by Dennis Crouch
As federal agencies begin to respond to the new Republican Administration’s agency reorganization directive, the USPTO finds itself in an unusual position. Unlike many federal agencies, the USPTO operates primarily on user fees rather than appropriated funds. However, this self-funding status does not exempt the agency from the new “Department of Government Efficiency” (DOGE) initiative requiring agencies to develop plans for “large-scale reductions in force” (RIFs) by March 13, 2025. opm-omb-memo-guidance-on-agency-rif-2-26-2025.
Depending on how Commerce Secretary Howard Lutnick and Acting USPTO Director Coke Stewart interpret and implement these directives, the impact on USPTO operations could be extremely disruptive. Lutnick has indicated he is in favor of major reductions in force, although not speaking directly about the USPTO. These negotiations continue behind closed doors while patent examiners, practitioners and applicants continue to sit in limbo about potential impacts on examination quality, processing times, and the stability of the U.S. patent system.
A new February 26, 2025 memorandum from OMB and OPM directs agencies to take serious steps toward shrinking their activity, workforce, and physical footprint. Agencies have been directed to focus on “maximum elimination of functions that are not statutorily mandated.” The memo notes that agencies should narrowly interpret statutory requirements:
Agency leadership must confirm statutes have not been interpreted in a way that expands requirements beyond what the statute actually requires. Instead, statutes should be interpreted to cover only what functions they explicitly require.
An important note here is that much of the USPTO operation is guided by precedential cases that are effectively already interpreting the statutes. This would seemingly guide any interpretation offered by the agency director. Although some of this may seem dramatic, the Agency is part of the executive branch, and thus subject to the direction of the President and his sworn duty to “take Care that the Laws be faithfully executed.” Cuts are ongoing, but major systemwide upheavals are unlikely for several more weeks. We should know more after the March 13 agency deadline.
The memo from OPM creates a framework for analyzing which USPTO functions might be vulnerable to cuts — some aspects of this are discussed in below. The rest of this post talks through various USPTO functions — considering ones that are statutorily mandated versus those that are discretionary as one approach to seeing where cuts might occur.
I want to note that this post was somewhat reflexively written and I certainly hope that cool heads will prevail within the US Government and particularly the USPTO to permit ongoing full operations.
Statutorily Required USPTO Functions
The Patent Act establishes several core functions that the USPTO must perform. These cannot be eliminated but might be subject to efficiency measures:
1. Core Patent Granting and Examination
At its most fundamental level, the USPTO’s examination function derives from several explicit statutory mandates:
- 35 U.S.C. § 2(a)(1) states the USPTO “shall be responsible for granting patents”
- 35 U.S.C. § 131 requires that the USPTO “shall cause an examination to be made of the application”
- 35 U.S.C. § 151 mandates that the USPTO “shall issue a patent” once an application is allowed
- 35 U.S.C. § 154 specifies that the USPTO “shall” determine the contents and term of a patent
- 35 U.S.C. § 122 requires that the USPTO maintain confidentiality of applications until publication (and then ‘shall publish’ them)
- 35 U.S.C. § 41 establishes that the USPTO “must” charge fees for patent filings and maintenance
- 35 U.S.C. § 261 mandates that the USPTO “maintain a register” of assignments and other interests in patent rights
In my mind, the directive raises questions about how the USPTO should approach functions like these that have developed through decades of practice. For example, while the law explicitly requires patent examination, it doesn’t specify precisely how that examination must be conducted. Loosening the level of review would save money and add “efficiency,” at least in the short term. Although I do recall that adage about being penny foolish.
2. Patent Trial and Appeals Process
Appeals and post-grant proceedings are also explicitly required:
- 35 U.S.C. § 6 establishes the Patent Trial and Appeal Board (PTAB), which “shall” review appeals from examiners and conduct post-grant reviews
- 35 U.S.C. § 134 guarantees applicants the right to appeal rejections
- 35 U.S.C. § 314 with IPRs, the director “shall determine whether to institute”
Of course, with regard to IPRs and PGRs, the statute does not appear to set any minimum number that must be handled each year. Thus, a narrow reading of the statute would permit the USPTO director, in her discretion, to deny each and every IPR petition.
3. International Treaty Obligations
Certain international functions are non-discretionary:
- 35 U.S.C. §§ 361-376 requires the USPTO to administer the Patent Cooperation Treaty (PCT) system
- 35 U.S.C. §§ 381-390 mandates administration of the Hague Agreement for design patents
Permitted (Discretionary) Functions: Prime Targets for Reduction
In contrast to core requirements, many USPTO activities fall into discretionary categories that could be reduced or eliminated under the OMB/OPM directive. For instance, the Agency appears to have already eliminated all programs and pilots related to outreach to particular communities such as minorities or women inventors. The following walk through several elements of the outreach
1. Outreach, Education, and Innovation Support Programs
The USPTO has developed numerous programs to support innovators that, while valuable, are not explicitly mandated:
- 35 U.S.C. § 2(b)(11-13) states that the USPTO “may” conduct programs and studies on IP law, but doesn’t require them
- 35 U.S.C. § 2(b)(9-10) permits but doesn’t mandate advising federal agencies and foreign governments on IP matters
- 35 U.S.C. §§ 11-12 allows but doesn’t require providing public copies of patents and educational materials
- The Patent Pro Bono Program, while beneficial for expanding access to the patent system, is not explicitly required by statute
These discretionary programs could be reduced or eliminated, including inventor assistance initiatives, educational programs for startups, and public engagement conferences.
2. International Cooperation Beyond Treaty Requirements
While basic treaty compliance is mandatory, extensive international cooperation is discretionary:
- 35 U.S.C. § 2(b)(5-6) permits but doesn’t require the USPTO to use foreign patent offices and international organizations
- 35 U.S.C. § 11 allows but doesn’t mandate exchanging copies of patents with foreign offices
- 35 U.S.C. § 2(b)(13) permits conducting joint studies with foreign IP offices, which could be eliminated
Potential cuts could include reduced participation in WIPO discussions beyond mandatory PCT administration, limiting involvement in IP5 collaboration (with the European, Japanese, Korean, and Chinese patent offices), and scaling back global IP harmonization efforts.
3. Office of Enrollment and Discipline (OED)
The regulation of patent practitioners could be substantially reduced:
- 35 U.S.C. § 32 states that the USPTO “may” suspend or exclude practitioners, but doesn’t preclude relying on state bars for discipline
- 35 U.S.C. § 33 addresses unauthorized practice, but the USPTO could reduce its direct enforcement role
Potential changes include focusing only on the most severe ethical violations, allowing state bars to handle most discipline matters, and automating a much simpler patent agent examination administration.
4. Satellite Offices and Physical Infrastructure
Regional presence, while authorized, is not statutorily required:
- 35 U.S.C. § 1(b) states that the USPTO “may” establish satellite offices, making them optional
- 35 U.S.C. § 2(b)(3) permits but doesn’t mandate acquiring or leasing office space beyond essential needs
This creates potential for consolidating the Detroit, Dallas, Denver, and Silicon Valley offices, and accelerating the shift toward remote work models to reduce real estate costs. Note here that the AIA does call for establishing 3 offices, including Detroit -and a straight interpretation would require them to remain open. But, remember here that the OPM order is directing agency heads to narrowly interpret the statutes – only do what is expressly required by statute.
5. AI Implementation as a Cost-Cutting Strategy
The OMB/OPM memorandum explicitly identifies technological solutions as a pathway to workforce reduction, and artificial intelligence represents the most promising avenue for the USPTO to maintain productivity with fewer personnel. This opens the door to the AI augmented examination with the goal of dramatically streamlining the time required for each application.
The Self-Funding Conundrum
The USPTO’s fee-funded structure creates an unusual situation in the federal budget landscape. Unlike most agencies dependent on appropriations, the USPTO operates primarily on fees paid by applicants and patent holders for specific services. This raises a fundamental question: if examination services have been paid for by users, to what extent is it appropriate to scale back those services to meet government-wide efficiency goals?
Furthermore, the Fee Setting Authority granted by the America Invents Act allows the USPTO to set its own fees to recover costs. This creates a circular problem – if functions are cut, fees should theoretically be reduced proportionally.