AIA Monitor

In a notification published in the Federal Register (77 FR 4509) today, the USPTO announced that it is planning to exercise its fee setting authority to set or adjust patent fees. The USPTO will publish a proposed patent fee schedule and related supplementary information for public viewing on or before February 7, 2012, on the USPTO Internet Web site (address: www.uspto.gov/americainventsact).

Under Section 10 of the AIA, Congress prescribes a process for the USPTO to follow in setting or adjusting patent and trademark fees by rule. Congress requires the Patent Public Advisory Committee (PPAC) to hold a public hearing about the USPTO fee proposals and prepare a written report on the proposed fees based on the testimony received.   The USPTO is required to consider the PPAC’s report before finally setting or adjusting the fees.

The PPAC will hold two public hearings about the proposed patent fee schedule on the dates indicated herein.  The first public hearing will be held on the February 15, 2012, beginning at 8 a.m., Eastern Standard Time (EST), and ending at 3 p.m., EST, at the USPTO, Madison Auditorium, Concourse Level, Madison Building, 600 Dulany Street, Alexandria, Virginia 22314.  The second public hearing will be held on Thursday, February 23, 2012, beginning at 8 a.m., Pacific Standard Time (PST), and ending at 3 p.m., PST, at the Sunnyvale Public Library, 665 W. Olive Avenue, Sunnyvale, California 94086.

Those wishing to present oral testimony at either hearing must request an opportunity to do so in writing no later than February 8, 2012.  Requests to testify must be submitted by e-mail to Jennifer Lo at Jennifer.Lo@uspto.gov  with the following information:  (1) The name of the person wishing to testify; (2) the person’s contact information (telephone number and email address); (3) the organization(s) the person represents, if any; and (4) an indication of the amount of time needed for the testimony.

The public hearings will be available via Web cast.  Information about the Web cast will be posted on the USPTO’s Internet Web site (address: www.uspto.gov/americainventsact) before the public hearing and transcripts of the hearings will be available on the USPTO Internet Web site (http://www.uspto.gov/ americainventsact) shortly after the hearings.

To gather information from the public about the USPTO’s proposed patent fees, the PPAC will post specific questions for public consideration on the PPAC’s Internet Web site (address: http://www.uspto.gov/about/ advisory/ppac) after the USPTO publishes its proposed patent fee schedule.  Those questions may be addressed when presenting testimony at a hearing and when submitting written comments to the PPAC.  Written comments may be submitted via e-mail addressed to fee.setting@uspto.gov with the subject line “Fee Setting”.  Written comments are due February 29, 2012.

After the hearings, Section 10 of the AIA also requires the USPTO to publish its proposed fees and supporting rationale in the Federal Register and give the public not less than 45 days in which to submit comments on the proposed change in fees.  The publication of that Notice will open a comment window through which the public may provide written comments directly to the USPTO.

In a notice of proposed rulemaking published on January 26, 2012 (77 FR 3666), the USPTO took the position that the proposed amendments to 37 CFR §§1.20 and 1.26 may raise the fees for reexamination without complying with the procedures laid out above.  The USPTO has taken the position that it is authorized to raise those fees under 35 USC §302 and 37 CFR §1.41(d)(2)(A).  Fee increases under that rule are permitted only when they are made under a cost recovery basis for that service.

The fees that will be proposed under Section 10 of the AIA are not required to compensate the USPTO on a service-by-service basis, but rather on an aggregate basis for the overall operation of the USPTO.  Section 10 permits the USPTO to use funds generated by one fee, or set of fees, to finance services associated with another fee, or set of fees, thereby allowing cross-subsidization within the USPTO.

While the fees to be generated under proposed rule 20 and refunded under proposed rule 26 and the cost of the corresponding services must be taken into consideration when balancing income against expenses, those fees and costs may not be used to offset fees and costs associated with the fees proposed under Section 10.  In this sense, the fees proposed under amended rules 20 and 26 are governed by a stricter budgetary regimen than the fees proposed under Section 10.

On the other hand, the fees to be proposed under Section 10 can be adjusted to promote policy objectives.  Under this regimen, the USPTO may raise fees for low administrative cost services to subsidize costly services aligned with legitimate public policy objectives under the AIA.  While addressing the aggregate cost for operating the USPTO under the AIA without the help of a financial accounting expert and a detailed understanding of the USPTO cost structure will be difficult, expressing an opinion regarding what policy objectives should be supported by cross-subsidization is relatively accessible.

Benchmarking USPTO fees against fees charged by other Patent Offices may also provide clues as to what types of fees could be used to generate income for subsidizing services.

Which policy objectives would you favor for subsidization?