Statement Of Judiciary Ranking Member Lamar Smith Hearing On The U.S. Patent And Trademark Office

Statement

As part of the Judiciary Committee's oversight responsibilities, we are here to examine the operations of the United States Patent and Trademark Office, or "PTO."

Director David Kappos' job is difficult, but he is working hard to reform and modernize the agency. The importance of PTO to inventors, trademark holders, and the American economy is widely acknowledged.

Our hearing this morning complements other efforts to pass meaningful patent reform in the 111th Congress.

We're working hard with the Senate to develop necessary changes to their bill that will improve patent quality and discourage frivolous lawsuits. I am hopeful about that outcome.

That said, the PTO is one of the most important agencies of the federal government, but it's not often regarded as such. Its work affects the productivity and economic growth of our nation as well as the standard of living for all Americans.

For over 200 years, the PTO has been responsible for issuing US patents and trademarks. The PTO also advises the Secretary of Commerce and the President on patent, trademark, and copyright protection, as well as trade-related aspects of intellectual property.

In recent years, Congress worked with the Bush Administration to provide full-funding for PTO operations. Following this trend, the Obama Administration recommends that we authorize PTO to collect and spend more than $2.3 billion in the upcoming fiscal year, subject to appropriations.

Observers estimate that more than $700 million have been diverted from PTO coffers since 1991 -- funds that could have been put to good use by the agency. Mr. Chairman, like you, I support ending fee diversion.

And I support the Committee's efforts to provide the agency with more control over its fee schedule and related funding.

This doesn't mean we won't exercise necessary oversight as appropriate. But PTO will solve more of its problems if it is able to respond more nimbly to its financial needs as they arise. This change, coupled with our ongoing push to end fee diversion, will position PTO as a first-tier 21st century agency.

But if Congress does provide PTO with 100% funding, the agency will have a greater responsibility to explain any of its shortcomings and correct them.

Specifically, the Committee and PTO must explore the patent application backlog, the state of the agency's IT infrastructure, hiring and retention of patent examiners, the relationships between management and examiners, and the amount of time examiners require to process patents.

Mr. Chairman, I'd like to conclude by recounting an event that illustrates the importance of the PTO. This involves Dr. William Thornton, architect of the Capitol, who was appointed by Thomas Jefferson as the first "superintendent" of the agency.

During the War of 1812, British redcoats marched on Washington to burn the city. Thornton realized they would eventually get to the Blodgett Hotel, which housed hundreds of patent models.

Hurrying to the scene, he argued to the commanding British officer that burning the Hotel and all of its contents would serve no purpose. In an impassioned speech, Thornton said the models were useful to all mankind, not just to Americans. Anyone who burned them would be condemned by future generations as were the Turks who burned the Library at Alexandria.

Thornton proved convincing, and the Blodgett Hotel was spared; in fact, it was the only government building not damaged during the attack. Disappointingly, Thornton's reward was a congressional order to vacate the premises. Since the Capitol Building had been burned, Congress needed a new meeting place, and the Blodgett was the most suitable venue.

Nearly 200 years later, the PTO is no less valuable. Everyone here understands the importance of the patent system to our knowledge-based economy.

Mr. Chairman, I look forward to working with the Committee and Director Kappos to make the PTO even stronger, and more productive and responsive to the needs of the inventor community and our country so we can enhance our international competitiveness and strengthen our economy.

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