The US Patent and Trade Office (UPTO) has warned of an even longer patent process time, after Congress announced a budget cutback of $100 million.

Adding to concerns that China and India may soon out-innovate the United States, patent processing is set to slow down.

The US Patent and Trade Office (UPTO) has warned of an even longer patent process time, after Congress announced a budget cutback of $100 million in April.

The USPTO generates millions of dollars each year through application and procedural fees, but because it is a federal agency, Congress determines how much the USPTO is actually allowed to spend.

In a blog post, USPTO director David Kappos announced that the agency's "spending authority" has been dialed back to $2.09 billion for the next five months, instead of the $2.19 billion it sought. As a result, Kappos wrote that the office has had to postpone a campaign to expedite patent examinations, freeze hiring, end overtime pay, reduce employee training, and scale back IT upgrades.

American Intellectual Property Law Association (AIPLA) president David Hill wrote a letter to House leaders urging them to reconsider the budget cuts.

"Most troubling is the absence of statutory 'buffer' language included in previous funding bills to ensure that the Office may utilize the fee revenue that exceeds the original projected collections for the fiscal year," he wrote.

Patently-O blogger Florien Mueller notes that although $100 million doesn't sound like a big cutback from the USPTO's annual budget, this cut asks for $100 million from the next five months (ending September 31, 2011) which actually represents a 10 percent cut in spending.

Bijal Vakil, an executive partner at White and Case's Silicon Valley office, thinks the move could have "devastating effects" on American innovation.

"Why are policy makers diverting the funds [away from the USPTO]? It absolutely contradicts the President's message about job creation and keeping America at the center of innovation," Vakil said. "Companies in Silicon Valley look to the patent system as a key for them to start deploying new technologies and creating new jobs based on those technologies."

In February, President including Apple CEO Steve Jobs and Facebook CEO Mark Zuckerberg, to discuss ways the private tech sector can revive the U.S. economy.