Section of Intellectual Property Law | eBulletin February 2012
February 2012
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ABA-IPL Section Chair presents testimony at USPTO PPAC hearing

ABA-IPL Section Chair Bob Armitage presented testimony on behalf of the Section at the February 15 hearing of the Patent Policy Advisory Committee (PPAC) on the proposed revised patent fee schedule provided to it by the USPTO on February 7. Section 10 of the America Invents Act (AIA) requires the Office to provide such a schedule of proposed fees to the PPAC at least 45 days before a Federal Register publication of proposed rules with the fee changes, and it requires the PPAC to hold at least one public hearing during the 30 day period following receipt of the Office proposal.

Mr. Armitage opened his testimony by noting that during the six-year period of development of the AIA, the Section opposed a statutory grant of fee-setting authority to the USPTO. However, now that Congress has granted that authority to the Director, the issue becomes one of implementation. Armitage reported that in this respect the Section is “largely aligned” with the Office’s stated goals for the new fee structure of backlog and pendency reduction. He also expressed the Section’s support for a fee structure that recognizes the value of a reserve fund concept to provide for stabilized funding.

The Section Chair expressed the view that within a general approach of setting individual fees to recover the cost of providing the service in question, there should be some flexibility. A noteworthy example is found in the maintenance fees, which are presently set far above the negligible cost of providing the service, and would continue to be under the proposal. These above-cost fees provide a valuable service in subsidizing below-cost fees for “front end” services such as application, search and examination fees. Bob cautioned that this flexibility should be used sparingly and only for good cause shown. New fees should be set only for cost recovery, in that setting fees too high might negate congressional intent regarding the availability of the services. In this regard, he expressed the views that some of the fees proposed by the Office “defy rationality as compared to the cost of the service,” citing the proposal for a fee of $590,000 for Post-Grant Review proceeding against a patent containing 200 claims, and noting that in the AIA Congress also mandated the availability of PGR for patents with the greatest prolixity.

Another set of proposed fees that Armitage identified as raising questions whether the escalating fees might frustrate congressional intent are those relating to Supplemental Examination, a new administrative remedy created by the AIA. In the case of filing for Supplemental Examination for consideration of 50 items with 100 pages each, the filing fees alone would be $158,000.

Although the subject of the hearing was the proposed rule package relating only to fees, Mr. Armitage closed his testimony with an observation that the fee rules cannot be evaluated in isolation from all the other rule packages that are mandated by the AIA. He reported observations gathered from discussions with subject matter experts and others who have studied the non-fee proposed rules. These include concerns that the rules are unduly complicated, and that the Office is not using its authority to simplify and streamline the rules and thereby reduce costs. The proposed rules on Post Grant Review and Inter Partes Review were specifically identified as rules that may be too complex and as a result too expensive for both the Office and its customers.
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