Increased USPTO "Fees Could Stifle Innovation and Revenue" Warns Go-To Patent Attorney for Startups

Also: New PTAB bill, $142 million for infringement of SEPs, eligibility of claims for "processing coupons," FTC noncompetes ban to increase patents, & depressing sequel to ANPRM.

From ‘19 presentation about adjusting patent portfolio strategy based on tracking emerging technology trends that made VIP think in ‘24 about the known knowns, the known unknowns, and the unknown unknowns in innovation and IP. According to one study, the number of “AI patents” increased by more than 500% between ‘18-’22.

This Week In Patents

SEPs: “G+ Communications wins $142 million verdict against Samsung” after Judge Rodney Gilstrap (E.D. TX) ordered a retrial on damages following a previous $67.5 million verdict for G+.

• G+ acquired the enforced standard essential patents (SEPs) from China’s ZTE

  • Jason Sheasby of Irell & Manella and Sam Baxter and Jennifer Truelove of McKool Smith PC secured the victory for G+ in Marshall, TX

    • Fittingly, Baxter - along with Judge John Ward - was the star of the ‘06 NYT article about Marshall becoming a haven for patent enforcement

      • Article discussed in classic Clause 8 interview with Judge Albright

Section 101: Judge John Murphy (E.D. PA) finds claims “directed to . . . processing coupons” patent eligible under Section 101 (H/T Matthew Dowd).

FTC predicts its final rule banning noncompetes “will help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 years under the final rule” (H/T Harry Vartanian).

AI: ex-parte appeal maestro Clint Mehall writes the piece of the year (so far…) on IPWatchdog about the future role of AI for patent drafting and the craft of patent prosecution: “[t]he job of a patent attorney is to move the needle in the favor of clients as much as possible, but perfection is not achievable…[s]uch tools would be more interactive and would aid in the deep work of refining claim language.” As they say, if you haven’t already read the thought-provoking piece everyone else is discussing, hurry.

PTAB rules: USPTO has finally released the Notice of Proposed Rulemaking (NPRM) for the PTAB based on its widely-panned April 2023 Advance Notice of Proposed Rulemaking (ANPRM) on the subject.

• Review of the NPRM by Scott McKeown - usually a defender of PTAB’s post-grant proceedings: “[p]erhaps more concerning is the absence of a codification of current Fintiv 314(a) [discretionary denial] practices . . . As to the content of the NPRM itself, some marginal value and an oddly misguided option that hurts Patent Owners and risks derailing the entire proposal.”

• The NPRM also does NOT include any proposals in line with the ANPRM: “Recognizing the important role the USPTO plays in encouraging and protecting innovation by individual inventors, startups, and under-resourced innovators who are working to bring their ideas to market, the Office is considering limiting the impact of AIA post-grant proceedings on such entities by denying institution when certain conditions are met.”

  • Although the specific proposals in the ANPRM wouldn’t actually have helped such innovators, it’s noticeable that the USPTO just threw out the idea altogether.

• Voice of IP reader & veteran USPTO watcher writes-in: “more rushed work product from the PTO that’s likely to create more problems than it solves.” Referring to one - particularly egregious in his view - NPRM proposal, “[w]hat is the point of [Information Disclosure Statements (IDSs)] if an examiner considering prior art cited in an IDS will not mean that the same prior art was ‘meaningfully addressed by the Office’”?

• Fortunately for him, many - including McKeown - are skeptical that there will be a final rule. This would be in line with USPTO former GC Nick Matich’s prediction on Clause 8 last year.

New PTAB Bill: Reps. Marcy Kaptur (D-OH) & Thomas Massie (R-KY) introduced the Balancing Incentives Act on Friday to “require a patent owner to consent to the filing of a petition for inter partes review or post-grant review, and for other purposes.”

• This bill is being championed by US Inventor because they don’t think the PTAB can be fixed through the incremental improvements the Senate’s PREVAIL Act seeks.

• Massie’s "Restoring America's Leadership in Innovation Act of 2021" (RALIA) to abolish the PTAB had 26 cosponsors - all Republicans. So, having Kaptur - a Democrat who opposed the American Invents Act in Congress - sponsor the new bill and backing away from outright calls to abolish the PTAB does signify some impressive political maturation of the effort.

  • BUT (1) the bill is still overly clever in a way that suggests it’s a messaging effort and (2) Massie continuing to play any lead role is a sure sign that it’s going to fail. As covered on Clause 8 last year, there’s no evidence that Massie has any actual interest in advancing pro-patent policies. Massie joining MTG’s call to oust the speaker from his own party just before this bill was released is just another sign of that.

• The likely only bet for advancing any patent legislation remains in helping leaders of the Senate’s IP Subcommittee - Senators Thom Tillis and Chris Coons - forge a compromise with the leaders of the House’s IP Subcommittee - Reps. Darrell Issa and Hank Johnson. Tillis and Coons also happen to be the co-sponsors of the PREVAIL Act.

Unintended Consequences: How Increased Patent Fees Could Stifle Innovation and Revenue

Voice of IP has been closely following the story of USPTO’s proposal for significant, unprecedented fee increases. However, many questions remain about the actual impact those fees will have.

To help answer those questions, Voice of IP asked Michael T. Abramson - a Principal of Jordan IP Law, LLC and a go-to patent attorney for startups - to share his thoughts below on the subject. He warns that the fees won’t only disproportionately hurt startups and smaller firms but may also lead to decreased revenue for the USPTO.

In the realm of innovation, patents play a pivotal role by protecting inventors and encouraging public disclosure of new ideas. The United States Patent and Trademark Office (USPTO) has traditionally aimed to balance the interests of inventors and the public by facilitating the patent process. However, proposed increases in patent fees (some by up to 80%) threaten to disrupt this balance. While intended to enhance the operational capacity of the USPTO by boosting its revenues, these fee hikes could paradoxically undermine the very ecosystem of innovation they aim to support. By exploring the broader effects of these increased costs, particularly on startups and individual inventors, it becomes clear that the changes may have far-reaching consequences, including slowing the pace of technological advancement and decreasing overall patent filings, which could diminish the USPTO’s revenue in the long run.

1. The increase in patent office fees contradicts one of its primary missions—to disseminate information for public use. While a granted patent primarily protects the claimed invention, the disclosures it contains also offer valuable knowledge that can inspire further innovation. However, higher fees may lead to more selective patent filings. Consequently, many inventions that could have been filed and contributed to new innovations may remain undisclosed, thereby slowing the pace of technological advancement.

2. Ironically, the objective of increasing fees—to generate more revenue for the USPTO—may be self-defeating. Initially, the increased fees might boost income as companies proceed with pre-planned filing strategies. Over time, however, the higher costs may deter companies, startups, and individual inventors from filing new applications and continuations. This reduction in filings will likely result in decreased revenue for the USPTO, counteracting the intended effect of the fee hike.

3. The impact of increased fees is particularly severe for startups and small companies. While costs concern everyone from solo inventors to large corporations, the latter will likely continue to file for their most critical IP regardless of expense. Startups and smaller firms, however, often lack the resources to do the same. For them, IP is not only a competitive barrier but also a key asset for attracting investment. Many clients I advise are small entities with outstanding inventions but limited capital. To manage costs, I often recommend filing an omnibus application covering multiple related inventions. This approach protects the priority date while allowing clients to defer further expenses until they file continuations/divisionals when more funds are available. Unfortunately, the significant rise just in continuation filing fees alone will greatly diminish the financial advantages of this strategy, and other creative cost savings will need to be employed.

Do you know why the USPTO decided not to propose rules “encouraging and protecting innovation by individual inventors, startups, and under-resourced innovators” in the PTAB NPRM? Can you provide an answer to “[w]hat is the point of [Information Disclosure Statements (IDSs)] if an examiner considering prior art cited in an will not mean that the same prior art was ‘meaningfully addressed by the Office’”?

Do you think VIP missed an important patent story? Do you know of an important, developing IP story?

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