Patent Office May Be Unable to Outlast Shutdown Past February

Jan. 16, 2019, 3:55 PM

The Patent and Trademark Office may run out of reserve funds and be forced to furlough thousands of examiners and other staff if the partial government shutdown continues into February, sources familiar with the agency’s operations told Bloomberg Law.

The agency has been using prior fee collections for patent and trademark registration applications to operate since the shutdown began Dec. 22. It can’t use fees it’s collected during the shutdown, the sources said. The PTO’s operating reserves will likely run out by early to mid-February, they said.

A PTO shutdown would delay the examination of tens of thousands of patent and trademark applications and slow down administrative challenges to patents, which can affect district court infringement lawsuits and licensing disputes between companies.

PTO spokesman Paul Fucito declined to comment on how long the agency can keep functioning, but said it’s monitoring the situation closely.

It’s unclear exactly when the office would run out of reserves and how much money it actually has left. The agency maintains two separate reserves, one for patent operations, and the other for work related to trademarks. Trademark reserves stood at $135 million and patent operating reserves at $312 million as of Sept. 30 according to the office’s fiscal 2018 performance report.

The patent reserve “remains far below the optimal level of $747 million, or three months of operating requirements,” for patent-related operations, the agency’s Patent Public Advisory Committee said in its 2018 annual report.

The committee reviews how the agency functions, including policies, budget, and user fees for patent services; gathers public comment; and advises the director.

The office has nearly 13,000 employees, including 8,185 patent examiners. Nearly 113 officials and staff—including the director, solicitor, chief patent trial and appeal board judge, IT specialists, and accountants—would continue working through the shutdown, according to a Department of Commerce plan released in July. The remaining staff would continue maintaining IT systems, accepting new applications and petitions for administrative challenges, and collecting fees for such filings, Fucito said.

The agency already has been cutting down on discretionary expenses, such as travel, the sources said. PTO Director Andrei Iancu pulled out of participating in the Consumer Electronics Show in Las Vegas in early January.

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bloomberglaw.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com

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