US Fiscal 2009 Proposed Budget Shows IP Enforcement A Priority

By Liza Porteus Viana for Intellectual Property Watch
The United States Patent and Trademark Office got a slight financial boost in President Bush’s proposed $3 trillion fiscal 2009 budget released Monday, while agencies such as the State Department and International Trade Commission also were funded for various intellectual property and copyright enforcement programmes.

Bush has requested about $2.1 billion for the USPTO – roughly a $159 million (8 percent) increase from FY2008 funding levels of $1.9 billion for the agency. The budget calls for just over $214 million to go toward the examination of trademark applications and $1.7 billion to go toward the examination and searching of patent applications. About $16 million is requested for training personnel in these processes. The US fiscal year runs from 1 October to 30 September.

The budget is available at: http://www.whitehouse.gov/omb/budget/fy2009/

Spending at USPTO will be used to: fund additional patent examiner staff workload; continue implementation of e-government initiatives to speed up the application process; competitively source the classification and reclassification functions performed by patent examiners; continue retention incentives to retain a qualified workforce; and to improve patent and trademark practices worldwide.

“The president’s budget request for 2009 will support the goals of the USPTO’s five-year strategic plan: optimising patent and trademark quality and timeliness, improving intellectual property protection both domestically and abroad, and achieving organisational excellence,” said Jon Dudas, Under Secretary of Commerce for Intellectual Property and USPTO chief. “Importantly, it provides us the resources to continue our record hiring of patent examiners and to streamline our processes to achieve maximum operational efficiency.”

A report commissioned by lawmakers last autumn found that the USPTO’s 5,000 patent examiners were buried under a pile of unreviewed applications that had grown by nearly 73 percent since 2002.

Many lawmakers and some 2008 presidential candidates have issued calls for an improved patent examination and approval process. In FY2009, USPTO plans to hire an additional 1,200 patent examiners, continue telework programmes, and encourage applicants to do business with the USPTO via the Web. The agency will also use the money to provide IP training for foreign officials through its Global Intellectual Property Academy and through work with international IP offices.

USPTO is funded through fees paid to obtain patents and trademarks. The budget requests a programme level of almost $2.1 million and allows full access to anticipated fee revenues. The proposal also retains the current fee structure.

Dudas on Tuesday noted to reporters that Congress has in the past approved full funding for his office with this system.

The budget also allots about $1 million for activities associated with the National Intellectual Property Law Enforcement Coordination Council, created in 1999 to coordinate US domestic and international intellectual property enforcement activities. Co-chaired by the director of the USPTO and the assistant attorney general, criminal division, other members include officials from the State, Customs and Commerce departments as well as from the US Trade Representative’s office.

A patent modernisation bill pending in the US Congress could result in operational changes at USPTO, which would also be funded by Bush’s budget. Those may include giving the USPTO authority to adjust patent and trademark fees, and to establish an efficient post-grant patent review process as an alternative to litigating over the validity of some patents (IPW, US Policy, 6 February 2008).

USTR, ITC

The Office of the US Trade Representative, which works with trading partners and groups like the World Trade Organization to promote strong intellectual property laws and effective enforcement, is allotted $46.3 million in the budget proposal – an increase over the $44.1 million received in FY2008.

A USTR spokeswoman said that with the FY2009 funds, USTR hopes to conclude several bilateral agreements, complete the global WTO agreement, pursue China’s compliance with its WTO obligations, litigate enforcement actions in the WTO worth billions of dollars to US companies, negotiate WTO accession agreements for key countries, and launch new negotiations as necessary to further the trade agenda.

“Enforcement and dispute resolution will continue to be top priorities for USTR,” she said.

Bush has requested $73.6 million for the International Trade Commission, an independent, quasi-judicial federal agency established by Congress. It received $68.4 million in FY08. One of the agency’s jobs is intellectual property-based import investigations, where it probes alleged unfair methods of competition and unfair acts in the importation of goods into the United States. These investigations most frequently involve allegations of patent and trademark infringement.

State, Justice Departments

The budget also includes $39.5 billion for the international affairs budget for the Department of State and other foreign affairs agencies. The State Department is allotted $11.2 billion of that, while foreign operations and related agencies would receive $26.1 billion.

One of the State Department’s roles is to combat piracy of copyrighted materials, specifically targeted at countries that are not members of the Organisation for Economic Cooperation and Development. Money would go toward: providing equipment and training to law enforcement, judges and prosecutors including in the interpretation of IP laws, and to help countries comply with obligations under applicable international treaties and agreements on copyright and other IP.

The secretary of state is also directed to consult with the World Intellectual Property Organization to help integrate countries into the global IP system.

The budget requests $1.5 billion to pay for US membership contributions to 47 international organisations, including the United Nations, World Health Organization and the OECD, some activities of which aim to protect intellectual property rights.

The president also proposes the Justice Department be allocated $22.7 billion. Although much of that money will go toward the Southwest border initiative, counterterrorism and incarceration and detection programmes, some funds will also go toward intellectual property enforcement activities pursued by the US attorney’s office, FBI and Justice Department’s criminal division, which has a computer crimes and intellectual property section that battles counterfeiting, piracy and other IP-related crime.

Access to Knowledge

Bush is requesting $67 million for the National Archives and Records Administration (NARA) to develop an electronic records archive for all government records and to ensure the preservation of and access to those records via computer. Funding also will go toward developing public access capabilities.

Senate Judiciary Committee Chairman Patrick Leahy (Democrat, Vermont) criticised the budget request for moving functions of the Office of General Information Services (OGIS) to the Justice Department, which he said runs contrary to a law Bush signed in December called the OPEN Government Act. Currently housed in NARA, the OGIS responds to outstanding Freedom of Information Act requests.

Access to Medicine

The Food and Drug Administration’s (FDA) $2.4 billion budget allotment is a 5.7 percent increase over what it received for the current fiscal year. It wants authority to seek about $16.6 million in user fees from proposed generic drugs to improve the generic drug review process and respond to the growing number of new applications.

During the past six years, generic drug applications increased by 186 percent. Demand for generics, which often cost 20 to 70 percent less than their brand-name counterpart, are in high demand, with the Congressional Budget Office estimating generic drug use results in US savings of $10 billion per year.

“As $60-$70 billion in brand name drugs lose patent protection in the next few years, Americans could substitute generic drugs for brand name drugs at a rate of 50 to 75 percent,” the FDA noted.

The administration also wants to give the FDA the authority to approve abbreviated applications for certain biologic products, or follow-on biologics – also known as biogenerics – which would be financed through user fees. The European Union and Australia have established such procedures.

Groups like the Generic Pharmaceutical Association hailed the plan, but said the administration needs to push to ensure the FDA provides “timely access” to biologics.

“A pathway filled with roadblocks to access, including excessive market exclusivity provisions, is an empty promise for countless patients who need these affordable life-saving medicines,” said group President Kathleen Jaeger. “Bringing generic medicines to market in a timely manner is a win-win for the federal government, the generic industry and, most of all, consumers.”

Biologics, man-made forms of human proteins that are more difficult to reproduce than traditional pharmaceuticals, are being used to treat a variety of conditions from HIV/AIDS to Alzheimer’s to cancer, and can produce insulin, human growth hormone, and other therapies. Advances in technology, expiring patents, and rising health care costs have given rise to these biologics.

The budget language says the legislative proposal needed to grant the FDA broader authority to approve biologic applications must include “necessary provisions to ensure the safety and effectiveness of these biologic products for patients,” and guidance for licensing.

“In addition, the proposal will include adequate intellectual property protections to preserve continued robust research into new and innovative life-saving medications,” the budget said. “The budget proposes a new authority for FDA to approve follow-on protein products through a new regulatory pathway that protects patient safety, promotes innovation, and includes a financing structure to cover the costs of this activity through user fees.”

Liza Porteus Viana may be reached at info@ip-watch.ch.