USPTO Fee Report: Discounts Don’t Cut It for Incentivizing New Patent Participants

The U.S. Patent and Trademark Office (USPTO) today announced the findings of two reports conducted by third-party academic economists and submitted to Congress late last year, as required by the Unleashing American Innovators Act of 2022 (UAIA).

One report examined the impact of patent application fees on entry into patenting, while the other focused on the USPTO’s fee structure and addressed issues such as “the potential impact on small and micro entities, whether fee structure changes are needed, and recommendations for administrative and legislative action.”

The reports were commissioned by the USPTO and conducted by academic economists Gaétan de Rassenfosse of Ecole polytechnique fédérale de Lausanne, Switzerland; and Adam B. Jaffe of Brandeis University and Motu Economic and Public Policy Research, New Zealand.

New Patent Applicants Are Deterred by More Than Fees

According to the report on the impact of “The Effect of Application Fees on Entry into Patenting,” USPTO fee reductions for small and micro entities have little effect on increased participation in the patent system.

“The major changes in participation were driven by non-fee-related factors, such as shifts in patent legislation (e.g., the transition to a first-inventor-to-file system) and external events like the COVID-19 pandemic,” said the report’s Executive Summary. Thus, while the current fee levels for small and micro entities do not inhibit patenting, they also do not incentivize it.

“[T]hese entities are more sensitive to the complexities and greater costs (external to the USPTO) of the patent process, but similarly responsive to legislative changes and global events as undiscounted entities,” said a USPTO summary document.

The report did not address the cost of internal factors like the Patent Trial and Appeal Board (PTAB) as part of the calculation for new entrants, but noted that “the substantial costs associated with patent attorneys, ranging from several thousand to tens of thousands of dollars, coupled with the opportunity costs that first-time patenting entails, may deter even the most optimistic potential applicants from engaging in the process.”

In another key finding, the report said that “the rate of new entrants among entities that pay small-entity discounted fees has been steadily declining, raising concerns about the long-term accessibility of the patent system for smaller players.”

Ultimately, the authors said that outreach programs to increase awareness and measures to simplify the patent application process would be more beneficial than additional fee reductions.

Fee Structure Report Recommends New Fees for Continuations

The report titled “Framework for Analysis of U.S. Patent Fee Structure Options” generally concluded that the Office’s current approach is satisfactory, but recommended that the agency could consider imposing an additional fee for continuation patents, which almost always expire before all maintenance fees are due, to help recover its costs. The report explains:

“For most patents, the filing date or domestic benefit date is a few years before the grant date, and if the patent is maintained for its maximum duration, all maintenance fees are paid. There are, however, some patents (mostly, but not entirely, continuation applications) for which the domestic benefit date is long before the grant date. For these patents, it is clear at the time of grant—and predictable at the time of application for many applications—that the patent will lapse before all maintenance payments come due.”

While the Office currently is able to set fees to account for this issue, the report suggested that “it would be desirable to impose, in some way, an additional fee or fees to be paid in connection with patents whose priority date is significantly before the filing date,” either through Congressional action or rulemaking. The authors proposed several options for addressing the issue, including:

• “Identify at the time of grant what maintenance payments will be made on any given patent if it is maintained for its full life” and adjust fees accordingly;
• impose “a single additional fee due with publication of the patent”; or
• “make all renewal fees payable on a schedule based on the application date rather than the grant date, as is done by the EPO. For this to capture full revenue from continuation patents, the application date used would have to be the domestic benefit date.”

Regarding option three, the report added, “this would in principle have the additional benefit of discouraging behavior that drags out the examination process.”

The report also recommended extending the USPTO’s fee setting authority beyond the September 2026 date contemplated by the SUCCESS Act.

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Author: iqoncept
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