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Strategic Plan > Index to Action Papers > Proprosal to Restructure Patent and Trademark Fees and Practices for Fiscal Year 2003

OVERVIEW

Proprosal to Restructure Patent and Trademark Fees
and Practices for Fiscal Year 2003

The USPTO remains firmly committed to the principle of charging fees for services based primarily on the cost incurred in providing these services.  USPTO fees have been organized for many years within a structure that is familiar to our customers and that has been proven to be workable and equitable.  Still, while generally acceptable, this fee structure can be improved in various ways.  Under the USPTO proposal and consistent with the existing structure, patent fees would continue to be primarily assessed for filing, searching, and examining an application, for patent grant, and for maintenance of the continuing benefit of patent rights.  In addition, fee discounts would be adopted to support practices reducing Office burden, while, together with additional fees and services, increasing customer choice.   Small entity discounts would be maintained.  The trademark fee system would also be modified to offer customers a greater range of choice.

These fee proposals more closely align applicant payment and USPTO revenue with actual cost, reduce the incentives for applicant's to pursue wasteful examination, and recover the USPTO cost of operations more directly.  The net effect is to elicit a level of participation from applicants and third party searchers that provides economies in examination while maintaining and improving timeliness and quality.  These benefits arise from a proposed structure that is similar to the existing structure, that better aligns fees with the value provided, that minimizes additional administrative complexity, and that retains the financial incentives for inventors of less financial means[*].

Patent Application Filing, Search and Examination Fees


Although the proposed patent fee structure remains essentially the same as the current system, with a single fee paid at filing, separation of this fee into filing, search, and examination components, together with a system of refunds will create a more optimal alignment of fees with services. Existing practice bundles filing, search, and examination into a composite, inseparable fee, as though the applicant only received value for the combination of services.  The result has been to encourage applicants to pursue prosecution until final disposition once the filing fee has been paid, irrespective of re-evaluations of the commercial utility of the invention throughout the prosecution period.  Instead of this simplistic model, under which substantive examination invariably follows filings in lockstep, a more flexible procedure would recognize that applicants have differing needs that can be satisfied with different levels of service, as determined by the applicant. 

In the proposed new system, the current single-track examination process is replaced with an examination process that provides multiple examination tracks (See Pendency 2 (P-01)) with differing fee outcomes.    For all tracks, the initial fee payment would consist of three components; a filing fee, a search fee, and an examination fee, all due on filing (or within the period specified by the USPTO under the current “missing parts” practice provided for in 37 CFR 1.53(f)).  The revised patent fee statute will authorize the USPTO to refund a portion of the excess claims, search, and examination fees if the application is expressly abandoned prior to an examination on the merits, and to refund a portion of the search fee if there is a qualified search report that the USPTO can exploit from a patent office with which the USPTO has a bilateral search exchange agreement.

Such practice would vary depending upon the track utilized:

·       First track: Applicant pays the filing, search, and examination fee on filing, but has the option of expressly abandoning the application before the search and examination and obtaining a refund on a portion of the fees paid for excess claims, search and examination. 

·       Second track: Applicant pays the filing, search, and examination fee on filing, and has the option of expressly abandoning the application after seeing the results of the search report performed by a Contractor Search Service (CSS). The patent fee structure would provide that the USPTO could refund a portion of the examination fee if the application is expressly abandoned after seeing the search results. The USPTO would initially pilot any plan to examine an application primarily on the basis of a search report acquired from a CSS.  Once examination of applications primarily on the basis of CSS search reports is proven successful, the utilization of this process would increase over time and eventually predominate.  The USPTO will continue to conduct in-house searches of most applications in the near term.

·       Third track: Applicant pays the filing, search, and examination fee on filing, but may receive a refund of a portion of the search fee if there is a qualified search that the USPTO can exploit from a patent office with which the USPTO has a bilateral agreement.

·       Fourth track: An examination fee set to recover the cost for contracted searches and their review during the International Stage will be charged.  This fee will likely exceed the comparable European Patent Office fee.

·       Fifth track: Applicant pays the National Stage filing, search, and examination fee on filing, but a refund of the search fee may be provided if the international search report/international patent examination report (ISR/IPER) is prepared by the USPTO, or if an international patent office with which the USPTO has a bilateral search exchange agreement has done an ISR/IPER that can be exploited by the USPTO.
The multi-track examination process contemplates the USPTO exploiting prior searches, and therefore avoiding duplication of the time-consuming task of searching for prior art.  Exploitation of searches from other sources would be tested and piloted in a step-by-step process to ensure proof of concept. To the extent such exploiting of prior searches can identify issues of patentability directly, it will reduce the effective demand for examination services and the time examiners spend between reviewing an application and rendering opinions as to patentability. 

Patent Application Contract Search Fees


The proposed fee structure allows the search fee, as a separate component of the three-part filing fee transaction, to be set to recover the cost of searching.  As noted above in the second track, the USPTO plans to pursue the feasibility of contracting the search to CSS organizations.  The fee structure provides the USPTO the ability to adjust the search fee to recover the average cost to the Office of searches.

Patent Application Claims Fees


An increase in the fees for claims in excess of three independent claims and 20 total claims is proposed to reflect the additional burden that excess numbers of claims place on the Office.   Applicants sometimes need the added protection obtained from many more claims than the norm, primarily as insurance against adverse claim construction in subsequent litigation, and to obtain the breadth of protection to which they are entitled where there is no clear shorthand manner of drafting such claims.  This added protection, reflected in excess numbers of claims, comes at a cost in examination resources.  In particular, excess numbers of independent claims place additional demands on examination because of their complexity and the interplay of distinction and commonality that must be unraveled among them.  The proposal also provides that a refund of a portion of the excess claims fees may be given for claims that are canceled before an examination on the merits.

Patent Application Extension of Time Fees


An increase is proposed for extension of time fees to reflect the impact such extensions of time have on the pendency of the application’s prosecution in the Office.  Extensions of time are given to patent applicants for replying to Office communications or meeting patent prosecution requirements.  Applicants frequently would like the opportunity for additional time to more fully consider and prepare the requirement or reply.  To accommodate this desire, extensions of time are provided, but at a price to minimize excessive delays.  As pendency to issuance has deteriorated, however, these extensions of time are adding to the already lengthy delays in prosecution.  To mitigate against such delays, increased fees would reduce the extent of such extensions, which in turn, would help reduce overall patent pendency.

Patent Application Appeals Fees


The existing fees for appeal, including the fees due at the time of filing the notice of appeal, and at the time of filing an appeal brief, are proposed to be increased to more closely reflect the cost of appeal.  Existing appeal fees are set very low to support a policy of low cost appeals required to balance examiner discretion in rejecting claimed subject matter.  This policy accepted appeal as a component of the patent examination process, generally funded from the application filing, issue and maintenance fees, but with minimal fees to deter totally frivolous appeals.  The proposed policy direction of more precisely aligning fees with Office costs argues for increasing appeal fees on its own merits. 

Patent Application Specification Fees


The USPTO proposes to charge additional fee amounts based on the size of the specification presented for examination in a patent application.  The fee is related to the additional processing related to managing large paper application files.  This would exclude sequence listings and computer program listings that are filed in an electronic format.

Patent Maintenance Fees


Fees for maintenance of patents will be increased at each of the three time stages, to reflect the increased value of patents over a full term.  The legislative policy in setting maintenance fees has been to partially fund patent examination operations from patent owners who continue to receive value from their patent rights.  The recent trends toward intellectual property-driven economic growth have dramatically increased the value received by patent owners, and maintenance fees should reflect this trend to more fairly apportion the cost of the examination process to those receiving the greatest benefit. 

Patent Recertification and Reinstatement Fees


The USPTO plans to require periodic computer-based confirmation of the currency of a patent practitioner’s legal knowledge by re-certifying registered practitioners for continued authorization to participate in the patent application examining process.  Only those confirming their legal knowledge using a paper, as opposed to the computer-based confirmation, system will be charged a fee for additional incurred costs.  Both the computerized and paper delivered system assure a high level of quality, and provide registered practitioners additional currency of legal knowledge addressing more issues in greater detail and the opportunity to obtain additional certification of expertise.  The USPTO also plans to establish procedures for reinstating practitioners who have been administratively suspended, referring registered attorneys and agents found to have engaged in inequitable conduct, who continue to practice before the Office despite being administratively suspended, or who allegedly provide frivolous replies to Office actions.  These procedures will be accompanied by a new set of fees to offset expenses.

TRADEMARK FEES


The USPTO intends to fully implement significant changes in trademark operations to create a market-based system consistent with the 21st century economy.  In short, the USPTO will seek to offer services applying a market-based concept that will allow applicants to choose among three filing options that will affect speed of service and the nature of the applicant’s communications with the USPTO.  The proposed options will establish different fees for filing applications based on the resources that the Office is required to expend to process and examine the application.  Lower fees would apply to applications and other documents that are filed electronically, whereas fees for paper filings would be set at a higher rate to recover the costs of handling paper for those who would continue to file on paper.  Applicants who file “complete” applications electronically, and agree to conduct all communications electronically, will pay the lowest filing fees and receive expedited services from the Office.  Ideally, trademark applicants would have sufficient information to select the filing and examination option that best suited their needs and budget with costs controlled by the options that the fee structure would provide.

FUTURE FEE ADJUSTMENTS

The current USPTO fee legislation proposal incorporates most, but not all, fee changes that are considered necessary for the future efficient operation of the U.S. intellectual property protection system.  Additional fees and fee-related changes, such as those discussed below, will be addressed by the Office in future legislative or regulatory proposals.

Patent Application Accelerated Examination Fees


Accelerated examination or expedited patent application processing alters the relative timing among applications by assigning high priority for a fee.  Examination accelerates for priority applications, ensuring prompt attention, expediting the steps of the entire prosecution process, and achieving a final disposition within a guaranteed 12-month period.  The value to the applicant from this service is in obtaining the economic value of patent rights early, in minimizing the risks to the inventors, investors, producers and users, associated with an unknown ultimate scope of patent rights and an unknown length of time to obtaining those rights, and in maintaining momentum and knowledge throughout the prosecution process which keeps the applicant and examiner resources focused.
The specific search and examination services performed do not differ from normal prosecution, so an accelerated examination fee is not aimed at direct cost recovery.  Instead, it is a fee for assigning a preferential priority to an application.  Because there is no significant incremental cost associated with the fee, the fee helps offset the costs for all applications.  The fee must be set sufficiently high to discourage all but the most urgent cases.  If a majority, or even a substantial minority of applicants apply for accelerated examination designation, then those applicants will not receive the expected service because examiners will simply have multiple applications that come to the head of their docket.  The expected service will only be received when each affected examiner has only one or, at most, a few such applications.  This implies the fee, and other requirements, must be sufficiently high to limit “rocket docket” applicants to only a few percent of the total.

Post-Grant Opposition Fees

Another fee-related proposal is post grant opposition proceedings to provide for streamlined inter partes review of issues material to patentability.  The fees proposed depend on the cost of such proceedings and the extent to which they should be financed by direct fees.  Cost estimates would attempt to take into account the proportion of proceedings that would be expected to terminate prior to a final decision after full hearing on the merits, a factor that would be influenced by the precise design of the procedure.  The degree to which the process should be financed by direct fees imposed on complainants depends both on the value to third parties of such a proceeding relative to litigation, and the extent to which a system for canceling improper claims can be regarded as an overhead cost of the patent system as a whole.  

Patent Application Electronic Filing Fees


The USPTO proposes to charge more for filing patent applications and follow-on documents in paper than electronically for those submissions for which electronic delivery is available.  This proposal would allow applicants the choice to file in a way that is less efficient for USPTO operations, but that would capture the additional cost.  Over time, the proportion of fees generated by this differential should decrease, as patent practitioners switch to electronic filing.  The additional fees generated over this period, however, would help the USPTO finance its transition to full electronic processing of applications.
E-filing-related fees are charges for the service of accepting an applicant's submission in anything other than a properly formatted electronic medium.  These fees are premised on the USPTO use of electronic file wrappers in which all prosecution documents are maintained in electronic form.  USPTO will realize many administrative efficiencies with electronic file wrappers, including enhanced speed and security, and less expensive organization and storage, which argue for universal adoption of electronic file wrappers for all applications.  Thus, fees related to e-filing would reflect any services the applicant required in converting information to or from the requisite electronic form.

Patent Practitioner Registration Fees


The USPTO plans to require annual registration of registered practitioners and persons granted limited recognition.  Costs for maintaining the roster of registered practitioners through changes of address, protecting the public and practitioners by conducting investigations to determine whether there has been a violation of the disciplinary rules, and protecting the public by developing and maintaining current registration examination questions would be borne by registered practitioners renewing their registration in the form of an annual fee. 



[*] Section 4204 of the American Inventors Protection Act of 1999 (AIPA) directed the USPTO to “conduct a study of alternative fee structures that could be adopted [by the Office] to encourage maximum participation by the inventor community in the United States.”  See Pub. L. No. 106-113, 113 Stat. 1501, 1501A-555 (1999).  The study undertaken pursuant to section 4204 has been concluded and this proposed revision of patent and trademark fees is being submitted to Congress in fulfillment of the Section 4204 requirement.
Implementation Schedule
Work Breakdown StructureTask NameStartFinishProject Lead
22Shared Responsibility 1: FR-1 - Fee Restructuring - 200306/03/0204/01/04B. Spar, B. Kisliuk
22.1Draft fee scheme (FR-1)01/01/0301/01/03 
22.2Obtain administration clearance (FR-1)01/03/0302/04/03 
22.3Introduce legislation (FR-1)02/04/0304/15/03 
22.4Enact legislation (FR-1)08/01/0308/01/03 
22.5Rules (Phase I) for FY03 Fee Changes (FR-1)08/21/0308/21/03 
22.6Publish interim rules (FR-1)08/21/0308/21/03 
22.7Effective date (FR-1)08/02/0308/02/03 
22.8Update Internet with new fee schedule and crosswalk if necessary (FR-1)10/01/0210/03/02 
22.9Rules (Phase II) for FY03 Fee changes (surcharges for indistinct claims, spec size, RCE/129 conforming) (FR-1)03/01/0403/01/04 
22.10Publish NPR (FR-1)08/21/0308/21/03 
22.11Publish NFR (FR-1)03/01/0403/01/04 
22.12Effective date (FR-1)04/01/0404/01/04 
22.13PALM Expo, PALM Pre-Exam (FR-1)06/03/0209/03/02 
22.14RAM (FR-1)06/03/0206/03/02 
22.15OIPE staff for fee processing (FR-1)06/03/0206/03/02 
22.16TSS staff for fee processing (CPA, RCE, claims fees) (FR-1)06/03/0206/03/02 
22.17Examining staff (claims fee, restrictions) (FR-1)06/03/0206/03/02 
KEY: e Biz=online business system fees=fees forms=formshelp=help laws and regs=laws/regulations definition=definition (glossary)

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