15 December 2010

Surcharge on USPTO Fees in FY2011 - Boom or Bust?

We are not experts on the US system of government, but we believe that the Bill must still be passed by the Senate, and that this may not be a straightforward process.  However, if Section 2202 of the Bill ultimately passes in its current form, it will provide the USPTO with a budget of US$2,262,000,000 for salaries and expenses, and also apply a 15% surcharge to many official fees on a temporary basis throughout FY2011.

We fear, however, that there is a risk of this temporary surcharge having precisely the opposite effect on the PTO budget than is intended.


We understand that there was reasonably widespread support for a surcharge of this kind.  Projections for fee income are reduced, due to the global economic downturn, at a time when the USPTO requires funding to expand the examining corps and improve its IT infrastructure, in order to address the backlog of pending applications.  The 15% surcharge is intended to assist these efforts.

The surcharge is combined with a provision for the PTO to access up to US$200,000,000 of additional funding, should fee income exceed the US$2.262B budget.


If fee receipts fall short of US$2.262B, then the amount available to the USPTO is reduced accordingly.  And this is where we see a potential problem, particularly in view of the recently-announced Extended Missing Parts Pilot Program.  This program will allow any applicant who has filed a US provisional application during FY2010 to delay payment of the search fee, examination fee and any excess claim fees on a corresponding nonprovisional application until after FY2011, thereby avoiding the 15% surcharge, and reducing fee income to the USPTO by the full amount of those fees.

In addition, a 15% surcharge on excess claim fees provides an incentive for applicants to file reduced numbers of claims initially, and then amend to add further claims after the temporary surcharge period expires.

Applicants could also make greater use of provisional applications in circumstances in which they might otherwise have filed nonprovisional applications, in order to avoid the increased fees during FY2011.

In other words, it seems to us that the surcharge may influence applicant behaviours in ways that could defeat its purpose, and create greater problems for the USPTO.


These are difficult economic times for many companies and individuals, as well as for the USPTO.  We would all like to see the application backlog reduced, and improvements in the quality of issued patents, but will applicants be willing to pay for this through fee surcharges if these can be avoided?

Of course, none of the strategies outlined above are applicable to non-US applicants wishing to file US national applications claiming priority from an earlier foreign application, or US national stage applications from existing international (PCT) applications.  Based on recent experience, it is likely that such applications will make up around 50% of all new filings at the USPTO in FY2011, which at least provides some basis for projecting fee income that is not subject to additional uncertainty associated with applicant behaviours.

We hope that our fears are unfounded, but time will tell.


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