United States Patent and Trademark Fee Modernization Act of 2003 - Part II

Floor Speech

SECTION 1. SHORT TITLE.

This Act may be cited as the "United States Patent and Trademark Fee Modernization Act of 2003".
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.
"© 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
"© 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.
"© 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.
"© 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
"© 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.".
© 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.
"© 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;
"(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; and
"(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.
"© 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.
(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 "DIRECTOR"; 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 ©, 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, UnitedStates 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.
© 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.
© 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;
© 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.
(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© 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 © of section 311 of title 35, United States Code, is amended by aligning the text with the text of subsection (a) of such section.
The CHAIRMAN. No amendments to the committee amendment in the nature of a substitute are in order except the amendments printed in House Report 108-431. Each amendment may be offered only in the order printed in the report, by a Member designated in the report, shall be considered read, shall be debatable for the time specified in the report, equally divided and controlled by the proponent and an opponent, shall not be subject to amendment, and shall not be subject to a demand for division of the question.
It is now in order to consider amendment No. 1 printed in House Report 108-431 and made in order by the order of the House of earlier today.

AMENDMENT NO. 1 OFFERED BY MR. SENSENBRENNER

Mr. SENSENBRENNER. Mr. Chairman, I offer an amendment.

The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:

Amendment made in order pursuant to the order of the House of today and House Resolution 547 offered by Mr. Sensenbrenner:

Strike section 5 and insert the following:
SEC. 5. PATENT AND TRADEMARK FUNDING.
Section 42© of title 35, United States Code, is amended-
(1) by striking "©" and inserting "©(1)"; and
(2) by adding at the end the following new paragraph:
"(2) There is established in the Treasury a Patent and Trademark Fee Reserve Fund. If fee collections by the Patent and Trademark Office for a fiscal year exceed the amount appropriated to the Office for that fiscal year, fees collected in excess of the appropriated amount shall be deposited in the Patent and Trademark Fee Reserve Fund. After the end of each fiscal year, the Director shall make a finding as to whether the fees collected for that fiscal year exceed the amount appropriated to the Patent and Trademark Office for that fiscal year. If the amount collected exceeds the amount appropriated, the Director shall, if the Director determines that there are sufficient funds in the Reserve Fund, make payments from the Reserve Fund to persons who paid patent or trademark fees during that fiscal year. The Director shall by regulation determine which persons receive such payments and the amount of such payments, except that such payments in the aggregate shall equal the amount of funds deposited in the Reserve Fund during that fiscal year, less the cost of administering the provisions of this paragraph.".
In section 6(a), strike "Except as" and all that follows through the end of the sentence and insert "Except as otherwise provided in this Act and this section, this Act and the amendments made by this Act shall take effect on October 1, 2004, or on the date of the enactment of this Act, whichever occurs later.".
Page 12, strike lines 17 through 20 and insert the following:
(d) ADJUSTMENTS.-
(1) IN GENERAL.-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.
(2) CONFORMING AMENDMENT.-Effective October 1, 2004, section 41(f) of title 35, United States Code, is amended by striking "(a) and (b)" and inserting "(a), (b), and (d)".
Page 11, add the following after line 24:
"(F) The Director shall require that any search by a qualified search authority that is a commercial entity is conducted in the United States by persons that-
"(i) if individuals, are United States citizens; and
"(ii) if business concerns, are organized under the laws of the United States or any State and employ United States citizens to perform the searches.
"(G) A search of an application that is the subject of a secrecy order under section 181 or otherwise involves classified information may only be conducted by Office personnel.
"(H) A qualified search authority that is a commercial entity may not conduct a search of a patent application if the entity has any direct or indirect financial interest in any patent or in any pending or imminent application for patent filed or to be filed in the Patent and Trademark Office.
Page 12, insert the following after line 20 and redesignate the succeeding subsection accordingly:
(e) FEES FOR SMALL ENTITIES.-Section 41(h) of title 35, United States Code, is amended-
(1) in paragraph (1), by striking "Fees charged under subsection (a) or (b)" and inserting "Subject to paragraph (3), fees charged under subsections (a), (b), and (d)(1)"; and
(2) by adding at the end the following new paragraph:
"(3) The fee charged under subsection (a)(1)(A) shall be reduced by 75 percent with respect to its application to any entity to which paragraph (1) applies, if the application is filed by electronic means as prescribed by the Director.".
(f) SIZE STANDARDS FOR SMALL ENTITIES.-
(1) STUDY.-The Director, in conjunction with the Administrator of the Small Business Administration and the Chief Counsel for Advocacy of the Small Business Administration, shall conduct a study on the effect of patent fees on the ability of small entity inventors to file patent applications. Such study shall examine whether a separate category of reduced patent fees is necessary to ensure adequate development of new technology by small entity inventors.
(2) REPORT.-The Director shall, not later than 6 months after the date of the enactment of this Act, submit a report on the results of the study under paragraph (1) to the Committee on the Judiciary and the Committee on Small Business of the House of Representatives and the Committee on the Judiciary and the Committee on Small Business and Entrepreneurship of the Senate.
Page 8, line 3, add the following after the period: "For the 3-year period beginning on October 1, 2004, the fee for a search by a qualified search authority of a patent application described in clause (i), (iv), or (v) of subparagraph (B) may not exceed $500, of a patent application described in clause (ii) of subparagraph (B) may not exceed $100, and of a patent application described in clause (iii) of subparagraph (B) may not exceed $300. The Director may not increase any such fee by more than 20 percent in each of the next 3 1-year periods, and the Director may not increase any such fee thereafter.".

The CHAIRMAN. Pursuant to House Resolution 547, the gentleman from Wisconsin (Mr. Sensenbrenner) and a Member opposed each will control 10 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr. Sensenbrenner).

Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may consume.
I have a lengthy statement that I will not read in full, but will insert in the RECORD. But let me state that a significant part of this amendment deals with the agreement that we have reached with the appropriators that was discussed in the colloquy which I had earlier today with the gentleman from Virginia (Mr. Wolf), the distinguished chairman of the Subcommittee on Commerce, Justice, State, Judiciary and Related Agencies of the Committee on Appropriations.
Let me also state that the amendment contains various provisions that the gentleman from Illinois (Mr. Manzullo) and I have agreed upon relative to our previous differences over the treatment of small entities under this bill. And pursuant to this agreement, my amendment applies a 50 percent discount to all searches for small entities, prohibits commercial searches that apply to classified matters, prevents commercial entities from performing searches when they have a financial interest or other conflict at stake, caps the search fee after the 6th year, and requires a joint PTO and Small Business Administration study regarding the effects of the fee structure on small entities.

This, I believe, meets the objections that members of the Committee on Small Business had relative to the cost to small business of applying for and hopefully obtaining a patent. I hope that this amendment clears the way for the other body to consider this bill and bring real reform to the PTO.

Mr. Chairman, I am delighted to report that this amendment reflects a thoughtful compromise between myself and Mr. WOLF, chairman of the CJS Appropriations Subcommittee, as well as a fair deal between the Judiciary Committee and the chairman of the Small Business Committee, the gentleman from Illinois, Mr. MANZULLO. I want to thank both of them for working so steadfastly and productively on this important issue.
Mr. Chairman, the heart of my amendment creates a "refund" program to eliminate the potential incentive for diverting PTO revenue to non-PTO programs. Briefly, if fee collections in a given fiscal year exceed the amount appropriated to the agency, the excess or overage shall be deposited in a PTO "Reserve Fund." At the end of the fiscal year the Director determines if there are sufficient funds to make payments to persons who paid fees during that year.
The Director is empowered to determine which recipients qualify and in what amounts, except that the payments in aggregate must equal the amount of revenue in the Reserve Fund during that fiscal year, less the cost of administering the program.
This text is crucial to the bill before us. We have been at loggerheads with the Appropriations committee on this matter for nearly a decade, so I am glad to say that we have struck an acceptable compromise that serves the interests of both committees. I am grateful to the appropriators and the majority leader for working with us on this point. I emphasize that without this language, support for the bill dissipates.
In addition, the bill as reported contains a pilot program to determine the efficacy of allowing commercial entities to perform the search function, thereby relieving the agency of the burden and freeing up examiners to do other work. The amendment specifies that participation in the pilot program will be restricted to American businesses and American citizens. We have worked closely with Chairman WOLF's staff on this point.
Also, in furtherance of the ongoing modernization efforts at PTO, the Director is required to reduce the filing fee for any small entity, independent inventor, or nonprofit organization by 75 percent provided those so qualified file their applications electronically.
As I noted a moment ago, Mr. MANZULLO, and I have resolve dour differences over the treatment of small entities under H.R. 1561. Pursuant to recently agreed-upon changes, my amendment: Applies a 50 percent discount to all searches for small entities; prohibits commercial searches that apply to classified matters; prevents commercial entities from performing searches when they have a financial interest or other conflict at stake; caps the search fee after the sixth year; and requires a joint PTO-SBA study regarding the effects of the fee structure on small entities.
Mr. Chairman, by addressing the fee diversion and other issues, this amendment clears the way for the other body to consider H.R. 1561 and bring real reform to the PTO. I urge its adoption.

Mr. BERMAN. Mr. Chairman, will the gentleman yield?

Mr. SENSENBRENNER. I yield to the gentleman from California.

Mr. BERMAN. Mr. Chairman, I thank the gentleman for yielding.
Mr. Chairman, I simply want to express my strong support for this amendment. If I were a betting man, I would have bet a lot of money that the chairman would not have been able to deal with the end of diversion in the fashion that he was able to without at least 25 or 30 appropriators on the House floor. I congratulate both him and the subcommittee chairman for their excellent work, and I urge the manager's amendment be adopted.

Mr. SMITH of Texas. Mr. Chairman, I strongly support this amendment, which is the result of careful negotiations between the Judiciary and Appropriations Committees.
The two goals of the underlying bill are to improve PTO operations and to end fee diversion. This amendment makes sure those goals are achieved.
In order to eliminate the incentive to divert fees from the PTO, the amendment establishes a rebate program that will deposit any fee collections that exceed the amount of money appropriated to the PTO in a "reserve fund." At the end of each year, the PTO Director will determine whether there are sufficient funds to make payments to users who paid applicant fees that year. By ending fee diversion and allowing the PTO to keep the fees its users pay each year, the agency will be able to make many much-needed reforms to increase its efficiency and productivity.
This amendment also contains provisions that will ensure the PTO will operate effectively. It establishes a pilot program to allow private entities to perform the search function associated with obtaining a patent. This will free up patent examiners to focus on other work.
Some have mischaracterized this provision as "outsourcing" that will cut American jobs and send work overseas. In fact, this amendment specifies that participation in the pilot program is restricted to American businesses and American citizens. By allowing patent searches to be performed by commercial entities, this pilot program will simply allow the private sector to take some of the load off of an already overburdened patent evaluation system at the PTO.
Twenty-five to thirty percent of the 355,000 patent applications the PTO receives each year come from small businesses. The Sensenbrenner amendment has many provisions to help small businesses obtain patents.
The PTO is one of the most important agencies in the country. It is the agency behind the innovation and invention that drives our economy. We must give it the funding it needs to implement meaningful reform and improve its operations.
This amendment strengthens the underlying bill and I urge my colleagues to support it.

Mr. SENSENBRENNER. Mr. Chairman, I have no further requests for time, and I yield back the balance of my time.

The CHAIRMAN. Does anyone seek time in opposition?
The question is on the amendment offered by the gentleman from Wisconsin (Mr. Sensenbrenner).
The amendment was agreed to.

The CHAIRMAN. It is now in order to consider Amendment No. 2 printed in House Report 108-431.
The gentleman from Illinois apparently is not offering his amendment.
It is now in order to consider Amendment No. 3 printed in House Report 108-431.

PARLIAMENTARY INQUIRY

Ms. KAPTUR. Mr. Chairman, I have a parliamentary inquiry.

The CHAIRMAN. The gentlewoman will state it.

Ms. KAPTUR. Mr. Chairman. I just wanted to ask, is this the final amendment in the series, and then will we move to final passage?

The CHAIRMAN. The gentlewoman is correct.
The Chair is ready to proceed. Apparently the gentlewoman from Texas does not offer her amendment.

The question is on the committee amendment in the nature of a substitute, as amended.

The committee amendment in the nature of a substitute, as amended, was agreed to.

The CHAIRMAN. Under the rule, the Committee rises.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr. Cunningham) having assumed the chair, Mr. LaHood, Chairman of the Committee of the Whole House on the State of the Union, reported that that Committee, having had under consideration the bill (H.R. 1561) to amend title 35, United States Code, with respect to patent fees, and for other purposes, pursuant to House Resolution 547, he reported the bill back to the House
with an amendment adopted by the Committee of the Whole.

The SPEAKER pro tempore. Under the rule, the previous question is ordered.

Is a separate vote demanded on the amendment to the committee amendment in the nature of a substitute adopted by the Committee of the Whole? If not, the question is on the committee amendment in the nature of a substitute.

The committee amendment in the nature of a substitute was agreed to.

The SPEAKER pro tempore. The question is on the engrossment and third reading of the bill.

The bill was ordered to be engrossed and read a third time, and was read the third time.

The SPEAKER pro tempore. The question is on the passage of the bill.

The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it.
Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The vote was taken by electronic device, and there were-yeas 379, nays 28, not voting 26, as follows:

[Roll No. 38]

YEAS--379

Abercrombie
Ackerman
Akin
Alexander
Allen
Andrews
Baca
Bachus
Baird
Baker
Baldwin
Ballance
Barrett (SC)
Barton (TX)
Bass
Beauprez
Becerra
Bell
Bereuter
Berkley
Berman
Biggert
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