USPTO DA - GDI 2024

USPTO Disad
***Top level***
1NC USPTO DA – patents
USPTO is maintaining high quality patents now – striking a balance between workload projections and limited capacity
Federal Register ’24, (Wednesday, April 3, 2024)] “Setting and Adjusting Patent Fees During Fiscal Year 2025; Proposed Rule,” Federal Register / Vol. 89 , No. 65 / Wednesday, April 3, 2024 / Proposed Rules, accessed July 10, 2024, https://www.govinfo.gov/content/pkg/FR-2024-04-03/html/2024-06250.htm
A. Fee Setting Strategy
The strategy of this proposed rule is to establish a fee schedule that generates sufficient multi-year revenue to recover the aggregate costs of maintaining USPTO patent operations. The overriding principles behind this strategy are to operate within a sustainable funding model that supports the USPTO's strategic goals and objectives, such as optimizing patent application pendency through the promotion of efficient operations and filing behaviors, issuing robust and reliable patents, and encouraging access to the patent system for all stakeholders.
The USPTO assessed this proposed rule for alignment with four key fee setting policy factors that promote a particular aspect of the U.S. patent system: (1) Promoting innovation strategies seeks to ensure barriers to entry into the U.S. patent system remain low, and innovation is incentivized by granting inventors certain short-term exclusive rights to stimulate additional inventive activity; (2) Aligning fees with the full costs of products and services recognizes that some applicants may use particular services in a more costly manner than other applicants (e.g., patent applications cost more to process when more claims are filed); (3) Facilitating the effective administration of the U.S. patent system seeks to encourage patent prosecution strategies that promote efficient patent prosecution, resulting in compact prosecution and reduction in the time it takes to obtain a patent; and (4) Recognizing that patent prosecution is not a one-size-fits-all process and, where feasible, offering application processing options. Part V: Individual Fee Rationale describes the reasoning for setting and adjusting individual fees, including the design benefits of the proposed fee schedule. The RIA, available on the fee setting section of the USPTO website at https://www.uspto.gov/FeeSettingAndAdjusting, also discusses fee schedule design benefits.
B. Fee Setting Considerations
The balance of this sub-section presents the specific fee setting considerations the USPTO reviewed in developing the proposed patent fee schedule: (1) historical cost of providing individual services; (2) the balance between projected costs and revenue to meet the USPTO's operational needs and strategic goals; (3) ensuring sustainable funding; and (4) PPAC's comments, advice, and recommendations on the USPTO's initial fee setting proposal. Collectively, these considerations inform USPTO's chosen rulemaking strategy.
1. Historical Cost of Providing Individual Services
The USPTO sets individual fee rates to further key policy considerations while considering the cost of a particular service. For instance, the USPTO has a longstanding practice of setting basic filing, search, and examination (``front-end'') fees below the actual cost of processing and examining applications to encourage innovators to take advantage of patent rights and protections.
The USPTO considers unit cost data provided by its Activity Based Information (ABI) program to decide how to best align fees with the full cost of products and services. Using historical cost data and forecasted application demands, the USPTO can align fees to the costs of specific patent products and services. Additional information on the USPTO's costing methodology in addition to the last three years of historical cost data is provided in the document titled ``Setting and Adjusting Patent Fees during Fiscal Year 2025--Activity Based Information and Patent Fee Unit Expense Methodology,'' available on the fee setting section of the USPTO website at https://www.uspto.gov/FeeSettingAndAdjusting. Part V: Individual Fee Rationale describes the reasoning and anticipated benefits for setting some individual fees at cost, below cost, or above cost such that the USPTO recovers the aggregate costs of providing services through aggregate fee collections.
2. Balancing Projected Costs and Revenue
In developing this proposed patent fee schedule, the USPTO considered its current estimates of future year workload demands, fee collections, and costs to maintain core USPTO operations and meet its strategic goals, as found in the FY 2025 Budget and the Strategic Plan. The USPTO's strategic goals include: (1) driving inclusive U.S. innovation and global competitiveness, (2) promoting the efficient delivery of reliable IP rights, (3) promoting the protection of IP against new and persistent threats, (4) bringing innovation to impact, and (5) generating impactful employee and customer experiences by maximizing agency operations. The following subsections provide details regarding updated revenue and cost estimates, cost-saving efforts taken by the USPTO, and planned strategic improvements.
a. Updated Revenue and Cost Estimates
Projected revenue from the current fee schedule is insufficient to meet future budgetary requirements (costs) due largely to unforeseen economic and policy factors since the USPTO last exercised its rulemaking authority to set patent fees in the FY 2020 Final Rule. As further discussed below, increased fee discounts for small and micro entities under the UAIA have reduced revenue estimates. Higher-than-expected inflation in the broader U.S. economy and government-wide pay raises have increased the USPTO's forecasted operating costs. Also, the USPTO has undertaken efforts to increase special pay rates and offer other incentives to recruit and retain examiners and other employees in patent specific job series in order to remain competitive in the job market for science, technology, engineering, and mathematics (STEM) workers. Absent the proposed increase in fees, the USPTO will be unable to collect sufficient fees at current fee rates to recover aggregate operating costs necessary to finance ongoing operations.
On December 29, 2022, the President signed into law the Consolidated Appropriations Act, 2023, which included the UAIA. The law reduced barriers to entry into the patent system by increasing small entity discounts from 50% to 60% and micro entity discounts from 75% to 80%. The USPTO estimated as part of its Fiscal Year 2024 Congressional Justification (FY 2024 Budget) that these discounts would reduce projected fee collections by $74 million in FY 2023 (partial year impact) and at least $100 million per year beginning in FY 2024 (full year impact). In addition to increased entity discounts, the UAIA increases costs through its provision that requires that the USPTO establish a new Southeast Regional Office and four new community outreach offices--including one in northern New England. The USPTO must also conduct a study to determine whether additional offices are required to achieve AIA mandates and to increase participation of underrepresented inventors in the patent system.
Higher-than-expected inflation in 2021 and 2022 in the broader U.S. economy increased the USPTO's operating costs above previous estimates for labor and nonlabor activities such as benefits, service contracts, and equipment. Salaries and benefits comprise 70% of all patent-related costs, and employee pay raises enacted across all U.S. government agencies--including the USPTO--in 2023 and 2024 were much larger than previously budgeted. Federal General Schedule (GS) pay was raised by 4.6% in 2023 and 5.2% in 2024; before 2023 the last time GS pay was raised by at least 4% was in 2004. The FY 2025 Budget includes an estimated 2.0% civilian pay raise planned in calendar year (CY) 2025 and assumed 3.0% civilian pay raises in CY 2026-29, as well as inflationary increases for other labor and nonlabor activities.
Similarly, the USPTO seeks to adjust the patent special rate table (pay) for the first time since 2007. In 2007 the special rate table was set 11.4% to 31.4% above the GS pay table for the Washington, DC area because patent-related job fields require a highly educated and technical STEM workforce. This specialization has historically posed recruitment challenges for the agency, and the increased pay rates kept the USPTO competitive with private sector compensation opportunities. The differential above the general schedule has diminished over the years--to 0.0% to 20.5% in 2023 because of cost-of-living-adjustments to the GS pay scale that were not similarly applied to the special rate table--reducing the USPTO's competitive edge amongst both private and other Federal agencies. The objective of the special rate table change is to provide competitive compensation to patent employees, thereby reducing attrition and enhancing recruitment of qualified talent.
The USPTO's recruitment and retention efforts go beyond adjustments to examiner pay. In support of its strategic goal of generating impactful employee and customer experiences by maximizing agency operations, the USPTO strives to be a model employer through its diversity, equity, inclusion, and accessibility (DEIA) practices. The agency will build upon its existing diversity and foster greater inclusion to empower the USPTO workforce to serve the IP community successfully. The USPTO will research and implement leading-edge practices related to hiring, development, advancement, accessibility, and retention, based on behavioral science research and data, to better integrate DEIA practices throughout the agency.
b. Cost-Saving Measures
The USPTO recognizes that fees cannot simply increase for every improvement deemed desirable. The USPTO has a responsibility to stakeholders to pursue strategic opportunities for improvement in an efficient, cost-conscious manner. Likewise, the USPTO recognizes its obligation to gain operational efficiency and reduce spending when appropriate.
The USPTO's FY 2025 Budget submission includes cost reducing measures such as releasing leased space in Northern Virginia and a moderate reduction in overall IT spending. In FY 2025, the USPTO estimates $4,569 million in total spending for patent and trademark operations. This is a $122 million net increase from the agency's FY 2024 estimated spending level of $4,447 million. The net increase includes a $224 million upward adjustment for prescribed inflation and other adjustments, and a $102 million downward adjustment in program spending and other realized efficiencies. This estimate builds on the $40 million in annual real estate savings assumed in the FY 2024 Budget submission to include additional annual cost savings of $12 million through releasing more leased space in Northern Virginia. The combined reduction in real estate space amounts to almost 1 million square feet and an estimated annual cost savings of approximately $52 million. Also, the USPTO is actively pursuing IT cost containment. The FY 2025 budget includes a relatively flat IT spending profile despite upward pressure from inflation, supply chain disruptions, and government-wide pay raises; ongoing IT improvements that offer business value to fee- paying customers; and data storage costs increasing proportionally with the USPTO's forecasted growth in patent and trademark applications. The USPTO will achieve this cost containment goal via modern equipment in a new data center that will cost less to maintain and by retiring legacy IT systems. Both of these cost containment measures will further improve the USPTO's cybersecurity posture and increase system resiliency.
c. Efficient Delivery of Reliable IP Rights: Quality, Backlog, and Pendency
The USPTO continuously works to improve patent quality, particularly the predictability, reliability, and robustness of issued patents. See the USPTO's Quality Metrics web page, https://www.uspto.gov/patents/quality-metrics, for more information on patent quality including (1) statutory compliance measures, (2) process measures, and (3) perception measures. The USPTO's strategic goal to ``promote the efficient delivery of reliable IP rights'' recognizes the importance of innovation as the foundation of American economic growth and global competitiveness as well as the role the USPTO plays in encouraging these principles. The USPTO is committed to improving pendency to deliver timely, efficient services that help innovators bring their ideas and products to impact more quickly and efficiently. The USPTO diligently works to balance timely examination with improvements in patent quality; particularly, the robustness and reliability of issued patents while remaining mindful that patent applications are becoming increasingly more complex and that technologies are converging. To address these challenges, the USPTO must continue to develop and equip examiners with additional guidance, training, tools, advanced technology, and procedural resources.
The USPTO is pursuing initiatives to enhance patent quality and the clarity and completeness of the official record during prosecution of an application, including encouraging applicants to begin filing patent applications in DOCX format, automating pre-examination procedures, expanding examiner training, and working on additional guidance for examiners and the PTAB. Current guidance initiatives include refresher guidance on obviousness under 35 U.S.C. 103 and enablement under 35 U.S.C. 112, and new guidance on how examiners should analyze inventorship issues for artificial intelligence (AI)-assisted inventions. See Updated Guidance for Making a Proper Determination of Obviousness, 89 FR 14449 (February 27, 2024); Guidelines for Assessing Enablement in Utility Applications and Patents in View of the Supreme Court Decision in Amgen Inc. et al. v. Sanofi et al., 89 FR 1563 (December 21, 2023); Inventorship Guidance for AI-Assisted Inventions, 89 FR 10043 (February 13, 2024). The USPTO is also increasing patent examination quality and efficiency via initiatives such as the Global Dossier Initiative (see https://www.uspto.gov/patents/basics/international-protection/global-dossier-initiative), and by providing examiners with advanced technologies and tools for identifying prior art, such as the artificial intelligence (AI)-based ``More Like This'' and ``Similarity Search'' features in the Patents End-to-End (PE2E) search suite (see 1494 Off. Gaz. Pat. Office 251 (January 11, 2022) and 1504 Off. Gaz. Pat. Office 359 (November 15, 2022)). More information on the USPTO's AI initiatives, including the Artificial Intelligence (AI) and Emerging Technologies Partnership, is available at https://www.uspto.gov/initiatives/artificial-intelligence.
The USPTO recognizes that optimal pendency helps inventors and investors bring innovation to impact. The growing demand for patent services requires that the USPTO embrace new ways of delivering these critical IP services. Therefore, the USPTO is also working to identify policies, process changes, and technologies to improve patent pendency. Some of these efforts will focus on operational improvements to the patent examination process, including aligning the patent workforce with the incoming workload in the most efficient manner. Other efforts will target improvements to how applicants and other customers engage with the USPTO and navigate the prosecution process. For example, the USPTO has enhanced its website to increase access to our resources and enhance customer service for inventors and practitioners, including modernizing and updating the Patent Basics and Patents Petitions pages, adding a Virtual Assistant on select pages, and providing an updated and modern general website search tool. The USPTO has also upgraded its computer systems, including transitioning from legacy systems to Patent Center for the electronic filing and management of patent applications in November 2023. Patent Center, a web-based platform that allows users to file and manage patent applications and requests, provides improved system performance and a more intuitive user interface for an enhanced user experience. The USPTO is committed to continuously improving the customer experience on our websites to enhance and modernize accessibility, design, and overall satisfaction in our digital space. For information on additional enhancements to our online services, visit our web improvements page at https://www.uspto.gov/about-us/website-improvements. Effecting the changes in the examination process needed to ensure the issuance of reliable patents, while also issuing those patents in a timely manner, means recognizing a potential increase in the core operating costs for future years.
Unexpected workload spikes cause backlog – overburdens the patent office, halting innovation and undermining growth
Li Liu ’24, March 18, Oxford Intellectual Property Research Centre, St. Catherine’s College, University of Oxford, Oxford, UK, “Patent Quality: A Critique of the State of the Discussion,” IIC – International Review of Intellectual Property and Competition Law, Volume 55, pages 499–529, (2024) accessed July 9, 2024, https://link.springer.com/article/10.1007/s40319-024-01444-w
Second, intensive examination is caught in a Mobius trap, highlighting the tension between the increased workload due to intensive examination and human resource constraints. Chen argues that the USPTO’s enhanced quality review initiative and productivity-promoting count system generated an unexpected rise in the number of continuing applications and ex parte appeals.Footnote 197 In addition, this combination led to increased examiner attrition due to unpaid overtime.Footnote 198 Such trends are held responsible for raising examiners’ workload and backlog.Footnote 199
Similar circumstances are also evident in the EPO, although one study finds that the EPO offers a better fee structure in comparison to the USPTO, and is therefore more likely to maintain a rigorous examination and high quality standard.Footnote 200 It is argued that the extensive “production pressure” imposed by the EPO’s policy prevents at least some examiners from thoroughly examining applications.Footnote 201 This is hardly surprising, as patent examination is a labor-intensive endeavor.Footnote 202
The conflict between productivity policy and quality control highlights an inherent Mobius trap for reforms intensifying examination. Strengthened examination requires more effort and time, exacerbating the workload and backlog. This backlog must be managed by the patent office, as it increases economic and legal uncertainty, suppresses innovation, and impedes investment in creative ideas.Footnote 203 This need has driven the USPTO and EPO to adopt productivity policies, which are alleged to diminish examination criteria.Footnote 204 As a result, patent offices seem to fall into a Mobius trap. In this trap, intensive examination consumes more time and effort, subsequently increasing the workload and backlog. The rise in workload and backlog leads to productivity policies that reduce the time and effort devoted to patent examination. Time constraints are found to result in a higher grant rate and the issuance of lower quality patents. Footnote 205 Consequently, the examination reforms are futile. This Mobius trap argument differs from the vicious circle hypothesis mentioned previously. This hypothesis posits a causal relationship between the decline in examination quality or the rise in patent quantity and the decline in patent quality, while the Mobius trap stresses the limitation of the policy for strengthening patent examination.
USPTO efficiency is key to clean tech patents, innovation solves climate change
Brian A. R. Raddatz ’24, April 17, “The USPTO’s Climate Pilot Fast-Tracks The Patent Process, Presents Oppor

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