost to the USPTO of searching applications for patent either by acquiring a search report from a qualified 

search authority, or by causing a search by Office personnel to be 

made, of each application for a patent. The USPTO is expected to 

test the concept of exploitation of search reports obtained from 

qualified search contractors during examination to determine 

whether such a procedure is a feasible means of addressing the 

USPTO increasing patent workload. It is expected that exploitation 

of search reports obtained from qualified search contractors during 

examination will be tested and piloted in a step-by-step process to 

ensure proof of concept prior to any full implementation of such a 

practice. 

Section 41(d)(1)(A) provides that for purposes of determining the 

fees to be established under § 41(d)(1), the cost to the USPTO of 

causing a search to be made of an application by USPTO personnel 

is deemed to be the transitional search fee set forth in Section Five 

of this Act: (1) $500 for each application for an original patent, except for a design, plant, or international application; (2) $100 for 

each application for an original design patent; (3) $300 for each application for an original plant patent; (4) $500 for each national 

stage of an international application; and (5) $500 for each application for the reissue of a patent. This provision is designed to simplify the process of determining the search fee under § 41(d)(1). 

18

Under § 41(d)(1)(B), the provisions of § 111(a)(3) for payment of 

the fee for filing the application apply to the payment of the search 

fee specified in § 41(d)(1) with respect to an application filed under 

§ 111(a), and the provisions of § 371(d) for the payment of the national fee apply to the payment of the search fee specified in 

§ 41(d)(1) with respect to a PCT international application entering 

the national stage under § 371. 

Under § 41(d)(1)(C), the Director may, by regulation, provide for 

a refund of any part of the search fee specified in § 41(d)(1) for any 

applicant who files a written declaration of express abandonment 

as prescribed by the Director before an examination has been made 

of the application under § 131, as well as for any applicant who provides a search report that meets the conditions prescribed by the 

Director (as discussed above). 

Finally, § 41(d)(1)(E) addresses the ability of the Director to ‘‘outsource’’ performance of the search function to commercial entities. 

Empowering the PTO Director to initiate a program to out-source 

the search function is part of a larger effort to make PTO a modern, productive, and efficient federal agency. The agency, Congress, 

and the user groups whose members pay for PTO services all want 

to improve PTO operations. The Committee believes that the agency would not condone the wholesale use of out-sourcing if the practice proved detrimental to its operations. Congress—and the Committee in particular—would never abandon our oversight responsibilities and permit such an occurrence. The user groups, which 

endorse the Strategic Plan and are not opposed to pilot-tested outsourcing, will always offer critical commentary when necessary.

While permitting the Director to initiate limited out-sourcing activity, § 41(d)(1)(E) places exacting constraints on its use. It permits 

the Director to conduct a pilot program within an 18-month period 

to determine if commercial entities can perform the search function 

by producing accurate results that meet or exceed current PTO 

standards. At the conclusion of the program, the Director must 

then submit a report on the results to the Patent Public Advisory 

Committee, an independent entity that evaluates PTO operations 

on a biannual basis, as well as to the Congress. The report must 

address a number of detailed criteria, such as methodology, cost, 

and productivity, for evaluation by the Advisory Committee and 

Congress. The Advisory Committee must then submit its own report to the Director and Congress as to the merits of out-sourcing 

relative to PTO standards. Once the Advisory Committee report is 

completed, Congress will have an entire year if it desires to limit 

or prohibit the wholesale out-sourcing of searches. 

Sec. 3. Adjustment of Trademark Fees. Section Three provides 

that the fee under section 31(a) of the Trademark Act of 1946 (15 

U.S.C. 1113(a)) for filing an electronic application for the registration of a trademark shall be $325. If the trademark application filing is done on paper the fee shall be $375. Section Three also provides that the Director may reduce the $325 fee for filing an application for the registration of a trademark in an electronic form prescribed by the Director to $275 for any applicant who also prosecutes the application through electronic means under such conditions as may be prescribed by the Director. Section Three also provides that beginning in fiscal year 2004, the provisions of the second and third sentence of section 31(a) of the Trademark Act of 

19

8See note 5, supra. 

1946 shall apply to the fees for filing an application for the registration of a trademark established under Section Three. Thus, the 

fees for filing an application for the registration of a trademark established under Section Three may be adjusted once each year (beginning on October 1, 2003) to reflect, in the aggregate, any fluctuations occurring during the preceding twelve months in the Consumer Price Index, as determined by the Secretary of Labor. 

Sec. 4. Correction of Erroneous Naming of Officer. Section Four 

corrects a clerical error in the Intellectual Property and High Technology Technical Amendments Act of 2002 (Title III, Subtitle B, of 

Public Law 107–273 (116 Stat. 1758)). Specifically, Section Four 

amends § 13203 of Public Law 107–273 to make the Deputy Director (and not the ‘‘Deputy Commissioner’’) of the USPTO a member 

of the Board of Patent Appeals and Interferences and the Trademark Trial and Appeal Board, as was the intended result of 

§ 13203(a) of Public Law 107–273 (see H.R. Conf. Rep. No. 107–685, 

at 220 (2002)). 

Sec. 5. Patent and Trademark Office Funding. Section Five is 

based on legislation from previous Congresses.8 The text consists of 

the strongest possible language to protect the PTO revenues from 

diversion. The bill accomplishes this goal by amending two key provisions of section 42 of the Patent Act, which prescribes the PTO 

funding mechanism. 

First, the requirement in subsection (b) that all agency funds be 

credited to a special PTO Appropriation Account is deleted; instead, 

such funds are to be credited to a PTO Account in the Treasury. 

Second, the requirement in subsection (c) that subjects the agency’s collected fees to the appropriations process is also deleted. This 

means that the Director will have the authority to collect all fees 

and use them for agency operations until expended. 

Sec. 6. Effective Date, Applicability, and Transitional Provision.

Section Six sets forth the effective date of this bill: the later of 

March 30, 2003 or the date of enactment of this Act, except that 

Section Four takes effect as of November 2, 2002 (the effective date 

of Public Law 107–273). 

Section Six also provides that the amendments made by Section 

Two apply to all patents, whenever granted, and to all patent applications pending on or filed after the effective date of this Act. 

Since applications pending before the effective date of this Act paid 

filing or basic national fees based upon former § 41(a), Section Six 

also provides that the filing, examination, and search fees specified 

in §§ 41(a)(1), 41(a)(3), and 41(d)(1), respectively (and the refund 

provisions of §§ 41(a)(3), and 41(d)(1)), apply only to all applications 

for patent filed under § 111(a) on or after the effective date of this 

Act, and to all PCT international applications entering the national 

stage after compliance with § 371 on or after the effective date of 

this Act, except that the provisional application filing fee specified 

in § 41(a)(1)(D) applies to all provisional applications for which the 

filing fee specified in § 41 was not paid before the effective date of 

this Act. Section Six also provides that the excess claims fees specified in § 41(a)(2) (and its refund provisions) apply only to the extent 

that the number of claims in independent form, after giving effect 

to any cancellation of claims, is in excess of the number of claims 

20

in independent form for which the excess claims fee specified in 

§ 41 was paid before the effective date of this Act, and that the 

number of total claims (whether independent or dependent), again 

after giving effect to any cancellation of claims, is in excess of the 

number of total claims (whether independent or dependent) for 

which the excess claims fee specified in § 41 was paid before the effective date of this Act. 

Section Six also provides that the amendments made by Section 

Three shall apply to all applications for the registration of a trademark and classes added to an existing trademark application filed 

after the effective date of this Act. The last sentence of § 31(a) will 

pertain to the trademark fees established herein. That sentence 

states that: ‘‘No fee established under this section shall take effect 

until at least 30 days after the notice of the fee has been published 

in the Federal Register and in the Official Gazette of the United 

States Patent and Trademark Office.’’

Section Six also provides a transitional provision concerning the 

search fees established under § 41(d). Section Six establishes a 

transitional search fee of: (1) $500 for the search of each application for an original patent, except for a design, plant, provisional, 

or international application; (2) $160 for the search of each application for an original design patent; (3) $300 for the search of each 

application for an original plant patent; (4) $500 for the national 

stage of an international application; and (5) $500 for the search 

of each application for the reissue of a patent. Section Six also provides that the provisions of § 111(a)(3) for payment of the fee for 

filing the application apply to the payment of the transitional 

search fees specified in Section Six with respect to an application 

filed under § 111(a), and that the provisions of § 371(d) for payment 

of the national fee apply to the payment of the transitional search 

fees specified in Section Six with respect to a PCT international application. Section Six also provides that the Director may, by regulation, provide for a refund of any part of the transitional search 

fees specified in Section Six for any applicant who files a written 

declaration of express abandonment as prescribed by the Director 

before an examination has been made of the application under section 131 of the patent code, as well as for any applicant who provides a search report that meets the conditions prescribed by the 

Director (as discussed above). 

Sec. 7. Definition. Section Seven clarifies that the term ‘‘Director’’

means the Under Secretary of Commerce for Intellectual Property 

and Director of the United States Patent and Trademark Office. 

Sec. 8. Clerical Amendment. Section Eight aligns the text of Subsection (c) of § 311 of title 35, United States Code, with that of subsection (a) of § 311.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

21

TITLE 35, UNITED STATES CODE 

* * * * * * *

PART I—UNITED STATES PATENT AND 

TRADEMARK OFFICE 

* * * * * * *

CHAPTER 4—PATENT FEES; FUNDING; SEARCH 

SYSTEMS 

* * * * * * *

§ 41. Patent fees; patent and trademark search systems 

ø(a) The Director shall charge the following fees: 

ø(1)(A) On filing each application for an original patent, ex- cept in design or plant cases, $690. 

ø(B) In addition, on filing or on presentation at any other time, $78 for each claim in independent form which is in excess 

of 3, $18 for each claim (whether independent or dependent) 

which is in excess of 20, and $260 for each application containing a multiple dependent claim. 

ø(C) On filing each provisional application for an original patent, $150. 

ø(2) For issuing each original or reissue patent, except in de- sign or plant cases, $1,210. 

ø(3) In design and plant cases— ø(A) on filing each design application, $310; 

ø(B) on filing each plant application, $480; 

ø(C) on issuing each design patent, $430; and 

ø(D) on issuing each plant patent, $580. 

ø(4)(A) On filing each application for the reissue of a patent, $690. 

ø(B) In addition, on filing or on presentation at any other 

time, $78 for each claim in independent form which is in excess 

of the number of independent claims of the original patent, and 

$18 for each claim (whether independent or dependent) which 

is in excess of 20 and also in excess of the number of claims 

of the original patent. 

ø(5) On filing each disclaimer, $110. 

ø(6)(A) On filing an appeal from the examiner to the Board 

of Patent Appeals and Interferences, $300. 

ø(B) In addition, on filing a brief in support of the appeal, 

$300, and on requesting an oral hearing in the appeal before 

the Board of Patent Appeals and Interferences, $260. 

ø(7) On filing each petition for the revival of an unintentionally abandoned application for a patent, for the unintentionally 

delayed payment of the fee for issuing each patent, or for an 

unintentionally delayed response by the patent owner in any 

reexamination proceeding, $1,210, unless the petition is filed 

under section 133 or 151 of this title, in which case the fee 

shall be $110. 

ø(8) For petitions for 1-month extensions of time to take actions required by the Director in an application—

ø(A) on filing a first petition, $110; 

22

ø(B) on filing a second petition, $270; and 

ø(C) on filing a third petition or subsequent petition, 

$490. 

ø(9) Basic national fee for an international application where 

the Patent and Trademark Office was the International Preliminary Examining Authority and the International Searching 

Authority, $670. 

ø(10) Basic national fee for an international application 

where the Patent and Trademark Office was the International 

Searching Authority but not the International Preliminary Examining Authority, $690. 

ø(11) Basic national fee for an international application 

where the Patent and Trademark Office was neither the International Searching Authority nor the International Preliminary Examining Authority, $970. 

ø(12) Basic national fee for an international application 

where the international preliminary examination fee has been 

paid to the Patent and Trademark Office, and the international 

preliminary examination report states that the provisions of 

Article 33(2), (3), and (4) of the Patent Cooperation Treaty 

have been satisfied for all claims in the application entering 

the national stage, $96. 

ø(13) For filing or later presentation of each independent 

claim in the national stage of an international application in 

excess of 3, $78. 

ø(14) For filing or later presentation of each claim (whether 

independent or dependent) in a national stage of an international application in excess of 20, $18. 

ø(15) For each national stage of an international application 

containing a multiple dependent claim, $260. 

For the purpose of computing fees, a multiple dependent claim referred to in section 112 of this title or any claim depending therefrom shall be considered as separate dependent claims in accordance with the number of claims to which reference is made. Errors 

in payment of the additional fees may be rectified in accordance 

with regulations of the Director. 

ø(b) The Director shall charge the following fees for maintaining 

in force all patents based on applications filed on or after December 

12, 1980: 

ø(1) 3 years and 6 months after grant, $830. 

ø(2) 7 years and 6 months after grant, $1,900. 

ø(3) 11 years and 6 months after grant, $2,910. 

Unless payment of the applicable maintenance fee is received in 

the Patent and Trademark Office on or before the date the fee is 

due or within a grace period of 6 months thereafter, the patent will 

expire as of the end of such grace period. The Director may require 

the payment of a surcharge as a condition of accepting within such 

6-month grace period the payment of an applicable maintenance 

fee. No fee may be established for maintaining a design or plant 

patent in force.¿

(a) GENERAL FEES.—The Director shall charge the following fees: 

(1) FILING AND BASIC NATIONAL FEES.—

(A) On filing each application for an original patent, except for design, plant, or provisional applications, $300. 

23

(B) On filing each application for an original design pat- ent, $200. 

(C) On filing each application for an original plant pat- ent, $200. 

(D) On filing each provisional application for an original patent, $200. 

(E) On filing each application for the reissue of a patent, $300. 

(F) The basic national fee for each international application filed under the treaty defined in section 351(a) of this 

title entering the national stage under section 371 of this 

title, $300. 

(G) In addition, excluding any sequence listing or computer program listing filed in an electronic medium as prescribed by the Director, for any application the specification 

and drawings of which exceed 100 sheets of paper (or 

equivalent as prescribed by the Director if filed in an electronic medium), $250 for each additional 50 sheets of paper 

(or equivalent as prescribed by the Director if filed in an 

electronic medium) or fraction thereof. 

(2) EXCESS CLAIMS FEES.—In addition to the fee specified in 

paragraph (1)— (A) on filing or on presentation at any other time, $200 

for each claim in independent form in excess of 3; (B) on filing or on presentation at any other time, $50 for 

each claim (whether dependent or independent) in excess of 

20; and 

(C) for each application containing a multiple dependent claim, $360. 

For the purpose of computing fees under this paragraph, a multiple dependent claim referred to in section 112 of this title or 

any claim depending therefrom shall be considered as separate 

dependent claims in accordance with the number of claims to 

which reference is made. The Director may by regulation provide for a refund of any part of the fee specified in this paragraph for any claim that is canceled before an examination on 

the merits, as prescribed by the Director, has been made of the 

application under section 131 of this title. Errors in payment of 

the additional fees under this paragraph may be rectified in accordance with regulations prescribed by the Director. 

(3) EXAMINATION FEES.—

(A) For examination of each application for an original 

patent, except for design, plant, provisional, or international applications, $200. 

(B) For examination of each application for an original 

design patent, $130. 

(C) For examination of each application for an original 

plant patent, $160. 

(D) For examination of the national stage of each inter- national application, $200. 

(E) For examination of each application for the reissue of a patent, $600. 

The provisions of section 111(a)(3) of this title relating to the 

payment of the fee for filing the application shall apply to the 

payment of the fee specified in this paragraph with respect to 

24

an application filed under section 111(a) of this title. The provisions of section 371(d) of this title relating to the payment of the 

national fee shall apply to the payment of the fee specified in 

this paragraph with respect to an international application. 

The Director may by regulation provide for a refund of any part 

of the fee specified in this paragraph for any applicant who files 

a written declaration of express abandonment as prescribed by 

the Director before an examination has been made of the application under section 131 of this title, and for any applicant who 

provides a search report that meets the conditions prescribed by 

the Director. 

(4) ISSUE FEES.— (A) For issuing each original patent, except for design or plant patents, $1,400. (B) For issuing each original design patent, $800. 

(C) For issuing each original plant patent, $1,100. 

(D) For issuing each reissue patent, $1,400. 

(5) DISCLAIMER FEE.—On filing each disclaimer, $130. 

(6) APPEAL FEES.— (A) On filing an appeal from the examiner to the Board of Patent Appeals and Interferences, $500. 

(B) In addition, on filing a brief in support of the appeal, $500, and on requesting an oral hearing in the appeal before the Board of Patent Appeals and Interferences, $1,000. 

(7) REVIVAL FEES.—On filing each petition for the revival of 

an unintentionally abandoned application for a patent, for the 

unintentionally delayed payment of the fee for issuing each patent, or for an unintentionally delayed response by the patent 

owner in any reexamination proceeding, $1,500, unless the petition is filed under section 133 or 151 of this title, in which case 

the fee shall be $500. 

(8) EXTENSION FEES.—For petitions for 1-month extensions of 

time to take actions required by the Director in an application— (A) on filing a first petition, $120; 

(B) on filing a second petition, $330; and 

(C) on filing a third or subsequent petition, $570. 

(b) MAINTENANCE FEES.—The Director shall charge the following 

fees for maintaining in force all patents based on applications filed 

on or after December 12, 1980: (1) 3 years and 6 months after grant, $900. 

(2) 7 years and 6 months after grant, $2,300. 

(3) 11 years and 6 months after grant, $3,800. 

Unless payment of the applicable maintenance fee is received in the 

United States Patent and Trademark Office on or before the date 

the fee is due or within a grace period of 6 months thereafter, the 

patent will expire as of the end of such grace period. The Director 

may require the payment of a surcharge as a condition of accepting 

within such 6-month grace period the payment of an applicable 

maintenance fee. No fee may be established for maintaining a design or plant patent in force.

ø(c)(1)¿ (c) LATE PAYMENT OF FEES.—(1) The Director may accept 

the payment of any maintenance fee required by subsection (b) of 

this section which is made within twenty-four months after the sixmonth grace period if the delay is shown to the satisfaction of the 

Director to have been unintentional, or at any time after the sixVerDate jul 14 2003 02:08 Jul 29, 2003 Jkt 019006 PO 00000 Frm 00024 Fmt 6659 Sfmt 6601 E:\HR\OC\HR241.XXX HR241
25

month grace period if the delay is shown to the satisfaction of the 

Director to have been unavoidable. The Director may require the 

payment of a surcharge as a condition of accepting payment of any 

maintenance fee after the six-month grace period. If the Director 

accepts payment of a maintenance fee after the six-month grace period, the patent shall be considered as not having expired at the 

end of the grace period. 

* * * * * * *

ø(d) The Director shall establish fees for all other processing, 

services, or materials relating to patents not specified in this section to recover the estimated average cost to the Office of such 

processing, services, or materials, except that the Director shall 

charge the following fees for the following services: 

ø(1) For recording a document affecting title, $40 per property. 

ø(2) For each photocopy, $.25 per page. 

ø(3) For each black and white copy of a patent, $3. 

The yearly fee for providing a library specified in section 13 of this 

title with uncertified printed copies of the specifications and drawings for all patents in that year shall be $50.¿

(d) PATENT SEARCH AND OTHER FEES.— (1) PATENT SEARCH FEES.—(A) The Director shall charge a fee 

for the search of each application for a patent, except for provisional applications. The Director shall establish the fees 

charged under this paragraph to recover an amount not to exceed the estimated average cost to the Office of searching applications for patent either by acquiring a search report from a 

qualified search authority, or by causing a search by Office personnel to be made, of each application for patent. 

(B) For purposes of determining the fees to be established 

under this paragraph, the cost to the Office of causing a search 

of an application to be made by Office personnel shall be 

deemed to be— (i) $500 for each application for an original patent, except for design, plant, provisional, or international applications; 

(ii) $100 for each application for an original design patent; 

(iii) $300 for each application for an original plant patent; 

(iv) $500 for the national stage of each international application; and (v) $500 for each application for the reissue of a patent. 

(C) The provisions of section 111(a)(3) of this title relating to 

the payment of the fee for filing the application shall apply to 

the payment of the fee specified in this paragraph with respect 

to an application filed under section 111(a) of this title. The 

provisions of section 371(d) of this title relating to the payment 

of the national fee shall apply to the payment of the fee specified 

in this paragraph with respect to an international application. 

(D) The Director may by regulation provide for a refund of 

any part of the fee specified in this paragraph for any applicant 

who files a written declaration of express abandonment as prescribed by the Director before an examination has been made of 

the application under section 131 of this title, and for any apVerDate jul 14 2003 02:08 Jul 29, 2003 Jkt 019006 PO 00000 Frm 00025 Fmt 6659 Sfmt 6603 E:\HR\OC\HR241.XXX HR241
26

plicant who provides a search report that meets the conditions 

prescribed by the Director. 

(E) For purposes of subparagraph (A), a ‘‘qualified search authority’’ may not include a commercial entity unless—

(i) the Director conducts a pilot program of limited scope, 

conducted over a period of not more than 18 months, which 

demonstrates that searches by commercial entities of the 

available prior art relating to the subject matter of inventions claimed in patent applications—

(I) are accurate; and 

(II) meet or exceed the standards of searches conducted by and used by the Patent and Trademark Office during the patent examination process; 

(ii) the Director submits a report on the results of the 

pilot program to the Congress and the Patent Public Advisory Committee that includes—

(I) a description of the scope and duration of the 

pilot program; 

(II) the identity of each commercial entity participating in the pilot program; 

(III) an explanation of the methodology used to 

evaluate the accuracy and quality of the search reports; 

(IV) an assessment of the effects that the pilot program, as compared to searches conducted by the Patent 

and Trademark Office, had and will have on—

(aa) patentability determinations: 

(bb) productivity of the Patent and Trademark 

Office; 

(cc) costs to the Patent and Trademark Office; 

(dd) costs to patent applicants; and 

(ee) other relevant factors; 

(iii) the Patent Public Advisory Committee reviews and 

analyzes the Director’s report under clause (ii) and the results of the pilot program and submits a separate report on 

its analysis to the Director and the Congress that includes—

(I) an independent evaluation of the effects that the 

pilot program, as compared to searches conducted by 

the Patent and Trademark Office, had and will have 

on the factors set forth in clause (ii)(IV); and 

(II) an analysis of the reasonableness, appropriateness, and effectiveness of the methods used in the pilot 

program to make the evaluations required under clause 

(ii)(IV); and 

(iv) the Congress does not, during the 1-year period beginning on the date on which the Patent Public Advisory 

Committee submits its report to the Congress under clause 

(iii), enact a law prohibiting searches by commercial entities of the available prior art relating to the subject matter 

of inventions claimed in patent applications. 

(2) OTHER FEES.—The Director shall establish fees for all 

other processing, services, or materials relating to patents not 

specified in this section to recover the estimated average cost to 

the Office of such processing, services, or materials, except that 

27

the Director shall charge the following fees for the following 

services: 

(A) For recording a document affecting title, $40 per 

property. (B) For each photocopy, $.25 per page. 

(C) For each black and white copy of a patent, $3. 

The yearly fee for providing a library specified in section 12 of 

this title with uncertified printed copies of the specifications 

and drawings for all patents in that year shall be $50.

(e) WAIVERS OF CERTAIN FEES.—The Director may waive the payment of any fee for any service or material related to patents in 

connection with an occasional or incidental request made by a department or agency of the Government, or any officer thereof. The 

Director may provide any applicant issued a notice under section 

132 of this title with a copy of the specifications and drawings for 

all patents referred to in that notice without charge. 

(f) ADJUSTMENTS IN FEES.—The fees established in subsections 

(a) and (b) of this section may be adjusted by the Director on October 1, 1992, and every year thereafter, to reflect any fluctuations 

occurring during the previous 12 months in the Consumer Price 

Index, as determined by the Secretary of Labor. Changes of less 

than 1 per centum may be ignored. 

(g) EFFECTIVE DATES OF FEES.—No fee established by the Director under this section shall take effect until at least 30 days after 

notice of the fee has been published in the Federal Register and in 

the Official Gazette of the Patent and Trademark Office. 

ø(h)(1)¿ (h) REDUCTIONS IN FEES FOR CERTAIN ENTITIES.—(1)

Fees charged under subsection (a) or (b) shall be reduced by 50 percent with respect to their application to any small business concern 

as defined under section 3 of the Small Business Act, and to any 

independent inventor or nonprofit organization as defined in regulations issued by the Director. 

* * * * * * *

ø(i)(1)¿ (i) SEARCH SYSTEMS.—(1) The Director shall maintain, 

for use by the public, paper, microform, or electronic collections of 

United States patents, foreign patent documents, and United 

States trademark registrations arranged to permit search for and 

retrieval of information. The Director may not impose fees directly 

for the use of such collections, or for the use of the public patent 

or trademark search rooms or libraries. 

* * * * * * *

§ 42. Patent and Trademark Office funding 

(a) * * *

(b) All fees paid to the Director and all appropriations for defraying the costs of the activities of the Patent and Trademark Office 

will be credited to the Patent and Trademark Office øAppropriation¿ Account in the Treasury of the United States. 

(c) øTo the extent and in the amounts provided in advance in appropriations Acts, fees¿ Fees authorized in this title or any other 

Act to be charged or established by the Director øshall be collected 

by and shall be available to the Director¿ shall be collected by the 

Director and shall be available until expended to carry out the activities of the Patent and Trademark Office. All fees available to 

28

the Director under section 31 of the Trademark Act of 1946 shall 

be used only for the processing of trademark registrations and for 

other activities, services, and materials relating to trademarks and 

to cover a proportionate share of the administrative costs of the 

Patent and Trademark Office. 

* * * * * * *

CHAPTER 10—PATENTABILITY OF INVENTIONS 

* * * * * * *

§ 119. Benefit of earlier filing date; right of priority 

(a) * * *

* * * * * * *

(e)(1)***

(2) A provisional application filed under section 111(b) of this 

title may not be relied upon in any proceeding in the Patent and 

Trademark Office unless the fee set forth in øsubparagraph (A) or 

(C) of¿ section 41(a)(1) of this title has been paid. 

* * * * * * *

CHAPTER 31—OPTIONAL INTER PARTES 

REEXAMINATION PROCEDURES 

* * * * * * *

§ 311. Request for inter partes reexamination 

(a) * * *

* * * * * * *

(c) COPY.—The Director promptly shall send a copy of the request 

to the owner of record of the patent. 

* * * * * * *

SECTION 13203 OF THE 21st CENTURY DEPARTMENT OF 

JUSTICE APPROPRIATIONS AUTHORIZATION ACT 

(Public Law 107–273) 

SEC. 13203. PATENT AND TRADEMARK EFFICIENCY ACT AMENDMENTS. 

(a) DEPUTY øCOMMISSIONER¿ DIRECTOR.—

(1) Section 17(b) of the Act of July 5, 1946 (commonly referred to as the ‘‘Trademark Act of 1946’’) (15 U.S.C. 1067(b)), 

is amended by inserting ‘‘the Deputy øCommissioner¿ Director,’’ after ‘‘øCommissioner¿ Director,’’. 

(2) Section 6(a) of title 35, United States Code, is amended 

by inserting ‘‘the Deputy øCommissioner¿ Director,’’ after 

‘‘øCommissioner¿ Director,’’. 

* * * * * * *

29

MARKUP TRANSCRIPT

BUSINESS MEETING 

WEDNESDAY, JULY 9, 2003

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:00 a.m., in Room 

2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr., [Chairman of the Committee] presiding. 

[Intervening business.] 

AFTERNOON SESSION 

Chairman SENSENBRENNER. The Committee will be in order. A 

working quorum is present, and the next item on the agenda is 

H.R. 1561, the ‘‘United States Patent and Trademark Fee Modernization Act of 2003.’’ The Chair recognizes the gentleman from 

Texas, Mr. Smith, Chairman of the Subcommittee on Courts, the 

Internet, and Intellectual Property for a motion. 

Mr. SMITH. Mr. Chairman, the Subcommittee on Courts, the 

Internet, and Intellectual Property reports favorably the bill H.R. 

1561 with a single amendment in the nature of a substitute, and 

moves its favorable recommendation to the full House. 

Chairman SENSENBRENNER. Without objection the bill will be 

considered as read and open for amendment at any point. 

[The bill, H.R. 1561, follows:]

30

1

I

108TH CONGRESS

1ST SESSION H. R. 1561

To amend title 35, United States Code, with respect to patent fees, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 2, 2003

Mr. SMITH of Texas (for himself and Mr. BERMAN) (both by request) introduced the following bill; which was referred to the Committee on the Judiciary

A BILL

To amend title 35, United States Code, with respect to

patent fees, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘United States Patent

5 and Trademark Fee Modernization Act of 2003’’.

6 SEC. 2. FEES FOR PATENT SERVICES.

7 (a) GENERAL PATENT FEES.—Section 41(a) of title

8 35, United States Code, is amended to read as follows:

9 ‘‘(a) GENERAL FEES.—The Director shall charge the

10 following fees:


I1561.AAB
31

2

•HR 1561 IH

1 ‘‘(1) FILING AND BASIC NATIONAL FEES.—

2 ‘‘(A) On filing each application for an

3 original patent, except for design, plant, or pro4 visional applications, $300.

5 ‘‘(B) On filing each application for an

6 original design patent, $200.

7 ‘‘(C) On filing each application for an

8 original plant patent, $200.

9 ‘‘(D) On filing each provisional application

10 for an original patent, $200.

11 ‘‘(E) On filing each application for the re12 issue of a patent, $300.

13 ‘‘(F) The basic national fee for each inter14 national application filed under the treaty de15 fined in section 351(a) of this title entering the

16 national state under section 371 of this title,

17 $300.

18 ‘‘(G) In addition, excluding any sequence

19 listing or computer program listing filed in an

20 electronic medium as prescribed by the Direc21 tor, for any application the specification and

22 drawings of which exceed 100 sheets of paper

23 (or equivalent as prescribed by the Director if

24 filed in an electronic medium), $250 for each

25 additional 50 sheets of paper (or equivalent as


I1561.AAC
32

3

•HR 1561 IH

1 prescribed by the Director if filed in an elec2 tronic medium) or fraction thereof.

3 ‘‘(2) EXCESS CLAIMS FEES.—In addition to the

4 fee specified in paragraph (1)—

5 ‘‘(A) on filing or on presentation at any

6 other time, $200 for each claim in independent

7 form in excess of 3;

8 ‘‘(B) on filing or on presentation at any

9 other time, $50 for each claim (whether de10 pendent or independent) in excess of 20; and

11 ‘‘(C) for each application containing a mul12 tiple dependent claim, $360.

13 For the purpose of computing fees under this para14 graph, a multiple dependent claim referred to in sec15 tion 112 of this title or any claim depending there16 from shall be considered as separate dependent

17 claims in accordance with the number of claims to

18 which reference is made. The Director may by regu19 lation provide for a refund of any part of the fee

20 specified in this paragraph for any claim that is can21 celed before an examination on the merits, as pre22 scribed by the Director, has been made of the appli23 cation under section 131 of this title. Errors in pay24 ment of the additional fees under this paragraph


I1561.AAD
33

4

•HR 1561 IH

1 may be rectified in accordance with regulations pre2 scribed by the Director.

3 ‘‘(3) EXAMINATION FEES.—

4 ‘‘(A) For examination of each application

5 for an original patent, except for design, plant,

6 provisional, or international applications, $200.

7 ‘‘(B) For examination of each application

8 for an original design patent, $130.

9 ‘‘(C) For examination of each application

10 for an original plant patent, $160.

11 ‘‘(D) For examination of the national stage

12 of each international application, $200.

13 ‘‘(E) For examination of each application

14 for the reissue of a patent, $600.

15 The provisions of section 111(a)(3) of this title re16 lating to the payment of the fee for filing the appli17 cation shall apply to the payment of the fee specified

18 in this paragraph with respect to an application filed

19 under section 111(a) of this title. The provisions of

20 section 371(d) of this title relating to the payment

21 of the national fee shall apply to the payment of the

22 fee specified in this paragraph with respect to an

23 international application. The Director may by regu24 lation provide for a refund of any part of the fee

25 specified in this paragraph for any applicant who


I1561.AAE
34

5

•HR 1561 IH

1 files a written declaration of express abandonment

2 as prescribed by the Director before an examination

3 has been made of the application under section 131

4 of this title, and for any applicant who provides a

5 search report that meets the conditions prescribed

6 by the Director.

7 ‘‘(4) ISSUE FEES.—

8 ‘‘(A) For issuing each original patent, ex9 cept for design or plant patents, $1,400.

10 ‘‘(B) For issuing each original design pat11 ent, $800.

12 ‘‘(C) For issuing each original plant pat13 ent, $1,100.

14 ‘‘(D) For issuing each reissue patent,

15 $1,400.

16 ‘‘(5) DISCLAIMER FEE.—On filing each dis17 claimer, $130.

18 ‘‘(6) APPEAL FEES.—

19 ‘‘(A) On filing an appeal from the exam20 iner to the Board of Patent Appeals and Inter21 ferences, $500.

22 ‘‘(B) In addition, on filing a brief in sup23 port of the appeal, $500, and on requesting an

24 oral hearing in the appeal before the Board of

25 Patent Appeals and Interferences, $1,000.


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1 ‘‘(7) REVIVAL FEES.—On filing each petition

2 for the revival of an unintentionally abandoned ap3 plication for a patent, for the unintentionally delayed

4 payment of the fee for issuing each patent, or for an

5 unintentionally delayed response by the patent owner

6 in any reexamination proceeding, $1,500, unless the

7 petition is filed under section 133 or 151 of this

8 title, in which case the fee shall be $500.

9 ‘‘(8) EXTENSION FEES.—For petitions for 1-

10 month extensions of time to take actions required by

11 the Director in an application—

12 ‘‘(A) on filing a first petition, $120;

13 ‘‘(B) on filing a second petition, $330; and

14 ‘‘(C) on filing a third or subsequent peti15 tion, $570.’’.

16 (b) PATENT MAINTENANCE FEES.—Section 41(b) of

17 title 35, United States Code, is amended to read as fol18 lows:

19 ‘‘(b) MAINTENANCE FEES.—The Director shall

20 charge the following fees for maintaining in force all pat21 ents based on applications filed on or after December 12,

22 1980:

23 ‘‘(1) 3 years and 6 months after grant, $900.

24 ‘‘(2) 7 years and 6 months after grant, $2,300.


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1 ‘‘(3) 11 years and 6 months after grant,

2 $3,800.

3 Unless payment of the applicable maintenance fee is

4 received in the United States Patent and Trademark

5 Office on or before the date the fee is due or within

6 a grace period of 6 months thereafter, the patent

7 will expire as of the end of such grace period. The

8 Director may require the payment of a surcharge as

9 a condition of accepting within such 6-month grace

10 period the payment of an applicable maintenance

11 fee. No fee may be established for maintaining a de12 sign or plant patent in force.’’.

13 (c) PATENT SEARCH FEES.—Section 41(d) of title

14 35, United States Code, is amended to read as follows:

15 ‘‘(d) PATENT SEARCH AND OTHER FEES.—

16 ‘‘(1) PATENT SEARCH FEES.—(A) The Director

17 shall charge a fee for the search of each application

18 for a patent, except for provisional applications. The

19 Director shall establish the fees charged under this

20 paragraph to recover an amount not to exceed the

21 estimated average cost to the Office of searching ap22 plications for patent either by acquiring a search re23 port from a qualified search authority, or by causing

24 a search by Office personnel to be made, of each ap25 plication for patent.


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1 ‘‘(B) For purposes of determining the fees to be

2 established under this paragraph, the cost to the Of3 fice of causing a search of an application to be made

4 by Office personnel shall be deemed to be—

5 ‘‘(i) $500 for each application for an origi6 nal patent, except for design, plant, provisional,

7 or international applications;

8 ‘‘(ii) $100 for each application for an origi9 nal design patent;

10 ‘‘(iii) $300 for each application for an

11 original plant patent;

12 ‘‘(iv) $500 for the national stage of each

13 international application; and

14 ‘‘(v) $500 for each application for the re15 issue of a patent.

16 ‘‘(C) The provisions of section 111(a)(3) of this

17 title relating to the payment of the fee for filing the

18 application shall apply to the payment of the fee

19 specified in this paragraph with respect to an appli20 cation filed under section 111(a) of this title. The

21 provisions of section 371(d) of this title relating to

22 the payment of the national fee shall apply to the

23 payment of the fee specified in this paragraph with

24 respect to an international application.


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1 ‘‘(D) The Director may by regulation provide

2 for a refund of any part of the fee specified in this

3 paragraph for any applicant who files a written dec4 laration of express abandonment as prescribed by

5 the Director before an examination has been made

6 of the application under section 131 of this title, and

7 for any applicant who provides a search report that

8 meets the conditions prescribed by the Director.

9 ‘‘(2) OTHER FEES.—The Director shall estab10 lish fees for all other processing, services, or mate11 rials relating to patents not specified in this section

12 to recover the estimated average cost to the Office

13 of such processing, services, or materials, except that

14 the Director shall charge the following fees for the

15 following services:

16 ‘‘(A) For recording a document affecting

17 title, $40 per property.

18 ‘‘(B) For each photocopy, $.25 per page.

19 ‘‘(C) For each black and white copy of a

20 patent, $3.

21 The yearly fee for providing a library specified in

22 section 12 of this title with uncertified printed copies

23 of the specifications and drawings for all patents in

24 that year shall be $50.’’.


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1 (d) ADJUSTMENTS.—Section 41(f) of title 35, United

2 States Code, shall apply to the fees established under the

3 amendments made by this section, beginning in fiscal year

4 2005.

5 (e) CONFORMING AMENDMENTS.—

6 (1) Section 41 of title 35, United States Code,

7 is amended—

8 (A) in subsection (c), by striking ‘‘(c)(1)’’

9 and inserting ‘‘(c) LATE PAYMENT OF FEES.—

10 (1)’’;

11 (B) in subsection (e), by striking ‘‘(e)’’ and

12 inserting ‘‘(e) WAIVERS OF CERTAIN FEES.—’’;

13 (C) in subsection (f), by striking ‘‘(f)’’ and

14 inserting ‘‘(f) ADJUSTMENTS IN FEES.—’’;

15 (D) in subsection (g), by striking ‘‘(g)’’

16 and inserting ‘‘(g) EFFECTIVE DATES OF

17 FEES.—’’;

18 (E) in subsection (h), by striking ‘‘(h)(1)’’

19 and inserting ‘‘(h) REDUCTIONS IN FEES FOR

20 CERTAIN ENTITIES.—(1)’’; and

21 (F) in subsection (i), by striking ‘‘(i)(1)’’

22 and inserting ‘‘(i) SEARCH SYSTEMS.—(1)’’.

23 (2) Section 119(e)(2) of title 35, United States

24 Code, is amended by striking ‘‘subparagraph (A) or

25 (C) of’’.


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1 SEC. 3. ADJUSTMENT OF TRADEMARK FEES.

2 (a) FEE FOR FILING APPLICATION.—The fee under

3 section 31(a) of the Trademark Act of 1946 (15 U.S.C.

4 1113(a)) for filing an electronic application for the reg5 istration of a trademark shall be $325. If the trademark

6 application is filed on paper, the fee shall be $375. The

7 Director may reduce the fee for filing an electronic appli8 cation for the registration of a trademark to $275 for any

9 applicant who prosecutes the application through elec10 tronic means under such conditions as may be prescribed

11 by the Director. Beginning in fiscal year 2005, the provi12 sions of the second and third sentences of section 31(a)

13 of the Trademark Act of 1946 shall apply to the fees es14 tablished under this section.

15 (b) REFERENCE TO TRADEMARK ACT OF 1946.—For

16 purposes of this section, the ‘‘Trademark Act of 1946’’

17 refers to the Act entitled ‘‘An Act to provide for the reg18 istration and protection of trademarks used in commerce,

19 to carry out the provisions of certain international conven20 tions, and for other purposes.’’, approved July 5, 1946 (15

21 U.S.C. 1051 et seq.).

22 SEC. 4. CORRECTION OF ERRONEOUS NAMING OF OFFICER.

23 (a) CORRECTION.—Section 13203(a) of Public Law

24 107–273 (116 Stat. 1902) is amended—

25 (1) in the subsection heading, by striking

26 ‘‘COMMISSIONER’’ and inserting ‘‘DIRECTOR’’; and


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•HR 1561 IH

1 (2) in paragraphs (1) and (2), by striking

2 ‘‘Commissioner’’ each place it appears and inserting

3 ‘‘Director’’.

4 (b) EFFECTIVE DATE.—The amendments made by

5 subsection (a) shall be effective as of the date of the enact6 ment of Public Law 107–273.

7 SEC. 5. EFFECTIVE DATE, APPLICABILITY, AND TRANSI8 TIONAL PROVISION.

9 (a) EFFECTIVE DATE.—Except as provided in sec10 tion 4 and this section, this Act and the amendments

11 made by this Act shall take effect on October 1, 2003,

12 or the date of the enactment of this Act, whichever is later.

13 (b) APPLICABILITY.—

14 (1)(A) Except as provided in subparagraphs

15 (B) and (C), the amendments made by section 2

16 shall apply to all patents, whenever granted, and to

17 all patent applications pending on or filed after the

18 effective date set forth in subsection (a) of this sec19 tion.

20 (B)(i) Except as provided in clause (ii), sections

21 41(a)(1), 41(a)(3), and 41(d)(1) of title 35, United

22 States Code, as amended by this Act, shall apply

23 only to—

24 (I) applications for patents filed under sec25 tion 111(a) of title 35, United States Code, on


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•HR 1561 IH

1 or after the effective date set forth in sub2 section (a) of this section, and

3 (II) international applications entering the

4 national stage after compliance with section

5 371 of title 35, United States Code, on or after

6 the effective date set forth in subsection (a) of

7 this section.

8 (ii) Section 41(a)(1)(D) of title 35, United

9 States Code as amended by this Act, shall apply only

10 to applications for patent filed under section 111(b)

11 of title 35, United States Code, before, on, or after

12 the effective date set forth in subsection (a) of this

13 section in which the filing fee specified in section 41

14 of title 35, United States Code, was not paid before

15 the effective date set forth in subsection (a) of this

16 section.

17 (C) Section 41(a)(2) of title 35, United States

18 Code, as amended by this Act, shall apply only to

19 the extent that the number of excess claims, after

20 giving effect to any cancellation of claims, is in ex21 cess of the number of claims for which the excess

22 claims fee specified in section 41 of title 35, United

23 States Code, was paid before the effective date set

24 forth in subsection (a) of this section.


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1 (2) The amendments made by section 3 shall apply

2 to all applications for the registration of a trademark filed

3 or amended on or after the effective date set forth in sub4 section (a) of this section.

5 (c) TRANSITIONAL PROVISIONS.—

6 (1) SEARCH FEES.—During the period begin7 ning on the effective date set forth in subsection (a)

8 of this section and ending on the date on which the

9 Director establishes search fees under the authority

10 provided in section 41(d)(1) of title 35, United

11 States Code, the Director shall charge—

12 (A) for the search of each application for

13 an original patent, except for design, plant, pro14 visional, or international application, $500;

15 (B) for the search of each application for

16 an original design patent, $100;

17 (C) for the search of each application for

18 an original plant patent, $300;

19 (D) for the search of the national stage of

20 each international application, $500; and

21 (E) for the search of each application for

22 the reissue of a patent, $500.

23 (2) TIMING OF FEES.—The provisions of sec24 tion 111(a)(3) of title 35, United States Code, relat25 ing to the payment of the fee for filing the applicaVerDate jul 14 2003 02:08 Jul 29, 2003 Jkt 019006 PO 00000 Frm 00043 Fmt 6659 Sfmt 6601 E:\HR\OC\HR241.XXX HR241

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1 tion shall apply to the payment of the fee specified

2 in paragraph (1) with respect to an application filed

3 under section 111(a) of title 35, United States Code.

4 The provisions of section 371(d) of title 35, United

5 States Code, relating to the payment of the national

6 fee shall apply to the payment of the fee specified

7 in paragraph (1) with respect to an international ap8 plication.

9 (3) REFUNDS.—The Director may by regula10 tion provide for a refund of any part of the fee spec11 ified in paragraph (1) for any applicant who files a

12 written declaration of express abandonment as pre13 scribed by the Director before an examination has

14 been made of the application under section 131 of

15 title 35, United States Code, and for any applicant

16 who provides a search report that meets the condi17 tions prescribed by the Director.

18 SEC. 6. DEFINITION.

19 In this Act, the term ‘‘Director’’ means the Under

20 Secretary of Commerce for Intellectual Property and Di21 rector of the United States Patent and Trademark Office.


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1 SEC. 7. CLERICAL AMENDMENT.

2 Subsection (c) of section 311 of title 35, Untied

3 States Code, is amended by aligning the text with the text

4 of subsection (a) of such section.

Æ


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Chairman SENSENBRENNER. And the subcommittee amendment 

in the nature of a substitute, which the Members have before them, 

will be considered as read, considered as the original text for purposes of amendment, and open for amendment at any point. 

[The amendment in the nature of a substitute follows:]

47 H.L.C.

AMENDMENT IN THE NATURE OF A SUBSTITUTE

TO H.R. 1561

AS REPORTED BY THE SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL

PROPERTY

Strike all after the enacting clause and insert the

following:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘United States Patent

3 and Trademark Fee Modernization Act of 2003’’.

4 SEC. 2. FEES FOR PATENT SERVICES.

5 (a) GENERAL PATENT FEES.—Section 41(a) of title

6 35, United States Code, is amended to read as follows:

7 ‘‘(a) GENERAL FEES.—The Director shall charge the

8 following fees:

9 ‘‘(1) FILING AND BASIC NATIONAL FEES.—

10 ‘‘(A) On filing each application for an

11 original patent, except for design, plant, or pro12 visional applications, $300.

13 ‘‘(B) On filing each application for an

14 original design patent, $200.

15 ‘‘(C) On filing each application for an

16 original plant patent, $200.


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2

H.L.C.

1 ‘‘(D) On filing each provisional application

2 for an original patent, $200.

3 ‘‘(E) On filing each application for the re4 issue of a patent, $300.

5 ‘‘(F) The basic national fee for each inter6 national application filed under the treaty de7 fined in section 351(a) of this title entering the

8 national stage under section 371 of this title,

9 $300.

10 ‘‘(G) In addition, excluding any sequence

11 listing or computer program listing filed in an

12 electronic medium as prescribed by the Direc13 tor, for any application the specification and

14 drawings of which exceed 100 sheets of paper

15 (or equivalent as prescribed by the Director if

16 filed in an electronic medium), $250 for each

17 additional 50 sheets of paper (or equivalent as

18 prescribed by the Director if filed in an elec19 tronic medium) or fraction thereof.

20 ‘‘(2) EXCESS CLAIMS FEES.—In addition to the

21 fee specified in paragraph (1)—

22 ‘‘(A) on filing or on presentation at any

23 other time, $200 for each claim in independent

24 form in excess of 3;


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3

H.L.C.

1 ‘‘(B) on filing or on presentation at any

2 other time, $50 for each claim (whether de3 pendent or independent) in excess of 20; and

4 ‘‘(C) for each application containing a mul5 tiple dependent claim, $360.

6 For the purpose of computing fees under this para7 graph, a multiple dependent claim referred to in sec8 tion 112 of this title or any claim depending there9 from shall be considered as separate dependent

10 claims in accordance with the number of claims to

11 which reference is made. The Director may by regu12 lation provide for a refund of any part of the fee

13 specified in this paragraph for any claim that is can14 celed before an examination on the merits, as pre15 scribed by the Director, has been made of the appli16 cation under section 131 of this title. Errors in pay17 ment of the additional fees under this paragraph

18 may be rectified in accordance with regulations pre19 scribed by the Director.

20 ‘‘(3) EXAMINATION FEES.—

21 ‘‘(A) For examination of each application

22 for an original patent, except for design, plant,

23 provisional, or international applications, $200.

24 ‘‘(B) For examination of each application

25 for an original design patent, $130.


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4

H.L.C.

1 ‘‘(C) For examination of each application

2 for an original plant patent, $160.

3 ‘‘(D) For examination of the national stage

4 of each international application, $200.

5 ‘‘(E) For examination of each application

6 for the reissue of a patent, $600.

7 The provisions of section 111(a)(3) of this title re8 lating to the payment of the fee for filing the appli9 cation shall apply to the payment of the fee specified

10 in this paragraph with respect to an application filed

11 under section 111(a) of this title. The provisions of

12 section 371(d) of this title relating to the payment

13 of the national fee shall apply to the payment of the

14 fee specified in this paragraph with respect to an

15 international application. The Director may by regu16 lation provide for a refund of any part of the fee

17 specified in this paragraph for any applicant who

18 files a written declaration of express abandonment

19 as prescribed by the Director before an examination

20 has been made of the application under section 131

21 of this title, and for any applicant who provides a

22 search report that meets the conditions prescribed

23 by the Director.

24 ‘‘(4) ISSUE FEES.—


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5

H.L.C.

1 ‘‘(A) For issuing each original patent, ex2 cept for design or plant patents, $1,400.

3 ‘‘(B) For issuing each original design pat4 ent, $800.

5 ‘‘(C) For issuing each original plant pat6 ent, $1,100.

7 ‘‘(D) For issuing each reissue patent,

8 $1,400.

9 ‘‘(5) DISCLAIMER FEE.—On filing each dis10 claimer, $130.

11 ‘‘(6) APPEAL FEES.—

12 ‘‘(A) On filing an appeal from the exam13 iner to the Board of Patent Appeals and Inter14 ferences, $500.

15 ‘‘(B) In addition, on filing a brief in sup16 port of the appeal, $500, and on requesting an

17 oral hearing in the appeal before the Board of

18 Patent Appeals and Interferences, $1,000.

19 ‘‘(7) REVIVAL FEES.—On filing each petition

20 for the revival of an unintentionally abandoned ap21 plication for a patent, for the unintentionally delayed

22 payment of the fee for issuing each patent, or for an

23 unintentionally delayed response by the patent owner

24 in any reexamination proceeding, $1,500, unless the


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6

H.L.C.

1 petition is filed under section 133 or 151 of this

2 title, in which case the fee shall be $500.

3 ‘‘(8) EXTENSION FEES.—For petitions for 1-

4 month extensions of time to take actions required by

5 the Director in an application—

6 ‘‘(A) on filing a first petition, $120;

7 ‘‘(B) on filing a second petition, $330; and

8 ‘‘(C) on filing a third or subsequent peti9 tion, $570.’’.

10 (b) PATENT MAINTENANCE FEES.—Section 41(b) of

11 title 35, United States Code, is amended to read as fol12 lows:

13 ‘‘(b) MAINTENANCE FEES.—The Director shall

14 charge the following fees for maintaining in force all pat15 ents based on applications filed on or after December 12,

16 1980:

17 ‘‘(1) 3 years and 6 months after grant, $900.

18 ‘‘(2) 7 years and 6 months after grant, $2,300.

19 ‘‘(3) 11 years and 6 months after grant,

20 $3,800.

21 Unless payment of the applicable maintenance fee is re22 ceived in the United States Patent and Trademark Office

23 on or before the date the fee is due or within a grace pe24 riod of 6 months thereafter, the patent will expire as of

25 the end of such grace period. The Director may require


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7

H.L.C.

1 the payment of a surcharge as a condition of accepting

2 within such 6-month grace period the payment of an appli3 cable maintenance fee. No fee may be established for

4 maintaining a design or plant patent in force.’’.

5 (c) PATENT SEARCH FEES.—Section 41(d) of title

6 35, United States Code, is amended to read as follows:

7 ‘‘(d) PATENT SEARCH AND OTHER FEES.—

8 ‘‘(1) PATENT SEARCH FEES.—(A) The Director

9 shall charge a fee for the search of each application

10 for a patent, except for provisional applications. The

11 Director shall establish the fees charged under this

12 paragraph to recover an amount not to exceed the

13 estimated average cost to the Office of searching ap14 plications for patent either by acquiring a search re15 port from a qualified search authority, or by causing

16 a search by Office personnel to be made, of each ap17 plication for patent.

18 ‘‘(B) For purposes of determining the fees to be

19 established under this paragraph, the cost to the Of20 fice of causing a search of an application to be made

21 by Office personnel shall be deemed to be—

22 ‘‘(i) $500 for each application for an origi23 nal patent, except for design, plant, provisional,

24 or international applications;


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8

H.L.C.

1 ‘‘(ii) $100 for each application for an origi2 nal design patent;

3 ‘‘(iii) $300 for each application for an

4 original plant patent;

5 ‘‘(iv) $500 for the national stage of each

6 international application; and

7 ‘‘(v) $500 for each application for the re8 issue of a patent.

9 ‘‘(C) The provisions of section 111(a)(3) of this

10 title relating to the payment of the fee for filing the

11 application shall apply to the payment of the fee

12 specified in this paragraph with respect to an appli13 cation filed under section 111(a) of this title. The

14 provisions of section 371(d) of this title relating to

15 the payment of the national fee shall apply to the

16 payment of the fee specified in this paragraph with

17 respect to an international application.

18 ‘‘(D) The Director may by regulation provide

19 for a refund of any part of the fee specified in this

20 paragraph for any applicant who files a written dec21 laration of express abandonment as prescribed by

22 the Director before an examination has been made

23 of the application under section 131 of this title, and

24 for any applicant who provides a search report that

25 meets the conditions prescribed by the Director.


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9

H.L.C.

1 ‘‘(2) OTHER FEES.—The Director shall estab2 lish fees for all other processing, services, or mate3 rials relating to patents not specified in this section

4 to recover the estimated average cost to the Office

5 of such processing, services, or materials, except that

6 the Director shall charge the following fees for the

7 following services:

8 ‘‘(A) For recording a document affecting

9 title, $40 per property.

10 ‘‘(B) For each photocopy, $.25 per page.

11 ‘‘(C) For each black and white copy of a

12 patent, $3.

13 The yearly fee for providing a library specified in

14 section 12 of this title with uncertified printed copies

15 of the specifications and drawings for all patents in

16 that year shall be $50.’’.

17 (d) ADJUSTMENTS.—Section 41(f) of title 35, United

18 States Code, shall apply to the fees established under the

19 amendments made by this section, beginning in fiscal year

20 2005.

21 (e) CONFORMING AMENDMENTS.—

22 (1) Section 41 of title 35, United States Code,

23 is amended—


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10

H.L.C.

1 (A) in subsection (c), by striking ‘‘(c)(1)’’

2 and inserting ‘‘(c) LATE PAYMENT OF FEES.—

3 (1)’’;

4 (B) in subsection (e), by striking ‘‘(e)’’ and

5 inserting ‘‘(e) WAIVERS OF CERTAIN FEES.—’’;

6 (C) in subsection (f), by striking ‘‘(f)’’ and

7 inserting ‘‘(f) ADJUSTMENTS IN FEES.—’’;

8 (D) in subsection (g), by striking ‘‘(g)’’

9 and inserting ‘‘(g) EFFECTIVE DATES OF

10 FEES.—’’;

11 (E) in subsection (h), by striking ‘‘(h)(1)’’

12 and inserting ‘‘(h) REDUCTIONS IN FEES FOR

13 CERTAIN ENTITIES.—(1)’’; and

14 (F) in subsection (i), by striking ‘‘(i)(1)’’

15 and inserting ‘‘(i) SEARCH SYSTEMS.—(1)’’.

16 (2) Section 119(e)(2) of title 35, United States

17 Code, is amended by striking ‘‘subparagraph (A) or

18 (C) of’’.

19 SEC. 3. ADJUSTMENT OF TRADEMARK FEES.

20 (a) FEE FOR FILING APPLICATION.—The fee under

21 section 31(a) of the Trademark Act of 1946 (15 U.S.C.

22 1113(a)) for filing an electronic application for the reg23 istration of a trademark shall be $325. If the trademark

24 application is filed on paper, the fee shall be $375. The

25 Director may reduce the fee for filing an electronic appliVerDate jul 14 2003 02:08 Jul 29, 2003 Jkt 019006 PO 00000 Frm 00056 Fmt 6659 Sfmt 6602 E:\HR\OC\HR241.XXX HR241

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H.L.C.

1 cation for the registration of a trademark to $275 for any

2 applicant who prosecutes the application through elec3 tronic means under such conditions as may be prescribed

4 by the Director. Beginning in fiscal year 2005, the provi5 sions of the second and third sentences of section 31(a)

6 of the Trademark Act of 1946 shall apply to the fees es7 tablished under this section.

8 (b) REFERENCE TO TRADEMARK ACT OF 1946.—For

9 purposes of this section, the ‘‘Trademark Act of 1946’’

10 refers to the Act entitled ‘‘An Act to provide for the reg11 istration and protection of trademarks used in commerce,

12 to carry out the provisions of certain international conven13 tions, and for other purposes.’’, approved July 5, 1946 (15

14 U.S.C. 1051 et seq.).

15 SEC. 4. CORRECTION OF ERRONEOUS NAMING OF OFFICER.

16 (a) CORRECTION.—Section 13203(a) of Public Law

17 107–273 (116 Stat. 1902) is amended—

18 (1) in the subsection heading, by striking

19 ‘‘COMMISSIONER’’ and inserting ‘‘DIRECTOR’’; and

20 (2) in paragraphs (1) and (2), by striking

21 ‘‘Commissioner’’ each place it appears and inserting

22 ‘‘Director’’.

23 (b) EFFECTIVE DATE.—The amendments made by

24 subsection (a) shall be effective as of the date of the enact25 ment of Public Law 107–273.


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12

H.L.C.

1 SEC. 5. PATENT AND TRADEMARK OFFICE FUNDING.

2 Section 42 of title 35, United States Code, is

3 amended—

4 (1) in subsection (b), by striking ‘‘Appropria5 tion’’; and

6 (2) in subsection (c), in the first sentence—

7 (A) by striking ‘‘To the extent’’ and all

8 that follows through ‘‘fees’’ and inserting

9 ‘‘Fees’’; and

10 (B) by striking ‘‘shall be collected by and

11 shall be available to the Director’’ and inserting

12 ‘‘shall be collected by the Director and shall be

13 available until expended’’.

14 SEC. 6. EFFECTIVE DATE, APPLICABILITY, AND TRANSI15 TIONAL PROVISION.

16 (a) EFFECTIVE DATE.—Except as provided in sec17 tion 4 and this section, this Act and the amendments

18 made by this Act shall take effect on October 1, 2003,

19 or the date of the enactment of this Act, whichever is later.

20 (b) APPLICABILITY.—

21 (1)(A) Except as provided in subparagraphs

22 (B) and (C), the amendments made by section 2

23 shall apply to all patents, whenever granted, and to

24 all patent applications pending on or filed after the

25 effective date set forth in subsection (a) of this sec26 tion.


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H.L.C.

1 (B)(i) Except as provided in clause (ii), sections

2 41(a)(1), 41(a)(3), and 41(d)(1) of title 35, United

3 States Code, as amended by this Act, shall apply

4 only to—

5 (I) applications for patents filed under sec6 tion 111(a) of title 35, United States Code, on

7 or after the effective date set forth in sub8 section (a) of this section, and

9 (II) international applications entering the

10 national stage under section 371 of title 35,

11 United States Code, for which the basic na12 tional fee specified in section 41 of title 35,

13 United States Code, was not paid before the ef14 fective date set forth in subsection (a) of this

15 section.

16 (ii) Section 41(a)(1)(D) of title 35, United

17 States Code as amended by this Act, shall apply only

18 to applications for patent filed under section 111(b)

19 of title 35, United States Code, before, on, or after

20 the effective date set forth in subsection (a) of this

21 section in which the filing fee specified in section 41

22 of title 35, United States Code, was not paid before

23 the effective date set forth in subsection (a) of this

24 section.


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14

H.L.C.

1 (C) Section 41(a)(2) of title 35, United States

2 Code, as amended by this Act, shall apply only to

3 the extent that the number of excess claims, after

4 giving effect to any cancellation of claims, is in ex5 cess of the number of claims for which the excess

6 claims fee specified in section 41 of title 35, United

7 States Code, was paid before the effective date set

8 forth in subsection (a) of this section.

9 (2) The amendments made by section 3 shall apply

10 to all applications for the registration of a trademark filed

11 or amended on or after the effective date set forth in sub12 section (a) of this section.

13 (c) TRANSITIONAL PROVISIONS.—

14 (1) SEARCH FEES.—During the period begin15 ning on the effective date set forth in subsection (a)

16 of this section and ending on the date on which the

17 Director establishes search fees under the authority

18 provided in section 41(d)(1) of title 35, United

19 States Code, the Director shall charge—

20 (A) for the search of each application for

21 an original patent, except for design, plant, pro22 visional, or international application, $500;

23 (B) for the search of each application for

24 an original design patent, $100;


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15

H.L.C.

1 (C) for the search of each application for

2 an original plant patent, $300;

3 (D) for the search of the national stage of

4 each international application, $500; and

5 (E) for the search of each application for

6 the reissue of a patent, $500.

7 (2) TIMING OF FEES.—The provisions of sec8 tion 111(a)(3) of title 35, United States Code, relat9 ing to the payment of the fee for filing the applica10 tion shall apply to the payment of the fee specified

11 in paragraph (1) with respect to an application filed

12 under section 111(a) of title 35, United States Code.

13 The provisions of section 371(d) of title 35, United

14 States Code, relating to the payment of the national

15 fee shall apply to the payment of the fee specified

16 in paragraph (1) with respect to an international ap17 plication.

18 (3) REFUNDS.—The Director may by regula19 tion provide for a refund of any part of the fee spec20 ified in paragraph (1) for any applicant who files a

21 written declaration of express abandonment as pre22 scribed by the Director before an examination has

23 been made of the application under section 131 of

24 title 35, United States Code, and for any applicant


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16

H.L.C.

1 who provides a search report that meets the condi2 tions prescribed by the Director.

3 (d) EXISTING APPROPRIATIONS.—The provisions of

4 any appropriation Act that make amounts available pursu5 ant to section 42(c) of title 35, United States Code, and

6 are in effect on the effective date set forth in subsection

7 (a) shall cease to be effective on that effective date.

8 SEC. 7. DEFINITION.

9 In this Act, the term ‘‘Director’’ means the Under

10 Secretary of Commerce for Intellectual Property and Di11 rector of the United States Patent and Trademark Office.

12 SEC. 8. CLERICAL AMENDMENT.

13 Subsection (c) of section 311 of title 35, United

14 States Code, is amended by aligning the text with the text

15 of subsection (a) of such section.


A1561.AAQ
63

Chairman SENSENBRENNER. The Chair recognizes the gentleman 

from Texas, Mr. Smith, to strike the last word. 

Mr. SMITH. Mr. Chairman, I move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. SMITH. Mr. Chairman, H.R. 1561 implements the Patent and 

Trademark Office’s revised strategic business plan to transform the 

agency’s operations. The bill incorporates a revised fee schedule 

previously submitted by the PTO that would generate an additional 

$201 million in revenue. This is the first step towards improving 

patent and trademark quality while reducing application backlogs 

and pendency at the agency. These goals are critical to the health 

of cutting edge industries and our economy. Americans lead the 

world in the production and export of intellectual property and related goods and services. 

Time is money in the intellectual property world. If the PTO cannot issue quality patents and trademarks in a timely manner, than 

inventors and trademark filers are the losers. The strategic business plan will result in more jobs, a higher standard of living, and 

a consuming public that will benefit from patented products. 

Because of the ongoing appropriations practice of using a portion 

of the PTO fee revenue to subsidize unrelated programs, the fee 

schedule factors in funding shortfalls that have resulted from revenue diversion. Fee diversion is regrettable and counterproductive. 

It needs to be addressed. In response, the subcommittee unanimously adopted an amendment at our markup that ends this practice by authorizing the PTO to keep all of the fee revenue it generates. 

Finally, Mr. Chairman, I will offer an amendment on behalf of 

Mr. Berman and myself that addresses the issue of outsourcing the 

search function at PTO, an issue that has generated some concern 

among members and inventors. The amendment responds to this 

matter in a fair and bipartisan way and I urge the Members to 

support it and the bill as well. 

Mr. Chairman, I yield back the balance of my time. 

Chairman SENSENBRENNER. The gentleman from California, Mr. 

Berman. 

Mr. BERMAN. Thank you, Mr. Chairman. And I ask unanimous 

consent that my entire statement on this measure and the substitute as amended be included in the record. 

Chairman SENSENBRENNER. Without objection. 

Mr. BERMAN. Thank you. Mr. Chairman, thank you for bringing 

to markup H.R. 1561 today, and let me also thank Chairman 

Smith, who has worked very cooperatively with the minority on 

this as well as many other issues in our subcommittee, in putting 

together what I think is a very good legislative product reflected 

by this. I might also mention, I think a special word, one part of 

this issue the Chairman made reference to is the issue of patent 

fees and diversion, and former Chairman Coble, who is here, spent 

a great deal of time working on this issue as well, and sort of pioneered the first efforts to really try to deal with the problem of diversion of patent fees, and I think we greatly all appreciate his efforts in all of this. 

But basically, this bill makes a serious, it’s not an outrageous, 

but a serious increase in the fees that applicants for patents will 

64

pay, probably averaging around 15 percent that will generate an 

additional $200 million. And the folks who are most impacted by 

those increased fees, support it, but only on one condition, that that 

additional revenue goes to deal with all the fundamental problems 

that the Patent Office now faces. Everyone knows the Patent Office 

has been losing ground for some time, and it finds itself in a near 

crisis situation. It faces allegations of issuing poor quality patents 

of diminishing value, an enormous backlog of applications, ever increasing pendency and an overburdened examining corps. 

So faced with this, Congress directed the PTO to develop a strategic plan to resolve these problems, and these problems are at the 

heart of innovation and technology in this country, the heart of 

where our economy is going. Sensitive to the needs of the PTO, the 

user groups, as I mentioned, have agreed to support this fee increase, but only if this money is not diverted for general fund appropriations, because otherwise, it’s only one thing. A fee increase 

is a tax on innovation and a tax on new technologies and new patents, having nothing to do with the more efficient functioning of 

the Patent Office, the reduction of backlogs, the improvement of 

patent quality. So in this legislation, as the Chairman mentioned, 

we have a very flat prohibition against any diversions to the general appropriations. That’s not what this fee was for. And the impact of allowing this to continue will I think turn many of us 

against any fee increase at all. In other words, our support for this 

fee increase is conditioned on the money being able to be used by 

the Patent Office to implement a number of the reforms that Director Rogan, a former colleague of ours, is proposing to try and correct some of the ills faced by the growing, complicated nature of 

and number of patents being submitted for approval. 

At this point, I think I won’t go on with my statement, but that’s 

the fundamental part. We’ll have an amendment later on dealing 

with the issue of outsourcing on searches, and I yield back. 

Ms. LOFGREN. Would the gentleman yield, rather than—— Mr. BERMAN. I’d be happy to yield. 

Ms. LOFGREN. Just very quickly, I will certainly vote for this bill, 

but for years we have—and I think it’s been unanimous on the Judiciary Committee—opposed the diversion of fees from this office. 

And the appropriators always thought better. We don’t know 

whether the language in this bill is going to work. I’m willing to 

take a stab at it and to believe that it will. 

But if we face again appropriators stealing the money, I’m going 

to introduce a bill to reverse the fee increase. If you talk to Jim 

Rogan privately, he will tell you how serious is the situation at the 

Patent Office and how desperately we need to provide the resources 

to upgrade our systems and the like. 

I come from a county where the largest number of patents in the 

world are issued to someone in Santa Clara County. The Patent Office is the engine for the technology miracle that will shape and 

carry our economy forward. So I hope that we understand, and we 

should let the appropriators know, that this money is not even 

going to be there if they try and steal it again, and I thank the gentleman for yielding. 

Chairman SENSENBRENNER. The gentleman’s time has expired. 

Without objection, all Members may place opening statements in 

the record at this point. 

65

Chairman SENSENBRENNER. Are there amendments? 

Mr. SMITH. Mr. Chairman? 

Chairman SENSENBRENNER. The gentleman from Texas. 

Mr. SMITH. I have an amendment at the desk. 

Chairman SENSENBRENNER. The clerk will report the amendment. 

The CLERK. Amendment to the Amendment in the Nature of a 

Substitute to H.R. 1561 Offered by Mr. Smith of Texas and Mr. 

Berman. Page 8, the following—— Chairman SENSENBRENNER. Without objection, the amendment is 

considered as read, and the gentleman from Texas will be recognized for 5 minutes. 

[Mr. Smith and Mr. Berman’s amendment follows:]

66 H.L.C.

AMENDMENT TO THE AMENDMENT IN THE

NATURE OF A SUBSTITUTE TO H.R. 1561

OFFERED BY MR. SMITH OF TEXAS AND MR.

BERMAN

Page 8, add the following after line 25:

1 ‘‘(E) For purposes of subparagraph (A), a

2 ‘qualified search authority’ may not include a com3 mercial entity unless—

4 ‘‘(i) the Director conducts a pilot program

5 of limited scope, conducted over a period of not

6 more than 18 months, which demonstrates that

7 searches by commercial entities of the available

8 prior art relating to the subject matter of inven9 tions claimed in patent applications—

10 ‘‘(I) are accurate; and

11 ‘‘(II) meet or exceed the standards of

12 searches conducted by and used by the

13 Patent and Trademark Office during the

14 patent examination process;

15 ‘‘(ii) the Director submits a report on the

16 results of the pilot program to the Congress

17 and the Patent Public Advisory Committee that

18 includes—

19 ‘‘(I) a description of the scope and du20 ration of the pilot program;


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2

H.L.C.

1 ‘‘(II) the identity of each commercial

2 entity participating in the pilot program;

3 ‘‘(III) an explanation of the method4 ology used to evaluate the accuracy and

5 quality of the search reports;

6 ‘‘(IV) an assessment of the effects

7 that the pilot program, as compared to

8 searches conducted by the Patent and

9 Trademark Office, had and will have on—

10 ‘‘(aa) patentability determinations:

11 ‘‘(bb) productivity of the Patent and

12 Trademark Office;

13 ‘‘(cc) costs to the Patent and Trade14 mark Office;

15 ‘‘(dd) costs to patent applicants; and

16 ‘‘(ee) other relevant factors;

17 ‘‘(iii) the Patent Public Advisory Com18 mittee reviews and analyzes the Director’s re19 port under clause (ii) and the results of the

20 pilot program and submits a separate report on

21 its analysis to the Director and the Congress

22 that includes—

23 ‘‘(I) an independent evaluation of the

24 effects that the pilot program, as compared

25 to searches conducted by the Patent and


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3

H.L.C.

1 Trademark Office, had and will have on

2 the factors set forth in clause (ii)(IV); and

3 ‘‘(II) an analysis of the reasonable4 ness, appropriateness, and effectiveness of

5 the methods used in the pilot program to

6 make the evaluations required under clause

7 (ii)(IV); and

8 ‘‘(iv) the Congress does not, during the 1-

9 year period beginning on the date on which the

10 Patent Public Advisory Committee submits its

11 report to the Congress under clause (iii), enact

12 a law prohibiting searches by commercial enti13 ties of the available prior art relating to the

14 subject matter of inventions claimed in patent

15 applications.


AA1561.AAD
69

Mr. SMITH. Thank you, Mr. Chairman. I offer this amendment on 

behalf of the Ranking Member, Mr. Berman, and myself. It addresses the desire of the Patent and Trademark Office to test the 

possibility of outsourcing the search function of the agency to commercial entities, empowering the PTO Director to initiate a program to outsource the search function as part of the larger effort 

to make PTO a modern, productive and efficient Federal agency. 

Our Committee and the Appropriations Committee have documented the need for PTO to abandon business as usual routines 

and improve patent and trademark quality while reducing backlogs 

and pendency. 

The House and Senate Appropriators have urged the agency in 

recent years to develop innovative management techniques and to 

shift PTO resources to high-priority areas. Allowing Director Rogan 

to test an outsourcing initiative supports the purpose of the agency’s strategic business plan developed in response to congressional 

directives. This subcommittee should assist the Director in his efforts, not hinder him. 

The agency, Congress and the user groups whose members pay 

for PTO services, all want to improve PTO operations. There is no 

way that the agency would condone the wholesale use of 

outsourcing if the practice proved detrimental to its operations. 

Congress and our Committee in particular would never abandon 

our oversight responsibilities and permit such an occurrence. The 

user groups which endorse the strategic plan and are not opposed 

to pilot testing outsourcing will always offer critical commentary 

when necessary. 

While permitting the Director to initiate limited outsourcing activity, the amendment places constraints on its use. It permits the 

Director to conduct a pilot program within an 18-month period to 

determine if commercial entities can perform the search function 

by producing accurate results that meet or exceed current PTO 

standards. 

At the conclusion of the program the Director must them submit 

a report on the results to the Patent Public Advisory Committee, 

an independent entity that evaluates PTO operations on a biennial 

basis, as well as to the Congress. The report must address a number of detailed criteria such as methodology, cost and productivity 

for evaluation by the Advisory Committee and Congress. The Advisory Committee must then submit its own report to the Director 

and Congress as to the merits of outsourcing relative to PTO standards. Once the Advisory Committee report is completed, Congress 

will have an entire year, if it desires, to limit or prohibit the wholesale outsourcing of searches. 

Mr. Chairman, this amendment is a fair, balanced and bipartisan response to those questions raised about the efficacy of 

outsourcing the search function. I urge the Members of the Committee to support the amendment. 

And before I yield back the balance of my time, I do want to 

thank Mr. Berman for helping to work out a compromise on the 

outsourcing and for coming up with a good idea on the pilot program, and we appreciate his input and his suggestions. 

And with that, I’ll yield back the balance of my time. 

Chairman SENSENBRENNER. The gentleman from California. 

70

Mr. BERMAN. Thank you, Mr. Chairman. I join with the Chairman in supporting this amendment. One of the more controversial 

parts of Director Rogan’s proposals is the outsourcing of these 

searches for prior art. A number of people who are familiar with 

the patent process tell me that an examiner needs to be involved 

himself or herself in that prior art search to fully understand and 

familiarize himself with what the patent involves and the whole 

question of the issues of whether or not the invention is novel and 

all the other standards that go into granting a patent. The compromise here is to try this on a pilot basis with an independent 

evaluation. I do say to the Patent Office, this is supposed to be a 

pilot. This is not we do 99 percent of what we want to do system 

wide and call it a pilot. It’s a pilot of limited scope and limited duration, evaluated by an objective and independent body. 

And then if Congress decides as a result of that survey they want 

to stop it from happening, we can initiate legislation to do so, but 

nothing in this amendment keeps the Patent Office from going 

ahead if and when the independent evaluation says this does make 

sense, this will save money, this will give examiners more time to 

work on the applications and allow faster processing of them without reducing patent quality. 

I yield back, Mr. Chairman. 

Chairman SENSENBRENNER. The question is on the amendment 

offered by the gentleman from Texas, Mr. Smith. Those in favor 

will say aye. 

Opposed, no. 

The ayes appear to have it. The ayes have it. The amendment 

is agreed to. Are there further amendments? 

Mr. COBLE. Mr. Chairman? 

Chairman SENSENBRENNER. Gentleman from North Carolina. 

Mr. COBLE. Move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. COBLE. And I promise you, Mr. Chairman, I won’t take 5 

minutes. I want to commend Chairman Smith and Ranking Member Berman for including the matter of diversion in this bill, and 

I thank Mr. Berman for his generous comments. This is an issue 

that has attracted my interest for a long time. The diversion of fees 

from the Patent and Trademark Office, Mr. Chairman and colleagues, continues to be a problem that plagues the PTO, and I am 

pleased that Mr. Berman and Mr. Smith have seen fit to include 

this in the bill, and I hope that we can get a firm handle on it before the end of this session. 

And I thank the Chairman and yield back my time. 

Chairman SENSENBRENNER. Are there further amendments? 

[No response.] 

Chairman SENSENBRENNER. The question is on agreeing to the 

substitute of the subcommittee. Those in favor will say aye. 

Opposed, no. 

The ayes appear to have it. The ayes have it, and the amendment in the nature of a substitute is agreed to. 

A reporting quorum is not present. Without objection, the previous question is ordered on reporting the bill, and we will vote on 

that question as soon as 19 Members appear. 

[Intervening business.] 

71

Chairman SENSENBRENNER. A reporting quorum is present, and 

the Chair will now go to the motion to report the bill H.R. 1561 

favorably, the ‘‘United States Patent and Trademark Fee Modernization Act of 2003.’’ Those in favor of reporting this bill favorably will say aye. 

Opposed, no. 

The ayes appear to have it. The ayes have it, and the motion to 

report favorably is agreed to. Without objection, the bill will be reported favorably to the House in the form of a single amendment 

in the nature of a substitute, incorporating the amendments adopted here today. Without objection, the Chairman is authorized to 

move to go to conference pursuant to House rules. Without objection, the staff is directed to make any technical and conforming 

changes, and all Members will be given 2 days as provided by 

House rules in which to submit additional dissenting, supplemental 

or minority views.

Æ