Patent and Trademark Office provisions of the omnibus appropriations bill (H.R. 4818) go beyond mere fee increases

The omnibus appropriations bill is likely to be signed by the President and become effective in mid-December.  Unless an unlikely success is achieved in last-minute attempts to amend the provisions affecting the Patent and Trademark Office, the current form of these provisions will become the law of the land.  This post presents an outline of the major themes of these provisions…which go way beyond mere fee increases.

1.  Fee increases.  This is no surprise — the bill includes a broad-based (affecting many aspects of patent prosecution and maintenance) and significant (read on…) increase in fees.  All persons who file and prosecute patent applications in the United States needs to conduct an analysis of their current and projected portfolios to determine the full impact of the bill.

While the fee increases are broad-based, some areas are hit harder than others.  For example, the cost of an appeal, from start to finish, more than doubles under the appropriations bill.  The fees for filing an appeal and taking it through oral hearing skyrocket to $2000.00.  This could absorb a significant portion of a patent budget if the appeal process is a primary component of your overall prosecution strategy.

2.  Establishment of a Multitrack Fee System.  For the first time, patent applicants must now pay filing, search and examination fees.  Each of these fees must be paid upon filing of an application.  So, it can be said that the new "filing fee" includes all three of these fees.  And the increase in the "filing fee" is significant — over 25% for large entities.

The 21st Century Strategic Plan, created by the Patent and Trademark Office, discusses a market-driven examination system that "permits applicants to have freedom of choice in the processing of their applications."  The break-out of separate search and examination fees appears to be a step in this direction, and makes you wonder if procedural changes are far behind (e.g., filing of a Request for Examination).

3.  Fee Refunds.  The bill authorizes the Director to promulgate regulations providing for the refund of the search fee in two situations: 

• where an applicant files a written declaration of express abandonment before an examination is made
• where an applicant provides a search report that meets the conditions prescribed by the Director

What is a qualified search report?  I speculate that a regulatory definition is likely to include a report from a foreign patent office and is not likely to include a ‘report’ from the applicant.  Time (and the Federal Register) will tell us the answer.

4.  Outsourcing of Prior Art Searches.  The outsourcing of searches is a major component of the 21st Century Strategic Plan and the bill includes provisions to initiate the program.  Congress was very cautious with this program, however, writing several key protections into the bill.  For example, the bill requires that the Director conduct a pilot study of limited time and scope to ensure appropriate quality of external searches.  Dual layers of reports (the Director and the Patent Public Advisory Committee) must be submitted to Congress on the pilot study, and the bill includes a suicide provision that allows Congress to easily kill the program by passage of a separate law.

Also, the outsourcing provisions ensure that, when and if commercial entities are used for prior art searches, only US companies and US citizens are used.  It seems the patent fee bill is also a jobs protection bill.

5.  Incentive to File Patent Applications Electronically.  The bill includes, for the first time, an economic incentive to file applications electronically — but the incentive is extremely narrow in scope, applying only to small entities and nonprovisional applications.

Under the bill, small entities will get a 75% discount (compared to 50%) on the filing fee (note — this only applies to the true filing fee, and does not apply to the search and examination fees) for a nonprovisional application.  This amounts to a savings of $75.00.  Is this enough of an incentive to increase usage of the electronic filing system?  Considering the relative costs of the entire prosecution system, the savings does not appear to be significant, but time will tell.  Interestingly, the cost of filing a nonprovisional application, including the electronic filing discount, still exceeds the old small entity filing fee.