USPTO Begins Process of Setting Fees and Shifting Applicant Behavior

My report to Congress last week included a statement regarding the greatest change at the USPTO since the September 16, 2011: Funding. After raising fees and receiving permission to spend fees collected, the USPTO began to quickly implement a plan to address the backlog of patent applications awaiting examination and to address particular bottlenecks in the system such as the 25,000+ queue awaiting action from the Board of Patent Appeals. Under the AIA, the USPTO has authority to set fees within certain limits. In a recent document, the Office has published a proposed patent fee schedule and will hold a hearing at the USPTO’s campus on February 15 and in Silicon Valley on February 24. (Note, the USPTO has also published a set of proposed rules to implement post-grant reforms. I will discuss those in a separate post).

The bottom line for fees is that that they are on the rise.

Proposals include:

  • Filing+Search+Examination Fee rising to $1,840 from $1,250.
  • Excess Independent Claims rising to $460 each (after 3) from $210.
  • Excess Total Claims rising to $100 each (after 20) from $60.
  • Request for Continued Examination rising to $1,700 from $930.
  • Notice of Appeal rising from $930 to $1,700 but issue fee is waived if Examiner withdraws rejection. Nothing more will be due at the appeal brief stage. However, once the examiner’s answer is received, applicant will need to pay $2,500 to move forward with the appeal.
  • Three-Stage Maintenance Fees from $8,710 to $12,800.

The one fee being reduced is for publication+issue – dropping from $2,040 to $960.

For a certain class of patent applicants, the new fee structure will not be a problem – so called “micro entities” will receive a 75% discount. The general definition of micro entities limits the scope of that class to individuals and very small companies with little patenting experience. The biggest winners in the AIA process have been universities. In the fee scenario, universities successfully lobbied to be classified as micro entities. (UC’s budget for 2011 was $22 billion…).

The idea with the fee increase is to provide the USPTO with more funding so that the office can do its job and address the various bottlenecks and backlogs in the system. However, the structure of the rules are also intended to shift patent applicant behavior. [More to come]

http://www.uspto.gov/aia_implementation/index.jsp

91 thoughts on “USPTO Begins Process of Setting Fees and Shifting Applicant Behavior

  1. What welcome news that the patent office has reinstated the application discount for micro entities. At least that is one measure that will, hopefully, help prevent the AIA from favoring major corporate entities at the expense of independent inventors and university researchers.

  2. I believe the substance of what you say is right, but I don’t think it addresses the question, which is: why did Kappos leave the 3rd MF out of the analysis. He is, after all, comparing what a patent cost before and after the proposed fee changes.

    Before and after, ya’ still gotta’ pay the 3rd MF. That’s part of the cost.

    For us small entity patent lawyers, this structure looks pretty good. By loading the back end, it doesn’t scare the trophy patents away. That’s where our bread and butter is, although it would likely be malpractice not to fully advise them what the patent will cost, full up.

  3. So Rich the social security says if they stole your Money by claiming I was dead you are entitled to it. I will pass it on when I go. I’ll tell them where you live so they can punch it in and then get in touch with you. This is going to be a blast from the hidden past.

  4. Nope. Provisionals don’t count as a micro-ninny strike.

    Here’s 123(a)(2)

    (a) IN GENERAL.—For purposes of this title, the term ‘micro entity’ means an applicant who makes a certification that the applicant—

    (2) has not been named as an inventor on more than 4 previously filed patent applications, other than applications filed in another country, provisional applications under section 111(b), or international applications filed under the treaty defined in section 351(a) for which the basic national fee under section 41(a) was not paid;

  5. They all arbitrarily delete the 3rd maintenance fee. Why?

    Because you only pay the 3rd fee after you’ve had 12 years to turn a profit on your patent. Either your patent is highly profitable and you can easily afford the fee, or it’s not and you don’t have to pay. It has nothing to do with whether poor people will be able to afford a patent.

  6. Thanks, EG.

    Is anybody seeing the shell-game I’m seeing?

    Look at those bar graphs 13-15 showing the before and after costs. They all arbitrarily delete the 3rd maintenance fee. Why? Because it boosts the total cost of the current basic scenario by 40% and Kappos doesn’t want you to see that.

    If you compare the outcome graphs 21 and 28, you see that at 2015 the proposed fees reduce the backlog only 17% more than the current fees. However, after that under the current fees the backlog starts to go back up but under proposed fees it continues to drop. That is because the huge 3rd maintenance fees are kicking in at 2015 with the proposed fees.

    OK, so why not keep the current fees with respect to everything but the 3rd maintenance and increase the 3rd maintenance as propsed? That way you still drive down the backlog to 2015 and keep driving it down after that but w/out the proposed disincentive to small guys to protect their stuff.

  7. So obviously no need to even worry about the dead man he has committed a Crime that should have removed him again that I sent to OED. So then because I don’t date the Instrument (POWER) correctly when revoking … they are filing it as a new one? But last week I sent corrected Revocations to fix their dastardly circle.
    and as for the riser. Sadly he is already out. And the fact that they even let him use the Circle to reapply himself is not going to cut it. He is not named on that page as an Atty. His was a two page Power, and my mistake was a good thing, even though he acted as an Agent.. so the one page that he used to regain Power Christ like child is INVALID.. NO NAME NO GAME… SO SORRY Christ like child.

  8. “Ironically, these are active inventors who have already paid into the PTO thousands of dollars at full or small inventor rates, while those who have never paid the PTO one dollar get the micro-ninny discount.”

    This is akin to any for-profit private venture offering introductory rates to new customers, that are unavailable to existing customers, and is entirely consistent with the PTO’s characterization as a business enterprise, rather than as a public service.

    For all but the tiniest minority of one-off independent inventors, I agree with Simple that the status is effectively illusionary for essentially all but universities.

  9. Ab initio is pretty limiting.

    Also raises a very pertinent question to be asked at the start of the relationship with a new client with no prior experience (per se) with the patent system:

    Did the client’s employer name the client in any patent applications (even those abandoned – and I imagine that provisional applications will count towards that talley as well)?

  10. “If you have three applications and two of them spawn divisionals, is your fee structure changed immediately?”

    Depends on what you mean by “spawn.”

    Having filed three applications, you have used up three of your four strikes. If two of the applications are under restriction requirements, only one of the subsequent divisionals would get the benefit of the micro-ninny discount. Four strikes total — includes CIP, continuation, divisional. Doesn’t include RCE.

    There is no limit in the statute as to how far back the count begins. If your micro-client filed 4 applications between 1970-1975, sol. If your micro-client was a named inventor on 4 applications filed by his employer 30 years ago, sol.

    Obviously, the goal was to prohibit an inventor from taking advantage of the micro-ninny discount more than four times. But the way the statute is worded it counts any US application at any time in history as a strike, thereby cutting tens of thousands of inventors out of the program ab initio w/ no benefit whatsoever.

    Ironically, these are active inventors who have already paid into the PTO thousands of dollars at full or small inventor rates, while those who have never paid the PTO one dollar get the micro-ninny discount.

    This 4-strikes provision is Exhibit “A” in making the case that Leahy and his minions are seriously brain-ded. To the extent that Kappos and his people reviewed this, ditto. In fact, the whole micro-ninny program is about as close to statutory fraud as one can get.

  11. Oops, that was only the score from the last quarter.

    Add that to the score of the first quarter of
    Wham: no backlog = 1
    Bam: user fees repurposed = 1
    Thank you Maam: office quacks silenced = 1

    Current Total Score::
    Registration system: 6
    Examination system: 0

  12. I do not find your answer compelling.

    While it is true that under a registration system, you would have to check out many more patents, this, as the saying goes, is a feature, not a bug.

    It does seem that you agree that checking out the patent landscape is a part of the due care that any business about to embark on a substantial investment would make. You do not seem to argue against this point.

    Rather, you argue against the volume of work involved.

    I will grant you that under a registration system this volume would increase, and I would even grant you that this volume would increase tremendously.

    Regardless of vloume, though, due diligence speaks to review.

    Point One to me.

    However, you do not answer my point that this is precisely the type of behavior that is called for in the constitutional grant of power. That power calls for more. It is axiomatic that progress is promoted not only by the best new answers, but also by the “width” or variety of new answers. Inherent in this scheme is an increased workload to go through all this promotion. This is a natural result of the success of the patent system. If the system works, innovation will be promoted. If innovation is proomoted, there will be more innovation. Rather than a “wasted” effort as your post implies (focusing only on cost), this effort may (and is a reason for having the system in the first place) invigorate innovation precisly because one goes through the 1000+1. Design arounds, new thoughts on combinations, or other innovative thoughts are quite possible to directly result from this review effort. Rather than a barrier, this is the purpose. Do not be a 1/4 glass empty kind of person. Be a 3/4 glass full person.

    Point Two to me. Your Point negated.

    My point three, we need to do something about the perverse effects of punishment for staying abreast of the field by reviewing patents is neutral to our discussion.

    Point Three – advantage to neither.

    You do not address my point four. Clearly, the economics of the situation are in my favor. A more widespread promotion at a fraction of the cost is simply more bang for the innovation buck.

    Point Four to me.

    Current score::
    Registration system: 3
    Examination system: 0

  13. They left one thing off the list for micro entities. Reasonably priced database files ,complete patent histories

  14. This has become as it was. A rich man’s club. The more things change, the more they stay the same.

  15. For argument’s sake, let’s assume that these fees are put in place by the USPTO. What prevents Congress from diverting these new fees from the USPTO to general expenditures? If the USPTO is going to have these fees diverted, then what the heck is the point?

  16. Thanks for the straight answer – very much appreciated.

    I think Babble Boy hit on something that prompted my question.

    For all of these new clients, who are unfamiliar with the system, there has to be a frank and earnest discussion on the virtual effect of limiting their innovation.

    After four total applications (my understanding is that this includes divisionals and continuations, but I could be off) the “good news” evaporates. Does anyone know if this is retroactive (to any live application)? If you have three applications and two of them spawn divisionals, is your fee structure changed immediately?

    Given that most professionals like repeat business (and truly hope their inventors are successful and have more than four applications in their total lifetime efforts), I cannot help but see more cloud than silver lining in your initial post at 6:10 PM. The micro status is illusionary (except for Universities).

  17. Yeah, the micro-ninny status doesn’t apply to any of your clients who have already filed 4 applications — regardless of whether or not they ever pursued the applications or got past the FOAMs.

    It also doesn’t apply to any inventor who has been sufficiently successful with a prior invention to make much $$ — the means test will boot him out.

    UNLESS, he is employed by a university. University employees — not just university departments — get a completely free ride with the micro-ninny program. Unlimited applications and no means testing. Their invention doesn’t have to have anything to do with the university, the only test is that the university pays 50% of their income. University janitors and $10M/year football coaches all get the automatic micro-ninny status.

    My hard working clients who have filed 4 previous applications and received absolutely no benefit from the program get nothing. But the shaft.

    Kappos is beginning to make Dudas look almost reasonable.

  18. No. If I can only get valid patents, then I have one. If I can get ANYTHING, then I can have 1000+1.

    So the due dilligence barrier is 1 patent instead of evaluating 1001. It’s a pretty big difference in the real world.

  19. But the barrier to entry to my competition would be astronomical because they’d have to look at all 1000 patents to be sure that there’s not a land mine in there.

    Shouldn’t this type of due care be being done now? Especially if you are considering a costly upfront investment, don’t you want to make sure that you clear the field?

    Further, wouldn’t that exact behavior (actually reviewing registered patents) do far more to meet the constitutional mandate of “promote?” After all, in the current system, I have had clients tell me not to look at the patents in the field (treble damage danger).

    And if this is something that should be done now (and it appears that more than one reason exists to be so), doesn’t this actually make a much stronger case for having a registration system?

    Finally, throw in the actual miniscule percentage of those involved in patents actually involved in the expense of litigation, and your argument loses its power.

  20. Yeah, speaking of FOIA and PTO revenues, I just filed a FOIA to get information on “Mail Stop 12 — Contributions to Examiners’ Education Fund.” It will go to USDC for sure.

    It seems to be a semi-secret way corporations and large law firms can “contribute” to the PTO’s mission. Maybe if one’s contribution is significant enough, one’s rate allowances on FOAM will increase, although I didn’t ask for confirmation of that in the FOIA request.

    I don’t know of any other federal agency that solicits “contributions” from the public, least of all an agency tasked with granting very valuable rights to the same public.

  21. Feel free to apply for one of the APJ positions they have posted on usajobs.gov. I agree with you, it sounds like a breeze.

  22. Did you just say that Examiners are no better than DMV clerks?

    As an outside practicioner and user of the DMV, that’s just wrong.

  23. Because often when I take on a new client, it is their first experience with patenting, and so the maximum lifetime application submission limit will not be a factor…

    as opposed to my existing clients, who are already in the system.

  24. The problem with a registratoin system is that no one ever knows AT ALL what’s valid and enforceable and what’s not. I could have 1000 patents, all invalid on prior art. But the barrier to entry to my competition would be astronomical because they’d have to look at all 1000 patents to be sure that there’s not a land mine in there.

    Registration is not the way to go.

    Everyone is trying to get too cute here. Just put your head down and work through it. Get a couple of clerk’s at the BPAI, and just pick whether the examiner wins or the applicant wins with a SHORT decision instead of these multi-page wastes of time we have now.

    Similarly, first action interview. Examiners should use it. Why bother reading and searching everything when you can just have the guy who wrote it point you in the right direction for your searching?

    Efficiency of process, then scale it up.

    It’s done every day, just not in the govn’t.

  25. anon –

    The coverage of the Paperwork Reduction Act is very broad. It doesn’t stop with “forms.”

    The PRA covers all “information” collected by an agency — every brief, reply, exhibit, oral testimony or oral argument, time spent filing, preparing, researching, analyzing whether or not to file, retention, building technology infrastructure, “adjusting the existing ways” of doing things, Documents generated in the ordinary course of business are not covered, but the additional burden of submitting those ordinary course documents to the government is. Look at 5 C.F.R. § 1320.3(b) and (c).

    Please Google me, “David Boundy 212″ and call me.

  26. How does “potential future clients” relate to the potential future loss of status by future additional filings?

  27. They were. No doubt we will see a repeat performance of some big pharma submariners trotting out another token “independent inventor” (whatever that means) for sympathy, and scoring an injunction against the office. Gratuitous meme – One does not simply shift applicant behavior.

  28. Inviting,

    Pay close attention to some of the requirements for the micro entity status – including maximum lifetime application submissions.

  29. To all:

    Definitely get yourself a copy of the Executive Summary from the followng link: link to uspto.gov. The Summary of Significant Changes in the fee structure is at page 11 of this Summary. See also page 16 for what the USPTO might do because of the greatly increased cost of RCEs in terms of after final practice. It will be very interesting how this proposed fee structure ends up after the USPTO receives comments and how it might alter patent prosecution as we know it. Also, the fee structuring for appeals could really create some interesting dynamics. Keep you fingers crossed as the proposed fee structures moves forward.

  30. On the bright side, it appears that those entities now qualifying as “micro entities” will actually have their fees reduced, relative to the previous “small entity fees” for which they would have qualified:

    filing + search + exam = 460, down from 625

    independent claims in excess of 3 = 115 each, down from 125

    total claims in excess of 20 = 25 each, down from 30

    RCE = 425, down from 465

    maintenance fees = 3200, down from 4355

    Small correction, independent claims in excess of 3 are currently $250 each, not $210 as reported here. Whatever.

    So it turns out that I might have some good news to report to at least some of my potential future clients regarding the fees.

  31. Curtailing ALL other efforts (no fees from anywhere else), even at a $1 million per appeal fee, the Office would still need to process TWO THOUSAND SEVEN HUNDRED appeals. That’s how big of a pit the Patent Office is.

    You can probably set up (and staff) a k_iller registration system for less than half a dozen such appeals.

    Wham – instant backlog gone.

    Bam – turn user fees of the remaining TWO BILLION, SIX HUNDRED NINETY FOUR MILLION dollars back to those with inventions to better put to use (like hiring people).

    Thank you Maam – turn those like 6 and Malcolm out of their cushy jobs bad mouthing patents.

    That’s 2,694,000,000 reasons why a registration system makes more sense than what we are paying for today. Plus no backlog. Plus no 6 or Malcolm.

  32. Channel him? I AM MICHEAL R. As are we all, in a manner of speaking. It is funny to think about it, but to the majority of the world us sitting around PO talking patent lawl must look odd in the extreme perhaps even to the point of insanity.

  33. That was the first thing to go through my mind as well.

    But, I like how they approached it. Simply make it the sport of kings a bit more. That should suffice.

  34. Oh and I almost forgot. You could totally make the gov. I noted just now completely accountable for every single action. Although if you did, you probably wouldn’t have anyone in office very long and no examiner would ever join the office.

    Although, if you did not change the whole gov. around and simply made examiners liable for their mistakes then that is fine. So long as examiners are paid 1 mil. per year.

  35. The other option, hmmmm, good question. There has been a suggestion that we put only recognized leaders in various areas (humanitarian, technological etc. etc.) in office and cease the enforcement of tax collection (at least of the common man) and condone violent means of apprehending only violent offenders of the law, and likewise never allow the government to go to war unless the country is assaulted in a huge way. In other words, only have goons for keeping the peace and nothing else. If you really have to, use economic pressure or other things to ensure compliance with any laws that do not involve violent crimes/actions.

    Notably that part about taxes isn’t too far from what we have today with regards to the federal gov and poor folks.

    But that is just one option. It really isn’t rocket scientry to put in place a decent gov. It’s just that nobody has really wanted to just yet who could get it done. Power corrupting and all that along with the current regimes not wanting to stop being goons etc etc.

    Or we could just do anarchy if you want to.

  36. Tafas was about not having them at any price point.

    This be just about the sport of kings. Pay to play.

  37. Plus, it was only meant to be illustrative of the fact that the patent system as currently realized does not serve a segment of the economy that it is not contemplated to specifically, intentionally or unintentionally, exclude from service.

  38. With a 3-year pendency, nothing.

    With a much shorter pendency, one that is no greater than the interval to mandatory publication, everything, depending on the time to market.

  39. Oh yes, those people at the DMV are so “accountable”. The people at the FBI are so “accountable”. The people at the treasury are so “accountable” (actually that one might be true lol). The people at the IRS are so “accountable”. The police are so “accountable”. The list goes on and on, there is little if any accountability in your government except for huge issues. Be clear, your government is a loose organization of thugs and ruffians with a pretty face and a nice smile (sometimes).

  40. well they are harmonizing everything else…bout time they harmonized the $$$. oh wait fed salaries are frozen ….ain’t it a b@#ch

  41. All they have to do is increase the fees so that only IBM can afford them.

    Then Kappos can examine the applications himself.

  42. there doesn’t seem to be any downside for the examiner, or the Office.”

    There never is

    A C C O U N T A B I L I T Y

  43. A pendency of 3 years for an invention used in something that has a product cycle of anything less than that, clearly does not work.

    What exactly is the point of filing patents or issuing patents on such inventions?

  44. Theres likley to be allot fewer patents because the system is getting whorse instead of better especiatty the critical important ones nothing than destroying the incentive create instead of punishing the guilty then calling it justice is there an attorney in the house. It apears under quanzi rules that stealing manufacturing rights is now legal as long as the consumer pays less. Take the solar panels from china there openly violating patents without reciptocation destroying the incentive to create and file.What part of backwards regression dont they understand.Certainly they c ould reach a compromise if the cost discrepency is that large by saying pay 15 to 33% of profits to take over the market except that doesent deal with the american jobs loss issue.

  45. Mr. Boundy, you are still my hero. Granted, you must feel like Sisyphus at times, and I don’t always agree with your views. But at least you are not sitting back and accepting whatever the PTO throws at us.

  46. At least she was honest with me; how often does this go on and no one will admit to it?

    Far, far less often than claims issuing without an in-depth examination.

    You’re welcome.

  47. Znutar, can you please phone me. Google “David Boundy 212″ I’ll keep your confidentiality absolute, except as you expressly permit.

  48. This is another example of how our country has failed to maintain our infrastructure for the past two or three decades and now we must pay the piper.

    Still, Kappos owes us an accounting of where all of this money will go, taking into account that there will be fewer filings.

  49. My thoughts exactly. I’m sure they are way behind on the pension funding since the 2007 ‘correction’. I actually wouldn’t mind if this were the reason behind the fee increases. It would be refreshing to see a large org actually admit there was a pension funding problem!

  50. “If the applicant doesn’t pay up, case closed, and if they do pay and the examiner is reversed, there doesn’t seem to be any downside for the examiner, or the Office.”

    There never is. They’re the gov. Well, except for having to deal with the appeal in the first place.

  51. “Filing+Search+Examination Fee rising to $1,840 from $1,250.
    Excess Independent Claims rising to $460 each (after 3) from $210.
    Excess Total Claims rising to $100 each (after 20) from $60.
    Request for Continued Examination rising to $1,700 from $930.
    Notice of Appeal rising from $930 to $1,700 but issue fee is waived if Examiner withdraws rejection. Nothing more will be due at the appeal brief stage. However, once the examiner’s answer is received, applicant will need to pay $2,500 to move forward with the appeal.
    Three-Stage Maintenance Fees from $8,710 to $12,800.”

    Lawd have mercy! lulz.

    I hereby declare this Sport of Kings to be OPEN!

    Also, btw, you guys all qqing about things have forgotten one thing, as much of a sissy as Kappos may or may not be when it comes to rules, he is not completely inept at running the PTO. Perhaps he is looking to extend examination times by another hour or so. He is after all doing a bit of examination himself. Surely he is planning to do quite a bit of hiring. Especially on the board. And those folks don’t come cheap.

    Also, David Boundy, if the pto is soooooo abusive of those lawls you <3 why don’t you simply ask Kappos about his position on whether the PTO needs to do xyz that you think they should? It isn’t like he doesn’t have a free moment, I’ve seen him standing around plenty. Catch him at a conference.

  52. What if you pay the $2500 and then win on the appeal? Do you still pay the issue fee? Seems like it.

    Why would any examiner withdraw a rejection and allow a case in response to an appeal brief when he/she can repeat the same nonesense and stick the applicant with a $2500 fee to add on top of the cost of preparing a reply brief? If the applicant doesn’t pay up, case closed, and if they do pay and the examiner is reversed, there doesn’t seem to be any downside for the examiner, or the Office.

    I have a case that will be going to appeal. The examiner explained (off the record) that she agreed with our arguments, but was being ‘guided’ to maintain the rejection, and although she has the authority to disregard said guidance, she once had a case pulled for quality inspection where she’d gone against ‘guidance’ and was tar and feathered for it, and now she’s not going to stick her neck out ever again. At least she was honest with me; how often does this go on and no one will admit to it? If this new fee schedule were in effect, we would have to pay an extra $2500 (and 2 years in the cooler) to get this joke reversed.

  53. continued…

    My personal view, repeated often here, is that we should move to a registration system, perhaps some sort of a tiered registration system for convenience, because I don’t believe the examination quality to be worth jack.

    But that belief is offset by suggestions like those of 6, in that any valid 102(b) rejection is extremely valuable. Again, I accept that possibility, and again, I have never personally received one in any application.

    I’m speaking broadly. Anybody who would register, depending on what registration would get you, would likely perform some sort of examination on their own, especially if registration alone didn’t get you much. Such private examination would likely be more efficient than public examination, and the patentee could choose the level of service they wished to receive.

    Hence a tiered registration system, driven by the perceived strength of the patent by the patentee–registrations would have varying costs and would come with different levels of risk and reward for the patentee, allowing the patentee to make a rational decision of the level of registration.

    Apart from a registration process, we are stuck with a public examination process–and inefficient or not, it must still work. A pendency of 3 years for an invention used in something that has a product cycle of anything less than that, clearly does not work.

    For some sectors, pendency must be reduced, and the only way to do that, practically speaking, is to expand–hence, we see the sought net increase of 1000 examiners over the year.

  54. Cut the backlog by not picking up published applications until someone (the applicant, anonymous third party or anything) pays a fee to proceed. Otherwise, let the application eventually lapse without any examination. A significant percentage (5%, 10%, 20% or higher) will never get examined saving the PTO resources and allowing more resources for those applications someone, anyone cares about. Why waste PTO resources on such applications unless someone shows an interest in resolving via examination?

    These new fees are too high in my opinion. It’s the new normal. Most people are working harder for each dollar earned. Emerging companies and even in-house depts of larger corps are working within tight budgets. Raising fees is not the answer to backlogs and bottlenecks.

  55. David,

    How chummy is the OMB with the PTO nowadays?

    Will any of the forms that the Office may require in this gargantuan new structure require OMB approval? Wasn’t that one of the past tripping points?

  56. I know, which is why I have difficulty with many government enterprises.

    It is inefficient, but not necessarily inefficacious–and the inefficiency problem is sort of beside the point, unless all of a sudden, in 1991, there was some reason for a sudden drop in efficiency, and then in 1995 some reason for a precipitous drop therein.

    And even if that was the case, it would only really be relevant to the extent that it could now be reversed.

    Did anything happen then? New computer system that allowed the inefficiencies resulting from initial implementation to persist throughout the decades?

    1995–the real rise and penetration of the internet, resulting in everybody playing instead of working, from examiners to APJ’s? Or access to too much data to permit efficient action?

    My suggestion that an inefficient process be scaled-up is akin to the expansion of the simulus. In some seemingly strange way, it can be rationalized.

  57. Now if they would take the extra money from fee increases to startup small entities top marketable inventions they would be doing something progressive instead of all retartive. Na not a chance!

  58. Anon –

    The Administrative Procedure Act, the Information Quality Act, the e-Government Act, and the Paperwork Reduction Act all required the PTO to disclose all its underlying data and calculations.

    Ron Katznelson, Rick Belzer, and I have all brought the law to the PTO’s attention in comment letter after comment letter (and FOIA request after FOIA request, all effectively denied) over the last few years.

    The first couple times, you could attribute the amateurish approach to the law to the general ineptitude of the PTO’s legal staff.

    Now, after the pattern of repeated breach, it’s hard to reach any other inference that the PTO has concluded that following the law is only for “the little people,” and that the PTO’s legal staff has advised PTO management that the PTO is above the reach of the law.

    Every losing party in one of the new post-grant challenge mechanisms will be able to challenge the PTO’s adjudication on the grounds that it was issued under invalid rules.

    Ms. Gongola, most of your colleagues are very bad lawyers. They’ve misled you, and made your very difficult job even more difficult. I don’t know how to solve your problem, except to diagnose it for you. Call if you’d like more information.

    David Boundy

  59. The examining staff is the examining staff. If you want more out of them, you either have to give them better tools, make their process more efficient (limit the length and content of the required Action like with the first action interview program), or hire more of them.

    Where I see the overpaid staff is APJ. Either they’re paid too much, or they produce FAR too little. They read two briefs, discuss, decide, and one of them cut and paste their decision from there with some template paragraphs. If it was private, you’d expect a decision per day, perhaps 2, and definitely 2 if they have clerks.

  60. “Even though I know that it is woefully inefficient, I don’t see an answer other than expansion.”

    If any business leaders are readying this, they probably had a heart attack about here. Scaling up an inefficient process is heresy (at least anywhere other than govn’t work).

  61. I believe that the PTO’s budget doesn’t include pension obligations to all of its overpaid staff.

    Now what if THAT were included in the cost-recovery calculation?

    Or IS it now being included, and is that to what we can attribute the increases?

  62. Please correct me if I’m wrong, but the “in the aggregate” argument doesn’t seem to make any sense.

    The fees set by the PTO are limited to cost-recovery, IIRC.

    Look at what the PTO is doing: clearly, it is trying to reduce the number of office proceedings, while raising the price of each of those proceedings, so that it can do less, while at the same time at least maintaining, or probably expanding, the current extent of its infrastructural capability to conduct said proceedings.

    This only makes sense if the patent office is woefully overburdened, otherwise they could jack the price of a single prosecution to the entire budget figure, and process only that single patent in a single year, while maintaining the infrastructure to process several thousand.

    The PTO releases all sorts of figures to support its contention that it is woefully overburdened. At this point, I believe that it is. Even though I know that it is woefully inefficient, I don’t see an answer other than expansion. Reducing the backlog is only one thing that needs to be done–the other, larger problem is to raise quality.

    Here’s where I don’t understand what is happening, because I don’t have the time to investigate the PTO’s budget: does the budget not contain increases in funding going forward in order to cover infrastructural expansion on a rolling basis?

    In their 2012 budget request was contemplated a net increase in examiner numbers of 1,000 (so much for the bogus “examiner attrition” arguments that I dismantled years ago), which could qualify as an increase in capacity–but hasn’t that been factored in during the period during which the backlog accrued?

    That is, WHY did the backlog accrue? Were the PTO’s projections way off, such that the demands upon the office increased at an unforeseen rate? And if so, for how many years could that continue before the PTO “caught on” to what was happening, and moved to correct it by asking for greater budget increases?

    Did the PTO do a reasonable job of this, only to have their requests denied by Congress?

    It seems as though, like in every other area of public endeavor in the US, those who need the system now are effectively going to be subsidizing those who used the system in the past, with an artificially low and clearly unsustainable fee structure–it is exactly like property taxes rising on current taxpayers to cover accrued pension obligations that were under-funded by the actual beneficiaries…or social security…or anything relating to the crumbling national physical infrastructure.

    IMHO, this gap began to open maybe in the late 80′s/early 90′s, and was completely ignored throughout the 90′s and 00′s.

    And here we are, 20-25 years down the road, paying for that 20-25 years of denial and avoidance. Take a look at a graph of the PTO backlog, and you will see that it coincides well with this general theory. The pendency was stable at around 18 months until 1991, when it began to rise; and in 1995 it began to rise meteorically.

    Assuming a consistent examination quality, why was this rise not addressed with a concomitant infrastructural increase beginning in 1991? Or how about 1993, when it could have been realized that the increase wasn’t a temporary blip? By 1995 it was too late…what about 1998, after 3 years of insane increases? Why wait until now to address this? We now see insane fee increases, implemented with the express intention of “influencing applicant behavior”–if “applicant behavior” was the problem, why was it not addressed 20 years ago? Why wait until now? Does affecting current applicant/potential applicant behavior “promote the progress”? Precisely which behaviors are they trying to influence, and in what direction are they hoping to influence them? Less filings? Less responses to adverse OA’s? More abandonments?

    And that is assuming a consistent examination quality, which I don’t know is an assumption that can be made, since I only started into this game in 2001.

    Further, it is another example of the middle class getting the squeeze. BigCorp Inc. will easily be able to absorb the fee increases, and micro-entities’ relative economic calculus probably won’t change much–but that of those in the middle will change greatly, particuarly ventures trying to get off the ground that are just outside the micro-entity cutoff. This seems strange to me, from a “promote the progress” and “jobs” perspectives…small businesses that are just large enough to actually provide some jobs, and that have the potential for growth, are penalized relative to the large businesses that do not exhibit the same job-growth potential, and relative to micro-entities that exhibit neither the same job-growth potential, nor the same industry-progress potential.

    The only way the “cost recovery” requirement can be justified is to consider legitimate the costs of the past 20-25 years that have been off-loaded to the current generation of applicants.

    Another sign of the times. The US is in real trouble, my friends.

  63. As he said, that was during the 2008 campaign. Things are different now; we’re in the third year of the 2012 campaign (also known as “operation blackout”).

  64. It’s also possible that the PTO is expecting drastic increases in overhead and fixed costs that don’t scale with throughput the way fee collections do.

    Very true, but that would be shown in the plain math. Accounting for items that do not scale through should not be a difficult task (it’s rather old in the arts).

    Such would also most likely be noticed on a line item budget (which was passed for this upcoming year without what you indicate).

    Wasn’t “transparency” an Obama buzzword?

  65. The only rationale for increasing “everything” is that the throughput must be estimated to be drastically lower.

    I’d like to see the math too, but that’s not the only rationale. It’s also possible that the PTO is expecting drastic increases in overhead and fixed costs that don’t scale with throughput the way fee collections do.

    I know Dave Kappos is always talking about modernizing the PTO’s IT infrastructure, which must be a dauntingly huge project, and they intend to have many more APJs to pay, but how much is that really going to cost?

    Also, I don’t see how raising all fees produces much “behavior shifting”. I don’t even think applicants are going to think twice about being part of the appeal backlog based on the examiner’s answer, which they’ve already seen back when it was called a “final action”.

  66. Can’t the USPTO effectively end a particular type of service (say, appeal or examination of claims beyond X number) just by raising the fee exorbitantly high, estimating that no one will pursue the service at that fee, and conclude aggregate costs are thus met?

    BTW, fee setting authority has a sunset provision in the AIA. If the USPTO abuses its authority now, it may be worth reminding them that it will become very difficult to get that authority extended or made permanent.

  67. as long as the total fees collected are expected to be about the same as the total operating expenses of the

    That’s what I am looking for.

    Somewhere, someone, somehow generated the numbers (starting at “X” and ending at “Y”). The numbers are not allowed to be made up out of the blue, because in the aggregate” they must balance out. The only rationale for increasing “everything” is that the throughput must be estimated to be drastically lower.

    The Office is simply not allowed to have that “extra spend.”

  68. You highlight my point. Fees are sent to the general fund and placed in a segregated account earmaked for the USPTO, but nowhere have I been able to determine if any general funds from outside the segregated account are used to cover any portion of USPTO expenditures.

  69. “in the aggregate” means there doesn’t have to be a highly specific calculation or justification for each individual fee, as long as the total fees collected are expected to be about the same as the total operating expenses of the Office. You’d never get a “calculation” of more than ~$10 for a maintenance fee, would you?

    What really puzzles me is that each year for the past several years, the PTO has collected way more fees than it could manage to spend. Now, they appear to be raising fees across the board. Just how much extra spend are they expecting that won’t be offset by, for example, the increased numbers of RCEs and issue fees generated by increased throughput?

  70. Just abolish the IP system. We do not need patents. The patent system is great for enriching and feeding unethical and parasitic patent lawyers no doubt.

  71. And that RCE fee is WAY out of line with the actual cost for an examiner to update a search and send the same lame rejection they’ve been sticking to.

    I thought these were supposed to reflect costs, but that’s clearly a stick to beat small companies with.

  72. Yeah, I’m sure there’s a “calculation” underlying that 2500 dollar “are you sure you want a BPAI decision” fee. LOL.

  73. The “within limits” provisio is that the fees must match expected cost in the aggregate. There must be some objective rational basis for this “in the aggregate” setting.

    What I would love to see (FOIA?) are the calculations that generated the fee structure.

  74. It’s hard to tell because it all comes out of the general fund, so the employees other than Examiners and BPAI judges are hard to account for (e.g., janitors).

    There’s probably an accurate count in some GAO office, but I’ve never seen it.

  75. This may seem like a silly question, but, quite frankly, it is one for which I have been unable to find an answer.

    Is there anything associated with the operation of the USPTO (employee salaries/benefits, capital equipment, consumables, etc.) that is funded from any source other than “user fees”?

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