Aggregate Patent Cost The basis for calculating the aggregate patent cost is the routine USPTO budget formulation and planning process (see also Part IV of the final rule). The USPTO budget is a five-year plan (prepared annually) for carrying out base programs and implementing strategic priorities. The estimated budgetary requirements (i.e., those presented in the FY 2018 President’s Budget) are the same for the Baseline and all alternatives. Aggregate patent cost is the total of estimated budgetary requirements and targeted patent operating reserve levels. Table 3-2 provides the projected aggregate patent revenue (including other income) and aggregate patent cost for each alternative. Table 3-2 Projected Aggregate Patent Cost and Aggregate Patent Revenue by Alternative (dollars in millions) FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Budgetary Requirements $2,986 $3,176 $3,231 $3,273 $3,365 Optimal Patent Operating Reserve Level $746 $794 $808 $818 $841 Alternative 1: Final Rule Fee Schedule –– Aggregate Patent Revenue $2,876 $3,274 $3,229 $3,350 $3,447 EOY Patent Operating Reserve Alternative 1: $245 $343 $341 $418 $501 Alternative 2: Unit Cost Recovery – Aggregate Patent Revenue $2,883 $3,221 $3,235 $3,311 $3,363 EOY Patent Operating Reserve Alternative 2: $251 $296 $300 $338 $336 Alternative 3: Across the Board Adjustment– Aggregate Patent Revenue $2,877 $3,299 $3,249 $3,373 $3,474 EOY Patent Operating Reserve Alternative 3: $245 $368 $386 $486 $595 Alternative 4: Baseline – Aggregate Patent Revenue $2,865 $3,141 $3,094 $3,213 $3,309 EOY Patent Operating Reserve Alternative 4: $233 $199 $63 $4 ($51)
Table 35 Benefit Description Alternative 4 Baseline Alternative 1 Final Rule Fee Schedule Alternative 2 Unit Cost Recovery Alternative 3 Across the Board Adjustment Secure Aggregate Revenue to Cover Aggregate Cost -- -- Fee Schedule Design Benefits -- -- -- Both the Final Rule Fee Schedule (Alternative 1) and Across the Board Adjustment (Alternative 3) secure sufficient aggregate revenue to cover aggregate cost. However, the only alternative that offers benefits beyond the current fee schedule design is Alternative 1. These benefits will be discussed in more detail in Section 4. Transfer Estimates OMB Circular A-4 details the importance of distinguishing between real costs and transfer payments. Circular A-4 states that “benefit and cost estimates should reflect real resource use. Transfer payments are monetary payments from one group to another that do not affect total resources available to society.” OMB’s “Regulatory Impact Analysis: A Primer” cites “fees to government agencies for goods or services provided by the agency” as an example of transfer payments. Circular A-4 states that transfer payments should be addressed “in a separate discussion of the regulation’s distributional effects.”
Patent Fee Transfers (Aggregate Fee Revenue) by Alternative – 3% Discount (Constant FY 2017 dollars in millions) FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Total (Net Present Value) Annualized (Net Present Baseline (Alternative 4) – Fee Revenue $2,758 $2,872 $2,696 $2,677 $2,628 $13,631 $2,976 Alternative 1: Rule – Fee Revenue $2,769 $2,995 $2,815 $2,792 $2,739 $14,110 $3,081 Transfer Amount from Baseline for Alternative 1 $11 $123 $119 $115 $111 $479 $105 Alternative 2: Fee Cost Recovery – Fee Revenue $2,776 $2,946 $2,820 $2,759 $2,671 $13,972 $3,051 Transfer Amount from Baseline for Alternative 2 $18 $74 $124 $82 $43 $341 $74 Alternative 3: Across the Board Adjustment – Fee Revenue $2,770 $3,018 $2,833 $2,811 $2,760 $14,192 $3,099 Transfer Amount from Baseline for Alternative 3 $12 $146 $137 $134 $132 $561 $122 Table 38 Patent Fee Transfers (Aggregate Fee Revenue) by Alternative – 7% Discount (Constant FY 2017 dollars in millions) FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Total (Net Present Value) Annualized (Net Present Baseline (Alternative 4) – Fee Revenue $2,655 $2,662 $2,405 $2,298 $2,172 $12,192 $2,974 Alternative 1: Final Rule Fee Schedule – Fee Revenue $2,666 $2,775 $2,511 $2,397 $2,264 $12,613 $3,076 Transfer Amount from Baseline for Alternative 1 $11 $113 $106 $99 $92 $421 $103
Alternative 2: Fee Cost Recovery – Fee Revenue $2,672 $2,730 $2,516 $2,369 $2,208 $12,495 $3,047 Transfer Amount from Baseline for Alternative 2 $17 $68 $111 $71 $36 $303 $74 Alternative 3: Across the Board Adjustment – Fee Revenue $2,666 $2,796 $2,527 $2,414 $2,281 $12,684 $3,094 Transfer Amount from Baseline for Alternative 3 $11 $134 $122 $116 $109 $492 $120 Summary of the Final Rule Fee Schedule (Alternative 1) The Accounting Statement (as shown in Table 3-9) summarizes the qualitative costs and benefits as well as other impacts of the patent fee schedule set forth in the final rule. Overall, this Final Rule Fee Schedule (Alternative 1) has significant qualitative benefits to patent applicants, patent holders, other patent stakeholders, and society, with no identified qualitative costs. Table 39 Agency/Program Office: United States Patent and Trademark Office Rule Setting and Adjusting Patent Fees during Fiscal Year 2017 RIN#: 0651-AD02 Date: November 14, 2017 Category Primary Estimate Minimum Estimate Maximum Estimate Source Citation FY 2017 – FY 2021 BENEFITS (see section 4 for a detailed explanation of the benefits related to the baseline and alternatives)
As in Table 4-3, the fees for securing and maintaining a patent through a typical prosecution sequence for its full 20-year term increases by $260 (1.6 percent) under the Final Rule Fee Schedule (Alternative 1). Assuming a three percent discount rate, the net present value of investing in a patent for Alternative 1 is $12,400, compared to a net present value of $12,157 for the Baseline. Section 4.2.3 presents securing aggregate revenue to cover aggregate cost and the fee schedule design as benefits of this alternative and presents numerous examples of how this alternative is uniquely responsive to stakeholder feedback in ways the other alternatives are not. Section 4.2.2 notes that there are no identified qualitative costs in this alternative. Table 4-4 presents fee adjustments included in the Final Rule Fee Schedule (Alternative 1) that have the greatest impact on patent revenue. Large, small, and micro entity dollar and percent changes are compared to current large, small, and micro entity fees. A complete list of fee changes for Alternative 1 can be found in the document titled “Table of Patent Fee Changes – Current, Final and Unit Cost Recovery,” available at . Table 44 Alternative 1 – Final Rule Fee Schedule – Setting and Adjusting Patent Fees During Fiscal Year 2017 Current and Final Fees Description Current Fees Final Fees Large Entity Fee Small Entity Fee Micro Entity Fee Large Entity Fee Small Entity Fee Entity Fee Basic Filing fee – Utility (paper filing also requires non-electronic filing fee under 1.16(t)) $280 $140 $70 $300 $150 $75 7% 7% 7% trial
Table 48 Alternative 2 – Unit Cost Recovery Current and Final Fees Description Current Fees Final Fees Large Entity Fee Small Entity Fee Micro Entity Fee Large Entity Fee Entity Fee Micro Entity Fee Filing fee – Utility (paper filing also requires filing fee under 1.16(t)) $280 $140 $70 $280 $140 $70 0% 0% 0% Basic Filing Fee – Utility (electronic filing for small entities) n/a $70 n/a n/a $70 0% n/a Filing Fee – Design $180 $90 $45 $280 $140 $70 56% 56% 56% Provisional Application Filing Fee $260 $130 $65 $160 $80 $40 -38% -38% -38% Filing Fee – Reissue $280 $140 $70 $280 $140 $70 0% 0% 0% Utility Search Fee $600 $300 $150 $1,780 $890 $445 197% 197% 197% Design Search Fee $120 $60 $30 $400 233% $200 233% $100 233% Utility Examination Fee $720 $360 $180 $2,200 $1,100 $550 206% 206% 206% Design Examination Fee $460 $230 $115 $600 30% $300 30% $150 30% Utility Issue Fee $960 $480 $240 $320 $160 $80 -67% -67% -67%
Request for Continued Examination (RCE) – 1st Request (see 37 CFR 1.114) $1,200 $600 $300 $2,180 82% $1,090 82% $545 82% Request for Continued Examination (RCE) – 2nd and Subsequent Request (see 37 CFR 1.114) $1,700 $850 $425 $1,540 $770 $385 -9% -9% -9% Maintenance Fee Due at 3.5 years $1,600 $800 $400 $860 $430 $215 -46% -46% -46% Maintenance Fee Due at 7.5 years $3,600 $1,800 $900 $1,700 $850 $425 -53% -53% -53% Maintenance Fee Due at 11.5 years $7,400 $3,700 $1,850 $2,540 $1,270 $635 -66% -66% -66% Notice of Appeal $800 $400 $200 $40 -95% $20 -95% $10 -95% Forwarding an Appeal in an Application or Ex Parte Reexamination Proceeding to the Board $2,000 $1,000 $500 $4,820 141% $2,410 141% $1,205 141% Inter Partes Review Request Fee – Up to 20 Claims $9,000 $22,160 146% Partes Review Fee – Up to 15 Claims $14,000 $12,680 -9%
Post-Grant or Covered Business Method Review Request Fee – Up to 20 Claims $12,000 $16,220 35% or Covered Business Method Review Fee – Up to 15 Claims $18,000 $23,060 28% Petition for Revival of an Abandoned Application for a Patent, for the Delayed Payment of the Fee for Issuing Each Patent, or for the Delayed Response by the Patent Owner in any Reexamination Proceeding $1,700 $850 $240 -86% $120 -86% $60 -93% Petition for the Delayed Submission of a Priority or Benefit or to Restore the Right of Priority or Benefit $1,700 $850 $240 $120 $60 -86% -86% -93%