The USPTO has published the new patent fee structure that it is implementing pursuant to its fee-setting authority under the Leahy-Smith America Invents Act (AIA). While some patent prosecution fees are decreasing, most large entities will see their total patent prosecution fees increase.  The majority of the new USPTO patent fees will take effect on March 19, 2013, but some will not take effect until January 14, 2014.

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 has interpreted this provision as giving it leeway to set specific fees lower or higher than the associated costs in order to promote its goals.

USPTO Objectives

According to the Federal Register Notice:

[The new fee structure will] will provide the Office with a sufficient amount of aggregate revenue to recover its aggregate cost of patent operations, while helping the Office implement a sustainable funding model, reduce the current patent application backlog, decrease patent application pendency, improve patent quality, and upgrade the Office’s patent business information technology (IT) capability and infrastructure. The fees also will further key policy considerations [and implement the new reduces fees for micro entities.]

The Federal Register Notice outlines the following “policy” objectives, and they ways in which the fee structure is designed to serve them:

  1. Fostering innovation
    –setting the basic filing, search and examination fees below cost-recovery levels to encourage innovators
    –offering fee reductions for micro and small entities
    –setting the issue and maintenance fees above cost-recovery levels to encourage release of less valuable patents to the public domain
  2. Facilitating effective administration of the patent system
    –encourage actions that enable examiners to provide prompt, quality interim and final decisions
    –encourage the prompt conclusion of prosecution
    –help recover the additional costs imposed by some applicants’ more intensive use of certain services
  3. Offering patent prosecution options to applicants
    –offering staged fees for RCEs, appeals, and contested cases

More Small Entity Fees

More fees can be paid at the small entity rate under the fee structure, although the fee for a statutory disclaimer under 37 CFR § 120(d) no longer will be subject to a small entity reduction.

Overview Of Significant Fee Changes

The Federal Register Notice divides the fee changes into two major categories:

  1. Fees where large entity amounts changed by greater than plus/minus 5 % and $10
  2. Fees where large entity amounts stayed the same or did not change by greater than plus/minus 5 % and $10

Fees in the first category fall into one of four further categories:

  1. Fee set at cost recovery
  2. Fee set below cost recovery
  3. Fee set above cost recovery
  4. Fee not set using cost data as an indicator

Looking at Table 4 of the Federal Register Notice (“Patent Fee Changes”), it appears that only the fee for a Request for Prioritized Examination (Track 1) is set at a cost recovery level. This fee is going down from $4800 to $4000 for a large entity.

The fees set above a cost recovery level make up a short list: pre-grant publication fees, issue fee, maintenance fees. Of these, only the maintenance fees are actually increasing (by $450, $700 and $2590 for a large entity for the 3.5 year, 7.5 year and 11.5 year fees, respectively).

The fees that are not set using cost as an indicator include extension of time fees (increasing), application size fees (increasing), excess claim fees (increasing), and a new fee for correcting inventorship after the first Office Action on the merits ($600 for a large entity). Additionally, the fee for a derivation petition will be $400. Interestingly,  after January 1, 2014, there will be no fee to record assignments submitted electronically, although the fee to record assignments not submitted electronically will remain $40.

While most fees are being set below cost recovery, this does not mean that they are decreasing. The filing and search fees are decreasing, but the examination fee is increasing, for a net increase in initial fees of $340 for a large entity. RCE fees are increasing to $1200 for the first RCE for a large entity and $1700 for each subsequent RCE. The Notice of Appeal fee is increasing to $800 for a large entity, but the Appeal Brief fee is being dropped. On the other hand, there is a new fee of $2000 for a large entity for forwarding the appeal to the Board.

The new fee structure also makes promised changes to the fees for the new or post-grant proceedings, reducing the fees for ex parte reexamination and supplemental examination, and implementing new, staged, ”per claim” fee structures for inter partes review, post-grant review, and covered business method patent review.

Misplaced Blame Justifies RCE, Appeal Fees

The USPTO justifies the higher fee for second and subsequent RCEs by asserting that applicants who file more than one RCE are “using the patent system more extensively” than other applicants. This justification ignores the possibility that multiple RCEs may be required to obtain consideration of Information Disclosure Statements, or that an application may be assigned to an intransigent examiner. Stakeholders who disagree with the USPTO should consider responding to the USPTO’s request for comments on RCE practice, which are due by February 4, 2013.

The USPTO justifies the new appeal fee structure with reference to the high costs of the appeal process. Further, the USPTO estimates that only 5% of applicants who receive a final rejection will proceed to the Board stage of an appeal, and that only 1/3 of applicants who file a Notice of Appeal will pay the new “appeal forwarding fee.” Responding to comments that appeals often are due to “examination problems,” the USPTO cites a statistic that “over 65%” of Board decisions affirm at least some of the rejected claims. However, included in that 65% statistic is the 15% of rejections that are only affirmed-in-part. Given that the Board outright reverses about 1/3 of appealed rejections, it is astounding that the USPTO does not believe that the appeal statistics reveal problems with the examination process.

Overall, Patent Costs Will Increase

Overall, it is likely that patent prosecution costs for a typical pharmaceutical application will increase, particularly if the application includes more than three independent claims or more than twenty total claims, or requires even one RCE or Notice of Appeal. While many companies already have set their patent budgets for 2013, they can start now to plan ahead for 2014.