January 14, 1997

Legislation in US Congress Proposes to Privatize the US Patent and Trademark Office

Just when we thought that the U.S. patent system couldn't possibly operate any more to the advantage of big business, there's a bill before the US Congress that proposes to modernize" the US Patent and Trademark Office by making it a private corporation. (1)

Privatization of the US PTO? This is not a joke. HR 400, "The 21st Century Patent System Improvement Act" is a series of six acts that propose major changes in the US patent system. Backed by powerful interests, the bill is moving quickly through Congress, and a vote is expected in the House of Representatives any day.

A corporatized PTO is cause for alarm because the legislation would give the government less control over who is entitled to the rewards of exclusive monopoly. For example, the proposed bill allows for the creation of a "Management Advisory Board" which will consult with the Director of the Patent Office in the drafting and review of all new patent regulations. HR 400 states that the new Board "shall include individuals with substantial background and achievement in corporate finance and management." Given these guidelines, it's not difficult to imagine that General Motors, Microsoft and Monsanto could become well-positioned to influence the future course of US patent policy. HR 400 doesn't even pretend that a privatized Patent Office should maintain a posture of impartiality. For example, it would allow the PTO to "accept monetary gifts or donations of services, or of real, personal or mixed property, in order to carry out the functions of the Office."

As one critic of HR 400 observes, "American patent applications that have always been assured of impartial review by a corps of government-insulated patent examiners that answered to no one but the US government will no longer have the assurance of a government enforced impartial review of their applications under HR 400." (2)

In keeping with the forces of economic globalization, HR 400 proposes many changes that aim to harmonize US patent legislation with Japanese and European patent laws. For example, HR 400 would require publication of US patents 18 months after filing (instead of when they are issued), and would allow third parties to participate in reexamination proceedings. Many small and independent inventors are vocally opposed to these changes, which they believe will favor large corporations.

HR 400 is complex and arcane, and our comments are limited to just a few features of the bill. The need to overhaul the US Patent and Trademark Office is beyond question, but HR 400 is not what we had in mind. Tinkering with national patent laws is not the solution. What we really need is a major societal review of intellectual property and innovation, especially as it applies to life forms.

UPDATE: HR 400 was passed, with amendments, by the US House of Representatives late on 24 April. A companion bill must now go to the US Senate. RAFI will provide further updates on the bill's status.

For more information on HR 400 and the complete text of the bill, see:


1) Technically, the US Patent and Trademark Office would become a wholly-owned government corporation, separate from any department of the US. While its policy direction would come from the Secretary of Commerce, its internal management would not be subject to direction or supervision by any government department.

2) The National Patent Association's (NPA) Fact Sheet on HR 400 is entitled the "Steal American Technologies Act.""

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