by Dennis Crouch

The USPTO has released additional information regarding its current operations and the ongoing Federal Government funding crisis. Bottom line is that the PTO expects to continue its patent operations “until at least the second week in February.” Things on DC appear to be thawing enough to provide hope that an appropriations bill will see some light before then.

Although the USPTO is user-fee funded, it may only spend money that has been appropriated by Congress. This limit comes directly from the US Constitution, which says “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Article I, Section 9.

The most recent USPTO appropriations authorization ended on December 22, 2018 — seemingly cutting of the agency’s ability to spend money. However, the USPTO has been setting aside previously appropriated money in an “operating reserve” fund for a rainy-day (or rainy month+). It is this operating reserve that is now being spent and set to run-out in a couple of weeks.

Many federal agencies receive budget authority for a single fiscal year, and any money appropriated but not spent by year-end will lapse and no longer be available. Thus, for instance, 31 U.S. Code § 1301 provides that an annual appropriation “may be construed to be … available continuously only if the appropriation … (2) expressly provides that it is available after the fiscal year covered by the law in which it appears.” USPTO appropriations ordinarily include the this type of additional express caveat that appropriated funds are “to remain available until expended.” That provision allows the USPTO to set-aside its rainy-day fund from prior appropriations.

The aforementioned reserve fund is part of the USPTO’s strategic plan. And the plan particularly involves setting user fees at a high enough level to grow that fund to withstand even fairly unreasonable funding lapses. One concern though is whether the USPTO fee setting authority covers such overage. In particular, the USPTO is authorized to set fees “only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees).” Adding a strategic operating-reserve-fund in case of a shutdown does not appear to fit within this list of cost bases.