One theme of the proposed fee increases is to reduce subsidization of certain activities that require more USPTO resources and thus incur more expenses than the current fee for those activities provides.

The USPTO is soliciting comments regarding its proposed fee increases for fiscal year 2025. Written comments must be received on or before June 3, 2024, to ensure consideration. Thus, it is critical that both in-house attorneys and outside counsel review and consider how these changes, some of which are significant, will impact the portfolios they manage. Comments can be submitted through the regulations.gov portal or the Federal Register before June 3, 2024.

The magnitude of the proposed fee increases is significant (12 fees with 100 percent or greater increases over the 2024 fees, with some fees showing a 724 percent increase). Implementation of the new fees will likely impact long-practiced corporate strategies. Thus, patent practitioners both in corporate legal departments as well as law firms need to review these changes with respect to their current practices and guidance.

The USPTO provided four policy factors in justifying the fee increases:

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. Recognizing that patent prosecution is not a one-size-fits-all process and, where feasible, offering application processing options.

One theme of the proposed fee increases is to reduce subsidization of certain activities that require more USPTO resources and thus incur more expenses than the current fee for those activities provides.

In some instances, fees are being instituted that previously did not exist. For example, new fees relating to timing and/or number of Non-Provisional Applications (i.e., Continuation, Divisional and Continuation-in-part Applications) filed are outlined below:

Payment of these fees would be required upon filing the later nonprovisional application claiming the benefit of an earlier priority date. These changes to continuation practice may significantly affect long-term filing strategies, including restriction practice. In many cases, applicants prosecute applications serially, but now may be financially incentivized to prosecute divisional applications in parallel. Also, if filed after five years from the earliest priority date, there will no longer be a “no-fee” continuation application option for maintain the pendency of a patent family (because the fee will be required at time of filing the continuation application).

A new tiered fee structure for information disclosure statements (IDSs), increasing as the number of references increases (ranging from $200 to $800) for all entities regardless of category (i.e., Undiscounted, Small, Micro), see table below:

Fees for cumulative submission are offset by any previously paid tiered IDS fees for the same application (e.g., supplemental IDS submissions). In addition, the proposed rules include a requirement that the applicant submit a statement that the proper fee is submitted for the cumulative IDS size. This will obviously create significant additional administrative overhead on the applicant’s part in monitoring the total number of IDS submissions and re-calculating the total fees after each IDS submission (e.g., when foreign office actions in the same patent family issue), resulting in additional expense for the applicant. Those entities that typically submit large IDS submission (life sciences or academic inventors) will be the most impacted by this fee structure. The USPTO disagrees, however, in stating that based on current IDS filing volume, only 13 percent of applications will require the first-tier IDS size fee.

A multi-tiered fee structure for successive requests for continued examination (RCEs) has been proposed. While the fee for first RCE increases in 2025 by a modest 10 percent over 2024, a second RCE and a third or subsequent RCEs will increase by 25 percent and 80 percent, respectively. See below:

CFR Section	Description	Entity Type	Current Fee	Proposed Fee	Percent Change
1.17(e)(1)	RCE - 1st request (see 37 CFR 1.114)	Undiscounted	$1,360	$1,500	10%
1.17(e)(1)	RCE - 1st request (see 37 CFR 1.114)	Small	$544	$600	10%
1.17(e)(1)	RCE - 1st request (see 37 CFR 1.114)	Micro	$272	$300	10%
1.17(e)(2)	RCE - 2nd and subsequent request (see 37 CFR 1.114)	Undiscounted	$2,000	n/a	n/a
1.17(e)(2)	RCE - 2nd and subsequent request (see 37 CFR 1.114)	Small	$800	n/a	n/a
1.17(e)(2)	RCE - 2nd and subsequent request (see 37 CFR 1.114)	Micro	$400	n/a	n/a
1.17(e)(2)	RCE - 2nd request (see 37 CFR 1.114)	Undiscounted	$2,000	$2,500	25%
1.17(e)(2)	RCE - 2nd request (see 37 CFR 1.114)	Small	$800	$1,000	25%
1.17(e)(2)	RCE - 2nd request (see 37 CFR 1.114)	Micro	$400	$500	25%
1.17(e)(3)	RCE - 3rd and subsequent request (see 37 CFR 1.114)	Undiscounted	$2,000	$3,600	80%
1.17(e)(3)	RCE - 3rd and subsequent request (see 37 CFR 1.114)	Small	$800	$1,440	80%
1.17(e)(3)	RCE - 3rd and subsequent request (see 37 CFR 1.114)	Micro	$400	$720	80%

The USPTO justifies the fee changes by stating that the current fees for second and subsequent RCEs are far below actual cost to the USPTO, that no amount of RCE filings would recapture the USPTO's expenses incurred to provide the service. For some applicants, this increase in RCE fees will shift the calculus as to whether to appeal an examiner’s final rejection rather than pursue an RCE.

After Final Consideration Program 2.0 (AFCP 2.0 ) will also be subject to new fees for all entity types as shown below:

CFR Section	Description	Entity Type	Proposed Fee
1.17(x)	Consideration of AFCP 2.0 request	Undiscounted	$500
1.17(x)	Consideration of AFCP 2.0 request	Small	$200
1.17(x)	Consideration of AFCP 2.0 request	Micro	$100

The USPTO noted that there were 60,000 AFCP 2.0 requests made annually, and these require a net $15 million to process. While the USPTO is not proposing any substantive changes to the AFCP 2.0 program, it is reconsidering the policy choice of continuing to offer the AFCP 2.0 program for free without recouping costs from applicants utilizing it.

Activities targeted for some of the largest fee increases include, for example, terminal disclaimer fees, excess claims fees, patent term extensions and design fees.

Terminal disclaimers appear to be subject to some of the largest percent change increases across all categories of entities with the percent ranges ranging from 194 percent to 724 percent depending on the timing of the filing of the terminal disclaimer, as shown below:

CFR Section	Entity	Description	Proposed Fee	Percent Change
1.20(d)(2)(v)	All	Terminal disclaimer, filed in a patented case or in an application for reissue	$1,400	724%
1.20(d)(2)(iv)	All	Terminal disclaimer, filed on or after a notice of appeal	$1,100	547%
1.20(d)(2)(iii)	All	Terminal disclaimer, filed after final or allowance	$800	371%
1.20(d)(2)(ii)	All	Terminal disclaimer, filed prior to a final action or allowance	$500	194%

The USPTO contends that the tiered fee increase will foster greater public certainty by providing earlier notice of when the patent term will end. Despite not offering discounts on these fees for either small or microentities, the USPTO has justified the fee increase by noting that this fee increase would not prejudice resource-constrained micro-entity filers. In particular, the USPTO noted that: (1) data collected by the USPTO shows that only about 1 percent of terminal disclaimers are filed by micro entities, and (2) under-resourced inventors would not encounter a double patenting rejection necessitating a terminal disclaimer unless they had sufficient resources to file multiple applications with closely-related subject matter.

In a similar fashion, excess claims fees, in particular for each claim in excess of 20 will increase as outlined below:

Independent claims in excess of three the proposed fee will be subject to a 25 percent increase and the proposed fees are shown below:

A significant fee increase for requesting patent term extension (PTE) is proposed across all entity types:

CFR Section	Description	Entity Type	Current Fee	Proposed Fee	Percent Change
1.20(j)(1)	Application for PTE	All	$1,180	$6,700	468%

 

The USPTO justified the fee increase based on the assumption that requesters would only request PTE after significant spend on clinical trials, for which the PTE fee would be relatively minor in comparison. Whether the applicant incorporates the increased fee into the eventual new drug, thereby increasing drug prices, remains to be determined.

The more common fees associated with patent application filings (e.g., basic filing fee, search and examination fee, etc.) are proposed to increase by only about 10 percent.

Not all fees will increase. The average extension of time fee for provisional applications will be reduced by about 77 percent for all entities; however, this is likely due to the fact that such an extension is rarely used.

As a final observation, although not explicitly mentioned as one policy reason for the proposed changes, financial disincentives for filing numerous related applications appears to align with earlier calls by Congress and FDA to the USPTO to take action to discourage patent thickets and “patent abuses.” One purpose that was stated by the USPTO for the proposed fee changes is “to support the strategic objectives to issue and maintain robust and reliable patents … and enhance internal processes to prevent fraudulent and abusive behaviors that do not embody the USPTO's mission. 89 FR 23226 at 23227. By providing financial disincentives to later filed continuation or divisional applications, the USPTO may be taking a step toward responding to the earlier calls by Congress and FDA[1] to the USPTO to “ensure that drug manufacturers cannot unfairly use the patent system to discourage competition by trimming “patent thickets by limiting the number of continuation applications in a patent family, and reducing other perceived “patent abuses.” It should be noted that the USPTO’s 2007 promulgation of a rule to impose an outright limit on the number of continuation applications in a patent family[2] was later invalidated by the District Court for the Eastern District of Virginia, on the basis that the rule altered patent laws and exceeded the USPTO’s statutory authority.[3] An initial affirmance by a three-judge panel of the Federal Circuit was later withdrawn, to permit en banc review. Before the rehearing took place, the USPTO withdrew the rule, mooting the appeal.[4] A joint request by the USPTO and co-plaintiff GSK to vacate the district court’s opinion was denied when the other co-plaintiff, Tafas, opposed the request, leaving the district court decision in place.[5] With an outright limit on the number of continuations disfavored by the courts, financial disincentives may be one of the remaining mechanisms at USPTO’s disposal to try to limit the filing of related applications later in a patent family life cycle.

In summary, there are significant changes proposed by the USPTO in the fee schedule that may affect patent filing and prosecution strategy. Thus, it is important to consider these changes in order to determine whether it is necessary to comment and/or adjust course.

As stated above, to be considered, written comments must be received on or before June 3, 2024. Comments can be submitted through the regulations.gov portal or the Federal Register using the “Comment” box.

For More Information

If you have any questions about this Alert, please contact Heidi Lunasin, Ryan C. Smith, Ph.D., Vicki G. Norton, Ph.D., any of the attorneys in our Intellectual Property Practice Group, any of the attorneys in our Life Sciences and Medical Technologies Industry Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.