The America Invents Act grants the U.S. Patent and Trademark Office (USPTO) the authority to set or adjust any fee for the next seven years within certain limits. With the tasks of setting up new branch offices, hiring new examiners to reduce the backlog, and implementing a variety of new processes established by the America Invents Act, the question is not whether the USPTO will raise fees but rather, how much will the USPTO raise fees.
People may be scratching their heads and asking, “Didn’t the patent office already increase fees by 15 percent in October 2011?” Yes it did, and while the USPTO indicates that it could just keep the fees at the current 15 percent surcharge level, it believes that further increases are necessary. The USPTO argues that if fees stayed the same, by 2018 the backlog of patents would be greater than it is today, application pendency would lengthen, the USPTO’s financial stability would be at risk, and it would not be able to keep pace with the anticipated rise in patent filings. The USPTO asserts that increased fees will be necessary to meet two main goals: 1) to operate with a more sustainable funding model than it has in the past to avoid disruptions in agency operations caused by fluctuations in the economy; and 2) to reduce the backlog of unexamined patent applications.
With those goals in mind, on Feb. 7, 2012, the USPTO released its first patent fee proposal for public inspection. The USPTO predicts that in 2013 its operational and administrative costs will total $2.549 billion, and under the proposed fee schedule the USPTO anticipates collecting $2.686 billion with the extra $137 million (plus $19 million from other revenue) to be deposited into the USPTO’s piggy bank for safe keeping.
Despite this increase in income, the USPTO alleges that the fee structure will result in a lower cost of entry into the patent system. One might wonder how the USPTO could allege that increased fees will result in “lower cost of entry.” The USPTO notes that while there is a 47 percent increase in the initial filing fees (i.e., the basic filing, search, and examination fee) for a utility patent application, the proposed pre-grant publication and issue fee due at the time of the patent issuing actually results in a decrease in the total fees for obtaining a patent (i.e., from $3,290 to $2,800 for a large entity). While its true that the governmental fees to obtain the patent in totality are decreasing, the assertion of a lower cost of entry is misleading because the USPTO has made applicants pay more at the start of the process, which may have the opposite effect of a lower cost of entry by causing some smaller businesses to choose not to file at all due to the increase in initial filing fees.
Moreover, this so called lower cost of entry does not take into consideration the fact that the costs for extensions of time, excess claims, notices of appeal, and Requests for Continued Examinations (RCEs) are also increased. For instance, the fees for an extension of time within the first month would increase 33 percent, claims in excess of 20 would increase 67 percent, independent claims in excess of three would increase 84%, a notice of appeal would increase 142 percent, and RCEs increase 83 percent. While extensions of times and excess claim charges can usually be avoided, the reality is that many applications do not proceed from filing to issuance without the need for the applicant to either file an RCE or appeal an examiner’s decision related to patentablity to obtain the scope of protection it is entitled to. As such, the decrease in cost the USPTO touts is likely not going to be realized for many applicants. Rather, the reality is that the USPTO is increasing such costs to discourage certain behaviors in an effort to reduce the back log of applications and expedite examination.
This is not the first time the USPTO has taken this route relative to extension of times, excess number of claims, and RCEs. Some may recall that a few years ago the USPTO tried to implement rules that had the same effect of decreasing the number of RCEs, dissuading those that wanted to file for claims over the minimum, and limiting the number of continuation applications allowed. While those rules ended up not going into effect, it is not surprising that some of those same concepts are now carried over in the current USPTO fee proposal.
The USPTO acknowledged as much by explaining that the increase in fees for extensions of time are to discourage applicants from taking more time, thereby improving application processing. The increase in fees for extra claims are to allow Examiners to examine a more succinct application faster. The increase in RCEs, Notice of Appeals, and Maintenance fees are to recoup costs and to help reduce the backlog of patent applications.
In its analysis of the fees, the USPTO does not explain how the fee proposals for the post issuance review procedures implemented under the Act achieve the USPTO’s overriding goals. After the patent is granted, the Act and existing law provides for the following review procedures: supplemental examination, ex parte reexamination, inter partes review, and post-grant review. The new review procedures were implemented with the intention of decreasing patent litigation.
Despite this intent, the fees for all the post-issuance reviews could potentially deter applicants from pursing any of these procedures. Under the new Act, inter partes review replaces inter partes reexamination and the fee is increased from $8,800 to $27,200 for 20 or fewer claims. The cost of an ex parte reexamination used to be $2,520, but under the new system the fee is increased to $17,760 (a 605 percent increase). The new post grant review for 20 or fewer claims is $35,800 and can be as much as $125,300 for up to 70 claims. The proposal does briefly mention that the high cost of supplemental examination ($27,000) was set to encourage applicants to provide all relevant information during the initial examination. However, other than that, the USPTO does not offer much discussion as to how these fees were factored into the costs for applicants or achieving the USPTO’s goals.
While the issue of whether the higher proposed fees accomplish the benefits outlined by the USPTO is subject to debate, it is clear that the fees will substantially increase if the USPTO follows through with its proposal. The USPTO plans for this new fee schedule to go into effect in February 2013. The USPTO is currently seeking feedback from the public on its fee proposal and has hearings scheduled for February 15 and February 23. We will provide further information and updates regarding the hearings on The Ice Loop and the Ice Miller Web site.
For those interested, the full table of proposed fees can be found at the following link:
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.