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Rule2024-26821

Setting and Adjusting Patent Fees During Fiscal Year 2025

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Published

November 20, 2024

Effective

January 19, 2025

Issuing agencies

Commerce DepartmentPatent and Trademark Office

Abstract

The United States Patent and Trademark Office (USPTO) sets or adjusts patent fees as authorized by the Leahy-Smith America Invents Act (AIA), as amended by the Study of Underrepresented Classes Chasing Engineering and Science Success Act of 2018 (SUCCESS Act). The fee adjustments are needed to provide the USPTO with sufficient aggregate revenue to recover the aggregate estimated costs of patent operations in future years (based on assumptions and estimates found in the agency's Fiscal Year 2025 Congressional Justification (FY 2025 Budget)), including implementing the USPTO 2022-2026 Strategic Plan (Strategic Plan).

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[Federal Register Volume 89, Number 224 (Wednesday, November 20, 2024)]
[Rules and Regulations]
[Pages 91898-92011]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-26821]

[[Page 91897]]

Vol. 89

Wednesday,

No. 224

November 20, 2024

Part II

Department of Commerce

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Patent and Trademark Office

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37 CFR Parts 1, 41, and 42

Setting and Adjusting Patent Fees During Fiscal Year 2025; Final Rule

Federal Register / Vol. 89 , No. 224 / Wednesday, November 20, 2024 /
Rules and Regulations

[[Page 91898]]

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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Parts 1, 41, and 42

[Docket No. PTO-P-2022-0033]
RIN 0651-AD64

Setting and Adjusting Patent Fees During Fiscal Year 2025

AGENCY: United States Patent and Trademark Office, Department of
Commerce.

ACTION: Final rule.

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SUMMARY: The United States Patent and Trademark Office (USPTO) sets or
adjusts patent fees as authorized by the Leahy-Smith America Invents
Act (AIA), as amended by the Study of Underrepresented Classes Chasing
Engineering and Science Success Act of 2018 (SUCCESS Act). The fee
adjustments are needed to provide the USPTO with sufficient aggregate
revenue to recover the aggregate estimated costs of patent operations
in future years (based on assumptions and estimates found in the
agency's Fiscal Year 2025 Congressional Justification (FY 2025
Budget)), including implementing the USPTO 2022-2026 Strategic Plan
(Strategic Plan).

DATES: This rule is effective on January 19, 2025. The amendments to
Sec. 1.18(b)(1) shall apply to those international design applications
under the Hague Agreement having a date of international registration
on or after January 19, 2025.

FOR FURTHER INFORMATION CONTACT: Brendan Hourigan, Director, Office of
Planning and Budget, at 571-272-8966 or <a href="/cdn-cgi/l/email-protection#bdffcfd8d3d9dcd393f5d2c8cfd4dadcd3fdc8cecdc9d293dad2cb"><span class="__cf_email__" data-cfemail="246656414a40454a0a6c4b51564d43454a64515754504b0a434b52">[email&#160;protected]</span></a> or
C. Brett Lockard, Director, Forecasting and Analysis Division, at 571-
272-0928 or <a href="/cdn-cgi/l/email-protection#94d7fce6fde7e0fbe4fcf1e6bad8fbf7fff5e6f0d4e1e7e4e0fbbaf3fbe2"><span class="__cf_email__" data-cfemail="35765d475c46415a455d50471b795a565e54475175404645415a1b525a43">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Introduction

The USPTO issues this final rule under section 10 of the AIA
(section 10), Public Law 112-29, 125 Stat. 284, available at <a href="https://www.congress.gov/112/plaws/publ29/PLAW-112publ29.pdf">https://www.congress.gov/112/plaws/publ29/PLAW-112publ29.pdf</a>, as amended by the
SUCCESS Act, Public Law 115-273, 132 Stat. 4158, available at <a href="https://www.congress.gov/115/plaws/publ273/PLAW-115publ273.pdf">https://www.congress.gov/115/plaws/publ273/PLAW-115publ273.pdf</a>, which
authorizes the Under Secretary of Commerce for Intellectual Property
and Director of the USPTO (Director) to set or adjust by rule any
patent fee established, authorized, or charged under 35 U.S.C. for any
services performed or materials furnished by the agency. Section 10
prescribes that fees may be set or adjusted only to recover the
aggregate estimated costs to the USPTO for processing, activities,
services, and materials relating to patents, including administrative
costs with respect to such patent fees. Section 10 authority includes
flexibility to set individual fees in a way that furthers key policy
factors while considering the cost of the respective services. Section
10 also establishes certain procedural requirements for setting or
adjusting fee regulations, such as public hearings and input from the
Patent Public Advisory Committee (PPAC), a public comment period, and
congressional oversight.

B. Purpose of This Action

Based on a biennial review of fees, costs, and revenues that began
in fiscal year (FY) 2021, the USPTO concluded that fee adjustments are
necessary to provide the agency with sufficient financial resources to
facilitate the effective administration of the U.S. patent system,
including implementing the Strategic Plan, available on the agency
website at <a href="https://www.uspto.gov/StrategicPlan">https://www.uspto.gov/StrategicPlan</a>. The USPTO reviewed and
analyzed the overall balance between the agency's estimated revenue and
costs over the next five years (based on current projections) under
this rule. The fees established under this final rule will help
stabilize the USPTO's finances by offsetting the forecasted increase in
aggregate costs and maintaining the patent operating reserve in the
desired range. The patent operating reserve mitigates financing risk
and enables the agency to deliver reliable and predictable service
levels, while positioning it to undertake initiatives that encourage
participation in the innovation ecosystem.
The individual fee adjustments align with the USPTO's strategic
goals and its fee structure philosophy, including the agency's four key
fee setting policy factors discussed in detail in Part IV: Rulemaking
Goals and Strategies of this rule: (1) promote innovation strategies,
(2) align fees with the full costs of products and services, (3)
facilitate effective administration of the U.S. patent system, and (4)
offer application processing options. The fee adjustments in this final
rule will enable the USPTO to accomplish its mission to drive U.S.
innovation, inclusive capitalism, and global competitiveness.

C. Summary of Provisions Impacted by This Action

This final rule sets or adjusts 433 patent fees for undiscounted,
small, and micro entities, including the introduction of 52 new fees.
Any reference herein to ``undiscounted entity'' includes all entities
other than those with established entitlement to either a small or
micro entity fee discount, see Part II: Background of this rule for
more information.
Overall, discussed in detail below, the routine fees to obtain a
patent (i.e., filing, search, examination, and issue fees) will
increase under this final rule relative to the current fee schedule to
ensure financial sustainability and accommodate increases needed to
improve the predictability and reliability of patent intellectual
property (IP) protection. Applicants who meet the eligibility criteria
for small or micro entity discounts will continue to pay a reduced fee
for the fees eligible for discount under AIA section 10(b). Additional
information describing the fee adjustments established by this final
rule is included in Part V: Individual Fee Rationale in this rulemaking
and in the ``Table of Patent Fees--Current, Final Patent Fee Schedule,
and Unit Cost'' (Table of Patent Fees) available on the fee setting
section of the USPTO website at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.

D. Summary of Costs and Benefits of This Action

This final rule is 3(f)(1) significant and requires a Regulatory
Impact Analysis (RIA) under Executive Order (E.O.) 12866, Regulatory
Planning and Review, (Sept. 30, 1993). The USPTO prepared an RIA to
analyze the costs and benefits of the final rule over a five-year
period, FY 2025-29. The RIA includes an analysis of how well the four
alternatives align with the rulemaking strategies and goals, which are
comprised of strategic priorities (goals, objectives, and key
performance strategies) from the Strategic Plan and fee setting policy
factors. From this conceptual framework, the USPTO assessed the
absolute and relative qualitative costs and benefits of each
alternative. Consistent with Office of Management and Budget (OMB)
Circular A-4, ``Regulatory Analysis'' (see 88 FR 77615, Nov. 13, 2023),
this final rule involves a transfer payment from one group to another.
The USPTO recognizes that it is very difficult to precisely monetize
and quantify social costs and benefits resulting from deadweight loss
of a transfer rule such as this final rule. The costs and benefits

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identified and analyzed in the RIA are strictly qualitative.
Qualitative costs and benefits have effects that are difficult to
express in either dollar or numerical values. Monetized costs and
benefits, on the other hand, have effects that can be expressed in
dollar values. The USPTO did not identify any monetized costs and
benefits of this final rule but found this final rule has significant
qualitative benefits and only minimal costs.
The RIA assesses the qualitative costs and benefits with respect to
fee schedule design--how well the fee schedule aligns to the key fee
setting policy factors--and securing aggregate revenue to recover
aggregate cost--whether the alternative provides adequate revenue to
support the core mission and strategic priorities described in the
final rule, Strategic Plan, and FY 2025 Budget. Based on the costs and
benefits identified and analyzed in the RIA, the fee schedule detailed
in this final rule offers the highest net benefits. As described
throughout this document, the final fee schedule maintains the existing
balance of below cost entry fees (e.g., filing, search, and
examination) and above cost maintenance fees as one approach to foster
innovation. Further, as detailed in Part V: Individual Fee Rationale of
this rule, the fee changes are targeted in support of one or more fee
setting policy factors. Lastly, this final rule secures the aggregate
revenue needed to maintain patent operations and achieve the strategic
priorities encompassed in the rulemaking goals and strategies (see Part
IV: Rulemaking Goals and Strategies of this rule). The final fee
schedule produces sufficient aggregate revenue to fund the strategic
objectives to issue and maintain robust and reliable patents, improve
patent application pendency, optimize the patent application process to
enable efficiencies for applicants and other stakeholders, and enhance
internal processes to prevent fraudulent and abusive behaviors that do
not embody the USPTO's mission. Table 1 summarizes the RIA results.
Additional details describing the costs and benefits can be found in
the RIA, available on the fee setting section of the USPTO website at
<a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.
[GRAPHIC] [TIFF OMITTED] TR20NO24.000

II. Background

Section 10(a) of the AIA authorizes the Director to set or adjust
by rule any patent fee established, authorized, or charged under 35
U.S.C. for any services performed or materials furnished by the agency.
Fees under 35 U.S.C. may be set or adjusted only to recover the
aggregate estimated costs to the USPTO for processing, activities,
services, and materials related to patents, including administrative
costs to the agency with respect to such patent operations. See 125
Stat. at 316. Provided that fees in the aggregate achieve overall
aggregate cost recovery, the Director may set individual fees under
section 10 at, below, or above their respective cost. Section 10(e)
requires the Director to publish the final fee rule in the Federal
Register and the USPTO's Official Gazette at least 45 days before the
final fees become effective.
Section 10 authorizes the USPTO to set or adjust patent fees within
the regulatory process. The USPTO has used the AIA's fee setting
authority to achieve its key fee setting policy factors and to generate
the aggregate revenue needed to recover the aggregate estimated costs
of operations and strategic patent priorities in final rules published
in FY 2013 (``Setting and Adjusting Patent Fees,'' 78 FR 4212 (Jan. 18,
2013)), FY 2018 (``Setting and Adjusting Patent Fees During Fiscal Year
2017,'' 82 FR 52780 (Nov. 14, 2017)), and FY 2020 (``Setting and
Adjusting Patent Fees During Fiscal Year 2020,'' 85 FR 46932 (Aug. 3,
2020) (FY 2020 Final Rule)).
Section 4 of the SUCCESS Act amended section 10(i)(2) to provide
that the Director's authority to set or adjust any fee under section 10
will end on September 16, 2026. While the fees established by this rule
will remain in effect in perpetuity or until adjusted by a future
rulemaking, the Director's authority to initiate new rulemakings to set
or adjust fees will expire on that date.
On December 29, 2022, the President signed into law the
Consolidated Appropriations Act, 2023, which included the Unleashing
American Innovators Act (UAIA). The UAIA, available at <a href="https://www.congress.gov/117/bills/hr2617/BILLS-117hr2617enr.pdf">https://www.congress.gov/117/bills/hr2617/BILLS-117hr2617enr.pdf</a>, increased fee
discounts for small entities from 50% to 60% and fee discounts for
micro entities from 75% to 80% for fees for filing, searching,
examining, issuing, appealing, and maintaining patent applications and
patents. The UAIA also increased fee discounts for small entities from
75% to 80% for filing a basic, nonprovisional utility application
electronically. See Consolidated Appropriations Act, 2023, Public Law
117-328; ``Reducing Patent Fees for Small Entities and Micro Entities
Under the Unleashing American Innovators Act of 2022,'' 88 FR 17147
(Mar. 22, 2023).
Section 10(b) of the AIA, as amended by the UAIA, requires the
USPTO to reduce by 60% the fees for small entities that are set or
adjusted under section 10(a) for filing, searching, examining, issuing,
appealing, and maintaining patent applications and patents.

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Section 10(g) of the AIA amended 35 U.S.C chapter 11 by adding
section 123 concerning micro entities. The AIA, as amended by the UAIA,
provides that the USPTO must reduce by 80% the fees for micro entities
for filing, searching, examining, issuing, appealing, and maintaining
patent applications and patents.
When adopting fees under section 10, the Director must provide PPAC
the proposed fees at least 45 days prior to publishing in the Federal
Register. PPAC then has 30 days to deliberate, consider, and comment on
the proposal, as well as hold public hearings on the proposed fees.
Before the USPTO issues any final fees, PPAC must make a written report
available to the public of the comments, advice, and recommendations of
the committee regarding the proposed fees. The USPTO must consider and
analyze any comments, advice, or recommendations received from PPAC
before finally setting or adjusting fees.
Consistent with this framework, on April 20, 2023, the Director
notified PPAC of the USPTO's intent to set or adjust patent fees and
submitted a preliminary patent fee proposal with supporting materials,
which are available on the fee setting section of the USPTO website at
<a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>. PPAC held a public
hearing at the USPTO's headquarters in Alexandria, Virginia, on May 18,
2023, where members of the public were given an opportunity to provide
oral testimony. Transcripts of the hearing are available on the USPTO
website at <a href="https://www.uspto.gov/sites/default/files/documents/PPAC_Hearing_Transcript-20230518.pdf">https://www.uspto.gov/sites/default/files/documents/PPAC_Hearing_Transcript-20230518.pdf</a>. Members of the public were also
given an opportunity to submit written comments for PPAC to consider,
and these comments are available on <a href="http://Regulations.gov">Regulations.gov</a> at <a href="https://www.regulations.gov/document/PTO-P-2023-0017-0001">https://www.regulations.gov/document/PTO-P-2023-0017-0001</a>. On August 14, 2023,
PPAC issued a written report setting forth in detail their comments,
advice, and recommendations regarding the preliminary proposed fees.
The report is available on the USPTO website at <a href="https://www.uspto.gov/sites/default/files/documents/PPAC-Report-on-2023-Fee-Proposal.docx">https://www.uspto.gov/sites/default/files/documents/PPAC-Report-on-2023-Fee-Proposal.docx</a>.
The USPTO considered and analyzed all comments, advice, and
recommendations received from PPAC before publishing the notice of
proposed rulemaking (NPRM), ``Setting and Adjusting Patent Fees during
Fiscal Year 2025,'' in the Federal Register on April 3, 2024, at 89 FR
23226. The NPRM and associated materials are available at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>. Likewise, before issuing this
final rule, the agency considered and analyzed all comments, advice,
and recommendations received from the public during the 60-day comment
period on the NPRM that closed on June 3, 2024. The agency's response
to comments received is available in Part VI: Discussion of Comments of
this rule.

III. Estimating Aggregate Costs and Revenues

Section 10 prescribes that patent fees may be set or adjusted only
to recover the aggregate estimated costs to the USPTO for processing,
activities, services, and materials relating to patents, including
administrative costs with respect to such patent fees. The following is
a description of how the USPTO calculates aggregate costs and revenue.

Step 1: Estimating Prospective Aggregate Costs

Estimating prospective aggregate costs is accomplished primarily
through the annual USPTO budget formulation process. The budget is a
five-year plan for carrying out base programs and new initiatives to
deliver on the USPTO's statutory mission and implement strategic goals
and objectives.
First, the USPTO projects the level of demand for patent products
and services. Demand for products and services depends on many factors
that are subject to change, including domestic and global economic
activity. The USPTO also considers overseas patenting activities,
policies and legislation, and known process efficiencies. Because
filing, search, and examination costs are the largest share of the
total patent operating costs, a primary production workload driver is
the number of patent application filings (i.e., incoming work to the
USPTO). The USPTO looks at indicators such as the expected growth in
Real Gross Domestic Product (RGDP), a leading indicator of incoming
patent applications, to estimate prospective workload. RGDP is reported
by the Bureau of Economic Analysis and is forecasted each February by
the OMB in the Economic and Budget Analyses section of the Analytical
Perspectives and twice annually by the Congressional Budget Office
(CBO) in the Budget and Economic Outlook.
The expected workload must then be compared to the current
examination capacity to determine any required staffing and operating
cost (e.g., salaries, workload processing contracts, and publication)
adjustments. The USPTO uses a patent pendency model to estimate patent
production output based on actual historical data and input
assumptions, such as incoming patent applications and overtime hours.
An overview of the model, including a description of inputs, outputs,
key data relationships, and a simulation tool is available at <a href="https://www.uspto.gov/learning-and-resources/statistics/patent-pendency-model">https://www.uspto.gov/learning-and-resources/statistics/patent-pendency-model</a>.
Next, the USPTO calculates budgetary spending requirements based on
the prospective aggregate costs of patent operations. First, the USPTO
estimates the prospective costs of status quo operations (base
requirements). Then, the base requirements are adjusted for anticipated
pay increases and inflationary increases for the budget year and four
outyears. The USPTO then estimates the prospective costs for expected
changes in production workload and new initiatives over the same
period. The USPTO reduces cost estimates for completed initiatives and
known cost savings expected over the same five-year horizon. A detailed
description of the budgetary requirements, aggregate costs, and related
assumptions for the Patents program is available in the FY 2025 Budget.
The USPTO estimates that the Patents program will cost $3.973
billion in FY 2025, including $2.835 billion for patent examining; $90
million for patent trial and appeals; $159 million for patent
information resources; $24 million for activities related to IP
protection, policy, and enforcement; and $866 million for general
support costs necessary for patent operations (e.g., the patent share
of rent, utilities, legal, financial, human resources, other
administrative services, and agency-wide information technology (IT)
infrastructure and IT support costs). See Appendix II of the FY 2025
Budget. In addition, the USPTO will transfer $2 million to the
Department of Commerce Inspector General for audit support.
Table 2 below provides key underlying production workload
projections and assumptions from the FY 2025 Budget used to calculate
aggregate costs. Table 3 (see Step 2) presents the total budgetary
requirements (prospective aggregate costs) for FY 2025 through FY 2029
and the estimated collections and operating reserve balances that would
result from the adjustments contained in this final rule. These
projections are based on point-in-time estimates and assumptions that
are subject to change. There is considerable uncertainty in out-year
budgetary requirements. There are risks that could materialize over the
next several years (e.g., adjustments to

[[Page 91901]]

examination capacity, higher contracting costs, changes in workload,
and other inflationary increases, etc.) that could increase the USPTO's
budgetary requirements. These estimates are refreshed annually in the
production of the USPTO's budget.
[GRAPHIC] [TIFF OMITTED] TR20NO24.001

Step 2: Estimating Prospective Aggregate Revenue

As described above in Step 1, the USPTO's prospective aggregate
costs (as presented in the FY 2025 Budget) include budgetary
requirements related to planned production, anticipated new
initiatives, and a contribution to the patent operating reserve
required for the USPTO to maintain patent operations and realize its
strategic goals and objectives for the next five years. The prospective
aggregate costs become the target aggregate revenue level that the new
fee schedule must generate in a given year over the five-year planning
horizon. To estimate aggregate revenue, the USPTO references the
production models used to estimate aggregate costs and analyzes
relevant factors and indicators to calculate or determine prospective
fee workloads (e.g., number of applications and requests for services
and products).
Economic activity is an important consideration when developing
workload and revenue forecasts for patent products and services because
economic conditions affect patenting activity. Major economic
indicators include the overall condition of the U.S. and global
economies, spending on research and development activities, and
investments that lead to the commercialization of new products and
services. These indicators correlate with patent application filings,
which are a key driver of patent fees. Economic indicators also provide
insight into market conditions and the management of IP portfolios,
which influence

[[Page 91902]]

application processing requests and post-issuance decisions to maintain
patent protection. When developing fee workload forecasts, the USPTO
considers other influential factors including overseas activity,
policies and legislation, court decisions, process efficiencies, and
anticipated applicant behavior.
Anticipated applicant behavior in response to fee changes is
measured using an economic principle known as elasticity, which for the
purpose of this final rule measures how sensitive applicants and
patentees are to changes in fee amounts. The higher the elasticity
measure (in absolute value), the greater the applicant response to the
relevant fee change. If elasticity is low enough (i.e., the elasticity
measure is less than one in absolute value and demand is inelastic), a
fee increase will lead to only a relatively small decrease in patent
activities, and overall revenues will still increase. Conversely, if
elasticity is high enough (i.e., the elasticity measure is greater than
one in absolute value and demand is elastic), a fee increase will lead
to a relatively large decrease in patenting activities such that
overall revenues will decrease. When developing fee forecasts, the
USPTO accounts for how applicant behavior will change at different fee
amounts projected for the various patent services. The USPTO previously
analyzed elasticity for nine broad patent fee categories: filing/
search/examination fees, excess independent claims fees, excess total
claims fees, application size (excess page) fees, issue fees, request
for continued examination (RCE) fees, appeal fees, AIA trial fees, and
maintenance fees, including distinctions by entity size where
applicable. Additional information about how the USPTO estimates
elasticity is provided in ``Setting and Adjusting Patent Fees during
Fiscal Year 2020--Description of Elasticity Estimates,'' available on
the USPTO website at <a href="https://www.uspto.gov/sites/default/files/documents/Elasticity_Appendix.docx">https://www.uspto.gov/sites/default/files/documents/Elasticity_Appendix.docx</a>.
As required by law, the USPTO collects fees for patent-related
services and products at different points in time within the patent
application examination process and over the life of the pending patent
application and granted patent to finance the associated work for
providing those services. Maintenance fee payments account for about
half of all patent fee collections and subsidize the cost of filing,
search, and examination activities. Changes in application filing
levels immediately impact current year fee collections. Fewer patent
application filings mean the USPTO collects fewer fees to devote to
production-related costs in the current pipeline. The production output
in one- year impacts outyear revenue because less output in one year
leads to fewer issue and maintenance fee payments in future years.
The USPTO's five-year estimated aggregate patent fee revenue (see
table 3) is based on the number of patent applications it expects to
receive for a given fiscal year, work it expects to process in a given
fiscal year (an indicator of patent issue fee workloads), expected
examination and process requests for the fiscal year, and the expected
number of post-issuance decisions to maintain patent protection over
that same fiscal year. Within the iterative process for estimating
aggregate revenue, the USPTO adjusts individual fee rates up or down
based on cost and policy decisions, estimates the effective dates of
new fee rates, and multiplies the resulting fee rates by workload
volumes (including elasticity adjustments) to calculate a revenue
estimate for each fee. For the aggregate revenue estimates shown below,
the USPTO assumes that all final rule fee rates will become effective
on January 18, 2025. Using these figures, the USPTO sums the individual
fee revenue estimates, and the result is a total aggregate revenue
estimate for a given year (see table 3). The aggregate revenue estimate
also includes collecting $50 million annually in other income
associated with recoveries and reimbursable agreements (offsets to
spending).
[GRAPHIC] [TIFF OMITTED] TR20NO24.002

[[Page 91903]]

IV. Rulemaking Goals and Strategies

A. Fee Setting Strategy

The strategy of this final rule is to establish a fee schedule that
generates sufficient multi-year revenue to recover the aggregate
estimated costs of maintaining USPTO patent operations. The overriding
principles behind this strategy are to operate within a sustainable
funding model that supports the USPTO's strategic goals and objectives,
such as optimizing patent application pendency through the promotion of
efficient operations and filing behaviors, issuing robust and reliable
patents, and encouraging access to the patent system for all
stakeholders.
The USPTO assessed this final rule for alignment with four key fee
setting policy factors: (1) promoting innovation strategies seeks to
ensure barriers to entry into the U.S. patent system remain low, and
innovation is incentivized by granting inventors certain short-term
exclusive rights to stimulate additional inventive activity; (2)
aligning fees with the full costs of products and services recognizes
that some applicants may use particular services in a more costly
manner than other applicants (e.g., patent applications cost more to
process when more claims are filed); (3) facilitating the effective
administration of the U.S. patent system seeks to encourage patent
prosecution strategies that promote efficient patent prosecution,
resulting in compact prosecution and reduction in the time it takes to
obtain a patent; and (4) offering application processing options, where
feasible, in recognition that patent prosecution is not a one-size-
fits-all process. Part V: Individual Fee Rationale of this rule
describes the reasoning for setting and adjusting individual fees,
including the design benefits of the final fee schedule. The RIA,
available on the fee setting section of the USPTO website at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>, also discusses fee schedule
design benefits.
In the event any provision is invalidated or held to be
impermissible as a result of a legal challenge, the ``remainder of the
regulation could function sensibly without the stricken provision.''
Belmont Mun. Light Dep't v. FERC, 38 F.4th 173, 187 (D.C. Cir. 2022)
(quoting MD/DC/DE Broad. Ass'n v. FCC, 236 F.3d 13, 22 (D.C. Cir.
2001)). The USPTO views each fee in this final rule as able to stand on
its own and to ``function sensibly'' without the others. This means
that in the event that a reviewing court were to find that any one fee
setting or fee adjustment was invalid, that finding would not affect
the fees or adjustments enacted elsewhere in the rule. Therefore, in
the event that any portion of this final rule is held to be invalid or
impermissible, the USPTO intends that the remaining aspects of the
regulatory provisions, and fees set and adjusted therein, remain valid.

B. Fee Setting Considerations

The balance of this sub-section presents the specific fee setting
considerations the USPTO reviewed in developing the final patent fee
schedule: (1) historical cost of providing individual services, (2) the
balance between projected costs and revenue to meet the USPTO's
operational needs and strategic goals, (3) ensuring sustainable
funding, and (4) PPAC's comments, advice, and recommendations on the
USPTO's initial fee setting proposal and the public comments received
in response to the April 2024 NPRM. Collectively, these considerations
inform USPTO's chosen rulemaking strategy.
1. Historical Cost of Providing Individual Services
The USPTO sets individual fee rates to further key policy
considerations while considering the cost of a particular service. For
instance, the USPTO has a longstanding practice of setting basic
filing, search, and examination (``front-end'') fees below the actual
cost of processing and examining applications to encourage innovators
to take advantage of patent rights and protections; these costs are
subsidized by aggregate patent revenues elsewhere.
The USPTO considers unit cost accounting data provided by its
Activity Based Information (ABI) program to evaluate the cost to
provide specific services and then decide how to best align fees for
particular services to recover the aggregate costs of all products and
services. Using historical cost data and forecasted application
demands, the USPTO can align fees to the costs of specific patent
products and services. Additional information on the USPTO's costing
methodology in addition to the last three years of historical cost data
is provided in the document titled ``Setting and Adjusting Patent Fees
during Fiscal Year 2025--Activity Based Information and Patent Fee Unit
Expense Methodology,'' available on the fee setting section of the
USPTO website at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>. Part V:
Individual Fee Rationale of this rule describes the reasoning and
anticipated benefits for setting some individual fees at cost, below
cost, or above cost such that the USPTO recovers the aggregate costs of
providing services through aggregate fee collections.
2. Balancing Projected Costs and Revenue
In developing this final patent fee schedule, the USPTO considered
its current estimates of future year workload demands, fee collections,
and costs to maintain core USPTO operations and meet its strategic
goals as found in the FY 2025 Budget and the Strategic Plan. The
USPTO's strategic goals include driving inclusive U.S. innovation and
global competitiveness, promoting the efficient delivery of reliable IP
rights, promoting the protection of IP against new and persistent
threats, bringing innovation to impact, and generating impactful
employee and customer experiences by maximizing agency operations. The
following subsections provide details regarding updated revenue and
cost estimates, cost-saving efforts taken by the USPTO, and planned
strategic improvements.
a. Updated Revenue and Cost Estimates
Projected revenue from the current fee schedule is insufficient to
meet future budgetary requirements (costs) due largely to unforeseen
economic and policy factors since the USPTO last exercised its
rulemaking authority to set patent fees in the FY 2020 Final Rule. As
further discussed below, increased fee discounts for small and micro
entities under the UAIA have reduced revenue estimates. Higher-than-
expected inflation in the broader U.S. economy and government-wide pay
raises have increased the USPTO's forecasted operating costs. Also, the
USPTO has increased special pay rates and undertaken efforts to offer
other incentives to recruit and retain examiners and other employees in
patent specific job series in order to remain competitive in the job
market for science, technology, engineering, and mathematics (STEM)
workers. The USPTO is required by law to finance operations by
recovering fees for the services offered by the agency. Not
implementing the final rule would result in insufficient fee
collections to process the anticipated work volumes, impacting
stakeholders and failing to deliver on the USPTO mission.
On December 29, 2022, the President signed into law the
Consolidated Appropriations Act, 2023, which included the UAIA. The law
reduced barriers to entry into the patent system by increasing small
entity discounts from 50% to 60% and micro entity

[[Page 91904]]

discounts from 75% to 80%. The USPTO estimated as part of its Fiscal
Year 2024 Congressional Justification (FY 2024 Budget) that these
discounts would reduce projected fee collections by $74 million in FY
2023 (partial year impact) and at least $100 million per year beginning
in FY 2024 (full year impact). In addition to increased entity
discounts, the UAIA increases costs through its provision that requires
that the USPTO establish a new Southeast Regional Office and four new
community outreach offices, including one in northern New England. The
USPTO must also conduct a study to determine whether additional offices
are required to achieve AIA mandates and to increase participation of
underrepresented inventors in the patent system.
Higher-than-expected inflation in the broader U.S. economy starting
in 2021 increased the USPTO's operating costs above previous estimates
for labor and nonlabor activities such as benefits, service contracts,
and equipment. Salaries and benefits comprise 70% of all patent-related
costs, and employee pay raises enacted across all U.S. government
agencies--including the USPTO--in 2023 and 2024 were much larger than
previously budgeted. Federal General Schedule (GS) pay was raised by
4.6% in 2023 and 5.2% in 2024; before 2023 the last time GS pay was
raised by at least 4.0% was in 2004. The FY 2025 Budget includes an
estimated 2.0% civilian pay raise planned in calendar year (CY) 2025
and assumed 3.0% civilian pay raises in CY 2026-29, as well as
inflationary increases for other labor and nonlabor activities.
Similarly, the USPTO adjusted the patent special rate table (pay)
for the first time since 2007. In 2007 the special rate table was set
11.4% to 31.4% above the GS pay table for the Washington, DC area
because patent-related job fields require a highly educated and
technical STEM workforce. This specialization has historically posed
recruitment challenges for the agency, and the increased pay rates kept
the USPTO competitive with private sector compensation opportunities.
Prior to the adjustment, the differential above the GS pay table had
diminished over the years, and by 2023 nearly half of the covered
employees no longer received a specialized supplement above the GS
counterparts--reducing the USPTO's competitive edge amongst both
private and other Federal agencies. Following the change in 2024, the
number of employees eligible for a specialized supplement increased,
and the special rate table was set at 5.8% to 19.3% above the GS pay
table for the Washington, DC area for most covered employees. The
objective of the special rate table change is to provide competitive
compensation to patent employees, thereby reducing attrition and
enhancing recruitment of qualified talent.
b. Cost-Saving Measures
The USPTO recognizes that fees cannot simply increase for every
improvement deemed desirable. The agency has a responsibility to
stakeholders to pursue strategic opportunities for improvement in an
efficient, cost-conscious manner. Likewise, the USPTO recognizes its
obligation to gain operational efficiency and reduce spending when
appropriate. As noted in the FY 2023 Agency Financial Report (AFR),
available on the agency website at <a href="https://www.uspto.gov/AnnualReport">https://www.uspto.gov/AnnualReport</a>,
total costs for the patent program increased 13.8% from FY 2019 to FY
2023; the Consumer Price Index for All Urban Consumers (CPI-U) grew by
19.9% over the same period. See CPI Inflation Calculator, U.S. Bureau
of Labor Statistics, <a href="https://www.bls.gov/data/inflation_calculator.htm">https://www.bls.gov/data/inflation_calculator.htm</a>.
The USPTO's FY 2025 Budget submission includes cost reducing
measures such as giving up leased space in Northern Virginia and a
moderate reduction in overall IT spending. In FY 2025, the USPTO
estimates $4,569 million in total spending for patent and trademark
operations. This is a $122 million net increase from the agency's FY
2024 estimated spending level of $4,447 million. The net increase
includes a $224 million upward adjustment for prescribed inflation and
other adjustments and a $102 million downward adjustment in program
spending and other realized efficiencies. This estimate builds on the
$40 million in annual real estate savings assumed in the FY 2024 Budget
submission to include additional annual cost savings of $12 million
through releasing more leased space in Northern Virginia. The combined
reduction in real estate space amounts to almost 1 million square feet
and an estimated annual cost savings of approximately $52 million.
Also, the USPTO is actively pursuing IT cost containment. The FY 2025
budget includes a relatively flat IT spending profile despite upward
pressure from inflation, supply chain disruptions, and government-wide
pay raises; ongoing IT improvements that offer business value to fee-
paying customers; and data storage costs increasing proportionally with
the forecasted growth in patent and trademark applications. The USPTO
will achieve this cost containment goal via modern equipment in a new
data center that will cost less to maintain and by retiring legacy IT
systems. Both of these cost containment measures will further improve
the USPTO's cybersecurity posture and increase system resiliency.
c. Efficient Delivery of Reliable IP Rights: Quality, Unexamined
Inventory, and Pendency
The USPTO continuously works to improve patent quality,
particularly the predictability, reliability, and robustness of issued
patents. See the patent quality section of the USPTO's website, <a href="https://www.uspto.gov/patents/quality-metrics">https://www.uspto.gov/patents/quality-metrics</a>, for more information including
statutory compliance measures, process measures, and perception
measures. The USPTO's strategic goal to ``promote the efficient
delivery of reliable IP rights'' recognizes the importance of
innovation as a foundation of American economic growth and global
competitiveness as well as the role the USPTO plays in encouraging
these principles. The USPTO is committed to improving pendency to
deliver timely, efficient services that help innovators bring their
ideas and products to impact more quickly and efficiently. The USPTO
diligently works to balance timely examination with improvements in
patent quality, particularly the robustness and reliability of issued
patents, while remaining mindful that patent applications are becoming
increasingly more complex and that technologies are converging. To
address these challenges, the USPTO must continue to develop and equip
examiners with additional guidance, training, tools, advanced
technology, and procedural resources.
The USPTO is pursuing initiatives to enhance patent quality and the
clarity and completeness of the official record during prosecution of
an application including encouraging applicants to begin filing patent
applications in DOCX format, automating preexamination procedures,
expanding examiner training, and working on additional guidance for
examiners and the Patent Trial and Appeal Board (PTAB). Current
guidance initiatives include refresher guidance on obviousness under 35
U.S.C. 103 and enablement under 35 U.S.C. 112 and new guidance on how
examiners should analyze inventorship issues for artificial
intelligence (AI)-assisted inventions. See ``Updated Guidance for
Making a Proper Determination of Obviousness,'' 89 FR 14449 (February
27, 2024); ``Guidelines for Assessing Enablement in Utility
Applications and Patents in

[[Page 91905]]

View of the Supreme Court Decision in Amgen Inc. et al. v. Sanofi et
al.,'' 89 FR 1563 (December 21, 2023); ``Inventorship Guidance for AI-
Assisted Inventions,'' 89 FR 10043 (February 13, 2024). Also, the USPTO
is increasing patent examination quality and efficiency via initiatives
such as the Global Dossier Initiative (see <a href="https://www.uspto.gov/patents/basics/international-protection/global-dossier-initiative">https://www.uspto.gov/patents/basics/international-protection/global-dossier-initiative</a>) and
by providing examiners with advanced technologies and tools for
identifying prior art, such as the AI-based ``More Like This'' and
``Similarity Search'' features in the Patents End-to-End (PE2E) search
suite (see 1494 Off. Gaz. Pat. Office 251 (January 11, 2022) and 1504
Off. Gaz. Pat. Office 359 (November 15, 2022)). More information on the
USPTO's AI initiatives, including the AI and Emerging Technologies
Partnership, is available at <a href="https://www.uspto.gov/initiatives/artificial-intelligence">https://www.uspto.gov/initiatives/artificial-intelligence</a>.
The USPTO recognizes that optimal pendency helps inventors and
investors bring innovation to impact. The growing demand for patent
services requires that the USPTO embrace new ways of delivering these
critical IP services. Therefore, the USPTO is also working to identify
policies, process changes, and technologies to improve patent pendency.
Some of these efforts will focus on operational improvements to the
patent examination process, including aligning the patent workforce
with the incoming workload in the most efficient manner. Other efforts
will target improvements to how applicants and other customers engage
with the USPTO and navigate the prosecution process. For example, the
USPTO has updated its website to improve access to resources and
enhance customer service for inventors and practitioners, including
modernizing and updating the Patent Basics and Patents Petitions pages,
adding a Virtual Assistant on select pages, and providing an updated
and modern general website search tool. The USPTO has also upgraded its
computer systems, including transitioning in November 2023from legacy
systems to Patent Center for the electronic filing and management of
patent applications. Patent Center, a web-based platform that allows
users to file and manage patent applications and requests, provides
improved system performance and a more intuitive user interface for an
enhanced user experience. The USPTO is committed to continuously
improving the customer experience on its website to enhance and
modernize accessibility, design, and overall satisfaction in our
digital space. For information on additional enhancements to the
agency's online services, visit the USPTO's web improvements page at
<a href="https://www.uspto.gov/about-us/website-improvements">https://www.uspto.gov/about-us/website-improvements</a>. Effecting the
changes in the examination process needed to ensure the issuance of
reliable patents while also issuing those patents in a timely manner
requires recognizing a potential increase in the core operating costs
for future years.
Another major component of the overall patent process that has seen
an increase in operating costs is the work carried out by the PTAB and
the Central Reexamination Unit (CRU). These units play a key role in
providing an efficient system for amending or voiding any patent claims
that overreach and stunt innovation, inclusive capitalism, and global
competitiveness. To ensure that post-issuance challenges to patent
rights through the PTAB and the CRU help protect innovation and
investments to commercialize innovation, the USPTO will invest in new
tools and resources that increase communication, knowledge sharing, and
collective problem solving. These strategic investments will enable the
USPTO to identify and continue to implement guidelines and best
practices to serve the patent system.
3. Sustainable Funding
All aspects of estimating the five-year forecast for aggregate
cost, aggregate revenue, and the patent operating reserve are
inherently uncertain because they are based on numerous, multifaceted
planning assumptions predicated on external indicators of economic IP
activity to forecast demand as well as internal workload drivers
derived from production models. Maintaining a viable operating reserve
is a key consideration as the USPTO sets patent fees. To mitigate the
risk of uncertain demand, the USPTO maintains a patent operating
reserve. The U.S. Government Accountability Office (GAO) considers
operating reserves a best practice for user fee-funded government
agencies like the USPTO. The patent operating reserve enables the USPTO
to align fees and costs over a longer horizon and to improve its
preparation for, and adjustment to, fluctuations in actual fee
collections and spending.
The USPTO manages the operating reserve within a range of
acceptable balances and assesses its options when projected balances
fall either below or above that range. Minimum planning targets are
intended to address immediate, unplanned changes in the economic or
operating environments as the reserve builds to the optimal level. The
minimum and optimal planning targets are reviewed every three years to
ensure the reserve operating range (between minimum and optimal
targets) mitigates the severity of an array of financial risks. Based
on the current risk environment, including various risk factors such as
economic and funding uncertainty and the high percentage of fixed costs
in the Patents program, the USPTO established a minimum planning level
of 8% of total spending--about one month's operating expenses
(estimated between $318 million and $368 million from FY 2025-29)--and
an optimal long-range target of 22% of total spending--about three
months' operating expenses (estimated between $875 million and $1,012
million from FY 2025-2029).
Based on current cost and revenue assumptions in the FY 2025
Budget, the USPTO forecasts that in FY 2024 aggregate estimated costs
will exceed aggregate revenue and the operating reserve will be used to
maintain operations. The fees contained in this final rule are
projected to increase patent fee collections to the point that they
exceed known spending requirements, and forecasted excess fee
collections will replenish the patent operating reserve each year from
FY 2025 through FY 2027. Based on this forecast, the USPTO will likely
achieve its optimal level for the patent operating reserve in FY 2026.
Based on spending requirements, the USPTO expects to rely on the patent
operating reserve to fund a portion of operating expenses in FY 2028
and FY 2029 as projected patent spending requirements will likely
exceed projected fee collections.
These projections are based on point-in-time estimates and
assumptions that are subject to change. For instance, the budget
includes assumptions about filing levels, renewal rates, whether the
President will authorize or Congress will mandate employee pay raises,
the productivity of the workforce, and many other factors. A change in
any of these factors could have a significant cumulative impact on fee
collections or spending requirements that affect the reserve balances.
As seen in table 3, set forth in Part III: Estimating Aggregate Costs
and Revenue of this rule, the operating reserve balance can change
significantly over a five-year planning horizon, underscoring the value
of the operating reserves as a risk mitigation tool for USPTO's
financial vulnerability to varying risk factors and the importance of
fee setting authority.
The USPTO will continue to evaluate long-term planning assumptions
to determine the appropriate course of

[[Page 91906]]

action beyond FY 2027 to appropriately adjust the Patents program for
fluctuations in annual revenue resulting from changes in the economy,
changes in spending requirements, and other financial risks. The USPTO
will also continue to assess the patent operating reserve balance
against its target balance annually, and at least every three years,
the USPTO will evaluate whether the minimum and optimal target balance
remain sufficient to provide the stable funding the USPTO needs. Per
the USPTO's operating reserve policy, if the operating reserve balance
is projected to exceed the optimal level by 10% for two consecutive
years, the USPTO will consider fee reductions. The USPTO will continue
to regularly review its operating budgets and long-range plans to
ensure the prudent use of patent fees.
4. Comments, Advice, and Recommendations From PPAC and the Public
As detailed in the NPRM and the report prepared in accordance with
AIA fee setting authority, PPAC conveyed support for seeking adequate
revenue to recover the costs for the USPTO to fulfill its role in
supporting the country's innovation ecosystem, commenting that
``[t]imely, high-quality search and examination require an
appropriately compensated work force with adequate time to complete the
same, supported by state of the art and reliable IT infrastructure.''
PPAC Report at 5-6.
In addition, PPAC recognized that ``the USPTO is in the best
position to assess its own needs and balance the tradeoffs in setting
individual fees.'' PPAC Report at 6. The USPTO considered and analyzed
the comments, advice, and recommendations received from PPAC before
publishing this final rule.
Likewise, the agency considered and analyzed the comments, advice,
and recommendations received from the public during the 60-day comment
period following publication of the NPRM before publishing this final
rule. The agency's response to comments received is available in Part
VI: Discussion of Comments of this rule.

C. Summary of Rationale and Purpose of the Proposed Rule

The USPTO estimates that the proposed patent fee schedule will
produce sufficient aggregate revenue to recover the aggregate estimated
costs of patent operations and ensure financial sustainability for
effective administration of the patent system. This proposed rule
aligns with the USPTO's four key fee setting policy factors and
supports the USPTO's mission-focused strategic goals.

V. Individual Fee Rationale

The USPTO projects that aggregate revenue generated by the patent
fees established in this final rule will recover the prospective
aggregate estimated costs of patent operations as laid out in the FY
2025 Budget.
The USPTO did not set each individual fee necessarily equal to the
estimated costs of performing activities related to the fee. Instead,
as described in Part IV: Rulemaking Goals and Strategies of this rule,
some fees are set at, above, or below their unit costs to balance four
key fee setting policy factors: (1) promoting innovation strategies,
(2) aligning fees with the full costs of products and services, (3)
facilitating effective administration of the U.S. patent system, and
(4) offering application processing options. For example, the agency
sets many initial filing fees below unit cost to promote innovation
strategies by removing barriers to entry to the patent system. To
balance the aggregate revenue loss of fees set below cost, the USPTO
must set other fees above cost in areas less likely to reduce
inventorship (e.g., maintenance).
For some fees established in this final rule, such as extension of
time fees, the USPTO does not maintain individual historical cost data
for services provided; instead, the agency considers the policy factors
described in Part IV: Rulemaking Goals and Strategies of this rule to
inform fee setting. For example, facilitating effective administration
of the U.S. patent system enables the USPTO to foster an environment
where USPTO personnel can provide and applicants can receive prompt,
quality interim and final decisions; encourage the prompt conclusion of
prosecuting an application, resulting in pendency reduction and faster
dissemination of patented information; and help recover costs for
activities that strain the patent system.
The fee changes are grouped into three categories: (A) an across-
the-board adjustment to patent fees, (B) an adjustment to front-end
fees, and (C) targeted fees. Part VII: Discussion of Specific Rules of
this rule contains a complete listing of fees set or adjusted in the
final patent fee schedule, including small and micro entity fees. This
information is also listed in the Table of Patent Fees available on the
fee setting section of the USPTO website at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.
This final rule includes one procedural amendment (D) expanding the
applicability of the rule allowing applicants to obtain a refund of
search and excess claims fees paid in an application through express
abandonment.

A. Across-the-Board Adjustment to Patent Fees

The broader U.S. economy has experienced higher-than-expected
inflation the last two years and, in turn, USPTO operating costs
increased relative to baseline estimates for labor and nonlabor
activities such as benefits, service contracts, and equipment.
Additionally, the USPTO adjusted the patent special rate table (pay)
for the first time since 2007 to provide competitive compensation to
patent employees. The agency's estimates of future costs in the FY 2025
Budget include a 2.0% civilian pay raise planned in CY 2025 and an
assumption of 3.0% civilian pay raises in CY 2026-29, as well as
inflationary increases for other labor and nonlabor activities.
In the NPRM, the USPTO proposed raising fees not covered by the
targeted adjustments discussed in part V(C) of this rule by 5%.
However, this final rule alters that proposal. The agency stated in the
NPRM that it may need to refine the size of the across-the-board-
adjustment either upward or downward such that fees are set at a level
that secures aggregate cost recovery and maintains the operating
reserves at acceptable levels. The USPTO has removed or adjusted
several of the targeted proposals in the NPRM based on stakeholder
feedback. To keep the USPTO on a stable financial track sufficient to
recover the aggregate estimated costs of patent operations and to
support the agency's strategic objectives, the agency is adjusting by
approximately 7.5% all patent fees not covered by the targeted
adjustments discussed in part V(C). This option results in an aggregate
increase to projected patent fee collections that is about the same as
the projected increase in the NPRM.
The effective date of this final rule is more than four years after
the agency's last fee adjustment in October 2020. A 7.5% across-the-
board increase in 2025 will be equivalent to a 1.7% annual increase,
well below the prevailing inflation rate since October 2020. The agency
is not proposing a larger increase in line with inflation because the
across-the-board adjustment is intended to supplement the additional
revenue collected from the targeted adjustments. Also, the USPTO will
continue its ongoing efforts to improve operational efficiency and
reduce spending when appropriate.

[[Page 91907]]

The 7.5% across-the-board adjustment strikes an appropriate balance
between projected aggregate revenue and aggregate costs based on the
assumptions used to develop the point-in-time estimates that support
this final rule. For patent fees with small and micro entity fee
reductions, the undiscounted fee is rounded up or down to the nearest
$5 by applying standard arithmetic rules. The resulting fee amounts are
more convenient to patent users and permit the USPTO to set small and
micro entity fees at whole dollar amounts when applying applicable fee
reductions. Therefore, some smaller fees will not change since a 7.5%
increase would round down to the current fee, while other fees will
change by slightly more or less than 7.5%, depending on rounding. For
patent fees that do not have small and micro entity fee reductions, the
fees are rounded to the nearest dollar by applying standard arithmetic
rules. The fee adjustments in this category are listed in the Table of
Patent Fees available on the fee setting section of the USPTO website
at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.

B. Adjustment to Front-End Patent Fees

The USPTO is adjusting all filing, search, and examination fees not
covered by the targeted adjustments as discussed in part V(C) of this
rule by an additional 2.5% on top of the 7.5% across-the-board
adjustment, for a total front-end increase of 10%. This total is
consistent with the fee increases proposed in the NPRM. The net
increase over the across-the-board adjustment has been lowered from 5%
to 2.5%, keeping the total increase for front-end patent fees at 10%.
The current fee schedule sets filing, search, and examination fees
below the costs of performing these services to achieve low barriers to
entry into the innovation ecosystem. These front-end fees are
subsidized by other fee collections, primarily maintenance fees. This
adjustment will marginally recover some, but not all, additional
filing, search, and examination costs earlier in the patent life cycle,
thus mitigating the risk of potentially lower maintenance fee payments
in the future while remaining consistent with a low barrier to entry
policy.
Similar to the across-the-board adjustment, for fees that have
small and micro entity fee reductions, the undiscounted fee is rounded
up or down to the nearest $5 by applying standard arithmetic rules.
Therefore, the fee rates established in this final rule might not be
precisely 10% higher than the current fee rates. The fee adjustments in
this category are listed in the Table of Patent Fees available on the
fee setting section of the USPTO website at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.

C. Targeted Adjustments to Patent Fees

The USPTO sets or adjusts the following fees for the reasons stated
below. Small and micro entity fees are set as 40% and 20%,
respectively, of the undiscounted fees.
1. After Final Consideration Pilot Program 2.0
The USPTO considered the public feedback on the After Final
Consideration Pilot Program 2.0 (AFCP 2.0) and the proposed fee and
decided not to renew the program. Consequently, a fee is not necessary.
The program will expire on December 14, 2024.
2. Continuing Application Fees

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[GRAPHIC] [TIFF OMITTED] TR20NO24.003

The USPTO is instituting new fees for certain continuing
applications to ensure a sustainable funding model into the future. The
patent fee structure is designed to encourage innovation by maintaining
low barriers to entry, which the agency accomplishes by keeping front-
end fees (filing, search, and examination fees) below the costs for the
corresponding front-end services (preexamination, search, and
examination), and by reducing most patent fees by 60% for small
entities and by 80% for micro entities. For example, for a utility
application, current front-end fees ($1,820 for undiscounted entities
in FY 2023) are set far below the USPTO's average costs for filing,
search, and examination activities ($6,165 in FY 2023). As of FY 2023,
the subsidy (the difference between the USPTO's costs and what an
applicant pays) for an average application was $4,345 for an
undiscounted entity and even higher for those applicants paying
discounted fee rates ($5,501 for a small entity filing electronically,
and $5,801 for a micro entity).
The USPTO recovers the shortfall (i.e., the costs associated with
filing, search, and examination activities that are not recouped by
their associated fees) from other fees, particularly issue fees and
maintenance fee payments made after issuance of a utility patent. See
e.g., FY 2023 AFR at 63-64, available on the USPTO website at <a href="https://www.uspto.gov/AnnualReport">https://www.uspto.gov/AnnualReport</a>. Maintenance fees are due 3.5 years, 7.5
years, and 11.5 years from the issue date of a utility patent. See 35
U.S.C. 41(b)(1). During FY 2023, maintenance fees collected from
utility patentees were 54.9% of the USPTO's patent revenue, about one-
third of which derived from payment of the 11.5-year fee. This revenue
is vital to providing

[[Page 91909]]

the necessary aggregate financing to fund patent operations.
Continuing applications, which include continuation, divisional,
and continuation-in-part applications filed under the conditions
specified in 35 U.S.C. 120, 121, 365(c), or 386(c) and Sec. 1.78,
represent a large and increasing share of patent applications. From FY
2010 to FY 2022, total serialized filings rose about 44%, including a
moderate increase in noncontinuing applications (about 25%) and a large
increase in continuing applications (about 100%), due almost entirely
to increased continuation filings. Since FY 2010, divisional and
continuation-in-part applications remained flat at annual levels of
about 22,000 and 19,000, respectively. However, continuation
applications have tripled, from about 40,000 in FY 2010 to about
122,800 in FY 2022, representing about 34% of FY 2022 serialized
filings.
The volume and rapid increase of continuing applications negatively
impacts the USPTO's workload and docketing practices. For example, it
is difficult for the agency to balance patent resources between the
examination of ``new'' (i.e., noncontinuing) applications disclosing
new technologies and innovations and continuing applications that, in
some cases, are a repetition of previously examined applications either
issued as patents or that have become abandoned. See e.g., FY 2021
pendency statistics review presented at the PPAC quarterly meeting on
Nov. 18, 2021, available on the USPTO website at <a href="https://www.uspto.gov/sites/default/files/documents/20211115-PPAC-FY21-pendency-stats-review.pdf">https://www.uspto.gov/sites/default/files/documents/20211115-PPAC-FY21-pendency-stats-review.pdf</a> (note that about 80% of continuations have a patented
parent). In addition, certain continuing applications, particularly
divisional and continuation-in-part applications, might present
different claimed inventions or more complex issues than a non-
continuing application. Examiners are provided the same amount of time
to examine a continuing application as a non-continuing application;
equal time equates to equal cost to the agency.
Moreover, continuing applications filed long after their earliest
benefit date (EBD) are less likely to have a patent term long enough
for the USPTO to recover more of their costs from maintenance fees. The
EBD is a term used in this rulemaking (the NPRM and this final rule) to
refer to the earliest filing date for which benefit is claimed under 35
U.S.C. 120, 121, 365(c), or 386(c) and Sec. 1.78(d). The EBD is
determined on an application-by-application basis. The EBD cannot be
the filing date of a foreign application or the filing date of a
provisional application to which benefit is claimed under 35 U.S.C.
119(e). When the later-filed application is a utility or plant patent
application, the EBD is also the date from which the 20-year patent
term is calculated under 35 U.S.C. 154(a)(2). The EBD is also known as
the patent term filing date. For more information about benefit claims,
see Manual of Patent Examining Procedure (MPEP) (9th ed., Rev. 01.2024,
November 2024) 210 and 211 et seq.; for more information about the
patent term filing date, see MPEP 804, subsection I.B.1(a); and for
more information about patent term, see MPEP 2701. The MPEP may be
viewed on or downloaded from the USPTO website at <a href="https://www.uspto.gov/MPEP">https://www.uspto.gov/MPEP</a> or <a href="https://mpep.uspto.gov">https://mpep.uspto.gov</a>.
Figure 1 depicts the estimated patent terms for a hypothetical
patent family containing five applications that are filed at different
times after their EBD: Parent A filed at 0 years, Child B filed at 2.5
years after the EBD, Child C filed at 5 years after the EBD, Child D
filed at 7.5 years after the EBD, and Child E filed at 10 years after
the EBD. Each application claims the benefit of every prior-filed
application in the family under 35 U.S.C. 120, e.g., Child C is a
continuation of Child B, which is a continuation of Parent A. The
pendency of each application is shown as a white bar with a dotted
outline, and the term of each patent is shown as a shaded gray bar. For
the sake of simplicity, the terms are estimated based on a 30-month
pendency and assume that no patent term adjustments, patent term
extensions, or terminal disclaimers apply. Key dates for each patent
are indicated by labeled ovals (e.g., ``I'' for the issue date, and
``M1,'' ``M2,'' or ``M3'' for the maintenance fee due dates, which for
purposes of this illustration are shown as inclusive of the 35 U.S.C.
41(b)(2) grace periods).
[GRAPHIC] [TIFF OMITTED] TR20NO24.004

[[Page 91910]]

As shown in figure 1, Parent A is filed on the EBD, Child B is
filed 2.5 years after the EBD, and Child C is filed 5 years after the
EBD. All three of these applications will have a patent term long
enough to require payment of all three maintenance fees to avoid
expiration prior to the maximum statutory term. Child D and Child E,
however, will not. Child D, filed 7.5 years after the EBD, will not
have a term long enough to require payment of the third maintenance fee
to avoid expiration prior to the maximum statutory term, and Child E,
filed 10 years after the EBD, will not have a term long enough to
require payment of the second or third maintenance fee to avoid
expiration prior to the maximum statutory term.
While not all patentees choose to maintain their patents for their
full term, the USPTO's ability to subsidize front-end fees is dependent
on a sufficient number of patentees paying maintenance fees so that the
aggregate revenue generated by patent fees will cover the aggregate
costs of patent operations. As the volume of applications with terms
that are not long enough to require one or more maintenance fees
increases, the risk that the agency will not generate sufficient
aggregate revenue also increases. Instituting fees for certain
continuing applications based on the EBD will make the USPTO's funding
model more resilient to changes in filing behaviors that impact the
average term of issued patents and the resulting impact on maintenance
fee payments.
In May 2023, the agency originally proposed that new fees would
apply to nonprovisional applications that have an actual filing date
more than three or more than seven years later than their EBD. In
response to feedback from PPAC, the USPTO adjusted the thresholds in
the NPRM and proposed that the new fees would apply to nonprovisional
applications that have an actual filing date more than five or more
than eight years later than their EBD. During the public comment period
following the NPRM, the USPTO received a number of comments expressing
concerns that the adjusted thresholds were still too early in time.
After weighing the public feedback and considering the effects on the
patent system as a whole, the USPTO has adjusted the timing thresholds
for the continuing application fees as detailed below.
As set forth in this final rule, the new fees in Sec. 1.17(w)
apply to nonprovisional applications that have an actual filing date
more than six years after their EBD. The Sec. 1.17(w)(1) fee applies
when the later-filed application's EBD is more than six and no more
than nine years earlier than its actual filing date and is $2,700 for
undiscounted applications, $1,080 for applications receiving a small
entity discount, and $540 for applications receiving a micro entity
discount. For the hypothetical patent family shown in figure 1, Child D
would incur the Sec. 1.17(w)(1) fee because it was filed 7.5 years
after its EBD. The Sec. 1.17(w)(2) fee applies when the later-filed
application's EBD is more than nine years earlier than its actual
filing date and is $4,000 for undiscounted applications, $1,600 for
applications receiving a small entity discount, and $800 for
applications receiving a micro entity discount. For the hypothetical
patent family shown in figure 1, Child E would incur the Sec.
1.17(w)(2) fee because it was filed 10 years after its EBD.
The new fees in Sec. 1.17(w) will partially offset foregone
maintenance fee revenue resulting from later-filed continuing
applications and, therefore, recover more costs related to continuing
applications filed long after their EBD directly from filers of such
applications. As noted previously, the Sec. 1.17(w) fees are designed
so that continuing applications filed six or fewer years after their
EBD will continue to receive a front-end fee subsidy that is equal to
that received by non-continuing applications. Thus, low barriers to
entry into the patent system are preserved for non-continuing
applications and for approximately 80.3% of continuing applications.
For those continuing applications filed more than six years after their
EBD, the Sec. 1.17(w) fee will essentially reduce the amount of the
front-end fee subsidy in recognition that such applications are less
likely to have a patent term long enough for the USPTO to recover the
costs of their search and examination from maintenance fees. The Sec.
1.17(w) fees are set at a rate that is both less than the front-end fee
subsidy and substantially less than the third maintenance fee amount.
For example, for the hypothetical patent family shown in figure 1,
under the undiscounted fee rates as adjusted by this final rule, Child
D would pay the undiscounted Sec. 1.17(w)(1) fee of $2,700 and would
not have a term long enough to require payment of the third maintenance
fee ($8,280) to avoid expiration prior to the maximum statutory term.
Child E would pay the undiscounted Sec. 1.17(w)(2) fee of $4,000 and
would not have a term long enough to require payment of the second
($4,040) or third ($8,280) maintenance fee to avoid expiration prior to
the maximum statutory term. Therefore, the Sec. 1.17(w)(1) fees will
help offset a front-end subsidy of approximately $4,165 (with front-end
fees adjusted to a combined $2,000 in this final rule and combined FY
2023 unit costs of $6,165 for filing, search, and examination
activities). If these applications paid discounted fees, the difference
would be even greater. For example, if Child D received small entity
fee discounts, the Sec. 1.17(w)(1) fee would be $1,080, partially
offsetting a front-end subsidy of approximately $5,435 and less than
the third maintenance fee of $3,312.
If future workloads for continuing applications were to remain
consistent with FY 2022 data, about 80.3% of continuing applications
would not incur the new fees because they are filed within six years of
their EBD, while the remaining 19.7% of continuing applications (about
6.5% of all applications) would incur a continuing application fee. In
particular, as shown in table 5, about 11.4% of continuing applications
are filed more than six but not more than nine years after their EBD
and would incur the Sec. 1.17(w)(1) fee, and an additional 8.3% of
continuing applications are filed more than nine years after their EBD
and would incur the Sec. 1.17(w)(2) fee. The table includes columns
for ranges of years from the EBD to the filing date, the share of
continuing applications in each range, and the applicability of the
Sec. 1.17(w) fees.

[[Page 91911]]

[GRAPHIC] [TIFF OMITTED] TR20NO24.005

Figure 2 illustrates the same data, with the addition of noting
when the Sec. 1.17(w) fees are incurred. The x-axis represents the
years from the EBD to the filing date, and the y-axis shows the total
share of continuing applications. Each vertical bar in figure 2
corresponds to a row in table 5. The leftmost two vertical bars labeled
``0 to 3'' and ``>3 to 6'' represent the approximate 80.3% share of
continuing applications will not incur the new fees, the vertical bar
labeled ``>6 to 9'' represents the 11.4% share of continuing
applications that will incur the Sec. 1.17(w)(1) fee, and the
rightmost three vertical bars inside the dashed box represent the 8.3%
share of continuing applications that will incur the Sec. 1.17(w)(2)
fee.
[GRAPHIC] [TIFF OMITTED] TR20NO24.006

For an application filed on or after the effective date of this
final rule, payment of the Sec. 1.17(w) fees is required at the time a
prompting benefit claim (i.e., a benefit claim that causes the EBD of
the later-filed application to be more than six or nine years earlier
than its actual filing date) is presented in the later-filed
application. If the prompting benefit claim is presented at the time of
filing the later-filed application, the applicable Sec. 1.17(w) fee
will be due at filing. If the prompting benefit claim is presented at a
later time, the applicable Sec. 1.17(w) fee will be due concurrently
with the presentation of the prompting benefit claim. If the later
presentation of the prompting benefit claim is by way of a petition for
acceptance of an unintentionally delayed benefit claim under Sec.
1.78(e), the applicable Sec. 1.17(w) fee will be due in addition to
the petition fee under Sec. 1.17(m).
Because the fees in Sec. 1.17(w) are based on the application's
EBD, presenting multiple benefit claims at the same time will not incur
multiple fees. However, if benefit claims are presented at multiple
times during an application's pendency, a second fee

[[Page 91912]]

may be due if the later-presented benefit claim changes the
application's EBD to be more than nine years earlier than the actual
filing date. In this situation, the amount due under Sec. 1.17(w)(2)
for the later presentation will reflect any prior payment under Sec.
1.17(w)(1) for the earlier presentation. For instance, if the fee under
Sec. 1.17(w)(1) was paid at the time of filing and a prompting benefit
claim requiring payment of the Sec. 1.17(w)(2) fee is presented at a
later time, the additional amount owed is the difference between the
current fee amount stated in Sec. 1.17(w)(2) and the amount of the
previous payment under Sec. 1.17(w)(1).
An application that is pending prior to the effective date of this
final rule will not incur a fee under Sec. 1.17(w) based on any
benefit claims that were properly presented prior to the effective
date. If a benefit claim is presented in the application on or after
the effective date of this final rule, however, the application will
incur a fee under Sec. 1.17(w) if the actual filing date of the
application is more than six or nine years later than its EBD.
The following examples are not exhaustive but illustrate the most
common situations anticipated to require payment of the new fees under
Sec. 1.17(w). For purposes of these examples, the agency assumes that
all requirements for claiming benefit under 35 U.S.C. 119, 120, 121,
365(c), or 386(c) and Sec. 1.78 are satisfied, and that all fees are
paid at the undiscounted rates.

Example 1: Claiming benefit of a nonprovisional application
under 35 U.S.C. 120. Application A is a nonprovisional application
filed on July 1, 2026. The Application Data Sheet (ADS) present upon
A's filing contains a benefit claim under 35 U.S.C. 120 to
nonprovisional application N filed on March 2, 2020, which is the
only benefit claim in the application. A's EBD is March 2, 2020,
which is more than six but not more than nine years earlier than A's
actual filing date of July 1, 2026. In this example, the Sec.
1.17(w)(1) fee of $2,700 is due upon A's filing.
Example 2: Claiming benefit of a provisional application under
35 U.S.C. 119(e). Application B is a nonprovisional application
filed on July 1, 2026. The ADS present upon B's filing contains a
benefit claim under 35 U.S.C. 120 to nonprovisional application O
filed on February 2, 2021, and a benefit claim under 35 U.S.C.
119(e) to provisional application P filed on March 3, 2020. The
USPTO's records indicate that O also contains a benefit claim under
35 U.S.C. 119(e) to provisional application P. In this situation,
P's filing date is not the EBD, because Sec. 1.17(w) does not
encompass benefit claims under 35 U.S.C. 119(e). Instead, B's EBD is
February 2, 2021, which is less than six years earlier than B's
actual filing date of July 1, 2026. In this example, no fee would be
due under Sec. 1.17(w).
Example 3: Claiming benefit of a provisional application under
35 U.S.C. 120. Application C is a nonprovisional application filed
on July 1, 2026. The ADS present upon C's filing contains a benefit
claim under 35 U.S.C. 120 to nonprovisional application O filed on
February 2, 2021, and a benefit claim under 35 U.S.C. 120 to
provisional application P filed on March 3, 2020. The USPTO's
records indicate that O also contains a benefit claim under 35
U.S.C. 120 to provisional application P. In this situation, P's
filing date is the EBD, because Sec. 1.17(w) encompasses benefit
claims under 35 U.S.C. 120. C's EBD is March 3, 2020, which is more
than six but not more than nine years earlier than C's actual filing
date of July 1, 2026. In this example, the Sec. 1.17(w)(1) fee of
$2,700 is due upon C's filing. Note, it is not recommended that
applicants claim the benefit to a provisional application under 35
U.S.C. 120 since such a claim could have the effect of reducing the
patent term. See MPEP 211.02, subsection III.
Example 4: Claiming priority to a foreign application under 35
U.S.C. 119(a). Application D is a nonprovisional application filed
on July 1, 2026. The ADS present upon D's filing contains a benefit
claim under 35 U.S.C. 120 to nonprovisional application O filed on
February 2, 2021, and a priority claim under 35 U.S.C. 119(a) to
foreign application Q filed on March 3, 2020. The USPTO's records
indicate that O also contains a priority claim under 35 U.S.C.
119(a) to foreign application Q. In this situation, Q's filing date
is not the EBD, because Sec. 1.17(w) does not encompass priority
claims to foreign applications under 35 U.S.C. 119. Instead, D's EBD
is February 2, 2021, which is less than six years earlier than D's
actual filing date of July 1, 2026. In this example, no fee would be
due under Sec. 1.17(w).
Example 5: National stage of an international application
claiming priority to a foreign application under 35 U.S.C. 119(a)
and 365(b). Application E is an international application filed
under the Patent Cooperation Treaty (PCT) on July 1, 2026. The PCT
Request form present upon E's filing contains a priority claim under
35 U.S.C. 119(a) and 365(b) to foreign application R filed on July
7, 2025. When the national stage of E is commenced in the United
States under 35 U.S.C. 371, the USPTO will determine the EBD of the
national stage application to evaluate whether any continuing
application fees are due. In this situation, R's filing date is not
the EBD, because Sec. 1.17(w) does not encompass priority claims to
foreign applications. Instead, E's EBD is July 1, 2026, which is the
same as its actual filing date. In this example, no fee would be due
under Sec. 1.17(w).
Example 6: National stage of an international application
claiming benefit of a nonprovisional application under 35 U.S.C. 120
and 365(c). Application F is an international application
designating the United States that is filed under the PCT on July 1,
2026. The PCT request form present upon F's filing contains a
benefit claim under 35 U.S.C. 120 and 365(c) to nonprovisional
application N filed on March 2, 2020. When the national stage of F
is commenced in the United States under 35 U.S.C. 371, the USPTO
will determine the EBD of the national stage application to evaluate
whether any continuing application fees are due. In this situation,
N's filing date of March 2, 2020, is the EBD, because Sec. 1.17(w)
encompasses benefit claims under 35 U.S.C. 120 and 365(c). Thus, F's
EBD is March 2, 2020, which is more than six years, and no more than
nine years, earlier than F's actual filing date of July 1, 2026. In
this example, the Sec. 1.17(w)(1) fee of $2,700 is due when F
commences the U.S. national stage under 35 U.S.C. 371.
Example 7: Bypass continuation of an international application
claiming benefit of a nonprovisional application under 35 U.S.C. 120
and 365(c). Application G is a nonprovisional application filed on
December 28, 2028. The ADS present upon G's filing contains benefit
claims under 35 U.S.C. 120 and 365(c) to international application F
filed on July 1, 2026, and nonprovisional application N filed on
March 2, 2020. As noted in Example 6, supra, F also contains a
benefit claim under 35 U.S.C. 120 and 365(c) to N. In this
situation, N's filing date of March 2, 2020, is the EBD because
Sec. 1.17(w) encompasses benefit claims under 35 U.S.C. 120 and
365(c). Thus, G's EBD is March 2, 2020, which is more than six but
not more than nine years earlier than G's actual filing date of
December 28, 2028. In this example, the Sec. 1.17(w)(1) fee of
$2,700 is due upon G's filing.
Example 8: International design application claiming benefit of
a nonprovisional application under 35 U.S.C. 120. Application H is
an international design application designating the United States
that is filed under the Hague Agreement Concerning the International
Registration of Industrial Designs, July 2, 1999 (``Hague
Agreement''), on July 1, 2026. The DM/1 form titled ``Application
for International Registration'' present upon H's filing does not
contain any priority or benefit claims. Thus, at the time of H's
filing, H's EBD is the same as its actual filing date, and no fee
would be due under Sec. 1.17(w). Shortly after the international
registration is published by the International Bureau and a U.S.
application number (35/series) is established, the applicant files a
corrected ADS containing a benefit claim under 35 U.S.C. 120 to
nonprovisional application N filed on March 2, 2020. Because this
newly added benefit claim causes H's EBD to become March 2, 2020,
which is more than six but not more than nine years earlier than H's
actual filing date of July 1, 2026, the Sec. 1.17(w)(1) fee of
$2,700 is due upon filing of the corrected ADS.
Example 9: Adding timely benefit claims under 35 U.S.C. 120
after filing; single fee due. Application I is a nonprovisional
application filed on July 3, 2028. The ADS present upon I's filing
does not contain any benefit claims, and thus no fee would be due
under Sec. 1.17(w) upon I's filing. Two months after I's filing,
the applicant files a second ADS containing a benefit claim under 35
U.S.C. 120 to nonprovisional application O filed on February 2,
2021. Because this newly added benefit claim causes I's EBD to
become February 2, 2021, which is more than six but

[[Page 91913]]

not more than nine years earlier than I's actual filing date of July
3, 2028, the Sec. 1.17(w)(1) fee of $2,700 is due upon filing of
the second ADS. The applicant pays the fee. One month later (three
months after I's filing), the applicant files a third ADS containing
the previously added benefit claim to O and a new benefit claim
under 35 U.S.C. 120 to nonprovisional application N filed on March
2, 2020. This newly added benefit claim causes I's EBD to become
March 2, 2020, which is more than six but not more than nine years
earlier than I's actual filing date of July 3, 2028. However,
because the applicant already paid the Sec. 1.17(w)(1) fee, no
additional fee is due upon filing of the third ADS.
Example 10: Adding timely benefit claims under 35 U.S.C. 120
after filing; multiple fees due. Application J is a nonprovisional
application filed on July 5, 2029. The ADS present upon J's filing
contains a benefit claim under 35 U.S.C. 120 to nonprovisional
application O filed on February 2, 2021, which is the only benefit
claim in the application. J's EBD is February 2, 2021, which is more
than six but not more than nine years, earlier than J's actual
filing date of July 5, 2029. In this example, the Sec. 1.17(w)(1)
fee of $2,700 is due upon J's filing. The applicant pays the fee.
Two months after I's filing, the applicant files a second ADS
containing the previously added benefit claim to O and a new benefit
claim under 35 U.S.C. 120 to nonprovisional application N filed on
March 2, 2020. This newly added benefit claim causes J's EBD to
become March 2, 2020, which is more than nine years earlier than I's
actual filing date of July 5, 2029, and thus prompts the fee in
Sec. 1.17(w)(2). Because the fee in Sec. 1.17(w)(1) was previously
paid, the previous payment is subtracted from the amount now due
under Sec. 1.17(w)(2). Accordingly, the amount due upon filing of
the second ADS is $1,300 (the current fee amount of $4,000 set forth
in Sec. 1.17(w)(2) less the $2,700 previously paid under Sec.
1.17(w)(1)).
Example 11: Adding delayed benefit claim under 35 U.S.C. 120.
Application K is a nonprovisional application filed on July 5, 2029.
The ADS present upon K's filing does not contain any benefit claims.
Eighteen months after K's filing, the applicant files a second ADS
containing a benefit claim under 35 U.S.C. 120 to nonprovisional
application N filed on March 2, 2020. Because this newly added
benefit claim causes K's EBD to become March 2, 2020, which is more
than nine years earlier than K's actual filing date of July 5, 2029,
the Sec. 1.17(w)(2) fee of $4,000 is due upon filing of the second
ADS. In addition, because this benefit claim is delayed (not
submitted within the required time period in Sec. 1.78(d)), a
petition for acceptance of an unintentionally delayed benefit claim
under Sec. 1.78(e) and the petition fee under Sec. 1.17(m) are
also required.
Example 12: Adding timely benefit claim under 35 U.S.C. 120 in
an application that predates the effective date of the final rule;
Sec. 1.17(w)(1) fee due. Application L is a nonprovisional
application filed on January 2, 2025, which is prior to the
effective date of this final rule. The ADS present upon L's filing
contains a benefit claim under 35 U.S.C. 120 to nonprovisional
application S filed on February 5, 2018, which is the only benefit
claim in the application. L's EBD is February 5, 2018, which is more
than six but not more than nine years earlier than L's actual filing
date of January 2, 2025. Because L was filed prior to the effective
date of this final rule, no fee under Sec. 1.17(w)(1) was due upon
L's filing or upon the effective date of the final rule. Two months
after L's filing and after the effective date of this final rule,
the applicant files a second ADS containing a benefit claim under 35
U.S.C. 120 to nonprovisional application O filed on February 2,
2021. While the newly added benefit claim does not change L's EBD,
its presentation in an application having an EBD more than six but
not more than nine years earlier than its actual filing date prompts
the fee in Sec. 1.17(w)(1). Accordingly, the Sec. 1.17(w)(1) fee
of $2,700 is due upon filing of the second ADS.
Example 13: Adding timely benefit claim under 35 U.S.C. 120 in
an application that predates the effective date of the final rule;
Sec. 1.17(w)(2) fee due. Application M is a nonprovisional
application filed on January 2, 2025, which is prior to the
effective date of this final rule. The ADS present upon M's filing
contains a benefit claim under 35 U.S.C. 120 to nonprovisional
application S filed on February 5, 2018, which is the only benefit
claim in the application. M's EBD is February 5, 2018, which is more
than six but not more than nine years earlier than M's actual filing
date of January 2, 2025. Because M was filed prior to the effective
date of this final rule, no fee under Sec. 1.17(w)(1) was due upon
M's filing or upon the effective date of the final rule. Two months
after M's filing and after the effective date of this final rule,
the applicant files a second ADS containing a benefit claim under 35
U.S.C. 120 to nonprovisional application T filed on March 6, 2015.
This newly added benefit claim causes M's EBD to become March 6,
2015, which is more than nine years earlier than M's actual filing
date of January 2, 2025, and thus prompts the fee in Sec.
1.17(w)(2). Accordingly, the Sec. 1.17(w)(2) fee of $4,000 is due
upon filing of the second ADS.

The USPTO does not believe these new fees will disproportionately
impact small or micro entities. Based on FY 2022 data, of the
applications that had an EDB more than six years before the actual
filing date, about 70% were undiscounted, about 29% received a small
entity discount, and about 1% received a micro entity discount. The
USPTO also anticipates that these fees will be relatively technology
neutral. Technology Center (TC) 3700 receives a much higher proportion
of late-filed continuing applications than other areas, but this TC
covers diverse subject matter and many technologies, including
mechanical engineering, manufacturing, gaming, and medical devices and
processes.
3. Design Application Fees
BILLING CODE 3510-16-P

[[Page 91914]]

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[[Page 91915]]

[GRAPHIC] [TIFF OMITTED] TR20NO24.008

BILLING CODE 3510-16-C
The patent fee structure is designed to encourage innovation by
maintaining low barriers to entry into the patent system. The USPTO
accomplishes this goal by keeping initial filing fees for utility,
plant, and design applications below the agency's costs for
preexamination, search, and examination, and by reducing most patent
fees by 60% for small entities and by 80% for micro entities. See Part
II: Background, supra. The USPTO recovers the remaining costs of
performing the work from other fees, particularly issue fees and
maintenance fee payments made after issuance of a utility patent. See
e.g., the FY 2023 Agency Financial Report at 63-64, available on the
USPTO website at <a href="https://www.uspto.gov/AnnualReport">https://www.uspto.gov/AnnualReport</a>. Although the USPTO
is not permitted to establish maintenance fees for design or plant
patents (see 35 U.S.C. 41(b)(3)), the maintenance fees it collects from
utility patentees represented 54.9% of patent revenue in FY 2023. This
revenue is vital to providing the necessary aggregate revenue to
recover the aggregate costs of patent operations.
Currently, the undiscounted design fees ($1,760 total for filing,
search, examination, and issue fees) are set well below the cost of
their associated services for both new design applications ($2,252 cost
in FY 2023) and continued prosecution applications (CPAs) ($2,947 cost
in FY 2023). The discounted design fees are significantly lower ($704
total for a small entity, and $352 total for a micro entity), even
though the costs are the same. More than half of design applicants pay
discounted fees; for example, of the design applications filed in FY
2023, 26% paid the micro entity fee amount, 37% paid the small entity
fee amount, and only 37% paid the undiscounted fee amount.
As a result of design fees being set below cost and the heavy use
of entity fee discounts by design applicants, the USPTO's collections
from design fees are significantly below design costs. In FY 2023, the
USPTO's collections from design fees averaged only $1,013 per
application. This resulted in a shortfall of $1,239 per design
application, which represented 55% of the cost. In other words, design
applicants, on an aggregate basis, paid for only 45% of design costs.
Because USPTO operations are financed solely by user fees, the agency
must make up the shortfall in the design area through fees set in other
patent areas. While the USPTO has

[[Page 91916]]

raised design fees twice in the last 10 years, those increases were not
large enough to eliminate the shortfall over the long term. Thus,
design costs continue to be subsidized by other fees, primarily utility
patent maintenance fees.
This subsidy has grown in recent years, as shown in figure 3. The
graph depicts average fee collections per design application (average
collections) in dark gray, and the average shortfall or subsidy per
design application (average subsidy) in light gray. The average subsidy
per design application in FY 2022 was $1,108 and in FY 2023 was $1,239.
Table 7 below figure 3 provides the actual dollar amounts for each data
point (unit cost, average collections, and average subsidy) shown in
figure 3 and also includes the subsidy as a percentage of unit cost for
each fiscal year.
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[[Page 91917]]

Historically, this difference between design fees and design costs
did not result in a significant subsidy because the annual volume of
design applications was much lower than the annual volume of issued
utility patents. Since 2014, however, the number of design applications
has surged 50% (from 36,254 in FY 2014 to 53,665 in FY 2023), while the
number of issued utility patents (and thus, the volume of potential
future maintenance fees) has increased only 2% (from 303,930 in FY 2014
to 310,245 in FY 2023). See e.g., FY 2023 Workload Table 1, available
on the USPTO website at <a href="https://www.uspto.gov/AnnualReport">https://www.uspto.gov/AnnualReport</a>.
Furthermore, most of the growth in design application filings is
attributable to applications in which discounted fees are paid. From FY
2014 to FY 2023, the number of undiscounted design applications
(including CPAs) filed increased 12%, but the number of small entity
applications increased 31%, and the number of micro entity applications
increased 306%. As a result, the entity spread for design applications
changed dramatically. For example, in FY 2014, the entity spread for
design applications was 50% undiscounted, 40% small entity, and 10%
micro entity; during FY 2023, the entity spread for design applications
was 37% undiscounted, 37% small entity, and 26% micro entity. In
contrast, the entity spread in utility application filings has remained
the same from FY 2014 to FY 2023, at about 72% undiscounted, 24% small
entity, and 4% micro entity.
Moreover, because design fee payors do not bear the full costs of
design services, the current imbalance between fees and costs in the
design patent area could lead to overuse of discounted services. See
e.g., ``Federal User Fees: A Design Guide,'' Report No. GAO-08-386SP
(May 2008), available at <a href="https://www.gao.gov/products/gao-08-386sp">https://www.gao.gov/products/gao-08-386sp</a>, and
the ``Patent and Trademark Office: New User Fee Design Presents
Opportunities to Build on Transparency and Communication Success,''
Report No. GAO-12-514R (April 2012), available at <a href="https://www.gao.gov/products/gao-12-514r">https://www.gao.gov/products/gao-12-514r</a>.
The USPTO is increasing the fees for design patent applications to
account for inflationary cost increases and recover a larger portion of
design costs from design applicants. The design fee increases will
affect national design application filings including CPAs, and
international design application filings that designate the United
States under the Geneva Act of the Hague Agreement.
As shown in the fee table above, the combined total of filing fees
in Sec. 1.16(b), search fees in Sec. 1.16(l), examination fees in
Sec. 1.16(p), and issue fees in Sec. 1.18(b)(1) for a design
application or CPA that proceeds to issuance is increasing from $1,760
to $2,600 for undiscounted applications, from $704 to $1,040 for
applications receiving a small entity discount, and from $352 to $520
for applications receiving a micro entity discount. The reissue fees
under Sec. 1.16(e), 16(n), and 16(r) are part of the across-the-board
adjustment and not included in this targeted adjustment.
Note that under the Hague Agreement and its implementing
regulations in the United States, including Sec. 1.1031, the required
fees (known as designation fees) for international design application
filings that designate the United States are set by reference to the
national fees. Thus, the first part of the designation fee corresponds
to the sum of the filing fee, search fee, and examination fee, and the
second part of the designation fee corresponds to the issue fee. See
MPEP 2910 for more information about international design application
fees. The transmittal fee for international design applications filed
in the USPTO as an office of indirect filing under Sec. 1.1031(a) is
part of the across-the-board adjustment and not included in this
targeted adjustment.
The increased design fees for an undiscounted applicant ($2,600 in
combined filing, search, examination, and issue fees) are now in
between the cost of new design applications and CPA design
applications, while the fees for discounted entities ($1,040 for a
small entity and $520 for a micro entity) remain far below cost.
Despite these increases, the adjusted fees will not achieve full
recovery of design costs. On an individual basis, the adjusted fees,
including the issue fee, will recover the cost of examining and issuing
a design application if the applicant pays the undiscounted rate and
does not file a CPA. Because most design applications qualify for
discounted fees, design fee collections will not fully recover design
costs on an aggregate basis. For example, if the application filing
volume, entity spread, and cost remain the same as in FY 2023, the
increased fees would result in design fee collections averaging $1,462
per application, thus reducing the shortfall to about $790 per
application, which is about 35% of the cost. The final rule thus
improves cost recovery from design applicants, who will now on an
aggregate basis pay for about 65% of design costs as compared to the
45% they paid in FY 2023.
These design fees maintain a low barrier to entry into the patent
system while increasing revenue to recover more design costs from
design applicants. The USPTO has accomplished these goals by balancing
relatively low front-end fees against the higher design issue fee and
the reduced, but still large, subsidy from utility maintenance fees.
While front-end fees are set below cost for all entities, both the
design issue fee and utility maintenance fees are set above their unit
cost for undiscounted entities. For example, the design issue cost is
$539, and the design issue fee is $1,300 for an undiscounted entity,
$520 for a small entity, and $260 for a micro entity. As of June 2024,
the undiscounted issue fee of $1,300 was 6% lower than the inflation-
adjusted 2013 issue fee would be. As a result of this balancing, the
USPTO has managed to keep the front-end fees only $5 to $10 higher than
they were set in 2020 for the majority of design applicants. When the
issue fee is included, the total fees paid by discounted entities are
still 13% less than inflation-adjusted 2013 fees would be. See CPI
Inflation Calculator, U.S. Bureau of Labor Statistics, <a href="https://www.bls.gov/data/inflation_calculator.htm">https://www.bls.gov/data/inflation_calculator.htm</a> (comparing March 2013 to June
2024 to calculate buying power).
The USPTO believes these fee adjustments appropriately balance
encouraging innovation and recovering costs. For example, based on the
FY 2023 unit cost and assuming that filing volume and entity spread
remain stable, recovering the full cost of design services from design
applicants would require total fees of about $4,000 for undiscounted
applications. Abruptly raising fees to these levels could discourage
innovation, so the USPTO is implementing a more moderate increase to
$2,600 for undiscounted applications. After considering all relevant
factors, the agency believes the adjusted design fees strike a balance
that encourages innovation while bringing in increased revenue to
recover more design costs.
The USPTO is conscious that fee increases affect resource-
constrained applicants. The agency will continue to offer the 60%
discount for small entities and the 80% discount for micro entities,
which reduces the impact of the fee increases on these entities. For
example, when these discounts are taken into account, the total fees
paid by discounted entities through issuance of a design application
represent less than half of the USPTO's costs (small entities pay 46%
of new design application costs and 35% of CPA costs, and micro
entities pay 23% of new design application costs and 18% of CPA costs).
4. Excess Claims Fees
BILLING CODE 3510-16-P

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BILLING CODE 3510-16-C
The USPTO charges a fee for filing, or later presenting at any
other time, each independent claim in excess of three (referred to as
an excess independent claim), as well as each claim (whether dependent
or independent) in excess of 20 (referred to as an excess total claim).
These thresholds for excess independent claims and excess total claims
(collectively, ``excess claims'') are set in 35 U.S.C. 41(a)(2).
In this final rule, the USPTO is increasing the fee for each excess
independent claim in an application (Sec. 1.16(h)), reissue
application (Sec. 1.16(h)), reexamination proceeding (Sec.
1.20(c)(3)), or national stage application (Sec. 1.492(d)) to $600 for
undiscounted entities. The USPTO is also increasing the fee for each
excess total claim in an application (Sec. 1.16(i)), a reissue
application (Sec. 1.16(i)), reexamination proceeding (Sec.
1.20(c)(4)), or national stage application (Sec. 1.492(e)) to $200 for
undiscounted entities. The Sec. 1.16(j) and Sec. 1.492(f) multiple
dependent claim fees are part of the across-the-board adjustment and
not included in this targeted adjustment.
These changes will provide the agency with more revenue to help
recover the additional search and examination costs associated with
excess claims, as well as prosecution costs not covered by front-end
fees. The USPTO notes that excess claiming can be a significant burden
to the patent system and the agency. The number of claims impacts the
complexity of examination and increases the demands placed on the
examiner. For example, if each independent claim in an application
requires a completely separate prior art patentability determination
and an application contains six independent claims, the examiner must
conduct six completely separate prior art patentability

[[Page 91920]]

determinations. Excess dependent claims also represent additional work,
because a dependent claim may be allowable over the prior art even if
the claim from which it depends is not. Dependent claims also require
separate patentability determinations for non-prior-art issues such as
enablement, subject matter eligibility, utility, and written
description. Thus, applicants who include excess claims are using the
patent system more extensively than those who do not.
Moreover, examination efficiency is promoted when there is a high
frequency of applications with 20 claims or fewer. Thus, these fee
changes will enhance prosecution, because the USPTO believes that
applicants motivated by costs will be incentivized by the fee
adjustments to not file excess claims. The agency has increased excess
claims fees several times during the last 20 years, which has been very
effective at reducing excess claims from their peak in the early 2000s.
For instance, in FY 2023, 83% of applications did not contain any
excess claims, and 17% contained excess total claims, excess
independent claims, or both (10% contained excess total claims only,
3.1% contained excess independent claims only, and 3.5% contained both
excess total claims and excess independent claims). These percentages
are in line with historic values over the last decade.
The excess total claims fees are also designed to ensure that most
applicants presenting excess claims will be able to do so for less than
the cost of filing a second application. The front-end application fees
(including the new continuing application fees discussed earlier) and
excess claims fees are naturally linked and likely to have
counterbalancing effects. For example, an increase in new or continuing
applications could result from raising only excess claims fees, and an
increase in excess claims could result from raising only the front-end
application fees (even in specific, lesser-occurring situations). The
increases in excess claims fees implemented in this final rule are
intended to avert the latter scenario. Without these adjustments, the
agency expects that excess claims numbers would increase in response to
increased front-end fees, including the fees for certain continuing
applications discussed previously.
In FY 2023, 86% of applications contained no excess total claims
and therefore will not be affected by this fee adjustment, 11% paid
excess claims fees but contained 10 or fewer excess claims, and only 3%
contained more than 10 excess claims. For the 11% of applications
containing 10 or fewer excess claims, it would remain either the same
cost or be less expensive to pay the excess total claims fees as
opposed to filing a second application. As an example, for an
undiscounted entity, 10 excess total claims at $200 each would equal
$2,000 in excess total claims fees, which is the same as the combined
filing, search and examination fees for filing an application as
adjusted by this final rule. Moreover, for applications containing from
one to 10 excess claims, the average number of excess claims was 5, so
on average, paying excess total claims fees would be much less
expensive than a second application. As an example, for an undiscounted
entity, 5 excess total claims at $200 each would equal $1,000 in excess
total claims fees.
For the 3% of applications containing more than 10 excess total
claims, the average was 34 excess claims. Thus, for this group of
applications, it would be more expensive to pay the excess total claims
fees as opposed to filing a second application, but this increased
expense reflects that these applications are, on average, presenting
more than the number of claims that would be covered by the fees for
filing a second application. Notably, about one-third of these
applications (10% of all applications containing excess total claims,
or 1% of all applications) contained an average of 59 excess claims,
which is more than would be covered by the fees for filing two
additional applications.
5. Extension of Time for Provisional Application Fees

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[[Page 91922]]

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The USPTO is implementing a standalone extension of time (EOT) fee
structure for provisional applications in which fees will be decreased
from current amounts by an average of 81%. Under EOT practice, if an
applicant is

[[Page 91923]]

required to reply within a nonstatutory or shortened statutory time
period, the applicant may normally petition to extend the time period
for reply with the requisite fee. The time extension may be up to the
earlier of the expiration of any maximum period set by statute or five
months after the time period set for reply if a petition for an EOT
under Sec. 1.136(a), including the EOT fee set in Sec. 1.17(a), is
filed.
Currently, the EOT fees specified in Sec. 1.17(a) apply equally to
both provisional and nonprovisional applications. The USPTO is
implementing an average 81% EOT fee decrease in provisional
applications under a new paragraph (u) of Sec. 1.17 and is
additionally amending Sec. 1.136(a) to refer to EOT fees under both
Sec. 1.17(a) and new Sec. 1.17(u). For patent applications other than
provisional applications, the EOT fees retained under Sec. 1.17(a)
will be increased in accordance with the across-the-board proposal.
With fees reduced by 81% on average, the separate EOT fee structure
for provisional applications will benefit filers in all entity status
categories. The agency envisions that micro entity provisional
application filers will benefit most. As explained in the Director's
April 20, 2023, letter to PPAC:

The USPTO's fee review concluded that applicants who have
certified micro entity status in provisional applications are more
than twice as likely to request EOT as compared to other applicants.
Thus, we are proposing reduced EOT fees for provisional applications
by an average of 81% to reduce financial and entry barriers and
further foster inclusive innovation.

Some micro entity applicants need time extensions to accommodate
attempts to meet additional formality requirements associated with
establishing micro entity status. Another consideration favoring this
change is that provisional applications are not examined; therefore,
there is less urgency to expedite processing.
6. Information Disclosure Statement Size Fees
[GRAPHIC] [TIFF OMITTED] TR20NO24.015

Sections 1.97 and 1.555 provide applicants and patent owners the
opportunity to submit an information disclosure statement (IDS)
containing items of information for consideration by the examiner. To
be considered in a

[[Page 91924]]

patent application, the IDS must meet the timing requirements of Sec.
1.97 and the content requirements of Sec. 1.98. In a reexamination
proceeding, the IDS must meet the content requirements of Sec. 1.98.
There are no specific regulatory limits to the number of items of
information that may be included in an IDS. Most applications contain
relatively few items of information provided by applicants for
consideration. Approximately 87% of applications contain 50 or fewer
applicant-provided items of information, and approximately 77% contain
fewer than 25.
The USPTO receives large IDS submissions that cause the cumulative
number of applicant-provided items of information in an application to
exceed 50 in a small percentage of applications. Based on the agency's
most recent data, in approximately 13% of applications applicants
provide over 50 total items of information. About 5% of applications
contain 51 to 100 applicant-provided items of information, about 4% of
applications contain 101 to 200 applicant-provided items of
information, and only 4% of applications contain more than 200
applicant-provided items of information. In an even smaller subset of
applications, the number of applicant-provided items can be quite
large, sometimes in the thousands or even tens of thousands.
In many instances, these large IDS submissions contain clearly
irrelevant, marginally relevant, or cumulative information. It is
onerous for examiners and hinders the USPTO's statutory obligation to
timely examine applications under 35 U.S.C. 154 to consider large
numbers of clearly irrelevant, marginally relevant, or cumulative
information. Additionally, large IDS submissions are costly for the
agency to consider. Therefore, the USPTO suggests, as a best practice,
that applicants and patent owners avoid filing large IDS submissions by
eliminating clearly irrelevant, marginally relevant, or cumulative
information. See MPEP 2004, item 13. If applicants or patent owners
file a large IDS, the USPTO encourages them to ``highlight those
documents which have been specifically brought to applicant's attention
and/or are known to be of most significance.'' MPEP 2004, item 13.
In 2006, the USPTO attempted to address large IDS submissions by
proposing new requirements, including that IDSs with more than twenty
citations be accompanied by an explanation of relevance. See ``Changes
To Information Disclosure Statement Requirements and Other Related
Matters,'' 71 FR 38808 (July 10, 2006). The proposal was not adopted;
instead, to provide some relief for examiners burdened with large IDS
submissions, the agency began providing examiners additional time to
consider large IDS submissions in applications.
On average, the USPTO provides examiners approximately 80,000
additional hours each year to consider large IDS submissions in
applications, costing the agency $10 million annually. As there is
currently no fee for large IDS submissions, this cost is subsidized
generally by patent fees, primarily maintenance fees collected for
patents that resulted from applications that did not contain large IDS
submissions.
Accordingly, to have applicants and patent owners filing large IDS
submissions cover more of their associated costs, the USPTO is amending
Sec. 1.17 by adding new paragraph (v) to implement a new IDS size fee
based on the cumulative number of items of information provided by an
applicant or patent owner during the pendency of the application or
reexamination proceeding. ``Provided'' in this context refers to items
cited on an IDS under Sec. 1.98(a)(1) by an applicant or patent owner,
whether or not an actual copy of the cited item is submitted by the
applicant or patent owner to the agency.
The IDS size fee sets forth: a first amount ($200) in Sec.
1.17(v)(1) for a cumulative number of applicant-provided or patent
owner-provided items of information in excess of 50; a second amount
($500) in Sec. 1.17(v)(2) for a cumulative number of applicant-
provided or patent-owner-provided items of information in excess of 100
but not exceeding 200, less any amount previously paid under Sec.
1.17(v)(1); and a third amount ($800) in Sec. 1.17(v)(3) for a
cumulative number of applicant-provided or patent owner-provided items
of information in excess of 200, less any amounts previously paid under
Sec. 1.17(v)(1) and/or (v)(2).
Generally, each item provided (listed under Sec. 1.98(a)(1) on an
IDS filed under Sec. 1.97) by an applicant or owner, including each
instance of a particular item, will count toward the cumulative number
of items of information. For example, if the applicant lists a
particular item (e.g., a journal article authored by Marie Curie) twice
on the same IDS, each listing will count. Similarly, if the applicant
lists the same item in multiple IDSs in the same application, each of
those listings will count. However, if a particular item provided by an
applicant or patent owner on an IDS was not considered because the item
was non-compliant and that particular item is provided on an IDS a
second time in the same application or patent, it will not be counted
again. Applicants are reminded that when a U.S. application is listed
on an IDS, the examiner will only consider the specification (including
the claims) and drawings of the application. If the applicant seeks
consideration of documents in the prosecution history of the
application such as particular Office actions, they must list such
documents separately. See MPEP 609.04(a)(I).
The cumulative count is determined for each application or patent
separately. That is, the count from an application does not carry over
to any continuing applications, CPAs, reissue applications, or any
post-issuance proceedings such as supplemental examinations or
reexamination proceedings. Instead, continuing, CPA, and reissue
applications and post-issuance proceedings will start with a count of
zero. Note, however, that a request for continued examination (RCE) is
not the filing of a new application, and thus the count will not reset
when an RCE is filed.
Under current IDS practice, an examiner will consider items of
information that were considered in a parent application when examining
a child application (e.g., a continuation, continuation-in-part, or
divisional application) without any action required on the applicant's
part. See MPEP 609.02 for information about this practice. Examiners
will continue to follow current IDS practice with respect to
considering items of information that were cited in parent
applications. To be clear, an item of information that an applicant
cited in a parent application will not be counted in a child
application for purpose of the IDS size fees unless it is resubmitted,
i.e., provided by the applicant on an IDS in the child application.
Thus, applicants who wish to avoid paying the IDS size fees in a child
application for items of information considered in a parent application
may do so by not resubmitting the items. An item of information must be
resubmitted in the continuing application if the applicant desires the
item of information to be printed on the patent. See MPEP 609.02,
subsection II.A.2.
Additionally, the USPTO is amending Sec. 1.98(a) to include a new
content requirement for an IDS that will facilitate implementation of
the IDS size fee. Specifically, the USPTO is requiring that an IDS
contain a clear written assertion by the applicant and patent owner
that the IDS is accompanied by the appropriate IDS size fee or that no
IDS size fee is required. This assertion is necessary because it
ensures the

[[Page 91925]]

record is clear as to which fee the applicant or patent owner believes
may be due (or that no fee may be due) with the IDS so the examiner can
promptly ascertain whether the IDS is compliant. There is no specific
language required for the written assertion, but it should be readily
identifiable on the IDS and clearly convey the applicable IDS size fee
by specifying the particular paragraph in Sec. 1.17(v) that applies
(e.g., ``the fee due under 1.17(v)(2)''), if any.
The following examples illustrate some common situations
anticipated to arise in connection with payment of the new fees under
Sec. 1.17(v):

Example 1: Single IDS submission with cumulative count less than
fee threshold. If an applicant submits a single IDS during
prosecution with 30 items of information, no IDS size fee would be
due. At the time of submitting the IDS, the applicant certifies that
no IDS size fee is required.
Example 2: Single IDS submission with cumulative count exceeding
fee threshold. If an applicant submits a single IDS during
prosecution with 101 items of information, the $500 fee under Sec.
1.17(v)(2) for exceeding 100 items of information, but not exceeding
200, is due. At the time of submitting the IDS, the applicant must
certify that the Sec. 1.17(v)(2) fee is due and pay the fee.
Example 3: Re-submission of item previously refused
consideration. If an applicant submits a first IDS with 49 items of
information, no IDS size fee would be due. At the time of submitting
the first IDS, the applicant certifies that no IDS size fee is
required. When the examiner evaluates the first IDS, the examiner
discovers that the copy of a particular item (a journal article
authored by Marie Curie) provided by the applicant is blurry and
illegible. Accordingly, the examiner does not consider the Curie
article. Subsequently, in that same application, the applicant files
a second IDS with two items of information, including the same Curie
article previously listed and a newly cited item. Because the Curie
article was previously before the examiner and refused consideration
for being noncompliant, its resubmission in the second IDS is not
counted again. Thus, the cumulative number of items of information
in the application after submission of the second IDS is only 50
(the total of the 49 items from the first IDS and the newly cited
item from the second IDS), and no IDS size fee would be due. At the
time of submitting the second IDS, the applicant certifies that no
IDS size fee is required.
Example 4: Multiple IDS submissions covered by the same fee. If
an applicant files a first IDS with 61 items of information, the
$200 fee under Sec. 1.17(v)(1) for exceeding 50 items of
information, but not exceeding 100, is due. At the time of
submitting the first IDS, the applicant certifies that the Sec.
1.17(v)(1) fee is due and pays the fee. Subsequently, in that same
application, if the applicant files a second IDS with 10 items of
information, the cumulative number of items of information in the
application would be 71. No additional fee would be due, because the
cumulative number of items is still in the range covered by the
Sec. 1.17(v)(1) fee that was previously paid. While the applicant
must still include a certification with the second IDS, the
applicant may certify that no IDS size fee is required with
submission of the second IDS.
Example 5: Multiple IDS submissions requiring additional fees.
If an applicant files a first IDS with 51 items of information, they
would certify that the Sec. 1.17(v)(1) fee for exceeding 50 items
of information, but not exceeding 100, is due and pay the fee of
$200. Subsequently, in that same application, if the applicant files
a second IDS with 50 items of information, the cumulative number of
items of information in the application would be 101. The applicant
would then certify that the Sec. 1.17(v)(2) fee for exceeding 100
items of information, but not exceeding 200, is due, and pay $300
(the $500 fee under Sec. 1.17(v)(2) minus the $200 previously
paid). Further, in that same application, if the applicant files a
third IDS with 100 items of information, the cumulative number of
items of information in the application would be 201. The applicant
would then certify that the Sec. 1.17(v)(3) fee for exceeding 200
items of information is due and pay $300 (the $800 fee under Sec.
1.17(v)(3) minus the $500 previously paid). Thus, in this example,
the applicant would pay a combined IDS size fee of $800 for the
three IDSs filed during the pendency of the application.

With respect to the new content requirement under Sec. 1.98(a),
the agency envisions modifying USPTO Form PTO/SB/08 to include the
requisite written assertion stylized as a set of check boxes
corresponding to each IDS size fee, along with an additional box
indicating that no IDS size fee is due. Since the form must be signed
in accordance with Sec. 1.33(b), certifications under Sec. Sec. 1.4
and 11.18 will apply. Applicants and patent owners are strongly advised
to use the PTO/SB/08 form, but it will not be required. An
authorization to charge fees to a deposit account is not a compliant
written assertion under the new Sec. 1.98(a) requirement, unless the
authorization clearly identifies the particular IDS size fee that
should be charged for submission of a particular IDS. For example,
language such as ``the Director is authorized to charge the Sec.
1.17(v)(2) fee for the IDS submitted on July 1, 2026 to deposit account
XX-XXXXX'' would be a compliant written assertion because reference to
paragraph (v)(2) particularly identifies the IDS size fee due, but
language such as ``the Director is authorized to charge any applicable
IDS size fee to deposit account XX-XXXXX'' would not be a compliant
written assertion because it fails to establish which IDS size fee is
due. General authorizations to charge fees to a deposit account are not
compliant written assertions under the new Sec. 1.98(a) requirement.
See 37 CFR 1.25 and MPEP 509.01 for more information about deposit
account authorization practice.
It is the applicant's and patent owner's responsibility to track
the cumulative number of items of information provided in the
application and provide a written assertion of any applicable IDS size
fee due. In accordance with Sec. 1.97(i), an IDS filed in an
application without the written assertion or the necessary IDS size fee
will be placed in the file but not considered. The applicant may then
file a new IDS accompanied by the written assertion or necessary IDS
size fee, but the date the new IDS is filed will be the date of the IDS
for purposes of determining compliance with Sec. 1.97. See MPEP
609.05(a). An IDS filed in a reexamination proceeding without the
written assertion or the necessary IDS size fee will be placed in the
file and will remain of record, but the IDS will not be considered.
Applicants are reminded that the duty of disclosure under
Sec. Sec. 1.56 and 1.555 only requires the submission of information
material to patentability. Material information is described in
Sec. Sec. 1.56(b) and 1.555(b) as information that is not cumulative
to information already of record and (1) establishes, by itself or in
combination with other information, a prima facie case of
unpatentability of a claim; or (2) refutes or is inconsistent with a
position the applicant takes in opposing an argument of unpatentability
relied on by the USPTO or asserting an argument of patentability. The
United States Court of Appeals for the Federal Circuit uses an even
higher standard for materiality than the Sec. Sec. 1.56(b) and
1.555(b) standards by requiring ``but-for'' materiality, such that the
USPTO would not have allowed a claim had it been aware of the
undisclosed information. Therasense, Inc. v. Becton, Dickinson & Co.,
649 F.3d 1276, 1288, 99 USPQ2d 1065, 1071 (Fed. Cir. 2011) (en banc).
Neither the Sec. Sec. 1.56(b) and 1.555(b) standards nor the Federal
Circuit's ``but-for'' standard require the submission of clearly
irrelevant or marginally relevant information.
By placing more of the cost for considering IDS submissions
totaling over 50 items of information on the applicants who file such
IDS submissions, less cost will be borne across the patent system. To
the extent that the IDS size fees may encourage some applicants to
filter out irrelevant or cumulative information prior to submission,
the examiners of those applications will be able to focus on the more
relevant information and perform a more efficient and effective

[[Page 91926]]

examination, thus benefiting the patent system as a whole.
The USPTO does not believe the IDS size fee will have a large
impact on patent applicants or owners. As stated previously, a majority
of applicants do not provide large amounts of information for
consideration. Based on current IDS filing volume, the vast majority
(approximately 87%) of applications will not be affected by these fees
because they contain 50 or fewer applicant-provided items of
information. Only 13% of applications contain more than 50 applicant-
provided items of information. About 5% of applications contain 51 to
100 applicant-provided items of information and would incur only the
first fee in Sec. 1.17(v)(1), about 4% of applications contain 101 to
200 applicant-provided items of information and would incur the first
and second fees in Sec. 1.17(v)(1) and (v)(2), and only 4% of
applications contain more than 200 applicant-provided items of
information and would incur all three fees in Sec. 1.17(v)(1), (v)(2),
and (v)(3). Additionally, the fee should not disproportionately impact
small and micro entities. During FY 2022, small entities accounted for
only 25% of applications that would incur a fee, while micro entities
made up less than 1%. When compared to all utility application filings
that same year, only 1 in 62 applications filed by micro entities and 1
in 7.5 applications filed by small entities would incur an IDS size
fee.
7. Patent Term Adjustment Fees
The USPTO considered the public feedback on the proposed increase
from $210 to $300 for filing an application for patent term adjustment
under Sec. 1.705(b) and decided not to proceed with this proposal.
Instead, the fee for this service will be increased in accordance with
the across-the-board adjustment applied to most patent fees.
8. Patent Term Extension Fees
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The USPTO is increasing the fees for filing applications for patent
term extensions (PTE) and applications for interim extensions under 35
U.S.C. 156 and implementing a new fee for requesting a supplemental
redetermination of the PTE in a pending PTE application. These changes
adjust the fee rates for inflation, reflect the full cost of these
services, and support the agency's fee setting policy of aligning fees
with the costs of providing the service. The fees for these services
are set forth in Sec. 1.20(j).
The PTE service and fee were introduced in October 1984 as part of
initial operating guidelines established after enactment of the PTE
provisions of 35 U.S.C. 156 in the Drug Price Competition and Patent
Term Restoration Act of 1984 (Pub. L. 98-417, 98 Stat. 1585 (1984))
(Hatch-Waxman Act). See Guidelines for Extension of Patent Term under
35 U.S.C. 156, 1047 Off. Gaz. Pat. Office 16 (Oct. 9, 1984). Patent
term extensions under 35 U.S.C. 156 enable owners of patents claiming
certain products subject to premarket regulatory review to restore to
the terms of those patents some of the time lost while awaiting
premarket approval for the products from a regulatory agency. The
products eligible for PTE services under 35 U.S.C. 156 include human
drug products, medical devices, animal drugs, and food or color
additive products, all of which are regulated by the FDA, and
veterinary biological products, which are regulated by the United
States Department of Agriculture (USDA). See MPEP 2750 for more
information regarding the legislative history and scope of the Hatch-
Waxman Act with respect to PTE.
In accordance with this law and its implementing regulations, the
patent owner must file an application for PTE with the USPTO within a
short time after the product receives permission for commercial
marketing or use from the applicable regulatory agency (i.e., the FDA
or the USDA). See MPEP 2754 et seq. Upon receipt, the USPTO reviews the
application, applicant, patent, and claimed product or process and then
works with the applicable regulatory agency to evaluate compliance with
the statutory requirements for PTE under 35 U.S.C. 156. While it is the
USPTO's responsibility to decide whether an

[[Page 91927]]

applicant has satisfied statutory requirements and whether the patent
qualifies for PTE, the applicable regulatory agency possesses expertise
and records regarding some statutory requirements and has certain
direct responsibilities under 35 U.S.C. 156 for determining length of
the regulatory review period. See MPEP 2756 for a more detailed
explanation of how the USPTO works with these regulatory agencies to
determine a patent's eligibility for PTE under 35 U.S.C. 156. Once the
USPTO has received the necessary information from the regulatory
agency, it determines the applicable PTE (if any) and formulates a
notice of final determination or determination of ineligibility,
reviews any responses or reconsideration requests received from the
patent owner, and prepares a final determination or certificate as
appropriate. See MPEP 2755 through 2759 for an explanation of this
process. Because of the coordination and communication required between
the USPTO and the appropriate regulatory agency and the complexity of
the legal determinations involved, it often takes two or more years to
reach a final determination or determination of ineligibility. The time
required varies greatly depending on the individual circumstances of
each application.
When introduced in 1984, the fee for this service was set at $750
and has since increased to $1,180. See e.g., ``Guidelines for Extension
of Patent Term Under 35 U.S.C. 156,'' 1047 OG 16 (Oct. 9, 1984),
``Rules for Extension of Patent Term,'' 52 FR 9386 (Mar. 24, 1987), and
FY 2020 Final Rule. If the original fee were adjusted for inflation as
measured by the CPI, it would be $2,238 as of June 2024. Moreover, the
complexity and cost of this service has increased over time due to the
subject matter and legal expertise required to evaluate the statutory
requirements. Thus, the USPTO proposed to raise the Sec. 1.20(j)(1)
fee for this service from $1,180 to $6,700.
While the proposed fee was greater than the reported unit cost in
the NPRM ($2,581 for FY 2022), the USPTO did not begin formally
tracking the unit cost of this specific service until midway through FY
2021. Prior to FY 2018, the service volume was quite low at about 42
applications each year. Since then, volume has averaged 100-plus
applications each year. As previously noted, PTE services involve work
that is performed over the course of multiple years, with individual
applications varying widely in terms of their complexity and the length
of time it requires to obtain the necessary information from the PTE
applicant and the appropriate regulatory agency. The USPTO is exploring
how it can improve its expense modeling for these services. For more
information about how the USPTO determines fee unit expenses, see the
document titled, ``USPTO Setting and Adjusting Patent Fees During
Fiscal Year 2025--Activity Based Information and Patent Fee Unit
Expense Methodology,'' available on the fee setting section of the
USPTO website at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.
The USPTO is also implementing a new service fee in Sec.
1.20(j)(4) that applies to the approximately one-third of applications
for PTE in which the user files a response that includes a terminal
disclaimer after receiving the notice of final determination. The
submission of terminal disclaimers at this late stage in the review
process affects the patent term, requiring the USPTO to engage in a
substantial amount of rework to recalculate the applicable PTE and make
a supplemental redetermination of the appropriate extension in view of
the disclaimer. These submissions became more common after the Federal
Circuit's decision in Gilead Sciences, Inc. v. Natco Pharma Ltd., 753
F.3d 1208 (Fed. Cir. 2014), which made it clear that the extended term
of a patent can be affected by a terminal disclaimer filed against a
later-issued but earlier-expiring reference patent.
These late-stage disclaimer submissions are expected to become more
common in the future because of In re Cellect, 81 F.4th 1216 (Fed. Cir.
2023), in which the Federal Circuit explained that patent term
adjustment and PTE are treated differently with respect to nonstatutory
double patenting and terminal disclaimers. Currently, beneficiaries of
this rework receive this additional service for free because the cost
is subsidized by other users (e.g., by unrelated fee collections from
other patent applicants and owners). In accordance with user fee design
principles, the USPTO is implementing a new fee of $1,440 to cover the
costs of this service and to be paid by users who benefit from it.
Because the notice of final determination is mailed at a late stage of
the review process, most PTE service users will have a window of
several years during the review process to submit terminal disclaimers
without incurring this additional fee.
The USPTO is also increasing the Sec. 1.20(j)(2) and (j)(3) fees
for filing applications for interim PTE under Sec. 1.790. This service
and fees were introduced in 1994 in response to an amendment of the
Hatch-Waxman Act that added 35 U.S.C. 156(d)(5). See MPEP 2750 and
Guidelines for Interim Extension Under 35 U.S.C. 156(d)(5) of a Patent
Term Prior To Regulatory Approval of a Product for Commercial Marketing
or Use--Public Law 103-179 (Dec. 3, 1993), 1159 Off. Gaz. Pat. 12 (Feb.
1, 1994). Interim patent extension under 35 U.S.C. 156(d)(5) is
available for a patent claiming a product that is undergoing the
approval phase of regulatory review as defined in 35 U.S.C. 156(g) if
the patent is expected to expire before approval is granted. The
application of an interim patent extension is very similar to an
application for PTE with a similar evaluation process, except the USPTO
is not required to seek the advice of the regulatory agency. See MPEP
2755.02 for more information regarding this service.
The interim extension service has a very low volume of about 20 or
fewer applications each year, but it is costly and requires special
handling due to the subject matter and legal expertise required to
evaluate the statutory requirements. The USPTO is raising the Sec.
1.20(j)(2) fees from $440 to $1,320 for the initial (first) application
for an interim extension of patent term and the Sec. 1.20(j)(3) fees
from $230 to $680 for each subsequent application. This fee increase
will help recover the agency's costs of performing this service. Upon
its introduction in 1994, the fees for this service were set at $400
for an initial application and $200 for subsequent applications, and
they have increased by only $40 and $30, respectively, since. See FY
2020 Final Rule.
No PTE-related fees are eligible for entity discounts in this fee
setting because section 10(b) of the AIA, as amended by the UAIA, only
authorizes discounting six categories of fees (i.e., fees for filing,
searching, examining, issuing, appealing, and maintaining patent
applications and patents). PTE-related fees do not fall into any of the
section 10 categories. Even without discounts, the USPTO expects that
PTE service users will be financially able to pay for the PTE services
they are requesting because the service is limited to certain patents
on human drug products, medical devices, animal drugs, food or color
additive products, and veterinary biological products.
Over the last 40 years, 81% of PTE applications concerned human
drug products, 15% concerned medical devices, 3% concerned animal
drugs, and about 1% concerned food or color additive products or
veterinary biological products. See, e.g., the USPTO website at https:/
/www.uspto.gov/patents/laws/patent-

[[Page 91928]]

term-extension/patent-terms-extended-under-35-usc-156, which provides a
list of patents that have been extended via this service. It costs
companies millions or billions of dollars to research, develop, test,
and obtain regulatory approval for the products and medical devices
that are the subjects of PTE applications. Thus, when compared to
either FDA user fees or the research and development costs required to
develop a new drug and obtain marketing approval, the fees to obtain a
PTE for the patent covering such a new drug are quite small.\1\
9. Request for Continued Examination Fees
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For utility and plant applications where prosecution is closed
(e.g., a final rejection has been mailed), the applicant may file a
request for continued examination (RCE) and pay a specified fee within
the requisite time period. Applicants typically file an RCE when they
choose to continue prosecution before an examiner rather than appeal a
rejection or abandon the application. Prior to application abandonment,
applicants may also file a continuing application to extend prosecution
rather than file an RCE.

[[Page 91929]]

Since FY 2013, the USPTO has split RCE fees into two parts: (1) a
fee for a first RCE and (2) a second, higher fee for a second or
subsequent RCE. ``See Setting and Adjusting Patent Fees,'' 78 FR 4212
(Jan. 18, 2013). Higher fees for RCEs filed after the first RCE are
intended to help promote more compact prosecutions by reducing RCE
filings in favor of appeal or reaching agreement with an examiner.
Higher fees for successively filed RCEs also address the inequities of
providing further subsidies to those applicants who use more USPTO
resources per application than others. As explained in the USPTO's FY
2013 rulemaking, 78 FR at 4245, because the USPTO sets the fee for the
first RCE below the costs to process it, the agency must recoup those
costs elsewhere. Since most applicants resolve their issues with the
first RCE, the agency determined that applicants who file more than one
RCE are using the patent system more extensively than those who file
zero or only one RCE. Therefore, the USPTO determined in the FY 2013
rulemaking that the cost to review applications with multiple RCEs
should not be subsidized with other back-end fees to the same extent as
applications with a first RCE, newly filed applications, or other
continuing applications. This splitting of the fees promotes compact
prosecution and more appropriately distributes the benefit of the low
barrier to entry feature of below cost front-end fees.
The USPTO's FY 2017 fee setting rulemaking maintained the
undiscounted fee for a first RCE well below cost but set the
undiscounted fee for second and subsequent RCEs at 19% above cost. See
``Setting and Adjusting Patent Fees During Fiscal Year 2017,'' 82 FR
52780 (Nov. 14, 2017). The initial undiscounted RCE fee from FY 2017
would have required an applicant to file four RCEs for the USPTO to
mostly recover the costs for treating all of the applicant's RCE
filings. These costs have increased annually since FY 2017. In fact,
the current undiscounted fee for second and subsequent RCEs is set so
far below cost that no amount of RCE filings would result in the agency
recapturing the costs of providing the service.
The bifurcated fee structure does not appear to have had much
effect on RCE filing behavior. During FY 2011, when the agency's fee
schedule set only one RCE fee, RCE filings comprised about 30% of all
RCE and utility patent application filings collectively. In FY 2018,
RCE filings comprised 29% of the total despite the bifurcated fee
structure introduced in FY 2013. The RCE filing percentage declined to
25% in FY 2021 and 23% in FY 2022. It is unlikely these recent
decreases resulted from the bifurcated fee structure, as the RCE filing
percentage was hardly affected in the years immediately following FY
2013.
The USPTO had proposed in the NPRM to trifurcate the RCE fee
structure, i.e., to split the existing RCE fees into three parts--a fee
for a first RCE, a higher fee for a second RCE, and a still higher fee
for third and subsequent RCEs filed in a single patent application.
Under the trifurcated structure, the undiscounted fee for a first RCE
would have been more than 50% below cost, and the undiscounted fee for
a second RCE would have been just above cost. As proposed, the
undiscounted fee for third and subsequent RCEs would have been enough
above current RCE costs that a third RCE from an applicant with no
entity status discount, combined with the fees for filing the first two
RCEs, would have covered agency costs for treating all three RCEs.
During the public comment period on the NPRM, the USPTO received a
number of comments expressing concerns over the proposal to trifurcate
the RCE fees. Having further considered the public feedback on this
proposal, the USPTO decided against proceeding with this proposal.
Instead, the USPTO will retain the existing bifurcated RCE fee
structure in which the first RCE is charged at a lower rate than the
second and subsequent RCEs.
In this final rule, the USPTO is increasing the Sec. 1.17(e)(1)
fee for a first RCE ($1,500 for undiscounted entities) only 10%,
similar to the across-the-board adjustment applied to most patent fees.
The undiscounted fee for a first RCE will thus remain more than 50%
below cost ($3,110 in FY 2023). In accordance with the existing
rationale for the bifurcated fee structure described above in
connection with the FY 2013 and FY 2017 fee settings, the USPTO is
increasing the undiscounted Sec. 1.17(e)(2) fee for the second and
subsequent RCEs to an amount ($2,860) that is above the agency's costs
of processing those RCEs ($2,258 in FY 2023).
Even at the undiscounted rate, the fee for second and subsequent
RCEs does not fully recoup the costs associated with the first RCE, and
the agency must recoup those costs elsewhere (e.g., for the second RCE,
the USPTO has incurred $5,368 in RCE costs for the first and second
RCEs, but has received only $4,360 in RCE fees from an undiscounted
entity). It is not until the fourth and subsequent RCEs that the
cumulative undiscounted RCE fees recover the cumulative RCE processing
costs. Moreover, although RCEs in applications receiving entity
discounts incur the same processing costs, the discounted fees are so
far below cost that the agency would never recoup its costs regardless
of the number of RCEs filed (e.g., for the second RCE, the USPTO has
incurred $5,368 in RCE costs for the first and second RCEs, but has
received only $1,744 in RCE fees from a small entity and $872 from a
micro entity). The final rule thus leaves the agency in essentially the
same position financially as it has been since FY 2017, in that it will
not recover its RCE processing costs from an applicant paying
undiscounted RCE fees until the fourth or subsequent RCE filing and
never recover its costs from applicants paying discounted RCE fees. For
all RCEs (first, second, and subsequent), about 76% are filed by
undiscounted entities, 22% by small entities, and 2% by micro entities.
10. Suspension of Action Fees

[[Page 91930]]

[GRAPHIC] [TIFF OMITTED] TR20NO24.018

Currently, Sec. 1.103(a) permits applicants to request a
suspension of action for a period not exceeding six months for good and
sufficient cause. The patent examiner typically decides the first
request for suspension. Second and subsequent requests require
Technology Center director approval. Due to the heightened approval
level, these requests cost the USPTO more to process. Additionally, the
pendency of an application increases as more requests for suspension
are requested and granted.
The USPTO is creating a new tiered fee structure for requests for
suspension of action under Sec. 1.103(a). Specifically, the agency is
increasing the undiscounted fee for a first suspension request to $300
and establishing a new undiscounted fee of $450 for the second or
subsequent requests in the same application. The fee increases strive
to shift the costs of the service to those applicants who request
suspensions, thereby reducing subsidization from other fees. This
increase will not affect fees for suspensions of action requested at
the time of filing a CPA under Sec. 1.103(b) or an RCE under Sec.
1.103(c).
To effect this change, the USPTO is amending Sec. 1.17(g) by
splitting it into two paragraphs, (g)(1) and (g)(2). Paragraph (g)(1)
covers all fees formerly encompassed by Sec. 1.17(g), other than those
for suspension of action under Sec. 1.103(a). Paragraph (g)(2) covers
fees for suspension of action under Sec. 1.103(a) and is bifurcated so
that new paragraph (g)(2)(i) covers the fee for the first suspension
request and new paragraph (g)(2)(ii) covers the fee for the second and
subsequent requests. The Sec. 1.17 (g)(2) fees are the tiered
suspension of action fees proposed in the NPRM and shown above in table
13.
The USPTO receives approximately 2,500 requests for suspension
under Sec. 1.103(a) each year. Of those requests, 86% are filed by
undiscounted entities, 12% by small entities, and 2% by micro entities.
Given the availability of entity discounts, the USPTO believes this fee
increase will generally have a negligible impact on small and micro
entities.
11. Terminal Disclaimer Fees
In the NPRM, the USPTO proposed creating a new tiered fee structure
for terminal disclaimers. The proposed fees for filing such terminal
disclaimers would have increased and would have varied depending on the
stage of examination of the application in which the terminal
disclaimer was filed. In particular, the proposal would have created
five tiers of fees for filing terminal disclaimers, beginning at $200
for the first tier and increasing by $300 for each subsequent tier. The
proposed structure focused on encouraging applicants to promptly
address double patenting issues that arise during prosecution.
However, during the public comment period, the USPTO received a
number of comments expressing concerns over the proposed structure,
particularly whether applicants would be able to make informed
decisions on whether to file a terminal disclaimer before the fees
escalated. The USPTO considered the public feedback and decided not to
proceed with this proposal. Instead, the fee for this service will be
increased in accordance with the across-the-board adjustment applied to
most patent fees.
12. Unintentional Delay Petition Fees
BILLING CODE 3510-16-P

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[GRAPHIC] [TIFF OMITTED] TR20NO24.023

BILLING CODE 3510-16-P
During FY 2020, the USPTO issued a notice to clarify when
additional information is required to support a petition for
unintentional delay. See ``Clarification of the Practice for Requiring
Additional Information in Petitions Filed in Patent Applications and
Patents Based on Unintentional Delay,'' 85 FR 12222 (March 2, 2020)
(2020 Notice). Petitions based on unintentional delay include petitions
seeking revival of an abandoned application, acceptance of a delayed
maintenance fee payment, and acceptance of a delayed priority or
benefit claim. The 2020 Notice clarified that ``any applicant filing a
petition to revive an abandoned application under Sec. 1.137 more than
two years after the date of abandonment, any patentee filing a petition
to accept a delayed maintenance fee under Sec. 1.378 more than two
years after the date of expiration for nonpayment of a maintenance fee,
and any applicant or patent owner filing a petition to accept a delayed
priority or benefit claim under Sec. 1.55(e) or Sec. 1.78(c) and (e)
more than two years after the due date of the priority or benefit claim
should expect to be required to provide an additional explanation of
the circumstances surrounding the delay that establishes that the
entire delay was unintentional.'' Id. at 12223.
As the evidentiary requirements for these petitions have increased,
the costs to review and treat these petitions have also increased due
to the higher level of review needed to consider the additional
explanation. Accordingly, the USPTO is setting a new, higher fee for
petitions based on unintentional delay over two years to recover their
additional associated costs. The higher fee should encourage timely
petition filings and avoid delays in the examination process. Timely
filing of petitions based on unintentional delay benefits applicants
because it avoids delays in the examination process, and it also
benefits the patent system as a whole by reducing uncertainty and
unpredictability relating to patent rights, inasmuch as the abandoned
status of an application, the expired status of a patent, or an absence
of the priority or benefit claim could be relied upon by other parties.
To effect this change, the USPTO is amending Sec. 1.17(m) by
splitting it into three paragraphs, (m)(1) through (m)(3). Paragraph
(m)(1) implements the new higher fee ($3,000 for undiscounted entities)
for petitions based on unintentional delay over two years. This higher
fee will apply to petitions under Sec. 1.78(c) and (e) to accept a
delayed benefit claim submitted more than two years after the date the
benefit claim was due, under Sec. 1.55(e) to accept a delayed priority
claim more than two years after the date the foreign priority claim was
due, under Sec. 1.137 to revive an abandoned application or
reexamination proceeding more than two years after the date of
abandonment, under Sec. 1.378 to seek reinstatement of an expired
patent more than two years after the date of expiration for nonpayment
of a maintenance fee, and under Sec. 1.1051 to excuse an applicant's
failure to act within prescribed time limits in an international design
application.
Paragraph (m)(2) implements the fee for petitions based on
unintentional delay that is less than or equal to two years, and
paragraph (m)(3) implements the fee for petitions requesting
restoration of the right of priority, i.e., petitions under Sec.
1.55(c), Sec. 1.78(b), or Sec. 1.452 for the extension of the 12-
month (6-month for designs) period for filing a subsequent application.
These

[[Page 91936]]

fees are also increasing as compared to the current Sec. 1.17(m) fee
(from $2,100 to $2,260 for undiscounted entities) in accordance with
the across-the-board adjustment applied to most patent fees.
The USPTO receives approximately 12,000 petitions each year based
upon the unintentional standard (FY 2021, 12,752 petitions; FY 2022,
11,755 petitions; FY 2023, 11,304 petitions). About 10% of these
petitions (1,200) have a delay of more than two years. Therefore, the
higher cost for petitions having a delay of greater than two years
should not have a significant impact on patent applicants overall. The
increased fee will help ensure those applicants requesting the service
pay its costs, thereby reducing subsidization from other patent
applicants.
13. America Invents Act Trial Fees
[GRAPHIC] [TIFF OMITTED] TR20NO24.024

As proposed, the USPTO is increasing existing fees for AIA trial
proceedings by 25%. Under 35 U.S.C. 311(a) and 321(a), the USPTO
Director must establish reasonable fees for inter partes review and
post-grant review in relation to their aggregate costs. The fee
increases will better align the fee rates charged to petitioners with
the actual costs borne by the USPTO in providing these proceedings.
This change will help the PTAB maintain the appropriate level of
judicial and administrative resources to continue providing high-
quality and timely decisions for AIA trials.
14. Request for Review of a PTAB Decision by the Director Fee

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The USPTO is setting a new fee for parties requesting Director
Review in AIA trial proceedings under part 42. The fee is set at the
same rate as a petition to the Chief Judge in ex parte appeals (see 37
CFR 42.20(a)) and is designed to partially recover the USPTO's costs
for conducting Director Reviews. The new fee is part of the agency's
ongoing efforts to formalize the Director Review process developed in
response to the Supreme Court's decision in United States v. Arthrex,
Inc. and furthers the USPTO's goals of promoting innovation through
consistent, transparent decision-making and the issuance and
maintenance of reliable patents.
More specifically, Arthrex explained that ``constitutional
principles chart a clear course: Decisions by [administrative patent
judges (APJs)] must be subject to review by the Director.'' See 141 S.
Ct. 1970, 1986 (2021). Following the statutory authority provided to
the Director by Congress and the constitutional principles explained by
the Supreme Court, the USPTO set forth an interim process for Director
Review, which has been updated periodically. The agency sought public
feedback on the interim process and is using feedback to promulgate
rules. See ``Rules Governing Director Review of Patent Trial and Appeal
Board Decisions,'' 89 FR 26807 (April 16, 2024); ``Request for Comments
on Director Review, Precedential Opinion Panel Review, and Internal
Circulation and Review of Patent Trial and Appeal Board Decisions,'' 87
FR 43249 (July 20, 2022).
As a part of the interim process, when the USPTO receives a
Director Review request from a party to an AIA proceeding, the request
is processed and routed to an advisory committee that assists with
Director Review. The committee includes at least 11 representatives
from various USPTO business units who serve at the Director's
discretion. Members independently review each request and associated
case materials, and the committee meets regularly to recommend which
requests for review should be granted. The Director considers each
request, its case materials, and the committee's recommendation in
determining whether to grant or deny review. When the Director
determines to grant review, personnel from various USPTO business units
assist in case processing and in issuing and publicizing the Director
Review decision.
Given the number of agency personnel involved in Director Review,
the USPTO expects the new fee will be relatively small compared to the
overall costs. The agency plans to formally capture and evaluate these
costs after the fee takes effect.

D. Amendment to Obtaining a Refund Through Express Abandonment

The USPTO is amending paragraph (d) of Sec. 1.138, which permits
an applicant to obtain a refund of the search and excess claims fees
that were paid in an application by submitting a petition and
declaration of express abandonment before an examination has been made
of the application. The current rule permits such refunds only in
nonprovisional applications filed under 35 U.S.C. 111(a) and Sec.
1.53(b). The amendment expands the applicability of the rule to permit
such refunds in national stage applications filed under 35 U.S.C. 371.
The amendment also clarifies that refunds of search and excess
claims fee payments under these provisions are limited to the search
and excess claims fees set forth in Sec. 1.16 (which apply to
applications filed under 35 U.S.C. 111(a) and Sec. 1.53(b)) and Sec.
1.492 (which apply to national stage applications filed under 35 U.S.C.
371). No refunds will be permitted of any search fees paid under Sec.
1.445 during the international stage of an application filed under the
PCT, even if such an application later enters the national stage under
35 U.S.C. 371.
The petition process and the conditions under which a refund will
be granted will not otherwise change. See MPEP 711.01, subsection III
for more information. The amendment puts national stage applications on
the same footing as applications filed under 35 U.S.C. 111(a) when an
application is expressly abandoned prior to examination.

VI. Discussion of Comments

Comments and Responses

The USPTO published a proposed rule on April 3, 2024, soliciting
comments on the proposed fee schedule. In response, the USPTO received
comments from 28 associations and individuals including intellectual
property organizations, law firms, corporations, attorneys, and others.
These comments are available on <a href="http://Regulations.gov">Regulations.gov</a> at <a href="https://www.regulations.gov/docket/PTO-P-2022-0033">https://www.regulations.gov/docket/PTO-P-2022-0033</a>.
Summaries of comments and the agency's responses follow.

General Fee Setting Approach

Comment 1: One commenter stated that most of the fee proposals are
necessary and appropriate. The commenter also urged Congress to
appropriate previously diverted funds from the USPTO budget back to the
agency to improve the patent examination process.
Response: The USPTO appreciates the feedback from the commenter and
is committed to achieving the goals developed in consultation with the
stakeholder community as set forth in the Strategic Plan. Comments
directed to Congress are outside the scope of this rulemaking.
Comment 2: One commenter expressed their support of the proposals
set forth in the NPRM in their entirety.
Response: The USPTO appreciates the commenter's support for the
proposed fees. The fees in the final rule will give the agency
sufficient financial resources to facilitate the effective
administration of the U.S. patent system and implement the goals
outlined in the Strategic Plan.
Comment 3: One commenter expressed their support of the

[[Page 91938]]

proposals, noting that the adjustments will allow the USPTO to come
closer to recovering its aggregate costs for patent examination
activities by better aligning fees with the costs of products and
services, while also promoting more efficient patent prosecution.
Response: The USPTO appreciates the commenter's feedback. The
agency carefully considered all comments it received about the
proposals outlined in the NPRM and believes the fees in the final rule
strike a balance between addressing commenter concerns and providing
sufficient financial resources to recover the aggregate estimated costs
of patent operations and support the goals described in the Strategic
Plan.
Comment 4: Commenters stated that the proposed fee increases are
severe and appear to represent a departure from the USPTO's historic
practice of adjusting fees incrementally to reflect anticipated cost
increases and agency priorities.
Response: The USPTO recognizes that higher fees will affect
entities interacting with the agency. The USPTO is experiencing an
increase in aggregate costs, and fee increases are necessary to
maintain operations and deliver the priorities listed in the Strategic
Plan. Most fees fall into the across-the-board and front-end
adjustments and will increase around 7.5% or 10% respectively. It has
been more than four years since the agency's last fee adjustment in
October 2020 and these increases are well below the prevailing
inflation rate since then. While some fees are increasing by larger
percentages and new fees are being introduced, the rationales for these
increases are explained in Part V(c): Targeted Adjustments to Patent
Fees. Moreover, the time frame associated with the fee setting process
inherently provides for the phasing in of fee changes. For example,
this fee setting process began with a proposal presented to PPAC in
April 2023, and the public has had two opportunities to review and
comment on the fee proposals as part of the process since then. The
USPTO refined the fee proposal in both the NPRM and this final rule
based on feedback from the public and PPAC.
Comment 5: One commenter stated that the proposals run counter to
the USPTO's stated goals and mission and could drive smaller companies
and start-ups out of the U.S. patent process.
Response: Helping small businesses and independent inventors with
limited resources is important to the USPTO. The agency provides
several free or reduced-fee programs to assist independent inventors
and small businesses in securing patent protection for their
inventions, including the Patent Pro Bono Program, Pro Se Assistance
Program, and Law School Clinic Certification Program, as well as tips
to avoid scams. More information on these programs can be found on the
USPTO website: <a href="https://www.uspto.gov/ProBonoPatents">https://www.uspto.gov/ProBonoPatents</a>, <a href="https://www.uspto.gov/ProSePatents">https://www.uspto.gov/ProSePatents</a>, and <a href="https://www.uspto.gov/LawSchoolClinic">https://www.uspto.gov/LawSchoolClinic</a>.
The USPTO also offers reduced fees for small and micro entities.
Applicants qualifying as a micro entity under section 11(g) of the AIA
are eligible for an 80% reduction on most fees, and applicants
qualifying as a small entity under 35 U.S.C. 41(h)(1) are eligible for
a 60% fee reduction. Many of the small and micro entity fees adjusted
in this rule will continue to be lower than the fee rates that were in
place prior to passage of the UAIA, which increased the percentages of
these discounts.
Comment 6: One commenter suggested that several of the proposed fee
adjustments are punitive charges.
Response: The USPTO has increased fees via this final rule because
it is required by law to recover its aggregate estimated costs for
processing, activities, services, and materials relating to the patent
system, including administrative costs with respect to such patent
fees. The agency set many of the targeted fee adjustments in this final
rule to recover more costs directly from the users of services that
increase the agency's costs of processing and examination. Setting fees
lower than prescribed in the final rule would necessitate an offset by
raising other fees, reducing spending on core mission and strategic
priorities, or depleting the operating reserves, thereby significantly
increasing agency financial risk. More information on why the USPTO is
setting individual fees at the specified rates can be found in Part V:
Individual Fee Rationale of this rule.
Comment 7: One commenter stated that an increase in the price of
obtaining a patent can be expected to decrease patents and innovation.
The commenter believed increasing fees to cover the agency's costs
could lead to excessive spending and suggested reducing costs rather
than increasing fees and potentially disincentivizing innovation.
Response: The USPTO recognizes its duty to stakeholders to be good
stewards of the patent system and continues to pursue efforts to
increase efficiency and control costs.
Additionally, the agency conducted an elasticity analysis (i.e., an
assessment of the degree to which changes in fee rates affect demand
for services) as part of a prior rulemaking and found that patent fees
are relatively inelastic. As such, increases of the nature contained in
this rule would not be expected to significantly deter innovation. A
description of elasticity estimates can be found on the fee setting and
adjusting section of the USPTO website at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.
The USPTO recognizes that fees cannot simply increase for every
improvement it deems desirable. The USPTO's financial advisory board
evaluates financial risk and determines which expenses are truly
necessary to achieve performance outcomes and service level commitments
to stakeholders. As noted in the FY 2023 AFR, available on the agency
website at <a href="https://www.uspto.gov/AnnualReport">https://www.uspto.gov/AnnualReport</a>, total costs for the
patent program increased 13.8% from FY 2019 to FY 2023, well below the
CPI-U, which grew by 19.9% over the same period.
Comment 8: One commenter stated that the patent system is not well
suited to sudden changes and requested that the USPTO consider a more
moderate, incremental approach to raising fees and adding new ones.
Response: The time frame associated with the fee setting process
inherently provides for the phasing in of fee changes and intentionally
incorporates multiple opportunities for public feedback. As part of the
fee setting process, the public has had two opportunities to review and
comment on the fee proposals. The agency refined the fee proposals in
both the NPRM and this final rule based on feedback from the public and
PPAC, including reducing some proposed fee increases.
Comment 9: Commenters stated that dramatic, controversial fee
increases run the risk of the USPTO losing its fee setting authority or
having it renewed only for another relatively short period of time.
Commenters cautioned the USPTO against reopening the door to
congressional interest in USPTO user fees and potential fee diversions
from collecting excessive funds.
Response: The agency recognizes its responsibility to be a good
steward of the fee setting authority granted by Congress, as well as
its duty to its stakeholders. After considering the many public
comments, the agency has removed or adjusted several fees proposed in
the NPRM. These changes include removal of the AFCP 2.0, terminal
disclaimer, patent term adjustment, and third and subsequent RCE
proposals and the adjustment of the patent term extension and
continuing applications proposals. The USPTO is committed to improving
the fee schedule design to generate sufficient financial resources for
effective

[[Page 91939]]

administration of the U.S. IP system while also remaining responsive to
stakeholder feedback. The agency takes its responsibility to
stakeholders seriously and appreciates the rigorous and open review
process involved in adjusting fee rates.
Comment 10: One commenter stated that fees need to be set in such a
way that patent applicants and holders do not overpay or underpay.
Response: With the exception of small and micro entity discounts,
the agency is legally obligated to charge the same fees for applicants.
As explained in this final rule, the revised fees strike the right
balance between maintaining low barriers to entry to the patent system
and providing sufficient financial resources to recover the aggregate
costs of patent operations and support the goals described in the
Strategic Plan.
Comment 11: One commenter stated the USPTO was effectively
proposing a one-size-fits-all fee structure in the NPRM. The commenter
believed the proposed fee structure would deny options to applicants by
imposing cost-prohibitive fees.
Response: The USPTO is not adopting a one-size-fits-all fee
structure. The fees in this final rule are intended to encourage
efficient operations and filing options, but they do not eliminate
other prosecution pathways. The USPTO agrees with the commenter that
applicants may have diverse patenting needs and strategies. However,
the current fee structure includes fees for many less-widely used
services below unit cost, meaning their costs are subsidized by
applicants who do not take advantage of the service. The fee structure
in this final rule will help redistribute some of those costs to
applicants who are directly requesting these services.
The agency realizes that fee increases will affect applicants. At
the same time, the USPTO's costs for processing, activities, services,
and materials relating to patents, including administrative costs with
respect to such patent fees, have increased. The agency set many of the
targeted fee adjustments in this final rule to recover more costs
directly from the users of services that increase the agency's costs of
processing and examination. Setting fees lower than prescribed in this
final rule would require that the USPTO offset shortfalls by raising
other fees, reducing spending on core mission and strategic priorities,
and/or depleting the operating reserves, thereby significantly
increasing agency financial risk. Additionally, the USPTO has continued
its longstanding policy of charging patent applicants and holders lower
filing, search, and examination (front-end) fees and higher issue and
maintenance (back-end) fees, when an invention's relative value is
better known.
In addition, the USPTO provides several programs to support
independent inventors and small businesses. See the response to comment
5 for resources regarding free or reduced fee programs to assist these
entities in securing patent protection for their inventions. The USPTO
also offers reduced fee rates for many fees to small and micro
entities. An applicant who meets micro entity requirements is eligible
for an 80% reduction in most fees, and small entity status offers a 60%
fee reduction. Many of the small and micro entity fees adjusted in this
final rule will continue to be lower than the fee rates that were in
place prior to passage of the UAIA, which increased the percentages of
these discounts.
Comment 12: Commenters stated the proposal escalates fees at
critical aspects of the patent process and for actions that many patent
owners take to clarify rights or simplify litigation. The commenters
cautioned against raising fees for common actions for valuable patents,
which might disproportionately impact the most innovative companies,
small businesses, and independent inventors who rely on patent
protection in response to theft by efficient infringers.
Response: As a fee-funded agency, the law requires the USPTO to
recover its aggregate costs for the services it provides. The agency
set many of the targeted fee adjustments in this final rule to recover
more costs directly from the users of services that increase the costs
of processing and examination. Setting fees lower than prescribed in
this final rule would require that the USPTO offset shortfalls by
raising other fees, reducing spending on core mission and strategic
priorities, and/or depleting the operating reserves, thereby
significantly increasing agency financial risk. Also, the USPTO has
continued its longstanding policy of charging patent applicants and
holders lower filing, search, and examination (front-end) fees and
higher issue and maintenance (back-end) fees when an invention's
relative value is better known. For small businesses and independent
inventors, applicants who meet the micro entity requirements are
eligible for an 80% reduction on most fees, and applicants with small
entity status receive a 60% fee reduction. The USPTO notes that many of
the small and micro entity fees adjusted in this final rule will
continue to be lower than the fee rates that were in place prior to
passage of the UAIA, which increased the size of these discounts.
Comment 13: One commenter stated that patent fees should reflect
the actual costs incurred by the USPTO rather than be used as a tool to
incentivize specific behaviors. The commenter stated that this strategy
could result in unintended consequences.
Response: Section 10(a) of the AIA grants the USPTO broad authority
to set or adjust patent fees to generate the aggregate revenue required
to recover the aggregate estimated costs of operations. As part of the
Final Regulatory Flexibility Analysis (FRFA), the agency considered a
unit cost recovery alternative that set most individual undiscounted
fees at the historical cost of performing the activities related to
that particular service in FY 2022. The USPTO ultimately opted against
this alternative because it would reverse the agency's longstanding
policy of setting front-end fees below cost and charging higher back-
end fees when a patent holder has more information about a patent's
value. The results of the FRFA are discussed further in Part VIII(b):
Regulatory Flexibility Act of this final rule.
Comment 14: One commenter stated that the proposed fee rule does
not appear to project that increased fees will result in any
performance improvements. The commenter requests that the USPTO share
information on how it will use the increased fees to address unexamined
inventory and pendency rates.
Response: The fees included in this final rule will provide the
agency with sufficient financial resources to facilitate the effective
administration of the U.S. patent system, including implementing the
Strategic Plan. The RIA associated with this rule uses the same
production models for all alternatives simply for comparison. Aggregate
revenue resulting from the current fee schedule, in absence of
implementation of this rule, would require the USPTO to reduce planned
spending, which would impede the agency's ability to achieve these
performance levels (i.e., pendency could increase) and other strategic
priorities. The Strategic Plan, available on the agency website at
<a href="https://www.uspto.gov/StrategicPlan">https://www.uspto.gov/StrategicPlan</a>, includes a description of several
initiatives that will address quality, unexamined inventory, and
pendency. Additionally, Part IV(C): Efficient Delivery of Reliable IP
Rights: Quality, Unexamined Inventory, and Pendency of this rule
includes discussion of some of these initiatives. To effect necessary
changes in the examination process and ensure

[[Page 91940]]

the timely issuance of reliable patents, the USPTO must plan for
potential increases in core operating costs for future years. The USPTO
lays out spending plans in each year's congressional budget
justification, available at <a href="https://www.uspto.gov/about-us/performance-and-planning/budget-and-financial-information">https://www.uspto.gov/about-us/performance-and-planning/budget-and-financial-information</a>. These strategic
investments will enable the USPTO to identify and continue implementing
improvements, guidelines, and best practices to serve the patent
system, including reducing pendency in the future.
Comment 15: One commenter stated the proposed fee structure could
result in decreased revenue. The commenter requested that the USPTO
share any financial impact analysis of the proposed fee structure's net
expected effect.
Response: The USPTO carefully considered the fee schedule in this
final rule. As part of the fee setting process, the agency conducted
both a regulatory flexibility analysis (IRFA for the NPRM and FRFA for
this final rule) and RIA. These analyses relied in part on the results
of an existing elasticity analysis (i.e., an assessment of the degree
to which changes in fee rates may affect demand for services), which
found that patent fees are relatively inelastic and, therefore, fee
increases will not reduce patenting activity enough to negatively
impact overall revenue. The results of the FRFA are discussed in Part
VIII(B): Regulatory Flexibility Act of this rule. The RIA and
Description of Elasticity Estimates can be found at <a href="https://www.uspto.gov/FeeSettingAndAdjusting">https://www.uspto.gov/FeeSettingAndAdjusting</a>.
Comment 16: One commenter stated that the proposed fee structure is
inconsistent with the goals and traditions of the U.S. patent system,
as the fees will increase the financial hurdle to gain entry into the
patent system.
Response: As discussed in Part I: Executive Summary of this final
rule, the individual fee adjustments included in this final rule align
with the USPTO's strategic goals and its fee structure philosophy,
including the agency's four key fee setting policy factors: (1) promote
innovation strategies, (2) align fees with the full costs of products
and services, (3) facilitate effective administration of the U.S.
patent system, and (4) offer application processing options. The fee
adjustments will enable the USPTO to accomplish its mission of driving
U.S. innovation, inclusive capitalism, and global competitiveness.
While many fees will increase, the USPTO has long promoted a fee
structure that fosters innovation by reducing barriers to entry into
the patent system through lower front-end fees (set below cost) and
higher back-end fees. Under the fee structure in the final rule, front-
end fees will remain below cost to continue facilitating entry into the
patent system and, in so doing, encourage the disclosure of information
on new inventions and ideas to the public. For small businesses and
independent inventors, applicants who meet the micro entity
requirements are eligible for an 80% reduction on most fees, and
applicants with small entity status receive a 60% fee reduction. The
USPTO notes that many of the small and micro entity fees adjusted in
this final rule will continue to be lower than the fee rates that were
in place prior to passage of the UAIA, which increased the size of
these discounts. The agency carefully considered many factors discussed
in this final rule and determined that the fee increases are adequate
to generate the aggregate revenue required to recover examination costs
while continuing to foster innovation.
Comment 17: One commenter expressed their support of the USPTO's
use of cost-cutting measures to limit the need for increasing or
creating new fees but expressed concern regarding the flatlining of IT
budgets, which they stated might be short-sighted.
Response: As outlined in the FY 2025 Budget, the agency will
achieve this cost containment goal via modern equipment in a new data
center that will cost less to maintain. In addition, by retiring legacy
systems, the agency will reduce the required number of maintenance
teams, reduce hardware and software costs, reduce storage and licensing
costs, improve technical debt and patching efficiency, and improve
cybersecurity. With respect to the impact these cost-cutting measures
will have on operations, the USPTO remains committed to sustaining its
planned levels of functionality and performance, and compliance with
Federal laws, regulations, and directives. The agency's FY 2025 Budget
is available on the USPTO website at <a href="https://www.uspto.gov/about-us/performance-and-planning/budget-and-financial-information">https://www.uspto.gov/about-us/performance-and-planning/budget-and-financial-information</a>.
Comment 18: One commenter stated that patent quality is a matter
for the courts and issues could be resolved by awarding legal costs to
prevailing parties in all but exceptional cases.
Response: Providing high-quality, efficient examination of patent
applications is paramount to the USPTO's mission. With respect to
shifting cost burdens in legal proceedings, such changes are beyond the
scope of this rulemaking.

Across-the-Board Adjustment to Patent Fees

Comment 19: One commenter recognized the need for the USPTO to
increase some patent fees and stated the across-the-board adjustment is
reasonable.
Response: The USPTO appreciates the commenter's feedback. The
across-the-board adjustment outlined in this final rule will help keep
the UPSTO on a stable financial track sufficient to recover the
aggregate costs of patent operations and support the agency's strategic
objectives.
Comment 20: One commenter expressed disagreement with including the
DOCX surcharge in the across-the-board adjustment since the agency
implemented the fee less than a year ago.
Response: The USPTO is adjusting the DOCX surcharge as part of the
across-the-board adjustment to help keep pace with inflationary cost
increases. Although the DOCX surcharge was instituted recently, the
agency is required by law to finance operations in the aggregate by
recovering fees for its services. Setting fees lower than prescribed in
this final rule would require that the USPTO offset shortfalls by
raising other fees, reducing spending on core mission and strategic
priorities, and/or depleting the operating reserves, thereby
significantly increasing agency financial risk.

Front-End Adjustment to Patent Fees

Comment 21: One commenter stated that the current relationship
between front-end and back-end fees should be maintained and noted that
PPAC objected to adding or increasing up-front processing fees.
Response: To encourage innovation, the USPTO will continue to set
front-end fees below its costs of providing these services. Further,
while the USPTO increased the across-the-board adjustment in this final
rule to ensure aggregate cost recovery in light of reductions to other
proposals, it lowered the front-end increase relative to the across-
the-board adjustment from 5% to 2.5%, keeping the total front-end
increase at 10%. Therefore, the fees set in this final rule will have a
smaller impact on the balance between front-end and back-end fees
compared to the NPRM proposal while still allowing the USPTO to
marginally recover some costs earlier in the patent life cycle.
Comment 22: One commenter expressed support for the USPTO
recovering more of its costs through

[[Page 91941]]

front-end fees and encouraged the USPTO to consider an even larger
shift towards cost recovery on the front-end.
Response: The USPTO appreciates the commenter's support. While this
final rule slightly increases filing, search, and examination fees, the
agency remains committed to promoting a fee structure that fosters
innovation by maintaining low barriers to entry into the patent system.
Lower front-end fees facilitate entry into the patent system and, in so
doing, encourage the disclosure of information on new inventions and
ideas to the public. Higher back-end fees not only help the agency
recoup costs incurred at the front end of the process but also foster
innovation by encouraging patent holders to assess the costs and
benefits of maintaining their patent at various points over its 20-year
term (i.e., 3.5 years, 7.5 years, and 11.5 years) when maintenance fees
are due. This strategy helps ensure that low-value patents are released
back into the public domain for subsequent commercialization. The USPTO
carefully considered many factors discussed in this final rule in
determining that the increases to filing, search, and examination fees
are adequate to generate the aggregate revenue needed to recover
examination costs and continue fostering innovation.
Comment 23: One commenter suggested that undiscounted fees be
decoupled from fees for small and micro entities to allow for further
fee increases for large users.
Response: The agency does not have the legal authority to set fees
for small and micro entities separately from undiscounted fees. The
authority to reduce fees for small and micro entities under the USPTO's
rulemaking authority is limited by the AIA as amended by the UAIA.
These statutes prescribe that the USPTO must provide small and micro
entity discounts based on a set percentage of the undiscounted fee
rate. Further, these discounts apply to only the six fee categories
under section 10(b) of the AIA. Helping small businesses and
independent inventors is an important part of the USPTO's mission of
driving U.S. innovation, inclusive capitalism, and global
competitiveness. See the response to comment 5 for resources regarding
free or reduced fee programs that assist these entities in securing
patent protection for their inventions.

Targeted Fee Adjustments

After Final Consideration Pilot Program 2.0 Fee

Comment 24: Commenters expressed concerns about the AFCP 2.0 pilot
program and the proposed participation fee. Commenters stated that the
program's primary benefit is the opportunity to hold an interview with
the examiner after the close of prosecution.
Response: The agency considered public feedback on AFCP 2.0 and the
proposed fee and opted to allow the program to expire on December 14,
2024. As a reminder, under customary examination practice, after the
close of prosecution, amendments that will place the application either
in condition for allowance or in better form for appeal may be entered,
and the applicant may also hold an interview with the examiner. See
Sec. 1.116(b) and section 714.12 of Manual of Patent Examining
Procedure (MPEP) (9th ed., Rev. 01.2024, November 2024), which may be
viewed on or downloaded from the USPTO website at <a href="https://www.uspto.gov/MPEP">https://www.uspto.gov/MPEP</a> or <a href="https://mpep.uspto.gov">https://mpep.uspto.gov</a>. Thus, even without the
program, applicants still have the opportunity to hold interviews with
examiners after the close of prosecution.

Continuing Application Fees

Comment 25: One commenter stated that the meaning of the term
``earliest benefit date'' or ``EBD'' as used in the NPRM was not clear,
particularly with regard to whether or how it differs from the
``effective filing date'' language in 35 U.S.C. 102. The commenter
suggested that established statutory language be used instead of the
``earliest benefit date'' or ``EBD.''
Response: EBD is not a synonym for ``effective filing date.'' The
USPTO has added additional examples and explanations in this final rule
to further clarify the meaning of EBD.
``Effective filing date'' is a term defined in the statute and can
refer to a priority date or a benefit date. The USPTO determines the
effective filing date on a claim-by-claim basis. As set forth in 35
U.S.C. 100(i)(1), for a patent application, the effective filing date
for a claimed invention is either (A) the actual filing date of the
application containing a claim to the invention or (B) the filing date
of the earliest application for which the application is ``entitled, as
to such invention, to a right of priority under [35 U.S.C.] section
119, 365(a), 365(b), 386(a), or 386(b) or to the benefit of an earlier
filing date under section 120, 121, 365(c), or 386(c).'' See MPEP
2152.01 for more information about the effective filing date.
The EBD is a term used in this rulemaking (the NPRM and this final
rule) to refer to the earliest filing date for which benefit is claimed
under 35 U.S.C. 120, 121, 365(c), or 386(c), and Sec. 1.78(d). The EBD
is determined on an application-by-application basis. The EBD cannot be
the filing date of a foreign application or the filing date of a
provisional application to which benefit is claimed under 35 U.S.C.
119(e).
In short, the effective filing date can be a priority date or a
benefit date, and different claims in the same application can have
different effective filing dates. The EBD, however, can only be a
benefit date, and there is only one EBD per application. The difference
is explained further in table 17.

[[Page 91942]]

[GRAPHIC] [TIFF OMITTED] TR20NO24.026

With respect to using statutory language, when the later-filed
application is a utility or plant patent application, the EBD is also
the date from which the 20-year patent term is calculated under 35
U.S.C. 154(a)(2), and thus for a utility or plant application the EBD
is synonymous with the ``patent term filing date.'' See MPEP 804,
subsection I.B.1(a) for more information about the patent term filing
date. There is no preexisting statutory language to use for design
applications, as the term of design patents is calculated differently
than for utility and plant patents. See MPEP 2701 for more information
about patent term.
Comment 26: One commenter questioned whether continuing application
fees would actually be technology neutral since the USPTO stated in the
NPRM that TC 3700 ``receives a much higher proportion of late-filed
continuing application than other areas.''
Response: The fee will be assessed for all continuing applications
in all technologies. Although TC 3700 has a higher proportion of
continuing applications that would be subject to the new fee(s) as
compared to other TCs, there is diverse subject matter examined within
this TC, encompassing many technologies. For example, TC 3700 examines
applications directed to mechanical engineering, machine and hand
tools, manufacturing (all disciplines), gaming, amusement and
educational devices (electrical and mechanical), combustion technology,
fluid handling, refrigeration, medical and surgical instruments and
processes, diagnostic equipment, and medical treatment devices.
Therefore, its relative excess of late-filed continuations does not
cause a significant difference when combined with data from the entire
corps, and technology sectors are considered as a whole.
Comment 27: Commenters expressed concern about perceived unfairness
of the continuing application fees for those applications that claim
priority to foreign applications.
Response: As noted above in the response to comment 25, foreign
priority dates are not included in the determination of an EBD. The EBD
is limited to the earliest filing date for which benefit is claimed
under 35 U.S.C. 120, 121, 365(c), or 386(c), and Sec. 1.78(d). Thus,
an application that claims a right of priority to a foreign application
will not incur any fees set forth in Sec. 1.17(w) based on that
priority claim.
Comment 28: Commenters suggested that the continuing application
fees will disproportionately affect national stage applications,
discourage use of the Patent Cooperation Treaty (PCT) system, or
prevent applicants from considering the merits of a bypass continuation
application claiming benefit of a PCT application until after the
applicable timing thresholds for the fees have passed.
Response: Applicants are free to choose whatever route they believe
is more advantageous for obtaining patent protection in the United
States, whether through the PCT or through a direct national filing
under 35 U.S.C. 111(a). National stage applications filed under 35
U.S.C. 371 are unlikely to be affected by the continuing application
fees because PCT time limits are much shorter than the timing
thresholds that prompt the continuing application fees, and very few
national stage applications contain benefit claims that could prompt
the fees.
Consider the following illustrative example. An international
application designating the U.S. is filed under the PCT on May 5, 2026.
The international application claims priority to a single foreign
patent application that was filed in the Canadian Intellectual Property

[[Page 91943]]

Office on June 6, 2025. This international application has an
international filing date of May 5, 2026, and a priority date of June
6, 2025 (the ``priority date'' for an international application is
defined in PCT Article 2(xi)).
The PCT time limit to commence the U.S. national stage is 30 months
(2.5 years) from the priority date. Assume the exemplary application
commences the U.S. national stage on the last possible day, which is
December 6, 2027 (the day that is 30 months from the June 6, 2025,
priority date). See MPEP 1893.01 for more information about national
stage commencement time limits. When the U.S. national stage is
commenced, the USPTO will determine the EBD of the national stage
application to evaluate whether any continuing application fees are
due. As explained in the response to comment 25, foreign priority dates
are not included in the determination of an EBD, and thus the filing
date of the Canadian patent application is not the EBD. Instead, the
exemplary national stage application would have an EBD that is the same
as its international filing date, i.e., May 5, 2026. Because the EBD is
the same as the actual filing date (the international filing date), no
continuing application fees would be due upon national stage
commencement of this application.
Even if the international application had also included a benefit
claim to an earlier-filed U.S. application, it is very unlikely that
the national stage application would be affected by the continuing
application fees. USPTO data from FY 2020 through FY 2023 indicates
that very few (less than 1%) U.S. national stage applications include a
benefit claim to an earlier-filed application such that their EBD would
be earlier than the international filing date, let alone an EBD that is
more than six years prior to the international filing date as would be
required to incur the continuing application fee. Given that the
primary purpose of filing an international application is usually to
pursue international patent protection, this data is not surprising.
Similarly, a so-called bypass continuing application of an
international application is unlikely to be affected by the continuing
application fees for any benefit claim to the international application
or any benefit or priority claim made through the PCT system (e.g.,
where the international application serves as an intermediate
application to establish copendency between the bypass application and
an earlier-filed application). See MPEP 1895 et seq. for more
information about bypass applications. Even if such an application were
affected, the effects would be similar to those for an application
where the benefit ``chain'' did not include an international
application.
Consider another illustrative example. On January 8, 2032, an
applicant files two applications: an international application
designating the U.S.; and application D, which is a U.S. nonprovisional
application. Both applications claim priority to a single foreign
pa

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