USPTO Fees 2011: Justifying the Fee Increase

It is clear that the USPTO needs funding to address its backlog of yet-to-be-examined patent applications and to revitalize its information technology infrastructure. An increase in funding is largely in the interest of the patent community. The primary downside is that most of the proposed increase will be paid by the patent community as well. Three forms of increased funding are currently on the table:

  1. Increase substantially all fees by 15%.
  2. Allow the USPTO to set its own fees.
  3. Allow the USPTO to retain and spend its collected fees even if they are over-budget

Fifteen Percent of What: Although a 15% increase in fees is significant. The current prosecution fees for a large entity total to $2,900. This includes Filing, Search, Examination, Publication, and Issue Fees. Many applicants pay additional fees for late responses, appeals, petitions and RCEs. The median fees paid for a large entity is probably closer to $4,000 and a 15% increase would be $600. For small-entities, the fees are reduced by 50%. Of course, the majority of the cost of patent prosecution is not found in USPTO fees, but rather in the cost of hiring patent attorneys & agents as well as the time spent by inventors and managers. For a large entity, the total cost of preparing an application and prosecuting the application through to issuance easily runs over $25,000. In that scenario, the $600 increase may be better seen as a 2.4% increase.

Trusting the USPTO: Some applicants may be worried that USPTO would rapidly increase fees if it were given the right to set its own fees. Perhaps the office would buy-into Tim Wilson’s $50,000 application fee proposal. I do not believe that fear is grounded in reality. Here, I point to three practical limits on the PTO’s power. First, as proposed, the fee increase would be limited to increases that allow the office to recoup its costs. Second, if the PTO raises a large excess amount in fees the extra revenue will almost certainly be taken by Congress. Knowing that, the PTO is unlikely to greatly increase fees. Finally, the current director David Kappos appears sympathetic to patent applicants and is unlikely to take actions that are truly adverse to that community as a whole.

Why not Cuts: The difficult case for the PTO is to explain why two-billion-dollars is not enough? (See tables below). I.e., should the needed money come from redirecting unhelpful spending rather than increasing revenue?

Redirection – An Office Full of Examiners: A particular thought that comes-to-mind is the potential that everyone on the patent-side who is qualified to be examining patent applications should be examining patent applications. This means that supervisors, technology center directors, quality-assurance specialists, legal advisors, international liaisons, patent attorneys, judges, petitions officers, and commissioners could all have examination dockets. Even if small, these folks are – for the most part – have a history of being productive examiners and would contribute to reducing the backlog. In addition, a refocus and reconnection on the core role of examination may also help the office both improve quality and its spirit.

The following two charts are taken from the USPTO FY2009 Annual Report:

Note: A note on my $25,000 prosecution budget above. That is my own anecdotal estimate. This includes (1) the time spent by in-house inventors and managers in writing-up the invention and selecting which inventions to patent along with patenting bonuses paid to the inventors; (2) attorney time in drafting and prosecuting the patent application; and (3) fees paid to the USPTO. Is this accurate?

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

83 thoughts on “USPTO Fees 2011: Justifying the Fee Increase

  1. rc cola …

    You are correct that that was the “official” way to do it. Most examiners didn’t bother because a lot of times it took months to actually happen, if ever. A lot easier to just photocopy the article & put it in the shoes of your own class. At least it got there.

    thanks,
    LL

  2. LL, it actually was a pink card that you would fill out and give the art unit secretary so a copy could be made and included in the shoes (subclass(es) noted on the card. This would cause the classification section to include that reference as a cross-classified document in the subclass.

    How’s that for old times!

  3. “Don’t be so malcomy…”

    LOL

    That sounds like a vile condition that involves copious quantities of green pus.

  4. Perhaps avoiding copyright infringement is one reason for not making IDS articles universally and easily available within the office. While the government can make (possibly losing) fair use arguments for the limited copying involved in reviewing an IDS for a single case, there’s no way that distributing or databasing an article for use by the entire office could be excused under fair use.

  5. fish bones,
    Unfortunately, no, they do not. Years ago an examiner could pull the references, or make a copy, & just drop them in the shoes. Today, about all that an examiner can do, AFAIK, is print it out & keep a personal copy for future reference. The reference would be cited on any issued patent, but the title would need to make it readily obvious it is worth looking at. And then an examiner could then call up the patent file on edan & look at the reference. Not real likely.

    So it is usually a loss for everyone else. Bad situation.

    thanks,
    LL

  6. I am not an examiner, have never been one and don’t play one on this blog.

    I have a question.

    When applicants send in and cite articles as part of an IDS, what does the PTO do with those articles? Does the PTO enter them into some type of data base so that they are available to all examiners to cite?

  7. The management is playing games as did the previous management. Their goal is to wait until the retirement. Sorry. Next generation. Now, it is your problem. Do you think even if Bill Gates type executive can solve the problem in 4 years ?

  8. The current model is not consistent with it’s funding on a per application basis nor is it transparent in the costs of reviewing that application compared to that which is charged.

    So, wait, the problem is that the PTO doesn’t charge exactly the same total amount from start to finish per application? Or that we don’t have enough information about how many applications are filed and examined every year and how much money that costs the PTO?

    What do you want, examiners to start billing applicants by the hour? Don’t even get me started on that as a business model.

  9. The current model is not consistent with it’s funding on a per application basis nor is it transparent in the costs of reviewing that application compared to that which is charged.

  10. INANE, I’m not saying it can’t be done but the benefits of operating on a non-consistent, non-transparent funded model are dubious at best and lead to a longer backlog in shortages and boom infrastructure during surpluses.

    To what “non-consistent, non-transparent funded model” are you referring?

    I honestly have no idea what I said that you could possibly be responding to with that statement.

  11. Sarah heres a pretty good post on why things are not good the way they are link to thomas.loc.gov

    INANE, I’m not saying it can’t be done but the benefits of operating on a non-consistent, non-transparent funded model are dubious at best and lead to a longer backlog in shortages and boom infrastructure during surpluses.

    In addition there are many other ways of accomplishing the objectives you laid out without forcing the USPTO to forcast and budget accordingly.
    One way would be simply moving maintenance fees out of USPTO’s domain and have Congress issue back that money in the form of tax credits for the now more expensive applications.

  12. DavidE,

    First off, thank you for ignoring the peanut gallery and having this conversation. I appreciate you not taking my “assailing” like a wimp and crying off to momma.

    Maybe you are just standing in the weeds and cannot see the thicket (meant in playful trading of euphemisms).

    Anon829’s point about the actual cost is not at issue. The reason why it is not at issue is because he is not making a new point. It is understood that there is some cost to the after allowance Office activities, but that the rate charged is not related to the direct cost. The rates never have been so tied. Somehow you think this is a startling revelation. It is not.

    Your clarification of policy is murky: “policy goal of maintenance fees is completely removed from the actual patent prosecution process. So again, we shouldn’t be using maintenance fee money to pay for patent examination because it makes the practical purpose of the fees one of revenue generation for the PTO.”

    Um, no. The policy goal is not so completely removed as you would have it. Patent prosecution does technically include the activities after grant. It is no secret that these after-grant activities are not represented by the charged rates. The policy of re-allocation of rates is likewise not an earth-shattering new policy. You act like this is something completely new to you. Where have you been? The fees are a reallocation of costs incurred earlier in the process. There is no way to correctly label these as “revenue generation” outside of the patent prosecution process. If that is a belief you hold, any “policy” you consider when holding this belief will be skewed.

    “Because this shift has evidently long since happened, it is a great idea to end it now by increasing the application/examination/issue fees to actually cover the costs to the USPTO of these services, or on the other hand, repackage maintenance fees as not a benefit to the public at large, but rather as a benefit to potential patent applications only.”

    Um, no – not only are you ignorant of the fact that an actual policy has been in place since “evidently long ago”, but you fail to see and understand the rationale for that policy is still in place. The reasons for that policy are tied to the (non-asterisked) Constitutional goal of PROMOTE. The law is written to have a wide open front gate. The re-allocation policy is in harmony with the law.

    So you see – Anon829 was standing in the field, not understanding that the “new” point of his was not new at all (and it is not overlooked in the least). Your flagging to the point only places you out in the field with Anon829.

    “…talking about subsidizing the process, not simply shifting fees to the back end.”

    Who is playing with semantics now?

    “Not every application goes to issue. Not every issued patent is maintained. As such, not every patent applicant pays the full cost of his application”

    Once again – you are acting like this is new knowledge. It is not. It is understood to be a condition of the policy of re-allocation that has “long since happened”. Do you really not know that this is an established policy?

    “policy goal of subsidizing patent prosecution outweighs the fact that it will come at the expense of validly earned (your term, NAL) patent term”

    You will have to explain what you mean by this. How does my term of “validly earned” come into a supposed tradeoff in policy between reallocation and a policy of … what exactly? What are you comparing the reallocation policy to? Maintenance fees in general? – Help me help you have a rational discussion.

    And we didn’t even get to the conversation of “thicket”. As you did not reply to my discussion of what a patent thicket actually is and how it is actually affected (or not affected) by maintenance fees, I am not sure if you either agree or disagree or even understand.

    You do make a valid point in your comment to IANAE “perverse incentive placed on the USPTO to somehow increase the maintenance fees paid. This is most easily done by increasing the allowance rate without regard to the patentability of applications”

    That is why I preach that ANY rubber stamping is wrong, and that either Reject-Reject-Reject or Allow-Allow-Allow should not be tolerated. I completely and enthusiastically agree with Examiner 9 on this point and would be interested in more details on his model (Kudos 9). Any and all applications should be judged on their own merits, not placed in some quasi-average widget mass produced examination process. I suspect that is also why the Office does not actually have responsibility for its fee setting and coffer control – there is a barrier to the direct perversity. And if you hadn’t noticed the historical allowance rate (affectionately known as the cliff dive in the era of reject-reject-reject), you would see that your concern has not been warranted (I will say that your concern is valid and needs to be watched).

  13. It can’t forecast it’s issuance fees.
    It can’t forecast how many of those maintenance fees will be paid.

    Sure it can.

    Plenty of private companies forecast far more nebulous quantities when they budget for the coming year.

    And budget accordingly ? Do you mean not give examiners more time they need to properly examine a case ? Not reclassify art units that haven’t been reclassified in years ? Not update existing It programs? Not Tackle the backlog by cutting overtime? Not hire examiners that they need to replace the lost ones?

    I mean some of those things. They should staff according to projected requirements, including hiring, attrition, and sensible approval of overtime. Reorganization and updating technology would cost money, so they’d have to be budgeted for as well. With fee-setting authority, they should be able to make the numbers add up.

    And yeah, if they find themselves overstaffed for the coming year, they should definitely give their examiners more time per count.

  14. It can’t forecast it’s issuance fees.
    It can’t forecast how many of those maintenance fees will be paid.
    And budget accordingly ? Do you mean not give examiners more time they need to properly examine a case ? Not reclassify art units that haven’t been reclassified in years ? Not update existing It programs? Not Tackle the backlog by cutting overtime? Not hire examiners that they need to replace the lost ones?

    Is this really your argument?

  15. throw more money at hiring examiners or getting more IT toys

    IANAE, follow the thread please – the only thrown money being discussed was….

    don’t be so “malcolmy”

  16. in order for the patent office to be adequately funded and not overfunded, the funding would have to be derived off a constant allowance rate.

    That’s not true at all. The PTO can forecast its revenue from maintenance fees every year as it does with its revenue from other sources, and budget accordingly.

    Has it ever been the case that the PTO tried to allow a higher proportion of cases to generate more maintenance fee revenue?

  17. I cannot agree with your position on maintenance fees, for in order for the patent office to be adequately funded and not overfunded, the funding would have to be derived off a constant allowance rate.
    Each application should be examined based on its merits and not based of a percentage of cases that need to be allowed to make funding.

    Your points 1 and 2 maybe noble goals ( a point I won’t argue) but they should not happen inside the patent office’s funding model. Instead maintance fee revenue could be diverted into the treasury and the government could issue tax credits depending on patents filed or some other discount. This would give consistency to the PTO’s funding model and allow the PTO to operate based on it’s costs.

  18. When usable revenue is generated by maintenance fees, there is a perverse incentive placed on the USPTO to somehow increase the maintenance fees paid.

    That’s unavoidable to some extent, but there’s also a fee for RCEs, and at the moment most of the complaints I see are of the reject-reject-reject variety. I don’t think maintenance fees (which are pretty far in the future, and focused on applications the PTO can’t easily identify) are a strong motivator of PTO examination policy, other than cutting through their backlog while all that patent-pending technology is still viable.

  19. About those fear-mongers going on about filings & the backlog drying up, a lot is art dependent, a lot is cyclical & a lot depends on how many examiners have been added in the particular art.

    When I started some 25 years ago my art had 3 examiners (2 of us brand new) and a 2 year backlog.

    We now have around a 3.25 year backlog and about 80 examiners.

    Over the years our class backlog has gone variously from 2 years down to under one (circa 1990) and up to almost 4 years. We’ve been around 3-3.5 years for at least 5 year despite adding around 25 examiners in that time frame.

    So the sky is not falling for everyone.

    thanks,

    LL

  20. IANAE, fair point that there need not be only one policy objective. However, you must concede that when there are multiple objectives behind a fee, the fee will never perfectly achieve any of the objectives. Also true that maybe if this issue were in a bubble, it would not be particularly important at the moment.

    However, it is NOT in a bubble. When usable revenue is generated by maintenance fees, there is a perverse incentive placed on the USPTO to somehow increase the maintenance fees paid. This is most easily done by increasing the allowance rate without regard to the patentability of applications (or more realistically, with specific regard to the types of patentability policies that can be nudged into more patent-applicant favorable positions not based upon new case law or legislation, but based upon new office objectives). The USPTO should not be encouraged to create substantive policy changes to balance the books.

  21. If this is really what you and IANAE advocate, then you really need to rethink what the policy goal of maintenance fees should be and argue that the policy goal of subsidizing patent prosecution outweighs the fact that it will come at the expense of validly earned (your term, NAL) patent term. If you do this, then we could have a rational discussion about what the maintenance fees should be and when they should be paid such that the fees would best serve this goal.

    Maintenance fees can have more than one policy objective, and can accomplish more than one goal.

    1) Maintenance fees should be costly enough that patentees have to at least consider whether they’re worth paying or whether they should let their patents lapse, but not so costly that they force valuable technology into the public domain early.

    2) Patent prosecution should be reasonably affordable. Shifting some of the cost to the people who get the most economic benefit from the system seems like a good way to improve access at the front end. One way or another, the total cost of the system has to be paid.

    I don’t know if maintenance fees do a perfect job of furthering those objectives, but I think they do a good enough job that the PTO has bigger fish to fry at the moment.

  22. NAL, I think you’re missing the forest for the thicket, so to speak. My original intention was to second the point originally made by Anon829, which is getting completely overlooked here.

    To remind you:

    the revenue associated with maintenance and issue is huge, but the cost to the PTO of issuing and “maintaining” a patent is essentially zero. Almost the entire cost is examination, which is incurred by the PTO regardless of whether the patent issues.

    I further wanted to clarify the policy goals of maintenance fees to point out that the policy goal of maintenance fees is completely removed from the actual patent prosecution process. So again, we shouldn’t be using maintenance fee money to pay for patent examination because it makes the practical purpose of the fees one of revenue generation for the PTO. Because this shift has evidently long since happened, it is a great idea to end it now by increasing the application/examination/issue fees to actually cover the costs to the USPTO of these services, or on the other hand, repackage maintenance fees as not a benefit to the public at large, but rather as a benefit to potential patent applications only.

    I think the use of maintenance fees as currently used in the policy of shifting cost to the aft end to open wide the front doors is a valid (and worthwhile) policy. My view on this is more in line with the view you ascribe to IANAE.

    Ok, so again, I see nothing wrong with the underlying concept of subsidizing the patent prosecution process, but we have to acknowledge that you are talking about subsidizing the process, not simply shifting fees to the back end. Not every application goes to issue. Not every issued patent is maintained. As such, not every patent applicant pays the full cost of his application. So again, if the idea is to make it cheaper to apply for a patent, then we have to talk in terms of subsidy.

    If this is really what you and IANAE advocate, then you really need to rethink what the policy goal of maintenance fees should be and argue that the policy goal of subsidizing patent prosecution outweighs the fact that it will come at the expense of validly earned (your term, NAL) patent term. If you do this, then we could have a rational discussion about what the maintenance fees should be and when they should be paid such that the fees would best serve this goal.

  23. I don’t think the call was to “fix it now with no money.”

    “I for one do not want to throw more money without first (etc.)”

  24. STRAWMAN ALERT

    “…costs no money and fixes the PTO to your satisfaction?”

    I don’t think the call was to “fix it now with no money.”

    I don’t think a satisfaction level was indicated, other than actually use the technology at hand (even if you can’t find the rotate image key, it’s easy enough to turn a piece of paper around.

  25. “People are starting to think it should stop doing that”

    Mooney, who are these “people?” You and your twenty sock puppets?

  26. I for one do not want to throw more money without first a radical overhaul of what is going on over there at the office

    What is your proposal for a “radical overhaul” that costs no money and fixes the PTO to your satisfaction?

    the backlog can wait

    It has been. People are starting to think it should stop doing that.

  27. Un-fn-incredible

    link to m.industry.bnet.com

    …and they want more money for more fancy IT?

    I for one do not want to throw more money without first a radical overhaul of what is going on over there at the office

    the backlog can wait

    lets get it right – right now

  28. “wannabe troll”

    Unlike Mooney who is an actual patent blog troll. That is his job – it’s all he ever does.

  29. Mooney is very busy posting to himself again… it must be exhausting keeping track of all those names.

    Your mother still h8tes you Mooney.

  30. The royalties of domestic patent holders, of course, are already taxed …

    Domestic holders, not holders of domestic patents.

    Besides, that’s just part of the general scheme of taxing all income, and the PTO doesn’t see any of that money. It’s still to the advantage of those patent holders to engage the system, and it’s still good for everybody if they pay for a little more of it.

    All Patents in that catagory should be put on a PTO “on sale sheet”

    Are there not already enough ways to sell things?

    And the PTO should get fees for the advertising paid mostly by the buyer to the USPTO. Therefore not taking all the Patentees profits from the sale.

    If the buyer is only willing to pay a certain amount, and the PTO takes a cut, that cut will come out of the seller’s pocket no matter who formally pays it. Whether it comes off his gross or his net doesn’t change anything.

    Unless of course the buyer contacts the applicant directly, since his name is right on the front cover, and nobody pays the PTO at all for providing this extra service at its own expense.

  31. Lets just look at this. A Patentee has an idea. They don’t have a buyer, an assignee, or money to start it up themselves. All Patents in that catagory should be put on a PTO “on sale sheet”, if it is wanted by the Patentee. And those Patents can be sold to the bidder that gets the Patentees okay. Selling and buying at their own risk. And the PTO should get fees for the advertising paid mostly by the buyer to the USPTO. Therefore not taking all the Patentees profits from the sale. And also the courts may be free of many Submarine Patent Cases that way.

  32. “doing like the rest of us”

    the case of the multiplying sockpuppets brought to you by the great Flaubert-Columbo.

    DavidE,

    “why you are arguing this semantic”

    It does edge on the semantic side in a certain sense. Your use, however, leads to the thinking that the payments buy something extra – the payments simply do not.

    I am not certain what your restated ‘thicket’ stance means, particularly “that which has been impliedly disclaimed by a patent-holder.” – How does this relate to “thicket”? Your restated view is very much in line with what I said. Later in your post you say “but to remove unused patents from the marketplace.” – this has nothing to do with “thicket” – “thickets” are used in at least the sense that the holders want them active to keep competition out – such holders will pay maintenance fees if their rationale makes economic sense to them, and there is nothing “impliedly disclaimed”. There is nothing in a patent that says you must actually use the invention – it appears that you are laboring under misunderstandings of both patents and maintenance fees. Further, the minute that keep-out rationale does not hold, the usefulness of the thicket is gone (and is the case typically with technology or marketplace evolution and not patent policy). The economic sense is NOT driven by the maintenance fee (the fee could not be high enough to do that); but rather, the economic sense has to do with the level of competition and total sales.

    “Whether the patent office can unilaterally impose maintenance fees is immaterial”

    While this may be a policy discussion, it is important to realize where the Office has its limits, thus this is NOT an immaterial point (unless you are new to the practice and missed the whole illegal power grab of the continuation rules saga). “If a sensibly implementation of policy objectives would require Congressional action, so be it.” – Agreed – but this additional statement does need to be said.

    “I see you are, in fact, against maintenance fees”

    This would be an incorrect position. I think the use of maintenance fees as currently used in the policy of shifting cost to the aft end to open wide the front doors is a valid (and worthwhile) policy. My view on this is more in line with the view you ascribe to IANAE.

    Malcolm,
    “maybe you are referring to the value of garbagepatents sold at auction to wannabe trolls?”
    – why do you persist in your false positions – I have provided the link to Peter Zura’s story twice now.
    link to 271patent.blogspot.com

    “Excellent news!” – celebrating that the patient is dieing.

  33. Malcolm Mooney: please ask Professor Crouch to remove your inappropriate and offensive comment. Maybe you think older people are senile, but we do not want to see it written here.

  34. “backlog over the course of the last two years has dropped from over 4 years to less than 18 months. He will soon be examining cases filed in 2009.”

    So the world was ending before because the PTO’s backlog was too huge. Now the world is ending because the backlog is being reduced. The world seems to be in perpetual peril around here.

    Yet we are all still employed.

  35. “Patent filings are dropping and will continue to decline. I spoke with an examiner buddy of mine last week whose backlog over the course of the last two years has dropped from over 4 years to less than 18 months. He will soon be examining cases filed in 2009. All the examiners I speak with (or at least those with half a clue) are extremely nervous about their situation. Layoffs are coming.”

    Your friend probably merely works in an art where inventions aren’t really all that forthcoming any longer. Looking at my docket the oldest new cases are around 06/2008. That’s approximately the delay we had when I started.

    “Between KSR, Bilski, eBay, and Medimmune it’s pretty hard to justify spending scarce resources on the patent process these days.”

    Not if you invent something non-obvious and valuable :) Especially if you make it too. Try it sometime, I bet you won’t be so upset anymore.

  36. “How is that getting “less”?”

    He means that it’s no longer going to be worth it to “actual” inventors to get patents on urination queueing methods now that they can’t permanently enjoin anyone with a bladder. This is a big problem for “actual” industry, Mooney. Stop being so insensitive.

  37. SenileTimer : I spoke with an examiner buddy of mine last week whose backlog over the course of the last two years has dropped from over 4 years to less than 18 months. He will soon be examining cases filed in 2009.

    Excellent news!

    The value of patents has been greatly reduced in the past five years.

    The value of a valid well-drafted and well-prosecuted patent seems just as strong as it ever was, if not stronger. Maybe you are referring to the value of garbagepatents sold at auction to wannabe trolls?

    Only a bureaucrat could decide that it is a good idea to charge more for less

    Except according to your own “data”, applications will be Examined faster and given more focused attention than they ever were before. How is that getting “less”?

  38. DavidE- don’t bother trying to discuss anything with Noise. I advise doing like the rest of us and skipping her comments unless you like torturing yourself.

  39. I’ve posted comments to this effect before, but I’ll post them again. Kappos’ main job is going to be figuring out how to cope with decline, not growth, at the USPTO.

    Patent filings are dropping and will continue to decline. I spoke with an examiner buddy of mine last week whose backlog over the course of the last two years has dropped from over 4 years to less than 18 months. He will soon be examining cases filed in 2009. All the examiners I speak with (or at least those with half a clue) are extremely nervous about their situation. Layoffs are coming.

    Patent holders are abandoning applications and issued patents at unprecedented rates. The well-publicized drop in maintenance fee revenue is going to accelerate in 2010-2011. This is the budgetary perfect storm for the PTO.

    Marching orders to allow cases have been issued at the PTO, but I think it is too late. The USPTO and the courts have spent the past 6 years pushing the U.S. patent system into irrelevance. Between KSR, Bilski, eBay, and Medimmune it’s pretty hard to justify spending scarce resources on the patent process these days.

    I foresee patent filings dropping back down below 400k, and possibly as low as 300k per year. Kappos will command a vastly diminished patent office if he is around until 2016.

    The value of patents has been greatly reduced in the past five years. Only a bureaucrat could decide that it is a good idea to charge more for less in the middle of the worst economic environment since the 1930s. Mindless.

  40. it makes perfect sense to me that the people who get the most value from the system should give some of it back.

    The royalties of domestic patent holders, of course, are already taxed …

  41. is paying for it via maintenance fees the proper avenue? Continuing on my point from the previous paragraph, I’d argue that it is not, because the policy goal of maintenance fees, as noted above, is NOT to generate income, but to remove unused patents from the marketplace.

    Just because there’s a policy goal to cull the population of issued patents (and I agree that it is one), that doesn’t mean the fees can’t also benefit the patent system in some other way.

    I believe the patent office has a general policy goal to encourage inventors to disclose their inventions by filing applications. One way to achieve that goal is to limit the aggregate fees payable prior to publication.

    The corollary to removing the unused patents is maintaining the valuable ones. The value threshold depends on the amount of the fees, of course. If we presume that patentees should be the ones who pay for the patent system, and that patentees should have access to the patent system so that it does its job of promoting the useful arts, it makes perfect sense to me that the people who get the most value from the system should give some of it back. It’s like an alumni fund for the PTO.

  42. DavidE – you are mistaken as the maintenance fees do not EXTEND the patent term – nonpayment results in the loss of the EARNED patent term.

    I’m unsure why you are arguing this semantic issue when substantively we clearly both agree. If your point is to say that maintenance fees are actually improper because they shorten an earned patent term, it may be worth setting forth an argument to that effect.

    The “thicket-busting” policy you speak of is a nice construct, but is a tad off in an anti-patent manner. Increased fees later in a patent’s life are not meant for busting thickets. If a thicket does indeed work, a higher fee will not serve as a deterrent. Higher maintenance fees more properly serve as a clearing house for patents that have not become financially viable and hasten the public’s ownership for those items the owners of which decide to let lapse.

    Again, a semantic issue. I refer to “the patent thicket” as meaning the set of issued patents, whereas it appears you refer to “a patent thicket” as a particular company’s patents surrounding a particular technology. To be more clear about my characterization of the policy goal, however, I think that the purpose of maintenance fees is to officially reclaim for the public that which has been impliedly disclaimed by a patent-holder. Monopolies are inherently bad things, but they ARE part of the quid-pro-quo of the patent system. When patent-holders disclaim rights, it makes some logical sense to free the technology to others.

    You are also mistaken to think that the Office can charge for something not related to its work – they cannot by law. Even if they could – such an obvious tax on America’s inventors is precisely the wrong policy to have.

    Whether the patent office can unilaterally impose maintenance fees is immaterial; this is a pure policy discussion in an area where the federal government clearly can act. If a sensibly implementation of policy objectives would require Congressional action, so be it.

    I see you are, in fact, against maintenance fees, though. I am not arguing that point and don’t feel particularly strongly about it. My argument is to say that the policy goals of these fees should be kept in mind when we determine how to adjust the fees going forward.

    IANAE, I think you assume subsidizing the patent process is a good thing for some classes of inventors. Maybe so, but even if you are right, is paying for it via maintenance fees the proper avenue? Continuing on my point from the previous paragraph, I’d argue that it is not, because the policy goal of maintenance fees, as noted above, is NOT to generate income, but to remove unused patents from the marketplace. If we calculate maintenance fees such that they achieve an amount of subsidizing revenue that we see fit, then we are not calculating maintenance fees such that they appropriately serve their ACTUAL policy goals.

  43. that is what these comment boards are for!

    You’re right, albeit unintentionally. The comments are for highlighting and correcting falsehoods promulgated by commenters. We are not in a “statistically proven reject-reject-reject era,” unless of course you’d like to define the term “reject-reject-reject era” in some self-serving (i.e., objectively misleading) fashion.

  44. “Patent teabaggers and their zombie myths. So pathetic.”

    AND that is what these comment boards are for!

    /off sarcasm

  45. *****The policy goal of maintenance fees is to reduce the patent thicket; however, the reality is that this money is used to fund the PTO.******

    Maintenance fees are not directly used to fund the PTO. When the PTO was collecting more money in fees than its budget, the PTO budget was not increased.

    It’s like this, in good times, the PTO gets as much money as it needs and no more. However, in bad times, the PTO gets only as much money as it collects, and no more. It doesn’t have to be that way. Congress could be fair and give the PTO the money it needs in view of the surplus fees that Congress siphoned off for other purposes, and that it will be able to siphon again when things turn around. But our representatives aren’t that wise and beneficent.

  46. The policy goal of maintenance fees is to reduce the patent thicket; however, the reality is that this money is used to fund the PTO.

    That’s a good thing. The people who get the really valuable patents pay maintenance fees to keep their inventions out of the public domain, and subsidize the system so that others have a lower barrier to entry. Good news for the people complaining about the fee hike.

    Hiring more examiners might also score the PTO more maintenance fee payments, as the payment deadlines (measured from issue) would be more likely to come due during the life cycle of the technology.

  47. *******Let’s assume that the fees are going to be raised 15%.

    Before they are raised Director Kappos should publish a report explaining how the fees are going to be spent and specifically how this will improve patent examination (e.g., increasing quality and reducing pendency.)******

    What’s the point of that? It would be a fiction. If I understand Dennis’s point in the article, the fees will only be raised to whatever extent the PTO’s fees are falling short of coverign the budget it received. The PTO is going to have the budgeted funds regardless. But raising the fees to cover a shortfall on projections will help avoid a budget cut the following year, so long as Congress continues to use the projected collected fees as a cieling for the budget it will grant.

  48. “Before they are raised Director Kappos should publish a report explaining how the fees are going to be spent and specifically how this will improve patent examination (e.g., increasing quality and reducing pendency.)”

    Puh-leeeez – – did your HMO give you a detailed explanation of how your increased insurance premiums would be spent? Did your city give you a detailed explanation of how your increased property taxes would be spent?, etc., etc., etc.

  49. Office wonks missed the point of the question of “what do I get for my maintenance fee?”
    IANAE was close – there are publication costs to offset and the fee is probably tied to those costs.

    However, the discussions of Quid pro Quo are simply daft. The point of the matter is that publication is taken and that the PUBLIC is the entity that benefits from the deal – not the applicant. The applicant even has to pay for the public and government’s benefit (I’m sure we all know what the answer would be if the fee and niceties were provided as optional to the applicant – those applicants who would derive benefit would gladly pay – maybe both of them).

    Even after having to pay for the public’s benefit, the applicant must wait months even years before his application is even picked up for examination. With the statistically proven reject-reject-reject era evidencing that applicants are not given a fair examination, many do not get the Quo of the deal – ever. All those published applications (deserving to be patents) caught up in the reject-reject-reject rubberstamping amounts to stealing from the inventors. Their work is published – the government and the public get the quid, but no quo is handed over. The “you get it later” line is for suckers and those who simply don’t have the option. Saying “pay more” when the already agreed price has been paid is tantamount to extortion.

    And let’s be clear – I do NOT believe that aiming for a certain percentage is the right thing to do. Each application deserves its own full and complete examination – I deplore rubber stamping of the accept-accept-accept kind just as mush as the reject-reject-reject kind. That being said – the famous cliff in allowance rate coinciding with the directive to reject-reject-reject unequivocally means that valid patents were unjustly denied. I am also NOT saying that all granted patents are gems – I recognize that both Type 1 and Type 2 errors are made by poor examination. Thus, the key is NOT more of the same – but rather, FIX the examination process and THEN get more of the fixed process.

    Now for some, non-publication requests ARE a viable option – but this choice is severely limited if the desire is to seek global protection. There is always a frank pro/con tradeoff discussion with Clients regarding publication options, and many of my small clients do choose the nonpublication route.

    Bad Joke Ahead, there is a second factor that is also policy driven that drives against the front end loading the fee structure. In a moment of rationality, the decision to promote filing was decided to be a good thing. More filing does mean more promotion. Someone actually realized that having more (rightfully earned) patents is a good thing . This means that the public is endowed with more knowledge, and after the limited time, that knowledge is completely free to everyone. Even before that time, that knowledge is “laid open” and the public is encouraged to innovate around that which they decide not to license. By backloading the system and throwing wide open the welcome gates, the public benefits .from the increased use of the patent system. Let’s be careful that we do not kill the patient in an attempt to cure the cold.

    DavidE – you are mistaken as the maintenance fees do not EXTEND the patent term – nonpayment results in the loss of the EARNED patent term. The “thicket-busting” policy you speak of is a nice construct, but is a tad off in an anti-patent manner. Increased fees later in a patent’s life are not meant for busting thickets. If a thicket does indeed work, a higher fee will not serve as a deterrent. Higher maintenance fees more properly serve as a clearing house for patents that have not become financially viable and hasten the public’s ownership for those items the owners of which decide to let lapse. You are also mistaken to think that the Office can charge for something not related to its work – they cannot by law. Even if they could – such an obvious tax on America’s inventors is precisely the wrong policy to have.

  50. If the just rolled the issuance fee into the intial search and filing fee they would make 17.3% more money (at a 50% allowance rate) and it wouldn’t cost allowed applications a dime more and could forgo the 15% hike in fees.

  51. Anon829, you’re missing the point of the maintenance fees. The point is to force things into the public domain if the inventor deems them to not be of significant value to himself.

    If you do it all up front, then there’s no reason to have a maintenance fee at all. Just eliminate the maintenance fee in the first place. But either way, it goes against the policy reason behind its existance.

    Actually, Anon829’s point was a great one. The policy goal of maintenance fees is to reduce the patent thicket; however, the reality is that this money is used to fund the PTO. Unless there is a good argument that the US government should subsidize patent prosecution, then really there should be a dramatic fee hike for the examination process, such that the entire process from application through issue is covered by the up-front fees. Thereafter, maintenance fees could (should?) still exist, but the proceeds should just be payable to the US Treasury, in recognition of the fact that the patent-holder is compensating the public (and NOT the USPTO) for extending his/her monopoly.

  52. “Exactly what is an “unexamined patent?”

    see generally patents issued before KSR

    (mooney impersonation off)

  53. Anon829, you’re missing the point of the maintenance fees. The point is to force things into the public domain if the inventor deems them to not be of significant value to himself.

    If you do it all up front, then there’s no reason to have a maintenance fee at all. Just eliminate the maintenance fee in the first place. But either way, it goes against the policy reason behind its existance.

  54. Quote: “[T]he USPTO needs funding to address its backlog of yet-to-be-examined patents….”

    Exactly what is an “unexamined patent?”

  55. What they should really do is front-load the fees – i.e., the entire $3000 fee for filing, issue, and maintenance should just be rolled into one large filing fee. Not that I needed to look at the pie charts to know this, but the revenue associated with maintenance and issue is huge, but the cost to the PTO of issuing and “maintaining” a patent is essentially zero. Almost the entire cost is examination, which is incurred by the PTO regardless of whether the patent issues.

    One might say that the patentee should pay for the extra value received when the patent issues and is kept enforceable at years 4, 8, and 12. But a better way to look at it is: Why should the applicant get a price break just because his application was so deficient that not one single claim was allowable? Non-allowable applications cost just as much to examine as allowable ones, and if an applicant believes in his application, he should be willing to pay the price up front.

  56. I wonder how much of the increase in personnel costs over the years can be attributed to increase in health care costs?

  57. Let’s assume that the fees are going to be raised 15%.

    Before they are raised Director Kappos should publish a report explaining how the fees are going to be spent and specifically how this will improve patent examination (e.g., increasing quality and reducing pendency.)

  58. “I still have a beef about the publication fee. What does a patentee get out of that fee?”

    Well, presumably the Applicant can still request non-publication. Also, there is the all but fictional quid pro quo of “provisional rights.”

  59. It’s accurate assuming that there is no appeal and that you get an allowance within 4 or 5 office actions. Add 10 for an appeal, becuase that will only happen after the client pushes you to 6 or more office actions for large entities.

  60. “I still have a beef about the publication fee. What does a patentee get out of that fee?”

    Would it make you feel better if they called it “Arbitrary Cost-Recovery Fee”?

  61. “Is this accurate?”

    Yes, it is, especially given the number of appeals that have to be filed these days, even if never actually heard. You also noted that the $25,000 estimate was for large entities. CAPat’s rant was off target on this one.

  62. A note on my $25,000 prosecution budget above. That is my own anecdotal estimate. This includes (1) the time spent by in-house inventors and managers in writing-up the invention and selecting which inventions to patent along with patenting bonuses paid to the inventors; (2) attorney time in drafting and prosecuting the patent application; and (3) fees paid to the USPTO. Is this accurate?

  63. “I still have a beef about the publication fee. What does a patentee get out of that fee?”

    And usually the PTO does not let the Applicant know the publication date, until AFTER the publication date.

  64. So the authority is limited such that the fee increase can only be implemented if the USPTO is projected to be failing to collect enough fees to cover its budget + $100 million

    My understanding was that they could pocket up to $100M in surplus. They presumably wouldn’t set fees to generate a larger surplus because they wouldn’t get to keep the money, and Congress could take fee-setting power back if they’re seen to abuse it.

  65. CPat: The easiest way to increase fee collections is to adopt more realistic policies toward issuing patents. Encourage patent examiners to remember that they are the PATENT office, not the REJECTION office.

    Hilarious – “let’s be realistic” followed by a propagandistic smear. I just got a bunch of nice broad claims allowed after overcoming an obviousness rejection. Maybe you need to brush up on your prosecution skills.

    Increasing the percentage of issued patents is not the answer to the PTO’s hiring and budget shortfalls. In fact, it’s almost certainly the worst solution out there. That’s how we got to this place.

    In the old days, it was recognized that the patent system was a bargain between the inventor and the public, and the quid pro quo to the public was publication of the invention, in exchange for a limited monopoly for the inventor.

    I’m sure you know this (you just choose to pretend not to) but patents were examined “even in the old days.” I’m sure Einstein rejected quite a few.

  66. I still have a beef about the publication fee. What does a patentee get out of that fee?

    You’ve seen a US published application, right? It’s all pretty, retyped and typeset into two columns with handy paragraph numbers and such. All the important bibliographical information is on the cover, and the whole lot is text-searchable. That costs money to do.

    Ever seen a Canadian published application? They just image whatever pages they received in the mail, and stick it all in a PDF. That’s why US applications are called “published” and Canadian applications are called “laid open”.

    In exchange for the publication fee, the application is published in a standard, searchable format that really does put the technology in the hands of the public. That’s the quid. If you want the quo at the same time, the PTO will have to hire more examiners.

    The easiest way to increase fee collections is to adopt more realistic policies toward issuing patents.

    I agree that more quality review is always a good thing – until it becomes too slow or expensive. However, it doesn’t really make sense to have policies about issuing patents. If the examiner can think of a rejection, it’s his job to make that rejection. The focus has to be on making the rejections sensible and well-reasoned, including reasons for combining multiple references. When the examiner has run out of sensible rejections, you get your patent.

  67. Or is it this:

    **First, as proposed, the fee increase would be limited to increases that allow the office to recoup its costs. Second, if the PTO raises a large excess amount in fees the extra revenue will almost certainly be taken by Congress.**

    So the authority is limited such that the fee increase can only be implemented if the USPTO is projected to be failing to collect enough fees to cover its budget + $100 million? Am I reading that right? How is that shortfall to be determined?

  68. A 15% fee increase, in this economy, will certainly reduce filings over what they would have been. So, they will not receive the revenue they are forecasting absent a sharply improved economy. The idea of a $25,000 patent application might be true for big companies in complex disciplines, but most patentees don’t pay anywhere near that — it’s probably more like $15,000. Attorneys I know are discounting substantially over what they billed a couple of years ago, and they are working a lot harder to collect. And small companies and individual inventors indeed care about the fees.

    The easiest way to increase fee collections is to adopt more realistic policies toward issuing patents. Encourage patent examiners to remember that they are the PATENT office, not the REJECTION office. Help them understand that KSR doesn’t give them license to string five barely related patents together and reject, reject, reject. Make sure QR doesn’t just review allowances, but also final rejections. The increased issue and maintenance fees would swiftly resolve this “budget” crisis.

    And, I still have a beef about the publication fee. What does a patentee get out of that fee? In the old days, it was recognized that the patent system was a bargain between the inventor and the public, and the quid pro quo to the public was publication of the invention, in exchange for a limited monopoly for the inventor. Now, the inventor has to publish before he receives his consideration, which he may never get, and he has to pay $300 for the privilege!

    OK, rant over.

  69. Raising fees further would only make still more money available to Congress for “pork projects,” or “bailout money,” whatever.

    Those are all great reasons not to let Congress set the fees. The PTO would have no big incentive to charge more in fees than it has budgeted to spend, under the current plan.

    Engaging the services of the PTO should cost the applicant in fees what it costs the PTO to provide the services. After all, the applicant is investing in his own technology, and expects (hopes?) to turn a profit on the deal.

  70. I see. So instead of giving the USPTO the money it asked for, they raised fees and gave the USPTO authority to take the money it asked for from the fees.

    But that still leaves the question of why the USPTO needs authority to raise fees even further. It’s not as if the fees that it collects are not going to far exceed the $100 million that it is going to take. It can take that $100 million from the front end, if I understand “full access” correctly. Raising fees further would only make still more money available to Congress for “pork projects,” or “bailout money,” whatever.

  71. “For a large entity, the total cost of preparing an application and prosecuting the application through to issuance easily runs over $25,000. In that scenario, the $600 increase may be better seen as a 2.4% increase.”

    These large costs (beyond preparing an application – like to see an examiner do that well – he he) is mostly because of very poor actions. Wasted first actions! Forced RCEs! Non-compacted prosecution. Especially under D-u-d-a-s’ regime.

  72. how is the increase in fees at all justified by the USPTO’s need for a larger budget?

    From two articles ago: “USPTO would also be given full access to its fee collections up-to $100 million over-budget.”

    The story is that the PTO needs all its fees and more to get through the backlog and keep pace with new filings. It’s certainly tough to dispute that they need more people, and people are by far their biggest expense.

  73. I was under the impression that the law was changed a whuile back so that the PTO does not keep any of the fees it collects, but that it goes straight out of the PTO to the general budget. I have been led to believe that the PTO collects much more money in fees than its own budget, and that its budget is in no way related to the amount of fees that it collects. Is any of that incorrect?

    If the above is not incorrct, then how is the increase in fees at all justified by the USPTO’s need for a larger budget? And how would fee setting authority help the USPTO, except to discourage patent filings in hopes of needing less personnel?

  74. 1. The Patent Office is a monopoly.

    2. The Patent Office has a documented history of being ignorant of, and refusing to learn, The Law of Unintended Consequences.

    The Patent Office cannot be trusted to set its own fees.

    Or its own Rules.

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