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The Honorable Judd Gregg July 12, 2000 Page 1 July 12, 2000 The Honorable Judd Gregg Chairman, Subcommittee on Commerce, Justice, State and Judiciary Committee on Appropriations United States Senate Washington, D.C. 20510 The Honorable Ernest Hollings Ranking Member, Subcommittee on Commerce, Justice, State and Judiciary Committee on Appropriations United States Senate Washington, D.C. 20510 Dear Mr. Chairman and Senator Hollings: The Subcommittee on Commerce, Justice, State and Judiciary is scheduled to mark up the Commerce, Justice, State and Judiciary appropriations bill for FY2001 in the near future. I am writing on behalf of the American Bar Association to express opposition to provisions in the bill, as passed by the House, which deny authority for the United States Patent and Trademark Office (USPTO) to spend $295 million in user fees to be collected in Fiscal Year 2001. Since the USPTO is funded entirely by user fees, the House-passed bill would, if enacted, lead to serious degradation in the provision of government services which are vital to the innovation and technology which fuel our nation’s economy. The American Bar Association believes that it is important for the USPTO to be able to utilize, in the year in which it is collected, all the revenue derived from user fees paid to fund the services provided by the Office. Congress itself has established these user fees so as to produce the revenue needed to fund the services of the USPTO, and the Office cannot function effectively if a substantial portion of that revenue is denied to the Office. While we do not believe that the withholding of any such user fees is justified, we strongly oppose the provisions in the House-passed bill that would withhold from the USPTO such an astronomically large amount of user fee revenue. The President’s budget proposal calls for withholding from USPTO use $368 million in user fees to be collected in FY 2001. Since that proposal would allow the USPTO to spend in FY 2001 $255 million in user fees collected in previous years, the net effect of the President’s proposal is a funding shortfall of $113 million based on anticipated user fee collections. Such a withholding of over $100 million—about ten percent of funding needed to run the Office—would seriously jeopardize the ability of the USPTO to support the vital areas of our economy which the Office serves. While the President’s proposal is ill-advised and damaging, the House proposal is devastating. It proposes withholding still an additional $182 million over what the President’s Budget calls for, bringing the total withheld to $295 million. The result would be funding for the USPTO at a level that is 25% less than the fees collected to run the Office. The House Judiciary Committee, the authorizing Committee for the USPTO, asked the Under Secretary of Commerce for Intellectual Property for his assessment of the impact of the funding cuts proposed by the Subcommittee. His response is extremely The Honorable Judd Gregg July 12, 2000 Page 2 disturbing. Under Secretary Dickinson reports that all hiring would have to be stopped. This includes not only expansion hiring to accommodate the ever growing demand for services, but also replacement hiring. As a result of such staffing reductions, services would be drastically slowed and reduced. The time delay in acting on trademark applications is expected to double, and action on patent applications would be slowed by one-third. Reduction and delay in services will result in a reduction in fee revenue, setting off a downward spiral that could be extremely damaging to technological and innovative sectors which are so vital to our nation’s economic and social health. We urge you in the strongest possible terms to reject these crippling funding cuts, and to provide the USPTO funding to run the Office that is equal to the fee revenue collected. Sincerely, Robert D. Evans cc: Members, Subcommittee on Commerce, Justice, State and Judiciary Q. Todd Dickinson, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office