Patent Office to Spin Off from Commerce Department

SAN FRANCISCO (03/30/2000) - Under public pressure to improve the quality of its Internet-related intellectual property patent awards, the U.S. Department of Commerce Patent and Trademark Office has announced a plan for reform that will make it independent from the Commerce Department.

In a presentation to members of the San Francisco Intellectual Property Law Association yesterday, the assistant secretary of commerce and commissioner of patents and trademarks, Q. Todd Dickinson, said the agency has become a "performance-based organization." As such, it will be granted managerial "flexibilities" and will operate with greater autonomy over budgeting, hiring and procurement. The revenue-generating agency will also take on accountability for its business results.

The reorganization also gives Dickinson the title of undersecretary of intellectual property and officially changes the agency's name to the U.S.

Patent and Trademark Office (PTO).

However, the agency still faces a budget crunch that won't improve this year, according to Dickinson. He said a third of the PTO's $1.2 billion revenue from filing and processing fees is currently appropriated during the budgeting process and applied to other areas of government. While the appropriated funds are later reapplied to the PTO, the amount appropriated increases each year.

"The practice is limiting our ability to hire examiners," Dickinson said. "The appropriation process negatively affects our work. The situation must be fixed."

Criticism of the PTO's patenting of intellectual property - particularly Internet-based business methods - is driving much of the agency's reorganization efforts. Dickinson described the organization's new status as part of an "action plan" for revamping its business methods patenting procedures. "Patenting of e-commerce technology has become controversial," Dickinson acknowledged, adding that the controversy centers on the perception that business methods cannot be patented and that the PTO itself is understaffed, under-experienced and undereducated when it comes to high-tech issues.

Dickinson cited court rulings and opinions dating from 1952 that establish the patentability of business methods, including a 1998 ruling he said ended the 20-year debate about whether software can be patented. He also outlined the agency's continuing efforts to hire professionals from high-tech business and academia, and to give its examiners access to more and better databases for researching prior patents.

Vice President Al Gore and the National Partnership for Reinventing Government created the performance-based organization (PBO) concept in 1996, which requires PBO senior management to commit to annual performance goals in return for bonuses. PBO status also raises the hiring pay for some positions. The PTO is the second government agency to take on the status of PBO. The Department of Education's Office of Student Financial Assistance spun off as a PBO in 1998, and a handful of others await approval from Congress to convert to PBO status as well.

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