The Patent and Trademark Office's newest proposal for patent fees, likely to
be effective in February or March, addresses a number of concerns raised by
stakeholders but still leaves open the question of whether new post-grant
administrative trial proceedings will be attractive to patent challengers.
The Leahy-Smith America Invents Act, Pub. L. 112-29, gave the PTO the
authority to reset patent application and maintenance fees. The agency issued an
initial proposal Feb. 7 (26 PTD, 2/9/12), but significant constituencies among
the patent community expressed disappointment (84 PTD, 5/2/12) (43 PTD,
The new proposed fees, to be published in a Sept. 6 notice of proposed
rulemaking, are generally lower compared to the original proposal, and the
office created additional opportunities to split fees between the cost of
initiating a procedure and ultimately going through with it.
“The proposed fees reflect the robust public input we have already received
at multiple public events and through written comments,” PTO Director David J.
Kappos said in a Sept. 4 press release.
Costs for AIA-authorized challenges to issued patents remain high in
circumstances when the PTO agrees to institute the challenge, though, and it is
still unclear whether prospective users of the administrative trial options will
favor PTO proceedings over district court litigation.
Stakeholders have 60 days after Federal Register posting--which would fall on
a Sunday, Nov. 25--to comment on the proposed fees. The PTO would then revise
the fees as needed and the new fees would go into effect “at least 45 days”
The office previously said that it was targeting implementation of the new
fee structure sometime in February 2013.
Section 10 of the America
Invents Act authorized the PTO to adjust fees “to recover the aggregate
estimated costs to the Office for processing, activities, services, and
materials relating to patents.”
It also allowed the PTO to assess a 15 percent temporary fee surcharge, and
the agency accordingly raised fees on 123 line
items Sept. 26, 2011 (185 PTD, 9/23/11). The surcharge was intended to
provide adequate funding to the office while it was in the process of creating
the new fee structure.
After the PTO first published a new fee structure proposal Feb. 7 (26 PTD,
2/9/12), stakeholders reacted negatively, but mostly because the PTO suggested
surprisingly high prices on post-issuance opposition procedures, also authorized
under the AIA (86 PTD, 5/4/12)(43 PTD, 3/6/12).
With the newly proposed fee structure, the PTO continues to defend its
aggregate cost-covering calculations in light of “two overriding principles”: a
necessary increase in resources to address the backlog and pendency burdens on
the agency in recent years, and a need for a “three-month patent operating
reserve” so as to establish “a more sustainable funding model than in the past
to avoid disruptions caused by fluctuations in the economy.”
The agency backed off slightly on the latter. While the original proposal
sought to reach the three-month reserve level in 2015, the current proposal
postpones the buildup until 2017.
As to performance goals, however, the NPRM indicates that the PTO will retain
its aggressive campaign:
To reach those goals, the PTO claims it must “hire additional patent
examiners, improve the patent business IT capability and infrastructure, and
implement other programs to optimize the timeliness of patent examination.”
Those costs add to the aggregate and, according to the NPRM, the agency must
therefore “collect more aggregate revenue than it estimates that it will collect
at existing fee rates.”
The NPRM first identifies the projected aggregate costs of the agency over
the next five years. Patent operations in fiscal year 2013 are anticipated to
cost $2.549 billion, rising to $2.945 billion in fiscal year 2017. But to reach
the operating reserve balance in FY 2017, aggregate cost recovery would have to
be $2.604 billion in FY 2013 and average 4 percent above operation costs per
Application and granted patent growth are then projected as well to provide a
basis for aggregate revenue equal to aggregate cost, and the fees are set to
reach that revenue in light of the calculated demand.
However, use of the word “aggregate” in AIA Section 10 further allows the
agency to set an individual activity fee without necessarily tying it to the
costs of performing that specific activity. The notice acknowledged this
flexibility as a way “to set individual fees to further key policy
considerations, while taking into account the cost of the associated service or
For example, the proposal would raise the total fees for patent application
filing, search, and examination from $1,250 for a large entity to $1,600, a 28
percent increase, but the figure still represents about 42 percent of the PTO's
cost of providing those services. The below-cost figure addresses the agency's
policy consideration for “fostering innovation.”
Fees for applications exceeding 100 pages and those with excess or multiple
dependent claims would increase compared to current rates as well, though less
so than in the original proposal.
The agency proposed to decrease, from $4,800 to $4,000, the fee for
prioritized examination--a final disposition of patent grant or rejection within
12 months--that went into effect right after the AIA was enacted, under the AIA's Section 11(h). The PTO
had announced its intention to drop that fee previously, based on the its actual
cost experience during the early months of implementation.
The PTO originally proposed not to give the same below-cost treatment to
RCEs, though, and instead proposed that the fee meet cost, rising from $930 to
Stakeholders were generally displeased with that decision, arguing that the
agency's actions often leave the patent applicant with no choice but to file an
RCE. In the Sept. 6 proposal, the agency now would allow a first RCE for $1,200,
while keeping the $1,700 fee for the second and subsequent RCEs.
“Those applications that cannot be completed with the first RCE do not
facilitate an effective administration of the patent system with the prompt
conclusion of patent prosecution,” the PTO said in the NPRM, pointing to another
of its policy considerations in setting individual fees.
The PTO maintained its clear desire to decrease RCE filings by pricing the
alternative, an appeal of an application rejection, competitively with the RCE
fee. The combined notice of appeal and appeal brief cost would be lowered from
its current level of $1,240 to $1,000.
“The USPTO proposes this fee relationship to ensure that all applicants have
viable options to dispute a final rejection when they believe the examiner has
erred,” the NPRM explained.
However, the appeal filer would incur an additional $2,000 fee if the
examiner does not withdraw the rejection and the applicant wishes to appeal the
examiner's answer to the appeal brief. Though that figure is lower than the Feb.
7 proposal, it still means that, in many if not most instances, the appeal filer
would ultimately incur $3,000 in fees, up significantly from the current $1,240
charge. Nevertheless, the new fee would still be below the agency's estimated
cost--as noted in the original proposal--of just under $5,000.
To recover aggregate costs despite the accommodations for the below-cost
activities, the PTO's proposal would set certain fees--publication, issuance,
and maintenance of patents--above the individual activity cost. The PTO
characterizes the revenues from these activities as a “back-end” subsidy of
“front-end” application examination fees.
Nevertheless, the publication and issuance fees represent a decrease from
current costs. The publication fee was eliminated--the PTO said it “benefits the
IP system more than individual applicants”--and the $960 issuance fee proposed
represents almost a 50 percent reduction from the current fee. The PTO contended
that this reduction more than offsets the increase in filing, search, and
examination fees, resulting in a decrease in end-to-end patent procurement fees.
That cost advantage would shift, however, for patent applicants who file two or
more RCEs before patent issuance.
An earlier proposal to add a fee for filing an oath or declaration was
scratched. A fee to correct inventorship was retained, but is now proposed to be
$1,000 instead of the originally proposed $1,700.
The fee to execute or change a patent assignment was kept at $40 if submitted
on paper, but eliminated altogether if performed electronically. The change will
“benefit the overall IP system by reducing the financial barrier for recording
patent ownership information and facilitating a more complete record of assigned
applications and grants,” according to the NPRM.
Total fees for the three maintenance stages--at 3.5, 7.5, and 11.5
years--would be $11,600, an increase of 45 percent above the current total
payment. The proposal justified the maintenance fees by contending that, at each
stage, “patent owners have more information about the commercial value of the
patented invention and can more readily decide whether the benefit of a patent
outweighs the cost of the fee.”
The PTO originally announced pricing for supplemental examination--an
AIA-created form of reexamination initiated by the patent owner to limit
exposure to inequitable conduct charges in future litigation--at $5,180 to
process the supplemental examination only, and an additional $16,120 for the
subsequent ex parte reexamination if a substantial new question of patentability
is raised (17 PTD, 1/27/12).
Those surprisingly high figures were raised even further in the February
proposal and that
proposal, too, goes into effect Sept. 16 under separate final rule (157 PTD,
However, the PTO backed off somewhat in the Sept. 6 NPRM, with respect to the
fees that will take effect in February. The new proposal would set those fees at
$4,400 and $13,600, respectively.
Ex parte reexamination as an independent request would cost $15,000 under the
new proposal, down 15 percent from the original proposal but still almost six
times what it cost in 2011.
The proposed fees published in February for the new AIA procedures known as
post-grant review and inter
partes review, as well as the PGR-like “transitional” program program
for challenging a “covered business method patent” or CBM were heavily
criticized (26 PTD, 2/9/12); (84 PTD, 5/2/12).
The IPR and CBM proceedings become available Sept. 16, and in an Aug. 14
final rule on the administrative trials, the PTO largely maintained the fees
from its original proposal to be effective as of that date(158 PTD,
The Sept. 6 notice would modify those fees after the February or March
implementation date of the new fee structure, however.
The PTO dropped the fees somewhat in the notice, and it further made PGR and
IPR potentially more attractive by splitting each cost into two parts, one to
cover the request--$12,000 and 9,000, respectively--and a follow-on cost only if
the challenge is approved by the PTO--$18,000 for PGR and $14,000 for IPR. The
challenger would have to make the entire payment upon the challenge request, but
the second charge would be returned if the PTO does not institute the
The original proposal also included step-wise increased costs for the
challenger for claims challenged above 20. The new proposal would require a $600
and $800 fee, respectively, per claim above 20, and again those fees would be
split between the two time periods for incurring charges.
“These options for staging and splitting fees into multiple parts will
benefit small and micro entities, who will be able to spread out their payments
of fees and in some instances, potentially receive refunds of fees where only a
portion of a particular service is ultimately provided,” according to the
The PTO continued to claim that its estimated costs for providing these trial
services would be higher than these fees. The agency dropped the fees only to
reflect the policy goal of “facilitating greater access to the post grant review
proceedings because certainty of patent rights benefits the overall IP
The proposal would also implement pricing, at a 75 percent discount, for the
new “micro entity” applicant category, defined in AIA Section 10(g). Small
entities not qualifying as micro entities would continue to receive the 50
percent discount on most of the above fees.
The discount would not apply, however, to the post-grant trial
procedures--inter partes review, post grant review, covered business method
patent review, and derivation proceedings--enabled by the AIA.
The PTO will conduct a one-day AIA
“roadshow” in each of eight cities in September. The agenda covers multiple
aspects of AIA implementation, including one 40-minute presentation on the fees.
The roadshow schedule is:
10 in Minneapolis;
12 at PTO headquarters in Alexandria, Va.;
14 in Los Angeles;
17 in Denver;
20 in Detroit;
24 in Atlanta;
26 in Houston; and
28 in New York City
The first three roadshows will also be web cast.
By Tony Dutra
Notice at http://pub.bna.com/ptcj/PTOFeesNPRM12Sep6.pdf