The U.S. patent office, which can take up to three years to approve a patent application, has a $200 million shortfall that may require a temporary 15 percent fee hike, its director said on Tuesday.

We've had to severely limit things like overtime, Patent Office Director David Kappos said, adding the number of examiners was shrinking because hiring was being curtailed even as people left the agency.

Kappos, the new head of the agency, urged Congress to pass a patent reform bill aimed at reducing infringement litigation.

He had lobbied for patent reform during his old job as International Business Machine's intellectual property chief, but opposition from the pharmaceutical industry stopped the legislation.

It's a top priority for Sen. Leahy, a spokeswoman for the Senate Judiciary Committee said. The patent reform bill has passed that committee, but has not passed in the House of Representatives' Judiciary Committee.

The bill would reduce damages for infringement for products like cellular telephones, which can have many patented elements, and would allow new patents to be challenged by those outside the patent office. Patents would also be awarded to the person who files for it first, not necessarily the inventor.

Commerce Secretary Gary Locke, whose department oversees the patent office, said in a letter to lawmakers that he would support giving the patent office the power to raise its fees, as well as the patent reform bill itself.

Enactment of patent reform legislation is another important step in placing the U.S. Patent and Trademark Office on a sound financial footing and ensuring that the intellectual property system as a whole is in a strong position to further our economic recovery, Locke said in a letter sent to Leahy, chair of the Judiciary Committee and its ranking member, Sen. Jeff Sessions.

(Reporting by Diane Bartz)

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