On Wednesday, February 15, 2012, the Patent Public Advisory Committee (PPAC) will hold its first public hearing on the patent fees that the USPTO proposes to charge in accordance with its new fee-setting authority conferred by the America Invents Act. In advance of this meeting, the USPTO released several documents outlining and explaining the proposed patent fees. Even taking the USPTO’s cost estimates at face value, I have several questions and concerns about some of the proposed fees.

The USPTO’s Fee-Setting Authority

The AIA requires the USPTO to set fees “only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees) . . . including administrative costs.” The USPTO interprets this provision as giving it leeway to set specific fees lower or higher than the associated costs in order to promote its goals, including incentivizing and disincentivizing certain applicant behaviors.

Primary Goals

The USPTO states that its proposed fee structure is designed to serve three goals:

  1. Reducing the backlog of unexamined patent applications and reducing application pendency
  2. Realigning the fee structure and adding processing options so that applicants can make more informed decisions
  3. Improving the financial sustainability of the USPTO, including building an operating reserve

Filing, Search, Examination Fees

The USPTO proposes to set filing, search and examination fees below cost in order “to enable lower cost of entry into the patent system.”

Is this like a “loss leader” that will lure in hapless applicants, who only will realize the true costs of obtaining a patent when it is too late to opt for trade secret protection?

Inventor Oath/Declaration Fees

Although the proposed rules to implement the inventor oath/declaration provisions of the AIA did not reflect significant changes from current practice (e.g., the USPTO still proposed to require an executed inventor oath/declaration during the initial processing stage), the proposed fees indicate that the USPTO is considering a different approach. Indeed, the USPTO’s “Detailed Appendices: Patent Fee Proposal” states:

These fee proposals are the result of public input to date that suggests that the USPTO should allow applicants to delay the submission of a declaration until allowance.
(Isn’t that what the AIA provides?)

Still, the USPTO clearly wants to discourage the late submission of an executed inventor oath/declaration, because it proposes to charge $3000 “to file an oath/declaration up to the notice of allowance” and $1700 to correct inventorship during examination when an executed inventor oath/declaration was not provided before examination.

Request For Continued Examination Fee

The USPTO proposes to set the Request for Examination (RCE) fee at a cost-recovery level, but this makes it higher than the fees associated with a new application and 83% higher than the current RCE fee.  The USPTO states that it is considering ways to soften the blow by

  • Improving the ability to submit an Information Disclosure Statement (IDS) after the Issue Fee has been paid without filing an RCE
    (What about making it easier to file an IDS after a final rejection? The current IDS rules provide a mechanism for submitting references cited in foreign counterpart applications, but not those cited in co-pending U.S. applications)
  • Incentivize examiners to consider amendments after a final rejection to identify allowable subject matter
    (The USPTO should revisit—and revise—37 CFR § 1.116 which in its current form only gives applicants a right to cancel claims after a final rejection—all other options are up to the Examiner’s discretion. The USPTO also should retract MPEP § 706.07(b) which permits Examiners to issue a final Office Action as the first Office Action after an RCE.)

Appeal Fees

The USPTO states that it proposes to increase appeal fees to provide necessary resources to the Board, to help reduce the backlog of ex parte appeals. Beyond that, the USPTO proposes to change the structure of fees associated with an appeal:

  • The large entity Notice of Appeal fee would go from $620 to $1500
  • The large entity Appeal Brief fee would go from $620 to $0
  • The large entity Appeal fee (after an Examiner’s Answer) would go from $0 to $2500
  • The large entity Oral Hearing fee would go from $1240 to $1300
  • The total large entity appeal fees would go from $1240 ($2480 with an oral hearing) to $4000 ($5300 with an oral hearing)
  • If the final rejection is withdrawn prior to an appeal (prior to the Appeal fee being paid?), the applicant will be entitled to pay $0 for the combined Issue Fee/Publication fee.

The USPTO states that the “objective for the changes . . . is to create a fair and equitable environment” by “recovering costs” for appeals while also reducing “fee burdens associated with withdrawn final rejections.” The USPTO believes that the new fee structure will permit applicants to “reduce the amount invested in the appeal process until receiving the examiner’s answer.” (Never mind the substantial costs of preparing an Appeal Brief!)

The USPTO’s proposed appeal fee structure and analysis ignores the common use of a Notice of Appeal to “buy time” and maintain pendendcy after an after-final response. Unless an applicant files a response within two months of the final Office Action, the six-month statutory response period continues to run while the applicant waits for the Examiner to issue a new Office Action, Advisory Action, or Notice of Allowance. Increasing the Notice of Appeal fee will further penalize applicants for USPTO delays, and will generate fees far in excess of the costs associated with the Examiner’s consideration of the after-final response.

Supplemental Examination Fee

 The USPTO proposes to set fees for the new Supplemental Examination proceedings above cost “to encourage applicants to provide all relevant information during initial examination.”

I can’t believe that the USPTO thinks that applicants need more incentive to disclose information during prosecution–the threat of inequitable conduct is much greater than even these high fees! (And where are those Therasense rules?)

Micro Entity Fees

The proposed fee schedule includes the new micro entity fees, but does not provide any insight or guidance on the definition of “micro entity.” Instead, the USPTO notes that its “proposed rulemaking with procedures for making a certification of micro entity status” is forthcoming.

Public Hearings, Written Comments

The February 15th public hearing will be held at the USPTO’s Alexandria, Virginia campus from 8:00 am to 3:00 pm, and will be webcast. Another public hearing will be held on February 23, 2012, at the Sunnyvale Public Library in Sunnyvale, California.

Written comments on the proposed fees should be submtted to the USPTO by February 29, 2012.