Fee increases aren’t enough to help USPTO keep pace

While the Office has data indicating that it will need more funds by 2025 to conduct its business, there are ways to increase funding fairly that would also place the Office on more secure financial footing going forward. One of the significant challenges the Office faces relates to how heavily examination services are subsidized using maintenance fees. Under the current fee schedule, the combined filing, search, and examination fee for large entities totals less than $2,000, but the cumulative operating costs per patent are around $6,000. It is not until the payment of the second maintenance fee, after seven years, that the Office reaches the break-even point. This means that an application that is abandoned just before issuance results in a net loss to the Office of around $4,000, and an issued patent that is abandoned prior to payment of the first maintenance fee results in a net loss of around $3,000.

Since it is the practice of some large companies to abandon applications or issued patents – sometimes in large numbers – before the first maintenance fee comes due, under the current fee schedule, the costs of examining these patents will be unfairly shifted to other patentees. This suggests that applicants, and especially large, sophisticated applicants, should be charged higher fees up front to ensure they pay their fair share and to prevent them from gaming the system. And, more generally, applicants should be paying more in order to fund better examination that will produce higher quality patents that their owners can have confidence will hold up in litigation. Although the Office is proposing some increases in early fees, in my view, they are not enough either to address the problems and potential abuses enabled by subsidizing examination with maintenance fees or to significantly increase the quality and accuracy of examination.