[House Report 115-966]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-966
======================================================================
STUDY OF UNDERREPRESENTED CLASSES CHASING ENGINEERING AND SCIENCE
SUCCESS ACT OF 2018
_______
September 25, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 6758]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 6758) to direct the Under Secretary of Commerce for
Intellectual Property and Director of the United States Patent
and Trademark Office, in consultation with the Administrator of
the Small Business Administration, to study and provide
recommendations to promote the participation of women and
minorities in entrepreneurship activities and the patent
system, to extend by 8 years the Patent and Trademark Office's
authority to set the amounts for the fees it charges, and for
other purposess, having considered the same, report favorably
thereon with amendments and recommend that the bill as amended
do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 3
Background and Need for the Legislation.......................... 3
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 4
New Budget Authority and Tax Expenditures........................ 5
Congressional Budget Office Cost Estimate........................ 5
Duplication of Federal Programs.................................. 6
Disclosure of Directed Rule Makings.............................. 6
Performance Goals and Objectives................................. 6
Advisory on Earmarks............................................. 6
Section-by-Section Analysis...................................... 7
Changes in Existing Law Made by the Bill, as Reported............ 7
The Amendment
The amendments are as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Study of Underrepresented Classes
Chasing Engineering and Science Success Act of 2018'' or the ``SUCCESS
Act''.
SEC. 2. FINDINGS; SENSE OF CONGRESS.
(a) Findings.--Congress finds the following:
(1) Patents and other forms of intellectual property are
important engines of innovation, invention, and economic
growth.
(2) Many innovative small businesses, which create over 20
percent of the total number of new jobs created in the United
States each year, depend on patent protections to commercialize
new technologies.
(3) Universities and their industry partners also rely on
patent protections to transfer innovative new technologies from
the laboratory or classroom to commercial use.
(4) Recent studies have shown that there is a significant gap
in the number of patents applied for and obtained by women and
minorities.
(b) Sense of Congress.--It is the sense of Congress that the United
States has the responsibility to work with the private sector to close
the gap in the number of patents applied for and obtained by women and
minorities to harness the maximum innovative potential and continue to
promote United States leadership in the global economy.
SEC. 3. REPORT.
(a) Study.--The Director, in consultation with the Administrator and
any other head of an appropriate agency, shall conduct a study that--
(1) identifies publicly available data on the number of
patents annually applied for and obtained by, and the benefits
of increasing the number of patents applied for and obtained by
women, minorities, and veterans and small businesses owned by
women, minorities, and veterans; and
(2) provides legislative recommendations for how to--
(A) promote the participation of women, minorities,
and veterans in entrepreneurship activities; and
(B) increase the number of women, minorities, and
veterans who apply for and obtain patents.
(b) Report.--Not later than 1 year after the date of the enactment of
this Act, the Director shall submit to the Committees on the Judiciary
and Small Business of the House of Representatives and the Committees
on the Judiciary and Small Business and Entrepreneurship of the Senate
a report on the results of the study conducted under subsection (a).
SEC. 4. EXTENSION OF FEE-SETTING AUTHORITY.
Section 10(i)(2) of the Leahy-Smith America Invents Act (Public Law
112-29; 125 Stat. 319; 35 U.S.C. 41 note) is amended by striking ``7-
year'' and inserting ``15-year''.
SEC. 5. DEFINITIONS.
In this Act:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Small Business Administration.
(2) Agency.--The term ``agency'' means a department, agency,
or instrumentality of the United States Government.
(3) Director.--The term ``Director'' means the Under
Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.
Amend the title so as to read:
A bill to direct the Under Secretary of Commerce for
Intellectual Property and Director of the United States Patent
and Trademark Office, in consultation with the Administrator of
the Small Business Administration, to study and provide
recommendations to promote the participation of women and
minorities in entrepreneurship activities and the patent
system, to extend by 8 years the Patent and Trademark Office's
authority to set the amounts for the fees it charges, and for
other purposes.
Purpose and Summary
H.R. 6758, the ``Study of Underrepresented Classes Chasing
Engineering and Science Success (SUCCESS) Act,'' is designed to
help close the gender and race gap in patenting rates and
entrepreneurship in the United States, and increase patenting
and entrepreneurship by U.S. veterans. It directs the Director
of the U.S. Patent and Trademark Office (PTO), in consultation
with the Administrator of the Small Business Administration
(SBA), to conduct a study on the number of patents annually
applied for and obtained by U.S. women, minorities, and
veterans, and requires a report that includes legislative
recommendations for how to increase participation in
entrepreneurial activities and patenting by U.S. women,
minorities, and veterans. This study will be critical in
developing policies to help these underrepresented groups
further engage in the type of entrepreneurial activities that
are the backbone of our American economy. The bill would also
amend the Leahy-Smith America Invents Act (``AIA'') to extend
by eight more years the authority granted to the PTO to set the
amount it charges for each of the services it provides to
patent and trademark applicants.
Background and Need for the Legislation
Patents are drivers of innovation and are critical to
economic growth. Small businesses contribute over 20 percent of
the total number of new jobs created in the United States each
year. Many businesses depend on patents to protect the new
technologies and innovative products they invent. Without
patent protection, companies that invest in developing new
technologies that distinguish their products from those of
their competitors risk having their competitors copy those
innovative features and steal sales and customer goodwill from
the inventing company. Absent patent protection, businesses in
some industries would have a much harder time securing the
funding needed to grow. Small businesses with a single product
would likely be driven out of business, if their invention is
easily reverse engineered and copied. Securing patent
protection is often very important to large companies but is
just as important for the health and survival of a small
business.
In the United States, women earn almost half of all
undergraduate degrees in science and engineering, and 39% of
all new PhDs in those fields.\1\ But when it comes to patenting
their inventions, they trail far behind men. Some estimates
suggest that between 20% and 10% of all patent-holders are
women.\2\ A 2016 study showed that racial minorities fair even
worse.\3\
---------------------------------------------------------------------------
\1\Jensen et al., Why Do Women Inventors Win Fewer Patents? Yale
Insights, Yale School of Management (Apr. 9, 2018), https://
insights.som.yale.edu/insights/why-do-women-inventors-win-fewer-
patents.
\2\Id.; see also, Milli et al, Equity in Innovation: Women
Inventors and Patents, Institute for Women's Policy Research, at 7
(Nov. 29, 2016), https://iwpr.org/wp-content/uploads/wpallimport/files/
iwpr-export/publications/C448%20Equity%20in%20Innovation.pdf.
\3\Milli et al., at 5.
---------------------------------------------------------------------------
We need full participation in our patent system by each
American with a great new idea to realize the full potential of
the American people. By encouraging every American to invent
and innovate, the United States can maintain its position as
the world's technology leader, and we can secure a brighter
economic future for ourselves and our children. To realize our
full scientific and economic potential, the SUCCESS Act
requires the PTO, in collaboration with the SBA, to provide
recommendations to Congress on how to increase the
participation of American women, minorities, and veterans in
entrepreneurship activities and the patent system.
The PTO plays a critical role in the development of new
technologies and the growth of the U.S. economy. The agency
runs on fees it collects from patent and trademark applicants.
To ensure that the PTO has all of the resources it needs to
properly examine patent applications and register trademarks,
and undertake such other efforts that are essential to
maintaining America's competitiveness, Congress needs to
reauthorize the PTO's authority to set its fees.
The SUCCESS Act would extend for eight more years the PTO's
authority to set the amounts it charges for the services it
provides to patent and trademark applicants. The extension
provided for in this bill will give the PTO the ability to
conduct long-term planning, but because the authority will
sunset unless reauthorized in eight years, the bill will also
ensure effective Congressional oversight.
Hearings
The Committee on the Judiciary held no hearings on H.R.
6758; however, on May 22, 2018, the Committee held a PTO
oversight hearing at which testimony was received from the
Honorable Andrei Iancu, Director of the U.S. Patent and
Trademark Office, Undersecretary of Commerce for Intellectual
Property. During that hearing, Director Iancu spoke on the need
for Congress to pass Section 4 of the bill, ``Extension of Fee-
Setting Authority,'' stating that when the PTO sets fees ``it
is a multi-year process'' and that the authority is ``a
critical factor in managing the agency's budget.'' Director
Iancu stated that this authority ``has allowed the agency to
efficiently and cautiously adjust user fees as needed to recoup
operational costs and drive effective operations.''
Committee Consideration
On September 13, 2018, the Committee met in open session
and ordered the bill (H.R. 6758) favorably reported, with an
amendment, by voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 6758.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to H.R. 6758, the following estimate and comparison
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act of 1974:
September 21, 2018.
Hon. Bob Goodlatte,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 6758, the SUCCESS
Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Keith Hall.
Enclosure.
cc: Honorable Jerrold Nadler,
Ranking Member.
0
H.R. 6758, the SUCCESS Act
As ordered reported by the House Committee on the Judiciary on
September 13, 2018
H.R 6758 would extend the authority of the Patent and
Trademark Office (PTO) to set and adjust the fees the agency
charges to obtain and renew patents and trademarks that offset
its operating costs. That authority expired on September 16,
2018. The bill also would direct PTO to conduct a study and
report on the number of patent filings applied for and obtained
by women, minorities, and veterans and small businesses owned
by women, minorities, and veterans. The report would include
recommendations on ways to promote participation in
entrepreneurship activities and increase patent filings by
those groups.
Under the bill, fees could be adjusted for changes in PTO's
aggregate costs. CBO has no basis for determining how or
whether PTO would adjust its fees in the future. Because any
fee adjustments could increase or decrease the total amounts
collected, CBO has not estimated any effects on those
collections from enacting the bill.
Using information from PTO, CBO estimates that it would
cost less than $500,000 for the agency to complete the study
and report. However, under the bill, PTO would be authorized to
adjust its fees to offset any change in operating costs;
therefore, CBO estimates that the net effect on discretionary
spending would be negligible, assuming appropriation actions
consistent with that authority.
Enacting H.R. 6758 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting H.R. 6758 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 6758 would impose a mandate as defined in the Unfunded
Mandates Reform Act (UMRA) on both public and private entities
by extending the authority of the PTO to set and adjust certain
fees. The requirement to pay those fees would be a mandate
because the federal government controls the patent and
trademark system, and no reasonable alternatives to that system
exist. If the PTO increases fees to offset the costs of
conducting a study required by the bill, H.R. 6758 would
increase the cost of an existing mandate on private and
intergovernmental entities required to pay those fees. Using
information from PTO, CBO estimates that the annual cost to
offset the costs of the PTO would be less than $500,000.
Therefore, the cost for public and private entities to comply
with the mandate would fall below the annual thresholds
established in UMRA for intergovernmental and private-sector
mandates ($80 million and $160 million in 2018, respectively,
adjusted annually for inflation).
The CBO staff contacts for this estimate are Stephen Rabent
(for federal costs) and Rachel Austin (for mandates). The
estimate was reviewed by H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Duplication of Federal Programs
No provision of H.R. 6758 establishes or reauthorizes a
program of the Federal government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee finds that H.R. 6758 contains no directed
rule making within the meaning of 5 U.S.C. Sec. 551.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 6758
will extend the authority for the PTO to set its fees for an
additional eight years and requires a report to assess the
rates of patenting by women, minorities, and veterans and to
provide legislative recommendations on how to encourage
patenting rates by these groups.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 6758 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Section 1. Short title. Section 1 sets forth the short
title of the bill as the ``Study of Underrepresented Classes
Chasing Engineering and Science Success (SUCCESS) Act.''
Sec 2. Findings; Sense of Congress. Provides the following
findings and sense of Congress regarding the importance of
patent protection to small business growth and the impact on
job creation.
(a) Findings.--Congress finds the following:
(1) Patents and other forms of intellectual property
are important engines of innovation, invention, and
economic growth.
(2) Many innovative small businesses, which create
over 20 percent of the total number of new jobs created
in the United States each year, depend on patent
protections to commercialize new technologies.
(3) Universities and their industry partners also
rely on patent protections to transfer innovative new
technologies from the laboratory or classroom to
commercial use.
(4) Recent studies have shown that there is a
significant gap in the number of patents applied for
and obtained by women and minorities and the number of
patents applied for and obtained by individuals from
other groups.
(b) Sense of Congress.--It is the sense of Congress that
the United States has the responsibility to work with the
private sector to close the gap in the number of patents
applied for and obtained by women and minorities to harness the
maximum innovative potential and continue to promote United
States leadership in the global economy.
Sec 3. Report. Obligates the PTO Director, in consultation
with the Administrator of the Small Business Administration, to
submit a report to the Committees on the Judiciary and Small
Business of the House of Representatives and the Committees on
the Judiciary and Small Business and Entrepreneurship of the
Senate on publicly available data on the number of patents
annually applied for and obtained by women, minorities, and
veterans; the benefits of increasing patenting by small
businesses owned by women, minorities, and veterans;
legislative recommendations for how to increase participation
in entrepreneurial activities by women, minorities, and
veterans; and increase the number of patents applied for by and
granted to women, minorities, and veterans.
Sec. 4. Extension of the USPTO's Fee Setting Authority.
This section extends the PTO's authority to set its own fees,
provided for in Section 10(i)(2) of the America Invents Act, by
eight years.
Sec. 5 Definitions. This section defines ``the
Administrator'' of the SBA, ``the Director'' of the PTO, and
federal ``agency.''
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
LEAHY-SMITH AMERICA INVENTS ACT
* * * * * * *
SEC. 10. FEE SETTING AUTHORITY.
(a) Fee Setting.--
(1) In general.--The Director may set or adjust by
rule any fee established, authorized, or charged under
title 35, United States Code, or the Trademark Act of
1946 (15 U.S.C. 1051 et seq.), for any services
performed by or materials furnished by, the Office,
subject to paragraph (2).
(2) Fees to recover costs.--Fees may be set or
adjusted under paragraph (1) 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) and trademarks (in the
case of trademark fees), including administrative costs
of the Office with respect to such patent or trademark
fees (as the case may be).
(b) Small and Micro Entities.--The fees set or adjusted under
subsection (a) for filing, searching, examining, issuing,
appealing, and maintaining patent applications and patents
shall be reduced by 50 percent with respect to the application
of such fees to any small entity that qualifies for reduced
fees under section 41(h)(1) of title 35, United States Code,
and shall be reduced by 75 percent with respect to the
application of such fees to any micro entity as defined in
section 123 of that title (as added by subsection (g) of this
section).
(c) Reduction of Fees in Certain Fiscal Years.--In each
fiscal year, the Director--
(1) shall consult with the Patent Public Advisory
Committee and the Trademark Public Advisory Committee
on the advisability of reducing any fees described in
subsection (a); and
(2) after the consultation required under paragraph
(1), may reduce such fees.
(d) Role of the Public Advisory Committee.--The Director
shall--
(1) not less than 45 days before publishing any
proposed fee under subsection (a) in the Federal
Register, submit the proposed fee to the Patent Public
Advisory Committee or the Trademark Public Advisory
Committee, or both, as appropriate;
(2)(A) provide the relevant advisory committee
described in paragraph (1) a 30-day period following
the submission of any proposed fee, in which to
deliberate, consider, and comment on such proposal;
(B) require that, during that 30-day period,
the relevant advisory committee hold a public
hearing relating to such proposal; and
(C) assist the relevant advisory committee in
carrying out that public hearing, including by
offering the use of the resources of the Office
to notify and promote the hearing to the public
and interested stakeholders;
(3) require the relevant advisory committee to make
available to the public a written report setting forth
in detail the comments, advice, and recommendations of
the committee regarding the proposed fee; and
(4) consider and analyze any comments, advice, or
recommendations received from the relevant advisory
committee before setting or adjusting (as the case may
be) the fee.
(e) Publication in the Federal Register.--
(1) Publication and rationale.--The Director shall--
(A) publish any proposed fee change under
this section in the Federal Register;
(B) include, in such publication, the
specific rationale and purpose for the
proposal, including the possible expectations
or benefits resulting from the proposed change;
and
(C) notify, through the Chair and Ranking
Member of the Committees on the Judiciary of
the Senate and the House of Representatives,
the Congress of the proposed change not later
than the date on which the proposed change is
published under subparagraph (A).
(2) Public comment period.--The Director shall, in
the publication under paragraph (1), provide the public
a period of not less than 45 days in which to submit
comments on the proposed change in fees.
(3) Publication of final rule.--The final rule
setting or adjusting a fee under this section shall be
published in the Federal Register and in the Official
Gazette of the Patent and Trademark Office.
(4) Congressional comment period.--A fee set or
adjusted under subsection (a) may not become
effective--
(A) before the end of the 45-day period
beginning on the day after the date on which
the Director publishes the final rule adjusting
or setting the fee under paragraph (3); or
(B) if a law is enacted disapproving such
fee.
(5) Rule of construction.--Rules prescribed under
this section shall not diminish--
(A) the rights of an applicant for a patent
under title 35, United States Code, or for a
mark under the Trademark Act of 1946; or
(B) any rights under a ratified treaty.
(f) Retention of Authority.--The Director retains the
authority under subsection (a) to set or adjust fees only
during such period as the Patent and Trademark Office remains
an agency within the Department of Commerce.
(g) [Amends other law--omitted]
(h) Electronic Filing Incentive.--
(1) In general.--Notwithstanding any other provision
of this section, an additional fee of $400 shall be
established for each application for an original
patent, except for a design, plant, or provisional
application, that is not filed by electronic means as
prescribed by the Director. The fee established by this
subsection shall be reduced by 50 percent for small
entities that qualify for reduced fees under section
41(h)(1) of title 35, United States Code. All fees paid
under this subsection shall be deposited in the
Treasury as an offsetting receipt that shall not be
available for obligation or expenditure.
(2) Effective date.--This subsection shall take
effect upon the expiration of the 60-day period
beginning on the date of the enactment of this Act.
(i) Effective Date; Sunset.--
(1) Effective date.--Except as provided in subsection
(h), this section and the amendments made by this
section shall take effect on the date of the enactment
of this Act.
(2) Sunset.--The authority of the Director to set or
adjust any fee under subsection (a) shall terminate
upon the expiration of the [7-year] 15-year period
beginning on the date of the enactment of this Act.
(3) Prior regulations not affected.--The termination
of authority under this subsection shall not affect any
regulations issued under this section before the
effective date of such termination or any rulemaking
proceeding for the issuance of regulations under this
section that is pending on such date.
* * * * * * *