Lutnick Tells Coons He Will Not ‘Harm Innovation’ With Patent Tax Proposal

During a Subcommittee hearing of the Senate Appropriations Committee today, Secretary of Commerce Howard Lutnick confirmed to Senator Chris Coons (D-DE) that he does not plan to implement his proposal to charge patent holders a percentage their patents’ value.

The Commerce, Justice, Science, and Related Agencies Subcommittee held the hearing primarily to as Lutnick questions about issues surrounding broadband deployment funding. Coons, however, took the opportunity to ask Lutnick about a proposal first reported by the Wall Street Journal in July 2025 to charge a 1%-5% patent “tax” on the value of granted U.S. patents.

While few details were ever revealed about the plan, it drew harsh criticism, including by IPWatchdog’s Founder and CEO Gene Quinn and conservative groups. Quinn called the idea “catastrophically stupid” and “fraught with peril,” while a letter sent by 36 conservative organizations in September said it would be decidedly bad for the United States.

During today’s hearing, Coons first said he has so far been “impressed with Director Squires’s leadership” of the U.S. Patent and Trademark Office (USPTO) and urged Lutnick to support the pending Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act0 2025. However, he expressed concern “with reports that you’re considering a value-based patent tax that would charge inventors different fees based on the PTO’s valuation,” a proposal Coons noted almost all of the IP community has been critical of. Coons echoed critics’ view that such a plan would be unworkable, as “it is very complex and difficult to value a patent” and such a system would “potentially impose a crushing tax on American innovation, something no other major country does.”

In response, Lutnick promised Coons that “we will avoid harming innovation by not doing a valuation , or any valuation fee or tax on patents.” The exchange then continued:

Coons: “Good.”

Lutnick: “That is not a plan. That is not going anywhere. We are totally on side. That is not a thing the Patent Office is going to do, is try to say, “This patent is worth X.” How in the world could we do that? How in the world could anyone reasonably do that?”

Coons: “It struck me as a completely unworkable proposal.”

Lutnick: “We are on the same side with that.”

While Lutnick’s plan may be off the table, there are some in the IP community who still believe the USPTO’s fee structure needs to be overhauled due to the changing nature of who obtains patents today.

“Reform will enable the agency to be what recently confirmed USPTO Director Squires described as ‘the Department of Commerce’s Central Bank of Innovation,’” said authors Edgar Baum, Julie Burke and Peter Harter in a recent article for IPWatchdog. “It’s about acknowledging that the patent system has become corporate infrastructure, yet we govern and fund it as if individual inventors still dominate.”