USPTO Fee Structure to Discourage Conduct?

It is expected that the rules to implement post-grant review (PGR), inter partes review (IPR) and transitional business methods post-grant review (TBMP) proceedings will be printed in the Federal Register this coming Tuesday. Included in the new rules will be the filing fees associated with these new proceedings. By statute these filing fees must be set to recover the average actual costs to the USPTO to conduct these proceedings.

As demonstrated in last week’s rule package for supplemental examination, the average aggregate cost can be significantly higher than present fee levels. The proposed rules issued last week set a fee of $ 5,180 to request supplemental examination and another $16,000 for the resulting ex parte reexamination should the supplemental examination request raise a substantial new question of patentability (SNQ). It is expected that Tuesday’s rule package for PGR, IPR and TBMP will set fee levels in excess of $ 40,000. But, such fee levels may have an unfortunate chilling effect on those interested in using these new post grant patent proceedings.

Interestingly, in February 2012, the USPTO will be publishing proposed rules for adjusting all of its fees under its new fee setting authority set forth in the America Invents Act (AIA). The new USPTO fee setting authority will permit the USPTO to revise the fees set by Congress under 35 U.S.C. §§ 41 (a) and (b) based on the aggregate costs of funding the USPTO. This will permit the USPTO to incentivize and disencentivize applicant, patent owner and third party behavior by setting the fees at low or high levels to encourage certain activities while discouraging others. For example, filing, issue and first stage maintenance fees may be set low to encourage innovation while excess claim, extension of time, continuation application, and second stage and third stage maintenance fees may be set higher to subsidize the costs of patent examination. However, if the USPTO were to set at punitive rates fees for requests for continued examination (RCE) and appeals, this will be not received favorably by the patent user community. RCE and appeals are not activities that applicants relish. If these are necessary to pursue because of poor patent examination it would be unjust to force applicants to pay excessive fees to achieve justice when the patents should have been granted at an earlier stage of examination.

Correction of improvidently issued patents by post grant proceedings is in the public’s interest. Therefore, if the USPTO were to impose excessively high fees to request ex parte reexamination, IPR, PGR and TBMP, such will be inconsistent with sound public policy. Ideally, if these patents should have not have issued, then the maintenance fees paid by the patent owners who have benefited by obtaining defective patents should be used to subsidize the costs of the proceedings. It is especially unfair for third parties adversely affected by such patents to have to pay the full costs of their correction. It is hoped that when the USPTO does its fee redesign in February that they will correct the problem created by Congress by resetting these post-grant patent proceedings fees at lower rates to increase participation rates to desired levels.

Finally, the patent user community is concerned that the new proposed rules for adjusting fees will be boosted above the 15% surcharge rate effective in September 2011 to build a revolving reserve fund above the collections level needed to achieve Congressional budget levels assigned by Congress. If fees collected exceed appropriation levels then they become subject to fee diversion by Congress. Until the fee diversion problem is resolved the patent user community will remain skittish about the money infused into a revolving fund with a future hope, but no guarantee, that the USPTO will have full access to the fees.

Today, by Federal Register Notice (here), the USPTO has scheduled public hearings on fee setting with the Patent Public Advisory Committee (PPAC). Interested members of the public may present their views and comments by coordinating in advance with the Office.