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47 “Let’s not sugar coat this. Charging patent owners a percentage of the overall value of a patent is catastrophically stupid.”
Commerce Secretary Howard Lutnick
The Wall Street Journal is reporting that the Trump Administration is considering a major change to patent fees, which would charge patent holders somewhere between 1% to 5% of the overall value of the patent.
Although the United States Patent and Trademark Office (USPTO) is reportedly circulating draft proposals and financial models, no specific framework has been leaked. However, in addition to obvious valuation complexities that go beyond anything the USPTO currently does, if the Trump Administration is going to charge patent owners a percentage of the value of the patent, the most logical way to do so would be through dramatically increased maintenance fees.
Maintenance fees are fees paid throughout the life of a utility patent to keep patent alive. No maintenance fees are due for design patents, which enjoy a fixed term. If maintenance fees are not paid, a utility patent covering an innovation becomes abandoned and falls into the public domain.
Understandable, But Shortsighted
While outside the box thinking to to address the $37 trillion national debt should be commended, charging patent holders a percentage of the overall value of a patent will be as complex as it is fraught with peril and unintended consequences. If this idea were to eventually become law many hundreds of thousands of patents—perhaps more—would be abandoned almost overnight.
Top patenting companies in the United States, such as Apple, Alphabet, Intel, Dell, Micron, Samsung, LG, Toyota, Sony, Panasonic, and Amazon obtain thousands of patents each year, but never—or almost never—assert those patent rights against anyone. And, as a result, those companies and many others who acquire patents for purely defensive purposes will almost certainly stop acquiring patents and instead move to a defensive publication policy. Indeed, as patent professionals well know, if information about an innovation is first published it will act as an absolute bar to anyone else ever obtaining a patent. So, if you are acquiring patents for purely defensive purposes, the publication of information about an innovation provides all the benefit without any of the cost.
Black Magic Doesn’t Work in Practice
And, let’s be honest, patent valuation is more black magic than it is science. And patent valuation is something the USPTO has never done and has no experience with. So, exactly who is going to do the valuation and what rights would patent owners have to challenge the exaggerated valuations?
On top of large multinational corporations almost certainly choosing to forego the U.S. patent system, a fee based on the overall value of the patent is unlikely to do anything other than annihilate research and development companies, who engage in often speculative R&D that leads to many failures as they attempt to push science and engineering forward by leaps and bounds. So, will this plan give rebates for patents that are completely worthless? Or what about patents that are not just merely worthless, but (the vast majority of all patents) that have negative value, having cost many thousands of dollars to obtain but that have no positive value in the marketplace?
The Elephant
And, of course, there is the elephant in the room, which is the unilateral dismantling of the U.S. patent system over the last generation. As a result of patent eligibility requirements run amok, some of the most innovative and valuable inventions of this generation are simply not patentable. Much of the innovation in the software, biotech and medical device industries have been summarily executed by the United States Supreme Court’s patent eligibility decisions in Bilski, Myriad, Mayo and Alice, including many artificial intelligence innovations. And, even when the USPTO is willing to grant patents in the software, artificial intelligence, biotech and medical device spaces—which isn’t often—those patents almost always fall to eligibility challenges in federal court, and often fall to novelty and obviousness challenges at the hyperactive Patent Trial and Appeal Board (PTAB).
So, let’s not sugar coat this. Charging patent owners a percentage of the overall value of a patent is catastrophically stupid.
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Join the Discussion
47 comments so far.
George Wileman
September 1, 2025 07:14 pmGo ahead and charge tariffs on non-US applicants. Then ROW can tell you to go **** **************** when you want to file patents in their countries. If the US is truly so innovative, the US will be the one hurt. Then the US can try and be like China used to be and copy great Chinese innovations, like their 5G developments and biotech advances. Not just the US admin that is catastrophically stupid, but commentators here also.
Anon
August 5, 2025 08:56 am(Apparent) Hack Hater,
? Please do not deign to speak for others.
Pro Say
August 1, 2025 08:33 pmHacker: “you’re rapidly alienating your own (very small) audience while eroding whatever credibility you may have once had on this subject.”
This from a guy who says he wants actual facts and figures . . . yet provides none for his assertions.
As for attempting to charge an asset tax on patents; one word:
Unconstitutional.
(Apparent) Hack Hater
August 1, 2025 04:08 pmGene,
I am sorry that you don’t seem to be able to support your own wild assertions or engage in any substantive discussion here (since you are apparently out of your depth). You haven’t provided a single piece of actual (reputable) data to support your non-sensical statements, and with good reason: you are factually incorrect on many, if not all, of them. Tellingly, you also did not dispute my prior point that you lack even the most basic credentials to make the affirmative representations that you are making/regurgitating. And rather than engage, you childishly resort to name calling before taking your toys and going home (figuratively). That’s really sad. As I said, you’re rapidly alienating your own (very small) audience while eroding whatever credibility you may have once had on this subject. If that’s your objective, congratulations!
In the meantime, the rest of us will be out here actually practicing law in this field and dealing with the multitude of headaches this Administration is causing. But by all means, if it makes you feel better to insult people in the comment section of your blog, go right ahead.
Gene Quinn
July 31, 2025 07:55 am@Jingleheimerschmak…
Convenient that you can’t give your name out. But nevertheless, as I said to @Apparent Hack Hater, further debate on this issue will require you to divulge your name. I’m out in the open and not afraid, and I’m happy to provide citation after citation to the long list of Trump accomplishments (and Biden failures), but I’m not willing to debate a ghost that is just trolling.
Gene Quinn
July 31, 2025 07:51 am@Apparent Hack Hater…
Obviously, you are trolling. Everything I’ve said is fact and it is well-reported in reputable media. That you don’t know what I’ve said to be fact is an indictment of the fake news you choose to consume. Your ignorance is not my problem.
I’m happy to debate you further, and I’m happy to provide all the references to prove I am right and you are wrong, but that will require your real name. Since you are obviously trolling, further conversation requires you to come in from the shadows and own your lies and ignorance.
Ponch Bruevich
July 30, 2025 10:42 pmThe idea to address the mounting national debt by hiking tariffs and taxes instead of balancing the bloating expenditures is hardly a silver bullet, but if this path is a goal – a change to income tax should be more than adequate of a tool to do just that.
Jingleheimerschmak
July 30, 2025 09:02 pmYes, I know you. And I respect you. Just disappointed that you cannot provide objectivity with your analysis here like you do in your day job.
I cannot give out my name (already had threats, I cannot put my family at risk. Sorry, but that is the world we live in).
I think that pointing out that Trump is doing a “wonderful job” is merely an opinion and not a statement of fact, and the extra twist of suggesting that others that think otherwise “just aren’t being honest” is quite alienating.
Rupert Murdoch runs both the Wall Street Journal and FOX News and their performance is less than stellar and his relationship as a Trump mouthpiece is well known (although things are changing). I don’t have cable, so CNN and MSNBC are not in my rotation.
Bottom line, things are not as “fantastic” as you say.
Stephen Schreiner
July 30, 2025 06:28 pmSeems like a very bad idea. Patent valuation is notoriously difficult. At least maintenance fees are predictable (they are fixed). There is also tension between this proposal and the administration’s statement of interest in the Radion/Samsung case that argues for more availability of injunctions because damages analysis is so unreliable. Let’s hope the administration (which has most definitely been pro-patent so far) and the community focus energy on meaningful changes that will fundamentally reform our patent system so that it is “Great Again” (e.g., eliminate the Supreme Court’s misadventures with the Alice/Mayo and eBay-Merc decisions) compared to other patent systems that are surging (e.g., EU, etc.).
Doug Pittman
July 30, 2025 05:37 pmNothing but great movements and reform of a disastrous patent system will happen in time.
Lots of speculation and banter because people don’t understand what’s happening within this concept and how it’s going to work.
Idk, kinda a cool idea – Devil’s always in the details (which everyone will see explained soon ) but the administration’s flipped the script on tariff / trade for the better, why not intangible assets (patents) alongside? Worth a think….I think.
Remember Howard is a patent holder and friend of the IP world. He’s extremely smart.
No one in their right mind would ever think he would damage his own portfolio and inventors / investors economic positions.
Patience folks patience.
Greg Aharonian
July 30, 2025 05:25 pmGene writes: “There are undoubtedly people at the USPTO that do not like this proposal, but there are some who enthusiastically support the idea.” That “enthusistically” scares me.
Taxing patent value will run into the same problem that a proposal 20 years ago from Pam Samuelson and Mitch Kapoor (and IRS experience with patent donations) ran into: government bureaucrats know little about free markets and valuations. The vast majority have never spent their own money starting/running businesses, they have never spent their own fighting on an endless stream of Office Action rejections, etc.
Pam and Mitch proposed a sui generis form of protection, to replace software patents and copyrights. While their proposal suffered from being a vague hybrid of patent and copyright law (think of the patent-law-stealing actual hybrid, Altai), one aspect of their proposal was that government bureaucrats would determine the fair-market lifetime of this sui-generis protection (i.e., your software is valuable enough to earn X dollars in Y years, so you have Y years of protection). Their proposal was loudly criticized, especially this part. Indeed, many wondered why Mitch (the founder of Lotus 1-2-3), with huge successful experience in the marketplace was proposing government bureaucrats assess software value. (Years later, over lunch, I asked him about this, and he admitted that he hadn’t read this part of what was mostly Pamela’s proposal).
Who is going to assess the value of a company’s patent portfolio, to then levy a tax on the value? Someone has to.
Sorry, but no one in the Commerce Department has such experience. The IRS’s problem with patent tax deductions was that you cannot rely on self-assessment by the patent owners (in the case of deductions, they claimed overly inflated values; in the case of value taxes, they will claim overly minimized values). Independent third parties? Maybe, but only if they somehow guarantee their valuations. Which they have never done in the last 30 years, and won’t do so going forward. Doing so is a huge gamble, and accountants don’t gamble.
The SEC? After all, they have to assess the financial accuracy of corporate reports, which is the type of analysis similar to patent valuation. Indeed, at least for publicly traded companies, the Commerce Department could ask Congress to order the SEC to order companies to include the value of their IP (and this taxation idea is DOA if it doesn’t include all forms IP) – and non-traded companies could use the same reporting mechanism.
In theory I like this idea of the SEC getting involved – they are the most business-saavy agency in the government. And here we run into the mega-super-grande problem of patent quality. Patent value is highly correlated to patent quality (except for trolls, hahaha), and in this year of 2025, the state of patent quality is as dismal as it was when I got involved with software patents in 1995.
For example, the PTO’s definition of patent quality still is pretty much “a quality patent is one that the Examiner examined in light of as much as MPEP as possible”. This is a bureaucrat’s definition of quality, because it focuses on checklists, not real determinants of quality. MPEP says the examiner must do a “search”. But MPEP does not say how long, how exhaustive, how relevant the search should be. Any “searching” satisfies this checkbox. This is why the majority of issued software patents still cite no non-patent prior art, despite me whining about this issue for 30 years (with statistics).
Second, the reason that the USPTO can’t be involved in valuation assessments, is that the USPTO doesn’t consider patent enforcement during patent examination. Not that it should, as 35 USC does not assign the USPTO that role, but enforcement is as huge a factor in patent valuation as patent validity. An issued patent that fully satisfies MPEP, but is unenforceable, has zero value. China exacerbated one aspect of this problem. You invent and apply for a patent on a new gizmo. Someone in China (or anywhere else) sees the invention, starts manufacturing your gizmo and selling them in the USA. If your patent ever issues, by then much of the profits have been obtained by others, who by then have shut down their businesses in case you try to sue them. You have a high quality patent according MPEP, but a low value quality patent due to the realities of the business world.
I have a paper (glad to post here) on why all quantum computing software patents and most AI patents are unenforceable (think the speed of light). In the patent insurance world, I assign most of these patents a value of zero. Yet many satisfy all of MPEP.
Thus, taxing patent valuations will require, finally, a serious addressing of measuring patent quality, and patent enforceability. But under whom? The USPTO cannot be assigned the task of measuring patent quality – self-assessments never work in the government (nor in the business world). Some other government agency in the Commerce Department such as the SEC? Maybe, but if they seriously pursue such tasks, there will be a major intra-agency battle.
Can we rely on some private sector, a Moody’s/Fitch-like rating service for patent value? While I like the idea of a private sector solution, such a service will need to “put their money with their mouth” is, and offer some sort of guarantee of the value (which then leads to an appeal process and this whole idea getting bogged down in the courts).
If they do have to provide some sort of guarantee, I know exactly what will happen, because I do this for a living (I assess the value of patents for Collateralized Patent Insurance, which is a form of guarantee on the value of a patent portfolio). They will issue assessments at (very) low valuations, to protect their interests and in light of their knowledge of the valuation deflating impact of validity and enforceability.
One reason what Collaterized Patent Insurance is still in its infancy, is that most insurers are assessing portfolio of patents written/examined/issued under the current nebulous standards of patent validity. Well, the insurance companies have carrier monies at risk, so they go for the throat, so to speak, and examine every weakness possible. And the result (at least for my cases), is that only a few percent of assessed portfolios have any legitimate value to allow some of that value to be collateralized.
So if the insurance people are struggling with this issue (who are the ideal candidates to be the Moody’s of patent value), it is a good indicator that whoever in the Commerce Department/USPTO that supports patent taxation really has no idea of the reality of patent validity, enforceability and valuation.
Which is why this proposed tax is a non-starter. It will generate inadequate amounts of revenue that won’t be worth the huge amount of controversy and pain the tax will cause.
I know the experts in patent valuation across the country, few in number and most in the patent insurance world. None are being asked for their input by the people proposing this tax. Why?
The proposed tax will never happen.
(Apparent) Hack Hater
July 30, 2025 05:04 pmGene,
Once again, you did not provide a single link to a reputable source or a single quantitative piece of data to support your list of “facts.” (And vaguely alluding to “the Wall Street Journal and Fox News” is hardly satisfactory, even under the most lax standards of proof.) If anything, your recitation reads like talking points from a representative of the current Administration, and it is riddled with misinformation. (For example, contrary to your assertion that “Stock market at all time highs,” the DJIA hit its peak on December 4, 2024, during the former Administration. That is an objective fact, and a simple Google search would have revealed it to you.) I would think/hope that you would prefer to maintain an appearance of objectivity, but perhaps I am wrong.
Furthermore, statements like “wars and disputes are being resolved all over the globe” belies a startling lack of information and awareness. Here again, perhaps you are best served sticking to topics that are more in your wheelhouse. You are not an economist or an economic expert, nor are you an expert on geopolitical conflict or even a journalist. Regurgitating Fox News headlines is not exactly an effective way to persuade.
Anon
July 30, 2025 04:46 pmIAmI
That you continue your nonsense only proves my point about you being butsore about something.
Clearly (whether or not ‘available elsewhere’), I made it clear that I could not see the entire article, so my comments were limited. There IS no way given my position that I could LEAP to the conclusion that you would so leap to.
Put that shovel down, and at the very least, remind me of which post of mine bent you so out of shape that you hold this grudge of yours. Frankly, none of you past posts are that memorable.
Anonymous
July 30, 2025 04:03 pmI’m still wondering what a maintenance fee maintains. After payment of the first maintenance fee, the patent owner has a settled expectation the Office’s determination on patentability is final.
The only tax that makes sense is to eliminate maintenance fees, then tax at 1% the revenue from patent licenses, capped at, say, $50k. The Office generates revenue only if its interests are aligned with the interests of the inventor.
Gene Quinn
July 30, 2025 03:33 pmIaml…
You seem to believe the USPTO is not supportive of this patent tax idea. That is incorrect, at least in part. There are undoubtedly people at the USPTO that do not like this proposal, but there are some who enthusiastically support the idea. I understand that John Squires thinks this a good idea and looks forward to implementing it once he is confirmed.
Gene Quinn
July 30, 2025 03:28 pm(Apparent) Hack Hater…
I don’t want to alienate anyone, and I’d be happy to debate you if you want to provide your name we can arrange it. As for my initial statement, I was accused of getting what I deserve presumably because I’m a Republican. So, I just pointed out that Trump is doing a wonderful job and said that if people think Trump is doing a poor job they just aren’t being honest.
And you claim my list is subjective (which is isn’t of course) and without any credible data. I provided a very specific list, which is all easily verifiable. If you want to stay in the dark that is up to you, but all of what I said has been pretty thoroughly covered by the Wall Street Journal, FOX News and other reputable sources. Of course, CNN and MSNBC haven’t told their viewers the truth, but they’ve gotten pretty much every story of consequence wrong over the last decade-plus.
And, to refresh, I pointed out the follow facts:
1. Tariffs are working and economies previously closed are opening up to American business with 0% tariff.
2. No recession despite predictions otherwise.
3. Hundreds of billions coming into the Treasury.
4. Hundreds of billions of waste cut from the budget with more coming.
5. Wars ending and prevented all over the globe.
6. Stock market at all time highs.
7. Biden inflation is gone!
8. Military recruitment surging after 4 years of missing quotas.
So, clearly I did point out specifics. And they are all easily verifiable and really well-established at this point.
I could also add…
1. Iran deprived of a nuclear weapon.
2. Trump Administration fighting anti-semitism across the country.
3. Gas prices down… and egg prices too!
4. Petroleum dyes being eliminated from our food supply.
5. No tax on tips or overtime or social security.
And I could go on and on.
Gene Quinn
July 30, 2025 03:12 pmJingleheimerschmak —
I’d love to debate you because pretty much everything you said is wrong. For example, gas prices are down, inflation is down compared with what it was when Biden was President, and wars and disputes are being resolved all over the globe. Not sure why you ignore what is really happening, but I’d still love to debate you. So, why don’t you tell us who you are?
Ron Katznelson
July 30, 2025 02:55 pmIamI:
Your argument below with Anon as to who the article attributes this proposal is irrelevant and besides the point. This is because, as I explained below, “we do not know how, and who from the outside or inside actually influenced this push for a ‘patent valuation’ trial balloon.”
Do not get distracted by the surface story here; focus on the real motivation behind this proposal, and tell us who you think benefits from the public discourse on it.
Willie b Brown
July 30, 2025 02:28 pmDot coms maybe the only hope left , when they get through gutting the fish
IamI
July 30, 2025 11:16 am?
The part that says it’s Lutnick’s idea is not pay walled, and the rest of the article can be found elsewhere.
You’re allegedly smart, yet do so well at playing dumb and resorting to insults when it suits you.
Anon
July 30, 2025 10:44 amIamI…
Really?
Why are you so butt-sore?
“Anon, even the part of the article that’s not pay walled says this is Lutnick’s idea, not the USPTO’s. Try to be more accurate with your commenting.”
Please note what I actually stated:
“Third, the article is behind a paywall, so the details are obscured and further issues are not yet available for me to critique.”
Jingleheimerschmak
July 29, 2025 10:37 pmThe USPTO is not a money-losing entity, and by all accounts, the proposed changes will not improve the process or quality of the product.
This is a pure money issue. The administration needs to close the funding gaps and they are ripping out the cushions looking for loose change in the sofa.
Bob Kelson
July 29, 2025 06:28 pmRather than the nebulosity of attempting to assess the “value of a patent”, more frequent requirements for payments of maintenance fees on a gradually increasing amounts would be better, similar to, but perhaps not as frequently as in European countries and Australia. This is provided that the maintenance fees are for the USPTO and not a cash grab for the Federal coffers.
Gregory Aharonian
July 29, 2025 05:09 pmTaxing patent valuation for government revenues makes little economic sense. What Lutnick and others in the Commerce Department don’t realize is that most patent valuations are WAY overvalued. Taxes on accurate valuations will not be that large (except for the drug patents, and that industry will get its exemption). For a variety of reasons.
First, most patent valuations do not discount for patent defense insurance. A patent is worth little more than the price of a patent defense policy against the patent. Most software patents, for example, can be insured against for less money than was spent on patent prosecution. That is, the patent is worthless at issuance, and in most cases, worthless at filing.
Indeed, a patent insurance policy to defend everyone in the USA from patent infringement lawsuits would cost less than the $5 billion spent on patent prosecution each year. But since patent valuation companies don’t understand patent insurance, this is never considered (see the scam of the Blackberry valuations from a few years ago – from hundreds of millions of dollars to zero when the deal collapsed).
The second reason is that too many patent valuations ignore patent validity. The accountants who mostly do these valuations don’t understand the details of technology, which is needed to consider prior art for patent validity. The value of a patent is little more than the cost to find one good piece of 102 prior art (which again will cost less than the prosecution cost), which is what patent insurance companies pay me to find for their patent defense policies. Why? A good piece of 102 art allows the insurance companies’ litigators to file for a motion to dismiss and for attorneys fees, and scare the other side.
The questionable nature of patent valuations versus patent insurance can be seen in guarantees. Pay for a patent valuation, they never guarantee the valuation they determined. But a patent defense insurance policy is required by contract law to cover your litigation expenses and damages (within limits). That guarantee implicitly makes the premium a guaranteed valuation of the patent.
The third reason is that case law is very hostile to patent owners. When you have 2000 pages (Patent Litigation for Patent Drafting) of way too many court decisions that help kill patents (few being more unjust than Chef America, Alice refusing to explicitly define ‘abstract’), you undermine patent value by making it easy to kill even good patents.
Patent valuation has been a decades long scam, which I am proud to have helped fight one battle. Around 22 years ago, the IRS had to deal with billions of dollars of patent valuations being claimed as deductions related to patent donations. Unlike the Commerce Department, the IRS had no problem saying that it didn’t know how to assess self-valuations used to justify the patent-related deductions. They brought some patent validity experts in, we introduced them to the reality of patent valuations, and they soon realized that the IRS could never really handle this issue.
So they got Congress to pass a law saying that you could only deduct for a patent donation, the revenues generated by the recipient using your donated patent(s). Patent valuations for donations went from billions of dollars a years, to tens of millions of dollars a year. Scam.
So this proposal of the Commerce Department is wrong because a) it is an insult to patent owners (as people above say, apply the same tax to copyright owners), b) it won’t bring in any significant amount of revenue, and c) patent owners should be able to deduct the cost of acquiring the patent from the assessed tax which will lead to even less revenue.
And Lutnick should know some of this, given some of the past practices of Cantor.
(Apparent) Hack Hater
July 29, 2025 04:37 pm“Only hack haters could deny that President Trump is doing amazing work.”
Statements like this not only serve to alienate (potentially significant) portions of your readership, but they are also purely subjective since you have not provided any reputable data (or even citations) for support or discussion. (Though it is not clear to me that you have any real interest in meaningful discussion on the subject given your choice of invective for those who disagree with you.) Furthermore, your myopic assessment of economic conditions seems to overlook a number of key indicators, as pointed out by Jingleheimerschmak.
Perhaps the better approach here is to stick to the topic at hand–on which I think we all agree–the shortsighted and seemingly ill-conceived proposal.
Brian Smith
July 29, 2025 04:31 pmBoth WSJ and Gene Quinn’s critique of the proposed patent value tax misses a critical angle: this policy might be aimed at “curbing tax avoidance strategies” like the “Double Irish with a Dutch Sandwich”, not just raising revenue from small inventors. Tech giants like Apple, Google, and Microsoft have historically assigned inflated values to patents and other IP, routing profits through Irish and Dutch subsidiaries to tax havens like Bermuda, dodging U.S. taxes. In 2017, U.S. multinationals held over $1 trillion offshore, with Google moving $75.4 billion through such structures in 2019 alone. The Trump administration’s 2017 Tax Cuts and Jobs Act tried to address this by encouraging profit repatriation, but companies adapted with new offshore strategies.A 1% to 5% tax on U.S. patent value could target these inflated IP valuations, making it costlier to use patents as vehicles for profit-shifting to low-tax jurisdictions. This aligns with broader “reshoring” efforts to bring IP and economic activity back to the U.S. However, the proposal’s broad scope—applying to all U.S. patents—muddies its intent, leading to misinterpretation as a blunt revenue grab. As Quinn and commenters note, it risks harming innovation, encouraging patent abandonment, or pushing companies toward trade secrets, especially for small inventors. The valuation challenge, highlighted by commenters like “Patent Attorney,” further complicates enforcement, as most patents lack clear market value. If this tax aims to close Double Irish-style loopholes, it’s poorly targeted, failing to address foreign-held IP directly. Clearer policy messaging is needed to confirm its anti-avoidance intent, lest it unfairly burdens legitimate small patent holders
Ron Katznelson
July 29, 2025 04:30 pmThis is not about Trump, nor even about Secretary Lutnick, both of whose actions so far have been strongly supportive of protecting innovation and patent rights. The Department of Commerce is a large organization, and we do not know how, and who from the outside or inside actually influenced this push for a “patent valuation” trial balloon.
What is clear is that any such move will require federal legislation, and the overwhelming majority in Congress has been on record against “fee diversion,” or using USPTO collections for purposes other than paying for the “aggregate costs of the Office.” If this proposal ever gets anywhere in Congress, there will be serious push-back against singling out patent assets for taxation. How many members of Congress would be able to stand on the floor and argue that patents are the culprits in our economy and accordingly only patent assets should be taxed to help reduce our national debt?
As I wrote below, this push is not intended to actually achieve the taxation result as reported in the surface story – – it is rather intended to merely create a debate on the public record of lower patent valuations, to benefit those who wish to minimize patent infringement licensing costs or damage awards.
Gene Farmer
July 29, 2025 03:30 pmGene, I think you are correct. This is outrageously dumb.
The debate between taxing income and assets seemed to be leaning away from taxing assets, with Ron Desantis stumping for lower property taxes on his retired seniors, citing the ambiguity of real estate valuations. Initially, I thought perhaps this would be a great idea if US citizens were exempt following the popularity of the Trump tariffs. Then, other countries might decide to charge for the use of their patent systems through WIPO or other means, causing those who have internationally viable ideas to get priced out of the market and bought out by multi-national corporations for pennies on the dollar.
Solution: Pass RALIA, close the PTAB, repeal AIA, Alice, eBay, etc.
Jingleheimerschmak
July 29, 2025 01:39 pm“Tariffs are working and economies previously closed are opening up to American business with 0% tariff. No recession as ignorantly predicted. Hundreds of billions coming into the Treasury. Hundreds of billions of waste cut from the budget with more coming. Wars ending and prevented all over the globe. Stock market at all time highs.”
Not trying to be a “hack hater” or anything, but economically speaking, I do not things are going that well:
-Inflation is up.
-GDP has significantly declined YoY.
-Tariffs have introduced uncertainty into the economy, which has caused businesses to hold back on investing (which is cascading on through to other areas).
-The cost of energy (electricity, natural gas, oil) is up.
-The availability of housing is down, the cost to build is up.
-30 yr fixed rate is the same as it was last year, so no good news there either.
-Because the top 10% own some 95% of the stock market, it is not a legitimate economic indicator.
-The amount of debt held by consumers is up (and savings is down).
-The strength of the dollar is down.
-Cost of pharma and medical care is up.
-Cost of a six-pack of brewskis is up.
-Cost of transportation is up.
-The number of bankruptcies is up.
-Exports are down.
-Wars are up (Ukraine, Gaza, Thailand, Myanmar, Sudan, Ethiopia)
I can think of ~3.4 trillion other reasons why the economy is not as sunshiny as you suggest.
If things are going well for you, then congratulations, but I don’t think the good fortune you are experiencing is being universally realized.
Gene Quinn
July 29, 2025 11:53 am@jokers
Yes, you are right. We do get what we vote for– and thank god! As anyone with any objectivity knows, President Trump is doing a fantastic job. Only hack haters could deny that President Trump is doing amazing work. Tariffs are working and economies previously closed are opening up to American business with 0% tariff. No recession as ignorantly predicted. Hundreds of billions coming into the Treasury. Hundreds of billions of waste cut from the budget with more coming. Wars ending and prevented all over the globe. Stock market at all time highs. Biden inflation is gone! Military recruitment surging after 4 years of missing quotas.
Sure, the idea of taxing patents based on value is stupid. But what Trump is doing is fixing America from the disaster that has been Democrat policies.
Don Baker
July 29, 2025 11:34 amWhat “value”?
Would that be an extra tax on profit from licensing, or on some speculative presumption on what a patent would have brought in, if someone were to license and manufacture it? Is this on the same financial and intellectual level as the “value” that President Trump claims for all of his “deals”? Are any dowsing rods involved?
How will it look on South Park?
jokers
July 29, 2025 11:12 amExactly the type of “big brained” nonsense from the morons at the wheel of the U.S.
Get what you vote for Big Gene.
TFCFM
July 29, 2025 10:28 amWill the federal government also tax all of the infringers that are enjoying the benefits of my clients’ patented inventions?
I presume the feds will prosecute all infringements, keep only the government’s share of the infringers’ value and transfer the balance of the infringement verdicts to my clients, RIGHT?
IamI
July 29, 2025 09:50 amAnon, even the part of the article that’s not pay walled says this is Lutnick’s idea, not the USPTO’s. Try to be more accurate with your commenting.
Anon
July 29, 2025 09:07 amAside from that, I do have serious reservations about this entire ‘proposal.’
First, the patent office is NOT a ‘for-profit’ entity, and fees MUST be aimed at balancing expenses OF THE PATENT OFFICE in the aggregate. The patent office may not attempt fees to balance the rest of the government’s budget.
Second, any actual fees (and structures therein) would need come from Congress and not the Office itself.
Third, the article is behind a paywall, so the details are obscured and further issues are not yet available for me to critique.
Anon
July 29, 2025 09:00 amRon,
Correct me if I am in error, but real estate is in fact taxed on an asset basis.
Jingleheimerschmak
July 29, 2025 08:38 amClearly an understanding of IP practice and law isn’t a requisite for disruptive change.
It is fallacy to think that patent value can only be through licensing or litigation. It can be randomly assigned. They can just say that all innovations associated with alternative energy (like wind or solar) should pay “X” and those in competing industries (like oil and gas) get a free pass.
Why would the current administration pass up the opportunity to be a perceived “technological kingmaker”?
Foreign investment in the U.S. is already dropping sharply. Any patent tariff or tax on non-US citizens will only accelerate this trend. No need to invest too heavily in a sizable but declining market that is electing isolationist policies (watch Brazil and India open up as the U.S. closes down).
It looks like the proposed changes see the U.S. patent system shifting away from market-driven innovation and more towards a singular or state-directed paradigm (think USSR).
Also, it is easier for SCOTUS to nod their heads in confirmation rather than get their hands dirty with any pesky 101 issues, so no help there.
Methinks that by the time this is all said and done, many will yearn for more predictable days long (or short) past, regardless of how unpredictable they actually were.
Enjoy your vote.
Ron Katznelson
July 29, 2025 06:11 amThis is a case of a story within a story, but do not let the surface story here obscure the hidden one. First, who could take seriously the radical fiscal notion that the government will tax assets instead of income? If taxing assets is the way to address the $37 trillion national debt, why stop at patents? What about taxing the value of copyrights, trademarks, or other productive assets such as plant machinery or real estate? Such assets, including patents, contribute to business income generation that is then taxed. I have yet to see an economic theory that proves that optimum revenues from taxation is based on double taxation – – tax on the assets, and on the net income from operating those assets.
Second, the absurdity of the surface story here is evident given the scale involved: According to WIPO, there were 3.5 million US patents in force in 2023. Economic estimates by Bessen and by Serrano for the average private value of a patent is about $165K per patent as deflated for 2025 dollars. Accordingly, US patent assets in force are worth about $ 0.57 trillion, a drop in the bucket compared to the $37 trillion national debt. Who seriously believes that government levy between 1% to 5% of these patent assets’ value in taxes will move the needle? Is that per year, or a one-time charge?
On the other hand, estimates for the total value of all assets in the United States are around $542 trillion. See https://www.bairdwealth.com/insights/market-insights/baird-market-strategy/2021/06/what-is-the-united-states-net-worth/. Can anybody take seriously this surface story in which only a drop in the bucket patent assets are to be taxed? I think not.
Rather, the more likely hidden story here is that certain parties are merely pushing for a patent valuation debate on the public record, wherein patent owners attempt to minimize prospective taxes on their patent assets. That necessarily requires their contribution to the public record on advocacy that shows depressed patent revenues and valuations (and the commensurate licensing fees and damage awards they ostensibly fetch). That can only help those parties who seek to minimize the costs of their “efficient infringement.”
Do not get distracted by the surface story.
IP Nerd
July 29, 2025 05:31 amThis must be political theater of the executive branch knighting revolutionary advances in monetizing unknown variables combining distributed ledger technology and zero knowledge proofs.
mike
July 29, 2025 05:23 amI’m with Robert.
– Charge a tariff on applications files by non-US citizens. If you want US patent protection and not all inventors are US citizens, congrats. Here is your tariff. US patent protection should come at a higher cost for those who aren’t already tax-paying citizens.
I’m also with Josh.
– Inventors would happily pay a small tax on revenues earned from the patent, on the condition that said patent cannot be challenged or reexamined by third parties after the patent has issued. (Paying taxes on revenues earned means that you are actually earning revenues, which is a good thing.) Maybe the USPTO will start supporting its product this way.
Luboš Motl
July 29, 2025 01:47 amMr Quinn wrote quite something about this technically difficult business. The first very general problem of all such Trump plans is that he just doesn’t have the intelligence and expertise to figure out what would happen, which ideas are good. The current system is not optimal, it is complex, but the markets have gradually adapted to it. A massive change leads to too many reactions, preventive steps, and the intrinsically impossible way to quantify the value opens room for huge corruption because an official simply will have the power to arbitrarily decide how much the government will be paid. Trump believes he can reduce the price of drugs by 1000% and that Greenland is greater than the US because it looks so on the map. Patents require a vastly deeper understanding than these two simple questions where he already failed.
The second general point is that he has no respect to individuals and companies. Suddenly charging a company holding patents much more than before means to reduce the value of the company and the difference is the partial nationalization, meaning the theft of private property by the communist style government. Such things simply shouldn’t happen in proper capitalism. First, because it is immoral without any consideration where it leads – some research and work took place because the rules indicated it was a good idea, he wants to change the rules and charge for work in the past pretty much retroactively. Second, because it reduces the motivation to do valuable things in the future, in this case some research that would be robbed most and where alternative protection isn’t feasible, and it reduces the predictability of the future which is simply a bad change for business. Only during the second term I started to appreciate how close he is to the standard communist politicians we knew under the Soviet domination. Some people think that rich people cannot think like communists but it is simply not true.
Robert Rountree
July 29, 2025 12:47 amIt’s not possible to value patents apart from testing in licensing or litigation, and licensing valuation is usually confidential.
Allowance by the USPTO is unrelated to value, since most will have invalid claims.
Finally, patent owners are already charged exhorbitant fees for filing, prosecution and maintenance.
My conclusion is that any new fees based on patent valuation is a very bad idea.
An alternative that might work is to charge a tariff on foreign applications.
An even better alternative is to cut federal spending.
Evan s
July 28, 2025 10:57 pmThe only way that this would make sense is if patent owners self report the value. And then are held to that value in court. So, they’d only pay for valuable patents.
Larry Bennett
July 28, 2025 08:15 pmEven when patents are offered for sale, or damages are considered, it is extremely difficult to determine patent value. Given that there are an estimated 3.5M currently valid patents estimated in the U.S., and surely the Administration will want to value them all based on the Idenix v Gilead settlement of $2.54B, they must be drooling at the concept of a $8.89E13 ($88.9 trillion at the 1% level) haul from our economy. Surely all patent holders will pony up. Haha what a bonehead idea.
John
July 28, 2025 08:11 pmWhen you out-communist china you’ve proven your incompetence is beyond dealing with. FIRE EVERY LAST IDIOT for this “I dont walk with jesus, jesus government carries me” mental retardation.
IamI
July 28, 2025 07:10 pmLiterally none of this idea is worth considering. How short sighted you continue to be with your comments, Josh.
Josh Malone
July 28, 2025 06:36 pmThat would be worth considering, provided they stop taking them back otherwise.