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Dr. Coburn Calling up Amendment to the Patent Reform Bill That Would End Diversion Fees

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Dr. Coburn: I want to do a couple of things. I want to talk about an amendment, but i also want to -- I have one of my colleagues sitting in your position as president pro tempore noticed an error i made on July 27. Senator Whitehouse questioned my numbers.

In fact, he was right. I said 115 million in regards to the savings on limousines. It was 11.5 million per year, not 115. It was 115 million over ten years. i stand to put that in the record that i was in error, and

Senator Whitehouse as a cordial colleague, questioned me on and i thank him for his accountability. we have before the senate now a patent bill, and there's no question that there's a lot of work that we need to do on patents. i know the president pro tempore sits on the committee that i do, and we spent a lot of time on this.

-- i'm really concerned I have to say with what we're hearing in the senate about why we wouldn't do the right thing that everybody agrees we should be doing because somebody doesn't want us to do that in the house. I think it's the worst answer we could ever give the American people.

When we have a 12% approval rating and the republicans have worse than that, why would we tell the American people we're not going to do the right thing for the right reason at the right time because somebody in the house doesn't want us to? and that we're going to say we're not going to put these corrections into a patent bill.

They're obviously important and we're going to say it's going to kill the bill when in fact it's not going to kill the bill. But that's what we use as a rationalization. Let me describe for a minute what has gone on over the years and what has not happened. The first point i would make is there has not been one oversight hearing at the patent office by the appropriations committee in either the house or the senate for ten years.

So I haven't evenly looked at it. and yet, the objection to -- what we're seeing from an appropriation objection is, and even our chairman of our committee on judiciary who is an appropriator, supports this amendment but isn't going to vote for it because somebody in the house is going to object to it.

But the point is, we have money that people pay every day from universities to businesses to individual small inventors. They pay significant dollars into the patent office. and you know what's happened with that money this year? $85 million that was paid for by American taxpayers for patent examination and first looks didn't go to the patent office. And yet, we have over a million patents in process at the patent office, and over 700,000 of those vent ever had their first look.

When we talk about our economy and we talk about the fact that we want to do things that enhance intellectual property in our country and which is one of our greatest assets, and then we don't allow the money that people actually pay for that process to go for that process, and we backlog, for years now patent applications -- and we've done two things. One is we've limited the intellectual property that we can capture.

Number two is we've allowed people to take those same patents when we have limited ability, especially some of -- especially some of our smaller organizations and allow those to be patented elsewhere. The lack of a kindly approach on that is lacking.

So, the process is broken, and since 1992, a billion -- almost a billion dollars has been taken out of the patent office, and so we wonder why in the world is the patent office behind?

The patent office is behind because we won't allow them to have the funds that the American taxpayers who are trying to get ideas and innovations, copyrights, trademarks and patents done, we won't allow the patent office to have the money. So the amendment that I'm going to be offering, I have a modification on it that's trying to be cleared on the other side, and I won't actually call up the amendment this time until I hear whether that has been accepted.

The amendment I have says that we will no longer divert the money that American businesses, American inventors, American universities pay to the patent office to be spent somewhere else, that it has to be spent on clearing their patents.

I would like to introduce into the record, and I would submit a copy at this time, a letter I received august 1 from the head of the patent office, and I must tell you that we are so fortunate that we have director capos.

We have a true expert in patents with great knowledge who has made tremendous strides in making changes at our patent office, but he requires a steady stream of money and he requires the ability to manage the organization in a way to where he can actually accomplish what we have asked him to do.

And quite frankly, I have spent a lot of time working with the patent office. Not everybody else that wants an advantage in the patent system, but with the patent office, and I'm convinced we have got great leadership there now. And in his letter, he talks about the inability to update because the money isn't there because we won't let them have the money. Their money, money of the American taxpayers. And let me just give a corollary.

If, in fact, you drive your car into the gas station and you give them $100 for 25 or 28 gallons of gas and if they only give you 12 gallons of gas and they say sorry, the appropriations committee said you couldn't have all the gas that you give for the money that you pay, we would be outraged.

Or if you go to the movie and you pay the fee to go to the movie and you buy a ticket and you walk in and halfway through the movie they stop the projection and say sorry, we will not give you the second half of the movie even though you paid for it.

Well, inventors in this country have paid the fees to have their patents examined and evaluated and reviewed. And yet, we, because of a power struggle, have decided that we're not going to let that money go to the patent office.

So the amendment I have says that we're going to allow that to happen, that if money is paid and it goes into a proper fund that is allocatable only to the patent office, it can't be spent anywhere else and has to go to the patent office.

Some of the objections, especially in the house of the appropriations committee is there is no oversight. Well, the reason there is no oversight is because they haven't done any oversight and neither have we. So you can't claim that as an excuse of why you're afraid.

This patent bill will give an authorization of seven years for their fees. We can change that if we want. But the fact is we're never going to know if we need to change it if we never do oversight, which they have not done. Nobody has done yost on patent laws.

And I'm talking aggressive oversight. What was your start, how would you end, where would you spend the money, what's your employee turnover, what's your employee productivity, what should we expect? None of that has been asked.

I believe it's probably pretty good based on -- I have a lot of confidence in the management at the patent office, especially in terms of what I have seen in performance in the last couple of years versus before that. But the fact is that oversight hasn't been done.

It's not just the patent office. We haven't done it anywhere. Very little oversight has been accomplished by the senate. And it's one of the biggest legitimate criticisms that can be made of us as a body, is that we're lazy in our oversight function. 7 trillion that's going to be spent, we're going to oversight about $100 billion of it total. So the amendment does a couple of things. And let me detail that for a moment.

One of the things by giving -- returning the money to the patent office is the director thinks that he can actually cut the backlog in half. In other words, we have over 700,000 patents that have never been looked at sitting at the patent office now. He believes that in a very short period of time they could cut that to 350,000.

From 1992-2011, $900 million has been taken from the p.t.o. In 2004, congress diverted $100 million. 2007, It diverted $12 million. Last year it diverted diverted $53 million. It's $80 million to $85 million that's going to be diverted this year. In four years out of the last ten, the congress gave the patent office all the money because it was so slow and so lethargic in terms of meeting the needs of inventors.

The only thing we have in the current bill is the promise of a speaker and the promise of a chairman that they will do that. There is nothing in law that forces them to do it. There is nothing that will make sure that the money is there. And no matter how good we fix the patent system in this country, if there is not the money to implement it, we will not have solved the problems.

In june of 2000, the house funding, and an interesting exchange took place between representative roybal-allard and representative rogers who was a cardinal at the time. Representative allard discussed fee diversion and user fees to pay for the agents. In the documentation of the congressional record, she asked chairman rogers if 100% of the user fees would go to the p.t.o. rogers stated the fees will not be siphoned off for any other agency or purpose and remain in the account for future years.

In fiscal year 2000, $121 million was, in fact, diverted. So when we have the chairman of the committee say we shouldn't doubt the word of the appropriations committee and yet we have in the record the exact opposite of what the appropriation committee said was going to happen, we should be concerned and we should fix it to where the money for patent examination goes for patent examination.

So we have a clear record of a statement that said it wasn't going to happen and in fact fact $121 million was diverted from the patent office. Finally, from 1992-2007, 1992-2007, $750 million more in patent and trademark fees was collected than was allowed to be spent by the patent and trademark office.

Had they had that money, we would have had a backlog of about 100,000 patents right now, not 750,000. They would have intellectual property as a greater value in our country with greater advantage over our trading partners because that money would have been effectively used.

On july 12, the former c.b.o. Director douglas holtz-eakin wrote saying that the establishment of the patent and trademark reserve fund would be ineffective in stopping the diversion of the fees from the u.s. patent office.

In other words, what's in this bill now won't stop the diversion of the fees. Just so people think I'm not just picking on one area, this is a bad habit of congress. It's not just in the patent and trademark office where we tell people they are going to pay a fee to get something done and then we steal the money and use it somewhere else.

For example, the nuclear waste fund at the department of energy. Utility payments by individual consumers pay for a nuclear waste fee, and that money has been spent on tons of other things through the years rather than on the collection and management of nuclear waste. $25 Billion, to the tune of of $25 billion has been spent on other things.

The securities and exchange commission, they are a fee-based agency was established, it's collected money by user fees, charged for various transactions in order to cover the cost of its regulation. The primary fees are for sales of stock, registration of a new stock, mergers, tender offers.

It also collects fees for penalty fines, for bad behavior that go into the treasuries general fund and amounts budget were diverted to other government programs. So in 2002, congress changed the treatment of the fees of the so they would only go to a special appropriations account solely for the s.e.c. wouldn't directly have access to the fees.

However, should they collect more than its appropriation. In the Dodd-frank bill, congress again changed the treatment of the fees and required some of the fees to go to the general treasury and others to the reserve fund.

As a result, lots of complaints with the s.e.c. They still don't have access to their funds. If congress chooses not to provide all the funds in the initial appropriation, they won't have them. In 2012 budget justification from the securities and exchange commission, they noted it had significant challenges -- noted maintaining the staffing level of the budget sufficient to carry out its core mission. had frozen or reduced budgets that forced the reduction of 10% of their staff and 50% in technology investment. What happened in 2007 and 2008 in this country? What were the problems?

So the diversion of the money actually contributed to the problems that we had in this country. So it doesn't work. Finally, one that is my favorite and I fought against every year since I have been here is the crime victims fund, and that's a fund where people who are criminals actually have to pay into a fund for restitution to criminal victims. And we have stolen billions of dollars from that fund that aren't taxes.

They are actually restitution moneys, but the congress has stolen it and spent it on other areas. The morality of that I don't think leads anybody to question that that is wrong.

Let me now, if I may, call up amendment 599 and ask that the pending amendment be set aside and ask that it be modified with the changes at the desk.

I noted before the chairman of the judiciary committee came to the floor that we had a difference of opinion and he would support on what happened to the bill. This was a minimal technical correction that was recommended to us, and I appreciate the senator allowing it to be considered. let me spend a minute talking about the chairman and his feeling that this won't go anywhere.

This is a critical, critical juncture for our country. When we're going to make a decision to not do what is right because somebody is threatening that they don't agree with doing what's right and that they won't receive it.

You know, in my life -- 63 years -- that's how bullies operate. And the way you break a bully is you challenge a bully.

And the fact is, as I've just recorded into the history of the house the statements by the chairman of the appropriation committee in the house in terms of his guarantee for protecting , which he turned around and took $121 million out of the funds that very same year that he guaranteed on the floor that he wouldn't do. So what I would say is we ought not worry about idle threats.

What we ought to worry about is doing the best right thing for our country. And the best right thing is to give the money to the patent office the people are paying for so that the patents will get approved and our technological innovation will be protected.

And so I don't buy the idea that the house isn't going to take this if we modify and actually what 95% of the people in this country would agree to, that the patent office ought to get the money that we're paying for patent fees, just like the ought to get the money that's paid by drug companies for new applications, just like the park service ought to put the money for the camping sites that are paid for camping sites back into the camping sites.

Why would we run away from doing right things? And so I find it very difficult when we rationalize down doing the correct thing that everybody agrees should be done, but we won't do it for the right reasons. That's why we have a 12% approval rating.

That's why people don't have confidence in congress, because we walk away from the tough challenges of bully who is say we won't do something if you do what is right. And I'm not going to live my life that way. I'm not going to be a senator that way. I'm going to stand on a position of principle. This is a principle that 95 senators in this body agree with.

And we're going to have several of our leaders try to get them not to do that on the basis of rationalization to a bully system that says we won't do the oversight but we still want to be in control. And in the fact, the process of that, America loses, because we have 750,000 patents that are pending right now, and there should only be about 100,000, because the bullies have won in the past. And I'm not going to take it anymore. I'm going to stand up and challenge it every time.

And I'm going to make the argument that if you pay a fee for something in this country for the government to do, that money ought to be spent doing what you paid the government to do. It's outside of a tax.

It's a fee, and it is immoral and close to being criminal to not spend that money for that fee. So if our body decides today they're going to table this amendment, the question that the american people have to ask is: Where's the courage in the senate to do what's best for our country?

Why are the senators here if they're not going to do what's best for the country? Why are they going to play the game of rationalization and extortion on principles that matter so much to our future? I won't do that anymore. Everybody knows this is the right thing to do.

And we're baby-sitting some spoiled members of congress who don't want to carry out their responsibilities in an honorable way and do the oversight that's necessary. And what they want to do is complain that they don't have control. Well, this bill authorizes funds for seven years. We can change that number of years.

We can actually change the actual amount of fees if in effect they're not doing a good job. Right now, as already put in the record, there's no history of significant oversight to the patent office, so they wouldn't know in the first place.

And so what we're asking is to do the right thing, the transparent thing, the morally correct thing, and give the patent office the opportunity to for America what it can do for them instead of handcuff us and handicap us to where we can't compete on intellectual property in our country. I've said enough on that.

I will reserve the balance of my time when I finish talking about one other item. There's an earmark in this patent bill for the medicine company. It ought not be there. This is something that's being adjudicated in the courts right now. Senator Sessions has an amendment that would change it.

I believe it's inappropriate to specify one company, one situation on a drug that is significant to this country, and we're fixing the wrong problem. We probably won't win that amendment but I think it is again something the american people ought to look at and say why is this here?

Why is something in this big bill that's so important to our country -- and I agree with our chairman. He has worked months, if not years, over the last six years trying to get to this process, and now we have this put in. We didn't have it ours. The chairman didn't have it in ours.

It came from the house, and we why is it there? Why are we interfering in something that's at the appellate court level right now? Why are we doing that? None of us can feel good about that. None of us can say it's the right thing to do. And why would we tolerate it?

You know, it really is this lack of confidence in America is about a lack of confidence in us. When people know and find out what's happened here, they're going to ask a question, the powerful and the wealthy advantage themselves at the expense of everybody else.

They have access, those that are lonely, those that are in terms of their material assets don't. It's the type of thing that undermines the confidence that we need to have. And I just wanted to say I'm a cosponsor of senator sessions' amendment.

I believe that he's accurate on it. I think they've won this in the court. It's on appeal. They'll probably win it on appeal. This will end up being an unnecessary thing. And there's a way for to us fix it if in fact they lose if it's appropriate to do that. But I believe it's inappropriate at this time. I yield the floor and reserve the balance of my time.

Mr. President, I reserve the balance of -- i would ask consent my full speech be made a part of the record and ask consent that I be allowed to reserve the balance of my time, and I would suggest the absence of a quorum.

I just wanted to respond to my chairman's comments. First of all, what we have proposed came out of the judiciary committee in the house 32-3. In other words, only three people in the judiciary committee in the house objected to this.

The other point I would make is the letter from chairman Rogers does not bind the next appropriations chairman. I think everybody would agree to that. It only binds him, and it only binds him as long as he honors his commitment. I have no doubt that he will honor his commitment as long as he is chairman.

And the third point I would make is what the house has set up doesn't make sure the funds go to the period of time. It means they just can't go somewhere else. That's what they have set up. They do not have to allow all the funds collected to go to the period of time. So they can reserve $200 million or $300 million a year and put it over there in a reserve fund that will set at the treasury that will cause us to borrow less, but the money won't necessarily go to the period of time. There's nothing that mandates the fees that are collected go to the patent and trademark office.

So I understand my chairman, I understand his frustration with trying to get this bill through, and I understand that he sees this as a compromise. I just don't. And I understand we're going to differ on that and agree to disagree. With that, I would yield the floor back and allow the chairman to take the roll and reserve the balance of my time.


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