Setting and Adjusting Patent Fees

DEPARTMENT OF COMMERCE

United States Patent and Trademark Office

37 CFR Parts 1, 41, and 42

[Docket No. PTO-C-2011-0008]

RIN 0651-AC54

Setting and Adjusting Patent Fees

AGENCY:

United States Patent and Trademark Office, Department of Commerce.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The United States Patent and Trademark Office (Office or USPTO) proposes to set or adjust patent fees as authorized by the Leahy-Smith America Invents Act (Act or AIA). The proposed fees 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 pendency, improve patent quality, and upgrade the Office's patent business information technology (IT) capability and infrastructure. The Office also proposes to reduce fees for micro entities under section 10(b) of the Act (75 percent discount). The proposed fees also will further key policy considerations. For example, the proposal includes multipart and staged fees for requests for continued examination and appeals, both of which aim to

increase patent prosecution options for applicants.

DATES:

The Office solicits comments from the public on this proposed rulemaking. Written comments must be received on or before November 5, 2012 to ensure consideration.

ADDRESSES:

Comments should be sent by electronic mail message over the Internet addressed to:

fee.setting@uspto.gov.

Comments may also be submitted by postal mail addressed to: Mail Stop—Office of the Chief Financial Officer, Director of the United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450, marked to the attention of “Michelle Picard.” Comments may also be sent by electronic mail message over the Internet via the Federal eRulemaking Portal. See the Federal eRulemaking Portal Web site (

http://www.regulations.gov

) for additional instructions on providing comments via the Federal eRulemaking Portal.

Although comments may be submitted by postal mail, the Office prefers to receive comments by electronic mail message over the Internet, which allows the Office to more easily share comments with the public. Electronic comments are preferred to be submitted in plain text, but also may be submitted in ADOBE® portable document format or MICROSOFT WORD® format. Comments not submitted electronically should be submitted on paper in a format that facilitates convenient digital scanning into ADOBE® portable document format.

The comments will be available for public inspection via the Office's Internet Web site (

http://www.uspto.gov

). Because comments will be made available for public inspection, information that the submitter does not desire to make public, such as an address or phone number, should not be included in the comments.

FOR FURTHER INFORMATION CONTACT:

Michelle Picard, Office of the Chief Financial Officer, by telephone at (571) 272-6354; or Dianne Buie, Office of Planning and Budget, by telephone at (571) 272-6301.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose of This Action

The Office proposes these rules under section 10 of the Act (section 10), which authorizes the Director of the USPTO to set or adjust by rule any patent fee established, authorized, or charged under Title 35, United States Code (U.S.C.) for any services performed by, or materials furnished by, the Office. Section 10 prescribes that fees may be set or adjusted only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents, including administrative costs to the Office with respect to such patent operations. Section 10 authority includes flexibility to set individual fees in a way that furthers key policy considerations, while taking into account the cost of the respective services. Section 10 also establishes certain procedural requirements for setting or adjusting fee regulations, such as public hearings and input from the Patent Public Advisory Committee and oversight by Congress.

The fee schedule proposed under section 10 in this rulemaking will recover the aggregate estimated costs of the Office while achieving strategic and operational goals, such as implementing a sustainable funding model, reducing the current patent application backlog, decreasing patent pendency, improving patent quality, and upgrading the patent IT business capability and infrastructure.

The United States economy depends on high quality and timely patents to protect new ideas and investments for business and job growth. The Office estimates that the additional aggregate revenue derived from the proposed fee schedule will enable a decrease in total patent pendency by 12 months for the five-year planning horizon (FY 2013-FY 2017), thus permitting a patentee to obtain a patent sooner than he or she would have under the status quo fee schedule. The additional revenue from the proposed fee schedule will also recover the aggregate cost of building a three-month patent operating reserve by FY 2017, thereby continuing to build a sustainable funding model that will aid the Office in maintaining shorter pendency and a smaller backlog.

The proposed rule will also advance key policy considerations, while taking into account the cost of individual services. For example, the proposal includes multipart and staged fees for requests for continued examination and appeals, both of which aim to increase patent prosecution options for applicants. Also, this rule would include a new 75 percent fee reduction for micro entities, and expand the availability of the 50 percent fee reduction for small entities as required under section 10, providing small entities a discount on more than 25 patent fees that do not currently qualify for a small entity discount. All in all, as a result of these proposed adjustments to patent fees, for all applicants the routine fees to obtain a patent (

i.e.,

filing, search, examination, publication, and issue fees) will decrease by at least 22 percent relative to the current fee schedule.

B. Parallel Rulemaking

January and February 2012 Proposed Rules.

In January and February 2012, the Office proposed rules setting fees for the new patent-related services authorized by the Act using its rulemaking authority under 35 U.S.C. 41(d). The Office proposed those rules under section 41(d) because fees for the new patent-related services must be in place one year from the AIA's enactment (September 16, 2012) and because the Office would not finish with its section 10 rulemaking by that date.

Unlike section 10 of the Act, section 41(d) of title 35 of the U.S.C. requires the Office to set fees for processing, services, or materials relating to patents at amounts to recover the estimated average cost to the Office of the particular processing, activity, service, or material per action (as opposed to the aggregate cost of all processing,

activities, services and material). 35 U.S.C. 41(d)(2). On January 5, 2012 (77 FR 448), the Office proposed fees for filing third party submissions; on January 25, 2012 (77 FR 3666), the Office proposed fees for

ex parte

reexaminations and supplemental examinations; on February 9, 2012 (77 FR 6879), the Office proposed fees for

inter partes

reviews, post-grant reviews, covered business method reviews, and derivation proceedings. Collectively, these rules are referred to herein as the “January and February 2012 Proposed Rules.”

The fees proposed in the January and February 2012 Proposed Rules are set to recover the Office's costs per action under section 41(d), as opposed to the Office's aggregate costs for all patent-related activities under section 10. The Office intends to finalize fees proposed in the January and February 2012 Proposed Rules within the coming months to meet its implementation obligations under the Act to institute certain new services. However, the Office anticipates that the fees in those final rules will only be needed on a temporary basis, from September 16, 2012, until this rulemaking becomes final. The instant notice of proposed rulemaking (NPRM) does not reopen the comment period for the January and February 2012 Proposed Rules. Rather, this NPRM establishes a different comment period for setting and adjusting fees under section 10. In sum, this parallel rulemaking is necessary so that the Office can comply with both the Act's one-year deadline for instituting certain new services, and commence the lengthier process under section 10 for setting or adjusting fees for all of the Office's patent processing, activities, services, and material. The Office provides additional information about the AIA implementation effort, including how the components of the AIA relate to one another, on its Web site,

http://www.uspto.gov/aia_implementation/index.jsp.

Proposed CPI Rule.

Similarly, in a separate rulemaking, the USPTO proposed to adjust certain patent fee amounts to reflect fluctuations in the Consumer Price Index (CPI) under 35 U.S.C. 41(f).

See

77 FR 8331 (May 14, 2012). This increase in fees is necessary for the USPTO to reach its strategic goals within the time frame outlined in the USPTO FY 2013 President's Budget (Budget). The fee increase in the CPI rulemaking is planned as a bridge to provide resources until the instant section 10 rulemaking (this NPRM) becomes final (at which time the anticipated section 10 fees would supersede the fees in the CPI rulemaking). The proposed rule for the CPI adjustment sets forth particular fees to be adjusted and describes how the adjustment will be calculated based on the fluctuation in the CPI over the twelve months preceding the issuance of the final CPI rule. The aggregate revenue estimates presented in this section 10 proposed rule reflect an estimate of a CPI increase of 1.9 percent, which was the figure included in the Budget and the initial patent fee proposal delivered to the Patent Public Advisory Committee on February 7, 2012. The hypothetical fee rates based on this estimated CPI and used to estimate the aggregate revenue are included in the documents titled

USPTO Section 10 Fee Setting—Aggregate Revenue Estimates

at

http://www.uspto.gov/aia_implementation/fees.jsp#heading-1.

The USPTO aggregate revenue estimate will be updated in the section 10 final rule to reflect the actual CPI rates included in the CPI final rule. The individual fee amounts proposed in this rule are not dependent on the final CPI fee rates and may be considered independent of the CPI increase. Except as otherwise noted, the current fees (baseline or status quo) included herein for comparative purposes include the January and February 2012 Proposed Rule fee amounts (as adjusted by the final rule) but not estimated CPI fee amounts.

The parallel rulemakings discussed in this section work in concert to meet the requirements of the AIA and secure the financial resources necessary to advance the Office's goals.

C. Summary of Provisions Impacted by This Action

The Office proposes to set or adjust 352 patent fees—94 apply to large entities (any reference herein to “large entity” includes all entities other than small or micro entities), 94 to small entities, 93 to micro entities, and 71 are not entity-specific. Of the 94 large entity fees, 66 are being adjusted, 19 are set at existing fee amounts, and 9 are newly proposed in this rule. Of the 94 small entity fees, 80 are being adjusted, 5 are set at existing fee amounts, and 9 are newly proposed in this rule. There are 93 new micro entity fees being set at a reduction of 75 percent from the large entity fee amounts. Of the 71 fees that are not entity-specific, 6 are either being adjusted or set as new fees in this rule and 65 are set at existing fee amounts.

In all, the routine fees to obtain a patent (i.e., filing, search, examination, publication, and issue fees) will decrease by 22 percent under this NPRM relative to the current fee schedule. Also, despite increases in some fees, applicants who meet the new micro entity definition will pay less than the amount paid for small entity fees under the current fee schedule for 88 percent of the fees eligible for a discount under section 10(b). Additional information describing the adjustments is included in

Part V: Individual Fee Rationale

section of Supplementary Information in this rulemaking.

D. Summary of Costs and Benefits of This Action

The Office prepared a Regulatory Impact Analysis (RIA) to analyze the costs and benefits of this NPRM over a five-year period. This analysis includes a comparison of the proposed fee schedule to the current fee schedule (baseline) (which is defined to include the January and February 2012 Proposed Rules fee amounts, as adjusted by the final rules) and to three other alternatives described in the RIA. The Office considered both monetized and qualitative costs and benefits. Monetized costs and benefits have effects that the Office can express in dollar values. Qualitative costs and benefits have effects that are difficult to express in either dollar or numerical values. The complete RIA is available for review at

http://www.uspto.gov/aia_implementation/fees.jsp#heading-1.

The RIA concluded that the proposed patent fee schedule has the largest net benefit. The incremental net monetized benefit to patent applicants, patent holders, other patent stakeholders, and society of the proposed fee schedule is nearly seven billion dollars (assuming a 7 percent discount rate) for the five-year period. The most significant incremental benefit is the increase in the average value of a patent that stems from a decrease in patent application pendency (the time it takes to have a patent application examined). The Office estimates that total patent application pendency will decrease by 12 months during the time period of this analysis, thereby permitting a patentee to obtain a patent sooner than he or she would have under the Baseline (status quo fee schedule). The proposed fee schedule also has qualitative benefits including fee schedule design benefits and a decrease in uncertainty of patent rights, as discussed below.

See

Table 1.

Table 1—Proposed Patent Fee Schedule Costs and Benefits, Cumulative FY 2013-FY 2017

Total

Monetized Costs and Benefits—3% Discount Rate (dollars in millions)

Benefits:

Increase in private patent value from a decrease in pendency

$6,921

Costs:

Cost of patent operations

($765)

Lost patent value from a decrease in patent applications

($166)

Net Benefit

$5,990

Monetized Costs and Benefits—7% Discount Rate (dollars in millions)

Benefits:

Increase in private patent value from a decrease in pendency

$7,694

Costs:

Cost of patent operations

($682)

Lost patent value from a decrease in patent applications

($135)

Net Benefit (Cost)

$6,877

Qualitative Costs and Benefits

Costs:

No qualitative costs

n/a

Benefit:

Fee Schedule Design Benefits (Significant, Moderate, Not Significant)

Moderate

Decreased Uncertainty Effect (Significant, Moderate, Not Significant)

Significant

To estimate the monetized benefits of the proposed fee schedule, the Office considered how the value of a patent would increase under the proposed fee schedule. When patent application pendency decreases, a patentee holds the exclusive right to the invention sooner, which would increase the private value of that patent. Because the outcomes of this proposed rule would decrease patent pendency by 12 months during the time period of the analysis, the Office expects the private patent value will increase, relative to the baseline. This benefit helps to speed the commercialization of new technologies and the jobs they can create.

See

Table 1.

The Office also estimated the incremental increase in the costs of its patent operations to determine the monetized costs of the proposed fee schedule. The most significant incremental costs of patent operations are (1) the increased patent examination capacity to work on the large backlog of patent applications in inventory, thus reducing patent application pendency; and (2) building a three-month patent operating reserve by FY 2017 to support a sustainable funding model.

See

Table 1.

In addition, the Office expects that this proposed rule will result in a short-term reduction in patent applications filed due to the new pricing. The Office estimates that 1.3 percent fewer applications than the number estimated to be filed in the absence of a fee increase will be filed during FY 2013. The Office further estimates that 2.7 percent fewer patent applications will be filed during FY 2014 and 4.0 percent fewer patent applications beginning in FY 2015 as patent filers adjust to the new fees, specifically the increase in the total filing, search, and examination fees for most applicants. However, the Office estimates that patent application filings will return to the same growth rate anticipated in the absence of a fee increase beginning in FY 2016. Overall, the demand for patent application services is generally inelastic and the number of patent applications filed will continue to grow year-over-year. An estimate of the monetized cost to patent applicants, other patent stakeholders, and society associated with this reduction in patent applications filed was also subtracted from the benefit of the increased patent value when estimating the overall net benefit of the proposed fee schedule.

See

Table 1.

When considering the qualitative benefits of the proposed fee schedule, the Office assessed the impact of the rule on two factors: fee schedule design and decreasing uncertainty. First, the design of the proposed fee schedule offers benefits relating to the three policy factors considered for setting individual fees as described in

Part III

of this NPRM, namely

fostering innovation, facilitating the effective administration of the patent system;

and

offering patent prosecution options to applicants.

By maintaining the current fee setting philosophy of keeping front-end fees below the cost of application processing and recovering revenue from back-end fees, the proposed fee schedule continues to

foster innovation

and ease access to the patent system. The fee schedule design continues to offer incentives and disincentives to engage in certain activities that

facilitate the effective administration of the patent system

and help reduce the amount of time it takes to have a patent application examined. For example, application size fees, extensions of time fees, and excess claims fees remain in place to facilitate the prompt conclusion of prosecution of an application. The proposal includes multipart and staged fees for requests for continued examination and appeals, both of which aim to

increase patent prosecution options for applicants.

Second, by decreasing pendency, this action provides the applicant and other potential innovators with greater certainty through clearly defined and an unambiguous scope of patent rights. This increase in certainty and clarity in patent rights has an overall positive impact on the freedom to innovate and the market for technology.

The RIA found that the proposed fee schedule generates the largest net benefit based on the analysis of the costs and benefits of: (a) the proposed fee schedule; (b) the no-action alternative (baseline); and (c) the three other alternatives. Additional details describing the costs and benefits is available in the RIA at

http://www.uspto.gov/aia_implementation/fees.jsp#heading-1.

II. Legal Framework

A. Leahy-Smith America Invents Act—Section 10

The Leahy-Smith America Invents Act was enacted into law on September 16, 2011.

See

Public Law 112-29, 125 Stat. 284. Section 10(a) of the Act authorizes the Director of the Office to set or adjust by rule any patent fee established, authorized, or charged under Title 35, U.S.C. for any services performed by, or materials furnished by, the Office. Fees under 35 U.S.C. may be set or adjusted only to recover the aggregate estimated cost to the Office for processing, activities, services, and materials related to patents, including administrative costs to the Office with respect to such patent operations.

See

125 Stat. at 316. Provided that the fees in the aggregate achieve overall aggregate cost recovery, the Director may set individual fees under section 10 at, below, or above their respective cost. Section 10(e) of the Act requires the Director to publish the final fee rule in the

Federal Register

and the Official Gazette of the Patent and Trademark Office at least 45 days before the final fees become effective. Section 10(i) terminates the Director's authority to set or adjust any fee under section 10(a) upon the expiration of the seven-year period that began on September 16, 2011.

B. Small Entity Fee Reduction

Section 10(b) of the AIA requires the Office to reduce by 50 percent the fees for small entities that are set or adjusted under section 10(a) for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents.

C. Micro Entity Fee Reduction

Section 10(g) of the AIA amends Chapter 11 of Title 35, U.S.C. to add section 123 concerning micro entities. The Act provides that the Office must reduce by 75 percent the fees for micro entities for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents. The implementing procedures for the provisions of 35 U.S.C. 123 are proposed in a separate rulemaking.

See

77 FR 31806 (May 30, 2012).

D. Patent Public Advisory Committee Role

The Secretary of Commerce established the Patent Public Advisory Committee (PPAC) under the American Inventors Protection Act of 1999. 35 U.S.C. 5. The PPAC advises the Under Secretary of Commerce for Intellectual Property and Director of the USPTO on the management, policies, goals, performance, budget, and user fees of patent operations.

When adopting fees under section 10 of the Act, the Director must provide the PPAC with the proposed fees at least 45 days prior to publishing the proposed fees in the

Federal Register

. The PPAC then has at least 30 days within which to deliberate, consider, and comment on the proposal, as well as hold public hearing(s) on the proposed fees. The PPAC must make a written report available to the public of the comments, advice, and recommendations of the committee regarding the proposed fees before the Office issues any final fees. The Office will consider and analyze any comments, advice, or recommendations received from the PPAC before finally setting or adjusting fees.

Consistent with this framework, on February 7, 2012, the Director notified the PPAC of the Office's intent to set or adjust patent fees and submitted a preliminary patent fee proposal with supporting materials. The preliminary patent fee proposal and associated materials are available at

http://www.uspto.gov/about/advisory/ppac/

. The PPAC held two public hearings: one in Alexandria, Virginia, on February 15, 2012; and another in Sunnyvale, California, on February 23, 2012. Transcripts of these hearings and comments submitted to the PPAC in writing are available for review at

http://www.uspto.gov/about/advisory/ppac/

. The PPAC is considering public comments from these hearings and will make available to the public a written report setting forth in detail the comments, advice, and recommendations of the committee regarding the preliminary proposed fees. The PPAC is scheduled to release its report no later than August 2012. The Office will consider and analyze any comments, advice, or recommendations received from the PPAC before publishing a final rule.

III. Rulemaking Goals and Strategies

Consistent with the Office's goals and obligations under the AIA, the overall strategy of this rulemaking is to ensure the fee schedule generates sufficient revenue to recover aggregate costs. Another strategy is to set individual fees to further key policy considerations while taking into account the cost of the particular service. As to the strategy of balancing aggregate revenue and aggregate cost, this rule will provide sufficient revenue to implement two significant USPTO goals: (1) Implement a sustainable funding model for operations; and (2) optimize patent timeliness and quality. As to the strategy of setting individual fees to further key policy considerations, the policy factors contemplated are: (1)

Fostering innovation;

(2)

facilitating effective administration of the patent system;

and (3)

offering patent prosecution options to applicants.

These fee schedule goals and strategies are consistent with strategic goals and objectives detailed in the USPTO 2010-2015 Strategic Plan (Strategic Plan) that is available at

http://www.uspto.gov/about/stratplan/USPTO_2010-2015_Strategic_Plan.pdf

, as amended by Appendix #1 of the Budget, available at

http://www.uspto.gov/about/stratplan/budget/fy13pbr.pdf

) (collectively referred to herein as “Strategic Goals”). The Strategic Plan defines the USPTO's missions and long-term goals and presents the actions the Office will take to realize those goals. The significant actions the Office describes in the Strategic Plan that are specific to the goals of this rulemaking are implementing a sustainable funding model, reducing the patent application backlog and pendency, and improving patent quality and IT.

Likewise, the fee schedule goals and strategies also support the

Strategy for American Innovation—

an Administration initiative first released in September 2009 and updated in February 2011 that is available at

http://www.whitehouse.gov/innovation/strategy

. The

Strategy for American Innovation

recognizes innovation as the foundation of American economic growth and national competitiveness. Economic growth in advanced economies like the United States' is driven by creating new and better ways of producing goods and services, a process that triggers new and productive investments, which is the cornerstone of economic growth. Achieving the

Strategy for American Innovation

depends, in part, on the USPTO's success in reducing the patent application backlog (the number of applications awaiting examiner action) and pendency (the time it takes to have a patent application examined)—both of which stall the delivery of innovative goods and services to market and impede economic growth and the creation of high-paying jobs. This rule positions the USPTO to reduce the backlog and pendency.

A. Ensure the Overall Fee Schedule Generates Sufficient Revenue to Recover Aggregate Cost

The first fee setting strategy is to ensure that the fee schedule generates sufficient multi-year aggregate revenue to recover the aggregate cost to maintain

USPTO operations and accomplish USPTO strategic goals. Two overriding principles, found in the Strategic Plan, motivate the Office here: (1) Operating within a more sustainable funding model than in the past to avoid disruptions caused by fluctuations in the economy; and (2) accomplishing strategic goals, including the imperatives of reducing the patent application backlog and pendency. Each principle is discussed in greater detail below.

1. Implement a Sustainable Funding Model for Operations

As explained in the Strategic Plan, the Office's objective of implementing a sustainable funding model for operations will facilitate USPTO's long-term operational and financial planning and enable the Office to adapt to changes in the economy and in operational workload.

Since 1982, patent fees that generate most of the patent revenue (e.g., filing, search, examination, issue, and maintenance fees) have been set by statute, and the Office could adjust these fees only to reflect changes in the CPI for All Urban Consumers, as determined by the Secretary of Labor. Because these fees were set by statute, the USPTO could not realign or adjust them to quickly and effectively respond to market demand or changes in processing costs other than for the CPI. Over the years, these constraints led to funding variations and shortfalls. Section 10 of the AIA changed this fee adjustment model and authorizes the USPTO to set or adjust patent fees within the regulatory process so that the Office will be better able to respond to its rapidly growing workload.

The Budget delineates the annual plans and prospective aggregate costs to execute the initiatives in the Strategic Plan. One of these costs is the creation of a three-month patent operating reserve to allow effective management of the U.S. patent system and responsiveness to changes in the economy, unanticipated production workload, and revenue changes, while maintaining operations and effectuating long-term strategies. The Office evaluated the optimal size of the operating reserve by examining specific risk factors. There are two main factors that create a risk of volatility in patent operations—spending levels and revenue streams. After reviewing other organizations' operating reserves, the Office found that a fully fee-funded organization such as the USPTO should maintain a minimum of a three-month operating reserve. The fees proposed here will gradually build the three-month operating reserve. The USPTO will assess the patent operating reserve balance against its target balance annually and, at least every two years, will evaluate whether the target balance continues to be sufficient to provide the stability in funding needed by the Office. If the proposed fee structure is implemented, then the USPTO anticipates that the three-month patent operating reserve would be achieved in FY 2017.

The proposed fees will provide the USPTO with sufficient aggregate revenue to recover the aggregate cost to operate the Office while improving the patent system. During FY 2013, patent operations will cost $2.604 billion (including an offset to spending from other income of $18 million and a deposit in the operating reserve of $73 million). The proposed fee schedule should generate $2.604 billion in aggregate revenue to offset these costs. Once the Office transitions to the proposed fee levels, it estimates an additional $11.8 billion in aggregate revenue will be generated from FY 2014 through FY 2017 to recover the total aggregate cost over the same time period—$11.2 billion in operating costs and $0.6 billion in a three-month operating reserve. (

See

Table 3 in

Part IV,

Step 2 of this NPRM.)

Under the new fee structure, as in the past, the Office will continue to regularly review its operating budgets and long-range plans to ensure the USPTO uses patent fees prudently.

2. Optimize Patent Quality and Timeliness

The Office developed the strategic goal of optimizing patent quality and timeliness in response to intellectual property (IP) community feedback, the

Strategy for American Innovation,

and in recognition that a sound, efficient, and effective IP system is essential for technological innovation and for patent holders to reap the benefits of patent protection.

Over the past several years, a steady increase in incoming patent applications and insufficient patent examiner hiring due to multi-year funding shortfalls has led to a large patent application backlog (the number of applications awaiting examiner action) and a long patent application pendency (the time it takes to have a patent application examined). Reducing pendency increases the private value of a patent because the more quickly a patent is granted, the more quickly the holder can commercialize the innovation. Shorter pendency also allows for earlier disclosure of the scope of the patent, which reduces uncertainty for the patentee, potential competitors, and additional innovators regarding patent rights and the validity of the patentees' claims.

To reduce the backlog and pendency, the USPTO must examine significantly more patent applications than it receives each year for the next several years. Bringing the applications in the backlog down to a manageable level, while at the same time keeping pace with the new patent applications expected to be filed each year, will require that the Office collect more aggregate revenue than it estimates that it will collect at existing fee rates. The Office needs this additional revenue to hire additional patent examiners, improve the patent business IT capability and infrastructure, and implement other programs to optimize the timeliness of patent examination. This proposed rulemaking will result in an average first action patent pendency of 10 months in FY 2015, an average total pendency of 20 months in FY 2016, and a reduced patent application backlog and inventory of approximately 350,000 patent applications by FY 2015. This would be a significant improvement over the 22.6 months and 34.1 months for average first action patent pendency and average total pendency, respectively, as of March 2012. Under this proposed rule, the patent application backlog is also expected to decrease significantly from the 644,775 applications in inventory as of March 2012.

In addition to timeliness of patent protection, the quality of application review is critical to ensure the value of an issued patent. Quality issuance of patents provides certainty in the market and allows businesses and innovators to make informed and timely decisions on product and service development. Under the proposed action, the Office will continue to improve patent quality through comprehensive training for new and experienced examiners, an expanded and enhanced ombudsmen program to help resolve questions about applications, improved hiring processes, and guidelines for examiners to address clarity issues in patent applications—all actions intended to place quality at the top of USPTO's priorities. The Office will continue to encourage interviews to help clarify allowable subject matter early in the examination process, and to encourage interviews later in prosecution to resolve outstanding issues. The Office will also continue to reengineer the examination process, and to monitor and measure examination using a comprehensive set of metrics that analyze the quality of the entire process.

In addition to direct improvements to patent quality and timeliness, the USPTO's development and implementation of the patent end-to-end processing system using the revenue generated from the proposed fee structure will also improve the efficiency of the patent system. The IT architecture and systems in place currently are obsolete and difficult to maintain, leaving the USPTO highly vulnerable to disruptions in patent operations. Additionally, the current IT systems require patent employees and external stakeholders to perform labor-intensive business processes manually, decreasing the efficiency of the patent system. This proposed rule provides the Office with sufficient revenue to modernize its IT systems so that the majority of applications are submitted, handled, and prosecuted electronically. Improved automation will benefit both the Office and innovation community.

B. Set Individual Fees to Further Key Policy Considerations, While Taking Into Account the Costs of the Particular Service

The second fee setting strategy is to set individual fees to further key policy considerations, while taking into account the cost of the associated service or activity. The proposed fee schedule recovers the aggregate cost to the Office, while also considering the individual cost of each service provided. This includes consideration that some applicants may use particular services in a much more costly manner than other applicants (e.g., patent applications cost more to process when more claims are filed). The proposed fee schedule considers three key policy factors: (1)

Fostering innovation;

(2)

facilitating effective administration of the patent system;

and (3)

offering patent prosecution options to applicants.

The Office is focusing on these policy factors because each promotes particular aspects of the U.S. patent system.

Fostering innovation

is an important policy factor to ensure that access to the U.S. patent system is without significant barriers to entry and innovation is incentivized by granting inventors certain short-term exclusive rights to stimulate additional inventive activity.

Facilitating effective administration of the patent system

is important to influence efficient patent prosecution, resulting in compact prosecution and reduction in the time it takes to obtain a patent. In addition, the Office recognizes that patent prosecution is not a one-size-fits-all process and therefore, where feasible, the Office endeavors to fulfill its third policy factor of

offering patent prosecution options to applicants.

Each of these policy factors is discussed in greater detail below.

1. Fostering Innovation

To encourage innovators to take advantage of patent protection, the Office proposes to set basic “front-end” fees (e.g., filing, search, and examination) below the actual cost of carrying out these activities. Likewise, consistent with the requirements in the Act, the Office proposes providing fee reductions for small and micro entity innovators to facilitate access to the patent system. Setting front-end and small and micro entity fees below cost requires, however, that other fees be set above cost. To that end, the Office proposes to set basic “back-end” fees (e.g., issue and maintenance) in excess of costs to recoup revenue not collected by front-end and small and micro entity fees. Charging higher back-end fees also fosters innovation and benefits the overall patent system when patent owners more closely assess the expected value of an existing patent over its life, and determine whether to pay maintenance fees to keep the patent in force. Expiration of a patent makes the subject matter of the patent available in the public domain for subsequent commercialization. Determining the appropriate balance between front-end and back-end fees is a critical component of aligning the Office's costs and revenues.

2. Facilitating Effective Administration of the Patent System

The proposed fee structure helps facilitate effective administration of the patent system by encouraging applicants or patent holders to engage in certain activities that facilitate an effective patent system. In particular, setting fees at the particular levels proposed here will: (1) Encourage the submission of applications or other actions that enable examiners to provide prompt, quality interim and final decisions; (2) encourage the prompt conclusion of prosecution of an application, which results in pendency reduction, faster dissemination of information, and certainty in patented inventions; and (3) help recover the additional costs imposed by some applicants' more intensive use of certain services that strain the patent system.

3. Offering Patent Prosecution Options to Applicants

The proposed fee schedule also provides applicants with flexible and cost-effective options for seeking patent protection. For example, in September 2011, the Office implemented prioritized examination for utility and plant applications, as specified in provisions of section 11(h) of the Act, to offer applicants the choice of a fast track examination for an additional fee. (

See

Changes To Implement the Prioritized Examination Track (Track I) of the Enhanced Examination Timing Control Procedures, 76 FR 6369 (Feb. 4, 2011)). In this proposed rule, the Office proposes multipart and staged fees for requests for continued examination (RCE) and appeals. The Office proposes to set the RCE fee in two parts. The first RCE fee would be set below cost to facilitate access to the service and in recognition that most applicants using RCEs only require one per application. The fee for the second and subsequent requests would be set at cost recovery as an option for those who require multiple RCEs. Likewise, the staging of appeal fees allows applicants to pay less in situations when an application is either allowed or reopened before being forwarded to the Board of Patent Appeals and Interferences (BPAI) (to become the Patent Trial and Appeal Board (PTAB) on September 16, 2012). This

patent prosecution option

allows applicants to make critical decisions at multiple points in the patent prosecution process.

Summary of Rationale and Purpose of the Proposed Rulemaking

The patent fee schedule proposed here will produce aggregate revenues to recover the aggregate costs of the USPTO, including for its management of strategic goals, objectives, and initiatives in FY 2013 and beyond. Using the two Strategic Plan goals (implementing a sustainable funding model for operations and optimizing patent quality and timeliness) as a foundation, the proposed rule would provide sufficient aggregate revenue to recover the aggregate cost of patent operations, including implementing a sustainable funding model, reducing the current patent application backlog, decreasing patent pendency, improving patent quality, and upgrading the patent business IT capability and infrastructure. Additionally, in this rule, the Office considers each individual fee by evaluating its historical cost and considering the policy factors of

fostering innovation, facilitating the effective administration of the patent system,

and

offering patent prosecution options to applicants.

IV. Fee Setting Methodology

There are three primary steps involved in developing the proposed fees:

Step 1: Determine the prospective aggregate costs of patent operations over the five-year period, including the cost of implementing new initiatives to achieve strategic goals and objectives.

Step 2: Calculate the prospective revenue streams derived from the individual fee amounts (from Step 3) that will collectively recover the prospective aggregate cost over the five-year period.

Step 3: Set or adjust individual fee amounts to collectively (through executing Step 2) recover projected aggregate cost over the five-year period, while furthering key policy considerations.

These three steps are iterative and interrelated. Following is a description of how the USPTO carries out these three steps.

Step 1: Determine Prospective Aggregate Costs

Calculating aggregate costs is accomplished primarily through the routine USPTO budget formulation process. The Budget is a five-year plan (that the Office prepares annually) for carrying out base programs and implementing the strategic goals and objectives. The first activity performed to determine prospective aggregate cost is to project the level of demand for patent products and services. Demand for products and services depends on many factors, including domestic and global economic activity. The USPTO also takes into account overseas patenting activities, policies and legislation, and known process efficiencies. Because examination costs are 70 percent of the total patent operating cost, a primary production workload driver is the number of patent application filings (i.e., incoming work to the Office). The Office looks at indicators such as the expected growth in Real Gross Domestic Product (RGDP), the leading indicator to incoming patent applications, to estimate prospective workload. RGDP is reported by the Bureau of Economic Analysis (

www.bea.gov

), and is forecasted each February by the Office of Management and Budget (OMB) (

www.omb.gov

) in the Economic and Budget Analyses section of the Analytical Perspectives, and each January by the Congressional Budget Office (CBO) (

www.cbo.gov

) in the Budget and Economic Outlook. A description of the Office's methodology for using RGDP can be found at pages 36 and 37 of the Budget. The expected change in the required production workload must then be compared to the current examination production capacity to determine any required staffing and operating cost (e.g., salaries, workload processing contracts, and printing) adjustments. The Office uses a patent pendency model that estimates patent production output based on actual historical data and input assumptions, such as incoming patent applications and overtime hours. An overview of the model, including a description of inputs, outputs, key data relationships, and a simulation tool is available at

http://www.uspto.gov/patents/stats/patent_pend_model.jsp.

The second activity is to calculate the aggregate costs to execute the requirements. In developing its Budget, the Office first looks at the cost of status quo operations (the base requirements). The base requirements are adjusted for anticipated pay raises and inflationary increases for the periods FY 2013-FY 2017 (detailed calculations and assumptions for this adjustment to base are available in Exhibit 8 and Exhibit 9 of the Budget). The Office then estimates the prospective cost for expected changes in production workload and new initiatives over the same period of time (refer to “Program Changes by Sub-Activity” sections of the Budget). The Office reduces cost estimates for completed initiatives and known cost savings expected over the same five-year horizon (

see

page 9 of the Budget). Finally, the Office estimates its three-month target operating reserve level based on this aggregate cost calculation for year to determine if operating reserve adjustments are necessary.

The Budget identifies that during FY 2013, patent operations will cost $2.549 billion (

see

page 31 of the Budget), including $1.733 billion for patent examination activities; $362 million for IT systems, support, and infrastructure contributing to patent operations; $61 million for activities related to patent appeals and the new AIA

inter partes

dispute actions; $30 million for activities related to IP protection, policy, and enforcement; and $363 million for general support costs necessary for patent operations (e.g., rent, utilities, legal, financial, human resources, and other administrative services). In addition, the Office estimates collecting $18 million in other income associated with reimbursable agreements (offsets to spending) and depositing $73 million during FY 2013 toward the cost of building the patent operating reserve to sustain operations. The operating reserve estimate in this NPRM is different than the estimate included in the Budget. The estimate included in the Budget is consistent with the estimate included in the initial proposal to PPAC on February 7, 2012, and has been reduced in this NPRM in response to public feedback provided to the PPAC. A detailed description of the operating requirements and related aggregate cost is located in the Budget. Table 2 below provides key underlying production workload projections and assumptions from the Budget used to calculate aggregate cost. Table 3 presents the total budgetary requirements (prospective aggregate cost) for FY 2013 through FY 2017.

Table 2—Patent Production Workload Projections—FY 2013-FY 2017

Utility, plant, and reissue (UPR)

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Applications*

565,300

599,200

632,200

666,900

700,300

Growth Rate**

6.0%

6.0%

5.5%

5.5%

5.0%

Production Units

620,600

671,900

694,200

645,200

656,200

End of Year Backlog

529,100

421,600

329,500

328,400

358,000

Examination Capacity**

8,700

8,600

8,300

8,300

8,200

Performance Measures (UPR)

Avg. First Action Pendency (Months)

16.9

15.9

10.1

9.4

9.4

Avg. Total Pendency (Months)

30.1

24.6

22.9

18.3

18.1

* In this table, the patent application filing data includes requests for continued examination (RCEs).

** In this table, demand for patent examination services, which is used to calculate aggregate cost in the FY 2013 President's Budget, is not adjusted for price elasticity.

Table 3—Estimated Annual Aggregate Costs and Proposed Fee Schedule Aggregate Revenues

(Dollars in millions)

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Aggregate Cost Estimate

Planned Operating Requirements

$2,549

$2,702

$2,809

$2,846

$2,945

Less Other Income

*

(18)

(18)

(18)

(18)

(18)

Net Operating Requirements

2,531

2,684

2,791

2,828

2,927

Planned Deposit in Operating Reserve

73

200

143

125

95

Total Aggregate Cost Estimate

2,604

2,884

2,934

2,953

3,022

Aggregate Revenue Estimate

**

2,604

2,884

2,934

2,953

3,022

Cumulative Operating Reserve Balance

Target Operating Reserve

637

676

702

712

736

Operating Reserve Ending Balance

$121

194

394

537

662

757

Over/(Under) Target Balance

(443)

(282)

(165)

(50)

21

* The Office collects other income associated with reimbursable agreements (offsets to spending) and recoveries of funds obligated in prior years in the amount of approximately $18 million each year.

** The proposed fee schedule will generate less revenue compared to the FY 2013 President's Budget in an effort to slow the growth of the operating reserve over the next five years.

Step 2: Calculate Prospective Aggregate Revenue

As described in “

Step 1,”

the USPTO's FY 2013 requirements-based budget includes the aggregate prospective cost of planned production, new initiatives, and an operating reserve required for the Office to realize its strategic goals and objectives for the next five years. The aggregate prospective cost becomes the target aggregate revenue level that the new fee schedule must generate in a given year and over the five-year planning horizon. To calculate the aggregate revenue estimates, the Office first analyzes relevant factors and indicators to calculate or determine prospective fee workload (e.g., number of applications and requests for services and products), growth, and resulting fee workload volumes (quantities) for the five-year planning horizon. Economic activity is an important consideration when developing workload and revenue forecasts for the USPTO's products and services because economic conditions affect patenting activity, as most recently exhibited in the recession of 2009 when incoming workloads and renewal rates declined.

The Office considers economic activity when developing fee workloads and aggregate revenue forecasts for its products and services. Major economic indicators include the overall condition of the U.S. and global economies, spending on research and development activities, and investments that lead to the commercialization of new products and services. The most relevant economic indicator that the Office uses is the RGDP, which is the broadest measure of economic activity and is anticipated to grow approximately three percent for FY 2013 based on OMB and CBO estimates.

These indicators correlate with patent application filings, which are a key driver of patent fees. Economic indicators also provide insight into market conditions and the management of IP portfolios, which influence application processing requests and post-issuance decisions to maintain patent protection. When developing fee workload forecasts, the Office considers other influential factors including overseas activity, policies and legislation, process efficiencies, and anticipated applicant behavior.

Anticipated applicant behavior in response to fee changes is measured using an economic principle known as elasticity, which for the purpose of this action means how sensitive applicants and patentees are to fee amounts or price changes. If elasticity is low enough (i.e., demand is

inelastic

), when fees increase, patent activities will decrease only slightly in response thereto, and overall revenues will still increase. Conversely, if elasticity is high enough (i.e., demand is

elastic

), when fees increase, patenting activities will decrease significantly enough in response thereto such that overall revenues will decrease. When developing fee forecasts, the Office accounts for how applicant behavior will change at different fee amounts projected for the various patent services. Additional detail about the Office's elasticity estimates is available in “

USPTO Section 10 Fee Setting—Description of Elasticity Estimates,”

at

http://www.uspto.gov/aia_implementation/fees.jsp.

Some of the information on which the Office based its elasticity estimates are copyrighted materials and are available for inspection at the USPTO.

Micro Entity Applicants

The introduction of a new class of applicants, called micro entities, requires a change to aggregate revenue estimations, and the Office has refined its workload and fee collection estimates to include this new applicant class.

See

35 U.S.C. 123;

see

also Changes to Implement Micro Entity Status for Paying Patent Fees, 77 FR 31806 (May 30, 2012) . 35 U.S.C. 123, which sets forth how an applicant can claim the micro entity discount, provides two bases under which an applicant may establish micro entity status.

First, section 123(a) provides that the term “micro entity” means an applicant who makes a certification that the applicant: (1) Qualifies as a small entity as defined in 37 CFR 1.27; (2) has not been named as an inventor on more than four previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications for which the basic national fee under 35 U.S.C. 41(a) was not paid; (3) did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income exceeding three times the median household income for that preceding calendar year; and (4) has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that had a gross income exceeding the income limit described in (3).

Second, 35 U.S.C. 123(d) provides that a micro entity shall also include an applicant who certifies that: (1) The applicant's employer, from which the applicant obtains the majority of the

applicant's income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education.

The Office estimates that when micro entity discounts on patent fees are available, 31 percent of small entity applications will be micro entity applications, under the criteria set forth in section 123(a) and (d). In making this estimate, the Office considered several factors, including historical data on patents granted. The Office began with patent grant data, because the best available biographic data on applicant type (e.g., independent inventor and domestic universities) comes from patent grant data in the Office's database.

The Office first estimated the number of individuals who were granted patents in FY 2011. There were 221,350 utility patents granted in FY 2011 as reported in the

FY 2011 USPTO Performance and Accountability Report

(

PAR

). The

PAR

is available for review at

http://www.uspto.gov/about/stratplan/ar/2011/index.jsp.

The Office's Patent Technology Monitoring Team (PTMT) provides data showing the split between domestic and foreign patent grants. (It should be noted that PTMT's data is based on the calendar year not the fiscal year.) PTMT's data is available at

http://www.uspto.gov/web/offices/ac/ido/oeip/taf/all_tech.htm#PartA1_1b.

From this data, the Office found that 5.0 percent of utility patents granted in FY 2011 were granted to individuals in the U.S. and 1.9 percent were granted to individuals from other countries, where the individuals were not listed in the USPTO database as associated with a company. These individuals would likely meet the criteria under section 123(a)(1) (small entity status). Using this information, the Office estimates that individuals in the U.S. received 11,068 utility patents (221,350 times 5.0 percent) in FY 2011, and that individuals from other countries received 4,206 utility patents (221,350 times 1.9 percent). In total, the Office estimates that 15,274 (11,068 plus 4,206) patents were granted to individuals in FY 2011.

Concerning the application threshold in 35 U.S.C. 123(a)(2), the Office's Patent Application Locating and Monitoring (PALM) database reports that 62 percent of both foreign and domestic small entity applicants filed fewer than 5 applications in FY 2009. As stated above, an estimated 15,274 patent grants were to individuals both domestic (11,068) and foreign (4,206). Using this information, the Office estimates that 6,862 (11,068 times 62 percent) patents will be granted to domestic applicants who meet the thresholds for micro entity status set forth in sections 123(a)(1) and 123(a)(2), while 2,608 (4,206 times 62 percent) patents will be granted to foreign applicants who meet the same thresholds.

Concerning the income threshold in 35 U.S.C. 123(a)(3), the median household income for calendar year (CY) 2010 (the year most recently reported by the Bureau of the Census) was $49,445.

See Income, Poverty, and Health Insurance Coverage in the United States: 2010,

at 5 and 33 (Table A-1) (Sept. 2011)

available at http://www.census.gov/prod/2011pubs/p60-239.pdf.

(The Office will indicate conspicuously on its Web site the median household income reported by the Bureau of the Census and the income level that is three times the median household income for the calendar year most recently reported.) Thus, the income level specified in 35 U.S.C. 1.29(a)(3) and (a)(4) (three times the median household income) is $148,335.

The Internal Revenue Service (IRS) records show that in 2009 about 97 percent of individuals (as proxied by the total number of IRS form filings) reported adjusted gross income of less than $200,000, and about 87 percent of individuals reported adjusted gross income of less than $100,000.

See

Table 1.1 at:

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html.

Using this information, the Office estimates that 6,656 (6,862 times 97 percent) of patents granted to individuals from the U.S. will be for individuals under the gross income threshold of the micro entity definition ($148,335 for CY 2010). The Office uses 97 percent as the best available estimate of the maximum number of individuals who satisfy the income limit. Median household income and gross income levels are not readily available for the country of origin for all foreign individuals. Therefore, the Office conservatively estimates that all foreign individuals will qualify for micro entity fee reductions, and income should not limit their eligibility. Using the best available data, as presented above, the Office estimates that the total number of individuals who meet the thresholds set forth in 123(a)(1), (a)(2), and (a)(3) is 9,264 (6,656 from the U.S. and 2,608 foreign).

The 9,264 figure represents a reasonable approximation of the number of patents granted annually to persons who would qualify as micro entities under section 123(a). There is no data available to indicate how many persons would be excluded under section 123(a)(4). However, the Office's approach with the other components of section 123(a) is sufficiently conservative to mitigate the risks of not capturing this population. Likewise, while a small company could qualify as a micro entity under section 123(a), the above calculation of individuals represents a reasonable overall approximation because the estimate of affected individuals is sufficiently conservative.

Turning to 35 U.S.C. 123(d), the most recent data available on university patent grants is from CY 2008. Reviewing the data from CY 2001-CY 2008, the Office estimates that domestic universities account for approximately 1.9 percent of all patent grants. The Office is using this figure as a reasonable approximation for the number of micro entity applicants expected under section 123(d), which covers applicants who are employed by universities or who have assigned their invention to a university. Applying this information to FY 2011, the Office estimates that universities received 4,206 (221,350 times 1.9 percent) of the patents granted in FY 2011. The data on university patent grants is available at:

http://www.uspto.gov/web/offices/ac/ido/oeip/taf/univ/asgn/table_1_2008.htm.

To combine 123(a) and 123(d), the Office adds the estimated number of patents granted that could meet the micro entity definition for individuals (9,264) and for university employees (4,206) to obtain a total of 13,470 patent grants. The Office divides 13,470 micro entity patents by the 43,827 small entity patents in FY 2011 (per the Office's PALM database) to calculate that approximately 31 percent of small entity patents will be micro entity patents. The Office expects a uniform distribution of micro entities across all application types. No data exists to suggest otherwise. Likewise, the Office applies the 31 percent estimate to both filings and grants because it expects a uniform distribution of micro entities among both applicants and patentees, and no data exists to suggest otherwise. Thus, the Office estimates that 31 percent of all small entity applicants will qualify as micro entity applicants.

In recent years, small entity applicants made up approximately 25 percent of utility filings and 20 percent of utility patent grants (per the PALM

database). Given that utility filings are the largest category of application types, for forecasting purposes, the Office uses utility filing data as representative of the universe of patent application filings. Applying the 31 percent estimate for the number of micro entities, the Office estimates that micro entities will account for 7.8 percent (25 percent times 31 percent) of all filings, and 6.2 percent (20 percent times 31 percent) of all grants.

Aggregate Revenue Estimate Ranges

To calculate aggregate revenue, the USPTO prepares a high-to-low range of fee collection estimates that includes a +/− 5 outer bounds to account for: the inherent uncertainty, sensitivity, and volatility of predicting fluctuations in the economy and market environment; interpreting policy and process efficiencies; and developing fee workload and fee collection estimates from assumptions. The Office used 5 percent because historically the Office's actual revenue collections have typically been within 5 percent of the projected revenue. Additional detail about the Office's aggregate revenue, including projected workloads by fee, is available in “

USPTO Section 10 Fee Setting—Aggregate Revenue Estimates Alternative 1: Proposed Alternative—Set and Adjust Section 10 Fees”

available at

http://www.uspto.gov/aia_implementation/fees.jsp.

Summary

Patent fees are collected for patent related services and products at different points in time within the patent application examination process and over the life of the pending patent application and granted patent. Approximately half of all patent fee collections are from issue and maintenance fees, which subsidize filing, search, and examination activities. Changes in application filing levels immediately impact current year fee collections, because fewer patent application filings means the Office collects fewer fees to devote to production-related costs, such as additional examining staff and overtime. The resulting reduction in production activities creates an out-year revenue impact because less production output in one year results in fewer issue and maintenance fee payments in future years.

The USPTO's five-year estimated aggregate patent fee revenue (

see

“Aggregate Revenue Estimate” in Table 3) is based on the number of patent applications it expects to receive for a given fiscal year, work it expects to process in a given fiscal year (an indicator for workload of patent issue fees), expected examination and process requests for the fiscal year, and the expected number of post-issuance decisions to maintain patent protection over that same fiscal year. Within the iterative process for estimating aggregate revenue, the Office adjusts individual fees up or down based on cost and policy decisions (

see Step 3: Set Specific Fee Amounts

), estimates the effective dates of new fee rates, and then multiplies the resulting fees by appropriate workload volumes to calculate a revenue estimate for each fee. To calculate the aggregate revenue, the Office assumes that all new fee rates, except for changes to sections 1.18(a) through (d) (patent issue and publication fees) and 1.21(h)(1) and 1.21(h)(2) (recording patent assignments), would be effective March 1, 2013. Fee changes for sections 1.18(a) through (d) (patent issue and publication fees) and 1.21(h)(1) and 1.21(h)(2) (recording patent assignments) are assumed to become effective on January 1, 2014. Using these figures, the USPTO sums the individual fee revenue estimates, and the result is a total aggregate revenue estimate for a given year (

see

Table 3).

Step 3: Set Specific Fee Amounts

Once the Office finalizes the annual requirements and aggregate prospective costs for a given year during the budget formulation process, the Office sets specific fee amounts that, together, will derive the aggregate revenue required to recover the estimated aggregate prospective costs during that time frame. Calculating individual fees is an iterative process that encompasses many variables. One variable that USPTO considers to inform fee setting is the historical cost estimates associated with individual fees. The Office's Activity-Based Information (ABI) provides historical cost for an organization's activities and outputs by individual fee using the activity-based costing (ABC) methodology. ABC is commonly used for fee setting throughout the Federal Government. Additional information about the methodology, including the cost components related to respective fees, is available at

http://www.uspto.gov/aia_implementation/fees.jsp#heading-1

in the document titled “

USPTO Section 10 Fee Setting—Activity-Based Information and Costing Methodology.”

The USPTO provides data for FY 2009-FY 2011 because the Office finds that reviewing the trend of ABI historical cost information is the most useful way to inform fee setting. The underlying ABI data are available for public inspection at the USPTO.

When the Office implements a new process or service, historical ABI data is typically not available. However, the Office will use the historical cost of a similar process or procedure as a starting point to calculate the cost of a new activity or service. For example, as described in the proposed rulemaking, Changes to Implement the Supplemental Examination Provisions of the Leahy-Smith America Invents Act, 77 FR 3666 (Jan. 25, 2012), the Office used the ABI historical cost for

ex parte

reexamination procedures as a starting point for calculating the prospective cost to implement the new supplemental examination procedures.

In other cases, ABI historical cost information related to similar processes are not available, and the Office estimates cost by calculating the resources necessary to execute the new process. To do so, the Office estimates the amount of time (in hours) and necessary skill level to complete an activity. The USPTO then multiplies the estimated amount of time by the hourly wage(s) of the persons required at each skill level and adds the administrative and indirect cost rates (derived from ABI historical cost data) to this base cost estimate to calculate the full cost of the activity. One-time costs, such as IT, training, or facilities, are added to the full cost estimate to obtain the total cost of providing the new process or service. Lastly, the USPTO applies a rate of inflation to estimate the prospective unit cost. For example, the Office used this methodology to calculate the costs associated with the new

inter partes

and post grant review processes. (

See

77 FR 6879, (Feb. 9, 2012).

This cost data serves as a point of reference for setting individual fee amounts. The USPTO also uses various policy factors discussed in the Rulemaking Goals and Strategies section of this NPRM to inform fee setting. Fees are set to allow the Office to recover its aggregate costs, while furthering key policy considerations. The following section describes the rationale for setting fee rates at specific amounts.

V. Individual Fee Rationale

The Office projects the aggregate revenue generated from the proposed patent fees will recover the prospective aggregate cost of its patent operations. However, each individual proposed fee is not necessarily set equal to the estimated cost of performing the activities related to the fee. Instead, as described in

Part III. Rulemaking Goals and Strategies,

some of the proposed fees are set to balance several key policy factors:

fostering innovation, facilitating effective administration of the patent

system,

and

offering patent prosecution options to applicants.

As also described in

Part III,

executing these policy factors in the patent fee schedule is consistent with the

Strategy for American Innovation

and the goals and objectives outlined in the Strategic Plan. Once the key policy factors are considered, fees are set at, above, or below individual cost recovery levels for the activity or service provided.

For the purpose of discussing the changes in this rule, the rationale for proposing to set or adjust individual fees are grouped into two major categories: (1) Fees where large entity amounts changed from the current amount by greater than plus or minus 5 percent and 10 dollars (described below in section (A)); and (2) fees where large entity amounts stayed the same or did

not

change by greater than plus or minus 5 percent and 10 dollars (described below in section (B). The purpose of the categorization is to identify large fee changes for the reader and provide an individual fee rationale for such changes. The categorization is based on changes in large entity fee amounts because percentage changes for small entity fees that are in place today would be the same as the percentage change for the large entity, and the dollar change would be half of that of the large entity change. Therefore, there will never be an instance where the small entity fee change meets the greater than plus or minus 5 percent and 10 dollars criteria and a large entity does not.

The “

USPTO Section 10 Fee Setting—Table of Patent Fee Changes”

is available at

http://www.uspto.gov/aia_implementation/fees.jsp

and the tables in

Part VI.

The table of patent fee changes includes the current fees for large and small entities and the proposed fees for large, small, and micro entities with the dollar and percent changes in large entity fees and the FY 2011, FY 2010, and FY 2009 unit costs. The Discussion of Specific Rules in this rulemaking contains a complete listing of fees that are set or adjusted in the proposed patent fee schedule.

A. Discounts for Small and Micro Entity Applicants

The fees described below include discounts for small and micro entity applicants as required by section 10. The current small entity discount scheme will change when fees are set in accordance with section 10. That is, section 10(a) provides that the USPTO can set or adjust “any fee established, authorized or charged under” Title 35, U.S.C. In turn, section 10(b) of the Act provides that fees set or adjusted under section 10(a) authority for “filing, searching, examining, issuing, appealing, and maintaining patent applications and patents” will be reduced by 50 percent for small entities and 75 percent for micro entities. A small entity is defined as currently set forth in 35 U.S.C. 41(h)(1), and a micro entity is defined in section 123.

Currently, the small entity discount is only available for statutory fees provided under sections 41(a) and (b). Section 10(b) extends the discount to some patent fees not contained in section 41(a) and (b). Thus, the Office will apply the discount to a number of fees that currently do not receive the small entity discount. Only one fee for which a small entity discount is currently offered will be ineligible for that discount under the proposed fee schedule (the fee for a statutory disclaimer under 37 CFR 1.20(d), which is currently $160 for a large entity and $80 for a small entity), because the particular fee does not fall under one of the six categories of patent fees set forth in section 10(b).

Additionally, the new contested case proceedings created under the Act (

inter partes

review, post grant review, covered business method patent review, and derivation proceedings) are trial services, not appeals. As such, the fees for these services do not fall under any of the six categories under section 10(b), and therefore are not eligible for discounts. Appeals before the BPAI involve contests to an examiner's findings. The new trial services, however, determine whether a patent should have been granted. They involve discovery, including cross-examination of witnesses. Further, the AIA amends sections of Title 35 that specifically reference “appeals,” while separately discussing

inter partes

review, post grant review, and derivation proceedings, highlighting that these new services are not appeals.

See

section 7 of the AIA (amending 35 U.S.C. 6).

B. Fees With Proposed Changes of Greater Than Plus or Minus 5 Percent and 10 Dollars

For those fees that are proposed to change by greater than plus or minus 5 percent and 10 dollars, the individual fee rationale discussion is divided into four general subcategories: (1) Fees to be set at cost recovery; (2) fees to be set below cost recovery; (3) fees to be set above cost recovery; and (4) fees that are not set using cost data as an indicator. Table 4 contains a summary of the individual fees that are discussed in each of the subcategories referenced above.

As discussed above, for purposes of comparing amounts in the individual fee rationale discussion, the Office has also included the fees proposed previously using the USPTO's existing 35 U.S.C. 41(d)(2) fee authority in the baseline (status quo).

See

77 FR 982 (Jan. 6, 2012), 77 FR 3666 (Jan. 25, 2012), 77 FR 6879 (Feb. 9, 2012), 77 FR 7028 (Feb. 10, 2012), and 77 FR 7060 (Feb. 10, 2012). The fees proposed in these January and February 2012 Proposed Rules (as adjusted by the final rules) are included in the “current” fee column and denoted with (*). This NPRM does not reopen the comment period for any of the January and February 2012 Proposed Rules. It is anticipated that those rules will be finalized in the coming months. This NPRM establishes a different comment period for setting or adjusting all patent fees under section 10 of the AIA. The Office anticipates finalizing this rulemaking after the January and February 2012 Proposed Rules are finalized.

In addition, for purposes of discussion within this section, where new micro entity fees are proposed, it is expected that an applicant or patent holder would have paid the current small entity fee (or large entity in the event there is not a small entity fee) and dollar and percent changes are calculated from the current small entity fee amount (or large entity fee, where applicable).

It should be noted that the “Utility Search Fee” listed below does not meet the “change by greater than plus or minus 5 percent and 10 dollars” threshold, but is nonetheless included in the discussion for comparison of total filing, search, and examination fees.

Table 4—Patent Fees Proposed To Change

[By greater than plus or minus 5 percent and 10 dollars]

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

(1) Fees To Be Set at Cost Recovery

Request for Prioritized Examination

$4,800

$4,000

−$800

−17%

($2,400)

($2,000)

(−$400)

(−17%)

[N/A]

[$1,000]

[−$1,400]

[−58%]

$930

$1,700

+$770

+83%

Second and Subsequent RCEs (NEW)

($465)

($850)

(+$385)

(+83%)

[N/A]

[$425]

[−$40]

[−9%]

(2) Fees To Be Set Below Cost Recovery

Basic Filing Fee—Utility

$380

$280

−$100

−26%

($190)

($140)

(−$50)

(−26%)

[N/A]

[$70]

[−$120]

[−63%]

Utility Search Fee

$620

$600

−$20

−3%

($310)

($300)

(−$10)

(−3%)

[N/A]

[$150]

[−$160]

[−52%]

Utility Examination Fee

$250

$720

+$470

+188%

($125)

($360)

(+$235)

(+188%)

[N/A]

[$180]

[+$55]

[+44%]

Basic Filing, Search, and Exam—Utility (Total)

$1,250

$1,600

+$350

+28%

($625)

($800)

(+$175)

(+28%)

[N/A]

[$400]

[−$225]

[−36%]

First Request for Continued Examination (RCE)

$930

$1,200

+$270

+29%

($465)

($600)

(+$135)

+29%

[N/A]

[$300]

[−$165]

[−35%]

Notice of Appeal

$620

$1,000

+$380

+61%

($310)

($500)

(+$190)

(+61%)

[N/A]

[$250]

[−$60]

[−19%]

Filing a Brief in Support of an Appeal in Application or

Ex Parte

Reexamination Proceeding

$620

$0

−$620

−100%

($310)

($0)

(−$310)

(−100%)

[N/A]

[$0]

[−$310]

[−100%]

Appeal Forwarding Fee for Appeal in Examination or

Ex Parte

Reexamination Proceeding

or

Filing a Brief in Support of an Appeal in

Inter Partes

Reexamination (NEW)

N/A

(N/A)

[N/A]

$2,000

($1,000)

[$500]

+$2,000

(+$1,000)

[+$500]

N/A

(N/A)

[N/A]

Total Appeal Fees (Paid before Examiner Answer)

$1,240

$1,000

−$240

−19%

($620)

($500)

(−$120)

(−19%)

[N/A]

[$250]

[−$370]

[−60%]

Total Appeal Fees (Paid after Examiner Answer)

$1,240

$3,000

+$1760

+142%

($620)

($1,500)

(+$880)

(+142%)

[N/A]

[$750]

[+$130]

[+21%]

Ex Parte

Reexamination

*$17,750

$15,000

−$2,750

−15%

(N/A)

($7,500)

(−$10,250)

(−58%)

[N/A]

[$3,750]

[−$14,000]

[−79%]

Processing and Treating a Request for Supplemental Examination—Up to 20 Sheets (NEW)

*$5,140

(N/A)

[N/A]

$4,400

($2,200)

[$1,100]

−$740

(−$2,940)

[−$4,040]

−14%

(−57%)

[−79%]

Ex Parte

Reexamination Ordered as a Result of a Supplemental Examination Proceeding (NEW)

*$16,120

(N/A)

[N/A]

$13,600

($6,800)

[$3,400]

−$2,520

(−$9,320)

[−$12,720]

−16%

(−58%)

[−79%]

Total Supplemental Examination Fees

*$21,300

$18,000

−$3,330

−15%

(N/A)

($9,000)

(−$12,300)

(−58%)

[N/A]

[$4,500]

[−$16,800]

[−79%]

Inter Partes

Review Request—Up to 20 Claims (Per Claim Fee for Each Claim in Excess of 20 is $200)

NEW

$9,000

(N/A)

[N/A]

+$9,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Inter Partes

Review Post Institution Fee—Up to 15 Claims (Per Claim Fee for Each Claim in Excess of 15 is $400)

NEW

$14,000

(N/A)

[N/A]

$14,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Total Inter Partes Review Fees (NEW) (For Current Fees, Per Claim Fee for Each Claim in Excess of 20 is $600)

*$27,200

(N/A)

[N/A]

$23,000

(N/A)

[N/A]

−$4,200

(N/A)

[N/A]

−15%

(N/A)

[N/A]

Post Grant Review or Covered Business Method Patent Review Request—Up to 20 Claims (Per Claim Fee for Each Claim in Excess of 20 is $250)

NEW

$12,000

(N/A)

[N/A]

+$12,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Post Grant Review or Covered Business Method Patent Review Post Institution Fee—Up to 15 Claims (Per Claim Fee for Each Claim in Excess of 15 is $550)

NEW

$18,000

(N/A)

[N/A]

$18,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Total Post Grant Review or Covered Business Method Patent Fees (NEW) (For Current Fees, Per Claim Fee for Each Claim in Excess of 20 is $800)

*$35,800

(N/A)

[N/A]

$30,000

(N/A)

[N/A]

−$5,800

(N/A)

[N/A]

−16%

(N/A)

[N/A]

(3) Fees To Be Set Above Cost Recovery

Publication Fee for Early, Voluntary, or Normal Publication (Pre Grant Publication or PG Pub)

$300

(N/A)

[N/A]

$0

($0)

[$0]

−$300

(−$300)

[−$300]

−100%

(−100%)

[−100%]

Utility Issue Fee

$1,740

$960

−$780

−45%

($870)

($480)

(−$390)

(−45%)

[N/A]

[$240]

[−$630]

[−72%]

Combined Total—Pre−grant Publication and Issue Fee—Utility

$2,040

($1,170)

[N/A]

$960

($480)

[$240]

−$1,080

(−$690)

[−$930]

−53%

(−59%)

[−79%]

Maintenance Fee Due at 3.5 Years (1st Stage)

$1,130

$1,600

+$470

+42%

($565)

($800)

(+$235)

(+42%)

[N/A]

[$400]

[−$165]

[−29%]

Maintenance Fee Due at 7.5 Years (2nd Stage)

$2,850

$3,600

+$750

+26%

($1,425)

($1,800)

(+$375)

(+26%)

[N/A]

[$900]

[−$525]

[−37%]

Maintenance Fee Due at 11.5 Years (3rd Stage)

$4,730

$7,400

+$2,670

+56%

($2,365)

($3,700)

(+$1,335)

(+56%)

[N/A]

[$1,850]

[−$515]

[−22%]

(4) Fees That Will Not Be Set Using Cost Data as an Indicator

Extensions for Response within 1st Month

$150

$200

+$50

+33%

($75)

($100)

(+$25)

(+33%)

[N/A]

[$50]

[−$25]

[−33%]

Extensions for Response within 2nd Month

$560

$600

+$40

+7%

($280)

($300)

(+$20)

(+7%)

[N/A]

[$150]

[−$130]

[−46%]

Extensions for Response within 3rd Month

$1,270

$1,400

+$130

+10%

($635)

($700)

(+$65)

(+10%)

[N/A]

[$350]

[−$285]

[−45%]

Extensions for Response within 4th Month

$1,980

$2,200

+$220

+11%

($990)

($1,100)

(+$110)

(+11%)

[N/A]

[$550]

[−$440]

[−44%]

Extensions for Response within 5th Month

$2,690

$3,000

+$310

+12%

($1,345)

($1,500)

(+$155)

(+12%)

[N/A]

[$750]

[−$595]

[−44%]

Utility Application Size Fee—For each Additional 50 Sheets that Exceed 100 Sheets

$310

($155)

[N/A]

$400

($200)

[$100]

+$90

(+$45)

[−$55]

+29%

(+29%)

[−35%]

Independent Claims in Excess of 3

$250

$420

+$170

+68%

($125)

($210)

(+$85)

(+68%)

[N/A]

[$105]

[−$20]

[−16%]

Claims in Excess of 20

$60

$80

+$20

+33%

($30)

($40)

(+$10)

(+33%)

[N/A]

[$20]

[−$10]

[−33%]

Multiple Dependent Claim

$450

$780

+$330

+73%

($225)

($390)

(+$165)

(+73%)

[N/A]

[$195]

>[−$30]

[−13%]

Correct Inventorship After First Action on the Merits (NEW)

N/A

(N/A)

[N/A]

$1,000

($500)

[$250]

+$1,000

(+$500)

[+$250]

N/A

(N/A)

[N/A]

Derivation Petition Fee (NEW)

*$400

$400

$0

0%

(N/A)

(N/A)

(N/A)

(N/A)

[N/A]

[N/A]

[N/A]

[N/A]

Derivation Institution and Trial Fee (NEW)

N/A

$0

$0

N/A

(N/A)

($0)

($0)

(N/A)

[N/A]

[$0]

[$0]

[N/A]

Assignments Submitted Electronically (NEW)

$40

$0

−$40

−100%

(N/A)

(N/A)

(N/A)

(N/A)

[N/A]

[N/A]

[N/A]

[N/A]

Assignments Not Submitted Electronically (NEW)

$40

$40

$0

0%

(N/A)

(N/A)

(N/A)

(N/A)

[N/A]

[N/A]

[N/A]

[N/A]

(1) Fees To Be Set at Cost Recovery

The following two fees are set at cost recovery. These fees support the policy factor of “

offering patent prosecution options to applicants”

by providing applicants with flexibilities in seeking patent protection. A discussion of the rationale for the proposed changes follows.

Request for Prioritized Examination:

Table 5—Request for Prioritized Examination Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee information

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Request for Prioritized Examination

$4,800

$4,000

−$800

−17%

($2,400)

($2,000)

(−$400)

(−17%)

[N/A]

[$1,000]

[−$1,400]

[−58%]

Table 6—Request for Prioritized Examination Cost Information

Cost information

FY 2011

Cost Calculation is available in the proposed rule published in the

Federal Register

Changes To Implement the Prioritized Examination Track (Track I) of the Enhanced Examination Timing Control Procedures, 76 FR 6369 (Feb. 4, 2011)

$4,000

A patent applicant may seek prioritized examination at the time of filing an original utility or plant application or a continuation application thereof or upon filing an RCE in compliance with section 1.114. A single request for prioritized examination may be granted for an RCE in a plant or utility application. When in the prioritized examination track, an application will be accorded special status during prosecution until a final disposition is reached. The target for prioritized examination is to provide a final disposition within twelve months, on average, of prioritized status being granted. This prioritized examination procedure is part of an effort by the USPTO to provide

patent applicants patent prosecution options

with greater control over the timing of examination of their applications. The procedure enables applicants to have greater certainty in their patent rights sooner.

The AIA established the current large and small entity fees for prioritized examination, which the Office put in place in 2011.

See

Changes To Implement the Prioritized Examination Track (Track I) of the Enhanced Examination Timing Control Procedures Under the Leahy-Smith America Invents Act, 76 FR 59050 (Sept. 23, 2011). The large entity fee is above the Office's cost to process a single prioritized examination request to subsidize the fee revenue lost from providing small entity applicants a 50 percent discount from the large entity fee. The cost calculation for the prioritized examination fees is available in the proposed rule.

See

Changes To Implement the Prioritized Examination Track (Track I) of the Enhanced Examination Timing Control Procedures, 76 FR 6369 (Feb. 4, 2011). The higher large entity fee, coupled with the lower small entity fee, recovers the Office's total cost for conducting all prioritized examinations.

Under section 10, micro entities are eligible to receive a 75 percent discount from the large entity fee for prioritized examination. Here, the Office proposes to set the large entity fee at cost ($4,000), instead of further increasing the fee to subsidize the new micro entity discount. This amount is the same as that which was proposed in the initial fee schedule delivered to the PPAC on February 7, 2012. The Office proposes to recover this subsidy through other fees that will be set above cost recovery, rather than through a separate, higher, large entity fee for prioritized examinations. The Office believes this system will

foster innovation

and allow for ease of entry into the patent system. Setting the large entity prioritized examination fee further above cost would contradict this policy factor and hinder fast patent protection for large entity applicants.

Request for Continued Examination (RCE)—Second and Subsequent Request (New):

Table 7—Second and Subsequent Request for Continued Examination (RCE) Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Second and Subsequent Requests for Continued Examination (RCE) (NEW)

$930

($465)

[N/A]

$1,700

($850)

[$425]

+$770

(+$385)

[−$40]

+83%

(+83%)

[−9%]

Table 8—Request for Continued Examination (RCE) Historical Cost Information

Historical unit cost information

FY 2011

FY 2010

FY 2009

Request for Continued Examination (RCE)

$2,070

$1,696

$1,881

Percentage of RCE cost compared to the cost to process a new application

60%

43%

51%

The historical unit cost information is calculated by subtracting the cost to complete a single application with no RCEs from the cost to complete a single application with one RCE. A description of the cost components is available for review in the “

Section 10 Fee Setting—Activity-Based Information and Costing Methodology”

document. It is reasonable to expect that the cost to the Office to complete a single RCE should be less than the cost to complete a new application because an RCE is continuing from work already performed on the original application. The Office's historical cost data demonstrates this, with the cost to process an RCE being, on average, half of the cost to prosecute a new application.

An applicant may file an RCE in an application that is under final rejection (i.e., prosecution is closed) by filing a submission and paying a specified fee within the requisite time period. Applicants typically file an RCE when they choose to continue to prosecute an application before the examiner, rather than appeal a rejection or abandon the application. In FY 2011, about 30 percent of applications filed were for RCEs. Generally, around 70 percent of RCE applications filed in a year are for first RCEs and the remaining 30 percent are a second or subsequent RCE. Given this data, it is reasonable to expect that most outstanding issues are resolved with the first RCE. Those applications that cannot be completed with the first RCE do not facilitate an effective administration of the patent system with the prompt conclusion of patent prosecution.

On February 7, 2012, the Office delivered to the PPAC a proposed RCE fee of $1,700. In response to stakeholder feedback on both the individual fee level and the growth rate of the patent operating reserve, the Office now proposes to divide the fee for RCEs into two parts: (1) A fee for a first RCE; and (2) a second, higher fee for a second or subsequent RCE. The Office proposes this RCE fee division because, as noted above, based on historical cost information, 70 percent of RCEs are for the first RCE, which indicates that applicants need modest additional time to resolve the outstanding issues with the examiner. The proposed multipart RCE fees demonstrate how the Office seeks to

facilitate the effective administration of the patent system

and

offer patent prosecution options to applicants.

The large entity fee for the first RCE would be set about 30 percent below cost recovery at $1,200 to advance innovation by easing the burden on an applicant needing to resolve the outstanding items with an examiner. The Office proposes to set the fee for the second and subsequent RCEs at the same amount as initially delivered to PPAC, i.e., $1,700, which is estimated to be at cost recovery. Setting the second and subsequent RCE fees higher than the fee for the first RCE helps to recover costs for activities that strain the patent system.

The USPTO calculated the large entity cost at $1,700 (rounded) by averaging historical costs after estimating the incremental cost to complete a single application with one RCE compared to the cost to complete an application with no RCE. The Office used a three-year average to estimate the cost of a single RCE in lieu of using only FY 2011 data, because the trend in historical data shows that the cost to process an RCE increased in FY 2011, and the Office believes this increase is due to an anomaly caused by the Clearing the Oldest Patent Application (COPA) initiative, as described in the

FY 2011 USPTO Performance and Accountability Report,

available at

http://www.uspto.gov/about/stratplan/ar/2011/mda_02_03.html

.

When an applicant does not agree with a final rejection notice, the applicant has the option to file a notice of appeal, for which the fee is also proposed to be set below cost recovery and less than the fee proposed for the first, and second and subsequent, RCEs (

see

appeal fee information in the following section). The USPTO proposes this fee relationship to ensure that all applicants have viable options to dispute a final rejection when they believe the examiner has erred. These

patent prosecution options

allow applicants to make critical decisions at multiple points in the patent prosecution process.

(2) Fees To Be Set Below Cost Recovery

There are seven types of fees that the Office proposes to be set below cost recovery that meet the greater than plus or minus 5 percent and 10 dollars criteria. The policy factors relevant to setting fees below cost recovery are

fostering innovation

and

offering patent prosecution options to applicants.

Applying these policy factors to set fees below cost recovery benefits the patent system by keeping the fees low and making patent filing and prosecution more available to applicants, thus

fostering innovation.

Although many fees would increase from current fee rates under this proposed rule, the Office is not proposing to increase “pre-grant” fees (e.g., filing, search, and examination) enough to create the same barrier to entry as otherwise would have been created if fees were to recover the full cost of the activity. The proposed fee schedule

offers patent prosecution options

to provide applicants flexible and cost-effective options for seeking and completing patent protection. This strategy provides multipart and staged fees for certain patent prosecution activities. A discussion of the rationale for each proposed fee adjustment follows.

Basic Filing, Search, and Examination—Utility:

Table 9—Basic Filing, Search, and Examination—Utility Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Basic Filing Fee—Utility

$380

($190)

[N/A]

$280

($140)

[$70]

−$100

(−$50)

[−$120]

−26%

(−26%)

[−63%]

Utility Search Fee

$620

($310)

[N/A]

$600

($300)

[$150]

−$20

(−$10)

[−$160]

−3%

(−3%)

[−52%]

Utility Examination Fee

$250

($125)

[N/A]

$720

($360)

[$180]

+$470

(+$235)

[+$55]

+188%

(+188%)

[+44%]

Basic Filing, Search, and Exam—Utility (Total)

$1,250

($625)

[N/A]

$1,600

($800)

[$400]

+$350

(+$175)

[−$225]

+28%

(+28%)

[−36%]

Table 10—Basic Filing, Search, and Examination—Utility Fee Historical Cost Information

Historical unit cost information

FY 2011

$/% of total

FY 2010

$/% of total

FY 2009

$/% of total

Basic Filing Fee—Utility

$234/6%

$243/6%

$241/7%

Utility Search Fee

$1,521/43%

$1,694/43%

$1,520/41%

Utility Examination Fee

$1,814/51%

$1,969/51%

$1,904/52%

Total Unit Cost

$3,569/100%

$3,906/100%

$3,665/100%

A non-provisional application for a patent includes filing, search, and examination fees. Currently, the large entity basic filing, search, and examination fees for a utility patent recover slightly more than one-third of the average unit cost for prosecuting a patent application, while a small entity application recovers around 17 percent of the average unit cost. The Office proposes to maintain this “back-end” subsidy of “front-end” fees structure to achieve the policy goal of

fostering innovation.

The current fee rates and respective costs associated with each stage of patent prosecution are out of alignment. For example, on average, 94 percent of the costs associated with filing, searching, and examining an application occur in the search and examination stages. Approximately half of those costs are estimated to occur in the examination stage, but only 20 percent of the total filing, search, and examination fees are derived from the examination fee (

see

Table 11). To adjust this fee structure and help stabilize the USPTO funding model, the Office proposes to increase the total filing, search, and examination fees and to realign the fee rates to more closely track the cost pattern by stage of prosecution (i.e., filing, search, and examination), while keeping each stage below actual cost.

Table 11—Utility Basic Filing, Search, and Examination—Current and Proposed Fee Information

Proposed fee information

Current

$/% of total

Proposed to PPAC

$/% of total

Proposed

$/% of total

Basic Filing Fee—Utility

$380/30%

$400/22%

$280/17%

Utility Search Fee

$620/50%

$660/36%

$600/38%

Utility Examination Fee

$250/20%

$780/42%

$720/45%

Total Fees

$1,250/100%

$1,840/100%

$1,600/100%

On February 7, 2012, the Office delivered to the PPAC a proposed combined total fee for filing, search, and examination of $1,840. In response to stakeholder feedback on both the individual fee level and the growth rate of the patent operating reserve, the Office now proposes to reduce the combined fees from the initial proposal ($1,840) to $1,600. This adjustment keeps the cost of entering the patent system at or below cost for large, small, and new micro entity applicants—45 percent, 22 percent, and 11 percent of FY 2011 total cost, respectively. Likewise, the proposed adjustment for filing, search, and examination fees continues to ensure that these initial fees remain a small part (10 percent) of the cost to apply for patent protection when compared to the average legal fees. The filing, search, and examination fees are also only 10 percent of the total fees paid for a patent through maintenance to full term (i.e., filing, search, examination, issue, and maintenance).

The overall increase in filing, search, and examination fees

facilitates the effective administration of the patent system,

because it encourages applicants to submit only the most thoughtful and unambiguous applications, therefore facilitating examiners' ability to provide prompt, quality interim and final decisions. At the same time, it helps to

stabilize the Office's revenue stream by collecting additional revenue when an application is filed, instead of when it is later published or issued. Also, while the Office proposes to increase these application fees, reducing the pre-grant publication and issue fees will offset that increase. In addition, as the patent IT systems continue to improve, the Office is also contemplating providing additional fee discounts to encourage applicants to use the new IT systems, when available, and the Office welcomes public comment on the possibility of these discounts.

The Office recognizes that some applicants may choose to reduce the number of applications filed in response to this proposed increase in fees. However, the Office anticipates that this impact will be relatively short-term; lasting for the first two and a half years of the fee increase. The Office estimates that applicants will file 1.3 percent fewer patent applications during FY 2013 than the number estimated to be filed in the absence of a fee increase (with new fee schedule implementation for half the fiscal year). The Office estimates that 2.7 percent fewer patent applications will be filed during FY 2014 and 4.0 percent fewer patent applications beginning in FY 2015, in response to the proposed fee adjustment. However, despite the decrease in patent applications filed when compared to the number filed absent this proposed fee increase, the Office estimates that the overall number of patent applications filed will continue to grow each year, albeit at a lower growth rate in FY 2013 through FY 2015. The Office estimates that beginning in FY 2016 the growth in patent applications filed will return to the same levels anticipated in the absence of a fee increase. Additional information about this estimate, including the calculation methodology, is available at

http://www.uspto.gov/aia_implementation/fees.jsp

, in a document entitled “

USPTO Section 10 Fee Setting—Description of Elasticity Estimates.

” The economic impact of this proposed adjustment is further considered in the cost-benefit calculation of the

Regulatory Impact Analysis,

available at

http://www.uspto.gov/aia_implementation/fees.jsp.

It should be noted that utility patent fees are referenced in this section to simplify the discussion of the fee rationale. However, the rationale also applies to the filing, search, and examination fee changes for design, plant, reissue, and PCT national stage fees as outlined in the “

USPTO Section 10 Fee Setting—Table of Patent Fee Changes.

”

Request for Continued Examination (RCE)—First Request:

Table 12—First Request for Continued Examination (RCE) Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

First Request for Continued Examination (RCE)

$930

($465)

[N/A]

$1,200

($600)

[$300]

+$270

(+$135)

[−$165]

+29%

(+29%)

[−35%]

Table 13—Request for Continued Examination (RCE) Historical Cost Information

Historical unit cost information

FY 2011

FY 2010

FY 2009

Request for Continued Examination (RCE)

$2,070

$1,696

$1,881

Percentage of RCE cost compared to the cost to process a new application

60%

43%

51%

The historical unit cost information is calculated by subtracting the cost to complete a single application with no RCEs from the cost to complete a single application with one RCE. A description of the cost components is available for review in the “

Section 10 Fee Setting—Activity-Based Information and Costing Methodology

” document. It is reasonable to expect that the cost to the Office to complete a single RCE should be less than the cost to complete a new application because an RCE is continuing from work already performed on the original application. The Office's historical cost data demonstrates this, with the cost to process an RCE being, on average, half of the cost to prosecute a new application.

An applicant may file an RCE in an application that is under final rejection (i.e., prosecution is closed) by filing a submission and paying a specified fee within the requisite time period. Applicants typically file an RCE when they choose to continue to prosecute an application before the examiner, rather than appeal a rejection or abandon the application. In FY 2011, about 30 percent of applications filed were for RCEs. Generally, around 70 percent of RCE applications filed in a year are for first RCEs and the remaining 30 percent are a second or subsequent RCE. Given this data, it is reasonable to expect that most outstanding issues are resolved with the first RCE.

On February 7, the Office delivered to the PPAC a proposed RCE fee of $1,700. In response to stakeholder feedback on both the individual fee level and the growth rate of the patent operating reserve, the Office now proposes to divide the fees for RCE into two parts: (1) a fee for a first RCE; and (2) a second, higher fee for a second or subsequent RCE. The Office is proposing this RCE fee division because, as stated before, 70 percent of RCEs are for the first RCE, which indicates that applicants need modest additional time to resolve the outstanding issues with the examiner. Multipart RCE fees demonstrate how the Office seeks to

facilitate the effective administration of the patent system

and

offer patent prosecution options to applicants.

The large entity fee for the first RCE would be set about 30 percent below cost recovery at $1,200 to advance innovation by easing the burden on an applicant needing to resolve the outstanding items with an examiner. This amount is a reduction from the $1,700 fee included in the February 7, 2012, initial proposal to PPAC.

The USPTO has calculated the large entity cost at $1,700 (rounded) by averaging historical costs after

estimating the incremental cost to complete a single application with one RCE compared to the cost to complete an application with no RCE. The Office used a three-year average to estimate the cost of a single RCE in lieu of using only FY 2011 data, because the trend in historical data shows that the cost to process an RCE increased in FY 2011, and the Office believes this increase is due to an anomaly caused by the Clearing the Oldest Patent Application (COPA) initiative, as described in the

FY 2011 USPTO Performance and Accountability Report,

available at

http://www.uspto.gov/about/stratplan/ar/2011/mda_02_03.html.

When an applicant does not agree with a final rejection notice, the applicant has the option to file a notice of appeal as an alternative to filing an RCE. The fee to file a notice of appeal is also proposed to be set below cost recovery and less than the fee proposed for the first, and second and subsequent, RCEs (

see

appeal fee information in the following section). The USPTO proposes this fee relationship to ensure all applicants have viable options to dispute a final rejection when they believe the examiner has erred. These

patent prosecution options

allow applicants to make critical decisions at multiple points in the patent prosecution process.

In addition to dividing the RCEs fees, the Office is exploring other ways to address RCEs. Specifically, the Office recently announced two pilot programs that aim to avoid the need to file an RCE by permitting: (i) An Information Disclosure Statement to be submitted after payment of the issue fee; and (ii) further consideration of after final responses.

The first initiative, called Quick Path Information Disclosure Statement (IDS) Pilot, permits an applicant to file an IDS after a final rejection and gives the examiner time to consider whether prosecution should be reopened. If the items of information in the IDS do not require prosecution to be reopened, the application will return to issue, thereby eliminating need for an RCE.

The second initiative, called the After Final Consideration Pilot, authorizes a limited amount of non-production time for examiners to consider responses filed after a final rejection with the goal of achieving compact prosecution and increased collaboration between examiners and stakeholders. Accordingly, the Office is hopeful for the success of these two pilot programs to reduce the number of RCEs and thereby enable applicants to secure a patent through a single application filing.

Appeal Fees (Partially New):

Table 14—Appeal Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Notice of Appeal

$620

($310)

[N/A]

$1,000

($500)

[$250]

+$380

(+$190)

[−$60]

+61%

(+61%)

[−19%]

Filing a Brief in Support of an Appeal in Application or

Ex Parte

Reexamination Proceeding

$620

($310)

[N/A]

$0

($0)

[$0]

−$620

(−$310)

[−$310]

−100%

(−100%)

[−100%]

Appeal Forwarding Fee for Appeal in Examination or

Ex Parte

Reexamination Proceeding

or

Filing a Brief in Support of an Appeal in

Inter Partes

Reexamination (NEW)

N/A

(N/A)

[N/A]

$2,000

($1,000)

[$500]

+$2,000

(+$1,000)

[+$500]

N/A

(N/A)

[N/A]

Total Appeal Fees

(paid before Examiner Answer)

$1,240

($620)

[N/A]

$1,000

($500)

[$250]

−$240

(−$120)

[−$370]

−19%

(−19%)

[−60%]

Total Appeal Fees

(paid after Examiner Answer)

$1,240

($620)

[N/A]

$3,000

($1,500)

[$750]

+$1,760

(+$880)

[+$130]

+142%

(+142%)

[+21%]

Table 15—Appeal Fee Historical Cost Information

Historical unit cost information

FY 2011

FY 2010

FY 2009

Notice of Appeal to Patent Trial and Appeal Board

Filing a Brief in Support of an Appeal

$4,799

$4,960

$5,008

Appeal Forwarding Fee

An applicant who disagrees with an examiner's final rejection may appeal to the BPAI by filing a notice of appeal and the required fee within the time period provided. An applicant likewise may file a notice of appeal after the applicant's claim(s) has/have been twice rejected, regardless of whether the claim(s) has/have been finally rejected. Further, an applicant may file a notice of appeal after a first rejection in a continuing application if any of the

claims in the parent application were previously rejected.

Within two months from the date of filing the notice of appeal, the appellant must file a Brief. Then, the examiner must file an Examiner's Answer. After the Answer is mailed, the appeal file is forwarded to the BPAI for review.

Currently, a large entity applicant pays $620 to file a notice of appeal and another $620 when filing a brief—a total of $1,240. These current fees only recover 25 percent of the Office's cost of an appeal. The Office proposes to increase appeal fees to reduce the gap between fees and cost. At the same time, the Office proposes to

offer patent prosecution options to applicants

and stage the appeal fees to recover additional cost at later points in time and thereby minimize the cost impacts on applicants associated with withdrawn final rejections.

The Office proposes a $1,000 notice of appeal fee and a $0 fee when filing the brief. Both of these actions would occur prior to the preparation of an Examiner's Answer (and forwarding of the appeal to the BPAI). The Office recognizes that after some notices of appeal are filed, the matter is resolved, and there is no need to take the ultimate step of forwarding the appeal to the BPAI for a decision. The Office further proposes a $2,000 fee to forward the appeal file—containing the appellant's Brief and the Examiner's Answer—to the BPAI for review. Under this proposed fee structure, one-third of the fee would be paid at the time of notice of appeal, and the remaining two-thirds would be paid after the Examiner's Answer, but only if the appeal is then forwarded to the BPAI. This fee payment structure allows the appellant to reduce the amount invested in the appeal process until receiving the Examiner's Answer. In fact, when prosecution issues are resolved after the notice of appeal and before forwarding an appeal to the BPAI, a large entity appellant would pay only $1,000 to obtain an Examiner's Answer—19 percent less than under the current fee structure.

Staging the appeal fees in this manner allows applicants to pay less in situations when an application is either allowed or reopened instead of being forwarded to the BPAI. This

patent prosecution option

allows applicants to make critical decisions at multiple points in the patent prosecution process.

When considering the proposed appeal fees, the Office evaluated several options to minimize the cost to applicants. For example, it contemplated refunding certain appeal fees if the appeal was not forwarded to the BPAI. However, under the current refund statutory authority, the Office can only refund all or part of a fee paid by mistake or in excess of the fee due.

See

35 U.S.C. 42(d). Neither of these conditions would apply when the issues raised on appeal are resolved and the appeal is not forwarded to the BPAI because the matter is resolved.

On February 7, 2012, the Office delivered to PPAC a fee proposal that included two appeal fee payment features: (1) Staging the appeal-related fees so that cost impacts on some applicants are minimized; and (2) paying a $0 pre-grant publication (PGPub) and issue fee if the examiner withdraws a final rejection prior to an appeal being forwarded to the BPAI.

While the staging features delivered to PPAC are included in this proposed rule, after reevaluating the $0 PGPub and Issue fee, the Office decided against proposing it here. Sometimes mistakes or errors in prosecution are not self-evident, and sometimes examiners properly consider After Final amendments and allow the application even after the applicant has filed an appeal. Accordingly, when operating with a $0 PGPub and Issue fee, the Office had planned to implement a case-by-case review process to evaluate the root cause of why the applicant filed an appeal. This process would increase the Office's cost of operations without realizing counterbalancing benefits.

Additionally, a $0 PGPub and issue fee would eliminate the need for the notice of issue fee payment and could impact when applicants receive notice that their applications will proceed to issue. The Office understands that the timing of issuance is extremely important in managing a business, and that timing may be critically important when an applicant intends to file a continuing application. In view of these considerations and risks, the Office decided not to propose a $0 PGPub and issue fee here.

Finally, just as the Office is exploring ways to minimize unnecessary RCE filings, the Office is likewise exploring other options, including pilot programs, in an effort to reduce the need to appeal to the BPAI.

Ex Parte Reexamination:

Table 16—Ex Parte Reexamination Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Ex Parte

Reexamination

*$17,750

(N/A)

[N/A]

$15,000

($7,500)

[$3,750]

−$2,750

(−$10,250)

[−$14,000]

−15%

(−58%)

[−79%]

* For purposes of comparing amounts, where a new fee has been proposed under 35 U.S.C. 41(d)(2) in the January and February 2012 Proposed Rules, that proposed fee (as adjusted by the final rule) is included in the current fee column and denoted with (*).

Table 17—Ex Parte Reexamination Historical Cost Information

Historical unit cost information

FY 2011

FY 2010

FY 2009

Ex Parte

Reexamination

$19,626

$16,647

$17,162

Table 18—Ex Parte Reexamination Prospective Cost Information

Prospective cost information

FY 2013

Cost Calculation, 77 FR 3666 (Jan. 25, 2012) available at

http://www.uspto.gov/aia_implementation/cost_calc_supplemental_exam.pdf

$17,750

Any person (including anonymously) may file a petition for the

ex parte

reexamination of a patent that has been issued. The Office initially determines if the petition presents “a substantial new question of patentability” as to the challenged claims. If such a new question has been presented, the Office will order a reexamination of the patent for the relevant claims.

Currently, the

ex parte

reexamination fee is $2,520. 37 CFR 1.20. However, while examining its costs to estimate the cost of a supplemental examination (pursuant to section 41(d)), the Office found that its current

ex parte

reexamination fee does not recover the Office's costs for that service. In fact, the Office incurs about seven times the amount of the current fee for an

ex parte

reexamination. Accordingly, to remedy this discrepancy, in January 2012, the Office proposed to set the

ex parte

reexamination fee under section 41(d) at $17,750, which recovers the Office's costs for the

ex parte

reexamination (Changes To Implement the Supplemental Examination Provisions of the Leahy-Smith America Invents Act and To Revise Reexamination Fees, 77 FR 3666 (Jan. 25, 2012)).

On February 7, 2012, the Office delivered to the PPAC a fee proposal under section 10 of the AIA proposing setting the large entity fee at the same amount as proposed in the January and February 2012 Proposed Rules (i.e., $17,750) and introducing new small and micro entity discounts for an

ex parte

reexamination. However, in accordance with section 10, third party requestors are not eligible for the micro entity discounts.

In response to stakeholder feedback on both the individual fee level and the growth rate of the patent operating reserve in the initial proposal, the Office now proposes to reduce the large entity fee for

ex parte

reexamination to $15,000, which is 15 percent below the Office's cost of conducting the proceeding. Setting the fee below cost will reduce the growth rate of the operating reserve and permit easier access to the

ex parte

reexamination process, which benefits the patent system and patent quality by removing low quality patents.

Supplemental Examination:

Table 19—Supplemental Examination Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Processing and Treating a Request for Supplemental Examination—Up to 20 Sheets (NEW)

*$5,140

(N/A)

[N/A]

$4,400

($2,200)

[$1,100]

−$740

(−$2,940)

[−$4,040]

−14%

(−57%)

[−79%]

Ex Parte

Reexamination Ordered as a Result of a Supplemental Examination Proceeding (NEW)

*$16,120

(N/A)

[N/A]

$13,600

($6,800)

[$3,400]

−$2,520

(−$9,320)

[−$12,720]

−16%

(−58%)

[−79%]

Total Supplemental Examination Fees

*$21,300

(N/A)

[N/A]

$18,000

($9,000)

[$4,500]

−$3,330

(−$12,300)

[−$16,800]

−15%

(−58%)

[−79%]

* For purposes of comparing amounts, where a new fee has been proposed under 35 U.S.C. 41(d)(2) in the January and February 2012 Proposed Rules, that proposed fee (as adjusted by the final rule) is included in the current fee column and denoted with (*).

Table 20—Supplemental Examination Prospective Cost Information

Prospective cost information

FY 2013

Cost calculation 77 FR 3666 (Jan. 25, 2012) available at

http://www.uspto.gov/aia_implementation/cost_calc_supplemental_exam.pdf

Supplemental Examination Request

$5,180

Supplemental Examination Reexamination

$16,120

Total Supplemental Examination Costs

$21,300

A patent owner may request a supplemental examination of a patent by the Office to consider, reconsider, or correct information believed to be relevant to the patent. This proceeding will help the patent owner preempt challenges to the patent during litigation. The need for this proceeding arises only after a patent owner recognizes that there is information that should have been brought to the attention of the Office to consider or reconsider during the application process, or information submitted

during the application process that needs to be corrected.

The January and February 2012 Proposed Rules (as adjusted by the final rule), using section 41(d), proposed to set the fees for the request for supplemental examination and the

ex parte

reexamination ordered as a result of a supplemental examination proceeding at $5,140 and $16,120, respectively.

On February 7, 2012, the Office delivered to the PPAC proposed fees of $7,000 and $20,000, respectively, using section 10 of the AIA, for the request for supplemental examination and the

ex parte

reexamination ordered as a result of a supplemental examination proceeding. This increase was proposed to encourage applicants to submit applications with all relevant information during initial examination, which facilitates compact patent prosecution. In response to stakeholder feedback on both the individual fee level and the growth rate of the patent operating reserve in the initial proposal, the Office now proposes to reduce these fees to $4,400 and $13,600, respectively. The Office believes these reduced fee amounts continue to be sufficient to encourage applicants to submit applications with all relevant information during initial examination, yet low enough to facilitate the effective administration of the patent system by providing patentees with an alternative to the court system for addressing inequitable conduct. The Office proposes to set total supplemental examination fees of $18,000, 15 percent below cost and 30 percent less than the total of $27,000 included in the proposal delivered to PPAC on February 7, 2012.

Inter Partes Review:

Table 21—Inter Partes Review Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Inter Partes

Review Request—Up to 20 Claims (Per Claim Fee for Each Claim in Excess of 20 is $200)

NEW

$9,000

(N/A)

[N/A]

+$9,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Inter Partes

Review Post Institution Fee—Up to 15 Claims (Per Claim Fee for Each Claim in Excess of 15 is $400)

NEW

$14,000

(N/A)

[N/A]

+$14,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Total Inter Partes Review Fees (For Current Fees, per Claim Fee for Each Claim in Excess of 20 is $600)

*$27,200

(N/A)

[N/A]

$23,000

(N/A)

[N/A]

−$4,200

(N/A)

[N/A]

−15%

(N/A)

[N/A]

* For purposes of comparing amounts, where a new fee has been proposed under 35 U.S.C. 41(d)(2) in the January and February 2012 Proposed Rules, that proposed fee (as adjusted by the final rule) is included in the current fee column and denoted with (*).

Table 22—Inter Partes Review Prospective Cost Information

Prospective Cost Information

FY 2013

The Total

Inter Partes

Review cost calculation of $27,200, 77 FR 6879, (Feb. 9, 2012) is available for review at

http://www.uspto.gov/aia_implementation/rin-0651-ac70.pdf

. The Office estimated that 35 hours of Judge time would be required during review and used this as the basis for estimating the cost for the

Inter Partes

Review. The IT-related costs are included in the Review Request portion of the fee.

Description

Base cost

Per claim cost

Inter Partes

Review Request—up to 20 claims

$10,500

>20 = $200

Inter Partes

Review Post Institution Fee—up to 15 claims

$16,700

>15 = $400

Total Inter Partes Review Costs

$27,200

N/A

Inter partes

review is a new trial proceeding created by the AIA that allows the Office to review the patentability of one or more claims in a patent only on a ground that could be raised under 35 U.S.C. 102 or 103, and only on the basis of prior art consisting of patents or printed publications. The

inter partes

review process begins with a third party filing a petition. An

inter partes

review may be instituted upon a showing that there is a reasonable likelihood that the petitioner would prevail with respect to at least one claim challenged.

In February 2012, the Office proposed setting a single fee for

inter partes

review pursuant to 35 U.S.C. 41(d), at a level to recover the Office's entire cost of conducting such proceeding. (

See

77 FR 6879 (Feb. 9, 2012)); (

See also

77 FR 7041 (Feb. 10, 2012)). Under that proposal, the fee for an

inter partes

review would be based on the number of claims for which review is sought, with the entire fee due on filing of the petition. A petitioner could file a petition seeking review of up to 20 claims for the base fee of $27,200. Fees would increase for each additional 10 claims. For example, an

inter partes

review of 51 to 60 claims would have cost $68,000 (

See

77 FR 7050 (Feb. 10, 2012)).

On February 7, 2012, the Office delivered to the PPAC a fee proposal under section 10 setting the fees at the same amount as proposed in the February 2012 Proposed Rule. In

response to stakeholder feedback on the individual fee levels, the structure of the proposed

inter partes

review fees, and the overall growth rate of the patent operating reserve in the initial proposal, with this rulemaking, the Office now proposes to set the

inter partes

review fees at a level below the Office's cost recovery and to improve the fee payment structure.

The Office now proposes to set four separate fees for

inter partes

review, which the petitioner would pay upon filing a petition. The Office also proposes to return fees for post-institution services should a petition not be instituted. Similarly, the Office proposes that fees paid for post-institution review of a large number of claims be returned if the Office only institutes the review of a subset of the requested claims.

The USPTO proposes to set the fee for an

inter partes

review petition at $9,000 for up to 20 claims. This fee would not be returned or refunded to the petitioner even if the review is not instituted.

In addition, the USPTO proposes to set a per claim fee of $200 for each claim requested for review in excess of 20. This fee would not be returned or refunded to the petitioner if the review is not instituted or if the institution is limited to a subset of the requested claims.

The USPTO also proposes to set the

inter partes

review post-institution fee at $14,000, for a review of up to 15 claims. This fee would be returned to the petitioner if the Office does not institute a trial.

Likewise, the Office proposes to set a per claim fee of $400 for review of each claim in excess of 15 during the post-institution trial. The entire post-institution fee would be returned to the petitioner if the Office does not institute a review. The excess claims fees would be returned if review of l5 or fewer claims is instituted. If the Office reviews more than 15 claims, but fewer than all of the requested claims, it would return part of the fee for each claim the Office did not review.

For example, under this proposal, if a party requests

inter partes

review of 52 claims, the petitioner would pay $44,200 ($9,000 plus 32 [52 minus 20] times $200 equals $15,400; plus $14,000 plus 37 [52 minus 15] times $400 equals $28,800; for a total of $44,200). This amount is 35 percent less than what the petitioner would pay under either the February 2012 Proposed Rule or the initial proposal to PPAC in February 2012. In addition, under this proposed rule, if the petitioner seeks review of 52 claims, but the Office only institutes review of 40 claims, the Office would return $4,800 (it did not institute review of the 41st through 52nd claim for which review was requested). Alternatively, if the review is not instituted at all, the Office would return the entire $28,800 for claims over 15 as well as the base $14,000 post-institution fee.

The Office proposes to maintain these two claim thresholds—one for petitions (up to 20 claims) and the other for the post-institution trials (up to 15 claims)—because it anticipates that it will not institute review of 25 percent of claims for which review is requested. The Office bases this approach on its analysis of the initial

inter partes

reexaminations filed after September 15, 2011, as well as the new opportunity for patent owners to file a response to the petition before the Office determines whether and for which claims to institute review.

This proposal also considers certain policy factors, such as

fostering innovation

through facilitating greater access to the

inter partes

review proceedings because certainty of patent rights benefits the overall IP system.

Post Grant Review or Covered Business Method Patent Review:

Table 23—Post Grant Review or Covered Business Method Patent Review Fee Changes

Fee description

Current fees

Proposed fees

Dollar change

Percent change

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Post Grant Review or Covered Business Method Patent Review Request—Up to 20 Claims (Per Claim Fee for Each Claim in Excess of 20 is $250)

NEW

$12,000

(N/A)

[N/A]

+$12,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Post Grant Review or Covered Business Method Patent Review Post Institution Fee—Up to 15 Claims (Per Claim Fee for Each Claim in Excess of 15 is $550)

NEW

$18,000

(N/A)

[N/A]

$18,000

(N/A)

[N/A]

N/A

(N/A)

[N/A]

Total Post Grant Review or Covered Business Method Patent Review Fees (For Current Fees, Per Claim Fee for Each Claim in Excess of 20 is $800)

* $35,800

(N/A)

[N/A]

$30,000

(N/A)

[N/A]

−$5,800

(N/A)

[N/A]

−16%

(N/A)

[N/A]

* For purposes of comparing amounts, where a new fee has been proposed under 35 U.S.C. 41(d)(2) in the January and February 2012 Proposed Rules, that proposed fee (as adjusted by the final rule) is included in the current fee column and denoted with (*).

Table 24—Post Grant Review or Covered Business Method Patent Review Prospective Cost Information

Prospective cost information

FY 2013

The Total Post Grant Review cost calculation of $35,800, 77 FR 6879, (Feb. 9, 2012) is available for review at

http://www.uspto.gov/aia_implementation/rin-0651-ac70.pdf

. The Office estimated that 50 hours of Judge time would be required during review and used this as the basis for estimating the cost for the Post Grant Review. The IT-related costs are included in the Review Request portion of the fee.

Description

Base cost

Per claim cost

Post Grant Review or Covered Business Method Patent Review Request—up to 20 claims

$14,700

> 20 = $250

Post Grant Review or Covered Business Method Patent Review Post Institution Fee—up to 15 claims

$21,100

> 15 = $550

Total Post Grant Review Costs

$35,800

N/A

Post grant review is a new trial proceeding created by the AIA that allows the Office to review the patentability of one or more claims in a patent on any ground that could be raised under 35 U.S.C. 282(b)(2) and (b)(3) in effect on September 16, 2012. The post grant review process begins when a third party files a petition within nine months of the grant of the patent. A post grant review may be instituted upon a showing that it is more likely than not that at least one challenged claim is unpatentable or that the petition raises an unsettled legal question that is important to other patents or patent applications. If the trial is instituted and not dismissed, the Board will issue a final determination within one year of institution. This period can be extended for good cause for up to six months from the date of one year after instituting the review.

In February 2012, the Office proposed under 35 U.S.C. 41(d) to set a single fee for post grant review at a level to recover the entire cost of conducting the proceeding based on the number of claims under review, with the entire fee due on filing of the petition. (

See

Changes To Implement Post-Grant Review Proceedings, 77 FR 7060 (Feb. 9, 2012)). The Office proposed a base fee of $35,800 for a post grant review of up to 20 claims. In addition, the Office proposed a structure of escalating fees for each additional 10 claims. For example, a post grant review of 51 to 60 claims would cost $89,500 (

See

77 FR 7060, 7070).

On February 7, 2012, the Office submitted to the PPAC a fee proposed under section 10 setting the fees at the same amount as the February 2012 proposed rule. In response to stakeholder feedback on the individual fee levels, alternative post grant review fee structures, and overall growth rate of the patent operating reserve in the initial proposal, the Office now proposes to set the post grant review fee at a level below the Office's cost recovery and to improve the fee payment structure.

The Office proposes here to set four separate fees for post grant review, which the petitioner would pay upon filing a petition for post grant review. The Office also proposes to return fees for post-institution services if a review is not instituted. Similarly, the Office proposes that fees paid for a post-institution review of a large number of claims be returned if the Office only institutes the review of a subset of the requested claims. The Office proposes the same structure and fees apply for covered business method review.

The Office proposes to set the fee for a post grant review petition at $12,000 for up to 20 claims. This fee would not be returned or refunded to the petitioner even if the review is not instituted by the Office.

In addition, the Office proposes a per claim fee of $250 for each claim in excess of 20. This fee would not be returned or refunded to the petitioner if the review is not instituted, or if the institution is limited to a subset of the requested claims.

The USPTO also proposes a post grant review post-institution fee at $18,000, for post-institution review of up to 15 claims. This fee would be returned to the petitioner if the Office does not institute a review.

Likewise, the Office proposes to set a per claim fee of $550 for review of each claim in excess of 15 during the post-institution trial. The entire fee would be returned to the petitioner if the Office does not institute a review. The excess claims fees would be returned if review of 15 or fewer claims is instituted. If the Office reviews more than 15 claims, but fewer than all of the requested claims, it would return part of the fee for each claim that was not instituted.

For example, under the proposal here, a party seeking post grant review of 52 claims would pay $58,350 ($12,000 plus 32 [52 minus 20] times $250 equals $20,000; plus $18,000 plus 37 [52 minus 15] times $550 equals $38,350; for a total of $58,350). This amount is 35 percent less than the petitioner would pay under the February 2012 Proposed Rule and the initial proposal to PPAC in February 2012. In addition, under this proposal, if the petitioner requests review of 52 claims, but the Office only institutes review of 40 claims, then the Office would return $6,600 (it did not institute review of the 41st through 52nd claims for which review was requested). Alternatively, if a review is not instituted at all, the Office would return the entire $38,350 for claims over 15, as well as the base $18,000 post-institution fee.

The Office proposes to maintain two different claim thresholds—one for petition (up to 20 claims) and the other for the post-institution trials (up to 15 claims)—because it anticipates that it will not institute a review of 25 percent of claims for which review is requested. The Office bases this approach on its analysis of the initial

inter partes

reexaminations filed after September 15, 2011, as well as the new opportunity for patent owners to file a response to the petition before the Office determines whether and for which claims to institute review.

The adjustments proposed here also consider certain policy factors, such as

fostering innovation

through facilitating greater access to the post grant review proceedings because certainty of patent rights benefits the overall IP system.

Pre Grant Publication (PGPub) Fee

:

Table 25—Pre Grant Publication (PGPub) Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Publication Fee for Early, Voluntary, or Normal Publication

$300

(N/A)

[N/A]

$0

($0)

[$0]

−$300

(−$300)

[−$300]

100%

(−100%)

[−100%]

Publication Fee for Republication

$300

(N/A)

[N/A]

$300

(N/A)

[N/A]

$0

(N/A)

[N/A]

0%

(N/A)

[N/A]

Table 26—Pre Grant Publication (PGPub) Historical Cost Information

Historical unit cost information

FY 2011

FY 2010

FY 2009

Publication Fee for Early, Voluntary, or Normal Publication

$181

$158

$243

With certain exceptions, each nonprovisional utility and plant patent application is published 18 months from the earliest filing date. The fee for this pre-grant publication (PGPub) is paid only after a patent is granted. If a patent is never granted, the applicant does not pay the fee for PGPub. Once the Office determines that the invention claimed in a patent application is patentable, the Office sends a notice of allowance to the applicant, outlining the patent application publication fees due, along with the patent issue fee. The applicant must pay these publication and issue fees three months from the date of the notice of allowance to avoid abandoning the application.

Currently, the PGPub fee is set at $300 and collects over one and a half times the cost to publish a patent application. The IP system benefits from publishing patent applications; disclosing information publicly stimulates research and development, as well as subsequent commercialization through further development or refinement of an invention. Therefore, a lower PGPub fee would benefit both the applicant and innovators in the patent system.

Given that publishing a patent application 18 months after its receipt benefits the IP system more than individual applicants, the Office proposes to reduce the PGPub fee to $0. Reducing this fee also helps rebalance the fee structure and offsets the proposed increases to filing, search, and examination fees ($350 increase, less this $300 decrease is a net $50 increase—or 3 percent—to apply for a patent and publish the application). This proposed change is consistent with the initial proposal delivered to PPAC on February 7, 2012.

It should be noted that the PGPub fee for republication of a patent application (1.18(d)(2)) is not proposed to be adjusted, but will be set at the existing rate of $300. The Office proposes to keep this fee at its existing rate for each patent application that must be published again after a first publication for $0.

(3) Fees To Be Set

Above

Cost Recovery

There are two types of fees that the Office proposes to set above cost recovery that meet the greater than plus or minus 5 percent and 10 dollars criteria. The policy factor relevant to setting fees above cost recovery is

fostering innovation.

Back-end fees (e.g., issue and maintenance fees) work in concert with front-end fees. The above-cost, back-end fees allow the Office to recover the revenue required to subsidize the cost of entry into the patent and reduce the backlog of patent applications. A discussion of the rationale for each proposed change follows.

Issue Fees:

Table 27—Issue Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Utility Issue Fee

$1,740

($870)

[N/A]

$960

($480)

[$240]

−$780

(−$390)

[−$630]

−45%

(−45%)

[−72%]

Table 28—Issue Fee Historical Cost Information

Historical unit cost information

FY 2011

FY 2010

FY 2009

Utility Issue Fee

$257

$231

$224

Once the Office determines that the invention claimed in a patent application is patentable, the USPTO sends a notice of allowance to the applicant outlining the patent application publication and patent issue fees due. The applicant must pay the publication and issue fees three months from the date of the notice of allowance to avoid abandoning of the application.

In setting fees due after completing prosecution at a level higher than cost, front-end fees can be maintained below cost, thereby

fostering innovation.

Currently, the large entity issue fee is set at $1,740, which is seven times more than the cost of issuing a patent. This fee recovers revenue, but it also poses a challenge to applicants at time of allowance. When the issue fee is due, patent owners possess less information about the value of their invention than they do a few years later. Lowering issue fees would consequently help inventors financially at a time when the marketability of their invention is less certain. Finally, setting the PGPub fee at $0 as discussed above, and recovering the combined cost of publishing and issuing an application through only the issue fee benefits small and micro entity innovators. The 50 percent discount for small entities and 75 percent discount for micro entities are not available for the publication fee, but are available for the issue fee. Thus, there are benefits to both the IP system and the applicant when the issue fees are set at an amount lower than the current fee amount, but still above cost recovery.

To both maintain the beneficial aspects of this back-end subsidy model and realign the balance of the fee structure, the Office proposes to decrease the large entity issue fee to $960. This amount is about twice the cost of both publishing an application (which is proposed to be set below cost at $0) and issuing a patent. This fee adjustment is over a 50 percent decrease from the amount currently paid for both the PGPub and issue fees together and is the amount initially proposed in the fee schedule delivered to the PPAC on February 7, 2012.

It should be noted that utility issue fees are referenced in this section to simplify the discussion of the fee rationale; however, the rationale is applicable to the issue fee changes for design, plant, and reissue fees as outlined in the

“USPTO Section 10 Fee Setting—Table of Patent Fee Changes”.

Maintenance Fees:

Table 29—Maintenance Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Maintenance Fee Due at 3.5 Years (1st Stage)

$1,130

$1,600

+$470

+42%

($565)

($800)

(+$235)

(+42%)

[N/A]

[$400]

[−$165]

[−29%]

Maintenance Fee Due at 7.5 Years (2nd Stage)

$2,850

$3,600

+$750

+26%

($1,425)

($1,800)

(+$375)

(+26%)

[N/A]

[$900]

[−$525]

[−37%]

Maintenance Fee Due at 11.5 Years (3rd Stage)

$4,730

$7,400

+$2,670

+56%

($2,365)

($3,700)

(+$1,335)

(+56%)

[N/A]

[$1,850]

[−$515]

[−22%]

Table 30—Maintenance Fee Historical Cost Information

Historical unit cost information

FY 2011

*

FY 2010

FY 2009

Maintenance Fee Due at 3.5 Years (1st Stage)

$1

$2

Maintenance Fee Due at 7.5 Years (2nd Stage)

$1

$2

Maintenance Fee Due at 11.5 Years (3rd Stage)

$1

$2

*

Beginning in FY 2011, the Office determined that the maintenance fee activity was in support of the process application fees activity and its associated fees. Therefore, the Office reassigned these costs accordingly, and no longer estimates a unit cost for maintenance fee activities. Additional information about the methodology for determining the cost of performing the Office's activities, including the cost components related to respective fees, available at

http://www.uspto.gov/aia_implementation/fees.jsp#heading-1

in the document titled “

USPTO Section 10 Fee Setting—Activity-Based Information and Costing Methodology.”

Maintenance fees must be paid at defined intervals—3.5 years, 7.5 years, and 11.5 years—after the Office grants a utility patent in order to keep the patent in force. Maintaining a patent costs the Office very little. However, maintenance fees benefit the Office and the patent system by generating revenue that permits the Office to keep front-end patent prosecution fees below cost and to subsidize the cost of prosecution for small and micro entity innovators.

Additionally, maintenance fees will be paid only by patent owners who believe the value of their patent is much higher than this fee for renewing these patent rights, thus when not renewed the subject matter of the patent can be utilized freely. On this score, setting early maintenance fees lower than later maintenance fees mitigates uncertainty associated with the value of the patent. As the value becomes more certain over time, the maintenance fee should (and does) increase, because patent owners have more information about the commercial value of the patented invention and can more readily decide whether the benefit of a patent outweighs the cost of the fee. For example, when a patent holder pays the first stage maintenance fee at 3.5 years, the holder has less information about the commercial value of the patent than when the holder pays the third stage maintenance fee at 11.5 years.

Therefore, under a progressively higher maintenance fee schedule, a

patent holder is positioned to perform an individual cost-benefit analysis to determine if the patent is at least as valuable as the maintenance fee payment. When the patent holder determines the patent benefit (value) outweighs the cost (maintenance fee), the holder will likely continue to maintain the patent. Conversely, when the patent holder determines that the benefit is less than the cost, the holder likely will not maintain the patent to full term. When the patent expires, the subject matter of the patent is no longer held with exclusive patent rights and subsequent stakeholders may utilize the idea from the public domain and work to extend its innovation or commercialization. More information on the economic costs and benefits of patent renewal can be found in the rulemaking Regulatory Impact Analysis, which is available for review at

http://www.uspto.gov/aia_implementation/fees.jsp

.

The Office proposes to increase the first, second, and third stage maintenance fees to $1,600, $3,600, and $7,400, respectively. This increase is commensurate with the subsidies offered for prosecution of a patent application and aligns with the fee setting strategy of

fostering innovation

by setting front-end fees below cost. The increase also ensures the USPTO has sufficient aggregate revenue to recover the aggregate cost of operations and implement goals and objectives.

On February 7, 2012, the Office delivered to the PPAC proposed fees of $1,600, $3,600, and $7,600 for the first, second, and third stage maintenance fees respectively. In response to stakeholder feedback on both the individual fee levels and the growth rate of the patent operating reserve, the Office now proposes to decrease the third stage maintenance fee to $7,400 while maintaining the first and second stage maintenance fees at the rates proposed to the PPAC.

(4) Fees That Are

Not

Set Using Cost Data as an Indicator

Fees in this category include those proposed fees for which the USPTO does not typically maintain historical cost information separate from that included in the average overall cost of activities during patent prosecution or did not refer to cost information for setting the particular fee. Instead, the Office evaluates the policy factors described in

Rulemaking Goals and Strategies, Part III

above, to inform fee setting. Some of these fees are based on the size and complexity of an application and help the Office to

effectively administer the patent system

by encouraging applicants to engage in certain activities. Setting fees at particular levels can: (1) Encourage the submission of applications or other actions which lead to more efficient processing where examiners can provide, and applicants can receive, prompt, quality interim and final decisions; (2) encourage the prompt conclusion of prosecuting an application, resulting in pendency reduction and the faster dissemination of patented information; and (3) help recover costs for activities that strain the patent system.

There are six types of fees in this category. A discussion of the rationale for each proposed change follows.

Extensions of Time Fees:

Table 31—Extensions of Time Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Extensions for Response within 1st Month

$150

$200

+$50

+33%

($75)

($100)

[+$25]

(+33%)

[N/A]

[$50]

[−$25]

[−33%]

Extensions for Response within 2nd Month

$560

$600

+$40

+7%

($280)

($300)

[+$20]

(+7%)

[N/A]

[$150]

[−$130]

[−46%]

Extensions for Response within 3rd Month

$1,270

$1,400

+$130

+10%

($635)

($700)

[+$65]

(+10%)

[N/A]

[$350]

[−$285]

[−45%]

Extensions for Response within 4th Month

$1,980

$2,200

+$220

+11%

($990)

($1,100)

[+$110]

(+11%)

[N/A]

[$550]

[−$440]

[−44%]

Extensions for Response within 5th Month

$2,690

$2,000

+$310

+12%

($1,345)

($1,500)

[+$155]

(+12%)

[N/A]

[$750]

[−$595]

[−44%]

If an applicant must reply within a non-statutory or shortened statutory time period, the applicant can extend the reply time period by filing a petition for an extension of time and paying the requisite fee. Extensions of time may be automatically authorized at the time an application is filed or requested as needed during prosecution. The USPTO proposes to increase these fees to facilitate an efficient and prompt conclusion of application processing, which benefits the Office's compact prosecution initiatives and reduces patent pendency. The fees proposed in this rulemaking are the same as those included in the proposal delivered to the PPAC on February 7, 2012.

Application Size Fees:

Table 32—Application Size Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Application Size Fee—For each Additional 50 Sheets that Exceed 100 Sheets

$310

($155)

[N/A]

$400

($200)

[$100]

+$90

(+$45)

[−$55]

+29%

(+29%)

[−35%]

Currently, the Office charges an additional fee for any application where the specification and drawings together exceed 100 sheets of paper. The application size fee applies for each additional 50 sheets of paper or fraction thereof. The USPTO proposes to increase the application size fee to facilitate an efficient and compact application examination process, which benefits the applicant and the

effective administration of patent prosecution.

Succinct applications facilitate faster examination with an expectation of fewer errors. The fees proposed in this rulemaking are the same as those included in the proposal delivered to the PPAC on February 7, 2012.

Excess Claims:

Table 33—Excess Claims Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Independent Claims in Excess of 3

$250

($125)

[N/A]

$420

($210)

[$105]

+$170

(+$85)

[−$20]

+68%

(+68%)

[−16%]

Claims in Excess of 20

$60

($30)

[N/A]

$80

($40)

[$20]

+$20

(+$10)

[−$10]

+33%

(+33%)

[−33%]

Multiple Dependent Claim

$450

($225)

[N/A]

$780

($390)

[$195]

+$330

(+$165)

[−$30]

+73%

(+73%)

[−13%]

Currently, the Office charges a fee for filing, or later presenting at any other time, each independent claim in excess of 3, as well as each claim (whether dependent or independent) in excess of 20. In addition, any original application that is filed with, or amended to include, multiple dependent claims must pay the multiple dependent claim fee. Generally, a multiple dependent claim is a dependent claim which refers back in the alternative to more than one preceding independent or dependent claim.

The Office proposes to increase claim fees to facilitate an efficient and compact application examination process, which benefits the applicant and the USPTO through more effective administration of patent prosecution. Filing applications with the most prudent number of claims will enable prompt conclusion of application processing, because more succinct applications facilitate faster examination with an expectation of fewer errors.

On February 7, 2012, the Office delivered to the PPAC proposed excess claims fee amounts higher than those proposed here. Specifically, the Office proposed setting the fee for independent claims in excess of three to $460, for claims in excess of 20 to $100, and for multiple dependent claims to $860. In response to stakeholder feedback about the amount of the increases to excess claims and the growth rate of the patent operating reserve, the Office now proposes to set fees for independent claims in excess of three to $420, for claims in excess of 20 to $80, and for multiple dependent claims to $780. The Office proposes to increase the excess claims fees to facilitate an efficient and compact application examination process, which benefits the applicant and the

effective administration of the patent system.

Succinct applications with a prudent number of unambiguous claims facilitate faster examination with an expectation of fewer errors during examination.

Correct inventorship after first action on the merits (New):

Table 34—Correct Inventorship After First Action on the Merits Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Correct Inventorship After First Action on the Merits (NEW)

N/A

(N/A)

[N/A]

$1,000

($500)

[$250]

+$1,000

(+$500)

[+$250]

N/A

(N/A)

[N/A]

The Office needs to know who the inventors are to prepare patent application publications, conduct examination under 35 U.S.C. 102 and 103, and prevent double patenting. Changes to inventorship (e.g., adding previously unnamed persons as inventors or removing persons previously named as inventors) cause additional work for the Office. For instance, the Office may need to repeat prior art searches and/or reconsider patentability under sections 102 and 103, as well as reconsider the possibility of double patenting.

On February 7, 2012, the Office delivered to the PPAC two proposed fees: (1) a $3,000 fee to file an oath and declaration up to the notice of allowance; and (2) a $1,700 fee to correct inventorship during examination where it had not been provided before examination started. In response to stakeholder feedback, the Office now proposes to eliminate the $3,000 filing fee and reduce the $1,700 inventorship correction fee to $1,000. The inventorship correction fee is proposed to encourage reasonable diligence and a bona fide effort to ascertain the actual inventorship as early as possible and to provide that information to the Office prior to examination. The fee will also help offset the costs incurred by the Office when there is a change in inventorship.

The Office appreciates that inventorship may change as the result of a restriction requirement by the Office. Where inventorship changes as a result of a restriction requirement, the applicant should file a request to correct inventorship promptly (prior to first Office action on the merits) to avoid this fee for requests to correct inventorship in an application after the first Office action on the merits. Otherwise, the Office will incur the costs during examination related to the change in inventorship. Accordingly, the fee for requests to correct inventorship in an application after the first Office action on the merits fee would be required.

Derivation proceeding (New):

Table 35—Derivation Proceeding Fee Changes

Current fees

Proposed fees

Dollar change

Percent change

Fee description

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Large

(small)

[micro]

entity

Derivation petition fee (NEW)

*$400

$400

$0

0%

(N/A)

(N/A)

(N/A)

(N/A)

[N/A]

[N/A]

[N/A]

[N/A]

Derivation institution and trial fee (NEW)

N/A

$0

$0

N/A

(N/A)

($0)

($0)

(N/A)

[N/A]

[$0]

[$0]

[N/A]

* For purposes of comparing amounts, where a new fee has been proposed under 35 U.S.C. 41(d)(2) in the January and February 2012 Proposed Rules, that proposed fee is included in the current fee column and denoted with (*).

A derivation proceeding is a new trial proceeding conducted at the BPAI to determine whether an inventor named in an earlie

This text is long and has been trimmed here. Open the source document for the complete record.