US House panels reach agreement on patent bill

* House to take up the bill on Wednesday

* Senate has passed similar version

* Bill gives appropriators a say in reserve fund

By Diane Bartz

WASHINGTON, June 21 (Reuters) - The U.S. Patent and Trademark Office could set its own fees but any surplus money would go into a fund overseen by lawmakers under an agreement reached by two U.S. House of Representatives committees on Tuesday.

The deal clears the way for House debate to begin Wednesday on the legislation aimed at clearing a years-long backlog of patent applications and at curbing frivolous patent litigation.

The Senate passed a very similar bill by an overwhelming margin in March.

One of the last stumbling blocks to House passage had been a dispute between the House Judiciary and Appropriations Committees over the funds.

Under the agreement, the patent office will be allowed to set its fees and any money it brings in above its budget will be put in a reserve fund. The PTO will not be able to access those reserve funds without the agreement of the lawmakers who oversee appropriations.

"The money in the fund will be reserved for and used by the PTO and only the PTO. This maintains congressional oversight, while making sure that fees collected by the PTO can no longer be diverted," said Representative Lamar Smith, chairman of the House Judiciary Committee.

Among those calling for the bill to be approved on Wednesday were House Speaker John Boehner.

Senator Patrick Leahy, who shepherded the bill through the upper chamber, said he was "disappointed" with the role that lawmakers would take in the patent office budget but called the legislation a "tremendous boon for American inventors."

In a statement, the Obama administration said it supported the bill but expressed concern about the potential congressional role in the agency's budget.

Supporters hope the bill will help the patent office hire more examiners and clear out a backlog of more than 700,000 applications that are awaiting approval or rejection. Critics say the bill could end up making it more difficult for inventors to defend their patents against infringement.

Other provisions in the bill aim to prevent bad patents from being issued by allowing third parties to provide information on why an application should be rejected. The bill also set rules for allowing patents to be challenged after they are granted, which proponents say is cheaper than litigation.

It would also change the U.S. system to a "first inventor to file" procedure, instead of requiring inventors to prove that they were the first to come up with the innovation they are requesting a patent on. (Reporting by Diane Bartz; Editing by Tim Dobbyn)