Setting and Adjusting Patent Fees During Fiscal Year 2020, 46932-46993 [2020-16559]

Download as PDF 46932 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations DEPARTMENT OF COMMERCE Patent and Trademark Office 37 CFR Parts 1, 11, 41, and 42 [Docket No. PTO–P–2018–0031] RIN 0651–AD31 Setting and Adjusting Patent Fees During Fiscal Year 2020 United States Patent and Trademark Office, Department of Commerce. ACTION: Final rule. AGENCY: The United States Patent and Trademark Office (Office or USPTO) sets or adjusts patent fees as authorized by the Leahy-Smith America Invents Act (Act or AIA), as amended by the Study of Underrepresented Classes Chasing Engineering and Science Success Act of 2018 (SUCCESS Act). The USPTO is a business-like operation where the demand for patent products and services and the cost of operations are affected by external factors, such as the economy, legislation, court decisions, and increases in the costs of supplies and contract services, as well as internal factors, such as changes in patent examination processes and procedures. The fee adjustments are needed to provide the Office with a sufficient amount of aggregate revenue to recover the aggregate cost of patent operations in future years (based on assumptions and estimates found in the FY 2021 Congressional Justification (FY 2021 Budget)) and to allow the Office to continue progress toward achieving its strategic goals. DATES: This rule is effective on October 2, 2020, except for the amendment to § 1.16(u) in amendatory instruction 2i, which is effective on January 1, 2022. The changes to § 1.18(b)(1) shall apply to those international design applications under the Hague Agreement having a date of international registration on or after October 2, 2020. FOR FURTHER INFORMATION CONTACT: Brendan Hourigan, Director of the Office of Planning and Budget, by telephone at (571) 272–8966; or Dianne Buie, Director, Forecasting and Analysis Division, by telephone at (571) 272– 6301. khammond on DSKJM1Z7X2PROD with RULES3 SUMMARY: SUPPLEMENTARY INFORMATION: I. Executive Summary A. Purpose of This Action The Office issues this Final Rule under section 10 of the AIA (section 10), Public Law 112–29, 125 Stat. 284, as VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 amended by Public Law 115–273, 132 Stat. 4158 (the SUCCESS Act), which authorizes the director of the USPTO to set or adjust by rule any patent fee established, authorized, or charged under title 35 of the United States Code (U.S.C.) for any services performed, or materials furnished, by the Office. Section 10 prescribes that fees may be set or adjusted only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents, including administrative costs of the Office with respect to such patent fees. Section 10 authority includes flexibility to set individual fees in a way that furthers key policy factors, while taking into account 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) and congressional oversight. The revenue and workload assumptions in this Final Rule are based on the assumptions and estimates found in the FY 2021 Budget. However, projections of aggregate revenues and costs are based on point-in-time estimates, and are subject to change. Notably, since the FY 2021 Budget was published, fee collections have been lower than anticipated, due, in part, to fewer application filings resulting from the COVID–19 outbreak. Although economic circumstances have changed substantially since the FY 2021 Budget was developed, the USPTO determined it remains the most appropriate starting point for developing this Final Rule. First, the USPTO’s projections of aggregate revenues and costs are necessarily estimates that can change substantially from one point in time to the next due to numerous factors outside the USPTO’s control, including cyclical economic changes or exogenous shocks, such as COVID–19, changes in the laws governing USPTO revenues or expenditures, and other events. Nevertheless, the USPTO has historically used its most recent budget assumptions when setting fees, because they are the most recent complete evaluation of the USPTO’s budget expectations and requirements, and provide assumptions for stakeholders to use when formulating their comments. Those projections were developed in late calendar year 2019, prior to the COVID–19 outbreak, and assumed continuing stable economic growth, not the sharp economic downturn and rebound of 2020. The FY 2021 Budget was developed based on the assumptions that real GDP PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 would grow around 2.2 percent in FY 2020 and 1.9 percent in FY 2021. The USPTO appreciates that revenue estimates based on those assumptions may be higher than what will ultimately be collected. The USPTO has considered the state of the U.S. economy, the operational needs of the agency, and the comments and advice received from the public during the 60-day comment period. The USPTO has made adjustments to the timing of the Final Rule based on all of these considerations, specifically delay publishing the Final Rule from April with a July effective date to August with an October effective date. This approach is consistent with the USPTO’s many other efforts to provide various types of relief to stakeholders, including deadline extensions and fee postponements. Ultimately, the goal of the USPTO is to ensure not only that businesses and entrepreneurs can weather the economic downturn, but that they can hit the ground running as it passes. B. Summary of Provisions Impacted by This Action Consistent with federal fee setting standards, the Office conducted a biennial review of fees, costs, and revenues that began in 2017 and concluded that fee adjustments are necessary to provide the resources needed to improve patent operations, including implementing the USPTO 2018–2022 Strategic Plan (Strategic Plan). As a result, the 296 fees set or adjusted in this rule align directly with the Office’s strategic goals and four key fee setting policy factors, discussed in detail in Part III: Rulemaking Goals and Strategies. The assumptions and estimates found in the FY 2021 Budget show that the fee schedule in this rule will recover the aggregate estimated costs of patent operations, including achieving the Office’s strategic goals as detailed in the Strategic Plan, available at: www.uspto.gov/strategicplan. The Strategic Plan defines the USPTO’s mission, vision, and long-term goals and presents the actions the Office will take to realize those goals. This fee setting rule supports the patent-related strategic goal to optimize patent quality and timeliness, which includes optimizing patent application pendency and examination time frames, issuing highly reliable patents, fostering innovation through business effectiveness, and enhancing the operations of the Patent Trial and Appeal Board (PTAB or Board). To the extent that the aggregate revenue generated by this rule will be used to pay for all patent-related costs E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations of the USPTO, this rule also supports the USPTO’s goal to provide domestic and global leadership to improve intellectual property (IP) policy protection and enforcement, as well as the mission support goal to deliver organizational excellence, which includes optimizing the speed, quality, and cost-effectiveness of IT delivery to achieve business value and ensuring financial sustainability to facilitate effective USPTO operations. Before issuing this Final Rule, the Office considered and analyzed all comments, advice, and recommendations received from the public during the 60-day comment period. The Office’s response to comments received is available in Part VI: Discussion of Comments. During a formal process closely tied to the annual budget process, the USPTO reviewed and analyzed the overall balance between the Office’s estimated revenue and costs over the next five years (based on the assumptions and estimates found in the FY 2021 Budget) and also reviewed individual fee changes and new fee proposals to assess their alignment with the Office’s strategic goals and fee structure philosophy, both of which aim to provide sufficient financial resources to facilitate the effective administration of patent operations. Specifically, the Office assessed how well each proposal aligned with four key fee setting policy factors: Promote innovation strategies, align fees with the full cost of products and services, set fees to facilitate the effective administration of the patent system, and offer processing options for applicants. This Final Rule sets or adjusts 296 patent fees for large, small, and micro entities (any reference herein to ‘‘large entity’’ includes all entities other than those that have established entitlement to either a small or micro entity fee discount). The fee rates for small and micro entities are tiered, with small entities receiving a 50 percent discount on certain patent fees and micro entities receiving a 75 percent discount. Small entity fee eligibility is based on the size or certain non-profit status of the applicant’s business and that of any other party holding rights to the invention. Micro entity fee eligibility is described in section 10(g) of the AIA. The Office is also introducing five new fees and discontinuing four fees. Overall, 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, in order to ensure financial sustainability and accommodate increases needed to improve the predictability and reliability of patent IP VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 protection. Applicants who meet the definition for small or micro entity discounts will continue to pay a reduced fee for the fees eligible for a discount under section 10(b) of the AIA. Additional information describing the fee adjustments 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’’ (hereinafter ‘‘Table of Patent Fees’’) available at https://www.uspto.gov/FeeSetting AndAdjusting. As background, section 10 of the AIA changed the Office’s fee setting model and authorized the USPTO to set or adjust patent fees within the regulatory process. Section 10 better equips the Office to respond to changing circumstances. In Fiscal Year (FY) 2013 and FY 2018, the USPTO used the AIA’s fee setting authority to achieve key fee setting policy factors—to promote innovation strategies, align fees with the full cost of products and services, set fees to facilitate the effective administration of the patent system, and offer patent processing options for applicants—and to generate sufficient resources needed to meet the Office’s strategic patent priorities. With the additional fees collected as a result of the January 2013 Setting and Adjusting Patent Fees Final Rule (hereinafter ‘‘the January 2013 Final Rule’’) (78 FR 4212) and the January 2018 Setting and Adjusting Patent Fees in Fiscal Year 2017 Final Rule (hereinafter ‘‘the January 2018 Final Rule’’) (82 FR 52780), the Office made considerable progress in reducing the patent application backlog and pendency. Since the development of the USPTO fee schedule currently in effect, there have been changes to a number of the assumptions on which the cost and revenue projections supporting that rulemaking were based. Notably, since the January 2018 Final Rule was published, the USPTO’s projected patent examination costs have increased, and (b) fee collections have been lower than anticipated due to a later than planned implementation of the January 2018 Final Rule. The higher fees set or adjusted in this rulemaking are needed as the Office continues its efforts towards accomplishing its mission and responding to the demands of both the domestic and international economies for robust and timely IP products and services. The USPTO must continually reinforce the predictability, reliability, and quality of those IP rights. Doing so fosters the utmost confidence in the legal durability of the USPTO’s products and inspires greater innovation and further economic growth. PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 46933 The Office’s strategic goal to optimize patent quality and timeliness recognizes the importance of innovation as the foundation of American economic growth and national competitiveness. Through this goal, the Office diligently works to balance timely examination with improvements in patent quality, particularly the reliability of issued patents. One of these improvements was a comprehensive analysis of examination time, known as the examiner time analysis (ETA). The last comprehensive review of examination time was completed over 40 years ago. Since then, significant changes to the examination process have occurred, including the emergence of new, more complex technologies, an increase in available prior art that must be searched, the impact of new electronic tools on the examination process, the challenges of transitioning to a new patent classification system, and changes in the legal landscape. As the USPTO plans for the future, the Office considers how changes such as these impact the amount of time it takes to examine an application. The USPTO is also working towards improving patent quality by providing increased clarity on patentable subject matter eligibility under 35 U.S.C. 101. The Office continues to strive to create consistency and increased clarity through this guidance. The Office is also focusing efforts on improving the initial search and availability of the best prior art to examiners. This aspect takes a variety of forms, and the Office is working on many possible approaches. Overall, presenting more comprehensive search results to the examiners initially will lead to more efficient examination, a decrease in the information gap between the examination phase and any potential later challenge or litigation phases during the life of a patent, and an increase in the reliability of the patent grant overall. Effecting the changes in the examination process needed to ensure the issuance of reliable patents, while also issuing those patents in a timely manner, means recognizing a potential increase in the core operating costs for future years. Another major component of the overall patent process is the work carried out by the PTAB. On April 24, 2018, the U.S. Supreme Court issued its decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). Changes related to the SAS decision, along with the implementation of other improvements, have increased the average cost to conduct each proceeding. These changes are discussed in detail in Part V: Individual Fee Rationale. E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46934 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations In addition, as a production-oriented entity, the USPTO relies on IT as a mission-critical enabler for every aspect of its operation. The quality, efficiency, and productivity of patent operations correlate to the performance of the USPTO’s IT systems. To accomplish its performance-based strategies, the USPTO continuously engages in multiyear efforts to stabilize and upgrade its business systems and the IT infrastructure supporting those systems in order to keep pace with emerging business, legislative, and court needs and technology standards. Since the last patent fee setting effort, the USPTO has made significant progress on IT tools, including continued development and implementation of the Patent End-toEnd (PE2E) IT capability. For example, the Office continues to work on releasing systems such as Patent Center which will modernize the transaction systems by combining EFS Web and Patent Application Information Retrieval (PAIR) in a single interface. The Office has also made progress on the continued development and deployment of the PTAB End-to-End (PTAB E2E) IT capabilities, which will expand the use of intelligent data to support appeal decisions and process inter partes review (IPR) proceedings, post-grant review (PGR) proceedings, covered business method review (CBM) proceedings, and derivation (DER) proceedings. Other IT efforts are underway to stabilize, modernize, or replace the USPTO’s legacy systems and aging infrastructure. To this end, in FY 2019, the USPTO performed an assessment of its IT systems, infrastructure, and processes and began stabilizing and modernizing IT. One of the first improvements was to move the critical Patent Application Location Monitoring (PALM) system from an aging server to new servers that are at least 10 times more reliable, 100 times faster, and use less than half of the power consumed by the prior server. The FY 2021 Budget does not anticipate that investments in IT modernization and stabilization costs will increase beyond levels previously foreseen. However, given the assumptions and estimates of revenue and spending found in the FY 2021 Budget, this fee increase is needed to support continuing IT investments at previously planned levels. Without an increase in the USPTO’s aggregate revenue, resources available for IT investment will inevitably be curtailed. Lastly, the USPTO has taken steps to establish and maintain operating reserves to facilitate execution of multiyear plans. Using fee setting authority and other tools, the USPTO VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 continuously refines its multi-year planning and budgeting. The fee setting authority prescribed in the AIA, as amended by the SUCCESS Act, allows the Office to effectively engage the stakeholder community on fee adjustments; fully recover the aggregate costs of its planned operations, including the development and maintenance of sufficient operating reserves; invest in strategic agency initiatives; and respond to changing market needs and other external factors. Research has shown that large feefunded, business-like agencies without an operating reserve are at risk of cash flow stress. The USPTO’s operating reserves enable the Office to mitigate this risk. For instance, in FY 2019, certain federal government departments and agencies, including the Department of Commerce, shut down as a result of a lapse in appropriations. The USPTO was able to remain open using funds available from the operating reserves. This allowed the USPTO to continue operations, thus preventing a significant degradation in service levels, such as patent pendency time frames. This example provides an ongoing, compelling case for the operating reserves’ significant value. Both external factors and internal decisions impacting the spending and revenue projections mentioned above have affected the Office’s ability to grow the operating reserve to the levels anticipated in the January 2018 Final Rule. The USPTO assesses risk annually and determines the minimum level of reserves necessary to shield core operations against known financial risks. The Office also establishes optimal operating reserve targets, which are reviewed at least biennially, based on an assessment of the likelihood and severity of an array of risks. Based on the cost and revenue assumptions found in the FY 2021 Budget, the USPTO’s patent operating reserve is projected to remain above the minimum level and gradually build toward the optimal level, due to the impact of this Final Rule. Absent this fee increase, the USPTO’s patent operating reserve will fall below the minimum level in FY 2021 and be exhausted by the end of FY 2022, which will leave the Office vulnerable to changes in the economy that reduce annual revenue, government-wide fiscal events, unexpected cost increases, and a number of other financial risks. The USPTO also acutely recognizes that fees cannot simply increase for every improvement the Office deems desirable. The USPTO has a responsibility to stakeholders to pursue strategic opportunities for improvement in an efficient, cost-conscious manner. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 The Office’s financial advisory board (FAB) focuses on financial risk management and determining what expenses are truly necessary. Each year the FAB reviews multiple scenarios to determine what level of fee collections are expected and what the hiring and spending levels should be in order to effectively carry out the Office’s mission. The FAB also regularly reviews USPTO activities to identify opportunities for cost savings and resources that can be redirected to higher-priority efforts. As a result of the USPTO’s careful financial management and prudent use of fee setting authority, Congress recognized the Office as a good steward of fee setting authority and extended that authority through the SUCCESS Act. In order to continue building on the progress made over the past several years, and consistent with the USPTO’s biennial fee review policy, the final patent fee schedule detailed herein continues to focus on the fundamental purpose of the USPTO, which is to foster innovation, competitiveness, and job growth by recognizing and securing IP rights through the delivery of highquality and timely patent examination and review proceedings in order to produce reliable and predictable IP rights. This Final Rule seeks to provide the USPTO sufficient financial resources to facilitate the effective administration of the U.S. IP system. This Final Rule includes targeted fee adjustments, and an approximately 5 percent across-the-board adjustment to all patent fees that are not covered by the targeted adjustments or that are discontinued. This Final Rule is needed because critical costs to the Office continue to increase. Based on the assumptions and estimates found in the FY 2021 Budget, the fees set forth in this Final Rule will help replenish and grow the patent operating reserve and maintain the USPTO’s finances, enabling the Office to deliver reliable and predictable service levels, even in times of financial fluctuations. A more robust patent operating reserve will also position the Office to identify and continue to undertake capital improvements, such as adapting to an ever-increasing technological future. The operating reserve will be managed carefully; if the projected operating reserve were to exceed the targeted optimal level by 10 percent for two consecutive years, it is USPTO policy to examine the contributing factors and determine whether it would be advisable to lower fee rates. The fees set or adjusted in this Final Rule intend to position the Office well to deliver on E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES3 known commitments and address unknown risks in the future. C. Summary of Costs and Benefits of This Action This Final Rule is economically significant and results in a need for a Regulatory Impact Analysis (RIA) under Executive Order 12866 (Regulatory Planning and Review) (Sept. 30, 1993). The Office prepared a RIA to analyze the costs and benefits of the Final Rule over a five-year period, FY 2020–FY 2024. The RIA includes an analysis of four alternatives and shows how well they aligned with the Office’s rulemaking strategies and goals, which include strategic priorities (goals, objectives, and initiatives) from the Strategic Plan and the Office’s fee setting policy factors. From this conceptual framework, the Office assessed the absolute and relative qualitative costs and benefits of each alternative. Consistent with the Office of Management and Budget (OMB) Circular A–4, ‘‘Regulatory Analysis,’’ this rule involves a transfer payment from one group to another. The Office 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 that the Office identifies and analyzes 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 Office did not identify any monetized costs and benefits of this Final Rule but found that this Final Rule has significant qualitative benefits with no identified costs. The qualitative costs and benefits that the RIA assesses are: (1) Fee schedule design—a measure of how well the fee schedule aligns with the key fee setting policy factors; and (2) securing aggregate revenue to recover aggregate cost—a measure of whether the alternative provides adequate revenue to support the core mission and strategic priorities based on assumptions and estimates found in the FY 2021 Budget and described in the Final Rule, Strategic Plan, and FY 2021 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 patent fee schedule maintains the existing balance of below-cost entry fees (e.g., filing, search, and examination) and above-cost maintenance fees as one VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 approach to foster innovation. Further, as detailed in Part V: Individual Fee Rationale, 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 achieve the strategic priorities encompassed in the rulemaking goals and strategies (see Part III: Rulemaking Goals and Strategies). The final patent fee schedule allows for optimizing patent quality and timeliness. This significantly increases the value of patents by advancing commercialization of new technologies sooner and reducing uncertainty regarding the scope of patent rights, which fosters innovation and has a positive effect on economic growth. The RIA explains the results in more detail at https:// www.uspto.gov/FeeSetting AndAdjusting. II. Legal Framework A. Leahy-Smith America Invents Act— Section 10 The Leahy-Smith America Invents Act was enacted into law on September 16, 2011. See Public Law 112–29, 125 Stat. 284. Section 10(a) of the Act authorizes the director of the Office to set or adjust by rule any patent fee established, authorized, or charged under title 35, U.S.C., for any services performed by, or materials furnished by, the Office. Fees under title 35 of the U.S.C. may be set or adjusted only to recover the aggregate estimated cost to the Office for processing, activities, services, and materials related to patents, including administrative costs to the Office with respect to such patent operations. See 125 Stat. at 316. Provided that the 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) of the Act requires the director to publish the final fee rule in the Federal Register and the Official Gazette of the USPTO at least 45 days before the final fees become effective. Section 10(i) terminates the director’s authority to set or adjust any fee under section 10(a) upon the expiration of the seven-year period that began on September 16, 2011. B. The Study of Underrepresented Classes Chasing Engineering and Science Success Act of 2018 The Study of Underrepresented Classes Chasing Engineering and Science Success Act of 2018 (SUCCESS Act), was enacted into law on October 31, 2018. See Public Law 115–273, 132 Stat. 4158. Section 4 of the SUCCESS Act amended section 10(i)(2) of the AIA PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 46935 by striking ‘‘7-year’’ and inserting ‘‘15year’’ in reference to the expiration of fee setting authority. Therefore, the updated section 10(i) of the AIA, as amended, terminates the director’s authority to set or adjust any fee under section 10(a) upon the expiration of the 15-year period that began on September 16, 2011, and ends on September 16, 2026. C. Small Entity Fee Reduction Section 10(b) of the AIA requires the Office to reduce by 50 percent 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. D. Micro Entity Fee Reduction Section 10(g) of the AIA amended 35 U.S.C. ch. 11 by adding section 123 concerning micro entities. The Act provides that the Office must reduce by 75 percent the fees for micro entities for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents. Micro entity fees were implemented through the January 2013 Final Rule, and the Office will maintain this 75 percent micro entity discount for the appropriate fees and will implement micro entity fees for additional services as appropriate. E. Patent Public Advisory Committee Role The Secretary of Commerce established the PPAC under the American Inventors Protection Act of 1999. 35 U.S.C. 5. The PPAC advises the Under Secretary of Commerce for Intellectual Property and Director of the USPTO on the management, policies, goals, performance, budget, and user fees of patent operations. When adopting fees under section 10 of the Act, the director must provide the PPAC with the proposed fees at least 45 days prior to publishing the proposed fees in the Federal Register. The PPAC then has at least 30 days within which to deliberate, consider, and comment on the proposal, as well as hold public hearing(s) on the proposed fees. The PPAC must make available to the public a written report of the comments, advice, and recommendations of the committee regarding the proposed fees before the Office issues any final fees. The Office considers and analyzes any comments, advice, or recommendations received from the PPAC before finally setting or adjusting fees. Consistent with this framework, on August 8, 2018, the director notified the PPAC of the Office’s intent to set or adjust patent fees and submitted a E:\FR\FM\03AUR3.SGM 03AUR3 46936 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations III. Rulemaking Goals and Strategies improvements, such as optimizing patent application pendency; issuing highly reliable patents; fostering innovation through business effectiveness; enhancing operations of the PTAB; and optimizing the speed, quality, and cost effectiveness of information technology delivery to achieve business value. In addition to the overriding principles outlined above, as discussed earlier in this document the Office assesses its alignment with the four key fee setting policy factors: (1) Promoting innovation strategies, (2) aligning fees with the full cost of products and services, (3) facilitating the effective administration of the U.S. patent system, and (4) offering patent processing options to applicants. Each factor promotes a particular aspect of the U.S. patent system. 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. Aligning fees with the full cost of products and services recognizes that as a fully fee-funded entity, the Office must account for all of its costs, even as it elects to set certain fees below, at, or above cost. This factor also recognizes that some applicants may use particular services in a much more costly manner than other applicants (e.g., patent applications cost more to process when more claims are filed). Facilitating effective administration of the patent system seeks to encourage patent prosecution strategies that promote efficient patent prosecution, resulting in compact prosecution and a reduction in the time it takes to obtain a patent. Finally, the Office recognizes that patent prosecution is not a one-size-fits-all process; therefore, where feasible, the Office endeavors to fulfill its fourth policy factor of offering patent processing options to applicants. A. Fee Setting Strategy The overall strategy of this Final Rule is to establish a fee schedule that generates sufficient multi-year revenue to recover the aggregate cost of maintaining USPTO patent-related operations and accomplishing the USPTO’s patent-related strategic goals in accordance with the authority granted to the USPTO by AIA section 10, as amended by the SUCCESS Act. The overriding principles behind this strategy are to operate within a sustainable funding model to avoid disruptions caused by fluctuations in financial operations and to enable the USPTO to continue strategic B. Fee Setting Considerations The balance of this sub-section presents the specific fee setting considerations the Office reviewed in developing the final patent fee schedule. Specific considerations are: (1) Historical costs of patent operations and investments to date in meeting the Office’s strategic goals; (2) the balance between projected costs to meet the Office’s operational needs and strategic goals and the projected future year fee collections; (3) fee schedule design; (4) sustainable funding; and (5) the comments, advice, and recommendations offered by the PPAC on the Office’s initial fee setting khammond on DSKJM1Z7X2PROD with RULES3 preliminary patent fee proposal with supporting materials. The preliminary patent fee proposal and associated materials are available at https:// www.uspto.gov/FeeSetting AndAdjusting. The PPAC held a public hearing in Alexandria, Virginia, on September 6, 2018. Transcripts of the hearing are available for review at https://www.uspto.gov/sites/default/ files/documents/PPAC_Hearing_ Transcript_20180906.pdf. Members of the public were invited to the hearing and given the opportunity to submit written and/or oral testimony for the PPAC to consider. The PPAC considered such public comments from this hearing and made all comments available to the public via the Fee Setting and Adjusting section of the USPTO website, https:// www.uspto.gov/FeeSetting AndAdjusting. The PPAC also provided a written report setting forth in detail the comments, advice, and recommendations of the committee regarding the preliminary proposed fees. The report regarding the preliminary proposed fees was released on October 29, 2018, and can be found online at https://www.uspto.gov/sites/default/ files/documents/PPAC_Fee_Setting_ Report_Oct2018_1.pdf. The Office considered and analyzed all comments, advice, and recommendations received from the PPAC before publishing the notice of proposed rulemaking (NPRM) Setting and Adjusting Patent Fees during Fiscal Year 2020. The NPRM and associated materials are available at https:// www.uspto.gov/FeeSetting AndAdjusting. Likewise, before issuing this Final Rule, the Office considered and analyzed all comments, advice, and recommendations received from the public during the 60-day comment period. The Office’s response to comments received is available in Part VI: Discussion of Comments. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 proposal and the public comments received in response to the July 2019 NPRM. The Office carefully considered the comments, advice, and recommendations offered by the PPAC and public. Collectively, these considerations informed the Office’s chosen rulemaking strategy. (1) Historical Cost. To ascertain how to best align fees with the full cost of products and services, the Office considers unit cost data provided by the USPTO’s activity based information (ABI) program. Using historical cost data and forecasted application demands, the Office can align fees with the costs of specific patent products and services. The document entitled ‘‘Setting and Adjusting Patent Fees during Fiscal Year 2020—Activity Based Information and Patent Fee Unit Expense Methodology,’’ available at https://www.uspto.gov/FeeSetting AndAdjusting, provides details on the Office’s costing methodology in addition to four years of historical cost data. Part IV of this Final Rule details the Office’s methodology for establishing fees. Additionally, Part V describes the reasoning for setting some fees at cost, below cost, or above cost such that the Office recovers the aggregate cost of providing services through fees. (2) Projected Costs and Revenue. In developing this Final Rule, the USPTO considered estimates of future year workload demands, fee collections, and costs to maintain core USPTO operations and meet the Office’s strategic goals, all of which can be found in the FY 2021 Budget. The FY 2021 Budget and the Strategic Plan highlight the priorities of: optimizing patent application pendency; issuing highly reliable patents; fostering innovation through business effectiveness; enhancing operations of the PTAB; optimizing the speed, quality, and cost effectiveness of IT delivery to achieve business value; and ensuring financial sustainability to facilitate effective USPTO operations. This also enables the USPTO to continue to leverage nationwide talent to build, retain, and effectively manage the highly educated and talented workforce it needs to properly serve its stakeholder community and the country. (a) Updated Revenue Estimates. As is discussed in more detail in Part IV: Fee Setting Methodology, when setting fees at appropriate levels to recover aggregate costs, the USPTO must estimate future year demand for its products and services through a careful analysis of economic conditions, potential changes in the legal and policy E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations environment, and operational efficiency and productivity. Many of these factors fall outside the USPTO’s control. Since the time that the USPTO published the January 2018 Final Rule, new information has become available that has resulted in adjustments to several of the assumptions underlying the Office’s revenue projections. The result of this change is a lowering of revenue expectations under the existing fee schedule. This reduction is due to a number of factors, including a reduction in the estimates for request for continued examination (RCE) submissions over several years and maintenance fee collections. These assumptions and estimates are found in the FY 2021 Budget. Despite increases in serialized filings in FYs 2017 through 2019, the rate of RCE submissions during that same time period was much less than expected. In particular, 2018 and 2019 saw a 10 percent decrease in the number of RCEs filed compared to the number projected, and RCE projections for FY 2020 and beyond have been reduced accordingly (as found in the FY 2021 Budget). This reduction of RCEs enables USPTO examining staff to re-allocate more of their time to examine an increased number of serialized filings, thereby reducing our unexamined inventory. While the USPTO considers the reduction in RCE submissions to be a generally positive development, it has resulted in the FY 2020 and FY 2021 revenues being lower than expected when the January 2018 Final Rule was published. In FYs 2017 through 2019 maintenance fee collections, particularly the most expensive third stage collections, were lower than projected. As a result, the refreshed forecast included in the FY 2021 Budget has been lowered. Absent the increase in fees or an unsustainable reduction in operating costs, the USPTO will be forced to draw down its operating reserves and take on higher levels of financial risk. (b) Quality, Backlog, and Pendency. The strategic goal to ‘‘optimize patent quality and timeliness’’ recognizes the importance of innovation as the foundation of American economic growth and national competitiveness. Through this goal, the Office will continually improve patent quality, particularly the predictability and reliability of issued patents. The USPTO is also committed to improving pendency to better ensure the timely delivery of innovative goods and services to market and the related economic growth and creation of new or higher-paying jobs. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 The Office will continue to diligently make progress toward pendency targets and quality expectations to issue predictable and reliable patents while also addressing the anticipated growth in application filings. The Office will work to optimize patent examination time frames within the framework of patent term adjustment (PTA) while continuing to monitor and report traditional pendency measures. This includes engaging customers to identify optimal pendency and examination time frames and making sure that the Office has the appropriate number of examiners to generate the level of production to meet those time frames. This Final Rule will produce revenues adequate to continue the USPTO’s progress towards attaining its strategic goal to optimize patent quality and timeliness. The Office recognizes the importance of issuing high-quality patents that provide reliable and predictable intellectual property protection. If the USPTO is to achieve its strategic objective of issuing highly reliable patents, patent examiners must be afforded sufficient time to conduct a thorough and complete examination of each application. In the time since fees were last adjusted, the USPTO has completed a comprehensive analysis of examination time, known as ETA, the result of which determined a need for updates to the allotment of examination time. In the past, allotment of examination time for a particular application was determined by the most comprehensive claim and could not account for multidisciplinary inventions. Sometimes, patent applications of similar technologies would receive disparate time for examination as a result. This, together with significant changes in patent prosecution that have occurred since examination time goals were established over 40 years ago—such as advancements in the technological complexities of applications, a growing volume of prior art, and a changing legal landscape—has brought about the need for updates to the allotment of examination time. The time examiners are given to examine applications is the critical link between pendency and quality. These updates reflect internal and external stakeholders’ priorities and experiences as they relate to examination time, quality, and application complexity, and also enable optimal pendency and quality levels. In addition to the changing legal landscape, increasing technical complexities of applications, and the growing volume of prior art to be searched during examination, updates PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 46937 to examination time will also take into account the full scope of technology recited in an application as well as the particular attributes of the application, such as the number of claims, the size of the specification, and the number of references cited in any filed information disclosure statement. Based on technology examined, examiners who currently receive the least amount of time for examination will generally see the largest increases in examination time, and conversely, examiners who currently receive the highest amount of time may see little, if any, increase in examination time. Further, all examiners will be provided additional examination time based on the specific attributes of the application. Together, these changes improve the calibration of the time needed to conduct a thorough examination, position the Office to better adjust time in the future as needed, and provide stakeholders increased confidence in the certainty of any resultant patent rights. Separate from the ETA findings, analysis of the patent staffing model indicates an incremental decrease in examiners’ average net output over time, resulting in higher core patent examination costs than in previous estimates. One possible explanation for this reduction in output may be that the percentage of examiners receiving production awards has dropped, and a larger number of examiners are forgoing promotions and staying at lower grades. Additionally, applicants’ increased use of programs like the after final consideration pilot (AFCP) and interviews, along with increased training needs due to changes in the legal landscape and examination practices, has increased the amount of non-examination time used by examiners, also leading to productivity losses. Another area where essential operating costs have increased is the PTAB. The PTAB, as it currently exists, was established by the AIA in September 2012. The PTAB manages pendency for three different activities: AIA trials, which, by statute, must be adjudicated within one year of filing; reexamination petitions, which, by statute, must be completed with ‘‘special dispatch’’; and ex parte appeals. The PTAB is committed to resolving appeals and inter partes matters within statutory or USPTO time frames, while streamlining processes and procedures throughout the PTAB. This entails retaining and leveraging nationwide talent. As the Office institutes operational changes at the PTAB to comply with the SAS decision and implements other improvements, as E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46938 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations detailed in Part V: Individual Fee Rationale, the average workload associated with each trial is increasing. (c) Business Effectiveness. Given the estimates of costs and revenue found in the FY 2021 Budget and absent efforts to boost future revenue, funding for other USPTO and stakeholder priorities, like IT stabilization and modernization and other business improvement initiatives, will need to be reduced to well below planned levels in the coming years. To this end, revenue generated from the final patent fee schedule will enable the USPTO to focus on how the Patents organization operates to foster business effectiveness. In fulfilling this objective, the Office will listen to customers and employees and then take patent-specific actions that will position the Office to meet expectations. The USPTO will provide the cuttingedge tools that employees and customers need to efficiently and effectively accomplish their tasks, particularly through the continued implementation of Patents End-to-End. For example, this could entail the use of artificial intelligence or machinelearning efforts. Another key initiative that will enhance the work capabilities of both employees and customers is to improve searchable (text) access to domestic and international patent applications, including access to nonpatent literature and prior art, and Office actions. (3) Fee Schedule Design. The final fee schedule was designed to set individual fees to further key policy considerations while taking into account the cost of the particular service. To encourage innovators to take advantage of patent protection, the Office continues its longstanding practice of setting basic ‘‘front-end’’ fees (e.g., filing, search, and examination) below the actual cost of carrying out these activities. Additionally, new fees are set, and existing fees are adjusted, in order to facilitate the effective administration of the patent system. Part IV of this Final Rule details the Office’s methodology for establishing fees, and Part V describes the reasoning for setting and adjusting individual fees, including fee schedule design benefits. The RIA, available at https://www.uspto.gov/ FeeSettingAndAdjusting, also discusses fee schedule design benefits. (4) Sustainable Funding. A major component of sustainable funding is the creation and maintenance of a viable patent operating reserve that allows for effective management of the U.S. patent system and responsiveness to changes in the economy, unanticipated production workload, and revenue changes. As a fee-funded agency, the VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 USPTO uses its reserves to mitigate the variability in its spending and revenue streams that can create volatility in patent operations and threaten the Office’s ability to support mission operations. The USPTO aims to manage the operating reserve within a range of acceptable balances and evaluates its options when projected balances fall either below or above that range. Minimum planning targets are assessed annually and are intended to address immediate unplanned changes in the economic or operating environments as the Office builds its reserve to the optimal level. The optimal reserve target, which is reviewed at least biennially, is established based on an assessment of the likelihood and severity of an array of financial risks. A 2019 evaluation of the patent operating reserve relative to the financial risk environment, revalidated the optimal reserve level of three months’ operating expenses as the appropriate long-range target given various risk factors, such as the high percentage of fixed costs in the Patent business and recent and potential changes in the legal, judicial, and policy environments. For the Patent business line’s operating reserve, a minimum planning level of approximately $300 million—just over one month’s operating expenses—has been established. The USPTO’s annual budget delineates prospective spending levels (aggregate costs) to execute core mission activities and strategic initiatives. In the FY 2021 Budget, the USPTO estimated that its aggregate patent operating costs for FY 2021, including administrative costs, would be $3.3 billion, and aggregate estimated patent fee collections and other income would be $3.4 billion, with the difference being added to the operating reserve. The health of the operating reserve is a key consideration as the USPTO sets its fees. Aided by the increased fees detailed in this Final Rule, future year projections are anticipated to gradually build the operating reserve toward the optimal level of three months’ operating requirements while maintaining the minimum operating reserve balance during the five-year period. The projections found in the FY 2021 Budget 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 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 have a significant cumulative impact on reserve balances. For example, the legally mandated 2019 and 2020 pay raises added a cumulative cost of $445 million (from FY 2020 to FY 2024) to patent operations. As seen in Table 2, set forth in Part IV: Fee Setting Methodology, over a five-year planning horizon the operating reserve balance can change significantly, underscoring the Office’s financial vulnerability to various risk factors and the importance of fee setting authority. The USPTO will continue to assess the patent operating reserve balance against its target balance annually, and at least every two years, the Office will evaluate whether the optimal target balance continues to be sufficient to provide the stable funding the Office needs. Per the Office’s operating reserve policy, if the operating reserve balance is projected to exceed the optimal level by 10 percent for two consecutive years, the Office will consider fee reductions. Under the new fee structure, as in the past, the Office will continue to regularly review its operating budgets and long-range plans to ensure the USPTO uses patent fees prudently. (5) Comments, Advice, and Recommendations from the PPAC and the Public. As detailed in the NPRM, in the report prepared in accordance with AIA fee setting authority, the PPAC conveyed support for the USPTO in seeking the revenues it needs to increase the reliability and certainty of patent rights, provide timely examination, improve and secure its IT infrastructure, and adequately fund its operating reserve. Specifically, the report stated, ‘‘As a general matter, we believe that increased revenue for the USPTO will be important to fulfill its Strategic Plan and implement the recommendations of the PPAC.’’ Patent Pub. Advisory Comm., Fee Setting Report (2018). The Office considered and analyzed the comments, advice, and recommendations received from the PPAC before publishing this Final Rule. Likewise, the Office considered and analyzed the comments, advice, and recommendations received from the public during the 60-day comment period before publishing this Final Rule. The Office’s response to comments received is available in Part VI: Discussion of Comments. C. Summary of Rationale and Purpose of the Final Rule The Office estimates that the patent fee schedule in this Final Rule will produce aggregate revenues to recover the aggregate costs of patent operations, including the implementation of its strategic and mission support goals, E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations objectives, and initiatives in FY 2020 and beyond. Using the Strategic Plan as a foundation, the Final Rule will provide sufficient aggregate revenue to recover the aggregate cost of patent operations, including optimizing patent application pendency; issuing highly reliable patents; fostering innovation through business effectiveness; enhancing the operations of the PTAB; optimizing the speed, quality, and costeffectiveness of information technology delivery to achieve business value; and ensuring financial sustainability to facilitate effective operations. khammond on DSKJM1Z7X2PROD with RULES3 IV. Fee Setting Methodology The Office carried out three primary steps in developing the final patent fee schedule: Step 1: Determine the prospective aggregate costs of patent operations over the five-year period, including the cost of implementing new initiatives to achieve strategic goals and objectives. Step 2: Calculate the prospective revenue streams derived from the individual fee amounts (from Step 3) that will collectively recover the prospective aggregate costs over the five-year period. Step 3: Set or adjust individual fee amounts to collectively (through executing Step 2) recover projected aggregate costs over the five-year period, while furthering key policy factors. These three steps are iterative and interrelated. The following is a description of how the USPTO carries out these three steps. Step 1: Determine Prospective Aggregate Costs Calculating prospective aggregate costs is accomplished primarily through the annual USPTO budget formulation process. The budget is a five-year plan (that the Office prepares annually) for carrying out base programs and new initiatives to implement the USPTO’s strategic goals and objectives. The first activity performed to determine prospective aggregate costs is to project 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 takes into account 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 Office). The Office looks at indicators such as the expected growth in real gross domestic product (RGDP), the leading indicator of incoming patent applications, to estimate prospective workload. RGDP is reported by the Bureau of Economic Analysis (www.bea.gov) and is forecasted each February by the OMB (www.omb.gov) in the Economic and Budget Analyses section of the Analytical Perspectives and twice annually by the Congressional Budget Office (CBO) (www.cbo.gov) in the Budget and Economic Outlook. A description of the Office’s methodology for using RGDP can be found in Appendix III: Multi-year Planning by Business Line, of the FY 2021 Budget. The expected change in the required production workload must then be compared to the current examination production capacity to determine any required staffing and operating cost (e.g., salaries, workload processing contracts, and publication) adjustments. The Office uses a patent pendency model that estimates 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 https://www.uspto.gov/patents/stats/ patent_pend_model.jsp. The second activity is to calculate the aggregate costs to execute the requirements. In developing its budget, the Office first looks at the cost of status quo operations (the base requirements). The base requirements are adjusted for OMB-directed pay increases and inflationary increases for the budget year and four out-years (detailed calculations and assumptions for this adjustment can be found in the FY 2021 Budget). The Office then estimates the prospective cost of expected changes in production workload and new initiatives over the same period of time (refer to ‘‘Program Changes by SubProgram’’ sections of the FY 2021 Budget). The Office reduces cost estimates for completed initiatives and known cost savings expected over the 46939 same five-year horizon. Finally, the Office estimates its three-month target operating reserve level based on this aggregate cost calculation for the year to determine if operating reserve adjustments are necessary. Based on the assumptions and estimates found in the FY 2021 Budget, during FY 2020, patent operations will cost $3.256 billion (see Appendix II of the FY 2021 Budget), including $2.221 billion for patent examining; $92 million for patent trial and appeals; $167 million for patent information resources; $28 million for activities related to IP protection, policy, and enforcement; and $754 million for general support costs necessary for patent operations (e.g., the patent share of rent; utilities; legal, financial, human resources, and other administrative services; and Office-wide IT infrastructure and support costs). In addition, the Office will transfer $2 million to the Department of Commerce Inspector General for audit support. The Office also estimates collecting $34 million in other income associated with recoveries and reimbursable agreements (offsets to spending). A detailed description of the operating requirements and related aggregate costs is located in the FY 2021 Budget. Table 1 below provides key underlying production workload projections and assumptions from the FY 2021 Budget used to calculate aggregate costs. Table 2 (see Step 2) presents the total budgetary requirements (prospective aggregate costs) for FY 2020 through FY 2024 and the estimated collections and operating reserve balances that will result from the adjustments contained in this Final Rule. As the FY 2021 Budget notes, these projections are based on point-intime estimates and assumptions that are subject to change. There is considerable uncertainty in out-year budgetary requirements. A number of risks could materialize over the next several years (e.g., those associated with the recompete of major contracts, including property leases, changing assumptions about presidentially authorized or congressionally mandated employee pay raises, etc.) that could increase the USPTO’s budgetary requirements in the short- to medium-term. These estimates are refreshed annually in the production of the USPTO’s Budget. TABLE 1—PATENT PRODUCTION WORKLOAD PROJECTIONS—FY 2020–FY 2024 FY 2020 Utility, Plant, and Reissue (UPR): Applications * .................................. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 FY 2021 632,400 PO 00000 Frm 00009 632,100 Fmt 4701 Sfmt 4700 FY 2022 FY 2023 642,700 E:\FR\FM\03AUR3.SGM 652,900 03AUR3 FY 2024 662,500 46940 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 1—PATENT PRODUCTION WORKLOAD PROJECTIONS—FY 2020–FY 2024—Continued FY 2020 Application Growth Rate ................. Production Units ............................. Unexamined Patent Application Backlog ....................................... Examination Capacity ** .................. Performance Measures (UPR): Avg. First Action Pendency (Months) ...................................... Avg. Total Pendency (Months) ....... FY 2021 FY 2022 FY 2023 FY 2024 1.9% 604,300 0.0% 589,500 1.7% 607,700 1.6% 626,400 1.5% 642,600 559,600 8,451 571,600 8,780 569,300 9,094 557,600 9,395 538,400 9,684 15.5 23.7 15.5 23.9 15.4 24.0 15.0 23.7 14.5 23.2 khammond on DSKJM1Z7X2PROD with RULES3 * In this table, the patent application filing data includes requests for continued examination (RCEs). ** In this table, Examination Capacity is the UPR Examiners On-Board at End-of-Year, as described in the FY 2021 Budget. Step 2: Calculate Prospective Aggregate Revenue As described above in Step 1, the USPTO’s FY 2020 requirements in the FY 2021 Budget include the aggregate prospective costs of planned production, anticipated new initiatives, and a contribution to the patent operating reserve required for the Office to maintain patent operations and realize its strategic goals and objectives for the next five years. The aggregate prospective costs become the target aggregate revenue level that the new fee schedule must generate in a given year and over the five-year planning horizon. To calculate the aggregate revenue estimates, the Office first analyzes relevant factors and indicators to calculate or determine prospective fee workloads (e.g., number of applications and requests for services and products), growth in those workloads, and resulting fee workload volumes (quantities) for the five-year planning horizon. The Office considers economic activity when developing fee workloads and aggregate revenue forecasts for its products and services. 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. The most relevant economic indicator that the Office uses is the RGDP, which is the broadest measure of economic activity. At the time the FY 2021 Budget was developed, CBO anticipated RGDP to grow around 2.2 percent in FY 2020 and 1.9 percent in FY 2021. These indicators correlate with patent application filings, which are key drivers of patent fees. Economic indicators also provide insight into market conditions and the management of IP portfolios, which influence application processing requests and post-issuance decisions to maintain patent protection. When developing fee VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 workload forecasts, the Office 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., demand is inelastic, or the elasticity measure is less than one in absolute value), 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., demand is elastic, or the elasticity measure is greater than one in absolute value), a fee increase will lead to a relatively large decrease in patenting activities such that overall revenues will decrease. When developing fee forecasts, the Office accounts for how applicant behavior will change at different fee amounts projected for the various patent services. The Office 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, RCE fees, appeal fees, AIA trial fees, and maintenance fees, including distinctions by entity size where applicable. Additional details about the Office’s elasticity estimates can be found in ‘‘Setting and Adjusting Patent Fees during Fiscal Year 2020—Description of Elasticity Estimates,’’ available at https:// www.uspto.gov/FeeSetting AndAdjusting. Summary of Step 2 Patent fees are collected for patentrelated services and products at different points in the patent PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 application examination process and over the life of the pending patent application and granted patent. Approximately half of all patent fee collections are from maintenance fees, which subsidize the cost of filing, search, and examination activities. Changes in application filing levels immediately impact current year fee collections, because fewer patent application filings means the Office collects fewer fees to devote to production-related costs. The resulting reduction in production activities also creates an out-year revenue impact because less production output in one year results in fewer issue and maintenance fee payments in future years. The USPTO’s five-year estimated aggregate patent fee revenue, based on assumptions found in the FY 2021 Budget, (see Table 2) 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 future patent issue fee workload), expected examination and process requests for the fiscal year, and the expected number of postissuance decisions to maintain patent protection over that same fiscal year. Within the iterative process for estimating aggregate revenue, the Office adjusts individual fee rates up or down based on cost and policy decisions (see Step 3: Set Specific Fee Amounts), estimates the effective dates of new fee rates, and then multiplies the resulting fee rates by appropriate workload volumes to calculate a revenue estimate for each fee. To calculate the aggregate revenue for the FY 2021 Budget, the Office assumed that all Final Rule fee rates would become effective on July 10, 2020, except for the new non-DOCX filing surcharge fee, which was assumed to become effective on January 1, 2021. The effective dates of all Final Rule fee rates have since been delayed from those original assumptions as USPTO further assessed the impact of the E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations pandemic on the economy and stakeholders. Using these figures, the USPTO summed the individual fee revenue estimates, and the result is a total aggregate revenue estimate for a given year (see Table 2). Additional details about the Office’s aggregate revenue, including projected workloads 46941 in the projected fee collections. The estimates in the table can be found in the FY 2021 Budget and were developed in late calendar year 2019, prior to the COVID–19 outbreak. Under current circumstances, it is difficult to predict what the actual numbers will be. by fee, can be found in ‘‘Aggregate Revenue Tables, Final Patent Rule Schedule’’ available at https:// www.uspto.gov/FeeSetting AndAdjusting. Table 2 shows the available revenue and operating reserve balances by fiscal year, including the Final Rule fee rates TABLE 2—PATENT FINANCIAL OUTLOOK—FY 2020–FY 2024 Dollars in millions FY 2020 Projected Fee Collections ...................... Other Income ......................................... Total Projected Fee Collections and Other Income ..................................... Budgetary Requirements ....................... Funding to (+) and from (¥) Operating Reserve .............................................. EOY Operating Reserve Balance .......... Over/(Under) $300M Minimum Level .... Over/(Under) Optimal Level ................... FY 2021* FY 2022 FY 2023 FY 2024 3,400 34 3,251 34 3,709 34 3,744 34 3,861 34 3,435 3,256 3,285 3,455 3,743 3,601 3,778 3,681 3,895 3,800 179 587 287 (227) (170) 417 117 (447) 141 558 258 (342) 97 656 356 (265) 95 751 451 (200) * The assumed effective date for the Final Patent Fee Schedule shifts some projected collections from FY 2021 to FY 2020, due to the expectation that patentees who are eligible will submit maintenance fee payments prior to the effective date of the Final Rule. khammond on DSKJM1Z7X2PROD with RULES3 Step 3: Set Specific Fee Amounts Once the Office finalizes the annual requirements and aggregate prospective costs through the budget formulation process, the Office determines specific fee amounts that, together, will derive the aggregate revenue required to recover the estimated aggregate prospective costs during the five-year budget horizon. Calculating individual fees is an iterative process that encompasses many variables and policy factors. These are discussed in greater detail in Part V: Individual Fee Rationale. One of the variables the USPTO considers to inform fee setting is the historical cost estimates associated with individual fees. The Office’s ABI provides historical costs for an organization’s activities and outputs by individual fees using the activity based costing (ABC) methodology. ABC is commonly used for fee setting throughout the federal government. Additional information about the methodology, including the cost components related to respective fees, can be found in the document entitled ‘‘Setting and Adjusting Patent Fees during Fiscal Year 2020—Activity Based Information and Patent Fee Unit Expense Methodology’’ available at https://www.uspto.gov/FeeSetting AndAdjusting. The USPTO provides data for FY 2016–FY 2019 because the Office finds that reviewing the trend of ABI historical cost information is the most useful way to inform fee setting. The underlying ABI data are available VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 for public inspection at the USPTO upon request. When the Office implements a new process or service, historical ABI data is typically not available. However, the Office will use the historical cost of a similar process or procedure as a starting point to estimate the full cost of a new activity or service. V. Individual Fee Rationale Based on assumptions and estimates found in the FY 2021 Budget, the Office projects that the aggregate revenue generated from the new patent fees will recover the prospective aggregate cost of its patent operations including contributions to the operating reserve, per the strategic initiative to ensure financial sustainability to facilitate effective USPTO operations. As detailed previously, the PPAC supports this approach, stating that, ‘‘The PPAC supports the USPTO in seeking the revenues it needs to increase the reliability and certainty of patent rights, provide timely examination, improve and secure its IT infrastructure and adequately fund its operating reserve’’ Patent Pub. Advisory Comm., Fee Setting Report [2] (2018). It is important to recognize that each individual fee is not necessarily set equal to the estimated cost of performing the activities related to the fee. Instead, as described in Part III: Rulemaking Goals and Strategies, some of the individual fees are set at, above, or below their unit costs to balance several key fee setting policy factors: Promoting innovation strategies, PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 aligning fees with the full cost of products and services, facilitating effective administration of the patent system, and offering patent processing options to applicants. For example, many of the initial filing fees are intentionally set below unit costs in order to promote innovation strategies by removing barriers to entry for innovators. To balance the aggregate revenue loss of fees set below cost, other fees must be set above cost in areas where it is less likely to reduce inventorship (e.g., maintenance). For some fees in this Final Rule, such as excess claims fees, the USPTO does not typically maintain individual historical cost data for the service provided. Instead, the Office considers the policy factors described in Part III to inform fee setting. For example, by setting fees at particular levels using the facilitating effective administration of the patent system policy factor, the USPTO aims to: (1) Foster an environment where examiners can provide and applicants can receive prompt, quality interim and final decisions; (2) encourage the prompt conclusion of prosecuting an application, resulting in pendency reduction and the faster dissemination of patented information; and (3) help recover costs for activities that strain the patent system. The rationale for the fee changes are grouped into three major categories, discussed below: (A) Across-the-board adjustment to patent fees; (B) targeted fees; and (C) discontinued fees. The purpose of the categorization is to E:\FR\FM\03AUR3.SGM 03AUR3 46942 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations identify large fee changes for the reader and provide an individual fee rationale for such changes. The categorization is based on changes in large entity fee amounts because percentage changes for small and micro entity fees that are in place today would be the same as the percentage change for the large entity, and the dollar change would be half or one quarter of the large entity change. The Table of Patent Fees includes the current and Final Patent Fee Schedule fees for large, small, and micro entities as well as unit costs for the last four fiscal years. Part VII: Discussion of Specific Rules contains a complete listing of fees that are set or adjusted in the patent fee schedule in this Final Rule. A. Across-the-Board Adjustment to Patent Fees In order to both keep the USPTO on a stable financial track and allow for the advancement of policies and practices that enhance the country’s innovation ecosystem, the Office is adjusting all patent fees not covered by the targeted adjustments as discussed in section B, or to be discontinued as discussed in section C, by approximately 5 percent. Given the time that has passed between the implementation date of the last fee adjustments and this Final Rule, a 5 percent increase is similar to fees increasing by 2 percent annually to help USPTO keep up with the cost of inflation and other cost increases, such as mandatory pay raises not planned for in previous budgets. Individual fees, above $50, are rounded to the nearest $10 1 by applying standard arithmetic rules. For fees that have small and micro entity fee reductions, the large entity fee is rounded up or down to the nearest 20 dollars by applying standard arithmetic rules. The resulting fee amounts are more convenient to patent users and permit the Office to set small and micro entity fees at whole dollar amounts when applying the applicable fee reduction. Therefore, some smaller fees will not be changing, since a 5 percent increase would round down to the current fee, while other fees would change by slightly more or less than 5 percent, depending on rounding. The fee adjustments in this category are listed in the Table of Patent Fees. The 5 percent 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. The underlying cost and revenue estimates in this Final Rule, which are supported by the FY 2021 Budget, show that fees are set at levels that secure aggregate cost recovery while ensuring a reasonable pace for operating reserve growth. B. Targeted Fees For those fees targeted for specific adjustments in this Final Rule, the individual fee rationale discussion is divided into two categories: (1) Adjustments to existing fees, and (2) new fees. Adjustments to existing fees are further divided into subcategories according to the function of the fees, including: (a) Maintenance fee surcharge, (b) request for the expedited examination of a design application fee, (c) utility and reissue issue and maintenance fees, and (d) AIA trial fees. New fees are further divided into subcategories according to the function of the fees, including: (a) Non-DOCX filing surcharge fee, and (b) pro hac vice. As discussed further below and in USPTO’s responses to public comments, the USPTO has considered public feedback on the proposed (c) annual active patent practitioner fee and has decided not to proceed with implementing this fee at this time. The USPTO does plan to pursue procedures to allow patent practitioners to voluntarily certify whether they have completed a minimum amount of continuing legal education (CLE). The USPTO further expects that registered practitioners who certify that they have completed such CLE will be recognized in the online practitioner directory. In the near future, the USPTO plans to issue proposed guidelines regarding such voluntary CLE certification, with a request for public comments. As discussed above, for purposes of comparing amounts in the individual fee rationale discussion, the Office has included the current fees as the baseline to calculate the dollar and percentage changes for new fees. (1) Adjustments to Existing Fees The following fees are to be increased by an amount other than the 5 percent across-the-board increase for most patent-related fees. These targeted adjustments are made for a variety of strategic reasons. A discussion of the rationale for each fee follows. (a) Maintenance Fee Surcharge TABLE 3—MAINTENANCE FEE SURCHARGE FEES—FEE CHANGES AND UNIT COST Current fees large (small) [micro] entity Fee description Surcharge—3.5 year—Late payment within 6 months .............................................................. khammond on DSKJM1Z7X2PROD with RULES3 Surcharge—7.5 year—Late payment within 6 months .............................................................. Surcharge—11.5 year—Late payment within 6 months .............................................................. 1 The description of the rounding rule in the NPRM incorrectly indicated that fees were rounded to the nearest $5, rather than to the nearest $10. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Final rule fees large (small) [micro] entity Dollar change large (small) [micro] entity FY 2018 unit cost FY 2019 unit cost $160 ($80) [$40] $500 ($250) [$125] +$340 (+$170) [+$85] +213 (+213) [+213] n/a n/a $160 ($80) [$40] $500 ($250) [$125] +$340 (+$170) [+$85] +213 (+213) [+213] n/a n/a $160 ($80) [$40] $500 ($250) [$125] +$340 (+$170) [+$85] +213 (+213) [+213] n/a n/a This error has been corrected in this Final Rule. The fees proposed in the NPRM and implemented in this Final Rule were both rounded to the nearest PO 00000 Percentage change large (small) [micro] entity Frm 00012 Fmt 4701 Sfmt 4700 $10 and are not affected by the error in the description. E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations The Office will set the surcharge for a late maintenance fee payment within six months following the due date at $500 for large entities. It is the responsibility of the patentee to ensure maintenance fees are paid timely to prevent expiration of a patent. If a maintenance fee is not paid within the first six months of the year in which it can be paid, a maintenance fee reminder notice is sent to the fee address or correspondence address on record. Failure to receive the notice does not shift the burden of monitoring the time for paying a maintenance fee from the patentee to the USPTO. At this point, a surcharge is required in addition to the maintenance fee in order to maintain a patent. If the maintenance fee and any applicable surcharge are not paid by the end of the 4th, 8th, or 12th years after the date of issue, the patent rights lapse, and a Notice of Patent Expiration is sent to the fee address or correspondence address on record. If a fee address has not been established, the notices are sent to the correspondence address. Over 95 percent of patent renewals are paid before the due date, but some patents are renewed during the sixmonth period following the due date. While still below what other IP offices charge, increasing this surcharge brings the USPTO more in line with its global counterparts. The goal of increasing this surcharge is to encourage patent holders to renew by the due date. Encouraging on-time renewals will benefit the public by increasing the understanding of which patents remain in force and which patent rights have been allowed to lapse. The USPTO provides tools to help patent owners monitor due dates, such 46943 as the Patent Maintenance Fees Storefront, https://fees.uspto.gov/ MaintenanceFees, where anyone can see the payment windows for all patents. Additionally, customers with USPTO.gov accounts (i.e., MyUSPTO) can create a ‘‘patent docket’’ and add patent or application numbers in order to keep track of due dates. Also, the weekly Official Gazette notices list the range of patents for which maintenance fees are now payable. In addition, with the availability of free calendar apps, individuals can easily set up their own reminders of when maintenance fee payments are eligible for renewal (3, 7, 11 years from issue) and when they are due (3.5, 7.5, 11.5 years from issue). (b) Request for Expedited Examination of a Design Application Fee TABLE 4—REQUEST FOR EXPEDITED EXAMINATION OF A DESIGN APPLICATION FEE—FEE CHANGES AND UNIT COST Current fees large (small) [micro] entity Fee description khammond on DSKJM1Z7X2PROD with RULES3 Request for expedited examination of a design application ........................................................ In the NPRM, the Office proposed increasing the fee to request expedited examination of a design application to $2,000. In this Final Rule, after carefully considering comments from the PPAC and the public, the Office is increasing the fee to request expedited examination of a design application to $1,600 for a large entity. This fee was introduced at a fee rate of $900 in November 2000. The Office is increasing the fee for the first time since its inception. Expedited examination is available to all design applicants who first conduct a preliminary examination search and file a request for expedited treatment accompanied by a fee for the expedited treatment and handling (37 CFR 1.17(k)) in addition to the required filing, search, and examination fees. This cost-based expedited treatment fulfills a particular need by affording rapid design patent protection that may be especially important where marketplace conditions are such that new designs on articles are typically in vogue for limited periods of time. The Office notes that the unit cost presented for this VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Final rule fees large (small) [micro] entity $900 ($450) [$225] $1,600 ($800) [$400] Dollar change large (small) [micro] entity +$700 (+$350) [+$175] service only accounts for the initial processing of the request and does not include additional resources expended. The applications are individually examined with priority, and the clerical processing is conducted and/or monitored by specially designated personnel to achieve expeditious processing through initial application processing and the design examining group. For a patentable design application, the expedited treatment is a streamlined filing-to-issuance procedure. This procedure further expedites design application processing by decreasing clerical processing time as well as the time spent routing the application between processing steps. Specially designated personnel are required to conduct and/or monitor the expedited clerical processing. Also, expedited design applications may be individually treated throughout the examination process where necessary for expedited treatment, whereas normally, the search phase of design application examination is conducted in groups. PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 Percentage change large (small) [micro] entity +78 (+78) [+78] FY 2018 unit cost $125 FY 2019 unit cost $97 For the first few years following the introduction of this program, requests for expedited examination of a design application were less than 1 percent of total design filings. In recent years, requests have increased to over 2 percent of total filings. As discussed in the NPRM, the increase in demand for this service forced the Office to choose to cap the program (i.e., impose limits on the number of expedited examinations it will undertake in a given fiscal year), end the program, or increase the fee. Increasing this optional fee will allow the USPTO to better manage staffing to match the demand for this service, while still keeping the service available as an option for those who may benefit from this program. The USPTO believes that this new fee amount, as well as the associated small and micro entity discounts, will provide the Office the ability to continue offering this service to applicants. (c) Utility and Reissue Patent Issue and Maintenance Fees E:\FR\FM\03AUR3.SGM 03AUR3 46944 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 5—UTILITY AND REISSUE PATENT ISSUE AND MAINTENANCE FEES—FEE CHANGES AND UNIT COST Final rule fees large (small) [micro] entity Current fees large (small) [micro] entity Fee description Utility issue fee ..................................................... Reissue issue fee ................................................ For maintaining an original or any reissue patent, due at 3.5 years ........................................ For maintaining an original or any reissue patent, due at 7.5 years ........................................ For maintaining an original or any reissue patent, due at 11.5 years ...................................... The Office is adjusting the issue fees by 20 percent and first stage maintenance fees by 25 percent. These adjustments will mark the first time maintenance fee rates have changed since 2013. The total package of fees in this Final Rule does not significantly impact the balance between front-end and back-end fees. The USPTO Dollar change large (small) [micro] entity Percentage change large (small) [micro] entity FY 2018 unit cost FY 2019 unit cost $1,000 ($500) [$250] $1,000 ($500) [$250] $1,200 ($600) [$300] $1,200 ($600) [$300] +$200 (+$100) [+$50] +$200 (+$100) [+$50] +20 (+20) [+20] +20 (+20) [+20] $325 $319 325 319 $1,600 ($800) [$400] $2,000 ($1,000) [$500] +$400 (+$200) [+$100] +25 (+25) [+25] n/a n/a $3,600 ($1,800) [$900] $3,760 ($1,880) [$940] +$160 (+$80) [+$40] +4 (+4) [+4] n/a n/a $7,400 ($3,700) [$1,850 $7,700 ($3,850) [$1,925] +$300 (+$150) [+$75] +4 (+4) [+4] n/a n/a shorter, it is important that the USPTO not rely too heavily on fees paid late in the life of a patent. Therefore, the Office is slightly rebalancing the back-end fees to recover the initial search and examination costs earlier in the life of the patent. continues to set front-end fees below the cost to the Office to provide those services in order to encourage innovation. Front-end fees for a utility patent with one RCE and lifetime maintenance will continue to be about 18 percent of the total fees paid over the life of a patent (see Table 6). However, as certain technology lifecycles grow TABLE 6—FRONT-END AND BACK-END FEE BALANCE Current Fee group Fee title Front-End Fees ................ Filing ................................. Search .............................. Examination ...................... 1st RCE ............................ $300 660 760 1,300 2 4 4 8 18 $320 700 800 1,360 2 4 4 8 18 Back-End Fees ................. Issue ................................. 1st Stage Maintenance .... 1,000 1,600 6 10 16 1,200 2,000 7 11 18 2nd Stage Maintenance ... 3rd Stage Maintenance .... 3,600 7,400 22 44 66 3,760 7,700 21 43 64 16,620 100 100 17,840 100 100 Large entity fee Total .......................... khammond on DSKJM1Z7X2PROD with RULES3 Final rule The issue fee for utility and reissue patents is increasing from $1,000 to $1,200, and the first stage maintenance fee is increasing from $1,600 to $2,000. As a result, the combined fees paid for issue and first stage maintenance is increasing from 16 percent to 18 percent of the total fees paid for a utility patent with one RCE and lifetime maintenance. However, second and third stage maintenance fees are only increasing by 4 percent—less than the across-the- VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Group’s percent of total Percent of total board adjustment—with second stage increasing from $3,600 to $3,760 and third stage increasing from $7,400 to $7,700. The Office determined elasticity estimates for the three maintenance payments for both large and small entities. For all point estimates and confidence intervals, maintenance fees were found to be inelastic, with the first stage being the least elastic of these fees. More detailed information on elasticity PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 Large entity fee Group’s percent of total Percent of total estimates can be found at https:// www.uspto.gov/FeeSettingAndAdjusting in the document entitled ‘‘Setting and Adjusting Patent Fees during Fiscal Year 2020—Description of Elasticity Estimates.’’ (d) AIA Trial Fees E:\FR\FM\03AUR3.SGM 03AUR3 46945 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 7—AIA TRIAL FEES—FEE CHANGES AND UNIT COST Current fees large (small) [micro] entity Fee description Inter partes review request fee—Up to 20 claims Inter partes review post-institution fee—Up to 15 claims * ............................................................. Inter partes review post-institution fee—Up to 20 Claims * ............................................................. Inter partes review request of each claim in excess of 20 ......................................................... Inter partes post-institution request of each claim in excess of 15 * ............................................... Inter partes post-institution request of each claim in excess of 20 * ............................................... Post-grant or covered business method review request fee—Up to 20 claims .......................... Post-grant or covered business method review post-institution fee—Up to 15 claims * ............. Post-grant or covered business method review post-institution fee—Up to 20 claims * ............. Post-grant or covered business method review request of each claim in excess of 20 ............. Post-grant or covered business method review post-institution request of each claim in excess of 15 * ....................................................... Post-grant or covered business method review post-institution request of each claim in excess of 20 * ....................................................... Final rule fees large (small) [micro] entity Dollar change large (small) [micro] entity Percentage change large (small) [micro] entity FY 2018 unit cost FY 2019 unit cost $15,500 $19,000 +$3,500 +23 $15,016 $17,887 15,000 n/a n/a n/a 25,490 27,376 n/a 22,500 n/a n/a n/a n/a 300 375 +75 +25 n/a n/a 600 n/a n/a n/a n/a n/a n/a 750 n/a n/a n/a n/a 16,000 20,000 +4,000 +25 21,465 26,296 22,000 n/a n/a n/a 29,842 40,791 n/a 27,500 n/a n/a n/a n/a 375 475 +100 +27 n/a n/a 825 n/a n/a n/a n/a n/a n/a 1,050 n/a n/a n/a n/a khammond on DSKJM1Z7X2PROD with RULES3 * The post-institutional threshold for paying claims fees will increase from 15 to 20. On April 24, 2018, the U.S. Supreme Court issued its decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). As required by the decision, the PTAB will institute a trial as to all claims or none. Previously, the PTAB instituted a trial on just some claims. This has increased the amount of time spent per case post-institution. The Office has also modified its preinstitution practice to take into account the impacts of the SAS decision. For example, prior to SAS, the PTAB did not generally address all arguments at institution. Post-SAS, for purposes of deciding whether to institute trial on a petition, the Office’s policy is to provide details to the parties to the extent practicable, including responding to arguments in a patent owner’s preliminary response that were not the basis for the decision whether or not to institute. This has increased the amount of time spent per case pre-institution. These changes related to the SAS decision have increased the average cost to conduct each proceeding. Other implementations, such as providing automatic sur-replies and prehearing conferences, were made to help provide additional fairness and certainty to the parties and public while continuing the PTAB’s practice of rendering high-quality decisions within the statutory time limits applicable to VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 AIA trial proceedings; however, these changes, too, have increased the average cost of conducting each proceeding. The post-institutional threshold for paying excess claim fees is increasing from 15 to 20 claims so as to match the PTAB’s request threshold, reflecting the fact that, following the Supreme Court decision in SAS, the PTAB is required to institute all claims or none. The NPRM proposed fees based on the Office’s best estimates at that time, taking into consideration the cost increases already experienced, plus future inflationary cost growth. Since then, the Office has collected and analyzed the additional cost data available through the end of FY 2019. In addition, the Office has taken into account uncertainties resulting from changes in the way in which AIA trials are conducted. While the unit cost data (see Table 7) shows that post-institution costs have increased more than pre-institution costs, pre-institution costs have also increased. These costs have increased in response to the Supreme Court’s SAS decision, as discussed above. In addition, in response to feedback from stakeholders, the Office has modified its approach to concurrent petitions challenging the same patent or patents in the same family filed by the same petitioner. Specifically, the Board PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 now considers whether to exercise its discretion to limit the number of these parallel petitions that may, if the threshold is met, be instituted. Similarly, the Board has undertaken a closer review of petitions to determine whether they raise issues that were considered by the examiner during ex parte prosecution or during other proceedings before the Office. To evaluate these requests the Board must make close comparisons between the challenges to determine whether it should exercise its discretion and institute a trial. Such comparisons require analyzing the prior art cited in the petitions and evaluating the reasons given by the petitioners for filing additional petitions. As this development in AIA trial practice is relatively recent (within the last 12 months), the Office does not yet have an accurate model to predict how many requests it will receive and how much additional effort will be necessary to evaluate them. To account for these uncertainties, it is necessary to set the pre-institution fees for inter partes reviews at $19,000. This 23 percent increase is less than the 25 percent increase proposed in the NPRM but above the FY 2019 unit cost. The preinstitution fee is set at more than the FY 2019 unit cost to take into account the uncertainties outlined above that arose E:\FR\FM\03AUR3.SGM 03AUR3 46946 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations in that year and are expected to continue in FY 2020 and beyond. The post-institution fee is set to $22,500 for inter partes review, which is above the increase proposed in the NPRM but considerably lower than the FY 2019 actual unit cost. As a result of the SAS and Arthrex Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) decisions, there has been an increase in the number of remands to the PTAB, which has increased the postinstitution amount of work and costs. At this time, it remains unclear whether the post-institution costs will remain at the current level or decrease after the SAS and Arthrex remands have been fully addressed. Accordingly, the postinstitution fee is set above the proposed NPRM fee, which is above the pre-SAS FY 2017 unit costs but below the postSAS FY 2019 unit costs. The Office continues to evaluate the data as it becomes available to better understand the long-term impact of SAS on postinstitution costs. Post-grant review and covered business method review fees will be maintained at the rates proposed in the NPRM, at $20,000 for pre-institution and $27,500 for post-institution. These fee rates are above the respective inter partes review fees, due to the additional work involved with post-grant and covered business method reviews, but below the FY 2019 actual unit costs for post-grant reviews and covered business method reviews due to uncertainties about future costs. Specifically, postgrant reviews and covered business method reviews may raise additional issues beyond those raised in inter partes reviews, such as patent eligibility, written description, enablement, indefiniteness, and public use. Further, given the additional issues that may be raised, post-grant reviews and covered business method reviews provide 33 percent higher word limits for petitions, patent owner responses, and preliminary responses. While the actual unit costs for post-grant and covered business method reviews have typically been higher than the unit costs for inter partes reviews for these reasons, it is harder to determine the precise cost of post-grant and covered business method reviews. Due to a relatively small number of trials (approximately 60 post-grant reviews or covered business method reviews annually), the data on actual unit costs can vary from year to year. Therefore, it is unclear whether the post-SAS costs will remain at the current levels. The Office will continue to evaluate data as it becomes available to better understand the long-term impact of SAS on post-grant review and covered business method review costs. This rulemaking will help the PTAB continue to maintain the appropriate level of judicial and administrative resources to continue to provide highquality and timely decisions for AIA trials. (2) New Fees (a) Non-DOCX Filing Surcharge Fee TABLE 8—NON-DOCX FILING SURCHARGE FEE—FEE CHANGES AND UNIT COST Current fees large (small) [micro] entity Fee description khammond on DSKJM1Z7X2PROD with RULES3 Surcharge—non-DOCX filing ............................... The Office is implementing a new fee for utility non-provisional applications filed under 35 U.S.C. 111 and submitted in a format other than DOCX (structured text). This surcharge applies to filings that are submitted in an electronic document, such as a PDF, that is not saved in the DOCX format. It also applies to filings that are submitted nonelectronically, in addition to the existing paper filing surcharge. The surcharge is being introduced for specifications, claims, and abstracts. The submission in DOCX format will facilitate improvements in the efficiency of patent operations. After careful consideration of public comments, the Office has decided to delay the implementation of the non-DOCX filing surcharge, and it will become effective on January 1, 2022. Over the next several months, the Office will continue with its outreach efforts, addressing customer concerns and providing ample time for applicants to transition to this new process. Using EFS-Web, anyone with a webenabled computer can file patent VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Final rule fees large (small) [micro] entity New $400 ($200) [$100] Dollar change large (small) [micro] entity +$400 (+$200) [+$100] applications and documents without downloading special software or changing document preparation tools and processes. Registering as an EFSWeb eFiler allows enhanced filing, follow-on processing, saved submissions, and more. EFS-Web registered eFilers have been able to file specification, abstract, and claims in DOCX for utility non-provisional filings since August 2017. Launched in 2015, the eCommerce Modernization (eMod) Project aims to improve the electronic application process for patent applicants by modernizing the USPTO’s filing and viewing systems. Recent improvements include implementing structured text functionalities. Structured text allows applicants to more easily submit their documents as text-based documents rather than having to create PDF documents. This streamlines the application and publication processes. The Office tested the capabilities of structured text within EFS-Web and PAIR with the eMod Text Pilot Program, which ran from August 2016 until PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 Percentage change large (small) [micro] entity n/a (n/a) [n/a] FY 2018 unit cost n/a FY 2019 unit cost n/a September 2017. The pilot was successful, and many improvements were made based on feedback from applicants, including independent inventors, law firms, and corporations. Structured text features are now available to all EFS-Web-registered and Private PAIR users and give applicants the ability to file structured text via EFS-Web and access structured text submissions, structured text Office actions, and Extensible Markup Language (XML) downloads via Private PAIR. Additional information can be found in the associated DOCX quick start guide available on the USPTO website, https://www.uspto.gov/patentsapplication-process/checkingapplication-status/quick-start-guides. For more information on filing in DOCX, please visit https:// www.uspto.gov/patent/docx. To encourage the filing of more applications in structured text, the required fee surcharge applies to application filings that do not include the specification, claims, and abstract in DOCX format. This will accelerate the E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations adoption of DOCX to realize a variety of benefits. Both the USPTO and applicants will see increased efficiencies, over the lifetime of an application, from encouraging DOCX filings. Based on a USPTO survey, over 80 percent of applicants author their patent applications in DOCX in the normal course of business. Filing in structured text allows applicants to submit their specifications, claims, and abstracts in text-based format and eliminates the need to convert structured text into a PDF for filing. Applicants can access examiner Office actions in text-based format, which makes it easy to copy and paste when drafting responses. The availability of structured text also improves accessibility for sight-impaired customers who use screen reading technology. DOCX filing provides opportunities to increase efficiency in the Office. It enables the development of software to provide automated initial reviews of applicant submissions to help reduce the effort required by the Office. The automated reviews can tell applicants up front if potential problems exist and allow them to make changes prior to or at the time of submission. This also improves validation based on content, such as claims validation for missing claim numbering or abstract validation for word count and paragraph count. Increased DOCX filing will also lead to higher data quality by reducing system conversion errors. It provides a flexible format with no template constraints. It also improves data quality by supporting original formats for chemical formulas, mathematical equations, and tables. DOCX filing also improves document identification by automatic detection, allows for greater reuse of content, and provides improved searching for patent applications and submissions. The originally submitted structured text document is available in Private PAIR, allowing easy retrieval of original DOCX files. Structured text usage also helps streamline the application process and provides benefits for the USPTO. The Office converts image-based filings (e.g., PDF documents) into text-based format for internal processing. Text-based filings will allow the Office to skip this time-consuming and costly step. Optical character recognition (OCR) of imagebased filings costs the Office approximately $3.15 per new submission. In addition to the initial submission, the use of image-based PDFs incurs many costs over the lifetime of an application. There are large costs associated with the USPTO’s systems and personnel—from preexamination, examination, and publication—due to the need to apply OCR to convert image-based PDFs into structured text that can be leveraged by downstream systems. The surcharge is applied not only to account for these inefficiencies, but also to address rising expenses. Encouraging text-based filings 46947 will decrease the Office’s costs. If, in the future, the program were extended to additional application documents besides specifications, claims, and abstracts, the potential savings could reach as much as $9.0 million annually. XML generated from DOCX files complies with the international World Intellectual Property Office (WIPO) Standard ST.96 from intake through display and use in examination tools. Receiving filings through structured text makes documents automatically available to examiners in almost realtime. DOCX filing also improves examination consistency by using automated tools to analyze text, increases the accuracy of examiner formalities reviews and tools (i.e., claims tree generators and document comparison), and improves results in automated pre-search and future analytics (i.e., section 112(b) and (f) evaluations) by using text supplied by applicants. DOCX submission contributes to the USPTO’s plan to begin the automation of publication processes, which will lead to large cost reductions in the production of patent artifacts (grants and pre-grant publications), and contributes to the USPTO’s plan to begin the automation of processes to assist in formalities reviews, classification, and routing, which leads to improved patent quality, reduced pendency, and greater consistency. (b) Pro Hac Vice Fee TABLE 9—PRO HAC VICE FEE—FEE CHANGES AND UNIT COST Fee description khammond on DSKJM1Z7X2PROD with RULES3 Fee for non-registered practitioners to appear before the Patent Trial and Appeal Board ....... In this Final Rule, the Office is implementing a fee to appear pro hac vice in an AIA trial proceeding. The non-registered practitioner fee is for each proceeding that a non-registered practitioner requests admission to practice. If a non-registered practitioner requests admission to multiple AIA trial proceedings, multiple requests and fees will be required, one for each proceeding. Once a request is granted, the counsel is admitted for the entire duration of a proceeding, which may extend for several years, (e.g., when an inter partes review proceeds to final written decision, and, after appeal to the Federal Circuit, is remanded back to the VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Current fees large (small) [micro] entity Final rule fees large (small) [micro] entity Dollar change large (small) [micro] entity Percentage change large (small) [micro] entity FY 2018 unit cost FY 2019 unit cost New $250 +$250 n/a n/a n/a PTAB for further proceedings). By instituting the pro hac vice fee, the Office will be able to shift the cost of the service of processing these requests from the overall AIA trial fees to the requesting, non-USPTO registered counsel. (c) Annual Active Patent Practitioner Fee In the NPRM, the USPTO proposed a new fee called the annual active patent practitioner fee, and an associated fee structure, under 37 CFR 1.21 and 11.8, so that patent practitioners, who directly benefit from registration, would bear the costs associated with PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 maintaining the integrity of their profession, including the costs of OED’s register maintenance and disciplinary functions. The fee collections were proposed to shift the costs of the services OED provides patent practitioners in administering the disciplinary system and register maintenance from patent applicants and owners to the patent practitioners. The annual active patent practitioner fee was proposed to be $340, with a $100 annual fee discount for those who certified completion of a certain number of CLE. In addition, the Office proposed that registered practitioners who are endorsed on the register as voluntarily E:\FR\FM\03AUR3.SGM 03AUR3 46948 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations inactive would be liable for a fee of $70 per year to cover OED’s administrative costs in maintaining the register and updating their information. Finally, a new emeritus status was proposed for active patent practitioners who have been registered for ten or more years to elect emeritus status, subject to certain conditions. However, during the public comment period, the USPTO received a number of comments expressing concerns over the proposed new fee. Having further considered the public feedback on this proposal, the USPTO has determined that it will not at this time implement the annual active patent practitioner fee, the proposed new voluntarily inactive fee, or the proposed emeritus status. The Office continues to recognize the value of CLE in maintaining and enhancing patent practitioners’ legal skills. In addition, the Office recognizes that it is beneficial to provide information regarding a registered practitioner’s CLE status to the public. Thus, while completion of CLE remains voluntary, the USPTO intends to recognize patent practitioners who certify completion of six hours of CLE in the preceding 24 months, including five hours of patent law and practice and one hour of ethics credit, in the online practitioner directory. In the near future, the USPTO intends to issue proposed CLE guidelines, with a request for public comment on them. It is anticipated that the proposed guidelines will address the types of CLE courses that may qualify for recognition and the form of recognition for patent practitioners who certify that they have completed the CLE. khammond on DSKJM1Z7X2PROD with RULES3 Registration Statement Although the USPTO is not implementing the annual active patent practitioner fee in this Final Rule, the Office intends to communicate with practitioners on a periodic basis for register maintenance. Thus, biennially, registered practitioners, as well as individuals granted limited recognition under 37 CFR 11.9(b), will be required to file a registration statement with the OED director. Notice will be provided to patent practitioners at least 120 days in advance of the due date for the filing of the registration statement, electronically, through the USPTO’s online system. The registration statement takes the place of the practitioner survey, which is administered on paper. The USPTO anticipates that patent practitioners will first be required to submit a registration statement in the spring of 2022. Registered practitioners will not be VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 required to pay any fee at the time the registration statement is filed. Failure to file the registration statement by the due date may result in the registered practitioner being subject to a delinquency fee and possible administrative suspension, as was the case for a patent practitioner who failed to respond to the practitioner survey. Specifically, if a registered practitioner, or a person granted limited recognition pursuant to 37 CFR 11.9(b), fails to file the registration statement by the due date, the OED director will publish and send a notice to the registered practitioner advising them of the failure to file the registration statement, the consequence of being administratively suspended, and the requirements for reinstatement. The notice will request filing of the registration statement within 60 days after the date of such notice. If a patent practitioner fails to comply with the notice within the time allowed, the OED director will then publish and send to the practitioner a Rule to Show Cause why his or her registration or recognition should not be administratively suspended. The OED director shall file a copy of the Rule to Show Cause with the USPTO director. The practitioner will be given 30 days from the date of the Rule to Show Cause to file a response with the USPTO director. The response should address any factual and legal bases why the practitioner should not be administratively suspended. Within 10 days of receiving a copy of the response, the OED director may file a reply with the USPTO director. The USPTO director will enter an order either dismissing the Rule to Show Cause or administratively suspending the practitioner. The aforementioned is the same procedure currently used when a registered practitioner fails to timely respond to the practitioner survey. Reinstatement The sections referring to reinstatement from administratively inactive status remain unchanged from the current regulations. The reinstatement sections relating to other statuses are set forth below. Administratively Suspended Under this Final Rule (37 CFR 11.11(f)(1)), any registered practitioner, or person granted limited recognition, who has been administratively suspended for less than five years may be reinstated on the register provided the patent practitioner is not a party to a disciplinary proceeding. Thus, the Final Rule eliminates the requirement that a registered practitioner who is PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 administratively suspended for more than two years (but less than five years) take and pass the registration examination in order to be reinstated. To apply for reinstatement, the practitioner will need to submit an application form supplied by the OED, demonstrate compliance with the provisions of § 11.7(a)(2)(i), submit a declaration or affidavit attesting to the fact that the practitioner has read the most recent revisions of the patent laws and the rules of practice before the Office, and pay the fees set forth in § 1.21(a)(9)(i) and (ii). However, under this Final Rule, any administratively suspended registered practitioner or person granted limited recognition who seeks reinstatement more than five years after the effective date of administrative suspension, also shall be required to file a petition to the OED director requesting reinstatement and providing objective evidence that they continue to possess the necessary legal qualifications to render valuable service to patent applicants. The objective evidence may include taking and passing the registration examination. Resigned Any registered practitioner who has been resigned for less than five years may be reinstated on the register provided the practitioner is not the subject of a disciplinary investigation or a party to a disciplinary proceeding. Thus, the Final Rule eliminates the requirement that a registered practitioner who was resigned for more than two years (but less than five years) take and pass the registration examination in order to be reinstated. To apply for reinstatement, the practitioner will need to submit an application form supplied by the OED, demonstrate compliance with the provisions of § 11.7(a)(2)(i), submit a declaration or affidavit attesting to the fact that the practitioner has read the most recent revisions of the patent laws and the rules of practice before the Office, and pay the fees set forth in § 1.21(a)(9)(i) and (ii). However, under this Final Rule any registered practitioner who seeks reinstatement after having been in resigned status for five years or more also shall be required to file a petition to the OED director requesting reinstatement and providing objective evidence that they continue to possess the necessary legal qualifications to render valuable service to patent applicants. The objective evidence may include taking and passing the registration examination. E:\FR\FM\03AUR3.SGM 03AUR3 46949 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations C. Discontinued Fees This section describes fees that are being discontinued. The purpose of this action is to help streamline the patent fee schedule while also focusing USPTO workforce efforts on producing products that benefit the general public rather than producing outputs for individual customers. TABLE 10—DISCONTINUED FEES Current fees large (small) [micro] entity Fee description khammond on DSKJM1Z7X2PROD with RULES3 Copy of Patent Technology Monitoring Team (PTMT) patent bibliographic extract and other DVD (optical disc) (currently at § 1.19(j)) ......... Copy of U.S. patent custom data extracts (currently at § 1.19(k)) ............................................ Copy of selected technology reports, miscellaneous technology areas (currently at § 1.19(l)) For USPTO-assisted recovery of ID or reset of password for the Office of Enrollment and Discipline Information System (currently at § 1.21(a)(6)(i)) ................................................... In January 2018, to comply with Executive Order 13681 (Improving the Security of Consumer Financial Transactions), select computer service fees were discontinued and the services made free. The three changes to the fees at 37 CFR 1.19 follow that trend. The service fees in § 1.19 will be eliminated, and the Office will instead provide these services in a slightly modified form (i.e., electronic) for free. The first fee being discontinued is the current 37 CFR 1.19(j) fee for a copy of the Patent Technology Monitoring Team (PTMT) patent bibliographic extract and other DVDs. PTMT patent bibliographic data is currently available online for free, curtailing the need for the USPTO to send out extracts on disc. The second fee being discontinued is the current 37 CFR 1.19(k) fee for a copy of U.S. patent custom data extracts. With the elimination of this service fee, the USPTO will create the common customizations and release them online, free to the public, at the same time the data is released. Further customizations will be discontinued. Additionally, PatentsView (http:// www.patentsview.org), while not an official USPTO data source, meets many of the needs of those requesting custom data extracts at no charge to the consumer. The third fee being discontinued is the current 37 CFR 1.19(l) fee for a copy of selected technology reports in miscellaneous technology areas. Selected technology reports are currently available online for free, curtailing the need for the USPTO to send out paper copies of the reports. Upon consideration of public comments, a fourth fee being VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Final rule fees large (small) [micro] entity Dollar change large (small) [micro] entity FY 2019 unit cost Discontinued ¥$50 n/a n/a n/a 100 Discontinued ¥$100 n/a n/a n/a 30 Discontinued ¥30 n/a n/a n/a 70 Discontinued ¥70 n/a 15 18 VI. Discussion of Comments Comments and Responses The USPTO published a proposed rule on July 31, 2019, soliciting comments on the proposed fee schedule. In response, the USPTO received comments from four intellectual property organizations and 40 individuals, attorneys, law firms, corporations, and other associations. These comments are posted on the USPTO’s website at https:// www.uspto.gov/FeeSetting AndAdjusting. The summaries of comments and the Office’s responses to the written comments follow. General Fee Setting Approach Comment 1: One commenter stated support for the proposed patent fee schedule. The commenter noted that the USPTO must continue to focus on reducing pendency and backlogged applications. Increased fees result in increased revenues, which allow for additional examiners to be hired. The commenter expressed that an increase in funding for examining allows applications to be processed faster and reduces the current backlog. Further, the focus on increasing up-front fees allows the USPTO to collect fees for the most cost-intensive operations. Response: The USPTO appreciates the feedback from the commenter and is committed to achieving the goals Frm 00019 FY 2018 unit cost $50 discontinued is the fee for the USPTOassisted recovery of ID or reset of password for the Office of Enrollment and Discipline Information System. This fee is being removed, as it is unnecessary. PO 00000 Percentage change large (small) [micro] entity Fmt 4701 Sfmt 4700 developed in consultation with the stakeholder community as set forth in the Strategic Plan. The USPTO has carefully considered the balance of front-end and back-end fees. In this Final Rule, the balance between frontend and back-end fees is not significantly impacted. However, as certain technology lifecycles grow shorter, it is important that the USPTO not rely too heavily on fees paid late in the life of a patent. Therefore, the Office is slightly rebalancing the fees to recover the initial search and examination costs earlier in the life of the patent. Comment 2: Several commenters expressed support for the Office’s work to ensure adequate funding. They are supportive of the goals of this fee setting, especially recovering aggregate estimated costs of patent operations and optimizing patent timeliness and quality. Response: The USPTO appreciates the feedback from the commenter and is committed to pursuing the goals in the Strategic Plan in a fiscally responsible manner. Comment 3: One commenter expressed support for the operating reserve, its goals, and the detailed supporting information contained in the NPRM. Response: The USPTO appreciates the feedback from the commenter. The operating reserve is an important tool that helps mitigate financial and operational risks and facilitate execution of multi-year plans in order to achieve the goals set forth in the Strategic Plan. The operating reserve also allowed the USPTO to remain open E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46950 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations and operational during the 35-day lapse in appropriations during FY 2019. Comment 4: One commenter stated that the USPTO should continue to prioritize patent quality, and if fee increases are needed, the increased resources should be devoted to ensuring examiners receive the time and resources they need to assess each application and all the relevant prior art. The commenter noted it is important that patent policy be crafted to limit the possibility that low-quality patents get in the way of technical and economic progress. Response: The Office’s strategic goal to optimize patent quality and timeliness recognizes the importance of innovation as the foundation of American economic growth and competitiveness. Through this goal, the Office diligently works to balance timely examination with improvements in patent quality, particularly the reliability of issued patents. Based on assumptions and estimates found in the FY 2021 Budget, the fee schedule in this Final Rule will recover the aggregate estimated costs of patent operations, including achieving the Office’s strategic goals. Comment 5: One commenter suggested that the Office consider phasing in fee increases to provide patentees adequate time to prepare for and adapt to the increased costs. Response: The Office realizes that higher fees will affect budgets. In the same way, the USPTO is experiencing an increase in aggregate costs, and the fee increases are necessary in order to deliver on the priorities listed in the Strategic Plan. The Office notes 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 the PPAC in August 2018, and the fee schedule in this Final Rule will not take effect until fall 2020, with the non-DOCX filing surcharge effective January 2022. As part of the fee setting process, the public had two opportunities to review and comment on the fee proposals. The public and PPAC feedback allowed the USPTO to refine the fee proposal in both the NPRM and this Final Rule. Comment 6: One commenter noted stakeholder concerns about the increasing uncertainty of patent rights and encouraged the USPTO to carefully consider whether excessive fee increases might have the unintended consequence of discouraging filings. Response: The Office appreciates the commenter’s concern and carefully considered the fee schedule in this Final Rule. The Office undertook an elasticity VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 analysis (i.e., an assessment of the degree to which changes in fee rates may affect demand for services) as part of this rulemaking, and a description of elasticity estimates can be found at https://www.uspto.gov/FeeSetting AndAdjusting. Comment 7: One commenter expressed support for the reduction in fees based on organization size. Response: The USPTO appreciates the feedback from the commenter and is committed to providing, as allowed by statute, fee reductions for small and micro entity innovators to facilitate access to the patent system. Comment 8: Multiple commenters noted the need for the USPTO to consider smaller entities when raising fees. Some noted that fee increases are prohibitive for pro se inventors, small entities, and micro entities and feel they will be disproportionately affected by these fee increases. Response: The USPTO appreciates the concern about increasing fees. For small businesses and individual filers, the fees for small and micro entity rates are tiered, with small entities at a 50 percent discount and micro entities receiving a 75 percent discount on the fees for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents. Small or micro entity discounts are available for those who are eligible in 86 of the 125 large entity fee rates being set or adjusted in this Final Rule. Comment 9: One commenter requested that the USPTO carefully consider whether further reductions in the fees are possible for small entities, and especially micro entities, while maintaining the legitimate goals articulated in the fee proposal. Similarly, another commenter suggested that, instead of increasing the fees, the USPTO could provide more financial assistance to individual inventors who can prove their individual inventor status. Response: The Office does not have the legal authority to provide further reductions in the fees for small and micro entities or to provide direct financial assistance. However, the USPTO notes that under the fee structure included in this Final Rule, an indirect financial assistance to small and micro entities is provided in the form of subsidizing the cost of patent application prosecution. For example, the costs to the Office, from filing through issue, exceed the fees paid by a micro entity who maintains a patent through the full term. Further, small entity fees only cover the costs to the Office if a patent is maintained for the full term. Therefore, maintenance fees PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 paid by large entity patentees and small entity patentees who maintain their patent for a full term are used in part to subsidize the filing, search, and examination costs for all applicants, including small and micro entities. Comment 10: One commenter questioned what the Office could do to encourage greater participation by small and micro entities in obtaining and maintaining patents. Response: Helping small businesses and independent inventors with limited resources is important to the USPTO. It has several free or reduced fee programs to assist independent inventors and small businesses in securing patent protection for their inventions, such as the Patent Pro Bono Program, Pro Se Assistance Program, and Law School Clinic Certification Program. More information on these programs can be found on the USPTO website: • https://www.uspto.gov/ ProBonoPatents • https://www.uspto.gov/ProSePatents • https://www.uspto.gov/ LawSchoolClinic Another advantage that the USPTO offers for small and micro entities is reduced fees. An applicant who meets the micro entity requirements is eligible for a 75 percent reduction on most fees, and small entity status offers a 50 percent fee reduction. Comment 11: One commenter stated that it is important to keep barriers to entry (fees) low enough that startups can obtain patents (e.g., application and examination fees), maintain them (e.g., maintenance fees), and challenge others’ low-quality patents that should not have been issued in the first place (e.g., AIA trial fees). The commenter stated it is essential for startups to be able to reap the benefits at each stage. Response: The USPTO agrees that it is important to keep front-end fees low enough so as not to prevent entry into the patent system. The USPTO also designs the fee structure so that fees to obtain and maintain a granted patent increase only as the age of the patent increases to minimize the financial impact early in the life of a patent application or patent. In this Final Rule, the balance between front-end and backend fees is not significantly impacted. The USPTO continues to set front-end fees below the cost to the Office to provide those services, in order to encourage innovation. While this Final Rule increases the issue and first stage maintenance fees, the fee schedule continues to maintain those fees below second stage maintenance fees and keeps the balance of front-end and backend fees substantially the same. The E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES3 USPTO also maintains small and micro entity discounts for the fees for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents. Comment 12: One commenter suggested that the Office should reduce the cost of filing certain patent applications by allowing an applicant to defer payment of some fees without penalty. Response: In the future, the USPTO may consider changes to the timing of fee payments for search and examination. Currently, however, except for provisional applications, each application for a patent requires the appropriate search and examination fees in addition to the patent application filing fees. Deferring payment of some fees would require a large enough operating reserve to sustain operations during the period in which fee collections would be lower due to the delayed payment of fees. The adjusted fee schedule set forth in this rulemaking will help replenish and grow the patent operating reserve to position the USPTO for future changes, such as those suggested by the commenter. Comment 13: One commenter noted the USPTO’s tendency to follow or align with patent practices in other countries, in fee structure and other aspects of the patent system. The commenter hopes the leaders and government agencies of our country are aware of the long-term consequences of the actions they take. Response: The Office and the administration carefully analyze all policy decisions before implementation. This includes considering best practices of other countries’ IP systems. When appropriate, the Office may implement practices similar to other national IP offices. Changes to policies are considered after public comments have been reviewed and a cost-benefit analysis has been performed (Regulatory Impact Analysis). Enactment of policy change occurs if generally supported by public comment and the corresponding costbenefit analysis displays a positive, long-term impact. Across-the-Board Adjustment to Patent Fees Comment 14: One commenter stated the fee increase should only reflect a cost-of-living increase to keep pace with inflation. Response: The USPTO appreciates the concern about rising fees and continuously evaluates its processes and costs to ensure the Office is achieving the optimal value from the resources used to carry out operations. Despite that, the USPTO must adjust fees to VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 recover the aggregate estimated cost to the Office for processing, activities, services, and materials relating to patents, including cost-of-living increases and administrative costs of the Office with respect to such patent fees over a multi-year period. Comment 15: One commenter expressed that the fee for the USPTOassisted change of address should be eliminated. Response: The USPTO would like to remind customers that they are able to perform this process online as a selfservice option free of charge. The change of address fee is only charged if it is requested that the USPTO perform this task instead of the customer utilizing the self-service options. The USPTO is not targeting this fee for a specific increase. Instead, this fee is increasing as part of the group of fees subject to the 5 percent across-the-board adjustment to patent fees. This fee was set in a previous rulemaking, and that structure is not changed in this Final Rule. Comment 16: One commenter expressed that the fee for the USPTOassisted recovery of ID or reset of password should be eliminated. Response: The fee for USPTO-assisted recovery of ID or reset of password for registered practitioners has been removed as unnecessary. Comment 17: One commenter noted that the NPRM does not state a rationale for the second and subsequent RCE fee to be different than the RCE fee for a first request. Response: The individual RCE fees were set at different amounts in a previous rulemaking, the January 2013 Final Rule (which set forth the rationale for the difference in those fees), and that structure is not changed in this Final Rule. The USPTO is not targeting these fees for a specific increase. Instead, the fees for RCEs—both for the first request and for second and subsequent requests—are being adjusted by the across-the-board adjustment to patent fees. Comment 18: One commenter wrote that the increase in the second and subsequent RCE fee would hurt small entity applicants and small entity law firms. The Initial Regulatory Flexibility Analysis offered no explanation justifying that differential effect on small entities. Response: The USPTO is not targeting the RCE fees for a specific increase. Instead, the fees for RCEs—both for the first request and for the second and subsequent requests—are being adjusted by the across-the-board adjustment to patent fees. The USPTO would like to note that small and micro entity PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 46951 applicants will continue to receive the small and micro entity discounts, which set the fee rates significantly below cost to examine second and subsequent RCE filings. Additionally, the Regulatory Flexibility Analysis analyzed applicants’ sensitivity to changes in fee rates by entity size, including RCE fees for small entities. This impact is also included in the RIA completed for this rulemaking, which is available at https://www.uspto.gov/FeeSetting AndAdjusting. Comment 19: One commenter stated that the methodology for calculating the unit cost for second and subsequent RCE filings is not in the Activity Based Information and Patent Fee Unit Expense Methodology document. Response: The commenter can find this information in the ‘‘Setting and Adjusting Patent Fees during Fiscal Year 2020—Activity Based Information and Patent Fee Unit Expense Methodology’’ document, on page 22, before Table 2. ‘‘Similarly, the same incremental approach is used to determine the expense of the second and subsequent RCE. The two scenarios presented to determine incremental expense for the second RCE are slightly different than for the first RCE, but the same basic method applies. The scenarios are: (1) The expense of a single application that has already performed one RCE, and (2) the expense of a single application that has completed a second RCE. All other calculation methods remain the same.’’ Additionally, the detail on the exact calculations for FYs 2016, 2017, and 2018 can be found on page 41 of the ‘‘USPTO Fee Unit Expense Calculation Detail’’ document under the heading ‘‘Latest patent fee setting information.’’ Both documents can be found at https:// www.uspto.gov/FeeSetting AndAdjusting. Comment 20: One commenter suggested that the proposed fee for submission of an information disclosure statement (IDS) is too high and may discourage prompt disclosure of material references. The commenter suggested that if the fee is increased, the Office could consider a tiered rate structure with a discounted IDS fee for submitting an IDS with fewer than five or 10 references, or below a certain page count for non-patent literature. Response: There is no fee for filing of an IDS if it is filed before the mailing of a first Office action. The USPTO is not targeting these fees for a specific increase. Instead, the fee for submission of an IDS is increasing as part of the group of fees subject to the 5 percent across-the-board adjustment to patent fees that is being set to help the USPTO E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46952 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations keep pace with inflationary cost increases. The single IDS fee was set in a previous rulemaking, and that structure is not changed in this Final Rule. The USPTO will consider the commenter’s suggestions for changes to the structure and fee amount for IDS fees for future fee adjustments. Comment 21: One commenter suggested the proposed increase to the fee for extension of time for response within the first month is too high. The commenter stated the increased fee makes it more difficult for practitioners to provide a thorough response, especially for complex issues where input and review may be required from multiple inventors, licensees, and/or owners. The commenter indicated that the need for extensions of time may be outside of the applicant’s control when extensions are required to maintain pendency after a response to a final Office action. Response: The Office recognizes that there are instances in which an applicant would need to extend the time period for responding to an Office action. However, an applicant may file a first after final reply within two months of the final rejection to avoid some of the costs associated with maintaining pendency after a reply to a final Office action. The USPTO is not targeting these fees for a specific increase. Instead, all fees for extensions of time for response are being increased as part of the 5 percent across-the-board adjustment to patent fees that are being set to help USPTO keep the pace with inflationary cost increases. Differences in the rate of increase result from rounding (the rounding rules are discussed in Part V: Individual Fee Rationale, A. Across-the-Board Adjustment to Patent Fees). Comment 22: One commenter suggested that increases in fees for extensions of time for response will fall disproportionately on small firms and solo practitioners. The commenter noted that fees for extensions of time for response beyond the third month are greater than the filing fees for a new application. The commenter believes that, with essentially no cost to the USPTO, this appears to be a penalty, not a reasonable fee increase. Response: These fees were set in a previous rulemaking, and the structure is not changed in this Final Rule. The USPTO is not targeting these fees for a specific increase. Instead, the increase in fees for extensions of time for response is part of the across-the-board adjustment to patent fees that is being set to help the USPTO keep pace with inflationary cost increases. Extension of time fees are intended to encourage VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 early submission of an applicant’s response to facilitate compact prosecution. Comment 23: One commenter stated that the increases in the notice of appeal fee and fee for forwarding an appeal in an application or ex parte reexamination proceeding to the Board should take into account the rate of reversal, in that the applicant should not bear the entirety of the cost of what could be interpreted as an error made by the Office. Response: The Office appreciates the feedback. Regardless of the outcome, the cost to render a decision on the appeal remains the same. The Office has limited the increase in both the notice of appeal fee and the fee for forwarding an appeal in an application or ex parte reexamination proceeding to the Board to the 5 percent across-the-board adjustment to patent fees. As a matter of policy, the Office has set the combined notice of appeal and fee for forwarding an appeal in an application or ex parte reexamination proceeding to the Board to less than half of the unit cost for deciding an appeal. Targeted Fee Adjustments Maintenance Fee Surcharge Comment 24: One commenter asked what information the USPTO had about the use of the maintenance fee grace period and the consequences. The commenter was concerned that higher fees could lead to greater conflict possibilities between clients and attorneys. A commenter suggested that the Office initiate procedures to notify patentees, by United States Postal Service (USPS) mail and email to all registered email addresses, of both the due date for the maintenance fees to be paid and entrance into the grace period. Response: The USPTO continuously monitors maintenance fee payments, including payments made during the grace period. While over 95 percent of maintenance fee payments are made in the six-month payment window prior to the grace period, the Office does recognize that a patentee may need the additional six-month grace period to make a decision on renewing their patent rights. Therefore, the Office lowered the proposed maintenance surcharge fee to $500 for large entities in the NPRM, compared to the initial proposal of $1,000. It is the responsibility of the patentee to ensure that maintenance fees are paid in a timely manner to prevent the expiration of a patent. Patentees are expected to maintain their own record and docketing systems. The Office does provide some notices as reminders that PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 maintenance fees are due, but the notices, errors in the notices or in their delivery, or the lack or tardiness of notices in no way relieve a patentee from the responsibility to make timely payment of each maintenance fee to prevent the patent from expiring by operation of law. The notices provided by the Office are courtesies in nature and intended to aid patentees. The Office’s provision of notices in no way shifts the burden of monitoring the time for paying maintenance fees on patents from the patentee to the Office. Comment 25: One commenter stated that those who delay payment of a maintenance fee include small entities, micro entities, and independent inventors, for whom the payment of a maintenance fee is often a significant investment. Forcing such entities to pay a higher surcharge fee does not appear to be justified in this circumstance. Response: The Office recognizes that the maintenance fee surcharge during the grace period affects small and micro entities as well as independent inventors. The Office lowered the proposed maintenance fee surcharge to $500 for large entities in the NPRM, compared to the USPTO’s initial proposal to PPAC of $1,000. Additionally, small and micro entity discounts apply to the maintenance fee surcharge as well as to the maintenance fees themselves. Comment 26: One commenter noted that no cost to the public of the sixmonth grace period was identified in the NPRM. Additionally, the commenter noted that a competitor would still need to wait until the expiration of the grace period to know that the maintenance fee has not been paid. Response: This rulemaking does not modify the maintenance fee grace period, nor does it change the timeline for submitting maintenance fee payments. The rulemaking simply adjusts the surcharge fee for submitting a maintenance fee payment during the six-month grace period, which provides patentees the option for an additional six months to submit maintenance fee payments. It is not anticipated that this fee adjustment will have a significant impact on patentees, since more than 95 percent of patent holders submit maintenance fee payments prior to the grace period. The impact of the fee adjustment to the maintenance fee grace period is included in the cost-benefit analysis provided in the RIA, available at https://www.uspto.gov/FeeSetting AndAdjusting. The Office cannot provide individuals legal advice on the status of a patent. The Office’s provision of notices of maintenance fee payments in no way shifts the burden of E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations monitoring the time for paying maintenance fees on patents from the patentee or other relevant stakeholders to the Office. Comment 27: One commenter wanted to know what other IP offices have late payment surcharges for maintenance fees, along with more information on those offices’ maintenance/annuity schedules. Response: The USPTO allows for payment of maintenance fees up to six months prior to the payment due date and up to six months after the due date (grace period) if accompanied with a surcharge. This practice is similar to other national or regional IP offices like the European Patent Office and the Japan Patent Office. Both of these offices impose a substantial surcharge for late payment of such fees, which, in the case of Japan, is a 100 percent surcharge for late payment. Each national or regional IP office has its own maintenance/annuity schedule, which can be found on its website. Below are links to two of the national/ regional IP offices’ fee schedules, which include maintenance/annuity fees: European Patent Office: • Fee Schedule: https:// my.epoline.org/portal/classic/ epoline.Scheduleoffees • About Renewal Fees: https:// www.epo.org/law-practice/legaltexts/html/guidelines/e/a_x_5_2_ 4.htm Japan Patent Office: • Fee Schedule: https:// www.jpo.go.jp/e/system/process/ tesuryo/hyou.html • About Renewal Fees: https:// www.jpo.go.jp/e/faq/yokuaru/ fees.html#anchor4-3 Comment 28: One commenter stated that charging surcharge fees for late payments on patent maintenance filings and encouraging earlier payment defies Congress. In the commenter’s opinion, Congress determined that the public should have clear notice of the expiration of a patent on the 4th, 8th, and 12th anniversaries of it being issued. The commenter believed the USPTO’s proposal suggests the public should know on the 31⁄2, 71⁄2, and 111⁄2 anniversaries. The commenter suggested there is no statutory delegation noted by the USPTO of the authority to hold such an opinion, let alone act on it. Response: The USPTO has specific statutory authority to charge fees under title 35 of the U.S.C. and the Trademark Act of 1946. The USPTO also has specific authority to set and adjust those fees as in the current rulemaking under section 10 of the AIA. This Final Rule does not modify the maintenance fee VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 grace period, which is set in 35 U.S.C. 41(b)(2), nor does it change the timeline for submitting maintenance fee payments. The rulemaking simply adjusts the surcharge fee for submitting a maintenance fee payment during the six-month grace period. The Office cannot provide legal advice to individuals on the status of a patent, but a higher surcharge may encourage more patent holders to pay maintenance fees before the grace period begins. Request for Expedited Examination of a Design Application Fee Comment 29: Several commenters stated that the increase has not been adequately justified as based on the cost of recovery or value to the recipient, noting that while the fee had not increased since November 2000, an increase of 1.6 percent annually would only put the fee at $1,256 in 2021. They further stated that the NPRM only opaquely describes the Office’s need without any calculation or demonstration of burden hours and threatens to close the program without the full increase, improperly discouraging applicant behavior. Commenters asked for further justification from the Office for the amount of the proposed increase. One commenter also suggested the Office may consider removing the requirement of a pre-examination search, which would help applicants by alleviating some of the financial burden associated with filing a request for expedited examination. Response: The Office received numerous comments that the fee increase to $2,000 was too great and would deter applicants from using the service. These comments were considered, and in response, the Office has chosen not to implement the proposed fee of $2,000. Instead, the nondiscounted fee for an application will be set at $1,600. Discounts for small and micro entities will continue to be available. Applicants who wish to have the examination of their design applications expedited must file a request for expedited examination and comply with the other requirements set forth in 37 CFR 1.155. The Office notes that the unit cost presented for this service only accounts for the initial processing of the request and does not include additional resources expended. From the time a request for expedited examination is filed in a design application, the application is expedited at every touch point during its prosecution. This includes initial processing, deciding the request to expedite, search and examination, publication, and any PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 46953 appeal that may be taken to the Board. The pendency for these applications, from granting of the request to expedite until first Office action, is currently just over one month. Expediting each step of the process for these applications causes the Office to expend resources that increase its costs with respect to these applications. Further, the Office needs to account not only for the increase in costs over the past twenty years, but also the anticipated costs of providing this service into the future, even with maintaining the requirement for a preexamination search. Accordingly, the Office determined that the fee for this service needs to be increased if the service is to be continued. The USPTO believes that this new fee amount, as well as the associated small and micro entity discounts, will provide the Office the ability to continue offering this service to applicants. Further, the Office notes this is an optional fee paid only by those who wish to receive the benefit of a faster decision on their application. Comment 30: A few commenters noted that design applications are limited to a single claim, meaning the proposed increase would cause applicants to pay roughly twice as much to expedite the examination of four design patent claims as they would to expedite the examination of four utility patent claims. Response: The Office acknowledges that design applications are limited to a single claim. The process of examining a design application differs from the process of examining a utility application. Based on the lifetime costs of expediting a design application, the Office has determined that the fee for this service needs to be increased if the service is to be continued. However, the Office has carefully considered all of the comments and, in response, has chosen not to implement the proposed fee of $2,000. Instead, the non-discounted fee for an application will be set at $1,600. The USPTO believes that this new fee amount, as well as the associated small and micro entity discounts, will provide the Office the ability to continue offering this service to applicants. Comment 31: Multiple commenters stated that the proposed increase in the request for expedited examination of a design application fee would disproportionately harm individual inventors and small entities. Response: The Office has carefully considered all of the comments and, in response, has chosen not to implement the proposed fee of $2,000. Instead, the non-discounted fee for an application will be set at $1,600. The Office will continue to offer the 50 percent small entity discount and the 75 percent E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46954 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations micro entity discount, which should not disproportionately harm individual inventors and small entities. The fees set in this Final Rule make the fee for small entities $800 and the fee for a micro entity $400. Further, the Office notes this is an optional fee paid only by those who wish to receive the benefit of a faster decision on their application. Comment 32: A few commenters noted that the process to obtain design protection in the U.S. is significantly longer than in many countries. Not all applicants and circumstances can wait for the normal lengthy U.S. examination process to be completed. The Office should not impose further barriers to obtaining timely design protection for those applicants who may need it. Response: The process to obtain a design patent in the U.S. takes longer than in some other countries because, unlike some other patent systems, the USPTO performs an examination for design patent applications. The Office agrees that expedited examination can be a benefit to applicants in numerous situations. As a result, the Office will continue to offer expedited examination for design applications. Additionally, the Office has chosen not to raise the fee for expedited examination of design applications to $2,000. Instead, the large entity fee for an application is being raised to only $1,600. The Office will continue to offer the 50 percent small entity discount and the 75 percent micro entity discount. Comment 33: One commenter noted that some industrial designs can be protected through copyright law but stated that designs that do not qualify for copyright protection should have an affordable expedited procedure to obtain IP rights. The commenter also noted that copyright law might not always be effective for protection of designs. Response: An applicant should determine what forms of IP protection are appropriate for each design. For those inventions where an applicant has determined that design patent protection is warranted, the applicant may expedite the examination of an application, when needed, as the Office will continue to offer the service. Based on comments received, the Office has chosen not to raise the fee for expedited examination of design applications to $2,000. Instead, the large entity fee for an application is being raised to only $1,600. The Office will continue to offer a discount for small and micro entities. Utility and Reissue Issue and Maintenance Fees Comment 34: One commenter noted that a stated rationale for the proposed VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 substantial increases to issue and first stage maintenance fees is that ‘‘technology lifecycles [have grown] shorter,’’ and, therefore, ‘‘It is important that the USPTO not rely too heavily on fees paid late in the life of a patent.’’ The commenter argued that in many industries, including telecommunications and pharmaceuticals, this is not necessarily true. Therefore, the commenter did not believe that shifting the burden of fee increases to the issue and first maintenance fees is warranted. Response: In accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the USPTO cannot differentiate IP policy by technology. Therefore, the Office must structure its fee schedule to align with the technology lifecycles of all industries and cannot establish different fee schedules for different technologies. While many technologies have not experienced a change in their lifecycle, for others there have been significant changes. Additionally, the aggregate average patent lifecycle is impacted by changes in the composition of patents granted by the USPTO. To account for these changes, the USPTO is increasing the issue and first stage maintenance fees. There has not been an adjustment to these fees since 2013. Comment 35: One commenter noted that it is important to set fees so that, during the entire lifecycle of a patent, a patentee can pay fees at points in time where sufficient information is available to make an appropriate decision about the commercial merits of obtaining/ maintaining a patent. Response: The fees over the life of a patent begin low and then gradually increase. The USPTO carefully considered the balance of front-end and back-end fees. In this Final Rule, the balance between front-end and back-end fees is not significantly impacted. The Office is slightly rebalancing the backend fees to recover the initial search and examination costs earlier in the life of the patent. AIA Trial Fees Comment 36: Several commenters stated that the Office should finish collecting and analyzing costs before increasing the AIA trial request fee and the post-institution fee. One commenter indicated that pre-institution costs may decrease due to higher settlement rates and lower institution rates. Other commenters indicated that most of the additional work after SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018) (SAS) occurs post-institution. Accordingly, the commenters propose that the increase PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 should be limited to the post-institution fee. Response: The USPTO is committed to maintaining the PTAB’s ability to provide fair, timely, and high-quality decisions. The SAS decision significantly affected the operations of the PTAB by increasing the amount of time spent per case and, thereby, increasing costs in both pre- and postinstitution stages. The NPRM proposed fees based on the Office’s best estimates, taking into consideration the cost increases already experienced, plus future inflationary cost growth. Since then, the Office has collected and analyzed the additional cost data available through the end of FY 2019. In addition, the Office has taken into account uncertainties resulting from changes in the way in which AIA trials are conducted. These uncertainties are discussed further below. While the unit cost data shows that post-institution costs have increased more than pre-institution costs, preinstitution costs have also increased. The Office has modified its preinstitution practice to take into account the Supreme Court’s SAS decision. For example, prior to SAS, the PTAB did not always address all arguments at institution. Post-SAS, for purposes of deciding whether to institute trial on a petition, the Office has committed to provide details to the parties to the largest extent practicable, including responding to arguments in a patent owner’s preliminary response that were not the basis for the decision whether or not to institute. In addition, in response to requests from stakeholders, the Office has modified its approach to concurrent petitions challenging the same patent or patents in the same family filed by the same petitioner. Specifically, the Board now considers whether to exercise its discretion to limit the number of these parallel petitions that may, if the threshold is met, be instituted. Similarly, the Board has undertaken a closer review of petitions to determine whether they raise issues that were considered by the examiner during ex parte prosecution or during other proceedings before the Office. To evaluate these requests, the Board must make close comparisons between the challenges to determine whether the Board should exercise its discretion and institute a trial. Such comparisons require analyzing the prior art cited in the petitions and evaluating the reasons given by the petitioners for filing additional petitions. As this development in AIA trial practice is relatively recent (within the last 12 months), the Office does not yet have an E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations accurate model to predict how many requests it will receive and how much additional effort will be necessary to evaluate them. To account for these uncertainties, it is necessary to set the pre-institution fees for inter partes reviews at $19,000. This 23 percent increase is less than the 25 percent increase proposed in the NPRM but above the FY 2019 unit cost. The preinstitution fee is set at more than the FY 2019 unit cost to take into account the uncertainties outlined above that arose in that year and are expected to continue in FY 2020 and beyond. The post-institution fee has been set at $22,500 for inter partes review, which is above the increase proposed in the NPRM but considerably lower than the FY 2019 actual unit cost. As a result of the SAS decision, there has been an increase in the number of remands to the PTAB, which has increased the postinstitution amount of work and costs. At this time, it is unclear whether the postinstitution costs will remain at the current level or will decrease after the SAS remands have been fully addressed. Accordingly, the postinstitution fee is set above the proposed NPRM fee, which is above the pre-SAS FY 2017 unit costs but below the postSAS FY 2019 unit costs. The Office continues to evaluate the data as it becomes available to better understand the long-term impact of SAS on postinstitution costs. Post-grant review and covered business method review fees will be maintained at the rates proposed in the NPRM, at $20,000 for pre-institution and $27,500 for post-institution. These fee rates are above the respective inter partes review fees, due to the additional work involved with post-grant and covered business method reviews, but below the FY 2019 actual unit costs for post-grant reviews and covered business method reviews due to uncertainties about future costs. Specifically, postgrant reviews and covered business method reviews may raise additional issues beyond those raised in inter partes reviews, such as patent eligibility, written description, enablement, indefiniteness, and public use. Further, given the additional issues that may be raised, post-grant reviews and covered business method reviews provide 33 percent higher word limits for petitions and patent owner responses and preliminary responses. While the actual unit costs for postgrant and covered business method review have typically been higher than the unit costs for inter partes reviews for these reasons, it is harder to determine the precise cost of post-grant and covered business method reviews. Due VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 to a relatively small number of trials (approximately 60 post-grant reviews or covered business method reviews annually), the data on actual unit costs can vary from year to year. Therefore, it remains unclear whether the post-SAS costs will remain at the current levels. The rates proposed in the NPRM will be implemented, and the Office will continue to evaluate data as it becomes available to better understand the longterm impact of SAS on post-grant review and covered business method review costs. Comment 37: One commenter stated that the USPTO’s elasticity data fails to capture whether small entities react differently than large entities to changes in the AIA trial fees. The commenter suggested the USPTO should study this before instituting a significant increase in fees. Response: AIA trial fees are not subject to small or micro entity discounts under section 10(b) of the AIA. Therefore, reliable data is not available to properly measure the impact of changes to AIA trial fees on small or micro entities. However, the AIA trial proceedings have been popular with some stakeholders because they provide a less expensive and faster alternative to district court litigation. As a result, the PTAB workload has increased significantly since the institution of AIA trials. The increase in AIA trial proceeding fees will help the PTAB maintain the level of judicial, legal, and administrative staff necessary to sustain the quality and timeliness of PTAB decisions. Comment 38: One commenter stated that, for AIA trial fees, the Office should consider a fee reduction or waiver for small and micro entities sued for infringement. Response: Under section 10(b) of the AIA, the Office is permitted to reduce fees for small and micro entities in six categories: ‘‘filing, searching, examining, issuing, appealing, and maintaining patent applications and patents.’’ AIA trial fees do not fall into any of those categories. Therefore, absent a change in statutory authority, AIA trial fees are not eligible for discounts or for waiver. Comment 39: Two commenters stated that the Office should reduce the excess claim threshold for an AIA trial request fee from 20 claims to between three and six claims, and also increase the excess claims fee. The commenters make similar proposals for post-institution AIA trial fees. Response: The fee increases are based on cost data collected and analyzed using current excess claims thresholds. The Office does not have sufficient data PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 46955 to evaluate the effect of reducing the excess claim threshold and increasing the excess claims fee. Additionally, the current excess claims fee threshold of 20 for the AIA trial request fee is the same as the threshold for excess claims for patent applications. Comment 40: One commenter indicated that the Office should raise fees significantly higher and charge more if the petitioner has not been sued. Response: 35 U.S.C. 311(a) and 321(a) require fees for AIA trial proceedings be ‘‘reasonable, considering the aggregate costs of the review.’’ Raising fees significantly higher for petitioners that have not been sued has been considered but, bearing in mind the aggregate costs of the review, has not been deemed reasonable at this time. Comment 41: One commenter indicated that raising fees runs counter to Congress’s intent to make costefficient proceedings. Response: 35 U.S.C. 311(a) and 321(a) indicate that fees for AIA trial proceedings are to be ‘‘reasonable, considering the aggregate costs of the review.’’ The Office is always looking for, and open to considering, ways to make AIA trial proceedings more costefficient. Non-DOCX Filing Surcharge Fee Comment 42: Several commenters expressed the opinion that the Office’s DOCX submission tools are not ready for implementation for a number of reasons. The DOCX submission process is only available for some submissions. The publicly available DOCX submission process is cumbersome. It is too soon to require a penalty (fee surcharge) of $400 for non-DOCX submissions. Before such a large penalty is enacted for failure to use DOCX submissions, applicants must be granted more time to adapt their processes to take advantage of the new capability. Commenters suggested an alternative approach of permitting submission of both a record copy and a searchable copy of an application that would provide a viable mechanism to help applicants transition to these new capabilities without prematurely penalizing them, especially in situations where the available tools may not be ready or able to accommodate special cases involving complicated submissions. Response: These comments were considered, and the Office has chosen to delay implementation of the non-DOCX filing surcharge until January 1, 2022. Over the next several months, the Office will continue with its outreach efforts, addressing customer concerns and E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46956 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations providing ample time for applicants to transition to this new process. Comment 43: One commenter questioned the statement made by the USPTO Acting Deputy Director in the September 2018 PPAC Fee Setting Hearing that ‘‘fees for search and examination are set below cost,’’ and wondered whether this was true when considering the paper filing surcharge and proposed non-DOCX filing surcharge. Response: Under the adjusted fee schedule, the combined fees for filing, search, and examination will continue to be below the cost to the Office to provide those services, even for filers who pay both the paper filing and nonDOCX surcharges. A large entity that pays both surcharges would pay $2,620 for filing, search, and examination. A small entity would pay $1,310, and a micro entity would pay $755. The cost to the USPTO to provide these services was a combined $4,970 in FY 2018. Comment 44: One commenter wrote that they understand that a non-DOCX surcharge cannot be applied to PCT filings because copies of the PCT publication automatically route into the U.S. national stage application in PDF form. However, the commenter stated that this highlights the unwarranted nature of the non-DOCX surcharge. If a relatively moderate increase in price for PCT national stage entry applications is believed to be fiscally sustainable within the proposed fee structure, then the same should be true of regular nonprovisional application filings, and the imposition of a new non-DOCX filing surcharge fee for one and not the other is thus inconsistent. Response: Processing DOCX in national stage applications presents additional challenges and burdens on the Office and applicants that are not encountered with a standard utility application. Further investigation is needed as to the possibility of alternative means for obtaining text data (i.e., via the International Bureau) that would not burden applicants. This is being considered for the future. Comment 45: One commenter stated that filing in DOCX is a wonderful idea in theory, but says that bugs have not been worked out of the process. The commenter writes that EFS-Web should stop removing ‘‘text ornaments.’’ Until it stops doing this, and until a DOCX filing will reliably result in an identical PDF document, there should be no penalty for filing PDF specifications or other application elements. Response: ‘‘Text ornaments,’’ or text decorations, may not be presented in a form that allows direct reproduction of readily legible copies. See CFR 1.52. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Therefore, they will continue to be automatically removed, and a warning will be provided. To date, the Office has not received notifications of any issues resulting from the filing of applications in DOCX format. If there is an instance in which an error occurs, the Electronic Business Center (EBC) should be contacted for investigation at 1–866–217–9197 (tollfree), 571–272–4100 (local), or ebc@ uspto.gov. The EBC is open from 6:00 a.m. to 12:00 midnight ET, Monday through Friday. Comment 46: Multiple commenters opposed the $400 surcharge for filing in non-DOCX format, suggesting it was unreasonable given the USPTO’s own cost figures, to apply optical character recognition (OCR) to convert a patent application submitted in PDF format. One commenter stated that the proposed benefits do not appear to justify the costs of the rule, and there does not appear to have been consideration of approaches that reduce burdens and maintain flexibility and freedom of choice for the public. Response: The use of image-based PDFs incurs many costs over the lifetime of an application. There are large costs associated with the USPTO’s systems and personnel, from preexamination, examination, and publication, due to the need to apply OCR to convert image-based PDFs into structured text that can be leveraged by downstream systems. The surcharge is applied not only to account for these inefficiencies, but also to address rising expenses. As a part of the DOCX intake process, preliminary validation is performed on DOCX documents at the time of upload. The system immediately detects and supplies the applicant with useful error and warning messages, allowing for adjustments to patent applications earlier in the process. This saves time, reduces potential costs, and prevents delays in processing by minimizing notices of missing parts or incomplete applications from the Office of Patent Application Processing (OPAP). As patent applications have become increasingly complicated, the nonDOCX surcharge is an effective measure to recover the cost of converting PDFs to text. The text is essential for efficient examination and maintaining the quality of patents issued. According to surveys conducted by the USPTO, the majority of applicants use wordprocessing software, such as Microsoft Office and LibreOffice, to author applications in DOCX format. These applicants will now be able to submit applications in this same format to the USPTO, therefore avoiding the new PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 non-DOCX surcharge. Furthermore, the fee is reduced by 50 percent for small entities and 75 percent for applicants that qualify as micro entities. The Office recognizes the need for freedom of choice to file in different formats. Therefore, image-based PDFs will continue to be accepted for customers who opt to continue to file in that format. Comment 47: Two commenters requested that the Office continue to accept PDF filings at no charge. Response: The use of image-based PDFs incurs many costs over the lifetime of an application. Receiving most applications in DOCX format will provide savings across USPTO systems, enabling efficient examination. Rising expenses make it prohibitive for the USPTO to continue allowing PDF filings with no associated fee to cover the costs of creating structured text that can be leveraged by downstream systems. Comment 48: Many commenters have suggested the USPTO should make a provision for the practitioner to be able to provide a PDF version of the patent application being filed, along with the DOCX file. The PDF version would serve as the controlling version in the event of any discrepancy in the USPTO’s rendering of the DOCX file. Response: Many applications are originally created in DOCX and subsequently converted to PDF by applicants prior to submission. An advantage of submitting in DOCX format directly is that submitted files from all applicants are validated and converted to PDF by USPTO systems in a consistent manner. This eliminates the unnecessary step for applicants to generate and attach their own PDF documents. The generated PDF is available pre-submission to provide the applicant an opportunity to review the document before selecting the submit button. As a part of the DOCX intake process, preliminary validation is performed on DOCX documents at the time of upload. The system immediately detects and supplies the applicant with useful error and warning messages, allowing for adjustments to patent applications early in the process. This saves time, reduces potential costs, and prevents delays in processing by minimizing notices of missing parts or incomplete applications from the Office. Furthermore, the USPTO continuously performs rigorous testing to ensure that document integrity is preserved. Comment 49: One commenter asked whether the surcharge would be waived if an applicant filed on paper because the electronic filing system was not E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations functioning and a DOCX version was later filed within a certain time period. Response: The current policy regarding significant unplanned electronic business system outages is available at: https:// www.federalregister.gov/documents/ 2018/08/30/2018-18897/filing-patentapplications-electronically-duringdesignated-significant-outages-of-theunited-states. The USPTO will post a notice on its website in the event of a designated significant unplanned electronic business system outage and indicate the dates during which the alternative electronic filing means are available due to such an outage. An application filed via the alternative electronic means during a designated significant unplanned electronic business system outage will be considered to have been filed by the USPTO’s electronic filing system and thus will not incur the non-DOCX surcharge or the fee required by section 10(h) of the AIA for a patent application not filed by the USPTO’s electronic filing system. Comment 50: One commenter stated that PDF format is the best and safest format for ensuring that no text becomes garbled or otherwise corrupted by the USPTO system. Response: There have been cases where an applicant submitted PDF documents that have been corrupted or garbled that were traced back to specific PDF creation software. By submitting in text format, the extra step to convert to a PDF copy is no longer necessary, which eliminates issues associated with that conversion process. Another advantage of submitting in DOCX format directly is that submitted files from applicants are validated and converted to PDF by USPTO systems in a consistent manner. The USPTO continuously performs rigorous testing to ensure that document integrity is preserved. Comment 51: One commenter wrote that PDF files are easier to manage when filing, are better for long-term archival use, can be generated in text-searchable form, will not require fragmented filings using both PDF and DOCX files, carry fewer concerns with respect to malware and viruses, and carry no licensing concerns. The commenter expressed that the DOCX file format is intended for facile editing and by design is not suited for archival purposes, will require fragmented filing with different file formats, will require archiving of files in multiple file formats, carries increased risk of malware and viruses, is no better than other editable file formats, and carries some uncertainty regarding licensing status. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Response: DOCX is a word-processing file format that is part of Office Open XML (OOXML), an XML-based open standard approved by the Ecma International® consortium and subsequently by the ISO/IEC joint technical committee. For more information about the OOXML standard, please see: • ECMA–376 at http://www.ecmainternational.org/publications/ standards/Ecma-376.htm • ISO/IEC 29500 at https://www.iso.org/ committee/45374/x/catalogue/ • NIST votes for US. Approval of OOXML at https://www.nist.gov/ news-events/news/2008/03/nist-votesus-approval-modified-office-openxml-standard The USPTO conducted a yearlong study of the feasibility of processing text in PDF documents. The results showed that searchable text data is available in some PDFs, but the order and accuracy of the content could not be preserved. With DOCX, the Office is able to use the text directly and pass it on to USPTO downstream systems, which results in increased data accuracy and a more streamlined patent process. PDFs are not immune to viruses or hidden malware. However, the USPTO filing system is equipped with malware and virus detection. DOCX is supported by many popular word-processing applications, such as Microsoft Word, Google Docs, Pages, and LibreOffice. Comment 52: One commenter asked if the USPTO has facts to support the statement that the DOCX to PDF conversion process will work flawlessly 100 percent of the time. If not, the commenter asserted that moving to DOCX is simply not justifiable from a technical perspective. Response: By submitting in DOCX format directly to USPTO systems, submitted files from all applicants are validated and converted to PDF by USPTO systems in a consistent manner. The USPTO continuously performs rigorous testing to ensure that document integrity is preserved. To date, the Office has not received notifications of any issues resulting from the filing of applications in DOCX format. If there is an instance in which an error occurs, the EBC should be contacted for investigation at 1–866–217–9197 (tollfree), 571–272–4100 (local), or ebc@ uspto.gov. The EBC is open from 6:00 a.m. to 12:00 midnight ET, Monday through Friday. Comment 53: One commenter asked about a situation in which the USPTO’s rendering engine has changed the result relative to what the practitioner saw on PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 46957 a word processor. The commenter expressed concerns about how to rectify such a situation and stated that knowing that there is a problem and being able to fix the problem in a timely manner may be two completely different things. Response: If there is an instance in which an error occurs, the EBC should be contacted for investigation at 1–866– 217–9197 (toll-free), 571–272–4100 (local), or ebc@uspto.gov. The EBC is open from 6:00 a.m. to 12:00 midnight ET, Monday through Friday. Comment 54: A few commenters noted that the USPTO places the responsibility on the practitioner to check the generated PDF for accuracy. One commenter wanted to confirm that the authoritative document will be the USPTO-generated PDF rather than the DOCX that was submitted. Another commenter felt that USPTO-generated PDFs remove the applicant’s ability to control accuracy, and applicants who choose to guarantee accuracy by filing a self-generated PDF should not be penalized with increased fees. Response: The authoritative document will be the PDF that the USPTO systems generate from the DOCX. The filer has always been responsible for the accuracy of the documents being submitted. According to surveys conducted by the USPTO, the majority of applicants use wordprocessing software, such as Microsoft Office and LibreOffice, which can produce a DOCX file. Currently, most applicants convert their DOCX documents to PDF and review the PDF documents before submission. Allowing applicants the ability to upload the specification, claims, and abstract in DOCX format reduces the applicants’ burden to convert the document to PDF. With this new and improved process, applicants have the ability to upload DOCX documents directly to the USPTO filing system, which will automatically generate PDF documents for the uploaded DOCX files. At this time, applicants are encouraged to review the PDF documents before submission. The step of applicants reviewing their selfgenerated PDF is being replaced with their review of the USPTO-generated PDF document. The amount of time required by an applicant to review the self-generated PDF is comparable to the time to review the USPTO-generated PDF. As a part of the DOCX intake process, preliminary validation is performed on DOCX documents at the time of upload. The system immediately detects and supplies the applicant with useful error and warning messages, allowing for adjustments to patent applications early E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46958 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations in the process. This saves time, reduces potential costs, and prevents delays in processing by minimizing notices from the Office of missing parts or incomplete applications. The USPTO continuously performs rigorous testing to ensure that document integrity is preserved. To date, the USPTO has not received notifications of any issues resulting from the filing of applications in DOCX format. If there is an instance in which an error occurs, the EBC should be contacted for investigation at 1–866–217–9197 (tollfree), 571–272–4100 (local), or ebc@ uspto.gov. The EBC is open from 6:00 a.m. to 12:00 midnight ET, Monday through Friday. Comment 55: One commenter wrote that instead of DOCX, applicants could upload most of their submissions as text-based PDFs. The commenter further stated that, currently, the USPTO’s computer systems degrade files to flatten them to unstructured bitmaps. The commenter contends the problem is caused by the USPTO. Response: The USPTO conducted a yearlong study of the feasibility of processing text in PDF documents. The results showed that searchable text data is available in some PDFs, but the order and accuracy of the content could not be preserved. With DOCX, the Office is able to use the text directly and pass it on to USPTO downstream systems, which results in increased data accuracy and a more streamlined patent process. Comment 56: One commenter stated that for lengthy, complex specifications, the 60-minute timeout in EFS-Web would preclude effective review. In the case of a timeout, the subsequent resubmission would still require the filer to review the entire conversion result from the beginning. Response: This concern can be mitigated by keeping a session active. The timeout process complies with National Institute of Standards and Technology (NIST) guidelines. Comment 57: One commenter recommended that no surcharge would be due if a substitute specification is filed after payment of a surcharge for filing a non-DOCX specification, claims, and/or abstract. Further, the commenter recommended only charging this fee once per application to avoid burdening those individuals who are unable to file DOCX documents. Response: Substitute specifications are considered follow-on documents to an existing application and would not be assessed the non-DOCX surcharge. There will only be one fee per application because the surcharge only applies to initial filings of the non- VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 provisional utility application filed under 35 U.S.C. 111. Comment 58: One commenter suggested that this surcharge be limited to filing of utility applications and not be extended to the filings of additional documents (e.g., responses, amendments, etc.) to avoid it unduly burdening small businesses and independent inventors by charging this surcharge every time a non-DOCX document is filed. Response: At this time, the surcharge only applies to initial filings of the nonprovisional utility application filed under 35 U.S.C. 111. Comment 59: Two commenters stated that there is no single DOCX standard to which Microsoft Word and the other word processors are all compliant. Response: DOCX is a word-processing file format that is part of Office Open XML (OOXML), an XML-based open standard approved by the Ecma International® consortium and subsequently by the ISO/IEC joint technical committee. For more information about the OOXML standard, please see: • ECMA–376 at http://www.ecmainternational.org/publications/ standards/Ecma-376.htm • ISO/IEC 29500 at https://www.iso.org/ committee/45374/x/catalogue/ • NIST votes for U.S. Approval of OOXML at https://www.nist.gov/ news-events/news/2008/03/nist-votesus-approval-modified-office-openxml-standard Comment 60: A few commenters were concerned that DOCX files that contain mathematical equations, chemical formulas, tables, or special fonts would get corrupted by the USPTO system. Response: When a DOCX file is uploaded to the USPTO filing system, a PDF equivalent document is generated for applicant review. The USPTO performs continuous testing of DOCX format files, including sample files that include mathematical equations, chemical formulas, tables, and special fonts. The past results have shown no issues with the conversion of these data types. The Office is working on advanced solutions so that complicated structures in chemical and biochemical patent applications are properly captured in DOCX format. After submission, applicants have the opportunity to download the associated XML of the submission document, which contains mathematical markup language (MathML) of the mathematical formulas and the content and structure of tables. The USPTO continuously performs rigorous testing to ensure that document integrity is preserved. PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 To date, the Office has not received notifications of any issues resulting from the filing of applications in DOCX format. If there is an instance in which the mathematical formulas or tables are corrupted in the DOCX and PDF generated by USPTO systems, the EBC should be contacted for investigation at 1–866–217–9197 (toll-free), 571–272– 4100 (local), or ebc@uspto.gov. The EBC is open from 6:00 a.m. to 12:00 midnight ET, Monday through Friday. The USPTO’s DOCX support web page located at https://www.uspto.gov/ patent/docx contains a complete list of approved fonts. If there is a font that is not supported, the EBC should be contacted. Pending thorough analysis of the proposed font, it may be added to the supported font list as allowable. Comment 61: A few commenters suggested that requiring a subscription to Microsoft Word to produce DOCX files or payment of a significant surcharge would especially impact individual inventors and start-ups, who are the least able to afford it. Response: Microsoft Word is not required to file in DOCX format. Listed below are word-processing applications that can be used to file in DOCX format. • Microsoft Word 2007 or higher • Google Docs • Office Online • LibreOffice • Pages for Mac Comment 62: One commenter stated that the USPTO’s current DOCX system breaks page numbering and other automatic formatting features provided by Word because it splits a single document into three documents: The specification, claims, and abstract. The commenter further stated that the shift from PDF to DOCX will affect applicants’ recordkeeping requirements and costs. The commenter contends the USPTO’s Paperwork Reduction Act of 1995 (PRA) analysis fails to consider this and similar costs. Response: The USPTO considered the impact of the conversion to DOCX, including the aspects raised by the commenter. Applicants can submit one single DOCX document for the specification, including the written description, claims, and abstract. Alternatively, they can submit three separate DOCX documents (specification, claims, abstract). Regardless, this will not affect page numbering or recordkeeping. Therefore, the Office does not believe that this will increase the overall burden and/or costs to applicants. Comment 63: One commenter wrote that in the NPRM, the USPTO claims that over 80 percent of applicants draft E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations their patent applications in DOCX. The commenter wishes to understand where this data originated and submits that this does not eliminate document integrity issues with the USPTO receiving DOCX filings properly. Response: A survey was conducted by the USPTO to obtain this data. An advantage of submitting in DOCX format directly is that submitted files from all applicants are validated and converted to PDF by USPTO systems in a consistent manner. The USPTO continuously performs rigorous testing to ensure that document integrity is preserved. Comment 64: One commenter stated that no reliable process exists in which errors introduced by EFS-Web in its rendering of DOCX files into PDF files may be corrected without being subject to the risk of rejection for new matter. Response: Applicants are encouraged to review the PDF documents generated by the USPTO filing system before submission. The step of applicants reviewing their self-generated PDF is being replaced with their review of the USPTO-generated PDF document. The amount of time required by the applicant to review the self-generated PDF is comparable to the time to review the USPTO-generated PDF. To date, the Office has not received notifications of any issues resulting from the filing of applications in DOCX format. If there is an instance in which an error occurs, the EBC should be contacted for investigation at 1–866– 217–9197 (toll-free), 571–272–4100 (local), or ebc@uspto.gov. The EBC is open from 6:00 a.m. to 12:00 midnight ET, Monday through Friday. Comment 65: One commenter suggested that the USPTO could extract the convenience text from PDF documents, which, as in current practice, are uploaded by filers without penalty and are intended to be the ‘‘official’’ filing artifacts. Almost all PDF files directly produced from wordprocessing software contain extractable text. (The USPTO states in the NPRM that more than 80 percent of filings use DOCX authoring tools; it is reasonable to extrapolate that a high fraction of non-drawing PDF files uploaded to EFSWeb could be directly produced by word-processing software and could contain extractable text.) Many PDF files created by other means also contain extractable text. Response: The USPTO conducted a yearlong study of the feasibility of processing text in PDF documents. The results showed that searchable text data is available in some PDFs, but the order and accuracy of the content could not be preserved. With DOCX, the Office is VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 able to use the text directly and pass it on to USPTO downstream systems, which results in increased data accuracy and a more streamlined patent process. Comment 66: One commenter suggested modifying the filing system so that if a DOCX document contains a discrepancy, it can be corrected after the filing date without losing priority to the filing date. Response: The ability for correction after the filing date depends on whether it was an applicant error or Office error. If the applicant makes an error, there is the potential to lose priority to the filing date depending on the type of correction. For example, for applications filed on or after September 16, 2012, if there is a discrepancy between the information submitted in an application data sheet and the information submitted elsewhere in the application, the application data sheet will control except for the naming of inventors. The naming of the inventorship is governed by 37 CFR 1.41, and changes to inventorship or the names of inventors is governed by 37 CFR 1.48. In addition, for applications filed on or after September 16, 2012, the most recent application data sheet in compliance with 37 CFR 1.76 will govern with respect to foreign priority claims or domestic benefit claims. See 37 CFR 1.76(d) and MPEP § 601.05(a). If it is the Office’s error, applicants are encouraged to contact the Patent Electronic Business Center (ebc@ uspto.gov) or file a petition. Comment 67: One commenter suggested that the Office should reduce fees for those who file an ISO 19005–1compliant PDF/A document, which is fully text searchable and accessible. The commenter also suggested that the Office could further reduce fees for those who file a DOCX version of the application with a certification of its accuracy in addition to their own PDF. The supplemental DOCX file would provide the Office with the structured text without jeopardizing the official application filed in PDF. Response: The USPTO conducted a yearlong study of the feasibility of processing text in PDF documents. The results showed that searchable text data is available in some PDFs, but the order and accuracy of the content could not be preserved. The USPTO has determined that increased data accuracy and a more streamlined patent process will result from DOCX submissions. Comment 68: One commenter suggested that the USPTO reduce the surcharge to reflect the true cost to the Office of processing non-DOCX applications (the current cost of OCR of approximately $3.15 per new PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 46959 submission) or offer a rebate for applicants filing in DOCX. Response: The cited cost only covers the initial OCR. The use of image-based PDFs incurs many costs over the lifetime of an application. There are large costs associated with the USPTO’s systems and personnel, from preexamination, examination, and publication, due to the need to apply OCR to convert image-based PDFs to structured text that can be leveraged by downstream systems. The surcharge is applied not only to account for these inefficiencies, but also to address rising expenses. Alternatively, to achieve these goals, the filing fee could be increased by $400 and a $400 rebate could be offered for filing in DOCX, but a lower filing fee with a non-DOCX surcharge makes the fee schedule more streamlined than a higher fee with a rebate. Comment 69: Several commenters asked how the Office will handle metadata retention to assure applicants’ interests will not be harmed. A commenter wanted to know whether metadata would be irretrievably removed upon filing or if the Office would maintain multiple versions of an application. Response: Generally, applicants remove metadata from their applications prior to submission. However, if metadata is still contained in the document when uploaded, EFS-Web (and the next generation Patent Center tool) will automatically remove unnecessary document properties such as author, last modified by, etc. The only metadata that remains part of the document is the size, number of pages, and word count. The pre-scrubbed document will not be stored by the USPTO. Only submitted documents are stored in the USPTO repository. Comment 70: One commenter was concerned that the process for submitting a DOCX file is uncertain and unclear. When the user uploads a DOCX file, the USPTO system runs it through a rendering engine to yield a PDF file. Further, while the DOCX web page indicates that the submission of a DOCX file generates a unique hash based on the content of the file to ensure that the DOCX file cannot be changed postsubmission, there is no indication as to when and how this hash is checked to determine whether a document has been modified or whether it would matter if it had been modified, as the converted PDF document is the official record. Because the converted PDF document is the official record, it appears that any discrepancies discovered after submission cannot be corrected. E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46960 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations Response: The message digest (hash) is generated to ensure non-repudiation of the DOCX. The benefit of this generated message digest to the applicant is that they can verify that the submitted DOCX is identical to the file in their records. Additionally, the applicant is given an opportunity to review the generated PDF to verify that it is accurate prior to submission. If there is an instance in which an error occurs, the EBC should be contacted for investigation at 1–866–217–9197 (tollfree), 571–272–4100 (local), or ebc@ uspto.gov. The EBC is open from 6:00 a.m. to 12:00 midnight ET, Monday through Friday. Comment 71: One commenter wanted the USPTO to consider the effects of breaking up sections of a single-source document (this is presently required of applicants who submit DOCX files, but the USPTO will do it in the future when it allows a single specification/claims/ abstract file to be uploaded). Response: The next generation Patent Center tool will be available to the public before the non-DOCX surcharge is implemented and will support the ability to upload a single file that contains all three application parts: Specification, claims, and abstract. Comment 72: One commenter wrote that the USPTO stated ‘‘Applications filed using DOCX will be more accessible in future searches of publication materials.’’ The commenter wanted to know what this statement meant, relative to OCR. Response: Structured text coming directly from DOCX submissions can be used for future initiatives to help streamline the patent process. The current publication process involves human intervention and text OCR’ed from images, which may contain errors. The goal is to leverage the structured text submitted by applicants, which will be more accurate than OCR’ed text, in downstream business processes. Comment 73: One commenter asked if the non-DOCX filing surcharge will apply to divisional and continuation applications. Response: Yes, the surcharge applies to divisional and continuation applications. Comment 74: One commenter wanted to know if the non-DOCX surcharge fee can be avoided in continuing applications by ‘‘filing by reference,’’ as provided in MPEP 601.01(a)(III). Response: No, the surcharge cannot be avoided by filing by reference in a continuing application. Comment 75: One commenter asked if the surcharge will apply to PCT applications at national stage entry. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Response: No, the surcharge does not apply to a PCT application at national stage entry. Comment 76: One commenter wanted to know if the surcharge applies to any other filings beyond filing the initial application (such as: Office action responses, preliminary amendments, a response with a replacement specification, etc.). Response: No, the surcharge will not apply at this time. Comment 77: One commenter questioned whether the surcharge will apply if, at filing, the applicant included both a DOCX and a PDF version of the application. Response: Applicants should not file both the DOCX and a PDF version of the application, as this may delay the processing of their application. The copy of the specification not filed in DOCX would require the surcharge, as the entire application capable of being filed in DOCX was not filed in DOCX. Comment 78: One commenter wanted to know whether the non-DOCX surcharge would be imposed in addition to the paper-filing surcharge for an application filed on paper. Response: Yes, both surcharges would be imposed. Comment 79: One commenter noted that plant patent applications have been required to be filed on paper and wondered whether the non-DOCX surcharge would apply to all plant patent applications. Response: No, the non-DOCX filing surcharge would not apply to plant patent applications. At this time, the surcharge only applies to initial filings of non-provisional utility applications filed under 35 U.S.C. 111. Pro Hac Vice Comment 80: One commenter requested that the Office clarify the specifics of the fee to request pro hac vice admission in an AIA trial proceeding. Response: The pro hac vice admission fee is per attorney, per AIA trial proceeding. Once the request is granted, the attorney is admitted for the entire duration of the AIA trial proceeding, which may extend for several years. Individuals not seeking to be recognized as an attorney of record in the AIA trial proceeding, such as expert witnesses, are not required to pay the fee. Annual Active Patent Practitioner Fee Comment 81: Multiple commenters oppose any practitioner fee. Three of the commenters stated that the USPTO should be able to fund itself, including the costs of OED, with other revenue sources such as patent fees, and not PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 practitioner fees. One of the commenters suggested that the USPTO cut costs elsewhere to compensate for the costs to be covered by the proposed annual active patent practitioner fee. One other commenter opposed funding OED through an annual active patent practitioner fee as established in the NPRM. Another commenter asserted that the justification provided for the fee is inadequate. Response: The USPTO received a number of comments on the proposed annual active patent practitioner fee. As discussed above, having further considered the public feedback on this proposal, the USPTO has determined that it will not implement the proposed annual active patent practitioner fee at this time. Comment 82: One commenter suggested the materials provided by the USPTO identify no statutory authorization. The commenter contended § 41(d)(2)(A) permits the director to ‘‘establish fees for all other processing, services, or materials,’’ but the USPTO has failed to identify a specific ‘‘processing, service, or material’’ that is provided. The commenter also contended § 2(a)(2)(D) authorizes the director to ‘‘govern recognition and conduct of agents [and] attorneys,’’ but no fee is authorized as part of § 2(a)(2)(D). Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 83: Two commenters wanted the USPTO to remove the annual active patent practitioner fee and CLE discount from the NPRM and to issue one or more separate NPRMs for any proposed annual active patent practitioner and CLE discount or requirement. A commenter argued that as a new fee, the newly proposed practitioner fee (and rules) likely must be implemented, if at all, only after issuing a Federal Register notice under the Administrative Procedures Act (APA). Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 84: One commenter stated that section 3(b)(1) of Executive Order (E.O.) 12866 (Regulatory Planning and Review) requires that the USPTO ‘‘identify the problem that it intends to address (including, where applicable, the failures of private markets or public institutions that warrant new agency action) as well as assess the significance of that problem.’’ The commenter E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations further stated that the APA requires a statement of rationale at the proposal stage. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 85: One commenter stated that the annual active patent practitioner fee is not in compliance with E.O. 12866, in part, because the NPRM did not include an estimate of either costs or benefits of the intended regulation and thus no balancing against the status quo. Another commenter similarly stated that the USPTO has not quantified and monetized the benefits and costs and evaluated non-quantified and non-monetized benefits and costs as required by OMB Circular A–4. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 86: One commenter wrote that the USPTO must analyze costs for all patent agents and patent attorneys who do not have an existing CLE requirement that would overlap with any USPTO requirement. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Under this Final Rule, completion of CLE remains voluntary. However, the Final Rule provides that patent practitioners who have completed six credits of CLE within the preceding 24 months may certify such completion to the OED director. The USPTO intends to issue proposed CLE guidelines, with a request for public comment on the proposed guidelines. Comment 87: One commenter claimed the Regulatory Flexibility Analysis must analyze the effect of the annual active patent practitioner fee on small entities because a great number of practitioners work for small entities. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 88: One commenter stated the USPTO must be able to certify that the annual active patent practitioner fee requirement is ‘‘necessary for the proper performance of the functions of the agency.’’ 44 U.S.C. 3506(c)(3)(A). Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Comment 89: One commenter stated that the USPTO must be able to certify that the annual active patent practitioner fee requirement is implemented in ways ‘‘consistent and compatible, to the maximum extent practicable, with the existing reporting and recordkeeping practices of those who are to respond,’’ including those attorneys in states that do not have existing CLE requirements, and for all agents. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Under the Final Rule, completion of CLE remains voluntary. Comment 90: One commenter argued the statement in 84 FR 37422 at col. 1 that, ‘‘The USPTO proposes to add paragraph (d) to § 11.8 to establish a new fee to be paid annually by practitioners’’ and the statement in E.O. 13771 certification, at 84 FR 37430 that states ‘‘this proposed rule is expected to involve a transfer payment’’ cannot both be true. The commenter contended the annual active patent practitioner fee does not fit any of the applicable definitions of ‘‘transfer payment.’’ Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 91: One commenter claimed the USPTO’s proposed $100 annual fee discount, as well as recognition on OED’s public practitioner search page for completed CLE, are encouragements that make the annual active patent practitioner fee an unconstitutional tax. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. In addition, under the Final Rule, completion of CLE remains voluntary. However, practitioners may be recognized in the online practitioner directory if they certify completion of six credit hours of CLE (five in patent law and practice; one in legal ethics) in the preceding 24 months. Comment 92: One commenter stated that the USPTO needs to account for the costs of reporting and recordkeeping and other compliance costs for the annual active patent practitioner fee under the PRA, including a discussion of the lowest burden alternative, and that the public benefit is in the same range. The commenter suggested that the annual fee must be the least costly way to achieve the benefit. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 46961 annual active patent practitioner fee at this time. Comment 93: One commenter stated that the USPTO does not specify in the NPRM what the ‘‘qualitative benefits’’ are for the annual active patent practitioner fee. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 94: A few commenters requested that the USPTO identify the statutory authority allowing for defraying the patent-related costs of operating OED by imposition of an annual active patent practitioner fee and also for the CLE requirement. One of the commenters stated that the NPRM is not explicit about the basis for setting the fee but that it is suggested that it is being set under the ‘‘Other fees’’ provisions of 35 U.S.C. 41(d)(2)(A). The commenter requested the USPTO explain how the proposed fees involve a service to the person being charged the fee in accordance with 31 U.S.C. 9701 (specifying that user fees must be set based on ‘‘the value of the service or thing to the recipient’’). One of the commenters stated that section 10 of the AIA prohibits the creation of new fees, such as the annual active patent practitioner fee. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Under the Final Rule, completion of CLE remains voluntary. Comment 95: One commenter requested that the Office consider approving USPTO CLE courses for onduty training of patent examiners. Another two commenters requested that the Office consider making the USPTO CLE courses required for Office employees, including patent examiners. One of these commenters requested that the USPTO have employees pay an annual employee fee as a pilot program prior to instituting the Final Rule to at least partially fund the USPTO. Response: Patent examiners receive extensive on-duty training for the performance of their official duties on a continual basis. Patent examiner training is specifically tailored to the requirements of the position and includes examiner guidance based on changes in the law and regulations. However, CLE courses offered by the USPTO are generally available to employees, just as they are available to other members of the public. The USPTO is not requiring that any member of the patent bar complete CLE and will not be requiring CLE of USPTO E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46962 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations employees who happen to be members of the patent bar. Comment 96: One commenter suggested that the first three to five years of the annual active patent practitioner fee be waived to alleviate the cost burden for those who become registered patent practitioners before attending law school. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 97: A few commenters suggested that the annual active patent practitioner fee is a tax, specifically a tax on innovation. Two of these commenters and three other commenters stated the annual active patent practitioner fee would particularly affect smaller law firms or part-time practitioners who represent smaller entities and independent inventors. The commenters further asserted that if individuals are deterred from patent practice, some patent applicants may be priced out of legal services. It is postured that this would increase the volume of pro se filings, inefficiency, cost, and use of USPTO resources. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 98: One commenter suggested that the annual active patent practitioner fees will be siphoned off to Treasury funds, disincentivizing innovation by misallocating funds. Another two commenters questioned what the funds collected from the annual active patent practitioner fee would be used for. One of these commenters requested that the funds collected be used to fund pro se services. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 99: Two commenters stated that the new annual active patent practitioner rules seem to require unneeded CLE where state bar associations already provide ample training. One commenter inquired whether the CLE reporting period would align with the reporting periods used by state bars. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. In addition, under the Final Rule, completion of CLE remains VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 voluntary. However, patent practitioners who certify completion of six credit hours of CLE in the preceding 24 months, including five hours of patent law and practice and one hour of ethics, may be recognized in the online practitioner directory. Generally, the same types of courses and activities that qualify for CLE credit for a state bar will qualify for credit for purposes of the CLE recognition in the online practitioner directory, so long as it covers the appropriate topics. It is expected that these CLE reporting periods will not align with all state bar reporting periods, as they vary from state to state. Each CLE certification for the purposes of recognition in USPTO’s online practitioner directory should be supported by the completion of different CLE courses. In other words, practitioners may not use the same courses to certify to the USPTO more than once that they have completed the six credits of CLE. Comment 100: One commenter stated that there was no explanation in the NPRM for the: (1) Manner of collecting the payment for the annual active patent practitioner fee, (2) different classes of practitioners having different fee requirements, (3) penalties for noncompliance, and (4) options for reinstatement. Another commenter inquired as to the process for reinstatement. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 101: One commenter stated that once the annual active patent practitioner fee is imposed, the fee will be increased over time, which will change the dynamics of practicing in patent matters before the USPTO. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 102: One commenter stated that, regarding the annual active patent practitioner fee, taxpayers, not patent practitioners, should pay for the Patent Pro Bono Program because taxpayers benefit from the program. Additionally, the commenter stated that there are already pro bono programs operated by law schools and non-governmental organizations that address this need. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 103: A few commenters stated that, regarding the annual active PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 patent practitioner fee, as attorneys, they already pay state bar dues and attend CLE, and the USPTO needs to account for those costs when charging the fee. One additional commenter stated that the USPTO must analyze costs for all patent attorneys who are admitted to the bars of any state that does not impose an existing CLE requirement that would overlap with any USPTO CLE requirement. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. The Office appreciates that CLE is required by other state bar organizations. Under this Final Rule, completion of CLE remains voluntary, but in taking six hours of CLE, practitioners may be recognized in the online practitioner directory. Additionally, practitioners may avoid duplicate expenses, as some or all of the CLE courses attended by practitioners as required by their state bar membership may count toward the six hours of CLE necessary to qualify for the USPTO CLE recognition. Comment 104: One commenter inquired about the implications of an administratively suspended or voluntarily suspended practitioner giving advice on a patent matter versus signing documents before the Office, and whether giving advice on a patent matter would be considered practice before the Office. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. However, the Final Rule requires patent practitioners to biennially file a registration statement. If a patent practitioner fails to timely file a registration statement, the patent practitioner may be administratively suspended, as is the case for patent practitioners who fail to respond to the practitioner survey. 37 CFR 11.5(b)(1) states, in part, that, ‘‘Practice before the Office in patent matters includes, but is not limited to . . . consulting with or giving advice to a client in contemplation of filing a patent application or other document with the Office.’’ Thus, practice before the Office is not limited to signing documents. An administratively suspended practitioner is under the disciplinary jurisdiction of the Office. See 37 CFR 11.19(a). Those who engage in the practice of patent law before the Office without being in active status may be engaging in the unauthorized practice of law and can be subject to discipline. See 37 CFR 11.10, 11.11(a)(6), and 11.505. Under this Final Rule, there is no ‘‘voluntarily E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations suspended’’ status. Voluntary inactive status, which is currently governed by 37 CFR 11.11(d), is unchanged by this Final Rule. Comment 105: Two commenters inquired if an administratively suspended or voluntarily suspended patent agent will lose attorney-client privilege due to their suspended status. Response: Under this Final Rule, there is no voluntary suspended status. All practitioners, including suspended patent agents, must comply with the USPTO Rules of Professional Conduct, including those pertaining to confidentiality of information. See 37 CFR 11.106. Attorney-client privilege is an evidentiary rule regarding communications. See e.g., Fed. R. Evid. 501. The right to assert attorney-client privilege belongs to the client, and the privilege exists for the client’s benefit. See e.g., Magnetar Techs. Corp. v. Six Flags Theme Park Inc., 886 F.Supp.2d 466 (D. Del. 2012). Patent agents are not attorneys in that they are not active members in good standing of the bar of the highest court of any state. See 37 CFR 11.1. The scope of the privilege as it applies to communications between clients and patent agents has been discussed or determined by some tribunals. See e.g., In re Queen’s Univ. at Kingston, 820 F.3d 1287 (Fed. Cir. 2016); In re Silver, 540 SW3d 530 (Tex. 2018); and Privilege for Patent Practitioners, 37 CFR 42.57. The scope of the privilege as it applies to communications between a client and an administratively suspended attorney, in general, is a matter of state law and has been addressed by some courts. See, e.g., Gucci America, Inc. v. Guess?, Inc., No. 09 Civ. 4373, 2011 WL 9375 (S.D.N.Y. Jan. 3, 2011); Safety Mgmt. Sys. v. Safety Software Ltd., No. 10 Civ. 1593, 2011 WL 4898085 (S.D.N.Y. Oct. 5, 2011); Restatement (Third) of the Law Governing Lawyers § 72, cmt. e, reporter’s note cmt. e (2000) (citing cases). Comment 106: Two commenters stated that the statuses for patent practitioners discussed in the NPRM, including administratively suspended, suspended due to discipline, voluntary inactive, emeritus, and resigned, are too numerous and complex for section 10 of the AIA fee setting authority and should be implemented in a separate rule package because each status has separate fee and reinstatement requirements. Response: No new statuses for patent practitioners are created by this Final Rule. Comment 107: Two commenters inquired why someone would opt for voluntary suspension status over VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 emeritus status, as there are no fees for emeritus status and reactivation is easier. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner this fee. Accordingly, emeritus status has been eliminated from the Final Rule. Furthermore, no ‘‘voluntary suspension status’’ was proposed by the NPRM or included in the Final Rule. Comment 108: One commenter inquired if the Office considered that an inadvertently administratively suspended attorney may need to report the suspension to their state bar. Response: If a patent practitioner is a member of a state bar, it is expected that the practitioner comply with the USPTO Rules of Professional Conduct, as well as any applicable state ethics rules, which may include any applicable reporting requirements in state bar rules. Comment 109: A few commenters stated that the CLE discount is not much of an incentive, given the cost of CLE programs, including out-of-pocket expenses and lost productivity, and it is likely that practitioners will choose not to make the certification and instead pay the undiscounted annual active patent practitioner fee. One commenter concluded that the discount therefore seems to be a tax. Another commenter stated that if the proposed discount and online recognition are meant to encourage CLE, then the proposal constitutes a tax that is being used to set policy. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time, and thus, there is no CLE discount in this Final Rule. Under this Final Rule, completion of CLE remains voluntary. However, this rule provides that practitioners may be recognized in the online practitioner directory for completing six credits of CLE in the preceding 24 months, including five credits in patent law and practice and one credit in ethics. CLE comports with the goal and spirit of 37 CFR 11.101: The USPTO requires the practitioner to be competent in the legal, scientific, and technical knowledge and skills reasonably necessary for client representation. This rule also provides that practitioners may obtain up to two of the five credits in patent law and practice by completing patent pro bono work. Comment 110: A few commenters stated that the annual active patent practitioner fee would disproportionately affect patent agents PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 46963 because they do not currently have a CLE requirement, and they would therefore incur an extra expense as compared to patent attorneys. Two of these commenters additionally stated that publication of the CLE certification status of practitioners by the OED director may be equivalent to a public shaming of those patent practitioners who do not have a state CLE requirement or who opt to pay the full fee, resulting in unfair prejudice toward those who do not certify completion of CLE and essentially making CLE mandatory. Response: In this Final Rule, there is no active patent practitioner fee, and thus there is no CLE discount. In addition, under the Final Rule completion of CLE remains voluntary. Separately, this rule provides for publication of a patent practitioner’s CLE certification status, which is intended to encourage patent practitioners to participate in CLE and provide information to the public regarding the patent practitioner’s CLE status. The USPTO also intends to provide additional free CLE courses to patent practitioners, thus alleviating the financial burden of obtaining CLE credits. Comment 111: Two commenters stated that unless the USPTO, in advance, actively commits resources to providing free, regular, and frequent qualifying CLE courses in the required areas, some practitioners, particularly solo practitioners and patent agents, will bear an additional financial burden or cost of doing business. One commenter requested that the Office explain how the USPTO will alleviate future CLE burden and cost. Response: The USPTO intends to provide additional free CLE courses for patent practitioners. Comment 112: One commenter inquired if, in determining a proper fee amount for the projected number of registered practitioners expected to pay each type of fee, factors such as the historical trends of active practitioner populations by registration year, including both estimated new practitioner registration as well as likely attrition rates from older subsets, were taken into consideration. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 113: One commenter stated that there is currently no mechanism for CLE to be recorded for non-attorney patent agents. This commenter inquired how patent agents would be able to avoid paying the full fee in the first year E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46964 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations without procedures or a mechanism established well in advance for patent agents to secure qualifying CLE credits. This commenter further inquired whether practitioners would be able to reference a training or workshop they attended even if they were not able to receive CLE credits at the time of participation. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time, thus, there is no CLE discount. However, patent practitioners who wish to receive recognition in the online practitioner directory for the completion of CLE are responsible for tracking their own CLE course attendance and credits, regardless of the method in which such credits are recorded (or not recorded) by a state bar or other organization. In order for the CLE credit to count toward recognition in the online practitioner directory, the credit must be acquired in the 24 months preceding the certification. The USPTO intends to coordinate the delivery of CLE programs, and make the completion of CLE—whether offered by the USPTO or third parties—as convenient as possible for practitioners to complete, while enhancing practitioner access to, and opportunities for, the training necessary to stay up-todate with current ethics and patent law and practice. Comment 114: One commenter inquired how practitioners will be able to determine, in advance, which thirdparty CLE programs will be adequate for meeting the CLE requirement. Response: Under this Final Rule, the completion of CLE is voluntary. For patent practitioners who wish to complete CLE and obtain recognition in the online practitioner directory, the USPTO intends to coordinate the delivery of CLE programs, and make the completion of CLE—whether offered by the USPTO or third parties—as convenient as possible for practitioners to complete, while enhancing practitioner access to, and opportunities for, the training necessary to stay up-todate with current ethics and patent law and practice. Additionally, in the near future, the USPTO intends to issue proposed CLE guidelines, with a request for public comment, as to the types of CLE programs, including those offered by third parties, which may qualify for the CLE certification and the form of recognition in the online practitioner directory. Comment 115: One commenter inquired if practitioners will be required to submit formal documentation of their CLE training on an annual basis or if VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 each practitioner would have to maintain their own CLE documentation records to certify they have completed the CLE. Another commenter requested clarification on the recordkeeping requirements for CLE, including what type of proof is sufficient to demonstrate CLE completion. Another commenter requested clarification on what CLE would be tracked and how long it would be tracked. Response: In the near future, the USPTO intends to issue proposed CLE guidelines, with a request for public comment on the proposed guidelines. The proposed CLE guidelines will address recordkeeping standards for practitioners who wish to certify completion of CLE and obtain recognition in the online practitioner directory. In general, it is contemplated that the proposed CLE guidelines will provide that practitioners are to retain their own CLE documentation records for a period of time. Comment 116: Two commenters stated that they are supportive of the notion to incentivize active practitioners to enhance and maintain their ongoing legal education awareness and skills by providing a $100 discount for registered practitioners who certify completion of CLE. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Thus, there is no discount associated with the completion of CLE. However, the Office may recognize patent practitioners in the online practitioner directory if they have completed six credits of CLE in the preceding 24 months. The Office believes that this will similarly incentivize active patent practitioners to enhance and maintain their skills. Comment 117: Two commenters inquired if the Office considered that imposing the annual active patent practitioner fee may result in an increase in practitioner malpractice premiums, especially if the USPTO does not actively notify practitioners of their due dates by both USPS mail and email. One of these commenters suggested that notification by mail alone may be insufficient, and the Office should encourage practitioners to register multiple mailing and email addresses with OED. One other commenter encouraged OED to use both practitioners’ addresses in the register and those in other USPTO databases to send out notices regarding payment, deadlines, and non-payment. The same commenter requested that OED telephone practitioners regarding non- PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 payment of the annual active patent practitioner fee. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the active patent practitioner fee at this time. Under the Final Rule, patent practitioners are required to submit an electronic registration statement, which takes the place of the practitioner survey. Prior to this Final Rule, patent practitioners were subject to administrative suspension for failure to respond to the practitioner survey. Likewise, under the Final Rule, patent practitioners who fail to submit a registration statement are subject to administrative suspension. The Office intends to notify patent practitioners of the due date of the registration statement at least 120 days before such date. Additionally, 37 CFR 11.11(a) requires practitioners to provide OED with at least one and up to three email addresses where the practitioner receives email. Patent practitioners are encouraged to make updates in a timely manner to and ensure the accuracy of their contact information in accordance with 37 CFR 11.11(a) so that OED may timely communicate with practitioners regarding any applicable deadline. Comment 118: Multiple commenters stated the annual active patent practitioner fee is too high. One commenter stated that the fee will deter some practitioners and add a barrier to entry. One commenter suggested setting the fee to the CLE discount level and providing a discount to solo practitioners, or patent practitioners employed by a small law firm, nonprofit, and/or the government because, otherwise, payment of the fee may become prohibitively expensive. Another commenter stated that instead of providing the CLE discount, the Office should provide a discount to practitioners who provide pro bono services via the Patent Pro Bono Program. The commenter also stated that the annual active patent practitioner fee is substantially higher than some state bar fees. One of these commenters concluded the fee was too high to just cover administrative costs and aiding the pro bono programs. Additionally, the commenter would like the CLE discount to be greater than $100. The other commenter stated that most practitioners do not work in large city firms and therefore cannot afford the fee. Another commenter stated that the annual active patent practitioner fee should only be high enough to maintain the roster and should not be used to administer CLE, pro bono activities, or outreach, such as speaking engagements, as there are already E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations mandatory fee schedules in place (i.e., small entity and micro entity) to aid financially under-resourced inventors. Other commenters questioned whether the annual active patent practitioner fee should be used to fund activities outside of practitioner discipline. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 119: A few commenters stated that the annual active patent practitioner fee will be passed on as overhead to applicants and that it is illusory to suggest that applicants will not eventually bear the cost of the fees. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 120: One commenter suggested that there should be no ‘‘voluntary inactive’’ or ‘‘emeritus’’ status because it seems to indicate that the USPTO is encouraging inactivity of practitioners who should always have a professional obligation to remain apprised of the current rules, case law, and filing procedures. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. As a result, the USPTO is not implementing the proposed emeritus status. Voluntary inactive status, which is currently available to practitioners pursuant to 37 CFR 11.11(d), is not altered by this Final Rule. Comment 121: Multiple commenters opposed offering a discount on the annual active patent practitioner fee for completion of CLE. One of the commenters asserted that by doing so, the USPTO is implying that it is permissible not to take CLE, as long as the USPTO gets paid more money. Commenters stated that any CLE requirement should be decoupled from the annual active patent practitioner fee. Response: This comment has been adopted in part. As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Under this Final Rule, patent practitioners are not required to complete any CLE. However, patent practitioners may be able to obtain recognition in the online practitioner directory by certifying that they completed six credits of CLE within the 24 months prior to the certification (including five credits of patent-related CLE and one credit of ethics CLE). The Office believes that CLE serves to VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 enhance patent practitioners’ legal skills and encourages patent practitioners to enhance their knowledge in the areas of patent and ethics legal skills. Competency in these areas is expected pursuant to the USPTO Rules of Professional Conduct. Comment 122: Two commenters questioned the value of CLE. One of these commenters questioned the statement, ‘‘CLE serves to enhance practitioners’ legal skills.’’ 84 FR 37415. One of these commenters stated that the present burden on attorneys of complying with CLE requirements is already onerous. Response: At least 46 states have implemented mandatory CLE for attorneys. Consistent with USPTO’s past statements regarding the completion of CLE, the primary purposes of CLE are to ensure lawyer competence, maintain public confidence in the legal profession, and support the fair administration of justice. See 78 FR 20188; Report of the Standing Committee on Continuing Legal Education of the American Bar Association (February 2017); and ABA Model Rule on Continuing Legal Education, February 2017, ‘‘Purpose.’’ Recognition in the online practitioner directory will also serve to provide information to the public regarding a patent practitioner’s CLE status. The USPTO intends to coordinate the delivery of CLE programs and make the completion of CLE—whether offered by the USPTO or third parties—as convenient as possible for patent practitioners to complete, while enhancing patent practitioner access to, and opportunities for, the training necessary to stay up-to-date with current ethics and patent law and practice. Thus, completion of CLE for state bar purposes may also satisfy the requirements to receive recognition in the online practitioner directory. Comment 123: One commenter stated that the proposed practitioner fee is not in compliance with E.O. 12866, in part, because the NPRM did not include an estimate of either costs or benefits of the intended regulation and thus no balancing against the status quo. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 124: One commenter stated that the USPTO needs to account for the costs of reporting and recordkeeping and other compliance costs for the annual active patent practitioner fee under the PRA, including a discussion of the lowest burden alternative and that the public benefit is in the same range. PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 46965 The commenters suggested that the annual active patent practitioner fee must be the least costly way to achieve the stated benefit. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 125: One commenter stated that the USPTO must be able to certify that the annual active practitioner fee requirement is implemented in ways ‘‘consistent and compatible, to the maximum extent practicable, with the existing reporting and recordkeeping practices of those who are to respond,’’ including for those attorneys in states that do not have existing CLE requirements, and for all agents. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Additionally, under the Final Rule, patent practitioners are not required to complete CLE. Comment 126: One commenter stated that, regarding the annual active patent practitioner fee, the USPTO has not quantified and monetized the benefits and costs and evaluated non-quantified and non-monetized benefits and costs as required by OMB Circular A–4. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 127: Two commenters stated that the USPTO does not need to engage in activities similar to state bars because either there is no similar activity at the USPTO, or such activities would be redundant with what is provided by state bars. Another commenter stated that state bar associations provide more distinct services to member attorneys than OED provides to patent practitioners. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. However, the USPTO engages in activities that are of concern to its stakeholders, who include patent practitioners. Activities provided by state bars are generally provided to attorneys registered with the state bar or to the clients of such attorneys. Most state bars do not provide patent agents access to such activities, as they are not registered with state bars. Thus, USPTO activities governed by this Final Rule address, in part, a gap in services to practitioners and their clients. Additionally, the USPTO provides free patent legal training to practitioners, a E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46966 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations service that is distinct to patent practitioners. Comment 128: Two commenters inquired whether the USPTO should impose surcharges for pro se applicants due to the cost of examining pro se applications. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 129: Two commenters stated that the USPTO has not provided an accounting of the costs of the services provided for by the proposed annual active patent practitioner fee and needs to do so. The commenter stated that without a detailed cost accounting, the annual active patent practitioner fee seems excessive to fund the current services provided by the OED, especially when considered as an increase to existing fees collected pursuant to 37 CFR 1.21(a)(1)–(10). Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 130: Two commenters stated that OED has been in existence without the annual active patent practitioner fee and has never needed the annual active patent practitioner fee, unlike state bars, which are only funded by fee revenue from practicing attorneys. One of the commenters stated the USPTO must be able to certify that the requirement is ‘‘necessary for the proper performance of the functions of the agency.’’ 44 U.S.C. 3506(c)(3)(A). One of the commenters additionally stated that it is not a valid reason to impose the fee because other jurisdictions do so. One commenter requested that the USPTO provide a justification or reasoning for why establishing an annual active patent practitioner fee is being implemented now, when a similar proposal was made and not adopted in the 2000s. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 131: Two commenters stated that ensuring the accuracy of OED’s records can be accomplished by a periodic registration requirement that does not require a fee, and OED already has the authority under 37 CFR 11.11 to conduct periodic surveys of registered practitioners, which would accomplish that goal. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 annual active patent practitioner fee at this time. The USPTO must maintain accurate records regarding the patent practitioners who practice before it for the benefit and protection of the public. Patent practitioners are required under 37 CFR 11.11(a) to update their contact information within 30 days of the date such information changed; however, many fail to do so. This provision was in effect prior to this Final Rule and continues to be in effect. Patent practitioner surveys have been conducted in the past, and many patent practitioners have failed to respond at great expense to the public and the USPTO. Thus, under this Final Rule, OED will be able to maintain accurate records by having patent practitioners electronically submit registration statements on which practitioners will indicate whether they are currently in active status and list their current contact information. Comment 132: One commenter requested that, regarding the CLE option, the Office state (1) whether the Office feels that there exist major deficiencies in the corpus of practitioners in its practice before the Office, (2) how CLE will solve these deficiencies, and (3) any other justification for requiring CLE. Response: This Final Rule does not require practitioners to complete any CLE. Comment 133: One commenter requested that the Office allow the requirement to take CLE to expire after one or two years if the benefits and goals of CLE are not attained. Response: This Final Rule does not require patent practitioners to complete CLE courses. Thus, it is left up to the individual patent practitioner to evaluate the relative costs and benefits of taking CLE courses to improve his or her patent legal skills and/or obtain recognition in the online practitioner directory for completing CLE. Comment 134: One commenter requested that the Office offer its own free CLE programs in an electronically accessible format, such as a web-based presentation, and ensure that such CLE programs complied with each state bar’s CLE requirements (for those states requiring CLE). Response: The Office currently offers free CLE programs that qualify for state bar credit in electronically accessible format. At present, they are available under the ‘‘Learning and Resources’’ tab on the uspto.gov web page. The Office will endeavor, where feasible, to structure programs that would meet both the requirements for USPTO CLE credit and the traditional requirements for CLE credit in other jurisdictions. PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 Comment 135: Two commenters requested that, prior to instituting the annual active patent practitioner fee and CLE option, the Office analyze the option under the PRA. The commenters specifically requested that the Office analyze the technical, administrative, and paperwork burden imposed, as well as the justifications for such burdens, and that the cost of the burdens would at least equal the benefits, and that the practitioner fee is the least costly way to achieve those benefits. Additionally, the commenters noted that the NPRM states that the information collection requirements were reviewed under OMB control nos. 0651–0012, 0651– 0016, 0651–0020, 0651–0021, 0651– 0031, 0651–0032, 0651–0033, 0651– 0059, 0651–0063, 0651–0064, 0651– 0069, and 0651–0075, but none of these appear to relate to annual active patent practitioner fees or CLE requirements. One of the commenters stated that such collection requirements should be reviewed under 0651–0012, ‘‘Admission to Practice and Roster of Registered Patent Attorneys and Agents.’’ Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 136: One commenter inquired whether OED is prepared to qualify seminars in the same manner that state bar associations qualify seminars for both substantive and ethics-based CLE credits. The commenter inquired whether OED will submit the materials to all 50 states and the District of Columbia for certification. One commenter inquired as to whether, like state bars, the Office intends to charge institutions for offering CLE programs that are in compliance with the expectations and requirements of the Office for CLE certification. Response: In the near future, the USPTO intends to issue proposed CLE guidelines, with a request for public comments on them. It is anticipated that the proposed guidelines will address issues including qualification of CLE programs. However, the Office will endeavor, where feasible, to structure programs it provides in accordance with the traditional requirements for CLE credit in other jurisdictions. Comment 137: A few commenters requested that the Office identify the statutory authority allowing for defraying the patent-related costs of operating OED by imposition of an annual active patent practitioner fee, and also for the CLE requirement. One of the commenters states that the NPRM is not explicit about the basis for setting the fee but that it is suggested that it is E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations being set under the ‘‘Other fees’’ provisions of 35 U.S.C. 41(d)(2)(A). The commenter requested the USPTO explain how the proposed fees involve a service to the person being charged the fee in accordance with 31 U.S.C. 9701 (specifying that user fees must be set based on ‘‘the value of the service or thing to the recipient’’). One of the commenters stated that section 10 of the AIA prohibits the creation of new fees, such as the annual active patent practitioner fee. One of the commenters opined that the annual active patent practitioner fee and CLE rules are not in compliance with E.O. 13771 (Reducing Regulation and Controlling Regulatory Costs) (January 30, 2017). One of the other commenters opined that the Independent Offices Appropriations Act of 1952 (IOAA) prohibits fees for general operating costs and that the annual active patent practitioner fee does not meet the qualifications for a ‘‘transfer payment.’’ Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 138: Two commenters requested clarification of the scope of acceptable patent and ethics CLE topics. One of these commenters inquired as to where CLE credit could be obtained, and the projected costs of attaining CLE credit. One commenter specifically inquired as to whether patent law and practice courses could include courses on estates and trusts, corporate regulation, and litigation-related topics, and whether ethics courses could include those related to substance abuse. Response: In the near future, the USPTO intends to issue proposed CLE guidelines, along with a request for public comment on them. It is anticipated that the proposed guidelines will address the types of CLE courses that may qualify for recognition in the online practitioner directory. Generally, it is anticipated that a patent practitioner may obtain eligible patent CLE credit for courses or activities on any topic covered under 37 CFR 11.5(b)(1), including legal training which relates to: Preparation and prosecution of patent applications, patentability determinations and opinions, and drafting documents to be presented for any patent-related proceeding before the USPTO. Other topics that a practitioner may count toward the five patent CLE credits include PTAB proceedings and patent litigation. Any course or activity that is counted for ethics credit by any U.S. state or territorial bar, including those of VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 which the practitioner is not a member, may be applied toward meeting the one hour of ethics CLE required for CLE recognition in the online practitioner directory. Comment 139: One commenter requested clarification on whether CLE credit can be earned for giving presentations or writing an article or paper on CLE topics. Response: In the near future, the USPTO intends to issue proposed CLE guidelines, along with a request for public comment on them. It is anticipated that the proposed guidelines will address the specific types of presentations or scholarly writing that may qualify for CLE credit that counts toward recognition in the online practitioner directory. Comment 140: One commenter requested clarification on what is considered pro bono work for the purposes of CLE certification. The commenter additionally stated that pro bono service should not count towards any CLE requirement because the pro bono patent client, unlike other types of pro bono clients, is not facing an unaffordable hardship; rather, the client is seeking an alternate form of venture funding, and as a part of CLE, pro bono work does not enhance a practitioner’s legal skills any more than work for hire. Another commenter stated that it is unclear how pro bono activities increase legal acumen in order for it to justify those activities counting as CLE credit in the CLE discount. Response: The Final Rule provides that a registered practitioner or person granted limited recognition may earn up to two of the five hours of CLE in patent law and practice by participating in the USPTO Patent Pro Bono Program. For every three hours of pro bono service, a patent practitioner may earn one hour of CLE credit toward the five credits in patent law and practice required for recognition in the online practitioner directory. Section 32 of the AIA calls on the USPTO to work with and support IP law associations to establish pro bono programs. A pro bono patent client is generally not accepted into the Patent Pro Bono Program unless their gross household income is less than three times the federal poverty level guidelines. Moreover, the Patent Pro Bono Program provides valuable learning opportunities for less experienced and experienced practitioners alike by providing volunteers the ability to obtain practical patent prosecution experience representing under-resourced inventors who would otherwise be unable to prosecute their patent applications. In addition, working with patent pro bono PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 46967 clients provides an opportunity to gain experience with clients who are less sophisticated in patent practice and procedure than typical corporate clients. Under the Final Rule, taking CLE courses or performing pro bono services as a part of the Patent Pro Bono Program by patent practitioners is not required. Information regarding the Patent Pro Bono Program is accessible at www.uspto.gov/probonopatents. Comment 141: Two commenters questioned whether the Office will audit practitioners for CLE compliance if they certify they have completed CLE and, if so, what the statute of limitations on the audit will be. One commenter opined that there is no limitation specified in the NPRM, so a practitioner presumably must keep CLE records indefinitely until retirement. Response: The Office does not plan to audit practitioners who certify they have completed CLE. If, however, a registered practitioner’s CLE compliance comes into question as part of a grievance or a disciplinary investigation, then that practitioner may be called upon to provide records of CLE completion. In the near future, the USPTO intends to issue proposed CLE guidelines, with a request for public comment on them. The proposed CLE guidelines will address recommended standards of recordkeeping for practitioners who wish to certify completion of CLE and obtain recognition in the online practitioner directory. Comment 142: One commenter requested clarification on whether the annual active patent practitioner fee would be due on different dates for each practitioner or by one date for all practitioners. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 143: One commenter inquired whether the annual active patent practitioner fee could be paid and forms filled out by administrative assistants or if each attorney would have to complete some yet-to-be-designed electronic certification form. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Correspondence with the Office must comply with the requirements of 37 CFR 1.4. Comment 144: One commenter inquired as to whether administratively suspended practitioners would be locked out of accessing their files in the PAIR system or in EFS-Web or both. E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46968 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations Commenters also inquired whether a response or application filed during a period of non-compliance would be invalid and, if so, whether there would be a mechanism for retroactively validating the documents to prevent unintentional abandonment of applications or whether the remedy would be to file an expensive request for revival of an unintentionally abandoned application. Additionally, commenters questioned how administrative suspension of a practitioner would affect clients’ rights and whether prosecution by an inadvertently suspended practitioner would cause a patent resulting from that prosecution to be invalid or unenforceable. The commenter further stated that any such corrections would be administratively burdensome on the Office and the practitioner. Response: Administratively suspended practitioners would not be able to access their USPTO online accounts and would be advised to contact OED to resolve the suspension. Thus, if administratively suspended, a practitioner would not be able to file documents electronically. Filing documents while administratively suspended may indicate the practitioner has engaged in the unauthorized practice of law. If an application were to go abandoned due to a practitioner’s inability to file documents while administratively suspended, then revival of the application may be necessary under 37 CFR 1.137. Invalidity and unenforceability of patents are matters determined by tribunals in particular litigations. Comment 145: One commenter inquired as to what metrics indicate that the annual active patent practitioner fee would improve patent quality. Another commenter suggested that the USPTO’s resources would be better spent in the interest of the patent community on issues that the USPTO is in the best position to address, such as assuring patent quality. Another commenter suggested that by practitioners passing the fee onto applicants, some applicants may reduce their reliance on patent practitioners, resulting in a decrease in patent quality. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 146: One commenter requested an explanation of how the annual active patent practitioner fee was calculated. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 annual active patent practitioner fee at this time. Comment 147: Two commenters opined that the proposed $70 fee charged of practitioners in voluntary inactive status is too high for maintaining a database and updating it once a year and that practitioners would not get a benefit equal to the fee. Two commenters do not support charging a voluntary inactive fee. One commenter stated that imposing an inactive patent practitioner fee is bad public policy because many semi-retired practitioners volunteer to mentor younger attorneys or to advise small businesses, and the fee would discourage semi-retired practitioners from staying active in the profession. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Accordingly, the USPTO also will not implement the proposed fee for patent practitioners in voluntary inactive status. Comment 148: One commenter stated that the beneficiaries of the OED disciplinary system are the Office and patent applicants, not the registered practitioners. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. Comment 149: One commenter stated that the USPTO argued to be an exception to the requirements of 5 U.S.C. 500(e), not because of the need for a second disciplinary authority to regulate conduct, but by reasoning that the USPTO and patent applicants would be better served by placing additional skill requirements on patent practitioners. H.R. Rep. No. 1141, 89th Cong., 1st Sess. (1965), reprinted in 1965 U.S.C.C.A.N. 4170, 4172–74, 4176–77, 4179; William H. Sager & Leslie S. Shapiro, Administrative Practice Before Federal Agencies, 4 U. Rich. L. Rev. 76, 82 (1969). Response: Pursuant to 35 U.S.C. 2(b) and 35 U.S.C. 32, the Office has statutory authority to promulgate regulations governing the conduct of patent practitioners and suspend or exclude them for misconduct. Comment 150: One commenter stated that trademark attorneys should pay the same annual active patent practitioner fee that patent practitioners are being asked to pay because OED administers disciplinary proceedings against trademark attorneys. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 active patent practitioner fee at this time. Comment 151: One commenter strongly supports an adequately and properly funded OED. Response: The Office appreciates the comment. The patent fee adjustments in this Final Rule are intended to provide the Office with a sufficient amount of aggregate revenue to recover the aggregate cost of patent operations, including the costs of OED services related to patent matters. Comment 152: One commenter stated that the annual active patent practitioner fee would provide increased funding to OED and would like to know what issues OED intends to address with the increased funding. The commenter also indicated that funding from the annual active patent practitioner fee should not be used to expand the role of OED per se to include any active investigation of practitioners that is not linked to a complaint or to a notification from a state bar association. The commenter also stated that since the annual active patent practitioner fee eliminates the need for the Office to perform surveys of practitioners, the cost of conducting the survey should be reflected as a savings to the Office and should be reflected in any cost accounting justifying the annual active patent practitioner fee. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. Comment 153: One commenter inquired whether OED could recover some of its funding by increasing the fees it already charges instead of charging the annual active patent practitioner fee. The commenter gave examples of an application fee for admission to the examination for registration, a fee for administering the registration examination, and a fee for recognition or registration after disbarment or suspension on ethical grounds. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. In addition, the fees cited by the commenter are enrollment fees, which are only being adjusted by the approximately 5 percent across-theboard adjustment to patent fees. A larger targeted adjustment of enrollment fees went into effect in the January 2018 Final Rule. Comment 154: One commenter requested that the USPTO address the specific OED services and other services that will be funded by the annual active E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations patent practitioner fee and how the collected funds will be applied to those services. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. Comment 155: One commenter stated that the Office estimates that the annual active patent practitioner fee will raise $10–$11 million per year and that this amount seems excessive to fund the patent-related services provided by the OED, especially when considered as an increase to the existing fees collected pursuant to 37 CFR 1.21(a)(1)–(10). Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. Comment 156: Two commenters requested details on the expenses for the Law School Clinic Certification Program and the Patent Pro Bono Program and on how the funds from the annual active patent practitioner fee will be applied to these expenses. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. Comment 157: One commenter stated that funds collected from the annual active patent practitioner fee will be used both for existing OED programs and to implement new programs and inquired to what extent would the expense of administrating the annual active patent practitioner fee take resources away from other programs. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. Comment 158: Two commenters welcomed the provision in the NPRM that states that only practitioners who have been resigned for more than two years would need to retake the registration exam. Response: As noted in the comment, the Final Rule eliminates the requirement that a registered practitioner who is administratively suspended for more than two years take and pass the registration examination in order to be reinstated. Under the Final Rule, resigned practitioners will only have to retake and pass the registration examination if they have been resigned for more than five years and cannot provide other objective evidence that they continue to possess the necessary legal qualifications to render valuable service to patent applicants. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Comment 159: One commenter stated that many practitioners will forego the CLE discount in order to avoid determining how to comply and document CLE compliance. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time and thus, there is no CLE discount in this Final Rule. Comment 160: One commenter questioned what the consequences would be for a CLE certification that does not meet OED’s standards and how disagreements regarding the challenged certification would be resolved. Response: Practitioners will selfcertify their completion of six credits of CLE, including five credits of CLE in patent law and practice and one credit of CLE in ethics. In the near future, the Office plans to issue proposed CLE guidelines, with a request for public comment on them that will address what types of CLE may qualify for CLE recognition. OED does not intend to audit practitioners who certify completion of CLE or review whether courses completed by a practitioner who certified completion of CLE in fact qualify for the certification. It is anticipated that such review would only take place for cases in which OED receives a grievance alleging that a patent practitioner falsely or fraudulently certified completion of CLE or where the submission was obviously noncompliant. Registered patent practitioners and those granted limited recognition to practice before the Office in patent matters are subject to the USPTO Rules of Professional Conduct, including 37 CFR 11.804(c), which prohibits conduct that involves dishonesty, fraud, deceit, or misrepresentation. Comment 161: One commenter questioned what effect an invalid CLE certification would have on patent validity or enforceability. Response: It appears that the comment anticipates a scenario in which a patent practitioner claims the CLE credit but is subsequently found not to have satisfied the requirements for claiming the credit. Under the Final Rule, a practitioner may certify completion of CLE in order to obtain recognition in the online patent practitioner directory. No administrative suspension would result from an ‘‘invalid’’ or mistaken CLE certification. Thus, it is not anticipated that an ‘‘invalid’’ or mistaken CLE certification would affect patent validity or enforceability. Comment 162: One commenter inquired how the regulatory and PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 46969 compliance costs of the CLE discount will affect the annual active patent practitioner fee. One commenter was concerned that the Office will use oversight of the CLE certification as justification for the annual active patent practitioner fee and any future increases thereto. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. Comment 163: One commenter is concerned that the Office’s proposed model of three hours of pro bono service to obtain one hour of CLE credit does not sufficiently reflect the importance and value of pro bono service and recommends providing one hour of CLE credit for each hour of pro bono service in the USPTO Patent Pro Bono Program. Response: This comment has not been adopted. According to the Standing Committee on Pro Bono & Public Service of the American Bar Association, of the states that offer CLE credit for pro bono service, the most common rate that is used for earning such credits is five hours of service for each CLE credit. No state offers one hour of CLE credit for each hour of pro bono service. Thus, one hour of CLE credit for every three hours of pro bono service is generally above the amount of CLE credit that states offer for pro bono service. In the near future, the USPTO intends to issue proposed CLE guidelines, with a request for public comments on them. Comment 164: One commenter stated that requiring a practitioner to retake the registration examination for failure to update their information with OED is equivalent to the penalty of disbarment and therefore grossly disproportionate to the offense. Instead, the commenter requests that the penalty for failing to update contact information be an extra charge to reinstate, based on the back fees missed and extra administration costs incurred. Response: Administratively suspended practitioners will only have to retake the examination if they have been suspended for more than five years and cannot provide other objective evidence that they continue to possess the necessary legal qualifications to render valuable service to patent applicants. Legal Considerations Comment 165: One commenter stated that RCE fees are governed by the IOAA, except for the one requirement that is carved out by section 10 of the AIA. Thus, the USPTO may charge actual cost, plus a proportional share of E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46970 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations general administrative costs, reduced by a proportional share of issue and maintenance fees, but no more than that. The excess charge for second and subsequent RCEs is unlawful. Response: The IOAA provides federal agencies the authority to charge user fees where the agencies do not have their own specific statutory authority to charge fees. Fees collected under the IOAA are deposited in the general fund of the U.S. Treasury and not available to the charging agency for its use. OMB Circular A–25, User Charges, provides guidance on IOAA authority. This has no relevance to the fee setting authority provided to the USPTO, as the USPTO has specific statutory authority to charge fees under title 35 of the U.S.C. and the Trademark Act of 1946. The USPTO further has specific authority to set and adjust those fees as in the current rulemaking under section 10 of the AIA. Fees collected by the USPTO are made available to the USPTO through annual appropriations and are available to use for the activities that generated the fee (patent and trademark examination and proportionate administrative expenses). The general authority described in the IOAA and OMB Circular A–25 is not relevant to the USPTO’s specific fee setting authority. Comment 166: One commenter disagreed with the RIA regarding the annual active patent practitioner fee and non-DOCX surcharge fee. The commenter stated that the point of the rule is to raise fees and disagreed with findings of ‘‘No identified costs.’’ The commenter suggested comment letters sent to PPAC identified substantial costs to the public for the annual active patent practitioner fee and non-DOCX surcharge fee. The commenter further wrote that the OMB’s Implementing Guidance puts the annual active patent practitioner fee and non-DOCX surcharge fee within the scope of E.O. 13771, which states: ‘‘Regulatory actions [that] impose requirements apart from transfers . . . need to be offset to the extent they impose more than de minimis costs.’’ Response: Guidance in OMB Circular A–4, Regulatory Analysis, and concerning RIAs provides that fees to government agencies for goods or services are considered transfer payments. The fee adjustments concern increases of fees for USPTO services, which are transfers, not costs. The nonDOCX surcharge fee is based on the services provided by the USPTO to patent applicants and, consequently, qualifies as a transfer payment under OMB’s guidance. As noted in response to Comment 81 above, the USPTO has elected not to implement the annual VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 active patent practitioner fee at this time. Comment 167: One commenter stated that the legislative history of the AIA makes abundantly clear that the USPTO may not use fee setting as a policy lever. Fee setting may only be used to recover aggregate costs. The commenter further stated that the U.S. Constitution denies agencies the authority to set fees for anything other than cost recovery— setting fee levels to ‘‘encourage or discourage’’ is a ‘‘tax’’; agencies do not have the authority to tax, and, therefore, fees being set to incentivize, disincentivize, and ‘‘to facilitate the effective administration of the patent and trademark systems,’’ are not within the statutory authority of the USPTO. Response: The AIA permits individual patent fees to be set or adjusted to encourage or discourage particular services, so long as the aggregate revenues for all patent fees recover the aggregate costs of the patent operation. The comment would read into the AIA limitations that do not exist and that are inconsistent with the AIA. Comment 168: One commenter wanted to know why the USPTO has never issued any legal analysis of the AIA’s legislative history. The commenter cited two examples: The removal of ‘‘notwithstanding the fee amounts established or charged’’ from the AIA and the discussion in the House report (H.R. Rep. No. 112–98), and the effect of the word ‘‘only’’ in the phrase ‘‘only to recover the aggregate estimated costs.’’ The commenter believed the legislative history makes clear that Congress intended ‘‘only’’ to apply to purpose as well as amount. Response: A legal analysis of legislative history is unnecessary in light of the plain language of the AIA, which permits individual patent fees to be set or adjusted to encourage or discourage particular services, so long as the aggregate revenues for all patent fees recover the aggregate costs of the patent operation. Comment 169: One commenter expressed that the fee setting efforts of the USPTO are unconstitutional because the U.S. Constitution denies agencies the authority to set fees for anything other than cost recovery—setting fee levels to ‘‘encourage or discourage’’ behavior is a ‘‘tax,’’ and agencies do not have the authority to tax (see §§ I.B.1 and I.C). Even with authority under the AIA, the USPTO may not ‘‘adjust assessments to encourage or discourage a particular activity’’ because the U.S. Constitution provides that the power to ‘‘lay and collect taxes’’ lies with the U.S. Congress, not the executive branch. PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 Response: Patent fees are paid for receiving and maintaining a patent grant. Courts have held that the payment of such fees should not be viewed as taxes but rather payments for a service. Comment 170: One commenter wrote that the USPTO may not create new fees where no fees are ‘‘established, authorized, or charged’’ in title 35 and there is no affirmative material, service, or processing provided. Similarly, the commenter wrote that the USPTO may not re-allocate fees among the categories specified in § 41; new fees may be created only where the USPTO has a specific statutory authorization (see § I.B.2). Response: The AIA permits individual patent fees to be set or adjusted to encourage or discourage particular services, so long as the aggregate revenues for all patent fees recover the aggregate costs of the patent operation. The comment would read into the AIA limitations that do not exist and that are inconsistent with the AIA. Comment 171: One commenter stated that this rulemaking exceeds the authority of the USPTO because it overrides a policy decision made by the U.S. Congress in favor of something the USPTO prefers. The commenter contended the U.S. Congress made a policy choice: Initial filings should be cross-subsidized by maintenance fees at approximately 50 percent. The U.S. Congress (by inference) felt it important to encourage filing and allow successful patentees to cross-subsidize filing. The commenter also felt the USPTO is exceeding its authority because it is second-guessing the U.S. Congress’s policy balances encoded in the appeal fee line. The commenter suggested this rulemaking relies on ‘‘factors which Congress has not intended [the agency] to consider,’’ making it an arbitrary and capricious agency action under the APA. The commenter believed the USPTO departed from the intent of the U.S. Congress in 2013 and should revert to the pre-2013 fee structure. Response: The USPTO has specific statutory authority to charge fees under title 35 of the U.S.C. and the Trademark Act of 1946. The USPTO further has specific authority to set and adjust those fees as in this Final Rule under section 10 of the AIA. The AIA permits individual patent fees to be set or adjusted to encourage or discourage particular services, so long as the aggregate revenues for all patent fees recover the aggregate costs of the patent operation. However, the USPTO notes that the adjustments to the fee schedule E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations do not significantly impact the balance between front-end and back-end fees. Comment 172: One commenter agreed in principle with the operating reserve of the USPTO but saw no statutory authorization for it. The commenter contended the operating reserve is not fairly within the text of section 10 of the AIA, which limits USPTO fee collections to ‘‘only’’ aggregate costs. Response: The AIA permits individual patent fees to be set or adjusted to encourage or discourage particular services, so long as the aggregate revenues for all patent fees recover the aggregate costs of the patent operation. One of these aggregate costs is the growth of an operating reserve to allow effective management of the U.S. patent system and responsiveness to changes in the economy, unanticipated production workload, and revenue changes, while maintaining operations and effectuating long-term strategies. Comment 173: One commenter stated that the NPRM for this rulemaking ignores the IOAA and OMB Circular A– 25, which are the general framework statute and Presidential interpretation, respectively, for agencies that charge user fees. The commenter claimed the IOAA limits user fees to cover services to a specific ‘‘identifiable recipient,’’ at the cost of providing that service or the value to the recipient, but may not recover agency general operating costs. The commenter also stated that fees without statutory grounding are not within section 10 of the AIA and thus are either barred outright or are subject to the constraints of the IOAA. The commenter suggested that relevant Supreme Court and D.C. Circuit case law holdings—especially Seafarers International Union of North America v. U.S. Coast Guard, 81 F.3d 179, 183 (D.C. Cir. 1996)—are opposite to the position the USPTO takes in the NPRM. Response: The IOAA provides federal agencies the authority to charge user fees where the agencies do not have their own specific statutory authority to charge fees. Fees collected under the IOAA are deposited in the general fund of the U.S. Treasury and not available to the charging agency for its use. OMB Circular A–25 provides guidance on IOAA authority. This has no relevance to the fee setting authority of the USPTO, as the USPTO has specific statutory authority to charge fees under title 35 of the U.S.C. and the Trademark Act of 1946. The USPTO further has specific authority to set and adjust those fees as in this Final Rule under section 10 of the AIA. Fees collected by the USPTO are made available to the USPTO through annual appropriations and are available to use for the activities VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 that generated the fee (patent and trademark services and proportionate administrative expenses). The general authority described in the IOAA and OMB Circular A–25 is not relevant to the USPTO’s specific fee setting authority. Comment 174: One commenter expressed that a change undertaken in a previous rulemaking, changing ‘‘notice of appeal’’ and ‘‘filing a brief in support of an appeal’’ of § 41(a)(6), was unlawfully restructured into ‘‘notice of appeal’’ and ‘‘forwarding an appeal to the Board’’ as in 37 CFR 41.20(b)(1) and (4). Response: The USPTO has specific authority to set and adjust fees, as in the current rulemaking, under section 10 of the AIA. The AIA permits individual patent fees to be set or adjusted so long as the aggregate revenues for all patent fees recover the aggregate costs of the patent operation. Comment 175: One commenter wrote that section 1(b)(2) of E.O. 12866 requires the USPTO to ‘‘examine whether existing regulations (or other law) have created, or contributed to, the problem that a new regulation is intended to correct.’’ Most of the policy goals of the fee schedule could be addressed by internal reforms to reduce costs, as an alternative to raised fees. For example, internal USPTO processes and incentives could be restructured to reduce costs to the USPTO and applicants. The commenter contends that the NPRM identifies no exemption from E.O. 12866 that permits the USPTO to forego this examination. Response: The USPTO is in compliance with all procedural and analytical requirements of E.O. 12866. The USPTO identified no existing regulation that created or contributed to the need for this Final Rule. In this Final Rule, the USPTO is not creating any new regulation. Rather, the USPTO is setting and adjusting patent fees based on assumptions found in the FY 20201 Budget in order to recover the aggregate cost of patent operations in future years and to allow the Office to continue progress towards achieving strategic goals. Also, contrary to the assertion made in the comment, the Office is constantly considering its operations, policies, and processes to identify ways to improve its operations. As an example, the Office recently issued a Notice of Proposed Rulemaking, Removal of Regulations Governing Requests for Presidential Proclamations under the Semiconductor Chip Protection Act of 1984 and Certain Rules of Practice Relating to Registration to Practice and Discipline, 84 FR 64800 (November 25, 2019), that eliminated PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 46971 unnecessary regulations. To support this regulatory reform effort, the Office assembled a working group consisting of subject-matter experts from each of the business units that implement the Office’s regulations. The working group considered, reviewed, and recommended ways that the regulations could be improved, revised, and streamlined so as to improve the operation of the Office. The working group reviewed existing regulations, both discretionary rules and those required by statute or judicial order. The USPTO also solicited comments from stakeholders through a web page established to provide information on the USPTO’s regulatory reform efforts. These efforts led to the development of candidate regulations for removal, based on the USPTO’s assessment that these regulations were not needed and/or that elimination could improve the USPTO’s body of regulations. As an additional example, the Office recently implemented adjustments to examination time to improve the examination process and examination quality. These time adjustments include increasing baseline examination time and providing additional examination time based on newly developed application attributes, such as the number of claims, size of the specification, number of pages of prior art citations submitted, etc. Additional examples of how the USPTO is constantly taking steps to improve processes, increase efficiency, and reduce costs, for both applicants and the USPTO, include our international cooperation programs, such as the Electronic Priority Document Exchange Program and the Global Dossier Program. Furthermore, efficiencies and cost savings have been realized as a result of the USPTO implementing ePetitions and the Access to Relevant Prior Art Initiative. Comment 176: One commenter stated section 1(b)(2) of E.O. 12866 directs agencies to ‘‘examine whether existing regulations (or other law) have created, or contributed to, the problem that a new regulation is intended to correct.’’ In 2012, the USPTO requested comment on RCE practice. Several of the comment letters noted that, at least in part, extended RCE practice was driven by a breakdown of ‘‘compact prosecution’’—Office actions were less complete, less careful, and less responsive to applicants’ arguments. The commenter observed no effort by the USPTO to address its ‘‘existing regulation’’ half of the problem—for example, the USPTO has not recalibrated the count system to remove E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 46972 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations incentives for gaming by examiners or provided sound supervision to ensure completeness of Office actions. E.O. 12866 suggests that it is inappropriate to shift costs to the public for a failure of the USPTO to implement its own selfregulatory obligations. Response: In this Final Rule, the USPTO is not creating any new regulations; rather, the USPTO is setting and adjusting patent fees in order to recover its increasing aggregate costs. Contrary to the position set forth in the comments, the Office is not shifting costs to the public. Since 2012, the Office has made considerable efforts to improve patent quality, including establishing the Office of the Deputy Commissioner for Patent Quality (DCPQ) within the Patents organization. The DCPQ is responsible for optimizing the quality of patent products, processes, and services to build a culture of process improvement and enhanced patent quality for the Patents organization. In addition to establishing this new office within the Patents organization, patent examiners have received extensive training on how to improve the quality of their Office actions. These trainings include a threepart training on how to evaluate, analyze, and respond to arguments presented by applicants. They also include training on interpreting claims, establishing a clear prosecution record in an application, and writing proper reasons for allowance. Also, contrary to the comments, the Office recently implemented adjustments to examination time to improve the examination process and examination quality. These time adjustments include increasing baseline examination time and providing additional examination time based on newly developed application attributes, such as the number of claims, size of specification, number of pages of prior art citations submitted, etc. Comment 177: One commenter stated that the USPTO did not meet its rulemaking obligation to disclose rationale. The commenter contended that even if there is a sound cause-andeffect relationship between the proposal and the asserted benefits, it is not explained in the NPRM, making it arbitrary and capricious under the APA. Response: The Office disagrees that it failed to disclose the rationale for the rulemaking or that the rulemaking is arbitrary and capricious under the APA. The preamble and regulatory text clearly set forth the new costs and explain the rationale for each change in compliance with the requirements of the APA. Comment 178: One commenter disagreed with the finding that this VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 rulemaking is a ‘‘transfer payment from one group to another.’’ The commenter wrote that the definition of ‘‘transfer payment’’ is in OMB Circular A–4 and the original definition involved cash payments to private sector actors, and the definition has grown to cover other direct cash transfers among private sector entities. The commenter continued that the NPRM calls for funds to be paid from private sector persons to government for government consumption and discusses no monetary payout to any private sector party. Response: Guidance in OMB Circular A–4 and concerning RIAs provides that fees to government agencies for goods or services are considered transfer payments. The fee adjustments concern increases of fees for USPTO services, which are transfers, not costs. Pursuant to the requirements of E.O. 12886, the USPTO submitted both the NPRM and RIA to the OMB for review prior to publication. The OMB determined that this rulemaking consisted entirely of transfer payments from one group to another, as defined in OMB Circular A– 4. Comment 179: One commenter wondered why there was not an analysis of raising all fees proportionally from the baseline set by Congress, with deviations only where the USPTO has specific data to support a deviation. The commenter contended that this analysis is required by statute and the U.S. Constitution. Response: The alternatives considered in the RIA are reasonable alternatives that are consistent with guidance in OMB Circular A–4. Among the alternatives considered was an acrossthe-board adjustment to the current baseline fee schedule. Comment 180: One commenter stated the RIA accompanying the NPRM only considers non-starter alternatives like not raising fees at all, setting all fees at actual cost, and applying only an inflation adjustment. The commenter contended these are unrealistic strawmen, against which the USPTO’s preferred alternative appears favorable. Considering only unrealistic strawmen as ‘‘alternatives’’ is not compliant with the USPTO’s obligations under the letter of the law and cannot be reconciled with the ‘‘regulatory philosophy’’ or spirit of the law. Artificially narrowing the options is arbitrary and capricious per se. Response: The alternatives considered in the RIA are reasonable alternatives that are consistent with guidance in OMB Circular A–4. Comment 181: One commenter questioned why there was no analysis of PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 the proportional lockstep fee hike relative to § 41 as a baseline. Response: Among the alternatives considered in the RIA is a lockstep, across-the-board adjustment to the current baseline fee schedule. Comment 182: One commenter stated that the USPTO may not set fees without a benefit-cost analysis under the PRA and E.O. 12866—for example, the USPTO may not reduce its own costs if that would increase costs on the public disproportionately (see § I.F). Response: The USPTO must comply with all rulemaking requirements when setting fees using the authority provided by section 10 of the AIA. As demonstrated in the Rulemaking Considerations section of this Final Rule, and in this rulemaking as a whole, the USPTO has complied with these requirements. Comment 183: One commenter expressed that several components of this rulemaking implicate the PRA (e.g., the DOCX proposal and the annual active patent practitioner fee). The NPRM asserts that the USPTO has obtained PRA clearance, but the commenter contends this assertion is false, and the USPTO has never even applied for clearance. Response: The USPTO must comply with the PRA in setting fees using the authority provided by section 10 of the AIA. The USPTO has filed with the OMB a worksheet addressing costs in compliance with the requirement of the statute. Comment 184: One commenter claimed the USPTO has made no filing seeking any substantive change to 0651– 0012 since 2014. Response: The USPTO has complied with the PRA in considering the paperwork burdens associated with this Final Rule. The USPTO has previously received OMB approval for associated burdens and submitted additional statements to address revisions. VII. Discussion of Specific Rules The following section shows the Code of Federal Regulations (CFR) for all fees set or adjusted in this Final Rule. The discussion below includes all fee amendments, all fee discontinuations, and all changes to the CFR text. Title 37 of the CFR, parts 1, 11, 41, and 42, are amended as follows: Section 1.16: Section 1.16 is amended by revising paragraphs (a) through (e), (h), (j), (k), and (m) through (s) and adding paragraph (u) to set forth the application filing, excess claims, search, and examination fees for patent applications filed as authorized under section 10 of the Act. The changes to the E:\FR\FM\03AUR3.SGM 03AUR3 46973 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations fee amounts indicated in § 1.16 are shown in Table 11. TABLE 11—CFR SECTION 1.16 FEE CHANGES CFR section Fee code Current fees (dollars) Description Large 1.16(a) ......................... 1011/2011/3011 .............. 1.16(a) ......................... 4011 ................................ 1.16(b) ......................... 1.16(b) ......................... 1.16(c) ......................... 1.16(d) ......................... 1.16(e) ......................... 1.16(e) ......................... 1.16(h) ......................... 1.16(h) ......................... 1.16(j) .......................... 1.16(k) ......................... 1.16(m) ........................ 1.16(n) ......................... 1012/2012/3012 1017/2017/3017 1013/2013/3013 1005/2005/3005 1014/2014/3014 1019/2019/3019 1201/2201/3201 1204/2204/3204 1203/2203/3203 1111/2111/3111 1113/2113/3113 1114/2114/3114 1.16(o) ......................... 1.16(p) ......................... 1311/2311/3311 .............. 1312/2312/3312 .............. 1.16(q) ......................... 1.16(r) ......................... 1313/2313/3313 .............. 1314/2314/3314 .............. 1.16(s) ......................... 1081/2081/3081 .............. 1.16(s) ......................... 1081/2081/3081 .............. 1.16(s) ......................... 1081/2081/3081 .............. 1.16(s) ......................... 1081/2081/3081 .............. 1.16(s) ......................... 1081/2081/3081 .............. 1.16(u) ......................... NEW ............................... Basic filing fee—Utility (paper filing also requires non-electronic filing fee under 1.16(t)). Basic filing fee—Utility (electronic filing for small entities). Basic filing fee—Design ............................................. Basic filing fee—Design (CPA) .................................. Basic filing fee—Plant ................................................ Provisional application filing fee ................................. Basic filing fee—Reissue ............................................ Basic filing fee—Reissue (Design CPA) .................... Each independent claim in excess of three ............... Each reissue independent claim in excess of three .. Multiple dependent claim ............................................ Utility Search Fee ....................................................... Plant Search Fee ........................................................ Reissue Search Fee or Reissue (Design CPA) Search Fee. Utility Examination Fee ............................................... Design Examination Fee or Design CPA Examination Fee. Plant Examination Fee ............................................... Reissue Examination Fee or Reissue (Design CPA) Examination Fee. Utility Application Size Fee—for each additional 50 sheets that exceeds 100 sheets. Design Application Size Fee—for each additional 50 sheets that exceeds 100 sheets. Plant Application Size Fee—for each additional 50 sheets that exceeds 100 sheets. Reissue Application Size Fee—for each additional 50 sheets that exceeds 100 sheets. Provisional Application Size Fee—for each additional 50 sheets that exceeds 100 sheets. Non-DOCX Filing Surcharge Fee ............................... .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. .............. Section 1.17: Section 1.17 is amended by revising paragraphs (a), (c) through (g), (i)(2), (k), (m), (p), (q), (r), and (s) to set forth the application processing fees as authorized under section 10 of the Act. The changes to the fee amounts indicated in § 1.17 are shown in Table 12. In this Final Rule, an existing fee code has been added to Table 12 for the petition for the extension of the twelvemonth (six-month for designs) period for filing a subsequent application. This Small Final rule fees (dollars) Micro Large Small Micro 300 150 75 320 160 80 n/a 75 n/a n/a 80 n/a 200 200 200 280 300 300 460 460 820 660 420 660 100 100 100 140 150 150 230 230 410 330 210 330 50 50 50 70 75 75 115 115 205 165 105 165 220 220 220 300 320 320 480 480 860 700 440 700 110 110 110 150 160 160 240 240 430 350 220 350 55 55 55 75 80 80 120 120 215 175 110 175 760 600 380 300 190 150 800 640 400 320 200 160 620 2,200 310 1,100 155 550 660 2,320 330 1,160 165 580 400 200 100 420 210 105 400 200 100 420 210 105 400 200 100 420 210 105 400 200 100 420 210 105 400 200 100 420 210 105 n/a n/a n/a 400 200 100 is not a new fee code created in this rule; rather, it reflects existing practice. In this section, table headers were added to make formatting consistent. TABLE 12—CFR SECTION 1.17 FEE CHANGES CFR section Fee code Current fees (dollars) Description khammond on DSKJM1Z7X2PROD with RULES3 Large 1.17(a)(1) .................... 1.17(a)(2) .................... 1.17(a)(3) .................... 1.17(a)(4) .................... 1.17(a)(5) .................... 1.17(c) ......................... 1.17(d) ......................... 1.17(e)(1) .................... 1251/2251/3251 1252/2252/3252 1253/2253/3253 1254/2254/3254 1255/2255/3255 1817/2817/3817 1819/2819/3819 1801/2801/3801 1.17(e)(2) .................... 1820/2820/3820 .............. 1.17(f) .......................... 1462/2462/3462 .............. 1.17(g) ......................... 1463/2463/3463 .............. 1.17(i)(2) ..................... 1.17(i)(2) ..................... 1.17(k) ......................... 1803/2803/3803 .............. 1808/2808/3808 .............. 1802/2802/3802 .............. VerDate Sep<11>2014 21:09 Jul 31, 2020 .............. .............. .............. .............. .............. .............. .............. .............. Jkt 250001 Extension for response within first month .................. Extension for response within second month ............ Extension for response within third month ................. Extension for response within fourth month ............... Extension for response within fifth month .................. Request for prioritized examination ............................ Correction of inventorship after first action on merits Request for continued examination (RCE)—1st request (see 37 CFR 1.114). Request for continued examination (RCE)—2nd and subsequent requests (see 37 CFR 1.114). Petitions requiring the petition fee set forth in 37 CFR 1.17(f) (Group I). Petitions requiring the petition fee set forth in 37 CFR 1.17(g) (Group II). Request for voluntary publication or republication ..... Other publication processing fee ................................ Request for expedited examination of a design application. PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 Small Final rule fees (dollars) Micro Large Small Micro 200 600 1,400 2,200 3,000 4,000 600 1,300 100 300 700 1,100 1,500 2,000 300 650 50 150 350 550 750 1,000 150 325 220 640 1,480 2,320 3,160 4,200 640 1,360 110 320 740 1,160 1,580 2,100 320 680 55 160 370 580 790 1,050 160 340 1,900 950 475 2,000 1,000 500 400 200 100 420 210 105 200 100 50 220 110 55 130 130 900 130 130 450 130 130 225 140 140 1,600 140 140 800 140 140 400 E:\FR\FM\03AUR3.SGM 03AUR3 46974 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 12—CFR SECTION 1.17 FEE CHANGES—Continued CFR section Fee code Current fees (dollars) Description Large 1.17(m) ........................ 1453/2453/3453 .............. 1.17(m) ........................ 1454/2454/3454 .............. 1.17(m) ........................ 1784/2784/3784 .............. 1.17(m) ........................ 1558/2558/3558 .............. 1.17(m) ........................ 1628/2628/3628 .............. 1.17(p) ......................... 1.17(r) ......................... 1806/2806/3806 .............. 1809/2809/3809 .............. 1.17(s) ......................... 1810/2810/3810 .............. Petition for revival of an abandoned application for a patent, for the delayed payment of the fee for issuing each patent, or for the delayed response by the patent owner in any reexamination proceeding. Petition for the delayed submission of a priority or benefit claim. Petition to excuse applicant’s failure to act within prescribed time limits in an international design application. Petition for the delayed payment of the fee for maintaining a patent in force. Petition for the extension of the twelve-month (sixmonth for designs) period for filing a subsequent application. Submission of an Information Disclosure Statement Filing a submission after final rejection (see 37 CFR 1.129(a)). For each additional invention to be examined (see 37 CFR 1.129(b)). Section 1.18: Section 1.18 is amended by revising paragraphs (a) through (f) to set forth the patent issue fees as authorized under section 10 of the Act. The changes to the fee amounts Small Final rule fees (dollars) Micro Large Small Micro 2,000 1,000 500 2,100 1,050 525 2,000 1,000 500 2,100 1,050 525 2,000 1,000 500 2,100 1,050 525 2,000 1,000 500 2,100 1,050 525 2,000 1,000 500 2,100 1,050 525 240 840 120 420 60 210 260 880 130 440 65 220 840 420 210 880 440 220 indicated in § 1.18 are shown in Table 13. TABLE 13—CFR SECTION 1.18 FEE CHANGES CFR section Fee code Current fees (dollars) Description Large 1.18(a)(1) .................... 1.18(a)(1) .................... 1.18(b)(1) .................... 1.18(c)(1) .................... 1.18(d)(3) .................... 1.18(e) ......................... 1.18(f) .......................... 1501/2501/3501 1511/2511/3511 1502/2502/3502 1503/2503/3503 1505/2505/3505 1455/2455/3455 1456/2456/3456 .............. .............. .............. .............. .............. .............. .............. Utility issue Fee .......................................................... Reissue issue Fee ...................................................... Design issue Fee ........................................................ Plant Issue Fee .......................................................... Publication fee for republication ................................. Filing an application for patent term adjustment ........ Request for reinstatement of term reduced ............... Section 1.19: Section 1.19 is amended by revising paragraphs (b)(1)(i)(B) and (b)(1)(ii)(B) and by removing and 1,000 1,000 700 800 300 200 400 reserving paragraphs (j) through (l) to set forth the patent document supply fees as authorized under section 10 of the Small Final rule fees (dollars) Micro 500 500 350 400 300 200 400 Large 250 250 175 200 300 200 400 Small 1,200 1,200 740 840 320 210 420 Micro 600 600 370 420 320 210 420 300 300 185 210 320 210 420 Act. The changes to the fee amounts indicated in § 1.19 are shown in Table 14. TABLE 14—CFR SECTION 1.19 FEE CHANGES CFR section Fee code Current fees (dollars) Description khammond on DSKJM1Z7X2PROD with RULES3 Large 1.19(b)(1) (i)(B) ........... 8051 ................................ 1.19(b)(1) (ii)(B) .......... 8052 ................................ 1.19(j) .......................... 8057 ................................ 1.19(k) ......................... 8058 ................................ 1.19(l) .......................... 8059 ................................ Section 1.20: Section 1.20 is revised to set forth post-issuance fees as authorized under section 10 of the Act. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Copy patent file wrapper, paper medium, any number of sheets. Copy patent file wrapper, electronic medium, any size or provided electronically. Copy of Patent Technology Monitoring Team (PTMT) patent bibliographic extract and other DVD (optical disc). Copy of U.S. patent custom data extracts. Copy of selected technology reports, miscellaneous technology areas. Small Frm 00044 Fmt 4701 Micro Large Small Micro 280 280 280 290 290 290 55 55 55 60 60 60 50 50 50 discontinued discontinued discontinued 100 100 100 discontinued discontinued discontinued 30 30 30 discontinued discontinued discontinued In this section, (c)(5) through (7) are being reinstated due to an inadvertent deletion. The changes to the fee PO 00000 Final rule fees (dollars) Sfmt 4700 amounts indicated in § 1.20 are shown in Table 15. E:\FR\FM\03AUR3.SGM 03AUR3 46975 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 15—CFR SECTION 1.20 FEE CHANGES CFR section Fee code Current fees (dollars) Description Large 1.20(a) ......................... 1.20(b) ......................... 1.20(c)(1) .................... 1.20(c)(2) .................... 1.20(c)(7) .................... 1.20(c)(3) .................... 1811/2811/3811 1816/2816/3816 1831/2831/3831 1812/2812/3812 1812/2812/3812 1821/2821/3821 .............. .............. .............. .............. .............. .............. 1.20(c)(6) .................... 1824/2824/3824 .............. 1.20(d) ......................... 1.20(e) ......................... 1814/2814/3814 .............. 1551/2551/3551 .............. 1.20(f) .......................... 1552/2552/3552 .............. 1.20(g) ......................... 1553/2553/3553 .............. 1.20(h) ......................... 1.20(h) ......................... 1.20(h) ......................... 1554/2554/3554 .............. 1555/2555/3555 .............. 1556/2556/3556 .............. 1.20(j)(1) ..................... 1.20(j)(2) ..................... 1457/2457/3457 .............. 1458/2458/3458 .............. 1.20(j)(3) ..................... 1459/2459/3459 .............. 1.20(k)(1) .................... 1.20(k)(2) .................... 1826/2826/3826 .............. 1827/2827/3827 .............. 1.20(k)(3)(ii) ................ 1829/2829/3829 .............. Certificate of correction .............................................. Processing fee for correcting inventorship in a patent Ex parte reexamination (§ 1.510(a)) Streamlined ...... Ex parte reexamination (§ 1.510(a)) Non-streamlined Refused request for ex parte reexamination .............. Each reexamination independent claim in excess of three and also in excess of the number of such claims in the patent under reexamination. Petitions in a reexamination proceeding, except for those specifically enumerated in 37 CFR 1.550(i) and 1.937(d). Statutory disclaimer, including terminal disclaimer .... For maintaining an original or any reissue patent, due at 3.5 years. For maintaining an original or any reissue patent, due at 7.5 years. For maintaining an original or any reissue patent, due at 11.5 years. Surcharge—3.5 year—Late payment within 6 months Surcharge—7.5 year—Late payment within 6 months Surcharge—11.5 year—Late payment within 6 months. Extension of term of patent ........................................ Initial application for interim extension (see 37 CFR 1.790). Subsequent application for interim extension (see 37 CFR 1.790). Request for supplemental examination ...................... Reexamination ordered as a result of supplemental examination. Supplemental Examination Document Size Fee—for each additional 50 sheets or a fraction thereof in a nonpatent document. Section 1.21: Section 1.21 is amended by adding paragraph (a)(8) and revising paragraphs (a)(1), (2), and (5), (9)(ii), (10); (k); (n); (o); and (q) to set forth miscellaneous fees and charges as authorized under section 10 of the Act. Section 1.21(a)(6)(i) is being revised to remove and reserve the fee for the USPTO-assisted recovery of ID or reset of password for the Office of Enrollment and Discipline Information System. The changes to the fee amounts indicated in § 1.21 are shown in Table 16. The USPTO amends paragraph (o) of § 1.21 to clarify the applicability of its provisions. The USPTO specifies that the mega-sequence listing fee applies to an application filed under 35 U.S.C. 111 or 371 to clarify that the fee applies to both provisional and nonprovisional applications filed under 35 U.S.C. 111, as well as to national stage applications under 35 U.S.C. 371. The fee does not apply to international applications filed with the U.S. Receiving Office (RO/US) that do not enter the U.S. national stage under 35 U.S.C. 371. Furthermore, the rule clarifies that it is the receipt by the Office of a mega-sequence listing in an application that is subject to the fee. A sequence listing in a national stage application may be received by the USPTO from the International Bureau in accordance with PCT Article 20 rather than directly submitted to the USPTO by the applicant. Thus, the clarification makes clear that the mega-sequence listing fee applies to such receipt. The USPTO further clarifies that the fee applies to only the first receipt of a sequence listing in electronic form having a size ranging from 300MB to Small Final rule fees (dollars) Micro Large Small Micro 150 150 6,000 12,000 3,600 460 150 150 3,000 6,000 1,800 230 150 150 1,500 3,000 900 115 160 160 6,300 12,600 3,780 480 160 160 3,150 6,300 1,890 240 160 160 1,575 3,150 945 120 1,940 970 485 2,040 1,020 510 160 1,600 160 800 160 400 170 2,000 170 1,000 170 500 3,600 1,800 900 3,760 1,880 940 7,400 3,700 1,850 7,700 3,850 1,925 160 160 160 80 80 80 40 40 40 500 500 500 250 250 250 125 125 125 1,120 420 1,120 420 1,120 420 1,180 440 1,180 440 1,180 440 220 220 220 230 230 230 4,400 12,100 2,200 6,050 1,100 3,025 4,620 12,700 2,310 6,350 1,155 3,175 280 140 70 300 150 75 800MB and to the first receipt of a sequence listing in electronic form having a size over 800MB. Thus, an applicant will not be charged the megasequence listing fee for the submission of a substitute or replacement electronic form of the sequence listing (see 37 CFR 1.825) unless the size of the substitute or replacement electronic form sequence listing is subject to the provisions of a different paragraph of § 1.21(o) (e.g., the first sequence listing in an application is between 300MB and 800MB and a replacement sequence listing is greater than 800MB). Finally, the USPTO specifies that for purposes of determining the fee required under § 1.21(o), the size of the electronic form of the sequence listing is measured without file compression. TABLE 16—CFR SECTION 1.21 FEE CHANGES khammond on DSKJM1Z7X2PROD with RULES3 CFR section Fee code Current fees (dollars) Description Large 1.21(a)(1)(i) ................. 9001 ................................ 1.21(a)(1)(ii)(A) ........... 9010 ................................ 1.21(a)(1)(ii)(B) ........... 9011 ................................ VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Application fee (non-refundable). For test administration by commercial entity. For test administration by the USPTO. PO 00000 Frm 00045 Fmt 4701 Small Final rule fees (dollars) Micro Large Small Micro 100 100 100 110 110 110 200 200 200 210 210 210 450 450 450 470 470 470 Sfmt 4700 E:\FR\FM\03AUR3.SGM 03AUR3 46976 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 16—CFR SECTION 1.21 FEE CHANGES—Continued CFR section Fee code Current fees (dollars) Description Large 1.21(a)(1)(iii) ............... 9029 ................................ 1.21(a)(2)(i) ................. 9003 ................................ 1.21(a)(2)(ii) ................ 9026 ................................ 1.21(a)(2)(iii) ............... 9025 ................................ 1.21(a)(5)(i) ................. 9012 ................................ 1.21(a)(5)(ii) ................ 9013 ................................ 1.21(a)(6)(i) ................. 9027 ................................ 1.21(a)(9)(ii) ................ 9004 ................................ 1.21(a)(10) .................. 9014 ................................ 1.21(k) ......................... 9024 ................................ 1.21(n) ......................... 8026 ................................ 1.21(o)(1) .................... 1091/2091/3091 .............. 1.21(o)(2) .................... 1092/2092/3092 .............. 1.21(q) ......................... 8054 ................................ Section 1.27: Section 1.27 is amended by revising the introductory text of paragraph (c)(3) to provide that the payment, by any party, of the exact amount of the small entity transmittal fee set forth in § 1.1031(a) will be treated as a written assertion of entitlement to small entity status. The change to § 1.27(c)(3) will make it easier for applicants filing an international design application through the USPTO For USPTO-administered review of registration examination. On registration to practice under § 11.6. On grant of limited recognition under § 11.9(b). On change of registration from agent to attorney. Review of decision by the Director of Enrollment and Discipline under § 11.2(c). Review of decision of the Director of Enrollment and Discipline under § 11.2(d). For USPTO-assisted recovery of ID or reset of password for the Office of Enrollment and Discipline Information System. Administrative reinstatement fee. On petition for reinstatement by a person excluded or suspended on ethical grounds, or excluded on consent from practice before the Office. Unspecified other services, excluding labor. Handling fee for incomplete or improper application. Submission of sequence listings of 300MB to 800MB. Submission of sequence listings of more than 800MB. Additional fee for expedited service. Small Final rule fees (dollars) Micro Large Small Micro 450 450 450 470 470 470 200 200 200 210 210 210 200 200 200 210 210 210 100 100 100 110 110 110 400 400 400 420 420 420 400 400 400 420 420 420 70 70 70 discontinued discontinued discontinued 200 200 200 210 210 210 1,600 1,600 1,600 1,680 1,680 1,680 AT COST 130 AT COST 130 AT COST 130 AT COST AT COST AT COST 140 140 140 1,000 500 250 1,060 530 265 10,000 5,000 2,500 10,500 5,250 2,625 160 160 160 170 170 170 as an office of indirect filing to establish small entity status. Section 1.431: Section 1.431 is amended by revising paragraph (c) to remove the reference to the late payment fee calculation under PCT Rule 16bis.2. The late payment fee pursuant to PCT Rule 16bis.2 is added to § 1.445, as that provision concerns international application filing, processing, and search fees. Section 1.445: Section 1.445 is amended by revising paragraph (a) to set forth international filing, processing, and search fees and charges as authorized under section 10 of the Act. The changes to the fee amounts indicated in 37 CFR 1.445 are shown in Table 17. Section 1.445(a) is also amended to include the late payment fee pursuant to PCT Rule 16bis.2. See discussion of § 1.431, supra. TABLE 17—CFR SECTION 1.445 FEE CHANGES CFR section Fee code Current fees (dollars) Description khammond on DSKJM1Z7X2PROD with RULES3 Large 1.445(a)(1) (i)(A) ......... 1.445(a)(2) (i) .............. 1601/2601/3601 .............. 1602/2602/3602 .............. 1.445(a)(3) (i) .............. 1604/2604/3604 .............. 1.445(a)(4) .................. 1621/2621/3621 .............. 1.445(a)(5) .................. 1627/2627/3627 .............. Section 1.482: Section 1.482 is amended by revising paragraphs (a) VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Transmittal fee ............................................................ Search fee—regardless of whether there is a corresponding application (see 35 U.S.C. 361(d) and PCT Rule 16). Supplemental search fee when required, per additional invention. Transmitting application to Intl. Bureau to act as receiving office. Late furnishing fee for providing a sequence listing in response to an invitation under PCT rule 13ter. through (c) to read as set out in the regulatory text at the end of this PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 Small Final rule fees (dollars) Micro Large Small Micro 240 2,080 120 1,040 60 520 260 2,180 130 1,090 65 545 2,080 1,040 520 2,180 1,090 545 240 120 60 260 130 65 300 150 75 320 160 80 document. The changes to the fee E:\FR\FM\03AUR3.SGM 03AUR3 46977 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations amounts indicated in § 1.482 are shown in Table 18. TABLE 18—CFR SECTION 1.482 FEE CHANGES CFR section Fee code Current fees (dollars) Description Large 1.482(a)(1)(i) ............... 1.482(a)(1)(ii) .............. 1.482(a)(2) .................. 1605/2605/3605 .............. 1606/2606/3606 .............. 1607/2607/3607 .............. 1.482(c) ....................... 1627/2627/3627 .............. Section 1.492: Section 1.492 is amended by revising paragraphs (a), (b)(3) and (4), (c)(2), (d), (f), (h), and (j) to set forth the application filing, excess Preliminary examination fee—U.S. was the ISA ........ Preliminary examination fee—U.S. was not the ISA .. Supplemental examination fee per additional invention. Late furnishing fee for providing a sequence listing in response to an invitation under PCT rule 13ter. claims, search, and examination fees for international patent applications entering the national stage as authorized under section 10 of the Act. The Small Final rule fees (dollars) Micro Large Small Micro 600 760 600 300 380 300 150 190 150 640 800 640 320 400 320 160 200 160 300 150 75 320 160 80 changes to the fee amounts indicated in § 1.492 are shown in Table 19. In this section, table headers were added to make formatting consistent. TABLE 19—CFR SECTION 1.492 FEE CHANGES CFR section Fee code Current fees (dollars) Description Large 1.492(a) ....................... 1.492(b)(3) .................. 1631/2631/3631 .............. 1642/2642/3642 .............. 1.492(b)(4) .................. 1.492(c)(2) .................. 1.492(d) ....................... 1.492(f) ........................ 1.492(h) ....................... 1632/2632/3632 1633/2633/3633 1614/2614/3614 1616/2616/3616 1617/2617/3617 1.492(j) ........................ 1681/2681/3681 .............. .............. .............. .............. .............. .............. khammond on DSKJM1Z7X2PROD with RULES3 Section 11.11: The USPTO amends paragraph (a)(1) to provide that the OED director may publish a practitioner’s CLE certification status. Paragraph (a)(1) has also been amended to require that persons granted limited recognition pursuant to § 11.9 provide the contact information listed in § 11.11(a)(1). The USPTO amends paragraph (a)(2) to provide that registered practitioners and persons granted limited recognition under § 11.9(b) are required to biennially file a registration statement. It further provides that failure to file the mandatory registration statement may result in administrative suspension as set forth in § 11.11(b). The USPTO adds paragraph (a)(3) to § 11.11 to provide that registered practitioners and persons granted limited recognition under § 11.9(b) may certify to the OED director that they Basic National Stage Fee ........................................... National Stage Search Fee—search report prepared and provided to USPTO. National Stage Search Fee—all other situations ....... National Stage Examination Fee—all other situations Each independent claim in excess of three ............... Multiple dependent claim ............................................ Search fee, examination fee or oath or declaration after the date of commencement of the national stage. National Stage Application Size Fee—for each additional 50 sheets that exceeds 100 sheets. have completed six credits of CLE in the preceding 24 months, with five of the credits in patent law and practice and one of the credits in ethics. The USPTO amends paragraph (b)(1) in § 11.11 to apply to those failing to comply with § 11.11(a)(2), which refers to the registration statement. The USPTO amends paragraph (e) in § 11.11 to provide that resigned practitioners are subject to investigation for their conduct that occurred prior to, during, or after the period of their resignation. The USPTO amends paragraph (f)(1) in § 11.11 to remove any references to resigned practitioners, remove the requirement that a practitioner who was administratively suspended for two or more years before the date the Office receives a completed application from the person must also pass the registration examination under Small Final rule fees (dollars) Micro Large Small Micro 300 520 150 260 75 130 320 540 160 270 80 135 660 760 460 820 140 330 380 230 410 70 165 190 115 205 35 700 800 480 860 160 350 400 240 430 80 175 200 120 215 40 400 200 100 420 210 105 § 11.7(b)(1)(ii), and add the requirement that any practitioner who remains administratively suspended for more than five years shall be required to file a petition to the OED director requesting reinstatement and providing objective evidence that the practitioner continues to possess the necessary legal qualifications to render valuable service to patent applicants. The USPTO adds paragraph (f)(3) to § 11.11, which sets forth the process by which a practitioner who has resigned may apply to be reinstated to the register in active status. Section 41.20: Section 41.20 is amended by revising paragraphs (a), (b)(1), (b)(2)(ii), and (b)(3) and (4) to set forth the appeal fees as authorized under section 10 of the Act. The changes to the fee amounts indicated in § 41.20 are shown in Table 20. TABLE 20—CFR SECTION 41.20 FEE CHANGES CFR section Fee code Current fees (dollars) Description Large 41.20(a) ....................... VerDate Sep<11>2014 1405/2405/3405 .............. 21:09 Jul 31, 2020 Jkt 250001 Petitions to the Chief Administrative Patent Judge under 37 CFR 41.3. PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 400 E:\FR\FM\03AUR3.SGM Small 400 03AUR3 Final rule fees (dollars) Micro 400 Large 420 Small 420 Micro 420 46978 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 20—CFR SECTION 41.20 FEE CHANGES—Continued CFR section Fee code Current fees (dollars) Description Large 41.20(b)(1) .................. 41.20(b)(2)(ii) .............. 1401/2401/3401 .............. 1404/2404/3404 .............. 41.20(b)(3) .................. 41.20(b)(4) .................. 1403/2403/3403 .............. 1413/2413/3413 .............. Section 42.15: Section 42.15 is amended by revising paragraphs (a) through (e) to set forth the inter partes Notice of appeal ......................................................... Filing a brief in support of an appeal in an inter partes reexamination proceeding. Request for oral hearing ............................................. Forwarding an appeal in an application or ex parte reexamination proceeding to the Board. review and post-grant review or covered business method patent review fees as authorized under section 10 of the Act. Small Final rule fees (dollars) Micro Large Small Micro 800 2,000 400 1,000 200 500 840 2,100 420 1,050 210 525 1,300 2,240 650 1,120 325 560 1,360 2,360 680 1,180 340 590 The changes to the fee amounts indicated in § 42.15 are shown in Table 21. TABLE 21—CFR SECTION 42.15 FEE CHANGES CFR section Fee code 42.15(a)(1) .................. 42.15(a)(2) .................. 1406 ................................ 1414 ................................ 42.15(a)(2) .................. 1414 ................................ 42.15(a)(3) .................. 1407 ................................ 42.15(a)(4) .................. 1415 ................................ 42.15(b)(1) .................. 1408 ................................ 42.15(b)(2) .................. 1416 ................................ 42.15(b)(2) .................. 1416 ................................ 42.15(b)(3) .................. 1409 ................................ 42.15(b)(4) .................. 1417 ................................ 42.15(c)(1) .................. 42.15(d) ....................... 1412 ................................ 1411 ................................ 42.15(e) ....................... NEW ............................... VIII. Rulemaking Considerations khammond on DSKJM1Z7X2PROD with RULES3 A. AIA: America Invents Act This Final Rule sets and adjusts fees under section 10(a) of the AIA as amended by the SUCCESS Act, Public Law 115–273, 132 Stat. 4158. Section 10(a) of the AIA authorizes the director of the USPTO to set or adjust by rule any patent fee established, authorized, or charged under title 35 of the U.S.C. for any services performed, or materials furnished, by the Office. The SUCCESS Act extends the USPTO fee setting authority until September 2026. Section 10 of the AIA prescribes that fees may be set or adjusted only to recover the aggregate estimated cost to the Office for processing, activities, services, and materials relating to patents, including administrative costs of the Office with respect to such patent fees. Section 10 authority includes flexibility to set individual fees in a way that furthers key policy factors, while taking into VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Current fees (dollars) Description Inter partes review request fee—Up to 20 Claims ..... Inter partes review post-institution fee—Up to 15 Claims. Inter partes review post-institution fee—Up to 20 Claims. Inter partes review request of each claim in excess of 20. Inter partes post-institution request of each claim in excess of 20. Post-grant or covered business method patent review request fee—Up to 20 Claims. Post-grant or covered business method patent review post-institution fee—Up to 15 Claims. Post-grant or covered business method patent review post-institution fee—Up to 20 Claims. Post-grant or covered business method review request of each claim in excess of 20. Post-grant or covered business method review postinstitution request of each claim in excess of 20. Petition for a derivation proceeding ........................... Request to make a settlement agreement available and other requests filed in a patent trial proceeding. Pro hac vice admission fee ........................................ account the cost of the respective services. Section 10(e) of the AIA sets forth the general requirements for rulemakings that set or adjust fees under this authority. In particular, section 10(e)(1) requires the director to publish in the Federal Register any proposed fee change under section 10 and include in such publication the specific rationale and purpose for the proposal, including the possible expectations or benefits resulting from the proposed change. For such rulemakings, the AIA requires that the Office provide a public comment period of no less than 45 days. The PPAC advises the Under Secretary of Commerce for Intellectual Property and Director of the USPTO on the management, policies, goals, performance, budget, and user fees of patent operations. When proposing fees under section 10 of the Act, the director must provide the PPAC with the proposed fees at least 45 days prior to publishing them in the Federal Register. PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 Final rule fees (dollars) Large Small Micro Large Small Micro 15,500 15,000 15,500 15,000 15,500 15,000 19,000 n/a 19,000 n/a 19,000 n/a n/a n/a n/a 22,500 22,500 22,500 300 300 300 375 375 375 600 600 600 750 750 750 16,000 16,000 16,000 20,000 20,000 20,000 22,000 22,000 22,000 n/a n/a n/a n/a n/a n/a 27,500 27,500 27,500 375 375 375 475 475 475 825 825 825 1,050 1,050 1,050 400 400 400 400 400 400 420 420 420 420 420 420 n/a n/a n/a 250 250 250 The PPAC then has at least 30 days within which to deliberate, consider, and comment on the proposal, as well as hold public hearing(s) on the proposed fees. The PPAC must make a written report available to the public of the comments, advice, and recommendations of the committee regarding the proposed fees before the Office issues any final fees. The Office considers and analyzes any comments, advice, or recommendations received from the PPAC before finally setting or adjusting fees. Consistent with this framework, on August 8, 2018, the director notified the PPAC of the Office’s intent to set or adjust patent fees and submitted a preliminary patent fee proposal with supporting materials. The preliminary patent fee proposal and associated materials are available at https:// www.uspto.gov/FeeSetting AndAdjusting. The PPAC held a public hearing in Alexandria, Virginia, on E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES3 September 6, 2018. Transcripts of the hearing are available for review at https://www.uspto.gov/sites/default/ files/documents/PPAC_Hearing_ Transcript_20180906.pdf. Members of the public were invited to the hearing and given the opportunity to submit written and/or oral testimony for the PPAC to consider. The PPAC considered such public comments from the hearing and made all comments available to the public via the Fee Setting website, https://www.uspto.gov/FeeSetting AndAdjusting. The PPAC also provided a written report setting forth in detail the comments, advice, and recommendations of the committee regarding the preliminary proposed fees. The report regarding the preliminary proposed fees was released on October 29, 2018, and can be found online at https://www.uspto.gov/sites/default/ files/documents/PPAC_Fee_Setting_ Report_Oct2018_1.pdf. The Office considered and analyzed all comments, advice, and recommendations received from the PPAC before publishing the NPRM on July 31, 2019 (84 FR 37398). The NPRM comment period closed on September 30, 2019. Section 10(e) of the Act requires the director to publish the final fee rule in the Federal Register and the Official Gazette of the USPTO at least 45 days before the final fees become effective. Pursuant to this requirement, this rule is effective on [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE Federal Register], except for the amendment to § 1.16(u), which is effective on January 1, 2022. B. Regulatory Flexibility Act The USPTO publishes this Final Regulatory Flexibility Analysis (FRFA) as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 601, et seq.) to examine the impact of the Office’s rule to implement the fee setting provisions of the Leahy-Smith America Invents Act (Pub. L. 112–29, 125 Stat. 284) (AIA or the Act) on small entities. Under the RFA, whenever an agency is required by 5 U.S.C. 553 (or any other law) to publish an NPRM, the agency must prepare and make available for public comment an Initial Regulatory Flexibility Analysis (IRFA), unless the agency certifies under 5 U.S.C. 605(b) that the rule, if implemented, will not have a significant impact on a substantial number of small entities (5 U.S.C. 603, 605). The Office published an IRFA, along with the NPRM, on July 31, 2019 (84 FR 37398). Given that the final patent fee schedule, based on the assumptions found in the FY 2021 Budget, is projected to result in $1.2 billion in additional aggregate revenue VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 over the current fee schedule (baseline) for the period including FY 2020 to FY 2024, the Office acknowledges that the fee adjustments will impact all entities seeking patent protection. The $1,205.1 million in additional aggregate revenue results from an additional $267.9 million in FY 2020, $39.1 million in FY 2021, $293.7 million in FY 2022, $297.8 million in FY 2023, and $306.7 million in FY 2024. Items 1–6 below discuss the five items specified in 5 U.S.C. 604(a)(1)–(6) to be addressed in an FRFA. Item 6 below discusses alternatives to this proposal that the Office considered. 1. A Statement of the Need for, and Objectives of, the Rule Section 10 of the AIA, as amended by the SUCCESS Act, authorizes the director of the USPTO to set or adjust by rule any patent fee established, authorized, or charged under title 35, U.S.C., for any services performed, or materials furnished, by the Office. The objective of the final patent fee schedule is for patent fees to recover the aggregate cost of patent operations, including administrative costs, while facilitating effective administration of the U.S. patent system. Since its inception, the Act strengthened the patent system by affording the USPTO the ‘‘resources it requires to clear the still sizeable backlog of patent applications and move forward to deliver to all American inventors the first rate service they deserve.’’ H.R. Rep. No. 112–98(I), at 163 (2011). In setting and adjusting fees under the Act, the Office will secure a sufficient amount of aggregate revenue to recover the aggregate cost of patent operations, including revenue needed to achieve strategic and operational goals. Additional information on the Office’s strategic goals may be found in the Strategic Plan, available at www.uspto.gov/strategicplan. Additional information on the Office’s operating requirements to achieve the strategic goals may be found in the ‘‘USPTO FY 2021 President’s Budget Request,’’ available at https:// www.uspto.gov/about-us/performanceand-planning/budget-and-financialinformation. 2. A Statement of the Significant Issues Raised by the Public Comments in Response to the Initial Regulatory Flexibility Analysis, a Statement of the Assessment of the Agency of Such Issues, and a Statement of Any Changes Made in the Final Rule as a Result of Such Comments The Office received two public comments in response to the IRFA. Details of those comments are discussed PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 46979 and analyzed above in Part VI: Discussion of Comments and are summarized here. Comment: One commenter wrote that the increase in the second and subsequent RCE fee would hurt small entity applicants and small entity law firms. The Initial Regulatory Flexibility Analysis offered no explanation justifying that differential effect on small entities. Response: The USPTO is not targeting the RCE fees for a specific increase. Instead, the fees for RCEs—both for the first request and for second and subsequent requests—are being adjusted by the across-the-board adjustment to patent fees. The USPTO would like to note that small and micro entity applicants will continue to receive the small and micro entity discounts, which set the fee rates significantly below cost to examine second and subsequent RCE filings. Additionally, the Regulatory Flexibility Analysis analyzed applicants’ sensitivity to changes in fee rates by entity size, including RCE fees for small entities. This impact is also included in the RIA completed for this rulemaking, which is available at https://www.uspto.gov/FeeSetting AndAdjusting. Comment: One commenter claimed the Regulatory Flexibility Analysis must analyze the effect of the annual active patent practitioner fee on small entities because a great number of practitioners work for small entities. Response: As noted in response to Comment 81 above, the USPTO has elected not to implement the annual active patent practitioner fee at this time. 3. The Response of the Agency to Any Comments Filed by the Chief Counsel for Advocacy of the Small Business Administration in Response to the Proposed Rule, and a Detailed Statement of Any Change Made to the Proposed Rule in the Final Rule as a Result of the Comments The Office did not receive any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule. 4. A Description of and, Where Feasible, an Estimate of the Number of Small Entities To Which the Rule Will Apply or an Explanation of Why No Such Estimate Is Available (a) SBA Size Standard The Small Business Act (SBA) size standards applicable to most analyses conducted to comply with the RFA are set forth in 13 CFR 121.201. These E:\FR\FM\03AUR3.SGM 03AUR3 46980 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations regulations generally define small businesses as those with less than a specified maximum number of employees or less than a specified level of annual receipts for the entity’s industrial sector or North American Industry Classification System (NAICS) code. As provided by the RFA, and after consulting with the Small Business Administration, the Office formally adopted an alternate size standard for the purpose of conducting an analysis or making a certification under the RFA for patent-related regulations. See Business Size Standard for Purposes of United States Patent and Trademark Office Regulatory Flexibility Analysis for Patent-Related Regulations, 71 FR 67109, 67109 (Nov. 20, 2006), 1313 Off. Gaz. Pat. Office 37, 60 (Dec. 12, 2006). The Office’s alternate small business size standard consists of the SBA’s previously established size standard for entities entitled to pay reduced patent fees. See 13 CFR 121.802. Unlike the SBA’s generally applicable small business size standards, the size standard for the USPTO is not industryspecific. The Office’s definition of a small business concern for RFA purposes is a business or other concern that: (1) Meets the SBA’s definition of a ‘‘business concern or concern’’ set forth in 13 CFR 121.105, and (2) meets the size standards set forth in 13 CFR 121.802 for the purpose of paying reduced patent fees, namely, an entity: (a) Whose number of employees, including affiliates, does not exceed 500 persons, and (b) that has not assigned, granted, conveyed, or licensed (and is under no obligation to do so) any rights in the invention to any person who made it and could not be classified as an independent inventor, or to any concern that would not qualify as a nonprofit organization or a small business concern under this definition. See 71 FR at 67109, 1313 Off. Gaz. Pat. Office 60. If a patent applicant self-identifies on a patent application as qualifying as a small entity or provides certification of micro entity status for reduced patent fees under the Office’s alternative size standard, the Office captures this data in the Patent Application Location and Monitoring (PALM) database system, which tracks information on each patent application submitted to the Office. Small Entity Defined The Act provides that fees set or adjusted under section 10(a) ‘‘for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be reduced by 50 percent’’ with respect to the application of such fees to any ‘‘small entity’’ (as defined in 37 CFR 1.27) that qualifies for reduced fees under 35 U.S.C. 41(h)(1). In turn, 125 Stat. at 316–17. 35 U.S.C. 41(h)(1) provides that certain patent fees ‘‘shall be reduced by 50 percent’’ for a small business concern as defined by section 3 of the SBA, and to any independent inventor or nonprofit organization as defined in regulations described by the director. Micro Entity Defined Section 10(g) of the Act created a new category of entity called a ‘‘micro entity.’’ 35 U.S.C. 123; see also 125 Stat. at 318–19. Section 10(b) of the Act provides that the fees set or adjusted under section 10(a) ‘‘for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be reduced by 75 percent with respect to the application of such fees to any micro entity as defined by 35 U.S. Code 123.’’ 125 Stat. at 315–17. 35 U.S.C. 123(a) defines a ‘‘micro entity’’ as an applicant that makes a certification that the applicant: (1) Qualifies as a small entity as defined in 37 CFR 1.27; (2) has not been named as an inventor on more than four previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or PCT applications for which the basic national fee under 35 U.S.C. 41(a) was not paid; (3) did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; 2 and (4) has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity exceeding the income limit set forth in (3) above. See 125 Stat. at 318. 35 U.S.C. 123(d) also defines a ‘‘micro entity’’ as an applicant that certifies that: (1) The applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education. Estimate of Number of Small Entities Affected The changes in this Final Rule will apply to any entity, including small and micro entities, that pays any patent fee set forth in this Final Rule. The reduced fee rates (50 percent for small entities and 75 percent for micro entities) will continue to apply to any small entity asserting small entity status and to any micro entity certifying micro entity status for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents. The Office reviews historical data to estimate the percentages of application filings asserting small entity status. Table 22 presents a summary of such small entity filings by type of application (utility, reissue, plant, design) over the last five years. TABLE 22—NUMBER OF PATENT APPLICATIONS FILED IN LAST FIVE YEARS * khammond on DSKJM1Z7X2PROD with RULES3 FY 2019 ** Utility: All .............................................................................. Small ......................................................................... % Small ..................................................................... Micro ......................................................................... % Micro ..................................................................... Reissue: All .............................................................................. FY 2018 FY 2017 FY 2016 21:09 Jul 31, 2020 Jkt 250001 PO 00000 Frm 00050 Average 619,186 140,097 22.6 19,844 3.2 597,952 135,307 22.6 20,314 3.4 604,655 134,393 22.2 20,359 3.4 609,063 131,617 21.6 20,652 3.4 579,358 125,991 21.7 19,119 3.3 602,043 133,481 22.2 20,058 3.3 1,131 1,023 1,086 1,123 1,154 1,103 2 For more information, see https:// www.uspto.gov/PatentMicroentity. VerDate Sep<11>2014 FY 2015 Fmt 4701 Sfmt 4700 E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations 46981 TABLE 22—NUMBER OF PATENT APPLICATIONS FILED IN LAST FIVE YEARS *—Continued FY 2019 ** Small ......................................................................... % Small ..................................................................... Micro ......................................................................... % Micro ..................................................................... Plant: All .............................................................................. Small ......................................................................... % Small ..................................................................... Micro ......................................................................... % Micro ..................................................................... Design: All .............................................................................. Small ......................................................................... % Small ..................................................................... Micro ......................................................................... % Micro ..................................................................... FY 2018 FY 2017 FY 2016 FY 2015 Average 241 21.3 33 2.9 219 21.4 20 2.0 237 21.8 23 2.1 237 21.1 21 1.9 217 18.8 12 1.0 230 20.9 22 2.0 1,168 594 50.9 7 0.6 1,043 467 44.8 7 0.7 1,076 536 49.8 18 1.7 1,181 563 47.7 10 0.8 1,095 577 52.7 6 0.5 1,113 547 49.2 10 0.9 45,945 18,628 40.5 6,464 14.1 46,433 18,992 40.9 5,459 11.8 44,048 18,014 40.9 4,983 11.3 42,298 16,723 39.5 4,289 10.1 38,183 14,709 38.5 3,879 10.2 43,381 17,413 40.1 5,015 11.6 * The patent application filing data in this table includes RCEs. ** FY 2019 application filing data are preliminary and will be finalized in the FY 2020 Performance and Accountability Report (PAR). Because the percentage of small entity filings varies widely between application types, the Office has averaged the small entity filing rates over the past five years for those application types in order to estimate future filing rates by small and micro entities. Those average rates appear in the last column of Table 22. The USPTO continuously updates both patent fee collections projections and workload projections based on the latest data. The estimated number of patent applications has been updated since the NPRM was published in July 2019. UPR filings growth projections were revised upward during the FY 2021 budget formulation process due to revised RGDP estimates and historical trends. As found in the FY 2021 Budget, the Office estimates that serialized UPR patent application growth rates will be 2.5 percent in FY 2020, 2.0 percent in FY 2021, 1.5 percent in FY 2022, and 1.0 percent in FYs 2023 and 2024. The Office forecasts design patent applications independently of UPR applications because they exhibit different behavior. Using the estimated filings for the next five years and the average historic rates of small entity filings, Table 23 presents the Office’s estimates of the number of patent application filings by all applicants, including small and micro entities, over the next five fiscal years by application type. TABLE 23—ESTIMATED NUMBERS OF PATENT APPLICATIONS IN FY 2020–FY 2024 khammond on DSKJM1Z7X2PROD with RULES3 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Utility ........................................................................................................ Reissue .................................................................................................... Plant ......................................................................................................... Design ...................................................................................................... 632,402 899 1,300 45,751 632,105 899 1,300 47,581 642,729 899 1,300 49,484 652,922 899 1,300 51,464 662,489 899 1,300 53,521 Total .................................................................................................. 680,352 681,885 694,412 706,585 718,209 The Office has undertaken an elasticity analysis to examine if fee adjustments may impact small entities and, in particular, whether increases in fees would result in some such entities not submitting applications. Elasticity measures how sensitive demand for services by patent applicants and patentees is to fee changes. If elasticity is low enough (demand is inelastic), then fee increases will not reduce patenting activity enough to negatively impact overall revenues. If elasticity is high enough (demand is elastic), then increasing fees will decrease patenting activity enough to decrease revenue. The Office analyzed elasticity at the overall filing level across all patent applicants with regard to entity size and estimated the potential impact to patent application filings across entities. VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 Additional information about elasticity estimates is available at https:// www.uspto.gov/FeeSettingAndAdjusting in the document entitled ‘‘Setting and Adjusting Patent Fees during Fiscal Year 2020—Description of Elasticity Estimates.’’ 5. A Description of the Projected Reporting, Recordkeeping, and Other Compliance Requirements of the Rule, Including an Estimate of the Classes of Small Entities Which Will be Subject to the Requirement and Type of Professional Skills Necessary for Preparation of the Report or Record When implemented, this rule will not change the burden of existing reporting and recordkeeping requirements for payment of fees. The current requirements for small and micro PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 entities will continue to apply. Therefore, the professional skills necessary to file and prosecute an application through issue and maintenance remain unchanged under this rule. This action only adjusts patent fees and does not set procedures for asserting small entity status or certifying micro entity status, as previously discussed. There are no new compliance requirements in this rule. The full fee schedule (see Part VII: Discussion of Specific Rules) is set forth in this Final Rule. The fee schedule sets or adjusts 296 patent fees in total. This includes four fees that will be discontinued and five new fees. E:\FR\FM\03AUR3.SGM 03AUR3 46982 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES3 6. A Description of the Steps the Agency Has Taken To Minimize the Significant Economic Impact on Small Entities Consistent With the Stated Objectives of Applicable Statutes, Including a Statement of the Factual, Policy, and Legal Reasons for Selecting the Alternative Adopted in the Final Rule and Why Each One of the Other Significant Alternatives to the Rule Considered by the Agency Which Affect the Impact on Small Entities Was Rejected The USPTO considered several alternative approaches to this Final Rule, discussed below, including full cost recovery for individual services, an across-the-board adjustment to fees, and a baseline (current fee rates). The discussion begins with Alternative 1, a description of the fee schedule adopted in this Final Rule. A full discussion of the costs and benefits of all four alternatives and the methodology used for that analysis is contained in the RIA, available at https://www.uspto.gov/ FeeSettingAndAdjusting. (a) Alternative 1: Final Patent Fee Schedule—Setting and Adjusting Patent Fees During Fiscal Year 2020 The USPTO chose the patent fee schedule in this Final Rule because it achieves the aggregate revenue needed for the Office to offset aggregate costs, based on the assumptions found in the FY 2021 Budget, and is therefore beneficial to all entities that seek patent protection. Also, the alternative selected here benefits from improvements in the design of the fee schedule. The final patent fee schedule herein secures the Office’s required revenue to recover its aggregate costs, while progressing towards high-quality and timely patent examination and review proceedings in order to produce reliable and predictable IP rights. This will benefit all applicants, including small and micro entities, without undue burden to patent applicants and holders, barriers to entry, or reduced incentives to innovate. This alternative maintains small and micro entity discounts. Compared to the current fee schedule, there are no new small or micro entity fee codes being extended to existing large entity fee rates, and none are being eliminated. All entities will benefit from the Office’s proposal to discontinue four fees. Three patent service fees are being eliminated in order to focus USPTO workforce efforts on producing products that benefit the general public rather than producing outputs for individual customers that can be obtained through other, more efficient means. Additionally, the Office is eliminating VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 the fee for assisting with the recovery of identification or reset of a password for the Office of Enrollment and Discipline Information System. This fee is being removed because it is unnecessary. As discussed throughout this document, the fee changes in this alternative are moderate compared to other alternatives. Given that the final patent fee schedule will result in increased aggregate revenue, small and micro entities will pay some higher fees when compared to the current fee schedule (Alternative 4). In summary, the fees to obtain a patent will increase. All patent fees not covered by the targeted adjustments as discussed in section B of Part V, or to be discontinued, as discussed in section C of Part V, are subject to the approximately 5 percent across the board increase. In addition to the across the board increase, some fees will be subject to a larger increase. For example, the issue fee and first stage maintenance fee rate will increase by 20 and 25 percent, respectively. However, second and third stage maintenance fees will only increase by 4 percent, less than the across-the-board increase. This alternative includes a new surcharge fee for applications not filed in DOCX format, which aims to improve the electronic application process for patent applicants by modernizing the USPTO’s filing and viewing systems. This streamlines the application and publication processes, which benefits both the applicants and examiners. In an effort to enable the PTAB to continue high-quality, timely, and efficient proceedings with the expected increase in work following the Supreme Court decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), AIA trial fees will increase by at least 23.0 percent. Finally, in response to feedback from members of the public, the fee for a request for the expedited examination of a design application has been reduced to $1,600. Under the NPRM, the fee was proposed to be $2,000. Adjusting the patent fee schedule as prescribed in this alternative allows the Office to implement the patent-related strategic goals and objectives documented in the Strategic Plan and to carry out requirements as described in the FY 2021 Budget. Specifically, this final patent fee schedule is estimated to generate sufficient revenue to support increases in core examination costs that are necessary to implement strategic initiatives to issue highly reliable patents, such as increasing the time examiners are provided to work on each application. This final patent fee schedule also supports the Strategic Plan’s mission support goal to deliver PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 organizational excellence (which includes optimizing the speed, quality, and cost-effectiveness of IT delivery to achieve business value and ensuring financial sustainability to facilitate effective USPTO operations) by allowing the Office to continue to make necessary business improvements. While all of the other alternatives discussed facilitate progress toward some of the Office’s goals, the final patent fee schedule is the only one that does so in a way that does not impose undue costs on patent applicants and holders. A comparison between the final patent fee schedule for this rule and existing fees (labeled Alternative 1— Final Patent Fee Schedule—Setting and Adjusting Patent Fees during Fiscal Year 2020) is available at https:// www.uspto.gov/FeeSettingAndAdjusting in the document entitled ‘‘Final Regulatory Flexibility Analysis Tables.’’ Fee changes for small and micro entities are included in the tables. For the comparison between the fees in the final patent fee schedule and current fees, as noted above, the ‘‘current fees’’ column displays the fees that were in effect as of January 2018. (b) Other Alternatives Considered In addition to the final patent fee schedule set forth in Alternative 1, above, the Office considered several other alternative approaches. For each alternative considered, the Office calculated fee rates and the resulting revenue derived by each alternative scenario. The fees and their corresponding revenue tables are available at https://www.uspto.gov/ FeeSettingAndAdjusting. Please note, only the fees outlined in Alternative 1 are being implemented in the Final Rule; other scenarios are discussed only to present the Office’s analysis of other options. Alternative 2: Unit Cost Recovery It is common practice in the federal government to set individual fees at a level sufficient to recover the cost of that single service. In fact, official guidance on user fees, as cited in OMB Circular A–25: User Charges, states that user charges (fees) should be sufficient to recover the full cost to the federal government of providing the particular service, resource, or good when the government is acting in its capacity as sovereign. As such, the USPTO considered setting most individual large entity fees at the historical cost of performing the activities related to the particular service in FY 2018. (While more recent FY 2019 cost data is now available, for E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations consistency with information presented in the NPRM, the Office continues to base the fee rates displayed under Alternative 2 in the IRFA and the RIA on FY 2018 unit cost data). There are several complexities in achieving individual fee unit cost recovery for the patent fee schedule. The most significant is the AIA requirement to provide a 50 percent discount on fees to small entities and a 75 percent discount on fees to micro entities. To account for this requirement, this alternative continues existing small and micro entity discounts where eligible under AIA authority. Thus, in order to continue the small and micro entity discounts and generate sufficient revenue to recover the Office’s anticipated budgetary requirements over the five-year period with the assumptions found in the FY 2021 Budget, for this alternative, maintenance fees must be set significantly above unit cost. With the exception of maintenance fees, fees for which there is no FY 2018 cost data would be set at current rates under this alternative. The Office no longer collects activity-based information for maintenance fees, and previous year unit costs were negligible. For the small number of services that have a variable fee, the aggregate revenue table does not list a fee. Instead, for those services with an estimated workload, the workload is listed in dollars rather than units to develop revenue estimates. Fees without either a fixed fee rate or a workload estimate are assumed to provide zero revenue to the Office. Note, this alternative bases fee rates for FY 2020 through FY 2024 on FY 2018 historical costs. The Office recognizes that this approach does not account for inflationary factors that would likely increase costs and necessitate higher fees in the out-years. Alternative 2 could present significant barriers to those seeking patent protection because front-end fees would increase significantly for all applicants, even with small and micro entity fee reductions. Further, this alternative is counter to the Office’s general philosophy to charge applicants and holders lower fees when they have less information about the relative value of their innovation. This alternative does not align well with the strategic and policy goals of this Final Rule. Both the current and final patent fee schedule are structured to collect more fees further along in the process (i.e., issue fees and maintenance fees), when the patent owner has better information about a patent’s value, rather than up front (i.e., filing fees, search fees, and examination fees), when applicants are less certain VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 about the value of their innovation, even though the front-end services are costlier to the Office. This alternative presents significant barriers to those seeking patent protection because if the Office were to immediately shift from the current front-end/back-end balance to a unit cost recovery structure, frontend fees would increase significantly, nearly tripling in some cases (e.g., search fees). The Office has estimated the potential quantitative elasticity impacts for application filings (e.g., filing, search, and examination fees), maintenance renewals (all stages), and other major fee categories. Results of this analysis indicate that a high cost of entry into the patent system could lead to a significant decrease in the incentives to invest in innovative activities among all entities, especially for small and micro entities. Under the current fee schedule, maintenance fees subsidize all applications, including those applications for which no claims are allowed. By insisting on unit cost payment at each point in the application process, the Office is effectively charging high fees for every attempted patent, meaning those applicants who have less information about the patentability of their claims or the market value of their invention may be less likely to pursue initial prosecution (e.g., filing, search, and examination) or subsequent actions to continue prosecution (e.g., RCE). The ultimate effect of these changes in behavior is likely to stifle innovation. In sum, this alternative is inadequate to accomplish the goals and strategies as stated in Part III of this Final Rule. The Office theorizes that the high costs of entry into the patent system could lead to a decrease in the incentives to invest in innovative activities among all entities, and especially small and micro entities. There is a strong possibility that funds previously used for issue and maintenance fee payments could offset the higher front-end costs for some users, but the front-end costs could prove insurmountable for other innovators. The fee schedule for Alternative 2: Unit Cost Recovery is available at https://www.uspto.gov/FeeSetting AndAdjusting in the document entitled ‘‘Final Regulatory Flexibility Analysis Tables.’’ For the comparison between unit cost recovery fees and current fees, the ‘‘current fees’’ column displays the fees that are in effect as of January 2018. This column is used to calculate dollar and percent fee change compared to unit cost recovery fees. PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 46983 Alternative 3: Across-the BoardAdjustment In years past, the USPTO used its authority to adjust statutory fees annually according to increases in the consumer price index (CPI), which is a commonly used measure of inflation. Building on this prior approach and incorporating the additional authority under the AIA to set small and micro entity fees, Alternative 3 would set fees by applying a one-time 10 percent, across the board inflationary increase to the baseline (current fees) beginning in July 2020. Ten percent represents the change in revenue needed to achieve the aggregate revenue needed to cover future budgetary requirements based on the assumptions found in the FY 2021 Budget. All entities (large, small, and micro) would pay 10 percent higher fees for every product and service. As estimated by the CBO in 2019, projected CPI rates by fiscal year are: 2.3 percent in FY 2020, 2.5 percent in FY 2021 through FY 2023, and 2.4 percent in FY 2024. The Office elected not to apply the estimated cumulative inflationary adjustment (12.8 percent), from FY 2020 through FY 2024 because doing so would result in significantly greater fee revenue than needed to meet the Office’s core mission and strategic priorities. Under this alternative, nearly every existing fee would be increased, and no fees would be discontinued or reduced. But this alternative maintains the status quo ratio of front-end and back-end fees, given that all fees would be adjusted by the same escalation factor, thereby promoting innovation strategies and allowing applicants to gain access to the patent system through fees set below cost while patent holders pay issue and maintenance fees above cost to subsidize the below cost frontend fees. Alternative 3 nevertheless fails to implement policy factors and deliver benefits beyond what exists in the baseline fee schedule (e.g., no fee adjustments to offer new patent prosecution options or facilitate more effective administration of the patent system). Given that all entities (large, small, and micro) would pay 10.0 percent higher fees for every product and service, especially the fees due at the time of filing, this alternative does not adequately support the Office’s policy factor to promote innovation strategies. The fee schedule for Alternative 3: Across-the-Board Adjustment is available at https://www.uspto.gov/ FeeSettingAndAdjusting in the document entitled ‘‘Final Regulatory Flexibility Analysis Tables.’’ For the comparison between the across-the- E:\FR\FM\03AUR3.SGM 03AUR3 46984 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations board adjustment fees and current fees, the ‘‘current fees’’ column displays the fees that are in effect as of January 2018. khammond on DSKJM1Z7X2PROD with RULES3 Alternative 4: Baseline (Current Fee Schedule) The Office considered a no-action alternative. This alternative would retain the status quo, meaning that the Office would continue the small and micro entity discounts that Congress provided in section 10 of the Act and maintain fees as of January 2018. This approach would not provide sufficient aggregate revenue, based on the assumptions found in the FY 2021 Budget, to accomplish the Office’s rulemaking goals as set forth in Part III of this Final Rule or the Strategic Plan. IT improvement, progress on backlog and pendency, and other improvement activities would continue, but at a significantly slower rate, as increases in core patent examination costs that are necessary to implement the strategic objective to issue highly reliable patents—such as increasing the time examiners are provided to work on each application—crowd out funding for other improvements. Likewise, without a fee increase, the USPTO would deplete its operating reserves, leaving the Office vulnerable to fiscal and economic events. This would expose core operations to unacceptable levels of financial risk and would position the Office to have to return to making inefficient, short-term funding decisions. The fee schedule for Alternative 4: Baseline (Current Fee Schedule) is available at https://www.uspto.gov/ FeeSettingAndAdjusting in the document entitled ‘‘Final Regulatory Flexibility Analysis Tables.’’ Alternatives Specified by the RFA The RFA provides that an agency should also consider four specified ‘‘alternatives’’ or approaches, namely: (1) Establishing different compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) clarifying, consolidating, or simplifying compliance and reporting requirements under the rule for small entities; (3) using performance rather than design standards; and (4) exempting small entities from coverage of the rule, or any part thereof (5 U.S.C. 604(c)). The USPTO discusses each of these specified alternatives or approaches below and describes how this Final Rule is adopting these approaches. Differing Requirements As discussed above, the changes in this Final Rule would continue existing VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 fee discounts for small and micro entities that take into account the reduced resources available to them as well as offer new discounts when applicable under AIA authority. Specifically, micro entities would continue to receive a 75 percent reduction in patent fees under this proposal and non-micro, small entities would continue to pay 50 percent of the fee. This Final Rule sets fee levels but does not set or alter procedural requirements for asserting small or micro entity status. To pay reduced patent fees, small entities must merely assert small entity status to pay reduced patent fees. The small entity may make this assertion by either checking a box on the transmittal form, ‘‘Applicant claims small entity status,’’ or by paying the basic filing or basic national small entity fee exactly. The process to claim micro entity status is similar in that eligible entities need only submit a written certification of their status prior to or at the time a reduced fee is paid. This Final Rule does not change any reporting requirements for any small or micro entity. For both small and micro entities, the burden to establish their status is nominal (making an assertion or submitting a certification), and the benefit of the fee reductions (50 percent for small entities and 75 percent for micro entities) is significant. This Final Rule makes the best use of differing requirements for small and micro entities. It also makes the best use of the redesigned fee structure, as discussed further below. Clarification, Consolidation, or Simplification of Requirements This Final Rule pertains to setting or adjusting patent fees. Any compliance or reporting requirements in this rule are de minimis and necessary to implement lower fees. Therefore, any clarifications, consolidations, or simplifications to compliance and reporting requirements for small entities are not applicable or would not achieve the objectives of this rulemaking. Performance Standards Performance standards do not apply to the Final Rule. Exemption for Small and Micro Entities The final patent fee schedule maintains a 50 percent reduction in fees for small entities and a 75 percent reduction in fees for micro entities. The Office considered exempting small and micro entities from paying increased patent fees but determined that the USPTO would lack statutory authority for this approach. Section 10(b) of the PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 Act provides that ‘‘fees set or adjusted under subsection (a) for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be reduced by 50 percent [for small entities] and shall be reduced by 75 percent [for micro entities]’’ (emphasis added). Neither the AIA nor any other statute authorizes the USPTO simply to exempt small or micro entities, as a class of applicants, from paying increased patent fees. C. Executive Order 12866 (Regulatory Planning and Review) This Final Rule has been determined to be economically significant for purposes of Executive Order 12866 (Sept. 30, 1993). The Office has developed an RIA as required for rulemakings deemed to be economically significant. The complete RIA is available at https://www.uspto.gov/ FeeSettingAndAdjusting. D. Executive Order 13563 (Improving Regulation and Regulatory Review) The Office has complied with Executive Order 13563 (Jan. 18, 2011). Specifically, the Office has, to the extent feasible and applicable: (1) Made a reasoned determination that the benefits justify the costs of this Final Rule; (2) tailored this Final Rule to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) involved the public in an open exchange of information and perspectives among experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole, and provided online access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes. E. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs) This Final Rule is not subject to the requirements of Executive Order 13771 (Jan. 30, 2017) because this Final Rule involves a transfer payment. E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations F. Executive Order 13132 (Federalism) This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999). G. Executive Order 13175 (Tribal Consultation) This rulemaking will not: (1) Have substantial direct effects on one or more Indian tribes, (2) impose substantial direct compliance costs on Indian tribal governments, or (3) preempt tribal law. Therefore, a tribal summary impact statement is not required under Executive Order 13175 (Nov. 6, 2000). H. Executive Order 13211 (Energy Effects) This rulemaking is not a significant energy action under Executive Order 13211 (May 18, 2001) because this final rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211. I. Executive Order 12988 (Civil Justice Reform) This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996). J. Executive Order 13045 (Protection of Children) This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997). khammond on DSKJM1Z7X2PROD with RULES3 K. Executive Order 12630 (Taking of Private Property) This rulemaking will not affect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988). L. Congressional Review Act Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the United States Patent and Trademark Office will submit a report containing the rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this Final Rule are expected to result in an annual effect on the economy of $100 million or more, a major increase in costs or prices, or significant adverse VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets. Therefore, this Final Rule is a ‘‘major rule’’ as defined in 5 U.S.C. 804(2). M. Unfunded Mandates Reform Act of 1995 The changes set forth in this rulemaking do not involve a federal intergovernmental mandate that will result in the expenditure by state, local, and tribal governments, in the aggregate, of $100 million (as adjusted) or more in any one year, or a federal private sector mandate that will result in the expenditure by the private sector of $100 million (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq. N. National Environmental Policy Act This rulemaking will not have any effect on the quality of the environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq. O. National Technology Transfer and Advancement Act The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions that involve the use of technical standards. P. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) requires that the Office consider the impact of paperwork and other information collection burdens imposed on the public. This Final Rule involves information collection requirements that are subject to review by the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3549). The collection of information involved in this Final Rule have been reviewed and previously approved by the OMB under control numbers 0651–0012, 0651–0016, 0651– 0020, 0651–0021, 0651–0031, 0651– 0032, 0651–0033, 0651–0059, 0651– 0063, 0651–0064, 0651–0069, and 0651– 0075. In addition, updates to the aforementioned information collections as a result of this Final Rule have been submitted to the OMB as nonsubstantive change requests. PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 46985 Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information has a currently valid OMB control number. List of Subjects 37 CFR Part 1 Administrative practice and procedure, Biologics, Courts, Freedom of information, Inventions and patents, Reporting and recordkeeping requirements, Small businesses. 37 CFR Part 11 Administrative practice and procedure, Inventions and patents, Lawyers, Reporting and recordkeeping requirements. 37 CFR Part 41 Administrative practice and procedure, Inventions and patents, Lawyers, Reporting and recordkeeping requirements. 37 CFR Part 42 Administrative practice and procedure, Inventions and patents, Lawyers. For the reasons set forth in the preamble, 37 CFR parts 1, 11, 41, and 42 are amended as follows: PART 1—RULES OF PRACTICE IN PATENT CASES 1. The authority citation for 37 CFR part 1 continues to read as follows: ■ Authority: 35 U.S.C. 2(b)(2), unless otherwise noted. 2. Section 1.16 is amended by: a. Revising paragraphs (a) through (e); b. Adding table headings to the tables in paragraphs (f) and (g); ■ c. Revising paragraph (h); ■ d. Adding a heading to the table in paragraph (i); ■ e. Revising paragraphs (j) and (k); ■ f. Adding a heading to the table in paragraph (l); ■ g. Revising paragraphs (m) through (s); ■ h. Adding a heading to the table in paragraph (t); and ■ i. Adding paragraph (u). The revisions and additions read as follows: ■ ■ ■ § 1.16 National application filing, search, and examination fees. (a) Basic fee for filing each application under 35 U.S.C. 111 for an original patent, except design, plant, or provisional applications: E:\FR\FM\03AUR3.SGM 03AUR3 46986 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations TABLE 1 TO PARAGRAPH (a) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By a small entity (§ 1.27(a)) if the application is submitted in compliance with the Office electronic filing system (§ 1.27(b)(2)) ............................. By other than a small or micro entity .. $80.00 160.00 80.00 320.00 (b) Basic fee for filing each application under 35 U.S.C. 111 for an original design patent: * * * * * TABLE 17 TO PARAGRAPH (q) (j) In addition to the basic filing fee in an application, other than a provisional application, that contains, or is amended to contain, a multiple dependent claim, per application: $55.00 110.00 220.00 By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $215.00 430.00 860.00 (c) Basic fee for filing each application for an original plant patent: TABLE 3 TO PARAGRAPH (c) TABLE 11 TO PARAGRAPH (k) $55.00 110.00 220.00 By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. (d) Basic fee for filing each provisional application: $75.00 150.00 300.00 (e) Basic fee for filing each application for the reissue of a patent: TABLE 5 TO PARAGRAPH (e) $80.00 160.00 320.00 (f) * * * * * * * * * * By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. * * By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 20 TO PARAGRAPH (t) $110.00 220.00 440.00 (n) Search fee for each application for the reissue of a patent: $175.00 350.00 700.00 (o) Examination fee for each application filed under 35 U.S.C. 111 for an original patent, except design, plant, or provisional applications: * khammond on DSKJM1Z7X2PROD with RULES3 TABLE 15 TO PARAGRAPH (o) (h) In addition to the basic filing fee in an application, other than a provisional application, for filing or later presentation at any other time of each claim in independent form in excess of three: TABLE 8 TO PARAGRAPH (h) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $120.00 240.00 480.00 (i) * * * VerDate Sep<11>2014 23:44 Jul 31, 2020 Jkt 250001 By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $200.00 400.00 800.00 (p) Examination fee for each application under 35 U.S.C. 111 for an original design patent: TABLE 16 TO PARAGRAPH (p) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 $105.00 210.00 420.00 (t) * * * * TABLE 13 TO PARAGRAPH (m) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 7 TO PARAGRAPH (g) * TABLE 19 TO PARAGRAPH (s) * $160.00 320.00 640.00 * * * * (u) Additional fee for any application filed on or after January 1, 2022 under 35 U.S.C.111 for an original patent, except design, plant, or provisional applications, where the specification, claims, and/or abstract does not conform to the USPTO requirements for submission in DOCX format: TABLE 14 TO PARAGRAPH (n) (g) * * * * * $580.00 1,160.00 2,320.00 (s) Application size fee for any application filed under 35 U.S.C.111 for the specification and drawings which exceed 100 sheets of paper, for each additional 50 sheets or fraction thereof: (m) Search fee for each application for an original plant patent: TABLE 6 TO PARAGRAPH (f) * By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 12 TO PARAGRAPH (l) TABLE 4 TO PARAGRAPH (d) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. (r) Examination fee for each application for the reissue of a patent: $175.00 350.00 700.00 (l) * * * By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $165.00 330.00 660.00 TABLE 10 TO PARAGRAPH (j) (k) Search fee for each application filed under 35 U.S.C. 111 for an original patent, except design, plant, or provisional applications: By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entit .... TABLE 18 TO PARAGRAPH (r) TABLE 2 TO PARAGRAPH (b) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. (q) Examination fee for each application for an original plant patent: TABLE 9 TO PARAGRAPH (i) TABLE 21 TO PARAGRAPH (u) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By a small entity (§ 1.27(a)) if the application is submitted in compliance with the Office electronic filing system (§ 1.27(b)(2)) ............................. By other than a small or micro entity .. $100.00 200.00 200.00 400.00 3. Section 1.17 is amended by: ■ a. Revising paragraph (a) and (c) through (g); ■ c. Revising paragraph (h) introductory text and adding heading to the table in paragraph (h); ■ d. Revising paragraph (i)(1) introductory text and adding a heading to the table in paragraph (i)(1); ■ e. Revising paragraphs (i)(2) and (k); ■ f. Revising paragraph (m); ■ g. Adding a heading to the table in paragraph (o); ■ E:\FR\FM\03AUR3.SGM 03AUR3 46987 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations h. Revising paragraphs (p) through (s); and ■ i. Adding a heading to the table in paragraph (t). The revisions and additions read as follows: ■ (f) For filing a petition under one of the sections in paragraphs (f)(1) through (6) of this section that refers to this paragraph (f): § 1.136(b)—for review of a request for an extension of time when the provisions of § 1.136(a) are not available § 1.377—for review of a decision refusing to accept and record payment of a maintenance fee filed prior to the expiration of a patent § 1.550(c)—for patent owner requests for an extension of time in ex parte reexamination proceedings § 1.956—for patent owner requests for an extension of time in inter partes reexamination proceedings § 5.12 of this chapter—for expedited handling of a foreign filing license § 5.15 of this chapter—for changing the scope of a license § 5.25 of this chapter—for a retroactive license (h) For filing a petition under one of the following sections that refers to this paragraph (h): TABLE 10 TO PARAGRAPH (f) TABLE 12 TO PARAGRAPH (h) (1) For filing a first request for continued examination pursuant to § 1.114 in an application: TABLE 8 TO PARAGRAPH (e)(1) § 1.17 Patent application and reexamination processing fees. By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. (a) Extension fees pursuant to § 1.136(a): (1) For reply within first month: (2) For filing a second or subsequent request for continued examination pursuant to § 1.114 in an application: TABLE 1 TO PARAGRAPH (a)(1) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 9 TO PARAGRAPH (e)(2) $55.00 110.00 220.00 (2) For reply within second month: TABLE 2 TO PARAGRAPH (a)(2) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $160.00 320.0 640.00 TABLE 3 TO PARAGRAPH (a)(3) $370.00 740.00 1,480.00 (4) For reply within fourth month: TABLE 4 TO PARAGRAPH (a)(4) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $580.00 1,160.00 $2,320.00 (5) For reply within fifth month: TABLE 5 TO PARAGRAPH (a)(5) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. (3) For reply within third month: By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $790.00 1,580.00 3,160.00 * * * * (c) For filing a request for prioritized examination under § 1.102(e): TABLE 6 TO PARAGRAPH (c) $1,050.00 2,100.00 4,200.00 khammond on DSKJM1Z7X2PROD with RULES3 (d) For correction of inventorship in an application after the first action on the merits: TABLE 7 TO PARAGRAPH (d) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $160.00 320.00 640.00 (e) To request continued examination pursuant to § 1.114: VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 $500.00 1,000.00 2,000.00 $105.00 210.00 420.00 § 1.36(a)—for revocation of a power of attorney by fewer than all of the applicants § 1.53(e)—to accord a filing date § 1.182—for a decision on a question not specifically provided for in an application for a patent § 1.183—to suspend the rules in an application for a patent § 1.741(b)—to accord a filing date to an application under § 1.740 for an extension of a patent term § 1.1023—to review the filing date of an international design application (g) For filing a petition under one of the following sections that refers to this paragraph (g): * * * * * (i) * * * (1) For taking action under one of the following sections that refers to this paragraph (i)(1): TABLE 13 TO PARAGRAPH (i)(1) * * * * * (2) For taking action under one of the sections in paragraphs (i)(2)(i) and (ii) of this section that refers to this paragraph (i)(2): TABLE 14 TO PARAGRAPH (i)(2) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $140.00 140.00 140.00 TABLE 11 TO PARAGRAPH (g) * By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $340.00 680.00 1,360.00 By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $55.00 110.00 220.00 § 1.12—for access to an assignment record § 1.14—for access to an application § 1.46—for filing an application on behalf of an inventor by a person who otherwise shows sufficient proprietary interest in the matter § 1.55(f)—for filing a belated certified copy of a foreign application § 1.55(g)—for filing a belated certified copy of a foreign application § 1.57(a)—for filing a belated certified copy of a foreign application § 1.59—for expungement of information § 1.103(a)—to suspend action in an application PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 § 1.217—for processing a redacted copy of a paper submitted in the file of an application in which a redacted copy was submitted for the patent application publication § 1.221—for requesting voluntary publication or republication of an application * * * * * (k) For filing a request for expedited examination under § 1.155(a): TABLE 15 TO PARAGRAPH (k) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. * $400.00 800.00 1,600.00 * * * * (m) For filing a petition for the revival of an abandoned application for a E:\FR\FM\03AUR3.SGM 03AUR3 46988 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations patent, for the delayed payment of the fee for issuing each patent, for the delayed response by the patent owner in any reexamination proceeding, for the delayed payment of the fee for maintaining a patent in force, for the delayed submission of a priority or benefit claim, for the extension of the 12-month (six-month for designs) period for filing a subsequent application (§§ 1.55(c) and (e); 1.78(b), (c), and (e); 1.137; 1.378; and 1.452), or for filing a petition to excuse an applicant’s failure to act within prescribed time limits in an international design application (§ 1.1051): TABLE 16 TO PARAGRAPH (m) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. * * * (o) * * * * $525.00 1,050.00 2,100.00 * * By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. * * * * 4. Section 1.18 is amended by revising paragraphs (a), (b)(1), (c), (d)(3), (e), and (f) to read as follows: ■ § 1.18 Patent post allowance (including issue) fees. (a) Issue fee for issuing each original patent, except a design or plant patent, or for issuing each reissue patent: TABLE 1 TO PARAGRAPH (a) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. * By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 2 TO PARAGRAPH (b)(1) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $65.00 130.00 260.00 (q) Processing fee for taking action under one of the sections in paragraphs (q)(1) through (3) of this section that refers to this paragraph (q): $50.00 § 1.41—to supply the name or names of the inventor or inventors after the filing date without a cover sheet as prescribed by § 1.51(c)(1) in a provisional application § 1.48—for correction of inventorship in a provisional application § 1.53(c)(2)—to convert a nonprovisional application filed under § 1.53(b) to a provisional application under § 1.53(c) (r) For entry of a submission after final rejection under § 1.129(a): TABLE 19 TO PARAGRAPH (r) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $220.00 440.00 880.00 (s) For each additional invention requested to be examined under § 1.129(b): TABLE 20 TO PARAGRAPH (s) By a micro entity (§ 1.29) .................... 22:47 Jul 31, 2020 $300.00 600.00 1,200.00 (b)(1) Issue fee for issuing an original design patent: * TABLE 18 TO PARAGRAPH (p) khammond on DSKJM1Z7X2PROD with RULES3 * $220.00 Jkt 250001 $185.00 370.00 740.00 * * * * * (c) Issue fee for issuing an original plant patent: TABLE 3 TO PARAGRAPH (c) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. (d) * * * (3) Republication fee (§ 1.221(a)) ....... (e) For filing an application for patent term adjustment under § 1.705 ........ (f) For filing a request for reinstatement of all or part of the term reduced pursuant to § 1.704(b) in an application for a patent term adjustment under § 1.705 .......................... $210.00 420.00 840.00 $320.00 210.00 420.00 5. Section 1.19 is amended by revising paragraphs (b)(1)(i)(B) and (b)(1)(ii)(B) and removing paragraphs (j) through (l). The revisions read as follows: ■ § 1.19 (B) Copy Patent File Wrapper, Electronic, Any Size: $60.00 * * * * * ■ 6. Section 1.20 is revised to read as follows: § 1.20 TABLE 21 TO PARAGRAPH (t) (p) For an information disclosure statement under § 1.97(c) or (d): VerDate Sep<11>2014 440.00 880.00 (t) * * * * TABLE 17 TO PARAGRAPH (o) * TABLE 20 TO PARAGRAPH (s)— Continued TABLE 1 TO PARAGRAPH (c)(1)(i) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 2 TO PARAGRAPH (c)(2) * PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 $1,575.00 3,150.00 6,300.00 (ii) The following parts of an ex parte reexamination request are excluded from paragraphs (c)(1)(i)(A) through (F) of this section: (A) The copies of every patent or printed publication relied upon in the request pursuant to § 1.510(b)(3) (B) The copy of the entire patent for which reexamination is requested pursuant to § 1.510(b)(4) (C) The certifications required pursuant to § 1.510(b)(5) and (6) (2) For filing a request for ex parte reexamination (§ 1.510(b)) that has sufficient clarity and contrast to permit direct reproduction and electronic capture by use of digital imaging and optical character recognition, and which otherwise does not comply with the provisions of paragraph (c)(1) of this section: Document supply fees. * * * * (b) * * * (1) * * * (i) * * * (B) Copy Patent File Wrapper, Any Number of Sheets: $290.00 * * * * * (ii) * * * Post-issuance fees. (a) For providing a certificate of correction for an applicant’s mistake (§ 1.323): $160.00 (b) Processing fee for correcting inventorship in a patent (§ 1.324): $160.00 (c) In reexamination proceedings: (1)(i) For filing a request for ex parte reexamination (§ 1.510(a)) having: (A) 40 or fewer pages (B) Lines that are double-spaced or one-and-a-half spaced (C) Text written in a non-script type font such as Arial, Times New Roman, or Courier (D) A font size no smaller than 12 point (E) Margins that conform to the requirements of § 1.52(a)(1)(ii) (F) Sufficient clarity and contrast to permit direct reproduction and electronic capture by use of digital imaging and optical character recognition By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $3,150.00 6,300.00 12,600.00 (3) For filing with a request for reexamination or later presentation at any other time of each claim in independent form in excess of three and E:\FR\FM\03AUR3.SGM 03AUR3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations also in excess of the number of claims in independent form in the patent under reexamination: TABLE 3 TO PARAGRAPH (c)(3) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $120.00 240.00 480.00 (4) For filing with a request for reexamination or later presentation at any other time of each claim (whether dependent or independent) in excess of 20 and also in excess of the number of claims in the patent under reexamination (note that § 1.75(c) indicates how multiple dependent claims are considered for fee calculation purposes): TABLE 4 TO PARAGRAPH (c)(4) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $25.00 50.00 100.00 (5) If the excess claims fees required by paragraphs (c)(3) and (4) of this section are not paid with the request for reexamination or on later presentation of the claims for which the excess claims fees are due, the fees required by paragraphs (c)(3) and (4) must be paid or the claims canceled by amendment prior to the expiration of the time period set for reply by the Office in any notice of fee deficiency in order to avoid abandonment. (6) For filing a petition in a reexamination proceeding, except for those specifically enumerated in §§ 1.550(i) and 1.937(d): TABLE 5 TO PARAGRAPH (c)(6) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $510.00 1,020.00 2,040.00 (7) For a refused request for ex parte reexamination under § 1.510 (included in the request for ex parte reexamination fee at § 1.20(c)(1) or (2)): TABLE 6 TO PARAGRAPH (c)(7) khammond on DSKJM1Z7X2PROD with RULES3 By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $1,890.00 945.00 3,780.00 (d) For filing each statutory disclaimer (§ 1.321): $170.00 (e) For maintaining an original or any reissue patent, except a design or plant patent, based on an application filed on or after December 12, 1980, in force beyond four years, the fee being due by three years and six months after the original grant: VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 TABLE 7 TO PARAGRAPH (e) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $500.00 1,000.00 2,000.00 (f) For maintaining an original or any reissue patent, except a design or plant patent, based on an application filed on or after December 12, 1980, in force beyond eight years, the fee being due by seven years and six months after the original grant: TABLE 8 TO PARAGRAPH (f) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $940.00 1,880.00 3,760.00 (g) For maintaining an original or any reissue patent, except a design or plant patent, based on an application filed on or after December 12, 1980, in force beyond twelve years, the fee being due by eleven years and six months after the original grant: TABLE 9 TO PARAGRAPH (g) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $1,925.00 3,850.00 7,700.00 (h) Surcharge for paying a maintenance fee during the six-month grace period following the expiration of three years and six months, seven years and six months, and eleven years and six months after the date of the original grant of a patent based on an application filed on or after December 12, 1980: TABLE 10 TO PARAGRAPH (h) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $125.00 250.00 500.00 (i) [Reserved] (j) For filing an application for extension of the term of a patent: TABLE 11 TO PARAGRAPH (j) (1) Application for extension under § 1.740 ............................................. (2) Initial application for interim extension under § 1.790 ........................... (3) Subsequent application for interim extension under § 1.790 .................. $1,180.00 440.00 230.00 (k) In supplemental examination proceedings: (1) For processing and treating a request for supplemental examination: TABLE 12 TO PARAGRAPH (k)(1) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 $1,155.00 2,310.00 4,620.00 46989 (2) For ex parte reexamination ordered as a result of a supplemental examination proceeding: TABLE 13 TO PARAGRAPH (k)(2) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $3,175.00 6,350.00 12,700.00 (3) For processing and treating, in a supplemental examination proceeding, a non-patent document over 20 sheets in length, per document: (i) Between 21 and 50 sheets: TABLE 14 TO PARAGRAPH (k)(3)(i) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $45.00 90.00 180.00 (ii) For each additional 50 sheets or a fraction thereof: TABLE 15 TO PARAGRAPH (k)(3)(ii) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $75.00 150.00 300.00 7. Section 1.21 is amended by: a. Revising paragraphs (a)(1), (2), and (5); ■ b. Removing and reserving paragraph (a)(6)(i); ■ c. Adding paragraph (a)(8); ■ d. Revising paragraphs (a)(9)(ii) and (a)(10); ■ e. Adding paragraph (k); and ■ f. Revising paragraphs (n), (o), and (q). The revisions and addition read as follows: ■ ■ § 1.21 Miscellaneous fees and charges. * * * * * (a) * * * (1) For admission to examination for registration to practice: (i) Application fee (non-refundable): $110.00 (ii) Registration examination fee (A) For test administration by commercial entity: $210.00 (B) For test administration by the USPTO: $470.00 (iii) For USPTO-administered review of registration examination: $470.00 (2) On registration to practice or grant of limited recognition: (i) On registration to practice under § 11.6 of this chapter: $210.00 (ii) On grant of limited recognition under § 11.9(b) of this chapter: $210.00 (iii) On change of registration from agent to attorney: $110.00 * * * * * (5) For review of decision: (i) By the Director of Enrollment and Discipline under § 11.2(c) of this chapter: $420.00 E:\FR\FM\03AUR3.SGM 03AUR3 46990 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations (ii) Of the Director of Enrollment and Discipline under § 11.2(d) of this chapter: $420.00 * * * * * (9) * * * (ii) Administrative reinstatement fee: $210.00 (10) On application by a person for recognition or registration after disbarment or suspension on ethical grounds, or resignation pending disciplinary proceedings in any other jurisdiction; on application by a person for recognition or registration who is asserting rehabilitation from prior conduct that resulted in an adverse decision in the Office regarding the person’s moral character; on application by a person for recognition or registration after being convicted of a felony or crime involving moral turpitude or breach of fiduciary duty; and on petition for reinstatement by a person excluded or suspended on ethical grounds, or excluded on consent from practice before the Office: $1,680.00 * * * * * (k) For items and services that the director finds may be supplied, for which fees are not specified by statute or by this part, such charges as may be determined by the director with respect to each such item or service: Actual cost * * * * * (n) For handling an application in which proceedings are terminated pursuant to § 1.53(e): $140.00 (o) The receipt of a very lengthy sequence listing (mega-sequence listing) in an application under 35 U.S.C. 111 or 371 is subject to the following fee: (1) First receipt by the Office of a sequence listing in electronic form ranging in size from 300MB to 800MB (without file compression): TABLE 1 TO PARAGRAPH (o)(1) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $265.00 530.00 1,060.00 (2) First receipt by the Office of a sequence listing in electronic form exceeding 800MB in size (without file compression): khammond on DSKJM1Z7X2PROD with RULES3 TABLE 2 TO PARAGRAPH (o)(2) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $2,625.00 5,250.00 10,500.00 * * * * * (q) Additional fee for expedited service: $170.00. ■ 8. Section 1.27 is amended by revising paragraph (c)(3) introductory text as follows: VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 § 1.27 Definition of small entities and establishing status as a small entity to permit payment of small entity fees; when a determination of entitlement to small entity status and notification of loss of entitlement to small entity status are required; fraud on the Office. * * * * * (c) * * * (3) Assertion by payment of the small entity basic filing, basic transmittal, basic national fee, international search fee, or individual designation fee in an international design application. The payment, by any party, of the exact amount of one of the small entity basic filing fees set forth in § 1.16(a), (b), (c), (d), or (e), the small entity transmittal fee set forth in § 1.445(a)(1) or § 1.1031(a), the small entity international search fee set forth in § 1.445(a)(2) to a Receiving Office other than the United States Receiving Office in the exact amount established for that Receiving Office pursuant to PCT Rule 16, or the small entity basic national fee set forth in § 1.492(a), will be treated as a written assertion of entitlement to small entity status even if the type of basic filing, basic transmittal, or basic national fee is inadvertently selected in error. The payment, by any party, of the small entity first part of the individual designation fee for the United States to the International Bureau (§ 1.1031) will be treated as a written assertion of entitlement to small entity status. * * * * * ■ 9. Section 1.431 is amended by revising paragraph (c) to read as follows: § 1.431 International application requirements. * * * * * (c) Payment of the international filing fee (PCT Rule 15.2) and the transmittal and search fees (§ 1.445) may be made in full at the time the international application papers required by paragraph (b) of this section are deposited or within one month thereafter. The international filing, transmittal, and search fee payable is the international filing, transmittal, and search fee in effect on the receipt date of the international application. If the international filing, transmittal, and search fees are not paid within one month from the date of receipt of the international application and prior to the sending of a notice of deficiency, which imposes a late payment fee (§ 1.445(a)(6)), the applicant will be notified and given a one-month nonextendable time limit within which to pay the deficient fees plus the late payment fee. * * * * * PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 10. Section 1.445 is amended by revising paragraph (a) to read as follows: ■ § 1.445 International application filing, processing and search fees. (a) The following fees and charges for international applications are established by law or by the director under the authority of 35 U.S.C. 376: (1) A transmittal fee (see 35 U.S.C. 361(d) and PCT Rule 14) consisting of: (i) A basic portion: (A) For an international application having a receipt date that is on or after October 2, 2020: TABLE 1 TO PARAGRAPH (a)(1)(i)(A) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $65.00 130.00 260.00 (B) For an international application having a receipt date that is on or after January 1, 2014, and before October 2, 2020: TABLE 2 TO PARAGRAPH (a)(1)(i)(B) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $60.00 120.00 240.00 (C) For an international application having a receipt date that is before January 1, 2014: $240.00. (ii) A non-electronic filing fee portion for any international application designating the United States of America that is filed on or after November 15, 2011, other than by the Office electronic filing system, except for a plant application: TABLE 3 TO PARAGRAPH (a)(1)(ii) By a small entity (§ 1.27(a)) ................ By other than a small entity ................ $200.00 400.00 (2) A search fee (see 35 U.S.C. 361(d) and PCT Rule 16): (i) For an international application having a receipt date that is on or after October 2, 2020: TABLE 4 TO PARAGRAPH (a)(2)(i) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $545.00 1,090.00 2,180.00 (ii) For an international application having a receipt date that is on or after January 1, 2014, and before October 2, 2020: TABLE 5 TO PARAGRAPH (a)(2)(ii) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. E:\FR\FM\03AUR3.SGM 03AUR3 $520.00 1,040.00 2,080.00 46991 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations (iii) For an international application having a receipt date that is before January 1, 2014: $2,080.00. (3) A supplemental search fee when required, per additional invention: (i) For an international application having a receipt date that is on or after October 2, 2020: TABLE 6 TO PARAGRAPH (a)(3)(i) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 7 TO PARAGRAPH (a)(3)(ii) $520.00 1,040.00 2,080.00 (iii) For an international application having a receipt date that is before January 1, 2014: $2,080.00. (4) A fee equivalent to the transmittal fee in paragraph (a)(1) of this section that would apply if the USPTO was the Receiving Office for transmittal of an international application to the International Bureau for processing in its capacity as a Receiving Office (PCT Rule 19.4). (5) Late furnishing fee for providing a sequence listing in response to an invitation under PCT Rule 13ter: $80.00 160.00 320.00 (6) Late payment fee pursuant to PCT Rule 16bis.2 ■ 11. Section 1.482 is revised to read as follows: khammond on DSKJM1Z7X2PROD with RULES3 § 1.482 International preliminary examination and processing fees. (a) The following fees and charges for international preliminary examination are established by the director under the authority of 35 U.S.C. 376: (1) The following preliminary examination fee is due on filing the demand: (i) If an international search fee as set forth in § 1.445(a)(2) has been paid on the international application to the United States Patent and Trademark Office as an International Searching Authority: (ii) If the International Searching Authority for the international application was an authority other than the United States Patent and Trademark Office: TABLE 2 TO PARAGRAPH (a)(1)(ii) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. VerDate Sep<11>2014 21:09 Jul 31, 2020 TABLE 2 TO PARAGRAPH (b)(1) * By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $160.00 320.00 640.00 (b) The handling fee is due on filing the demand and shall be as prescribed in PCT Rule 57. (c) Late furnishing fee for providing a sequence listing in response to an invitation under PCT Rule 13ter: TABLE 4 TO PARAGRAPH (c) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $80.00 160.00 320.00 12. Section 1.492 is amended by: a. Revising paragraph (a); b. Adding headings to the tables in paragraphs (b)(1) and (2); ■ c. Revising paragraphs (b)(3) and (4); ■ d. Adding a heading to the table in paragraph (c)(1); ■ e. Revising paragraphs (c)(2) and (d); ■ f. Adding a heading to the table in paragraph (e); ■ g. Revising paragraphs (f) and (h); ■ h. Adding a heading to the table in paragraph (i); and ■ i. Revising paragraph (j). The revisions and additions read as follows: § 1.492 * * * * (a) The basic national fee for an international application entering the national stage under 35 U.S.C. 371: * * * * * * (3) If an international search report on the international application has been prepared by an International Searching Authority other than the United States International Searching Authority and is provided, or has been previously communicated by the International Bureau, to the Office: TABLE 4 TO PARAGRAPH (b)(3) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $135.00 270.00 540.00 (4) In all situations not provided for in paragraph (b)(1), (2), or (3) of this section: TABLE 5 TO PARAGRAPH (b)(4) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $175.00 350.00 700.00 (c) * * * (1) * * * TABLE 6 TO PARAGRAPH (c)(1) * * * * * (2) In all situations not provided for in paragraph (c)(1) of this section: TABLE 7 TO PARAGRAPH (c)(2) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $200.00 400.00 800.00 (d) In addition to the basic national fee, for filing or on later presentation at any other time of each claim in independent form in excess of three: By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $120.00 240.00 480.00 (e) * * * TABLE 1 TO PARAGRAPH (a) TABLE 9 TO PARAGRAPH (e) $80.00 160.00 320.00 * * * * * (f) In addition to the basic national fee, if the application contains, or is (b) * * * (1) * * * Frm 00061 * TABLE 8 TO PARAGRAPH (d) * PO 00000 * TABLE 3 TO PARAGRAPH (b)(2) National stage fees. By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. * (2) * * * TABLE 3 TO PARAGRAPH (a)(2) $160.00 Jkt 250001 $200.00 400.00 800.00 (2) An additional preliminary examination fee when required, per additional invention: TABLE 1 TO PARAGRAPH (a)(1)(i) By a micro entity (§ 1.29) .................... 320.00 640.00 ■ ■ ■ TABLE 8 TO PARAGRAPH (a)(5) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $545.00 1,090.00 2,180.00 (ii) For an international application having a receipt date that is on or after January 1, 2014, and before October 2, 2020: By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. TABLE 1 TO PARAGRAPH (a)(1)(i)— Continued Fmt 4701 Sfmt 4700 E:\FR\FM\03AUR3.SGM 03AUR3 46992 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations amended to contain, a multiple dependent claim, per application: TABLE 10 TO PARAGRAPH (f) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $215.00 430.00 860.00 * * * * * (h) Surcharge for filing the search fee, the examination fee, or the oath or declaration after the date of the commencement of the national stage (§ 1.491(a)) pursuant to § 1.495(c): TABLE 11 TO PARAGRAPH (h) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $40.00 80.00 160.00 (i) * * * TABLE 12 TO PARAGRAPH (i) * * * * * (j) Application size fee for any international application, the specification and drawings of which exceed 100 sheets of paper, for each additional 50 sheets or fraction thereof: TABLE 13 TO PARAGRAPH (j) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $105.00 210.00 420.00 PART 11—REPRESENTATION OF OTHERS BEFORE THE UNITED STATES PATENT AND TRADEMARK OFFICE 13. The authority citation for 37 CFR part 11 continues to read as follows: ■ Authority: 5 U.S.C. 500; 15 U.S.C. 1123; 35 U.S.C. 2(b)(2), 32, 41; sec. 1, Pub. L. 113– 227, 128 Stat. 2114. 14. Section 11.11 is amended by revising the section heading and paragraphs (a)(1) and (2), adding paragraph (a)(3), revising paragraphs (b)(1), (e), and (f)(1), and adding paragraph (f)(3) to read as follows: ■ khammond on DSKJM1Z7X2PROD with RULES3 § 11.11 Administrative suspension, inactivation, resignation, reinstatement, and revocation. (a) * * * (1) A registered practitioner, or person granted limited recognition under § 11.9(b), must notify the OED director of the postal address for their office, at least one and up to three email addresses where they receive email, and a business telephone number, as well as every change to each of said addresses and telephone number within thirty VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 days of the date of the change. A registered practitioner, or person granted limited recognition under § 11.9(b), shall, in addition to any notice of change of address and telephone number filed in individual patent applications, separately file written notice of the change of address or telephone number with the OED director. A registered practitioner, or person granted limited recognition under § 11.9(b), who is an attorney in good standing with the bar of the highest court of one or more states shall provide the OED director with the identification number associated with each bar membership. The OED director shall publish a list containing the name, postal business addresses, business telephone number, registration number or limited recognition number, and registration status as an attorney or agent of each registered practitioner, or person granted limited recognition under 11.9(b), recognized to practice before the Office in patent matters. The OED director may also publish the continuing legal education certification status of each registered practitioner, or person granted limited recognition under § 11.9(b). (2) Biennially, registered practitioners and persons granted limited recognition may be required to file a registration statement with the OED director for the purpose of ascertaining whether such practitioner desires to remain in an active status. Any registered practitioner, or person granted limited recognition under § 11.9(b), failing to file the registration statement or give any information requested by the OED director within a time limit specified shall be subject to administrative suspension under paragraph (b) of this section. (3)(i) A registered practitioner, or person granted limited recognition under § 11.9(b), who has completed, in the past 24 months, five hours of continuing legal education credits in patent law and practice and one hour of continuing legal education credit in ethics, may certify such completion to the OED director. (ii) A registered practitioner, or person granted limited recognition under § 11.9(b), may earn up to two of the five hours of continuing legal education credit in patent law and practice by providing patent pro bono legal services through the USPTO Patent Pro Bono Program. One hour of continuing legal education credit in patent law and practice may be earned for every three hours of patent pro bono legal service. (b) * * * PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 (1) Whenever it appears that a registered practitioner, or person granted limited recognition under § 11.9(b), has failed to comply with paragraph (a)(2) of this section, the OED director shall publish and send a notice to the registered practitioner, or person granted limited recognition, advising of the noncompliance, the consequence of being administratively suspended set forth in paragraph (b)(6) of this section if noncompliance is not timely remedied, and the requirements for reinstatement under paragraph (f) of this section. The notice shall be published and sent to the registered practitioner, or person granted limited recognition, by mail to the last postal address furnished under paragraph (a) of this section or by email addressed to the last email address furnished under paragraph (a) of this section. The notice shall demand compliance and payment of a delinquency fee set forth in § 1.21(a)(9)(i) of this chapter within 60 days after the date of such notice. * * * * * (e) Resignation. A registered practitioner who is not under investigation under § 11.22 for a possible violation of the USPTO Rules of Professional Conduct, is not subject to discipline under § 11.24 or § 11.25, or against whom probable cause has not been found by a panel of the Committee on Discipline under § 11.23(b), may resign by notifying the OED director in writing that they desire to resign. Upon acceptance in writing by the OED director of such notice, that registered practitioner shall no longer be eligible to practice before the Office in patent matters but shall continue to file a change of address for five years thereafter in order that they may be located in the event information regarding the practitioner’s conduct comes to the attention of the OED director or any grievance is made about their conduct while they engaged in practice before the Office. The name of any registered practitioner whose resignation is accepted shall be removed from active status, endorsed as resigned, and notice thereof published in the Official Gazette. Upon acceptance of the resignation by the OED director, the resigned practitioner must comply with the provisions of § 11.116. A resigned practitioner is subject to investigation and discipline for their conduct that occurred prior to, during, or after the period of their resignation. (f) * * * (1)(i) Any administratively suspended registered practitioner, or person granted limited recognition under E:\FR\FM\03AUR3.SGM 03AUR3 khammond on DSKJM1Z7X2PROD with RULES3 Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules and Regulations § 11.9(b), may be reinstated provided the practitioner: (A) Is not the subject of a disciplinary investigation or a party to a disciplinary proceeding; (B) Has applied for reinstatement on an application form supplied by the OED director; (C) Has demonstrated good moral character and reputation and competence in advising and assisting patent applicants in the presentation and prosecution of their applications before the Office; (D) Has submitted a declaration or affidavit attesting to the fact that the practitioner has read the most recent revisions of the patent laws and the rules of practice before the Office; (E) Has paid the fees set forth in § 1.21(a)(9)(ii) of this chapter; and (F) Has paid all applicable delinquency fees as set forth in § 1.21(a)(9)(i) of this chapter. (ii) Any administratively suspended registered practitioner, or person granted limited recognition, who applies for reinstatement more than five years after the effective date of the administrative suspension, additionally shall be required to file a petition to the OED director requesting reinstatement and providing objective evidence that they continue to possess the necessary legal qualifications to render valuable service to patent applicants. * * * * * (3)(i) Any registered practitioner who has been endorsed as resigned pursuant to paragraph (e) of this section may be reinstated on the register provided the practitioner: (A) Is not the subject of a disciplinary investigation or a party to a disciplinary proceeding; (B) Has applied for reinstatement on an application form supplied by the OED director; (C) Has demonstrated good moral character and reputation and competence in advising and assisting patent applicants in the presentation and prosecution of their applications before the Office; (D) Has submitted a declaration or affidavit attesting to the fact that the practitioner has read the most recent revisions of the patent laws and the rules of practice before the Office; (E) Has paid the fees set forth in § 1.21(a)(9)(ii) of this chapter; and (F) Has paid all applicable delinquency fees as set forth in § 1.21(a)(9)(i) of this chapter. (ii) Any resigned registered practitioner who applies for reinstatement more than five years after the effective date of the resignation VerDate Sep<11>2014 21:09 Jul 31, 2020 Jkt 250001 additionally shall be required to file a petition to the OED director requesting reinstatement and providing objective evidence that they continue to possess the necessary legal qualifications to render valuable service to patent applicants. PART 41—PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD 46993 PART 42—TRIAL PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD 17. The authority citation for 37 CFR part 42 continues to read as follows: ■ Authority: 35 U.S.C. 2(b)(2), 6, 21, 23, 41, 135, 311, 312, 316, 321–326; Pub. L. 112–29, 125 Stat. 284; and Pub. L. 112–274, 126 Stat. 2456. 18. Section 42.15 is revised to read as follows: ■ 15. The authority citation for part 41 continues to read as follows: ■ Authority: 35 U.S.C. 2(b)(2), 3(a)(2)(A), 21, 23, 32, 41, 134, 135, and Pub. L. 112–29. 16. Section 41.20 is amended by revising paragraphs (a), (b)(1), (b)(2)(ii), and (b)(3) and (4) to read as follows: ■ § 41.20 Fees. (a) Petition fee. The fee for filing a petition under this part is: $420.00. (b) * * * (1) For filing a notice of appeal from the examiner to the Patent Trial and Appeal Board: TABLE 1 TO PARAGRAPH (b)(1) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $210.00 420.00 840.00 (2) * * * (ii) In addition to the fee for filing a notice of appeal, for filing a brief in support of an appeal in an inter partes reexamination proceeding: TABLE 2 TO PARAGRAPH (b)(2)(ii) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $525.00 1,050.00 2,100.00 (3) For filing a request for an oral hearing before the Board in an appeal under 35 U.S.C. 134: TABLE 3 TO PARAGRAPH (b)(3) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. $340.00 680.00 1,360.00 (4) In addition to the fee for filing a notice of appeal, for forwarding an appeal in an application or ex parte reexamination proceeding to the Board: TABLE 4 TO PARAGRAPH (b)(4) By a micro entity (§ 1.29) .................... By a small entity (§ 1.27(a)) ................ By other than a small or micro entity .. PO 00000 $590.00 1,180.00 2,360.00 § 42.15 Fees. (a) On filing a petition for inter partes review of a patent, payment of the following fees are due: (1) Inter Partes Review request fee: $19,000.00 (2) Inter Partes Review PostInstitution fee: $22,500.00 (3) In addition to the Inter Partes Review request fee, for requesting a review of each claim in excess of 20: $375.00 (4) In addition to the Inter Partes PostInstitution request fee, for requesting a review of each claim in excess of 20: $750.00 (b) On filing a petition for post-grant review or covered business method patent review of a patent, payment of the following fees are due: (1) Post-Grant or Covered Business Method Patent Review request fee: $20,000.00 (2) Post-Grant or Covered Business Method Patent Review Post-Institution fee: $27,500.00 (3) In addition to the Post-Grant or Covered Business Method Patent Review request fee, for requesting a review of each claim in excess of 20: $475.00 (4) In addition to the Post-Grant or Covered Business Method Patent Review Post-Institution fee, for requesting a review of each claim in excess of 20: $1,050.00 (c) On the filing of a petition for a derivation proceeding, payment of the following fee is due: (1) Derivation petition fee: $420.00. (2) [Reserved] (d) Any request requiring payment of a fee under this part, including a written request to make a settlement agreement available: $420.00. (e) Fee for non-registered practitioners to appear pro hac vice before the Patent Trial and Appeal Board: $250.00. Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. [FR Doc. 2020–16559 Filed 7–31–20; 8:45 am] BILLING CODE 3510–16–P Frm 00063 Fmt 4701 Sfmt 9990 E:\FR\FM\03AUR3.SGM 03AUR3

Agencies

[Federal Register Volume 85, Number 149 (Monday, August 3, 2020)]
[Rules and Regulations]
[Pages 46932-46993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16559]



[[Page 46931]]

Vol. 85

Monday,

No. 149

August 3, 2020

Part III





 Department of Commerce





-----------------------------------------------------------------------





Patent and Trademark Office





-----------------------------------------------------------------------





37 CFR Parts 1, 11, 41, et al.





Setting and Adjusting Patent Fees During Fiscal Year 2020; Final Rule

Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Rules 
and Regulations

[[Page 46932]]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Parts 1, 11, 41, and 42

[Docket No. PTO-P-2018-0031]
RIN 0651-AD31


Setting and Adjusting Patent Fees During Fiscal Year 2020

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The United States Patent and Trademark Office (Office or 
USPTO) sets or adjusts patent fees as authorized by the Leahy-Smith 
America Invents Act (Act or AIA), as amended by the Study of 
Underrepresented Classes Chasing Engineering and Science Success Act of 
2018 (SUCCESS Act). The USPTO is a business-like operation where the 
demand for patent products and services and the cost of operations are 
affected by external factors, such as the economy, legislation, court 
decisions, and increases in the costs of supplies and contract 
services, as well as internal factors, such as changes in patent 
examination processes and procedures. The fee adjustments are needed to 
provide the Office with a sufficient amount of aggregate revenue to 
recover the aggregate cost of patent operations in future years (based 
on assumptions and estimates found in the FY 2021 Congressional 
Justification (FY 2021 Budget)) and to allow the Office to continue 
progress toward achieving its strategic goals.

DATES: This rule is effective on October 2, 2020, except for the 
amendment to Sec.  1.16(u) in amendatory instruction 2i, which is 
effective on January 1, 2022. The changes 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 
October 2, 2020.

FOR FURTHER INFORMATION CONTACT: Brendan Hourigan, Director of the 
Office of Planning and Budget, by telephone at (571) 272-8966; or 
Dianne Buie, Director, Forecasting and Analysis Division, by telephone 
at (571) 272-6301.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose of This Action

    The Office issues this Final Rule under section 10 of the AIA 
(section 10), Public Law 112-29, 125 Stat. 284, as amended by Public 
Law 115-273, 132 Stat. 4158 (the SUCCESS Act), which authorizes the 
director of the USPTO to set or adjust by rule any patent fee 
established, authorized, or charged under title 35 of the United States 
Code (U.S.C.) for any services performed, or materials furnished, by 
the Office. Section 10 prescribes that fees may be set or adjusted only 
to recover the aggregate estimated costs to the Office for processing, 
activities, services, and materials relating to patents, including 
administrative costs of the Office with respect to such patent fees. 
Section 10 authority includes flexibility to set individual fees in a 
way that furthers key policy factors, while taking into account 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) and congressional oversight. The revenue and workload 
assumptions in this Final Rule are based on the assumptions and 
estimates found in the FY 2021 Budget. However, projections of 
aggregate revenues and costs are based on point-in-time estimates, and 
are subject to change. Notably, since the FY 2021 Budget was published, 
fee collections have been lower than anticipated, due, in part, to 
fewer application filings resulting from the COVID-19 outbreak.
    Although economic circumstances have changed substantially since 
the FY 2021 Budget was developed, the USPTO determined it remains the 
most appropriate starting point for developing this Final Rule. First, 
the USPTO's projections of aggregate revenues and costs are necessarily 
estimates that can change substantially from one point in time to the 
next due to numerous factors outside the USPTO's control, including 
cyclical economic changes or exogenous shocks, such as COVID-19, 
changes in the laws governing USPTO revenues or expenditures, and other 
events. Nevertheless, the USPTO has historically used its most recent 
budget assumptions when setting fees, because they are the most recent 
complete evaluation of the USPTO's budget expectations and 
requirements, and provide assumptions for stakeholders to use when 
formulating their comments. Those projections were developed in late 
calendar year 2019, prior to the COVID-19 outbreak, and assumed 
continuing stable economic growth, not the sharp economic downturn and 
rebound of 2020.
    The FY 2021 Budget was developed based on the assumptions that real 
GDP would grow around 2.2 percent in FY 2020 and 1.9 percent in FY 
2021. The USPTO appreciates that revenue estimates based on those 
assumptions may be higher than what will ultimately be collected.
    The USPTO has considered the state of the U.S. economy, the 
operational needs of the agency, and the comments and advice received 
from the public during the 60-day comment period. The USPTO has made 
adjustments to the timing of the Final Rule based on all of these 
considerations, specifically delay publishing the Final Rule from April 
with a July effective date to August with an October effective date. 
This approach is consistent with the USPTO's many other efforts to 
provide various types of relief to stakeholders, including deadline 
extensions and fee postponements. Ultimately, the goal of the USPTO is 
to ensure not only that businesses and entrepreneurs can weather the 
economic downturn, but that they can hit the ground running as it 
passes.

B. Summary of Provisions Impacted by This Action

    Consistent with federal fee setting standards, the Office conducted 
a biennial review of fees, costs, and revenues that began in 2017 and 
concluded that fee adjustments are necessary to provide the resources 
needed to improve patent operations, including implementing the USPTO 
2018-2022 Strategic Plan (Strategic Plan). As a result, the 296 fees 
set or adjusted in this rule align directly with the Office's strategic 
goals and four key fee setting policy factors, discussed in detail in 
Part III: Rulemaking Goals and Strategies.
    The assumptions and estimates found in the FY 2021 Budget show that 
the fee schedule in this rule will recover the aggregate estimated 
costs of patent operations, including achieving the Office's strategic 
goals as detailed in the Strategic Plan, available at: www.uspto.gov/strategicplan. The Strategic Plan defines the USPTO's mission, vision, 
and long-term goals and presents the actions the Office will take to 
realize those goals. This fee setting rule supports the patent-related 
strategic goal to optimize patent quality and timeliness, which 
includes optimizing patent application pendency and examination time 
frames, issuing highly reliable patents, fostering innovation through 
business effectiveness, and enhancing the operations of the Patent 
Trial and Appeal Board (PTAB or Board). To the extent that the 
aggregate revenue generated by this rule will be used to pay for all 
patent-related costs

[[Page 46933]]

of the USPTO, this rule also supports the USPTO's goal to provide 
domestic and global leadership to improve intellectual property (IP) 
policy protection and enforcement, as well as the mission support goal 
to deliver organizational excellence, which includes optimizing the 
speed, quality, and cost-effectiveness of IT delivery to achieve 
business value and ensuring financial sustainability to facilitate 
effective USPTO operations. Before issuing this Final Rule, the Office 
considered and analyzed all comments, advice, and recommendations 
received from the public during the 60-day comment period. The Office's 
response to comments received is available in Part VI: Discussion of 
Comments.
    During a formal process closely tied to the annual budget process, 
the USPTO reviewed and analyzed the overall balance between the 
Office's estimated revenue and costs over the next five years (based on 
the assumptions and estimates found in the FY 2021 Budget) and also 
reviewed individual fee changes and new fee proposals to assess their 
alignment with the Office's strategic goals and fee structure 
philosophy, both of which aim to provide sufficient financial resources 
to facilitate the effective administration of patent operations. 
Specifically, the Office assessed how well each proposal aligned with 
four key fee setting policy factors: Promote innovation strategies, 
align fees with the full cost of products and services, set fees to 
facilitate the effective administration of the patent system, and offer 
processing options for applicants.
    This Final Rule sets or adjusts 296 patent fees for large, small, 
and micro entities (any reference herein to ``large entity'' includes 
all entities other than those that have established entitlement to 
either a small or micro entity fee discount). The fee rates for small 
and micro entities are tiered, with small entities receiving a 50 
percent discount on certain patent fees and micro entities receiving a 
75 percent discount. Small entity fee eligibility is based on the size 
or certain non-profit status of the applicant's business and that of 
any other party holding rights to the invention. Micro entity fee 
eligibility is described in section 10(g) of the AIA. The Office is 
also introducing five new fees and discontinuing four fees.
    Overall, 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, in order to ensure financial 
sustainability and accommodate increases needed to improve the 
predictability and reliability of patent IP protection. Applicants who 
meet the definition for small or micro entity discounts will continue 
to pay a reduced fee for the fees eligible for a discount under section 
10(b) of the AIA. Additional information describing the fee adjustments 
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'' (hereinafter ``Table of Patent Fees'') available at https://www.uspto.gov/FeeSettingAndAdjusting.
    As background, section 10 of the AIA changed the Office's fee 
setting model and authorized the USPTO to set or adjust patent fees 
within the regulatory process. Section 10 better equips the Office to 
respond to changing circumstances. In Fiscal Year (FY) 2013 and FY 
2018, the USPTO used the AIA's fee setting authority to achieve key fee 
setting policy factors--to promote innovation strategies, align fees 
with the full cost of products and services, set fees to facilitate the 
effective administration of the patent system, and offer patent 
processing options for applicants--and to generate sufficient resources 
needed to meet the Office's strategic patent priorities. With the 
additional fees collected as a result of the January 2013 Setting and 
Adjusting Patent Fees Final Rule (hereinafter ``the January 2013 Final 
Rule'') (78 FR 4212) and the January 2018 Setting and Adjusting Patent 
Fees in Fiscal Year 2017 Final Rule (hereinafter ``the January 2018 
Final Rule'') (82 FR 52780), the Office made considerable progress in 
reducing the patent application backlog and pendency.
    Since the development of the USPTO fee schedule currently in 
effect, there have been changes to a number of the assumptions on which 
the cost and revenue projections supporting that rulemaking were based. 
Notably, since the January 2018 Final Rule was published, the USPTO's 
projected patent examination costs have increased, and (b) fee 
collections have been lower than anticipated due to a later than 
planned implementation of the January 2018 Final Rule. The higher fees 
set or adjusted in this rulemaking are needed as the Office continues 
its efforts towards accomplishing its mission and responding to the 
demands of both the domestic and international economies for robust and 
timely IP products and services. The USPTO must continually reinforce 
the predictability, reliability, and quality of those IP rights. Doing 
so fosters the utmost confidence in the legal durability of the USPTO's 
products and inspires greater innovation and further economic growth.
    The Office's strategic goal to optimize patent quality and 
timeliness recognizes the importance of innovation as the foundation of 
American economic growth and national competitiveness. Through this 
goal, the Office diligently works to balance timely examination with 
improvements in patent quality, particularly the reliability of issued 
patents. One of these improvements was a comprehensive analysis of 
examination time, known as the examiner time analysis (ETA). The last 
comprehensive review of examination time was completed over 40 years 
ago. Since then, significant changes to the examination process have 
occurred, including the emergence of new, more complex technologies, an 
increase in available prior art that must be searched, the impact of 
new electronic tools on the examination process, the challenges of 
transitioning to a new patent classification system, and changes in the 
legal landscape. As the USPTO plans for the future, the Office 
considers how changes such as these impact the amount of time it takes 
to examine an application.
    The USPTO is also working towards improving patent quality by 
providing increased clarity on patentable subject matter eligibility 
under 35 U.S.C. 101. The Office continues to strive to create 
consistency and increased clarity through this guidance. The Office is 
also focusing efforts on improving the initial search and availability 
of the best prior art to examiners. This aspect takes a variety of 
forms, and the Office is working on many possible approaches. Overall, 
presenting more comprehensive search results to the examiners initially 
will lead to more efficient examination, a decrease in the information 
gap between the examination phase and any potential later challenge or 
litigation phases during the life of a patent, and an increase in the 
reliability of the patent grant overall. Effecting the changes in the 
examination process needed to ensure the issuance of reliable patents, 
while also issuing those patents in a timely manner, means recognizing 
a potential increase in the core operating costs for future years.
    Another major component of the overall patent process is the work 
carried out by the PTAB. On April 24, 2018, the U.S. Supreme Court 
issued its decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 
(2018). Changes related to the SAS decision, along with the 
implementation of other improvements, have increased the average cost 
to conduct each proceeding. These changes are discussed in detail in 
Part V: Individual Fee Rationale.

[[Page 46934]]

    In addition, as a production-oriented entity, the USPTO relies on 
IT as a mission-critical enabler for every aspect of its operation. The 
quality, efficiency, and productivity of patent operations correlate to 
the performance of the USPTO's IT systems. To accomplish its 
performance-based strategies, the USPTO continuously engages in multi-
year efforts to stabilize and upgrade its business systems and the IT 
infrastructure supporting those systems in order to keep pace with 
emerging business, legislative, and court needs and technology 
standards. Since the last patent fee setting effort, the USPTO has made 
significant progress on IT tools, including continued development and 
implementation of the Patent End-to-End (PE2E) IT capability. For 
example, the Office continues to work on releasing systems such as 
Patent Center which will modernize the transaction systems by combining 
EFS Web and Patent Application Information Retrieval (PAIR) in a single 
interface. The Office has also made progress on the continued 
development and deployment of the PTAB End-to-End (PTAB E2E) IT 
capabilities, which will expand the use of intelligent data to support 
appeal decisions and process inter partes review (IPR) proceedings, 
post-grant review (PGR) proceedings, covered business method review 
(CBM) proceedings, and derivation (DER) proceedings. Other IT efforts 
are underway to stabilize, modernize, or replace the USPTO's legacy 
systems and aging infrastructure. To this end, in FY 2019, the USPTO 
performed an assessment of its IT systems, infrastructure, and 
processes and began stabilizing and modernizing IT. One of the first 
improvements was to move the critical Patent Application Location 
Monitoring (PALM) system from an aging server to new servers that are 
at least 10 times more reliable, 100 times faster, and use less than 
half of the power consumed by the prior server.
    The FY 2021 Budget does not anticipate that investments in IT 
modernization and stabilization costs will increase beyond levels 
previously foreseen. However, given the assumptions and estimates of 
revenue and spending found in the FY 2021 Budget, this fee increase is 
needed to support continuing IT investments at previously planned 
levels. Without an increase in the USPTO's aggregate revenue, resources 
available for IT investment will inevitably be curtailed.
    Lastly, the USPTO has taken steps to establish and maintain 
operating reserves to facilitate execution of multi-year plans. Using 
fee setting authority and other tools, the USPTO continuously refines 
its multi-year planning and budgeting. The fee setting authority 
prescribed in the AIA, as amended by the SUCCESS Act, allows the Office 
to effectively engage the stakeholder community on fee adjustments; 
fully recover the aggregate costs of its planned operations, including 
the development and maintenance of sufficient operating reserves; 
invest in strategic agency initiatives; and respond to changing market 
needs and other external factors.
    Research has shown that large fee-funded, business-like agencies 
without an operating reserve are at risk of cash flow stress. The 
USPTO's operating reserves enable the Office to mitigate this risk. For 
instance, in FY 2019, certain federal government departments and 
agencies, including the Department of Commerce, shut down as a result 
of a lapse in appropriations. The USPTO was able to remain open using 
funds available from the operating reserves. This allowed the USPTO to 
continue operations, thus preventing a significant degradation in 
service levels, such as patent pendency time frames. This example 
provides an ongoing, compelling case for the operating reserves' 
significant value. Both external factors and internal decisions 
impacting the spending and revenue projections mentioned above have 
affected the Office's ability to grow the operating reserve to the 
levels anticipated in the January 2018 Final Rule. The USPTO assesses 
risk annually and determines the minimum level of reserves necessary to 
shield core operations against known financial risks. The Office also 
establishes optimal operating reserve targets, which are reviewed at 
least biennially, based on an assessment of the likelihood and severity 
of an array of risks. Based on the cost and revenue assumptions found 
in the FY 2021 Budget, the USPTO's patent operating reserve is 
projected to remain above the minimum level and gradually build toward 
the optimal level, due to the impact of this Final Rule. Absent this 
fee increase, the USPTO's patent operating reserve will fall below the 
minimum level in FY 2021 and be exhausted by the end of FY 2022, which 
will leave the Office vulnerable to changes in the economy that reduce 
annual revenue, government-wide fiscal events, unexpected cost 
increases, and a number of other financial risks.
    The USPTO also acutely recognizes that fees cannot simply increase 
for every improvement the Office deems desirable. The USPTO has a 
responsibility to stakeholders to pursue strategic opportunities for 
improvement in an efficient, cost-conscious manner. The Office's 
financial advisory board (FAB) focuses on financial risk management and 
determining what expenses are truly necessary. Each year the FAB 
reviews multiple scenarios to determine what level of fee collections 
are expected and what the hiring and spending levels should be in order 
to effectively carry out the Office's mission. The FAB also regularly 
reviews USPTO activities to identify opportunities for cost savings and 
resources that can be redirected to higher-priority efforts. As a 
result of the USPTO's careful financial management and prudent use of 
fee setting authority, Congress recognized the Office as a good steward 
of fee setting authority and extended that authority through the 
SUCCESS Act.
    In order to continue building on the progress made over the past 
several years, and consistent with the USPTO's biennial fee review 
policy, the final patent fee schedule detailed herein continues to 
focus on the fundamental purpose of the USPTO, which is to foster 
innovation, competitiveness, and job growth by recognizing and securing 
IP rights through the delivery of high-quality and timely patent 
examination and review proceedings in order to produce reliable and 
predictable IP rights. This Final Rule seeks to provide the USPTO 
sufficient financial resources to facilitate the effective 
administration of the U.S. IP system. This Final Rule includes targeted 
fee adjustments, and an approximately 5 percent across-the-board 
adjustment to all patent fees that are not covered by the targeted 
adjustments or that are discontinued. This Final Rule is needed because 
critical costs to the Office continue to increase. Based on the 
assumptions and estimates found in the FY 2021 Budget, the fees set 
forth in this Final Rule will help replenish and grow the patent 
operating reserve and maintain the USPTO's finances, enabling the 
Office to deliver reliable and predictable service levels, even in 
times of financial fluctuations. A more robust patent operating reserve 
will also position the Office to identify and continue to undertake 
capital improvements, such as adapting to an ever-increasing 
technological future. The operating reserve will be managed carefully; 
if the projected operating reserve were to exceed the targeted optimal 
level by 10 percent for two consecutive years, it is USPTO policy to 
examine the contributing factors and determine whether it would be 
advisable to lower fee rates. The fees set or adjusted in this Final 
Rule intend to position the Office well to deliver on

[[Page 46935]]

known commitments and address unknown risks in the future.

C. Summary of Costs and Benefits of This Action

    This Final Rule is economically significant and results in a need 
for a Regulatory Impact Analysis (RIA) under Executive Order 12866 
(Regulatory Planning and Review) (Sept. 30, 1993). The Office prepared 
a RIA to analyze the costs and benefits of the Final Rule over a five-
year period, FY 2020-FY 2024. The RIA includes an analysis of four 
alternatives and shows how well they aligned with the Office's 
rulemaking strategies and goals, which include strategic priorities 
(goals, objectives, and initiatives) from the Strategic Plan and the 
Office's fee setting policy factors. From this conceptual framework, 
the Office assessed the absolute and relative qualitative costs and 
benefits of each alternative. Consistent with the Office of Management 
and Budget (OMB) Circular A-4, ``Regulatory Analysis,'' this rule 
involves a transfer payment from one group to another. The Office 
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 that the Office 
identifies and analyzes 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 Office did not identify any monetized costs and 
benefits of this Final Rule but found that this Final Rule has 
significant qualitative benefits with no identified costs.
    The qualitative costs and benefits that the RIA assesses are: (1) 
Fee schedule design--a measure of how well the fee schedule aligns with 
the key fee setting policy factors; and (2) securing aggregate revenue 
to recover aggregate cost--a measure of whether the alternative 
provides adequate revenue to support the core mission and strategic 
priorities based on assumptions and estimates found in the FY 2021 
Budget and described in the Final Rule, Strategic Plan, and FY 2021 
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 patent 
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, 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 achieve the strategic priorities 
encompassed in the rulemaking goals and strategies (see Part III: 
Rulemaking Goals and Strategies). The final patent fee schedule allows 
for optimizing patent quality and timeliness. This significantly 
increases the value of patents by advancing commercialization of new 
technologies sooner and reducing uncertainty regarding the scope of 
patent rights, which fosters innovation and has a positive effect on 
economic growth. The RIA explains the results in more detail at https://www.uspto.gov/FeeSettingAndAdjusting.

II. Legal Framework

A. Leahy-Smith America Invents Act--Section 10

    The Leahy-Smith America Invents Act was enacted into law on 
September 16, 2011. See Public Law 112-29, 125 Stat. 284. Section 10(a) 
of the Act authorizes the director of the Office to set or adjust by 
rule any patent fee established, authorized, or charged under title 35, 
U.S.C., for any services performed by, or materials furnished by, the 
Office. Fees under title 35 of the U.S.C. may be set or adjusted only 
to recover the aggregate estimated cost to the Office for processing, 
activities, services, and materials related to patents, including 
administrative costs to the Office with respect to such patent 
operations. See 125 Stat. at 316. Provided that the 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) of the Act requires the director to publish the 
final fee rule in the Federal Register and the Official Gazette of the 
USPTO at least 45 days before the final fees become effective. Section 
10(i) terminates the director's authority to set or adjust any fee 
under section 10(a) upon the expiration of the seven-year period that 
began on September 16, 2011.

B. The Study of Underrepresented Classes Chasing Engineering and 
Science Success Act of 2018

    The Study of Underrepresented Classes Chasing Engineering and 
Science Success Act of 2018 (SUCCESS Act), was enacted into law on 
October 31, 2018. See Public Law 115-273, 132 Stat. 4158. Section 4 of 
the SUCCESS Act amended section 10(i)(2) of the AIA by striking ``7-
year'' and inserting ``15-year'' in reference to the expiration of fee 
setting authority. Therefore, the updated section 10(i) of the AIA, as 
amended, terminates the director's authority to set or adjust any fee 
under section 10(a) upon the expiration of the 15-year period that 
began on September 16, 2011, and ends on September 16, 2026.

C. Small Entity Fee Reduction

    Section 10(b) of the AIA requires the Office to reduce by 50 
percent 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.

D. Micro Entity Fee Reduction

    Section 10(g) of the AIA amended 35 U.S.C. ch. 11 by adding section 
123 concerning micro entities. The Act provides that the Office must 
reduce by 75 percent the fees for micro entities for filing, searching, 
examining, issuing, appealing, and maintaining patent applications and 
patents. Micro entity fees were implemented through the January 2013 
Final Rule, and the Office will maintain this 75 percent micro entity 
discount for the appropriate fees and will implement micro entity fees 
for additional services as appropriate.

E. Patent Public Advisory Committee Role

    The Secretary of Commerce established the PPAC under the American 
Inventors Protection Act of 1999. 35 U.S.C. 5. The PPAC advises the 
Under Secretary of Commerce for Intellectual Property and Director of 
the USPTO on the management, policies, goals, performance, budget, and 
user fees of patent operations.
    When adopting fees under section 10 of the Act, the director must 
provide the PPAC with the proposed fees at least 45 days prior to 
publishing the proposed fees in the Federal Register. The PPAC then has 
at least 30 days within which to deliberate, consider, and comment on 
the proposal, as well as hold public hearing(s) on the proposed fees. 
The PPAC must make available to the public a written report of the 
comments, advice, and recommendations of the committee regarding the 
proposed fees before the Office issues any final fees. The Office 
considers and analyzes any comments, advice, or recommendations 
received from the PPAC before finally setting or adjusting fees.
    Consistent with this framework, on August 8, 2018, the director 
notified the PPAC of the Office's intent to set or adjust patent fees 
and submitted a

[[Page 46936]]

preliminary patent fee proposal with supporting materials. The 
preliminary patent fee proposal and associated materials are available 
at https://www.uspto.gov/FeeSettingAndAdjusting. The PPAC held a public 
hearing in Alexandria, Virginia, on September 6, 2018. Transcripts of 
the hearing are available for review at https://www.uspto.gov/sites/default/files/documents/PPAC_Hearing_Transcript_20180906.pdf. Members 
of the public were invited to the hearing and given the opportunity to 
submit written and/or oral testimony for the PPAC to consider. The PPAC 
considered such public comments from this hearing and made all comments 
available to the public via the Fee Setting and Adjusting section of 
the USPTO website, https://www.uspto.gov/FeeSettingAndAdjusting. The 
PPAC also provided a written report setting forth in detail the 
comments, advice, and recommendations of the committee regarding the 
preliminary proposed fees. The report regarding the preliminary 
proposed fees was released on October 29, 2018, and can be found online 
at https://www.uspto.gov/sites/default/files/documents/PPAC_Fee_Setting_Report_Oct2018_1.pdf.
    The Office considered and analyzed all comments, advice, and 
recommendations received from the PPAC before publishing the notice of 
proposed rulemaking (NPRM) Setting and Adjusting Patent Fees during 
Fiscal Year 2020. The NPRM and associated materials are available at 
https://www.uspto.gov/FeeSettingAndAdjusting. Likewise, before issuing 
this Final Rule, the Office considered and analyzed all comments, 
advice, and recommendations received from the public during the 60-day 
comment period. The Office's response to comments received is available 
in Part VI: Discussion of Comments.

III. Rulemaking Goals and Strategies

A. Fee Setting Strategy

    The overall strategy of this Final Rule is to establish a fee 
schedule that generates sufficient multi-year revenue to recover the 
aggregate cost of maintaining USPTO patent-related operations and 
accomplishing the USPTO's patent-related strategic goals in accordance 
with the authority granted to the USPTO by AIA section 10, as amended 
by the SUCCESS Act. The overriding principles behind this strategy are 
to operate within a sustainable funding model to avoid disruptions 
caused by fluctuations in financial operations and to enable the USPTO 
to continue strategic improvements, such as optimizing patent 
application pendency; issuing highly reliable patents; fostering 
innovation through business effectiveness; enhancing operations of the 
PTAB; and optimizing the speed, quality, and cost effectiveness of 
information technology delivery to achieve business value.
    In addition to the overriding principles outlined above, as 
discussed earlier in this document the Office assesses its alignment 
with the four key fee setting policy factors: (1) Promoting innovation 
strategies, (2) aligning fees with the full cost of products and 
services, (3) facilitating the effective administration of the U.S. 
patent system, and (4) offering patent processing options to 
applicants. Each factor promotes a particular aspect of the U.S. patent 
system. 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. Aligning fees with the full 
cost of products and services recognizes that as a fully fee-funded 
entity, the Office must account for all of its costs, even as it elects 
to set certain fees below, at, or above cost. This factor also 
recognizes that some applicants may use particular services in a much 
more costly manner than other applicants (e.g., patent applications 
cost more to process when more claims are filed). Facilitating 
effective administration of the patent system seeks to encourage patent 
prosecution strategies that promote efficient patent prosecution, 
resulting in compact prosecution and a reduction in the time it takes 
to obtain a patent. Finally, the Office recognizes that patent 
prosecution is not a one-size-fits-all process; therefore, where 
feasible, the Office endeavors to fulfill its fourth policy factor of 
offering patent processing options to applicants.

B. Fee Setting Considerations

    The balance of this sub-section presents the specific fee setting 
considerations the Office reviewed in developing the final patent fee 
schedule. Specific considerations are: (1) Historical costs of patent 
operations and investments to date in meeting the Office's strategic 
goals; (2) the balance between projected costs to meet the Office's 
operational needs and strategic goals and the projected future year fee 
collections; (3) fee schedule design; (4) sustainable funding; and (5) 
the comments, advice, and recommendations offered by the PPAC on the 
Office's initial fee setting proposal and the public comments received 
in response to the July 2019 NPRM. The Office carefully considered the 
comments, advice, and recommendations offered by the PPAC and public. 
Collectively, these considerations informed the Office's chosen 
rulemaking strategy.
    (1) Historical Cost. To ascertain how to best align fees with the 
full cost of products and services, the Office considers unit cost data 
provided by the USPTO's activity based information (ABI) program. Using 
historical cost data and forecasted application demands, the Office can 
align fees with the costs of specific patent products and services. The 
document entitled ``Setting and Adjusting Patent Fees during Fiscal 
Year 2020--Activity Based Information and Patent Fee Unit Expense 
Methodology,'' available at https://www.uspto.gov/FeeSettingAndAdjusting, provides details on the Office's costing 
methodology in addition to four years of historical cost data. Part IV 
of this Final Rule details the Office's methodology for establishing 
fees. Additionally, Part V describes the reasoning for setting some 
fees at cost, below cost, or above cost such that the Office recovers 
the aggregate cost of providing services through fees.
    (2) Projected Costs and Revenue. In developing this Final Rule, the 
USPTO considered estimates of future year workload demands, fee 
collections, and costs to maintain core USPTO operations and meet the 
Office's strategic goals, all of which can be found in the FY 2021 
Budget. The FY 2021 Budget and the Strategic Plan highlight the 
priorities of: optimizing patent application pendency; issuing highly 
reliable patents; fostering innovation through business effectiveness; 
enhancing operations of the PTAB; optimizing the speed, quality, and 
cost effectiveness of IT delivery to achieve business value; and 
ensuring financial sustainability to facilitate effective USPTO 
operations. This also enables the USPTO to continue to leverage 
nationwide talent to build, retain, and effectively manage the highly 
educated and talented workforce it needs to properly serve its 
stakeholder community and the country.
    (a) Updated Revenue Estimates. As is discussed in more detail in 
Part IV: Fee Setting Methodology, when setting fees at appropriate 
levels to recover aggregate costs, the USPTO must estimate future year 
demand for its products and services through a careful analysis of 
economic conditions, potential changes in the legal and policy

[[Page 46937]]

environment, and operational efficiency and productivity. Many of these 
factors fall outside the USPTO's control. Since the time that the USPTO 
published the January 2018 Final Rule, new information has become 
available that has resulted in adjustments to several of the 
assumptions underlying the Office's revenue projections. The result of 
this change is a lowering of revenue expectations under the existing 
fee schedule. This reduction is due to a number of factors, including a 
reduction in the estimates for request for continued examination (RCE) 
submissions over several years and maintenance fee collections. These 
assumptions and estimates are found in the FY 2021 Budget.
    Despite increases in serialized filings in FYs 2017 through 2019, 
the rate of RCE submissions during that same time period was much less 
than expected. In particular, 2018 and 2019 saw a 10 percent decrease 
in the number of RCEs filed compared to the number projected, and RCE 
projections for FY 2020 and beyond have been reduced accordingly (as 
found in the FY 2021 Budget). This reduction of RCEs enables USPTO 
examining staff to re-allocate more of their time to examine an 
increased number of serialized filings, thereby reducing our unexamined 
inventory. While the USPTO considers the reduction in RCE submissions 
to be a generally positive development, it has resulted in the FY 2020 
and FY 2021 revenues being lower than expected when the January 2018 
Final Rule was published.
    In FYs 2017 through 2019 maintenance fee collections, particularly 
the most expensive third stage collections, were lower than projected. 
As a result, the refreshed forecast included in the FY 2021 Budget has 
been lowered.
    Absent the increase in fees or an unsustainable reduction in 
operating costs, the USPTO will be forced to draw down its operating 
reserves and take on higher levels of financial risk.
    (b) Quality, Backlog, and Pendency. The strategic goal to 
``optimize patent quality and timeliness'' recognizes the importance of 
innovation as the foundation of American economic growth and national 
competitiveness. Through this goal, the Office will continually improve 
patent quality, particularly the predictability and reliability of 
issued patents. The USPTO is also committed to improving pendency to 
better ensure the timely delivery of innovative goods and services to 
market and the related economic growth and creation of new or higher-
paying jobs.
    The Office will continue to diligently make progress toward 
pendency targets and quality expectations to issue predictable and 
reliable patents while also addressing the anticipated growth in 
application filings. The Office will work to optimize patent 
examination time frames within the framework of patent term adjustment 
(PTA) while continuing to monitor and report traditional pendency 
measures. This includes engaging customers to identify optimal pendency 
and examination time frames and making sure that the Office has the 
appropriate number of examiners to generate the level of production to 
meet those time frames. This Final Rule will produce revenues adequate 
to continue the USPTO's progress towards attaining its strategic goal 
to optimize patent quality and timeliness.
    The Office recognizes the importance of issuing high-quality 
patents that provide reliable and predictable intellectual property 
protection. If the USPTO is to achieve its strategic objective of 
issuing highly reliable patents, patent examiners must be afforded 
sufficient time to conduct a thorough and complete examination of each 
application. In the time since fees were last adjusted, the USPTO has 
completed a comprehensive analysis of examination time, known as ETA, 
the result of which determined a need for updates to the allotment of 
examination time.
    In the past, allotment of examination time for a particular 
application was determined by the most comprehensive claim and could 
not account for multi-disciplinary inventions. Sometimes, patent 
applications of similar technologies would receive disparate time for 
examination as a result. This, together with significant changes in 
patent prosecution that have occurred since examination time goals were 
established over 40 years ago--such as advancements in the 
technological complexities of applications, a growing volume of prior 
art, and a changing legal landscape--has brought about the need for 
updates to the allotment of examination time. The time examiners are 
given to examine applications is the critical link between pendency and 
quality. These updates reflect internal and external stakeholders' 
priorities and experiences as they relate to examination time, quality, 
and application complexity, and also enable optimal pendency and 
quality levels.
    In addition to the changing legal landscape, increasing technical 
complexities of applications, and the growing volume of prior art to be 
searched during examination, updates to examination time will also take 
into account the full scope of technology recited in an application as 
well as the particular attributes of the application, such as the 
number of claims, the size of the specification, and the number of 
references cited in any filed information disclosure statement. Based 
on technology examined, examiners who currently receive the least 
amount of time for examination will generally see the largest increases 
in examination time, and conversely, examiners who currently receive 
the highest amount of time may see little, if any, increase in 
examination time. Further, all examiners will be provided additional 
examination time based on the specific attributes of the application. 
Together, these changes improve the calibration of the time needed to 
conduct a thorough examination, position the Office to better adjust 
time in the future as needed, and provide stakeholders increased 
confidence in the certainty of any resultant patent rights.
    Separate from the ETA findings, analysis of the patent staffing 
model indicates an incremental decrease in examiners' average net 
output over time, resulting in higher core patent examination costs 
than in previous estimates. One possible explanation for this reduction 
in output may be that the percentage of examiners receiving production 
awards has dropped, and a larger number of examiners are forgoing 
promotions and staying at lower grades. Additionally, applicants' 
increased use of programs like the after final consideration pilot 
(AFCP) and interviews, along with increased training needs due to 
changes in the legal landscape and examination practices, has increased 
the amount of non-examination time used by examiners, also leading to 
productivity losses.
    Another area where essential operating costs have increased is the 
PTAB. The PTAB, as it currently exists, was established by the AIA in 
September 2012. The PTAB manages pendency for three different 
activities: AIA trials, which, by statute, must be adjudicated within 
one year of filing; re-examination petitions, which, by statute, must 
be completed with ``special dispatch''; and ex parte appeals. The PTAB 
is committed to resolving appeals and inter partes matters within 
statutory or USPTO time frames, while streamlining processes and 
procedures throughout the PTAB. This entails retaining and leveraging 
nationwide talent. As the Office institutes operational changes at the 
PTAB to comply with the SAS decision and implements other improvements, 
as

[[Page 46938]]

detailed in Part V: Individual Fee Rationale, the average workload 
associated with each trial is increasing.
    (c) Business Effectiveness. Given the estimates of costs and 
revenue found in the FY 2021 Budget and absent efforts to boost future 
revenue, funding for other USPTO and stakeholder priorities, like IT 
stabilization and modernization and other business improvement 
initiatives, will need to be reduced to well below planned levels in 
the coming years. To this end, revenue generated from the final patent 
fee schedule will enable the USPTO to focus on how the Patents 
organization operates to foster business effectiveness. In fulfilling 
this objective, the Office will listen to customers and employees and 
then take patent-specific actions that will position the Office to meet 
expectations.
    The USPTO will provide the cutting-edge tools that employees and 
customers need to efficiently and effectively accomplish their tasks, 
particularly through the continued implementation of Patents End-to-
End. For example, this could entail the use of artificial intelligence 
or machine-learning efforts. Another key initiative that will enhance 
the work capabilities of both employees and customers is to improve 
searchable (text) access to domestic and international patent 
applications, including access to non-patent literature and prior art, 
and Office actions.
    (3) Fee Schedule Design. The final fee schedule was designed to set 
individual fees to further key policy considerations while taking into 
account the cost of the particular service. To encourage innovators to 
take advantage of patent protection, the Office continues its 
longstanding practice of setting basic ``front-end'' fees (e.g., 
filing, search, and examination) below the actual cost of carrying out 
these activities. Additionally, new fees are set, and existing fees are 
adjusted, in order to facilitate the effective administration of the 
patent system. Part IV of this Final Rule details the Office's 
methodology for establishing fees, and Part V describes the reasoning 
for setting and adjusting individual fees, including fee schedule 
design benefits. The RIA, available at https://www.uspto.gov/FeeSettingAndAdjusting, also discusses fee schedule design benefits.
    (4) Sustainable Funding. A major component of sustainable funding 
is the creation and maintenance of a viable patent operating reserve 
that allows for effective management of the U.S. patent system and 
responsiveness to changes in the economy, unanticipated production 
workload, and revenue changes. As a fee-funded agency, the USPTO uses 
its reserves to mitigate the variability in its spending and revenue 
streams that can create volatility in patent operations and threaten 
the Office's ability to support mission operations.
    The USPTO aims to manage the operating reserve within a range of 
acceptable balances and evaluates its options when projected balances 
fall either below or above that range. Minimum planning targets are 
assessed annually and are intended to address immediate unplanned 
changes in the economic or operating environments as the Office builds 
its reserve to the optimal level. The optimal reserve target, which is 
reviewed at least biennially, is established based on an assessment of 
the likelihood and severity of an array of financial risks. A 2019 
evaluation of the patent operating reserve relative to the financial 
risk environment, revalidated the optimal reserve level of three 
months' operating expenses as the appropriate long-range target given 
various risk factors, such as the high percentage of fixed costs in the 
Patent business and recent and potential changes in the legal, 
judicial, and policy environments. For the Patent business line's 
operating reserve, a minimum planning level of approximately $300 
million--just over one month's operating expenses--has been 
established. The USPTO's annual budget delineates prospective spending 
levels (aggregate costs) to execute core mission activities and 
strategic initiatives. In the FY 2021 Budget, the USPTO estimated that 
its aggregate patent operating costs for FY 2021, including 
administrative costs, would be $3.3 billion, and aggregate estimated 
patent fee collections and other income would be $3.4 billion, with the 
difference being added to the operating reserve. The health of the 
operating reserve is a key consideration as the USPTO sets its fees. 
Aided by the increased fees detailed in this Final Rule, future year 
projections are anticipated to gradually build the operating reserve 
toward the optimal level of three months' operating requirements while 
maintaining the minimum operating reserve balance during the five-year 
period. The projections found in the FY 2021 Budget 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 reserve balances. For example, the legally 
mandated 2019 and 2020 pay raises added a cumulative cost of $445 
million (from FY 2020 to FY 2024) to patent operations. As seen in 
Table 2, set forth in Part IV: Fee Setting Methodology, over a five-
year planning horizon the operating reserve balance can change 
significantly, underscoring the Office's financial vulnerability to 
various risk factors and the importance of fee setting authority.
    The USPTO will continue to assess the patent operating reserve 
balance against its target balance annually, and at least every two 
years, the Office will evaluate whether the optimal target balance 
continues to be sufficient to provide the stable funding the Office 
needs. Per the Office's operating reserve policy, if the operating 
reserve balance is projected to exceed the optimal level by 10 percent 
for two consecutive years, the Office will consider fee reductions. 
Under the new fee structure, as in the past, the Office will continue 
to regularly review its operating budgets and long-range plans to 
ensure the USPTO uses patent fees prudently.
    (5) Comments, Advice, and Recommendations from the PPAC and the 
Public. As detailed in the NPRM, in the report prepared in accordance 
with AIA fee setting authority, the PPAC conveyed support for the USPTO 
in seeking the revenues it needs to increase the reliability and 
certainty of patent rights, provide timely examination, improve and 
secure its IT infrastructure, and adequately fund its operating 
reserve. Specifically, the report stated, ``As a general matter, we 
believe that increased revenue for the USPTO will be important to 
fulfill its Strategic Plan and implement the recommendations of the 
PPAC.'' Patent Pub. Advisory Comm., Fee Setting Report (2018). The 
Office considered and analyzed the comments, advice, and 
recommendations received from the PPAC before publishing this Final 
Rule.
    Likewise, the Office considered and analyzed the comments, advice, 
and recommendations received from the public during the 60-day comment 
period before publishing this Final Rule. The Office's response to 
comments received is available in Part VI: Discussion of Comments.

C. Summary of Rationale and Purpose of the Final Rule

    The Office estimates that the patent fee schedule in this Final 
Rule will produce aggregate revenues to recover the aggregate costs of 
patent operations, including the implementation of its strategic and 
mission support goals,

[[Page 46939]]

objectives, and initiatives in FY 2020 and beyond. Using the Strategic 
Plan as a foundation, the Final Rule will provide sufficient aggregate 
revenue to recover the aggregate cost of patent operations, including 
optimizing patent application pendency; issuing highly reliable 
patents; fostering innovation through business effectiveness; enhancing 
the operations of the PTAB; optimizing the speed, quality, and cost-
effectiveness of information technology delivery to achieve business 
value; and ensuring financial sustainability to facilitate effective 
operations.

IV. Fee Setting Methodology

    The Office carried out three primary steps in developing the final 
patent fee schedule:
    Step 1: Determine the prospective aggregate costs of patent 
operations over the five-year period, including the cost of 
implementing new initiatives to achieve strategic goals and objectives.
    Step 2: Calculate the prospective revenue streams derived from the 
individual fee amounts (from Step 3) that will collectively recover the 
prospective aggregate costs over the five-year period.
    Step 3: Set or adjust individual fee amounts to collectively 
(through executing Step 2) recover projected aggregate costs over the 
five-year period, while furthering key policy factors.
    These three steps are iterative and interrelated. The following is 
a description of how the USPTO carries out these three steps.

Step 1: Determine Prospective Aggregate Costs

    Calculating prospective aggregate costs is accomplished primarily 
through the annual USPTO budget formulation process. The budget is a 
five-year plan (that the Office prepares annually) for carrying out 
base programs and new initiatives to implement the USPTO's strategic 
goals and objectives.
    The first activity performed to determine prospective aggregate 
costs is to project 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 takes into account 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 
Office). The Office looks at indicators such as the expected growth in 
real gross domestic product (RGDP), the leading indicator of incoming 
patent applications, to estimate prospective workload. RGDP is reported 
by the Bureau of Economic Analysis (www.bea.gov) and is forecasted each 
February by the OMB (www.omb.gov) in the Economic and Budget Analyses 
section of the Analytical Perspectives and twice annually by the 
Congressional Budget Office (CBO) (www.cbo.gov) in the Budget and 
Economic Outlook. A description of the Office's methodology for using 
RGDP can be found in Appendix III: Multi-year Planning by Business 
Line, of the FY 2021 Budget. The expected change in the required 
production workload must then be compared to the current examination 
production capacity to determine any required staffing and operating 
cost (e.g., salaries, workload processing contracts, and publication) 
adjustments. The Office uses a patent pendency model that estimates 
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 https://www.uspto.gov/patents/stats/patent_pend_model.jsp.
    The second activity is to calculate the aggregate costs to execute 
the requirements. In developing its budget, the Office first looks at 
the cost of status quo operations (the base requirements). The base 
requirements are adjusted for OMB-directed pay increases and 
inflationary increases for the budget year and four out-years (detailed 
calculations and assumptions for this adjustment can be found in the FY 
2021 Budget). The Office then estimates the prospective cost of 
expected changes in production workload and new initiatives over the 
same period of time (refer to ``Program Changes by Sub-Program'' 
sections of the FY 2021 Budget). The Office reduces cost estimates for 
completed initiatives and known cost savings expected over the same 
five-year horizon. Finally, the Office estimates its three-month target 
operating reserve level based on this aggregate cost calculation for 
the year to determine if operating reserve adjustments are necessary.
    Based on the assumptions and estimates found in the FY 2021 Budget, 
during FY 2020, patent operations will cost $3.256 billion (see 
Appendix II of the FY 2021 Budget), including $2.221 billion for patent 
examining; $92 million for patent trial and appeals; $167 million for 
patent information resources; $28 million for activities related to IP 
protection, policy, and enforcement; and $754 million for general 
support costs necessary for patent operations (e.g., the patent share 
of rent; utilities; legal, financial, human resources, and other 
administrative services; and Office-wide IT infrastructure and support 
costs). In addition, the Office will transfer $2 million to the 
Department of Commerce Inspector General for audit support. The Office 
also estimates collecting $34 million in other income associated with 
recoveries and reimbursable agreements (offsets to spending).
    A detailed description of the operating requirements and related 
aggregate costs is located in the FY 2021 Budget. Table 1 below 
provides key underlying production workload projections and assumptions 
from the FY 2021 Budget used to calculate aggregate costs. Table 2 (see 
Step 2) presents the total budgetary requirements (prospective 
aggregate costs) for FY 2020 through FY 2024 and the estimated 
collections and operating reserve balances that will result from the 
adjustments contained in this Final Rule. As the FY 2021 Budget notes, 
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. A number of risks could materialize over 
the next several years (e.g., those associated with the re-compete of 
major contracts, including property leases, changing assumptions about 
presidentially authorized or congressionally mandated employee pay 
raises, etc.) that could increase the USPTO's budgetary requirements in 
the short- to medium-term. These estimates are refreshed annually in 
the production of the USPTO's Budget.

                                            Table 1--Patent Production Workload Projections--FY 2020-FY 2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                FY 2020            FY 2021            FY 2022            FY 2023            FY 2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Utility, Plant, and Reissue (UPR):
    Applications *.......................................            632,400            632,100            642,700            652,900            662,500

[[Page 46940]]

 
    Application Growth Rate..............................               1.9%               0.0%               1.7%               1.6%               1.5%
    Production Units.....................................            604,300            589,500            607,700            626,400            642,600
    Unexamined Patent Application Backlog................            559,600            571,600            569,300            557,600            538,400
    Examination Capacity **..............................              8,451              8,780              9,094              9,395              9,684
Performance Measures (UPR):
    Avg. First Action Pendency (Months)..................               15.5               15.5               15.4               15.0               14.5
    Avg. Total Pendency (Months).........................               23.7               23.9               24.0               23.7               23.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* In this table, the patent application filing data includes requests for continued examination (RCEs).
** In this table, Examination Capacity is the UPR Examiners On-Board at End-of-Year, as described in the FY 2021 Budget.

Step 2: Calculate Prospective Aggregate Revenue

    As described above in Step 1, the USPTO's FY 2020 requirements in 
the FY 2021 Budget include the aggregate prospective costs of planned 
production, anticipated new initiatives, and a contribution to the 
patent operating reserve required for the Office to maintain patent 
operations and realize its strategic goals and objectives for the next 
five years. The aggregate prospective costs become the target aggregate 
revenue level that the new fee schedule must generate in a given year 
and over the five-year planning horizon. To calculate the aggregate 
revenue estimates, the Office first analyzes relevant factors and 
indicators to calculate or determine prospective fee workloads (e.g., 
number of applications and requests for services and products), growth 
in those workloads, and resulting fee workload volumes (quantities) for 
the five-year planning horizon.
    The Office considers economic activity when developing fee 
workloads and aggregate revenue forecasts for its products and 
services. 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. The most relevant economic indicator that the 
Office uses is the RGDP, which is the broadest measure of economic 
activity. At the time the FY 2021 Budget was developed, CBO anticipated 
RGDP to grow around 2.2 percent in FY 2020 and 1.9 percent in FY 2021.
    These indicators correlate with patent application filings, which 
are key drivers of patent fees. Economic indicators also provide 
insight into market conditions and the management of IP portfolios, 
which influence application processing requests and post-issuance 
decisions to maintain patent protection. When developing fee workload 
forecasts, the Office 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., demand is 
inelastic, or the elasticity measure is less than one in absolute 
value), 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., demand is elastic, or 
the elasticity measure is greater than one in absolute value), a fee 
increase will lead to a relatively large decrease in patenting 
activities such that overall revenues will decrease. When developing 
fee forecasts, the Office accounts for how applicant behavior will 
change at different fee amounts projected for the various patent 
services. The Office 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, RCE fees, appeal fees, AIA trial fees, and maintenance 
fees, including distinctions by entity size where applicable. 
Additional details about the Office's elasticity estimates can be found 
in ``Setting and Adjusting Patent Fees during Fiscal Year 2020--
Description of Elasticity Estimates,'' available at https://www.uspto.gov/FeeSettingAndAdjusting.
Summary of Step 2
    Patent fees are collected for patent-related services and products 
at different points in the patent application examination process and 
over the life of the pending patent application and granted patent. 
Approximately half of all patent fee collections are from maintenance 
fees, which subsidize the cost of filing, search, and examination 
activities. Changes in application filing levels immediately impact 
current year fee collections, because fewer patent application filings 
means the Office collects fewer fees to devote to production-related 
costs. The resulting reduction in production activities also creates an 
out-year revenue impact because less production output in one year 
results in fewer issue and maintenance fee payments in future years.
    The USPTO's five-year estimated aggregate patent fee revenue, based 
on assumptions found in the FY 2021 Budget, (see Table 2) 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 future patent issue fee workload), 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 Office adjusts individual fee rates up or down based on 
cost and policy decisions (see Step 3: Set Specific Fee Amounts), 
estimates the effective dates of new fee rates, and then multiplies the 
resulting fee rates by appropriate workload volumes to calculate a 
revenue estimate for each fee. To calculate the aggregate revenue for 
the FY 2021 Budget, the Office assumed that all Final Rule fee rates 
would become effective on July 10, 2020, except for the new non-DOCX 
filing surcharge fee, which was assumed to become effective on January 
1, 2021. The effective dates of all Final Rule fee rates have since 
been delayed from those original assumptions as USPTO further assessed 
the impact of the

[[Page 46941]]

pandemic on the economy and stakeholders. Using these figures, the 
USPTO summed the individual fee revenue estimates, and the result is a 
total aggregate revenue estimate for a given year (see Table 2). 
Additional details about the Office's aggregate revenue, including 
projected workloads by fee, can be found in ``Aggregate Revenue Tables, 
Final Patent Rule Schedule'' available at https://www.uspto.gov/FeeSettingAndAdjusting.
    Table 2 shows the available revenue and operating reserve balances 
by fiscal year, including the Final Rule fee rates in the projected fee 
collections. The estimates in the table can be found in the FY 2021 
Budget and were developed in late calendar year 2019, prior to the 
COVID-19 outbreak. Under current circumstances, it is difficult to 
predict what the actual numbers will be.

                                                   Table 2--Patent Financial Outlook--FY 2020-FY 2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Dollars in millions
                                                          ----------------------------------------------------------------------------------------------
                                                                FY 2020            FY 2021*           FY 2022            FY 2023            FY 2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected Fee Collections................................              3,400              3,251              3,709              3,744              3,861
Other Income.............................................                 34                 34                 34                 34                 34
Total Projected Fee Collections and Other Income.........              3,435              3,285              3,743              3,778              3,895
Budgetary Requirements...................................              3,256              3,455              3,601              3,681              3,800
Funding to (+) and from (-) Operating Reserve............                179              (170)                141                 97                 95
EOY Operating Reserve Balance............................                587                417                558                656                751
Over/(Under) $300M Minimum Level.........................                287                117                258                356                451
Over/(Under) Optimal Level...............................              (227)              (447)              (342)              (265)              (200)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The assumed effective date for the Final Patent Fee Schedule shifts some projected collections from FY 2021 to FY 2020, due to the expectation that
  patentees who are eligible will submit maintenance fee payments prior to the effective date of the Final Rule.

Step 3: Set Specific Fee Amounts

    Once the Office finalizes the annual requirements and aggregate 
prospective costs through the budget formulation process, the Office 
determines specific fee amounts that, together, will derive the 
aggregate revenue required to recover the estimated aggregate 
prospective costs during the five-year budget horizon. Calculating 
individual fees is an iterative process that encompasses many variables 
and policy factors. These are discussed in greater detail in Part V: 
Individual Fee Rationale.
    One of the variables the USPTO considers to inform fee setting is 
the historical cost estimates associated with individual fees. The 
Office's ABI provides historical costs for an organization's activities 
and outputs by individual fees using the activity based costing (ABC) 
methodology. ABC is commonly used for fee setting throughout the 
federal government. Additional information about the methodology, 
including the cost components related to respective fees, can be found 
in the document entitled ``Setting and Adjusting Patent Fees during 
Fiscal Year 2020--Activity Based Information and Patent Fee Unit 
Expense Methodology'' available at https://www.uspto.gov/FeeSettingAndAdjusting. The USPTO provides data for FY 2016-FY 2019 
because the Office finds that reviewing the trend of ABI historical 
cost information is the most useful way to inform fee setting. The 
underlying ABI data are available for public inspection at the USPTO 
upon request.
    When the Office implements a new process or service, historical ABI 
data is typically not available. However, the Office will use the 
historical cost of a similar process or procedure as a starting point 
to estimate the full cost of a new activity or service.

V. Individual Fee Rationale

    Based on assumptions and estimates found in the FY 2021 Budget, the 
Office projects that the aggregate revenue generated from the new 
patent fees will recover the prospective aggregate cost of its patent 
operations including contributions to the operating reserve, per the 
strategic initiative to ensure financial sustainability to facilitate 
effective USPTO operations. As detailed previously, the PPAC supports 
this approach, stating that, ``The PPAC supports the USPTO in seeking 
the revenues it needs to increase the reliability and certainty of 
patent rights, provide timely examination, improve and secure its IT 
infrastructure and adequately fund its operating reserve'' Patent Pub. 
Advisory Comm., Fee Setting Report [2] (2018).
    It is important to recognize that each individual fee is not 
necessarily set equal to the estimated cost of performing the 
activities related to the fee. Instead, as described in Part III: 
Rulemaking Goals and Strategies, some of the individual fees are set 
at, above, or below their unit costs to balance several key fee setting 
policy factors: Promoting innovation strategies, aligning fees with the 
full cost of products and services, facilitating effective 
administration of the patent system, and offering patent processing 
options to applicants. For example, many of the initial filing fees are 
intentionally set below unit costs in order to promote innovation 
strategies by removing barriers to entry for innovators. To balance the 
aggregate revenue loss of fees set below cost, other fees must be set 
above cost in areas where it is less likely to reduce inventorship 
(e.g., maintenance).
    For some fees in this Final Rule, such as excess claims fees, the 
USPTO does not typically maintain individual historical cost data for 
the service provided. Instead, the Office considers the policy factors 
described in Part III to inform fee setting. For example, by setting 
fees at particular levels using the facilitating effective 
administration of the patent system policy factor, the USPTO aims to: 
(1) Foster an environment where examiners can provide and applicants 
can receive prompt, quality interim and final decisions; (2) encourage 
the prompt conclusion of prosecuting an application, resulting in 
pendency reduction and the faster dissemination of patented 
information; and (3) help recover costs for activities that strain the 
patent system.
    The rationale for the fee changes are grouped into three major 
categories, discussed below: (A) Across-the-board adjustment to patent 
fees; (B) targeted fees; and (C) discontinued fees. The purpose of the 
categorization is to

[[Page 46942]]

identify large fee changes for the reader and provide an individual fee 
rationale for such changes. The categorization is based on changes in 
large entity fee amounts because percentage changes for small and micro 
entity fees that are in place today would be the same as the percentage 
change for the large entity, and the dollar change would be half or one 
quarter of the large entity change.
    The Table of Patent Fees includes the current and Final Patent Fee 
Schedule fees for large, small, and micro entities as well as unit 
costs for the last four fiscal years. Part VII: Discussion of Specific 
Rules contains a complete listing of fees that are set or adjusted in 
the patent fee schedule in this Final Rule.

A. Across-the-Board Adjustment to Patent Fees

    In order to both keep the USPTO on a stable financial track and 
allow for the advancement of policies and practices that enhance the 
country's innovation ecosystem, the Office is adjusting all patent fees 
not covered by the targeted adjustments as discussed in section B, or 
to be discontinued as discussed in section C, by approximately 5 
percent. Given the time that has passed between the implementation date 
of the last fee adjustments and this Final Rule, a 5 percent increase 
is similar to fees increasing by 2 percent annually to help USPTO keep 
up with the cost of inflation and other cost increases, such as 
mandatory pay raises not planned for in previous budgets. Individual 
fees, above $50, are rounded to the nearest $10 \1\ by applying 
standard arithmetic rules. For fees that have small and micro entity 
fee reductions, the large entity fee is rounded up or down to the 
nearest 20 dollars by applying standard arithmetic rules. The resulting 
fee amounts are more convenient to patent users and permit the Office 
to set small and micro entity fees at whole dollar amounts when 
applying the applicable fee reduction. Therefore, some smaller fees 
will not be changing, since a 5 percent increase would round down to 
the current fee, while other fees would change by slightly more or less 
than 5 percent, depending on rounding. The fee adjustments in this 
category are listed in the Table of Patent Fees.
---------------------------------------------------------------------------

    \1\ The description of the rounding rule in the NPRM incorrectly 
indicated that fees were rounded to the nearest $5, rather than to 
the nearest $10. This error has been corrected in this Final Rule. 
The fees proposed in the NPRM and implemented in this Final Rule 
were both rounded to the nearest $10 and are not affected by the 
error in the description.
---------------------------------------------------------------------------

    The 5 percent 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. The underlying cost and revenue estimates in 
this Final Rule, which are supported by the FY 2021 Budget, show that 
fees are set at levels that secure aggregate cost recovery while 
ensuring a reasonable pace for operating reserve growth.

B. Targeted Fees

    For those fees targeted for specific adjustments in this Final 
Rule, the individual fee rationale discussion is divided into two 
categories: (1) Adjustments to existing fees, and (2) new fees.
    Adjustments to existing fees are further divided into subcategories 
according to the function of the fees, including: (a) Maintenance fee 
surcharge, (b) request for the expedited examination of a design 
application fee, (c) utility and reissue issue and maintenance fees, 
and (d) AIA trial fees. New fees are further divided into subcategories 
according to the function of the fees, including: (a) Non-DOCX filing 
surcharge fee, and (b) pro hac vice. As discussed further below and in 
USPTO's responses to public comments, the USPTO has considered public 
feedback on the proposed (c) annual active patent practitioner fee and 
has decided not to proceed with implementing this fee at this time. The 
USPTO does plan to pursue procedures to allow patent practitioners to 
voluntarily certify whether they have completed a minimum amount of 
continuing legal education (CLE). The USPTO further expects that 
registered practitioners who certify that they have completed such CLE 
will be recognized in the online practitioner directory. In the near 
future, the USPTO plans to issue proposed guidelines regarding such 
voluntary CLE certification, with a request for public comments.
    As discussed above, for purposes of comparing amounts in the 
individual fee rationale discussion, the Office has included the 
current fees as the baseline to calculate the dollar and percentage 
changes for new fees.
(1) Adjustments to Existing Fees
    The following fees are to be increased by an amount other than the 
5 percent across-the-board increase for most patent-related fees. These 
targeted adjustments are made for a variety of strategic reasons. A 
discussion of the rationale for each fee follows.
(a) Maintenance Fee Surcharge

                                           Table 3--Maintenance Fee Surcharge Fees--Fee Changes and Unit Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Final rule                      Percentage
                                                                   Current fees     fees large     Dollar change   change large     FY 2018     FY 2019
                         Fee description                           large (small)      (small)      large (small)      (small)      unit cost   unit cost
                                                                  [micro] entity  [micro] entity  [micro] entity  [micro] entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surcharge--3.5 year--Late payment within 6 months...............            $160            $500           +$340            +213         n/a         n/a
                                                                           ($80)          ($250)         (+$170)          (+213)
                                                                           [$40]          [$125]          [+$85]          [+213]
Surcharge--7.5 year--Late payment within 6 months...............            $160            $500           +$340            +213         n/a         n/a
                                                                           ($80)          ($250)         (+$170)          (+213)
                                                                           [$40]          [$125]          [+$85]          [+213]
Surcharge--11.5 year--Late payment within 6 months..............            $160            $500           +$340            +213         n/a         n/a
                                                                           ($80)          ($250)         (+$170)          (+213)
                                                                           [$40]          [$125]          [+$85]          [+213]
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 46943]]

    The Office will set the surcharge for a late maintenance fee 
payment within six months following the due date at $500 for large 
entities. It is the responsibility of the patentee to ensure 
maintenance fees are paid timely to prevent expiration of a patent. If 
a maintenance fee is not paid within the first six months of the year 
in which it can be paid, a maintenance fee reminder notice is sent to 
the fee address or correspondence address on record. Failure to receive 
the notice does not shift the burden of monitoring the time for paying 
a maintenance fee from the patentee to the USPTO. At this point, a 
surcharge is required in addition to the maintenance fee in order to 
maintain a patent. If the maintenance fee and any applicable surcharge 
are not paid by the end of the 4th, 8th, or 12th years after the date 
of issue, the patent rights lapse, and a Notice of Patent Expiration is 
sent to the fee address or correspondence address on record. If a fee 
address has not been established, the notices are sent to the 
correspondence address. Over 95 percent of patent renewals are paid 
before the due date, but some patents are renewed during the six-month 
period following the due date.
    While still below what other IP offices charge, increasing this 
surcharge brings the USPTO more in line with its global counterparts. 
The goal of increasing this surcharge is to encourage patent holders to 
renew by the due date. Encouraging on-time renewals will benefit the 
public by increasing the understanding of which patents remain in force 
and which patent rights have been allowed to lapse.
    The USPTO provides tools to help patent owners monitor due dates, 
such as the Patent Maintenance Fees Storefront, https://fees.uspto.gov/MaintenanceFees, where anyone can see the payment windows for all 
patents. Additionally, customers with USPTO.gov accounts (i.e., 
MyUSPTO) can create a ``patent docket'' and add patent or application 
numbers in order to keep track of due dates. Also, the weekly Official 
Gazette notices list the range of patents for which maintenance fees 
are now payable. In addition, with the availability of free calendar 
apps, individuals can easily set up their own reminders of when 
maintenance fee payments are eligible for renewal (3, 7, 11 years from 
issue) and when they are due (3.5, 7.5, 11.5 years from issue).
(b) Request for Expedited Examination of a Design Application Fee

                            Table 4--Request for Expedited Examination of a Design Application Fee--Fee Changes and Unit Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Final rule                      Percentage
                                                                   Current fees     fees large     Dollar change   change large     FY 2018     FY 2019
                         Fee description                           large (small)      (small)      large (small)      (small)      unit cost   unit cost
                                                                  [micro] entity  [micro] entity  [micro] entity  [micro] entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Request for expedited examination of a design application.......            $900          $1,600           +$700             +78        $125         $97
                                                                          ($450)          ($800)         (+$350)           (+78)
                                                                          [$225]          [$400]         [+$175]           [+78]
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In the NPRM, the Office proposed increasing the fee to request 
expedited examination of a design application to $2,000. In this Final 
Rule, after carefully considering comments from the PPAC and the 
public, the Office is increasing the fee to request expedited 
examination of a design application to $1,600 for a large entity. This 
fee was introduced at a fee rate of $900 in November 2000. The Office 
is increasing the fee for the first time since its inception.
    Expedited examination is available to all design applicants who 
first conduct a preliminary examination search and file a request for 
expedited treatment accompanied by a fee for the expedited treatment 
and handling (37 CFR 1.17(k)) in addition to the required filing, 
search, and examination fees. This cost-based expedited treatment 
fulfills a particular need by affording rapid design patent protection 
that may be especially important where marketplace conditions are such 
that new designs on articles are typically in vogue for limited periods 
of time. The Office notes that the unit cost presented for this service 
only accounts for the initial processing of the request and does not 
include additional resources expended. The applications are 
individually examined with priority, and the clerical processing is 
conducted and/or monitored by specially designated personnel to achieve 
expeditious processing through initial application processing and the 
design examining group. For a patentable design application, the 
expedited treatment is a streamlined filing-to-issuance procedure. This 
procedure further expedites design application processing by decreasing 
clerical processing time as well as the time spent routing the 
application between processing steps. Specially designated personnel 
are required to conduct and/or monitor the expedited clerical 
processing. Also, expedited design applications may be individually 
treated throughout the examination process where necessary for 
expedited treatment, whereas normally, the search phase of design 
application examination is conducted in groups.
    For the first few years following the introduction of this program, 
requests for expedited examination of a design application were less 
than 1 percent of total design filings. In recent years, requests have 
increased to over 2 percent of total filings. As discussed in the NPRM, 
the increase in demand for this service forced the Office to choose to 
cap the program (i.e., impose limits on the number of expedited 
examinations it will undertake in a given fiscal year), end the 
program, or increase the fee. Increasing this optional fee will allow 
the USPTO to better manage staffing to match the demand for this 
service, while still keeping the service available as an option for 
those who may benefit from this program. The USPTO believes that this 
new fee amount, as well as the associated small and micro entity 
discounts, will provide the Office the ability to continue offering 
this service to applicants.
(c) Utility and Reissue Patent Issue and Maintenance Fees

[[Page 46944]]



                                Table 5--Utility and Reissue Patent Issue and Maintenance Fees--Fee Changes and Unit Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Final rule                      Percentage
                                                                   Current fees     fees large     Dollar change   change large     FY 2018     FY 2019
                         Fee description                           large (small)      (small)      large (small)      (small)      unit cost   unit cost
                                                                  [micro] entity  [micro] entity  [micro] entity  [micro] entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Utility issue fee...............................................          $1,000          $1,200           +$200             +20        $325        $319
                                                                          ($500)          ($600)         (+$100)           (+20)
                                                                          [$250]          [$300]          [+$50]           [+20]
Reissue issue fee...............................................          $1,000          $1,200           +$200             +20         325         319
                                                                          ($500)          ($600)         (+$100)           (+20)
                                                                          [$250]          [$300]          [+$50]           [+20]
For maintaining an original or any reissue patent, due at 3.5             $1,600          $2,000           +$400             +25         n/a         n/a
 years..........................................................          ($800)        ($1,000)         (+$200)           (+25)
                                                                          [$400]          [$500]         [+$100]           [+25]
For maintaining an original or any reissue patent, due at 7.5             $3,600          $3,760           +$160              +4         n/a         n/a
 years..........................................................        ($1,800)        ($1,880)          (+$80)            (+4)
                                                                          [$900]          [$940]          [+$40]            [+4]
For maintaining an original or any reissue patent, due at 11.5            $7,400          $7,700           +$300              +4         n/a         n/a
 years..........................................................        ($3,700)        ($3,850)         (+$150)            (+4)
                                                                         [$1,850        [$1,925]          [+$75]            [+4]
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Office is adjusting the issue fees by 20 percent and first 
stage maintenance fees by 25 percent. These adjustments will mark the 
first time maintenance fee rates have changed since 2013. The total 
package of fees in this Final Rule does not significantly impact the 
balance between front-end and back-end fees. The USPTO continues to set 
front-end fees below the cost to the Office to provide those services 
in order to encourage innovation. Front-end fees for a utility patent 
with one RCE and lifetime maintenance will continue to be about 18 
percent of the total fees paid over the life of a patent (see Table 6). 
However, as certain technology lifecycles grow shorter, it is important 
that the USPTO not rely too heavily on fees paid late in the life of a 
patent. Therefore, the Office is slightly rebalancing the back-end fees 
to recover the initial search and examination costs earlier in the life 
of the patent.

                                                       Table 6--Front-End and Back-End Fee Balance
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Current                               Final rule
                                                                          ------------------------------------------------------------------------------
                 Fee group                            Fee title                                         Group's                                Group's
                                                                              Large      Percent of   percent of      Large      Percent of   percent of
                                                                            entity fee     total         total      entity fee     total        total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Front-End Fees............................  Filing.......................         $300            2           18          $320            2           18
                                            Search.......................          660            4                        700            4
                                            Examination..................          760            4                        800            4
                                            1st RCE......................        1,300            8                      1,360            8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Back-End Fees.............................  Issue........................        1,000            6           16         1,200            7           18
                                            1st Stage Maintenance........        1,600           10                      2,000           11
                                           -------------------------------------------------------------------------------------------------------------
                                            2nd Stage Maintenance........        3,600           22           66         3,760           21           64
                                            3rd Stage Maintenance........        7,400           44                      7,700           43
                                                                          ------------------------------------------------------------------------------
    Total.................................                                      16,620          100          100        17,840          100          100
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The issue fee for utility and reissue patents is increasing from 
$1,000 to $1,200, and the first stage maintenance fee is increasing 
from $1,600 to $2,000. As a result, the combined fees paid for issue 
and first stage maintenance is increasing from 16 percent to 18 percent 
of the total fees paid for a utility patent with one RCE and lifetime 
maintenance.
    However, second and third stage maintenance fees are only 
increasing by 4 percent--less than the across-the-board adjustment--
with second stage increasing from $3,600 to $3,760 and third stage 
increasing from $7,400 to $7,700.
    The Office determined elasticity estimates for the three 
maintenance payments for both large and small entities. For all point 
estimates and confidence intervals, maintenance fees were found to be 
inelastic, with the first stage being the least elastic of these fees. 
More detailed information on elasticity estimates can be found at 
https://www.uspto.gov/FeeSettingAndAdjusting in the document entitled 
``Setting and Adjusting Patent Fees during Fiscal Year 2020--
Description of Elasticity Estimates.''
(d) AIA Trial Fees

[[Page 46945]]



                                                   Table 7--AIA Trial Fees--Fee Changes and Unit Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Final rule                      Percentage
                                                                   Current fees     fees large     Dollar change   change large     FY 2018     FY 2019
                         Fee description                           large (small)      (small)      large (small)      (small)      unit cost   unit cost
                                                                  [micro] entity  [micro] entity  [micro] entity  [micro] entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Inter partes review request fee--Up to 20 claims................         $15,500         $19,000         +$3,500             +23     $15,016     $17,887
Inter partes review post-institution fee--Up to 15 claims *.....          15,000             n/a             n/a             n/a      25,490      27,376
Inter partes review post-institution fee--Up to 20 Claims *.....             n/a          22,500             n/a             n/a         n/a         n/a
Inter partes review request of each claim in excess of 20.......             300             375             +75             +25         n/a         n/a
Inter partes post-institution request of each claim in excess of             600             n/a             n/a             n/a         n/a         n/a
 15 *...........................................................
Inter partes post-institution request of each claim in excess of             n/a             750             n/a             n/a         n/a         n/a
 20 *...........................................................
Post-grant or covered business method review request fee--Up to           16,000          20,000          +4,000             +25      21,465      26,296
 20 claims......................................................
Post-grant or covered business method review post-institution             22,000             n/a             n/a             n/a      29,842      40,791
 fee--Up to 15 claims *.........................................
Post-grant or covered business method review post-institution                n/a          27,500             n/a             n/a         n/a         n/a
 fee--Up to 20 claims *.........................................
Post-grant or covered business method review request of each                 375             475            +100             +27         n/a         n/a
 claim in excess of 20..........................................
Post-grant or covered business method review post-institution                825             n/a             n/a             n/a         n/a         n/a
 request of each claim in excess of 15 *........................
Post-grant or covered business method review post-institution                n/a           1,050             n/a             n/a         n/a         n/a
 request of each claim in excess of 20 *........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The post-institutional threshold for paying claims fees will increase from 15 to 20.

    On April 24, 2018, the U.S. Supreme Court issued its decision in 
SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). As required by the 
decision, the PTAB will institute a trial as to all claims or none. 
Previously, the PTAB instituted a trial on just some claims. This has 
increased the amount of time spent per case post-institution. The 
Office has also modified its pre-institution practice to take into 
account the impacts of the SAS decision. For example, prior to SAS, the 
PTAB did not generally address all arguments at institution. Post-SAS, 
for purposes of deciding whether to institute trial on a petition, the 
Office's policy is to provide details to the parties to the extent 
practicable, including responding to arguments in a patent owner's 
preliminary response that were not the basis for the decision whether 
or not to institute. This has increased the amount of time spent per 
case pre-institution. These changes related to the SAS decision have 
increased the average cost to conduct each proceeding.
    Other implementations, such as providing automatic sur-replies and 
pre-hearing conferences, were made to help provide additional fairness 
and certainty to the parties and public while continuing the PTAB's 
practice of rendering high-quality decisions within the statutory time 
limits applicable to AIA trial proceedings; however, these changes, 
too, have increased the average cost of conducting each proceeding.
    The post-institutional threshold for paying excess claim fees is 
increasing from 15 to 20 claims so as to match the PTAB's request 
threshold, reflecting the fact that, following the Supreme Court 
decision in SAS, the PTAB is required to institute all claims or none. 
The NPRM proposed fees based on the Office's best estimates at that 
time, taking into consideration the cost increases already experienced, 
plus future inflationary cost growth. Since then, the Office has 
collected and analyzed the additional cost data available through the 
end of FY 2019. In addition, the Office has taken into account 
uncertainties resulting from changes in the way in which AIA trials are 
conducted.
    While the unit cost data (see Table 7) shows that post-institution 
costs have increased more than pre-institution costs, pre-institution 
costs have also increased. These costs have increased in response to 
the Supreme Court's SAS decision, as discussed above.
    In addition, in response to feedback from stakeholders, the Office 
has modified its approach to concurrent petitions challenging the same 
patent or patents in the same family filed by the same petitioner. 
Specifically, the Board now considers whether to exercise its 
discretion to limit the number of these parallel petitions that may, if 
the threshold is met, be instituted. Similarly, the Board has 
undertaken a closer review of petitions to determine whether they raise 
issues that were considered by the examiner during ex parte prosecution 
or during other proceedings before the Office. To evaluate these 
requests the Board must make close comparisons between the challenges 
to determine whether it should exercise its discretion and institute a 
trial. Such comparisons require analyzing the prior art cited in the 
petitions and evaluating the reasons given by the petitioners for 
filing additional petitions. As this development in AIA trial practice 
is relatively recent (within the last 12 months), the Office does not 
yet have an accurate model to predict how many requests it will receive 
and how much additional effort will be necessary to evaluate them. To 
account for these uncertainties, it is necessary to set the pre-
institution fees for inter partes reviews at $19,000. This 23 percent 
increase is less than the 25 percent increase proposed in the NPRM but 
above the FY 2019 unit cost. The pre-institution fee is set at more 
than the FY 2019 unit cost to take into account the uncertainties 
outlined above that arose

[[Page 46946]]

in that year and are expected to continue in FY 2020 and beyond.
    The post-institution fee is set to $22,500 for inter partes review, 
which is above the increase proposed in the NPRM but considerably lower 
than the FY 2019 actual unit cost. As a result of the SAS and Arthrex 
Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) decisions, 
there has been an increase in the number of remands to the PTAB, which 
has increased the post-institution amount of work and costs. At this 
time, it remains unclear whether the post-institution costs will remain 
at the current level or decrease after the SAS and Arthrex remands have 
been fully addressed. Accordingly, the post-institution fee is set 
above the proposed NPRM fee, which is above the pre-SAS FY 2017 unit 
costs but below the post-SAS FY 2019 unit costs. The Office continues 
to evaluate the data as it becomes available to better understand the 
long-term impact of SAS on post-institution costs.
    Post-grant review and covered business method review fees will be 
maintained at the rates proposed in the NPRM, at $20,000 for pre-
institution and $27,500 for post-institution. These fee rates are above 
the respective inter partes review fees, due to the additional work 
involved with post-grant and covered business method reviews, but below 
the FY 2019 actual unit costs for post-grant reviews and covered 
business method reviews due to uncertainties about future costs. 
Specifically, post-grant reviews and covered business method reviews 
may raise additional issues beyond those raised in inter partes 
reviews, such as patent eligibility, written description, enablement, 
indefiniteness, and public use. Further, given the additional issues 
that may be raised, post-grant reviews and covered business method 
reviews provide 33 percent higher word limits for petitions, patent 
owner responses, and preliminary responses. While the actual unit costs 
for post-grant and covered business method reviews have typically been 
higher than the unit costs for inter partes reviews for these reasons, 
it is harder to determine the precise cost of post-grant and covered 
business method reviews. Due to a relatively small number of trials 
(approximately 60 post-grant reviews or covered business method reviews 
annually), the data on actual unit costs can vary from year to year. 
Therefore, it is unclear whether the post-SAS costs will remain at the 
current levels. The Office will continue to evaluate data as it becomes 
available to better understand the long-term impact of SAS on post-
grant review and covered business method review costs.
    This rulemaking will help the PTAB continue to maintain the 
appropriate level of judicial and administrative resources to continue 
to provide high-quality and timely decisions for AIA trials.
(2) New Fees
(a) Non-DOCX Filing Surcharge Fee

                                            Table 8--Non-DOCX Filing Surcharge Fee--Fee Changes and Unit Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Final rule                      Percentage
                                                                   Current fees     fees large     Dollar change   change large     FY 2018     FY 2019
                         Fee description                           large (small)      (small)      large (small)      (small)      unit cost   unit cost
                                                                  [micro] entity  [micro] entity  [micro] entity  [micro] entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surcharge--non-DOCX filing......................................             New            $400           +$400             n/a         n/a         n/a
                                                                                          ($200)         (+$200)           (n/a)
                                                                                          [$100]         [+$100]           [n/a]
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Office is implementing a new fee for utility non-provisional 
applications filed under 35 U.S.C. 111 and submitted in a format other 
than DOCX (structured text). This surcharge applies to filings that are 
submitted in an electronic document, such as a PDF, that is not saved 
in the DOCX format. It also applies to filings that are submitted non-
electronically, in addition to the existing paper filing surcharge. The 
surcharge is being introduced for specifications, claims, and 
abstracts. The submission in DOCX format will facilitate improvements 
in the efficiency of patent operations. After careful consideration of 
public comments, the Office has decided to delay the implementation of 
the non-DOCX filing surcharge, and it will become effective on January 
1, 2022. Over the next several months, the Office will continue with 
its outreach efforts, addressing customer concerns and providing ample 
time for applicants to transition to this new process.
    Using EFS-Web, anyone with a web-enabled computer can file patent 
applications and documents without downloading special software or 
changing document preparation tools and processes. Registering as an 
EFS-Web eFiler allows enhanced filing, follow-on processing, saved 
submissions, and more. EFS-Web registered eFilers have been able to 
file specification, abstract, and claims in DOCX for utility non-
provisional filings since August 2017.
    Launched in 2015, the eCommerce Modernization (eMod) Project aims 
to improve the electronic application process for patent applicants by 
modernizing the USPTO's filing and viewing systems. Recent improvements 
include implementing structured text functionalities. Structured text 
allows applicants to more easily submit their documents as text-based 
documents rather than having to create PDF documents. This streamlines 
the application and publication processes. The Office tested the 
capabilities of structured text within EFS-Web and PAIR with the eMod 
Text Pilot Program, which ran from August 2016 until September 2017. 
The pilot was successful, and many improvements were made based on 
feedback from applicants, including independent inventors, law firms, 
and corporations. Structured text features are now available to all 
EFS-Web-registered and Private PAIR users and give applicants the 
ability to file structured text via EFS-Web and access structured text 
submissions, structured text Office actions, and Extensible Markup 
Language (XML) downloads via Private PAIR. Additional information can 
be found in the associated DOCX quick start guide available on the 
USPTO website, https://www.uspto.gov/patents-application-process/checking-application-status/quick-start-guides. For more information on 
filing in DOCX, please visit https://www.uspto.gov/patent/docx.
    To encourage the filing of more applications in structured text, 
the required fee surcharge applies to application filings that do not 
include the specification, claims, and abstract in DOCX format. This 
will accelerate the

[[Page 46947]]

adoption of DOCX to realize a variety of benefits. Both the USPTO and 
applicants will see increased efficiencies, over the lifetime of an 
application, from encouraging DOCX filings. Based on a USPTO survey, 
over 80 percent of applicants author their patent applications in DOCX 
in the normal course of business. Filing in structured text allows 
applicants to submit their specifications, claims, and abstracts in 
text-based format and eliminates the need to convert structured text 
into a PDF for filing. Applicants can access examiner Office actions in 
text-based format, which makes it easy to copy and paste when drafting 
responses. The availability of structured text also improves 
accessibility for sight-impaired customers who use screen reading 
technology.
    DOCX filing provides opportunities to increase efficiency in the 
Office. It enables the development of software to provide automated 
initial reviews of applicant submissions to help reduce the effort 
required by the Office. The automated reviews can tell applicants up 
front if potential problems exist and allow them to make changes prior 
to or at the time of submission. This also improves validation based on 
content, such as claims validation for missing claim numbering or 
abstract validation for word count and paragraph count.
    Increased DOCX filing will also lead to higher data quality by 
reducing system conversion errors. It provides a flexible format with 
no template constraints. It also improves data quality by supporting 
original formats for chemical formulas, mathematical equations, and 
tables. DOCX filing also improves document identification by automatic 
detection, allows for greater reuse of content, and provides improved 
searching for patent applications and submissions. The originally 
submitted structured text document is available in Private PAIR, 
allowing easy retrieval of original DOCX files.
    Structured text usage also helps streamline the application process 
and provides benefits for the USPTO. The Office converts image-based 
filings (e.g., PDF documents) into text-based format for internal 
processing. Text-based filings will allow the Office to skip this time-
consuming and costly step. Optical character recognition (OCR) of 
image-based filings costs the Office approximately $3.15 per new 
submission. In addition to the initial submission, the use of image-
based PDFs incurs many costs over the lifetime of an application. There 
are large costs associated with the USPTO's systems and personnel--from 
pre-examination, examination, and publication--due to the need to apply 
OCR to convert image-based PDFs into structured text that can be 
leveraged by downstream systems. The surcharge is applied not only to 
account for these inefficiencies, but also to address rising expenses. 
Encouraging text-based filings will decrease the Office's costs. If, in 
the future, the program were extended to additional application 
documents besides specifications, claims, and abstracts, the potential 
savings could reach as much as $9.0 million annually.
    XML generated from DOCX files complies with the international World 
Intellectual Property Office (WIPO) Standard ST.96 from intake through 
display and use in examination tools. Receiving filings through 
structured text makes documents automatically available to examiners in 
almost real-time. DOCX filing also improves examination consistency by 
using automated tools to analyze text, increases the accuracy of 
examiner formalities reviews and tools (i.e., claims tree generators 
and document comparison), and improves results in automated pre-search 
and future analytics (i.e., section 112(b) and (f) evaluations) by 
using text supplied by applicants. DOCX submission contributes to the 
USPTO's plan to begin the automation of publication processes, which 
will lead to large cost reductions in the production of patent 
artifacts (grants and pre-grant publications), and contributes to the 
USPTO's plan to begin the automation of processes to assist in 
formalities reviews, classification, and routing, which leads to 
improved patent quality, reduced pendency, and greater consistency.
(b) Pro Hac Vice Fee

                                                  Table 9--Pro Hac Vice Fee--Fee Changes and Unit Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Percentage
                                                              Current fees   Final rule fees   Dollar change     change large     FY 2018      FY 2019
                      Fee description                        large (small)    large (small)    large (small)   (small) [micro]   unit cost    unit cost
                                                             [micro] entity   [micro] entity   [micro] entity       entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fee for non-registered practitioners to appear before the              New             $250            +$250              n/a          n/a          n/a
 Patent Trial and Appeal Board............................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In this Final Rule, the Office is implementing a fee to appear pro 
hac vice in an AIA trial proceeding. The non-registered practitioner 
fee is for each proceeding that a non-registered practitioner requests 
admission to practice. If a non-registered practitioner requests 
admission to multiple AIA trial proceedings, multiple requests and fees 
will be required, one for each proceeding. Once a request is granted, 
the counsel is admitted for the entire duration of a proceeding, which 
may extend for several years, (e.g., when an inter partes review 
proceeds to final written decision, and, after appeal to the Federal 
Circuit, is remanded back to the PTAB for further proceedings). By 
instituting the pro hac vice fee, the Office will be able to shift the 
cost of the service of processing these requests from the overall AIA 
trial fees to the requesting, non-USPTO registered counsel.
(c) Annual Active Patent Practitioner Fee
    In the NPRM, the USPTO proposed a new fee called the annual active 
patent practitioner fee, and an associated fee structure, under 37 CFR 
1.21 and 11.8, so that patent practitioners, who directly benefit from 
registration, would bear the costs associated with maintaining the 
integrity of their profession, including the costs of OED's register 
maintenance and disciplinary functions. The fee collections were 
proposed to shift the costs of the services OED provides patent 
practitioners in administering the disciplinary system and register 
maintenance from patent applicants and owners to the patent 
practitioners. The annual active patent practitioner fee was proposed 
to be $340, with a $100 annual fee discount for those who certified 
completion of a certain number of CLE. In addition, the Office proposed 
that registered practitioners who are endorsed on the register as 
voluntarily

[[Page 46948]]

inactive would be liable for a fee of $70 per year to cover OED's 
administrative costs in maintaining the register and updating their 
information. Finally, a new emeritus status was proposed for active 
patent practitioners who have been registered for ten or more years to 
elect emeritus status, subject to certain conditions.
    However, during the public comment period, the USPTO received a 
number of comments expressing concerns over the proposed new fee. 
Having further considered the public feedback on this proposal, the 
USPTO has determined that it will not at this time implement the annual 
active patent practitioner fee, the proposed new voluntarily inactive 
fee, or the proposed emeritus status. The Office continues to recognize 
the value of CLE in maintaining and enhancing patent practitioners' 
legal skills. In addition, the Office recognizes that it is beneficial 
to provide information regarding a registered practitioner's CLE status 
to the public. Thus, while completion of CLE remains voluntary, the 
USPTO intends to recognize patent practitioners who certify completion 
of six hours of CLE in the preceding 24 months, including five hours of 
patent law and practice and one hour of ethics credit, in the online 
practitioner directory. In the near future, the USPTO intends to issue 
proposed CLE guidelines, with a request for public comment on them. It 
is anticipated that the proposed guidelines will address the types of 
CLE courses that may qualify for recognition and the form of 
recognition for patent practitioners who certify that they have 
completed the CLE.
Registration Statement
    Although the USPTO is not implementing the annual active patent 
practitioner fee in this Final Rule, the Office intends to communicate 
with practitioners on a periodic basis for register maintenance. Thus, 
biennially, registered practitioners, as well as individuals granted 
limited recognition under 37 CFR 11.9(b), will be required to file a 
registration statement with the OED director. Notice will be provided 
to patent practitioners at least 120 days in advance of the due date 
for the filing of the registration statement, electronically, through 
the USPTO's online system. The registration statement takes the place 
of the practitioner survey, which is administered on paper. The USPTO 
anticipates that patent practitioners will first be required to submit 
a registration statement in the spring of 2022. Registered 
practitioners will not be required to pay any fee at the time the 
registration statement is filed.
    Failure to file the registration statement by the due date may 
result in the registered practitioner being subject to a delinquency 
fee and possible administrative suspension, as was the case for a 
patent practitioner who failed to respond to the practitioner survey. 
Specifically, if a registered practitioner, or a person granted limited 
recognition pursuant to 37 CFR 11.9(b), fails to file the registration 
statement by the due date, the OED director will publish and send a 
notice to the registered practitioner advising them of the failure to 
file the registration statement, the consequence of being 
administratively suspended, and the requirements for reinstatement. The 
notice will request filing of the registration statement within 60 days 
after the date of such notice.
    If a patent practitioner fails to comply with the notice within the 
time allowed, the OED director will then publish and send to the 
practitioner a Rule to Show Cause why his or her registration or 
recognition should not be administratively suspended. The OED director 
shall file a copy of the Rule to Show Cause with the USPTO director. 
The practitioner will be given 30 days from the date of the Rule to 
Show Cause to file a response with the USPTO director. The response 
should address any factual and legal bases why the practitioner should 
not be administratively suspended. Within 10 days of receiving a copy 
of the response, the OED director may file a reply with the USPTO 
director. The USPTO director will enter an order either dismissing the 
Rule to Show Cause or administratively suspending the practitioner. The 
aforementioned is the same procedure currently used when a registered 
practitioner fails to timely respond to the practitioner survey.
Reinstatement
    The sections referring to reinstatement from administratively 
inactive status remain unchanged from the current regulations. The 
reinstatement sections relating to other statuses are set forth below.
Administratively Suspended
    Under this Final Rule (37 CFR 11.11(f)(1)), any registered 
practitioner, or person granted limited recognition, who has been 
administratively suspended for less than five years may be reinstated 
on the register provided the patent practitioner is not a party to a 
disciplinary proceeding. Thus, the Final Rule eliminates the 
requirement that a registered practitioner who is administratively 
suspended for more than two years (but less than five years) take and 
pass the registration examination in order to be reinstated. To apply 
for reinstatement, the practitioner will need to submit an application 
form supplied by the OED, demonstrate compliance with the provisions of 
Sec.  11.7(a)(2)(i), submit a declaration or affidavit attesting to the 
fact that the practitioner has read the most recent revisions of the 
patent laws and the rules of practice before the Office, and pay the 
fees set forth in Sec.  1.21(a)(9)(i) and (ii).
    However, under this Final Rule, any administratively suspended 
registered practitioner or person granted limited recognition who seeks 
reinstatement more than five years after the effective date of 
administrative suspension, also shall be required to file a petition to 
the OED director requesting reinstatement and providing objective 
evidence that they continue to possess the necessary legal 
qualifications to render valuable service to patent applicants. The 
objective evidence may include taking and passing the registration 
examination.
Resigned
    Any registered practitioner who has been resigned for less than 
five years may be reinstated on the register provided the practitioner 
is not the subject of a disciplinary investigation or a party to a 
disciplinary proceeding. Thus, the Final Rule eliminates the 
requirement that a registered practitioner who was resigned for more 
than two years (but less than five years) take and pass the 
registration examination in order to be reinstated. To apply for 
reinstatement, the practitioner will need to submit an application form 
supplied by the OED, demonstrate compliance with the provisions of 
Sec.  11.7(a)(2)(i), submit a declaration or affidavit attesting to the 
fact that the practitioner has read the most recent revisions of the 
patent laws and the rules of practice before the Office, and pay the 
fees set forth in Sec.  1.21(a)(9)(i) and (ii).
    However, under this Final Rule any registered practitioner who 
seeks reinstatement after having been in resigned status for five years 
or more also shall be required to file a petition to the OED director 
requesting reinstatement and providing objective evidence that they 
continue to possess the necessary legal qualifications to render 
valuable service to patent applicants. The objective evidence may 
include taking and passing the registration examination.

[[Page 46949]]

C. Discontinued Fees

    This section describes fees that are being discontinued. The 
purpose of this action is to help streamline the patent fee schedule 
while also focusing USPTO workforce efforts on producing products that 
benefit the general public rather than producing outputs for individual 
customers.

                                                               Table 10--Discontinued Fees
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Final rule                      Percentage
                                                                   Current fees     fees large     Dollar change   change large     FY 2018     FY 2019
                         Fee description                           large (small)      (small)      large (small)      (small)      unit cost   unit cost
                                                                  [micro] entity  [micro] entity  [micro] entity  [micro] entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Copy of Patent Technology Monitoring Team (PTMT) patent                      $50    Discontinued            -$50             n/a         n/a         n/a
 bibliographic extract and other DVD (optical disc) (currently
 at Sec.   1.19(j)).............................................
Copy of U.S. patent custom data extracts (currently at Sec.                  100    Discontinued           -$100             n/a         n/a         n/a
 1.19(k)).......................................................
Copy of selected technology reports, miscellaneous technology                 30    Discontinued             -30             n/a         n/a         n/a
 areas (currently at Sec.   1.19(l))............................
For USPTO-assisted recovery of ID or reset of password for the                70    Discontinued             -70             n/a          15          18
 Office of Enrollment and Discipline Information System
 (currently at Sec.   1.21(a)(6)(i))............................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In January 2018, to comply with Executive Order 13681 (Improving 
the Security of Consumer Financial Transactions), select computer 
service fees were discontinued and the services made free. The three 
changes to the fees at 37 CFR 1.19 follow that trend. The service fees 
in Sec.  1.19 will be eliminated, and the Office will instead provide 
these services in a slightly modified form (i.e., electronic) for free.
    The first fee being discontinued is the current 37 CFR 1.19(j) fee 
for a copy of the Patent Technology Monitoring Team (PTMT) patent 
bibliographic extract and other DVDs. PTMT patent bibliographic data is 
currently available online for free, curtailing the need for the USPTO 
to send out extracts on disc.
    The second fee being discontinued is the current 37 CFR 1.19(k) fee 
for a copy of U.S. patent custom data extracts. With the elimination of 
this service fee, the USPTO will create the common customizations and 
release them online, free to the public, at the same time the data is 
released. Further customizations will be discontinued. Additionally, 
PatentsView (http://www.patentsview.org), while not an official USPTO 
data source, meets many of the needs of those requesting custom data 
extracts at no charge to the consumer.
    The third fee being discontinued is the current 37 CFR 1.19(l) fee 
for a copy of selected technology reports in miscellaneous technology 
areas. Selected technology reports are currently available online for 
free, curtailing the need for the USPTO to send out paper copies of the 
reports.
    Upon consideration of public comments, a fourth fee being 
discontinued is the fee for the USPTO-assisted recovery of ID or reset 
of password for the Office of Enrollment and Discipline Information 
System. This fee is being removed, as it is unnecessary.

VI. Discussion of Comments

Comments and Responses

    The USPTO published a proposed rule on July 31, 2019, soliciting 
comments on the proposed fee schedule. In response, the USPTO received 
comments from four intellectual property organizations and 40 
individuals, attorneys, law firms, corporations, and other 
associations. These comments are posted on the USPTO's website at 
https://www.uspto.gov/FeeSettingAndAdjusting.
    The summaries of comments and the Office's responses to the written 
comments follow.
General Fee Setting Approach
    Comment 1: One commenter stated support for the proposed patent fee 
schedule. The commenter noted that the USPTO must continue to focus on 
reducing pendency and backlogged applications. Increased fees result in 
increased revenues, which allow for additional examiners to be hired. 
The commenter expressed that an increase in funding for examining 
allows applications to be processed faster and reduces the current 
backlog. Further, the focus on increasing up-front fees allows the 
USPTO to collect fees for the most cost-intensive operations.
    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. The USPTO has 
carefully considered the balance of front-end and back-end fees. In 
this Final Rule, the balance between front-end and back-end fees is not 
significantly impacted. However, as certain technology lifecycles grow 
shorter, it is important that the USPTO not rely too heavily on fees 
paid late in the life of a patent. Therefore, the Office is slightly 
rebalancing the fees to recover the initial search and examination 
costs earlier in the life of the patent.
    Comment 2: Several commenters expressed support for the Office's 
work to ensure adequate funding. They are supportive of the goals of 
this fee setting, especially recovering aggregate estimated costs of 
patent operations and optimizing patent timeliness and quality.
    Response: The USPTO appreciates the feedback from the commenter and 
is committed to pursuing the goals in the Strategic Plan in a fiscally 
responsible manner.
    Comment 3: One commenter expressed support for the operating 
reserve, its goals, and the detailed supporting information contained 
in the NPRM.
    Response: The USPTO appreciates the feedback from the commenter. 
The operating reserve is an important tool that helps mitigate 
financial and operational risks and facilitate execution of multi-year 
plans in order to achieve the goals set forth in the Strategic Plan. 
The operating reserve also allowed the USPTO to remain open

[[Page 46950]]

and operational during the 35-day lapse in appropriations during FY 
2019.
    Comment 4: One commenter stated that the USPTO should continue to 
prioritize patent quality, and if fee increases are needed, the 
increased resources should be devoted to ensuring examiners receive the 
time and resources they need to assess each application and all the 
relevant prior art. The commenter noted it is important that patent 
policy be crafted to limit the possibility that low-quality patents get 
in the way of technical and economic progress.
    Response: The Office's strategic goal to optimize patent quality 
and timeliness recognizes the importance of innovation as the 
foundation of American economic growth and competitiveness. Through 
this goal, the Office diligently works to balance timely examination 
with improvements in patent quality, particularly the reliability of 
issued patents. Based on assumptions and estimates found in the FY 2021 
Budget, the fee schedule in this Final Rule will recover the aggregate 
estimated costs of patent operations, including achieving the Office's 
strategic goals.
    Comment 5: One commenter suggested that the Office consider phasing 
in fee increases to provide patentees adequate time to prepare for and 
adapt to the increased costs.
    Response: The Office realizes that higher fees will affect budgets. 
In the same way, the USPTO is experiencing an increase in aggregate 
costs, and the fee increases are necessary in order to deliver on the 
priorities listed in the Strategic Plan. The Office notes 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 the PPAC in August 2018, and the fee 
schedule in this Final Rule will not take effect until fall 2020, with 
the non-DOCX filing surcharge effective January 2022. As part of the 
fee setting process, the public had two opportunities to review and 
comment on the fee proposals. The public and PPAC feedback allowed the 
USPTO to refine the fee proposal in both the NPRM and this Final Rule.
    Comment 6: One commenter noted stakeholder concerns about the 
increasing uncertainty of patent rights and encouraged the USPTO to 
carefully consider whether excessive fee increases might have the 
unintended consequence of discouraging filings.
    Response: The Office appreciates the commenter's concern and 
carefully considered the fee schedule in this Final Rule. The Office 
undertook an elasticity analysis (i.e., an assessment of the degree to 
which changes in fee rates may affect demand for services) as part of 
this rulemaking, and a description of elasticity estimates can be found 
at https://www.uspto.gov/FeeSettingAndAdjusting.
    Comment 7: One commenter expressed support for the reduction in 
fees based on organization size.
    Response: The USPTO appreciates the feedback from the commenter and 
is committed to providing, as allowed by statute, fee reductions for 
small and micro entity innovators to facilitate access to the patent 
system.
    Comment 8: Multiple commenters noted the need for the USPTO to 
consider smaller entities when raising fees. Some noted that fee 
increases are prohibitive for pro se inventors, small entities, and 
micro entities and feel they will be disproportionately affected by 
these fee increases.
    Response: The USPTO appreciates the concern about increasing fees. 
For small businesses and individual filers, the fees for small and 
micro entity rates are tiered, with small entities at a 50 percent 
discount and micro entities receiving a 75 percent discount on the fees 
for filing, searching, examining, issuing, appealing, and maintaining 
patent applications and patents. Small or micro entity discounts are 
available for those who are eligible in 86 of the 125 large entity fee 
rates being set or adjusted in this Final Rule.
    Comment 9: One commenter requested that the USPTO carefully 
consider whether further reductions in the fees are possible for small 
entities, and especially micro entities, while maintaining the 
legitimate goals articulated in the fee proposal. Similarly, another 
commenter suggested that, instead of increasing the fees, the USPTO 
could provide more financial assistance to individual inventors who can 
prove their individual inventor status.
    Response: The Office does not have the legal authority to provide 
further reductions in the fees for small and micro entities or to 
provide direct financial assistance. However, the USPTO notes that 
under the fee structure included in this Final Rule, an indirect 
financial assistance to small and micro entities is provided in the 
form of subsidizing the cost of patent application prosecution. For 
example, the costs to the Office, from filing through issue, exceed the 
fees paid by a micro entity who maintains a patent through the full 
term. Further, small entity fees only cover the costs to the Office if 
a patent is maintained for the full term. Therefore, maintenance fees 
paid by large entity patentees and small entity patentees who maintain 
their patent for a full term are used in part to subsidize the filing, 
search, and examination costs for all applicants, including small and 
micro entities.
    Comment 10: One commenter questioned what the Office could do to 
encourage greater participation by small and micro entities in 
obtaining and maintaining patents.
    Response: Helping small businesses and independent inventors with 
limited resources is important to the USPTO. It has several free or 
reduced fee programs to assist independent inventors and small 
businesses in securing patent protection for their inventions, such as 
the Patent Pro Bono Program, Pro Se Assistance Program, and Law School 
Clinic Certification Program. More information on these programs can be 
found on the USPTO website:

 https://www.uspto.gov/ProBonoPatents
 https://www.uspto.gov/ProSePatents
 https://www.uspto.gov/LawSchoolClinic

    Another advantage that the USPTO offers for small and micro 
entities is reduced fees. An applicant who meets the micro entity 
requirements is eligible for a 75 percent reduction on most fees, and 
small entity status offers a 50 percent fee reduction.
    Comment 11: One commenter stated that it is important to keep 
barriers to entry (fees) low enough that startups can obtain patents 
(e.g., application and examination fees), maintain them (e.g., 
maintenance fees), and challenge others' low-quality patents that 
should not have been issued in the first place (e.g., AIA trial fees). 
The commenter stated it is essential for startups to be able to reap 
the benefits at each stage.
    Response: The USPTO agrees that it is important to keep front-end 
fees low enough so as not to prevent entry into the patent system. The 
USPTO also designs the fee structure so that fees to obtain and 
maintain a granted patent increase only as the age of the patent 
increases to minimize the financial impact early in the life of a 
patent application or patent. In this Final Rule, the balance between 
front-end and back-end fees is not significantly impacted. The USPTO 
continues to set front-end fees below the cost to the Office to provide 
those services, in order to encourage innovation. While this Final Rule 
increases the issue and first stage maintenance fees, the fee schedule 
continues to maintain those fees below second stage maintenance fees 
and keeps the balance of front-end and back-end fees substantially the 
same. The

[[Page 46951]]

USPTO also maintains small and micro entity discounts for the fees for 
filing, searching, examining, issuing, appealing, and maintaining 
patent applications and patents.
    Comment 12: One commenter suggested that the Office should reduce 
the cost of filing certain patent applications by allowing an applicant 
to defer payment of some fees without penalty.
    Response: In the future, the USPTO may consider changes to the 
timing of fee payments for search and examination. Currently, however, 
except for provisional applications, each application for a patent 
requires the appropriate search and examination fees in addition to the 
patent application filing fees. Deferring payment of some fees would 
require a large enough operating reserve to sustain operations during 
the period in which fee collections would be lower due to the delayed 
payment of fees. The adjusted fee schedule set forth in this rulemaking 
will help replenish and grow the patent operating reserve to position 
the USPTO for future changes, such as those suggested by the commenter.
    Comment 13: One commenter noted the USPTO's tendency to follow or 
align with patent practices in other countries, in fee structure and 
other aspects of the patent system. The commenter hopes the leaders and 
government agencies of our country are aware of the long-term 
consequences of the actions they take.
    Response: The Office and the administration carefully analyze all 
policy decisions before implementation. This includes considering best 
practices of other countries' IP systems. When appropriate, the Office 
may implement practices similar to other national IP offices.
    Changes to policies are considered after public comments have been 
reviewed and a cost-benefit analysis has been performed (Regulatory 
Impact Analysis). Enactment of policy change occurs if generally 
supported by public comment and the corresponding cost-benefit analysis 
displays a positive, long-term impact.
Across-the-Board Adjustment to Patent Fees
    Comment 14: One commenter stated the fee increase should only 
reflect a cost-of-living increase to keep pace with inflation.
    Response: The USPTO appreciates the concern about rising fees and 
continuously evaluates its processes and costs to ensure the Office is 
achieving the optimal value from the resources used to carry out 
operations. Despite that, the USPTO must adjust fees to recover the 
aggregate estimated cost to the Office for processing, activities, 
services, and materials relating to patents, including cost-of-living 
increases and administrative costs of the Office with respect to such 
patent fees over a multi-year period.
    Comment 15: One commenter expressed that the fee for the USPTO-
assisted change of address should be eliminated.
    Response: The USPTO would like to remind customers that they are 
able to perform this process online as a self-service option free of 
charge. The change of address fee is only charged if it is requested 
that the USPTO perform this task instead of the customer utilizing the 
self-service options. The USPTO is not targeting this fee for a 
specific increase. Instead, this fee is increasing as part of the group 
of fees subject to the 5 percent across-the-board adjustment to patent 
fees. This fee was set in a previous rulemaking, and that structure is 
not changed in this Final Rule.
    Comment 16: One commenter expressed that the fee for the USPTO-
assisted recovery of ID or reset of password should be eliminated.
    Response: The fee for USPTO-assisted recovery of ID or reset of 
password for registered practitioners has been removed as unnecessary.
    Comment 17: One commenter noted that the NPRM does not state a 
rationale for the second and subsequent RCE fee to be different than 
the RCE fee for a first request.
    Response: The individual RCE fees were set at different amounts in 
a previous rulemaking, the January 2013 Final Rule (which set forth the 
rationale for the difference in those fees), and that structure is not 
changed in this Final Rule. The USPTO is not targeting these fees for a 
specific increase. Instead, the fees for RCEs--both for the first 
request and for second and subsequent requests--are being adjusted by 
the across-the-board adjustment to patent fees.
    Comment 18: One commenter wrote that the increase in the second and 
subsequent RCE fee would hurt small entity applicants and small entity 
law firms. The Initial Regulatory Flexibility Analysis offered no 
explanation justifying that differential effect on small entities.
    Response: The USPTO is not targeting the RCE fees for a specific 
increase. Instead, the fees for RCEs--both for the first request and 
for the second and subsequent requests--are being adjusted by the 
across-the-board adjustment to patent fees. The USPTO would like to 
note that small and micro entity applicants will continue to receive 
the small and micro entity discounts, which set the fee rates 
significantly below cost to examine second and subsequent RCE filings. 
Additionally, the Regulatory Flexibility Analysis analyzed applicants' 
sensitivity to changes in fee rates by entity size, including RCE fees 
for small entities. This impact is also included in the RIA completed 
for this rulemaking, which is available at https://www.uspto.gov/FeeSettingAndAdjusting.
    Comment 19: One commenter stated that the methodology for 
calculating the unit cost for second and subsequent RCE filings is not 
in the Activity Based Information and Patent Fee Unit Expense 
Methodology document.
    Response: The commenter can find this information in the ``Setting 
and Adjusting Patent Fees during Fiscal Year 2020--Activity Based 
Information and Patent Fee Unit Expense Methodology'' document, on page 
22, before Table 2. ``Similarly, the same incremental approach is used 
to determine the expense of the second and subsequent RCE. The two 
scenarios presented to determine incremental expense for the second RCE 
are slightly different than for the first RCE, but the same basic 
method applies. The scenarios are: (1) The expense of a single 
application that has already performed one RCE, and (2) the expense of 
a single application that has completed a second RCE. All other 
calculation methods remain the same.'' Additionally, the detail on the 
exact calculations for FYs 2016, 2017, and 2018 can be found on page 41 
of the ``USPTO Fee Unit Expense Calculation Detail'' document under the 
heading ``Latest patent fee setting information.'' Both documents can 
be found at https://www.uspto.gov/FeeSettingAndAdjusting.
    Comment 20: One commenter suggested that the proposed fee for 
submission of an information disclosure statement (IDS) is too high and 
may discourage prompt disclosure of material references. The commenter 
suggested that if the fee is increased, the Office could consider a 
tiered rate structure with a discounted IDS fee for submitting an IDS 
with fewer than five or 10 references, or below a certain page count 
for non-patent literature.
    Response: There is no fee for filing of an IDS if it is filed 
before the mailing of a first Office action. The USPTO is not targeting 
these fees for a specific increase. Instead, the fee for submission of 
an IDS is increasing as part of the group of fees subject to the 5 
percent across-the-board adjustment to patent fees that is being set to 
help the USPTO

[[Page 46952]]

keep pace with inflationary cost increases. The single IDS fee was set 
in a previous rulemaking, and that structure is not changed in this 
Final Rule. The USPTO will consider the commenter's suggestions for 
changes to the structure and fee amount for IDS fees for future fee 
adjustments.
    Comment 21: One commenter suggested the proposed increase to the 
fee for extension of time for response within the first month is too 
high. The commenter stated the increased fee makes it more difficult 
for practitioners to provide a thorough response, especially for 
complex issues where input and review may be required from multiple 
inventors, licensees, and/or owners. The commenter indicated that the 
need for extensions of time may be outside of the applicant's control 
when extensions are required to maintain pendency after a response to a 
final Office action.
    Response: The Office recognizes that there are instances in which 
an applicant would need to extend the time period for responding to an 
Office action. However, an applicant may file a first after final reply 
within two months of the final rejection to avoid some of the costs 
associated with maintaining pendency after a reply to a final Office 
action. The USPTO is not targeting these fees for a specific increase. 
Instead, all fees for extensions of time for response are being 
increased as part of the 5 percent across-the-board adjustment to 
patent fees that are being set to help USPTO keep the pace with 
inflationary cost increases. Differences in the rate of increase result 
from rounding (the rounding rules are discussed in Part V: Individual 
Fee Rationale, A. Across-the-Board Adjustment to Patent Fees).
    Comment 22: One commenter suggested that increases in fees for 
extensions of time for response will fall disproportionately on small 
firms and solo practitioners. The commenter noted that fees for 
extensions of time for response beyond the third month are greater than 
the filing fees for a new application. The commenter believes that, 
with essentially no cost to the USPTO, this appears to be a penalty, 
not a reasonable fee increase.
    Response: These fees were set in a previous rulemaking, and the 
structure is not changed in this Final Rule. The USPTO is not targeting 
these fees for a specific increase. Instead, the increase in fees for 
extensions of time for response is part of the across-the-board 
adjustment to patent fees that is being set to help the USPTO keep pace 
with inflationary cost increases. Extension of time fees are intended 
to encourage early submission of an applicant's response to facilitate 
compact prosecution.
    Comment 23: One commenter stated that the increases in the notice 
of appeal fee and fee for forwarding an appeal in an application or ex 
parte reexamination proceeding to the Board should take into account 
the rate of reversal, in that the applicant should not bear the 
entirety of the cost of what could be interpreted as an error made by 
the Office.
    Response: The Office appreciates the feedback. Regardless of the 
outcome, the cost to render a decision on the appeal remains the same. 
The Office has limited the increase in both the notice of appeal fee 
and the fee for forwarding an appeal in an application or ex parte 
reexamination proceeding to the Board to the 5 percent across-the-board 
adjustment to patent fees. As a matter of policy, the Office has set 
the combined notice of appeal and fee for forwarding an appeal in an 
application or ex parte reexamination proceeding to the Board to less 
than half of the unit cost for deciding an appeal.
Targeted Fee Adjustments
Maintenance Fee Surcharge
    Comment 24: One commenter asked what information the USPTO had 
about the use of the maintenance fee grace period and the consequences. 
The commenter was concerned that higher fees could lead to greater 
conflict possibilities between clients and attorneys. A commenter 
suggested that the Office initiate procedures to notify patentees, by 
United States Postal Service (USPS) mail and email to all registered 
email addresses, of both the due date for the maintenance fees to be 
paid and entrance into the grace period.
    Response: The USPTO continuously monitors maintenance fee payments, 
including payments made during the grace period. While over 95 percent 
of maintenance fee payments are made in the six-month payment window 
prior to the grace period, the Office does recognize that a patentee 
may need the additional six-month grace period to make a decision on 
renewing their patent rights. Therefore, the Office lowered the 
proposed maintenance surcharge fee to $500 for large entities in the 
NPRM, compared to the initial proposal of $1,000.
    It is the responsibility of the patentee to ensure that maintenance 
fees are paid in a timely manner to prevent the expiration of a patent. 
Patentees are expected to maintain their own record and docketing 
systems. The Office does provide some notices as reminders that 
maintenance fees are due, but the notices, errors in the notices or in 
their delivery, or the lack or tardiness of notices in no way relieve a 
patentee from the responsibility to make timely payment of each 
maintenance fee to prevent the patent from expiring by operation of 
law. The notices provided by the Office are courtesies in nature and 
intended to aid patentees. The Office's provision of notices in no way 
shifts the burden of monitoring the time for paying maintenance fees on 
patents from the patentee to the Office.
    Comment 25: One commenter stated that those who delay payment of a 
maintenance fee include small entities, micro entities, and independent 
inventors, for whom the payment of a maintenance fee is often a 
significant investment. Forcing such entities to pay a higher surcharge 
fee does not appear to be justified in this circumstance.
    Response: The Office recognizes that the maintenance fee surcharge 
during the grace period affects small and micro entities as well as 
independent inventors. The Office lowered the proposed maintenance fee 
surcharge to $500 for large entities in the NPRM, compared to the 
USPTO's initial proposal to PPAC of $1,000. Additionally, small and 
micro entity discounts apply to the maintenance fee surcharge as well 
as to the maintenance fees themselves.
    Comment 26: One commenter noted that no cost to the public of the 
six-month grace period was identified in the NPRM. Additionally, the 
commenter noted that a competitor would still need to wait until the 
expiration of the grace period to know that the maintenance fee has not 
been paid.
    Response: This rulemaking does not modify the maintenance fee grace 
period, nor does it change the timeline for submitting maintenance fee 
payments. The rulemaking simply adjusts the surcharge fee for 
submitting a maintenance fee payment during the six-month grace period, 
which provides patentees the option for an additional six months to 
submit maintenance fee payments. It is not anticipated that this fee 
adjustment will have a significant impact on patentees, since more than 
95 percent of patent holders submit maintenance fee payments prior to 
the grace period. The impact of the fee adjustment to the maintenance 
fee grace period is included in the cost-benefit analysis provided in 
the RIA, available at https://www.uspto.gov/FeeSettingAndAdjusting. The 
Office cannot provide individuals legal advice on the status of a 
patent. The Office's provision of notices of maintenance fee payments 
in no way shifts the burden of

[[Page 46953]]

monitoring the time for paying maintenance fees on patents from the 
patentee or other relevant stakeholders to the Office.
    Comment 27: One commenter wanted to know what other IP offices have 
late payment surcharges for maintenance fees, along with more 
information on those offices' maintenance/annuity schedules.
    Response: The USPTO allows for payment of maintenance fees up to 
six months prior to the payment due date and up to six months after the 
due date (grace period) if accompanied with a surcharge. This practice 
is similar to other national or regional IP offices like the European 
Patent Office and the Japan Patent Office. Both of these offices impose 
a substantial surcharge for late payment of such fees, which, in the 
case of Japan, is a 100 percent surcharge for late payment.
    Each national or regional IP office has its own maintenance/annuity 
schedule, which can be found on its website. Below are links to two of 
the national/regional IP offices' fee schedules, which include 
maintenance/annuity fees:

European Patent Office:
     Fee Schedule: https://my.epoline.org/portal/classic/epoline.Scheduleoffees
     About Renewal Fees: https://www.epo.org/law-practice/legal-texts/html/guidelines/e/a_x_5_2_4.htm
Japan Patent Office:
     Fee Schedule: https://www.jpo.go.jp/e/system/process/tesuryo/hyou.html
     About Renewal Fees: https://www.jpo.go.jp/e/faq/yokuaru/fees.html#anchor4-3

    Comment 28: One commenter stated that charging surcharge fees for 
late payments on patent maintenance filings and encouraging earlier 
payment defies Congress. In the commenter's opinion, Congress 
determined that the public should have clear notice of the expiration 
of a patent on the 4th, 8th, and 12th anniversaries of it being issued. 
The commenter believed the USPTO's proposal suggests the public should 
know on the 3\1/2\, 7\1/2\, and 11\1/2\ anniversaries. The commenter 
suggested there is no statutory delegation noted by the USPTO of the 
authority to hold such an opinion, let alone act on it.
    Response: The USPTO has specific statutory authority to charge fees 
under title 35 of the U.S.C. and the Trademark Act of 1946. The USPTO 
also has specific authority to set and adjust those fees as in the 
current rulemaking under section 10 of the AIA. This Final Rule does 
not modify the maintenance fee grace period, which is set in 35 U.S.C. 
41(b)(2), nor does it change the timeline for submitting maintenance 
fee payments. The rulemaking simply adjusts the surcharge fee for 
submitting a maintenance fee payment during the six-month grace period. 
The Office cannot provide legal advice to individuals on the status of 
a patent, but a higher surcharge may encourage more patent holders to 
pay maintenance fees before the grace period begins.
Request for Expedited Examination of a Design Application Fee
    Comment 29: Several commenters stated that the increase has not 
been adequately justified as based on the cost of recovery or value to 
the recipient, noting that while the fee had not increased since 
November 2000, an increase of 1.6 percent annually would only put the 
fee at $1,256 in 2021. They further stated that the NPRM only opaquely 
describes the Office's need without any calculation or demonstration of 
burden hours and threatens to close the program without the full 
increase, improperly discouraging applicant behavior. Commenters asked 
for further justification from the Office for the amount of the 
proposed increase. One commenter also suggested the Office may consider 
removing the requirement of a pre-examination search, which would help 
applicants by alleviating some of the financial burden associated with 
filing a request for expedited examination.
    Response: The Office received numerous comments that the fee 
increase to $2,000 was too great and would deter applicants from using 
the service. These comments were considered, and in response, the 
Office has chosen not to implement the proposed fee of $2,000. Instead, 
the non-discounted fee for an application will be set at $1,600. 
Discounts for small and micro entities will continue to be available.
    Applicants who wish to have the examination of their design 
applications expedited must file a request for expedited examination 
and comply with the other requirements set forth in 37 CFR 1.155. The 
Office notes that the unit cost presented for this service only 
accounts for the initial processing of the request and does not include 
additional resources expended. From the time a request for expedited 
examination is filed in a design application, the application is 
expedited at every touch point during its prosecution. This includes 
initial processing, deciding the request to expedite, search and 
examination, publication, and any appeal that may be taken to the 
Board. The pendency for these applications, from granting of the 
request to expedite until first Office action, is currently just over 
one month. Expediting each step of the process for these applications 
causes the Office to expend resources that increase its costs with 
respect to these applications. Further, the Office needs to account not 
only for the increase in costs over the past twenty years, but also the 
anticipated costs of providing this service into the future, even with 
maintaining the requirement for a pre-examination search. Accordingly, 
the Office determined that the fee for this service needs to be 
increased if the service is to be continued. The USPTO believes that 
this new fee amount, as well as the associated small and micro entity 
discounts, will provide the Office the ability to continue offering 
this service to applicants. Further, the Office notes this is an 
optional fee paid only by those who wish to receive the benefit of a 
faster decision on their application.
    Comment 30: A few commenters noted that design applications are 
limited to a single claim, meaning the proposed increase would cause 
applicants to pay roughly twice as much to expedite the examination of 
four design patent claims as they would to expedite the examination of 
four utility patent claims.
    Response: The Office acknowledges that design applications are 
limited to a single claim. The process of examining a design 
application differs from the process of examining a utility 
application. Based on the lifetime costs of expediting a design 
application, the Office has determined that the fee for this service 
needs to be increased if the service is to be continued. However, the 
Office has carefully considered all of the comments and, in response, 
has chosen not to implement the proposed fee of $2,000. Instead, the 
non-discounted fee for an application will be set at $1,600. The USPTO 
believes that this new fee amount, as well as the associated small and 
micro entity discounts, will provide the Office the ability to continue 
offering this service to applicants.
    Comment 31: Multiple commenters stated that the proposed increase 
in the request for expedited examination of a design application fee 
would disproportionately harm individual inventors and small entities.
    Response: The Office has carefully considered all of the comments 
and, in response, has chosen not to implement the proposed fee of 
$2,000. Instead, the non-discounted fee for an application will be set 
at $1,600. The Office will continue to offer the 50 percent small 
entity discount and the 75 percent

[[Page 46954]]

micro entity discount, which should not disproportionately harm 
individual inventors and small entities. The fees set in this Final 
Rule make the fee for small entities $800 and the fee for a micro 
entity $400. Further, the Office notes this is an optional fee paid 
only by those who wish to receive the benefit of a faster decision on 
their application.
    Comment 32: A few commenters noted that the process to obtain 
design protection in the U.S. is significantly longer than in many 
countries. Not all applicants and circumstances can wait for the normal 
lengthy U.S. examination process to be completed. The Office should not 
impose further barriers to obtaining timely design protection for those 
applicants who may need it.
    Response: The process to obtain a design patent in the U.S. takes 
longer than in some other countries because, unlike some other patent 
systems, the USPTO performs an examination for design patent 
applications. The Office agrees that expedited examination can be a 
benefit to applicants in numerous situations. As a result, the Office 
will continue to offer expedited examination for design applications. 
Additionally, the Office has chosen not to raise the fee for expedited 
examination of design applications to $2,000. Instead, the large entity 
fee for an application is being raised to only $1,600. The Office will 
continue to offer the 50 percent small entity discount and the 75 
percent micro entity discount.
    Comment 33: One commenter noted that some industrial designs can be 
protected through copyright law but stated that designs that do not 
qualify for copyright protection should have an affordable expedited 
procedure to obtain IP rights. The commenter also noted that copyright 
law might not always be effective for protection of designs.
    Response: An applicant should determine what forms of IP protection 
are appropriate for each design. For those inventions where an 
applicant has determined that design patent protection is warranted, 
the applicant may expedite the examination of an application, when 
needed, as the Office will continue to offer the service. Based on 
comments received, the Office has chosen not to raise the fee for 
expedited examination of design applications to $2,000. Instead, the 
large entity fee for an application is being raised to only $1,600. The 
Office will continue to offer a discount for small and micro entities.
Utility and Reissue Issue and Maintenance Fees
    Comment 34: One commenter noted that a stated rationale for the 
proposed substantial increases to issue and first stage maintenance 
fees is that ``technology lifecycles [have grown] shorter,'' and, 
therefore, ``It is important that the USPTO not rely too heavily on 
fees paid late in the life of a patent.'' The commenter argued that in 
many industries, including telecommunications and pharmaceuticals, this 
is not necessarily true. Therefore, the commenter did not believe that 
shifting the burden of fee increases to the issue and first maintenance 
fees is warranted.
    Response: In accordance with the Agreement on Trade-Related Aspects 
of Intellectual Property Rights (TRIPS), the USPTO cannot differentiate 
IP policy by technology. Therefore, the Office must structure its fee 
schedule to align with the technology lifecycles of all industries and 
cannot establish different fee schedules for different technologies.
    While many technologies have not experienced a change in their 
lifecycle, for others there have been significant changes. 
Additionally, the aggregate average patent lifecycle is impacted by 
changes in the composition of patents granted by the USPTO. To account 
for these changes, the USPTO is increasing the issue and first stage 
maintenance fees. There has not been an adjustment to these fees since 
2013.
    Comment 35: One commenter noted that it is important to set fees so 
that, during the entire lifecycle of a patent, a patentee can pay fees 
at points in time where sufficient information is available to make an 
appropriate decision about the commercial merits of obtaining/
maintaining a patent.
    Response: The fees over the life of a patent begin low and then 
gradually increase. The USPTO carefully considered the balance of 
front-end and back-end fees. In this Final Rule, the balance between 
front-end and back-end fees is not significantly impacted. The Office 
is slightly rebalancing the back-end fees to recover the initial search 
and examination costs earlier in the life of the patent.
AIA Trial Fees
    Comment 36: Several commenters stated that the Office should finish 
collecting and analyzing costs before increasing the AIA trial request 
fee and the post-institution fee. One commenter indicated that pre-
institution costs may decrease due to higher settlement rates and lower 
institution rates. Other commenters indicated that most of the 
additional work after SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 
(2018) (SAS) occurs post-institution. Accordingly, the commenters 
propose that the increase should be limited to the post-institution 
fee.
    Response: The USPTO is committed to maintaining the PTAB's ability 
to provide fair, timely, and high-quality decisions. The SAS decision 
significantly affected the operations of the PTAB by increasing the 
amount of time spent per case and, thereby, increasing costs in both 
pre- and post-institution stages. The NPRM proposed fees based on the 
Office's best estimates, taking into consideration the cost increases 
already experienced, plus future inflationary cost growth. Since then, 
the Office has collected and analyzed the additional cost data 
available through the end of FY 2019. In addition, the Office has taken 
into account uncertainties resulting from changes in the way in which 
AIA trials are conducted. These uncertainties are discussed further 
below.
    While the unit cost data shows that post-institution costs have 
increased more than pre-institution costs, pre-institution costs have 
also increased. The Office has modified its pre-institution practice to 
take into account the Supreme Court's SAS decision. For example, prior 
to SAS, the PTAB did not always address all arguments at institution. 
Post-SAS, for purposes of deciding whether to institute trial on a 
petition, the Office has committed to provide details to the parties to 
the largest extent practicable, including responding to arguments in a 
patent owner's preliminary response that were not the basis for the 
decision whether or not to institute.
    In addition, in response to requests from stakeholders, the Office 
has modified its approach to concurrent petitions challenging the same 
patent or patents in the same family filed by the same petitioner. 
Specifically, the Board now considers whether to exercise its 
discretion to limit the number of these parallel petitions that may, if 
the threshold is met, be instituted. Similarly, the Board has 
undertaken a closer review of petitions to determine whether they raise 
issues that were considered by the examiner during ex parte prosecution 
or during other proceedings before the Office. To evaluate these 
requests, the Board must make close comparisons between the challenges 
to determine whether the Board should exercise its discretion and 
institute a trial. Such comparisons require analyzing the prior art 
cited in the petitions and evaluating the reasons given by the 
petitioners for filing additional petitions. As this development in AIA 
trial practice is relatively recent (within the last 12 months), the 
Office does not yet have an

[[Page 46955]]

accurate model to predict how many requests it will receive and how 
much additional effort will be necessary to evaluate them. To account 
for these uncertainties, it is necessary to set the pre-institution 
fees for inter partes reviews at $19,000. This 23 percent increase is 
less than the 25 percent increase proposed in the NPRM but above the FY 
2019 unit cost. The pre-institution fee is set at more than the FY 2019 
unit cost to take into account the uncertainties outlined above that 
arose in that year and are expected to continue in FY 2020 and beyond.
    The post-institution fee has been set at $22,500 for inter partes 
review, which is above the increase proposed in the NPRM but 
considerably lower than the FY 2019 actual unit cost. As a result of 
the SAS decision, there has been an increase in the number of remands 
to the PTAB, which has increased the post-institution amount of work 
and costs. At this time, it is unclear whether the post-institution 
costs will remain at the current level or will decrease after the SAS 
remands have been fully addressed. Accordingly, the post-institution 
fee is set above the proposed NPRM fee, which is above the pre-SAS FY 
2017 unit costs but below the post-SAS FY 2019 unit costs. The Office 
continues to evaluate the data as it becomes available to better 
understand the long-term impact of SAS on post-institution costs.
    Post-grant review and covered business method review fees will be 
maintained at the rates proposed in the NPRM, at $20,000 for pre-
institution and $27,500 for post-institution. These fee rates are above 
the respective inter partes review fees, due to the additional work 
involved with post-grant and covered business method reviews, but below 
the FY 2019 actual unit costs for post-grant reviews and covered 
business method reviews due to uncertainties about future costs. 
Specifically, post-grant reviews and covered business method reviews 
may raise additional issues beyond those raised in inter partes 
reviews, such as patent eligibility, written description, enablement, 
indefiniteness, and public use. Further, given the additional issues 
that may be raised, post-grant reviews and covered business method 
reviews provide 33 percent higher word limits for petitions and patent 
owner responses and preliminary responses. While the actual unit costs 
for post-grant and covered business method review have typically been 
higher than the unit costs for inter partes reviews for these reasons, 
it is harder to determine the precise cost of post-grant and covered 
business method reviews. Due to a relatively small number of trials 
(approximately 60 post-grant reviews or covered business method reviews 
annually), the data on actual unit costs can vary from year to year. 
Therefore, it remains unclear whether the post-SAS costs will remain at 
the current levels. The rates proposed in the NPRM will be implemented, 
and the Office will continue to evaluate data as it becomes available 
to better understand the long-term impact of SAS on post-grant review 
and covered business method review costs.
    Comment 37: One commenter stated that the USPTO's elasticity data 
fails to capture whether small entities react differently than large 
entities to changes in the AIA trial fees. The commenter suggested the 
USPTO should study this before instituting a significant increase in 
fees.
    Response: AIA trial fees are not subject to small or micro entity 
discounts under section 10(b) of the AIA. Therefore, reliable data is 
not available to properly measure the impact of changes to AIA trial 
fees on small or micro entities. However, the AIA trial proceedings 
have been popular with some stakeholders because they provide a less 
expensive and faster alternative to district court litigation. As a 
result, the PTAB workload has increased significantly since the 
institution of AIA trials. The increase in AIA trial proceeding fees 
will help the PTAB maintain the level of judicial, legal, and 
administrative staff necessary to sustain the quality and timeliness of 
PTAB decisions.
    Comment 38: One commenter stated that, for AIA trial fees, the 
Office should consider a fee reduction or waiver for small and micro 
entities sued for infringement.
    Response: Under section 10(b) of the AIA, the Office is permitted 
to reduce fees for small and micro entities in six categories: 
``filing, searching, examining, issuing, appealing, and maintaining 
patent applications and patents.'' AIA trial fees do not fall into any 
of those categories. Therefore, absent a change in statutory authority, 
AIA trial fees are not eligible for discounts or for waiver.
    Comment 39: Two commenters stated that the Office should reduce the 
excess claim threshold for an AIA trial request fee from 20 claims to 
between three and six claims, and also increase the excess claims fee. 
The commenters make similar proposals for post-institution AIA trial 
fees.
    Response: The fee increases are based on cost data collected and 
analyzed using current excess claims thresholds. The Office does not 
have sufficient data to evaluate the effect of reducing the excess 
claim threshold and increasing the excess claims fee. Additionally, the 
current excess claims fee threshold of 20 for the AIA trial request fee 
is the same as the threshold for excess claims for patent applications.
    Comment 40: One commenter indicated that the Office should raise 
fees significantly higher and charge more if the petitioner has not 
been sued.
    Response: 35 U.S.C. 311(a) and 321(a) require fees for AIA trial 
proceedings be ``reasonable, considering the aggregate costs of the 
review.'' Raising fees significantly higher for petitioners that have 
not been sued has been considered but, bearing in mind the aggregate 
costs of the review, has not been deemed reasonable at this time.
    Comment 41: One commenter indicated that raising fees runs counter 
to Congress's intent to make cost-efficient proceedings.
    Response: 35 U.S.C. 311(a) and 321(a) indicate that fees for AIA 
trial proceedings are to be ``reasonable, considering the aggregate 
costs of the review.'' The Office is always looking for, and open to 
considering, ways to make AIA trial proceedings more cost-efficient.
Non-DOCX Filing Surcharge Fee
    Comment 42: Several commenters expressed the opinion that the 
Office's DOCX submission tools are not ready for implementation for a 
number of reasons. The DOCX submission process is only available for 
some submissions. The publicly available DOCX submission process is 
cumbersome. It is too soon to require a penalty (fee surcharge) of $400 
for non-DOCX submissions. Before such a large penalty is enacted for 
failure to use DOCX submissions, applicants must be granted more time 
to adapt their processes to take advantage of the new capability. 
Commenters suggested an alternative approach of permitting submission 
of both a record copy and a searchable copy of an application that 
would provide a viable mechanism to help applicants transition to these 
new capabilities without prematurely penalizing them, especially in 
situations where the available tools may not be ready or able to 
accommodate special cases involving complicated submissions.
    Response: These comments were considered, and the Office has chosen 
to delay implementation of the non-DOCX filing surcharge until January 
1, 2022. Over the next several months, the Office will continue with 
its outreach efforts, addressing customer concerns and

[[Page 46956]]

providing ample time for applicants to transition to this new process.
    Comment 43: One commenter questioned the statement made by the 
USPTO Acting Deputy Director in the September 2018 PPAC Fee Setting 
Hearing that ``fees for search and examination are set below cost,'' 
and wondered whether this was true when considering the paper filing 
surcharge and proposed non-DOCX filing surcharge.
    Response: Under the adjusted fee schedule, the combined fees for 
filing, search, and examination will continue to be below the cost to 
the Office to provide those services, even for filers who pay both the 
paper filing and non-DOCX surcharges. A large entity that pays both 
surcharges would pay $2,620 for filing, search, and examination. A 
small entity would pay $1,310, and a micro entity would pay $755. The 
cost to the USPTO to provide these services was a combined $4,970 in FY 
2018.
    Comment 44: One commenter wrote that they understand that a non-
DOCX surcharge cannot be applied to PCT filings because copies of the 
PCT publication automatically route into the U.S. national stage 
application in PDF form. However, the commenter stated that this 
highlights the unwarranted nature of the non-DOCX surcharge. If a 
relatively moderate increase in price for PCT national stage entry 
applications is believed to be fiscally sustainable within the proposed 
fee structure, then the same should be true of regular non-provisional 
application filings, and the imposition of a new non-DOCX filing 
surcharge fee for one and not the other is thus inconsistent.
    Response: Processing DOCX in national stage applications presents 
additional challenges and burdens on the Office and applicants that are 
not encountered with a standard utility application. Further 
investigation is needed as to the possibility of alternative means for 
obtaining text data (i.e., via the International Bureau) that would not 
burden applicants. This is being considered for the future.
    Comment 45: One commenter stated that filing in DOCX is a wonderful 
idea in theory, but says that bugs have not been worked out of the 
process. The commenter writes that EFS-Web should stop removing ``text 
ornaments.'' Until it stops doing this, and until a DOCX filing will 
reliably result in an identical PDF document, there should be no 
penalty for filing PDF specifications or other application elements.
    Response: ``Text ornaments,'' or text decorations, may not be 
presented in a form that allows direct reproduction of readily legible 
copies. See CFR 1.52. Therefore, they will continue to be automatically 
removed, and a warning will be provided.
    To date, the Office has not received notifications of any issues 
resulting from the filing of applications in DOCX format. If there is 
an instance in which an error occurs, the Electronic Business Center 
(EBC) should be contacted for investigation at 1-866-217-9197 (toll-
free), 571-272-4100 (local), or [email protected]. The EBC is open from 
6:00 a.m. to 12:00 midnight ET, Monday through Friday.
    Comment 46: Multiple commenters opposed the $400 surcharge for 
filing in non-DOCX format, suggesting it was unreasonable given the 
USPTO's own cost figures, to apply optical character recognition (OCR) 
to convert a patent application submitted in PDF format. One commenter 
stated that the proposed benefits do not appear to justify the costs of 
the rule, and there does not appear to have been consideration of 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public.
    Response: The use of image-based PDFs incurs many costs over the 
lifetime of an application. There are large costs associated with the 
USPTO's systems and personnel, from pre-examination, examination, and 
publication, due to the need to apply OCR to convert image-based PDFs 
into structured text that can be leveraged by downstream systems. The 
surcharge is applied not only to account for these inefficiencies, but 
also to address rising expenses.
    As a part of the DOCX intake process, preliminary validation is 
performed on DOCX documents at the time of upload. The system 
immediately detects and supplies the applicant with useful error and 
warning messages, allowing for adjustments to patent applications 
earlier in the process. This saves time, reduces potential costs, and 
prevents delays in processing by minimizing notices of missing parts or 
incomplete applications from the Office of Patent Application 
Processing (OPAP).
    As patent applications have become increasingly complicated, the 
non-DOCX surcharge is an effective measure to recover the cost of 
converting PDFs to text. The text is essential for efficient 
examination and maintaining the quality of patents issued. According to 
surveys conducted by the USPTO, the majority of applicants use word-
processing software, such as Microsoft Office and LibreOffice, to 
author applications in DOCX format. These applicants will now be able 
to submit applications in this same format to the USPTO, therefore 
avoiding the new non-DOCX surcharge. Furthermore, the fee is reduced by 
50 percent for small entities and 75 percent for applicants that 
qualify as micro entities.
    The Office recognizes the need for freedom of choice to file in 
different formats. Therefore, image-based PDFs will continue to be 
accepted for customers who opt to continue to file in that format.
    Comment 47: Two commenters requested that the Office continue to 
accept PDF filings at no charge.
    Response: The use of image-based PDFs incurs many costs over the 
lifetime of an application. Receiving most applications in DOCX format 
will provide savings across USPTO systems, enabling efficient 
examination. Rising expenses make it prohibitive for the USPTO to 
continue allowing PDF filings with no associated fee to cover the costs 
of creating structured text that can be leveraged by downstream 
systems.
    Comment 48: Many commenters have suggested the USPTO should make a 
provision for the practitioner to be able to provide a PDF version of 
the patent application being filed, along with the DOCX file. The PDF 
version would serve as the controlling version in the event of any 
discrepancy in the USPTO's rendering of the DOCX file.
    Response: Many applications are originally created in DOCX and 
subsequently converted to PDF by applicants prior to submission. An 
advantage of submitting in DOCX format directly is that submitted files 
from all applicants are validated and converted to PDF by USPTO systems 
in a consistent manner. This eliminates the unnecessary step for 
applicants to generate and attach their own PDF documents. The 
generated PDF is available pre-submission to provide the applicant an 
opportunity to review the document before selecting the submit button.
    As a part of the DOCX intake process, preliminary validation is 
performed on DOCX documents at the time of upload. The system 
immediately detects and supplies the applicant with useful error and 
warning messages, allowing for adjustments to patent applications early 
in the process. This saves time, reduces potential costs, and prevents 
delays in processing by minimizing notices of missing parts or 
incomplete applications from the Office. Furthermore, the USPTO 
continuously performs rigorous testing to ensure that document 
integrity is preserved.
    Comment 49: One commenter asked whether the surcharge would be 
waived if an applicant filed on paper because the electronic filing 
system was not

[[Page 46957]]

functioning and a DOCX version was later filed within a certain time 
period.
    Response: The current policy regarding significant unplanned 
electronic business system outages is available at: https://www.federalregister.gov/documents/2018/08/30/2018-18897/filing-patent-applications-electronically-during-designated-significant-outages-of-the-united-states. The USPTO will post a notice on its website in the 
event of a designated significant unplanned electronic business system 
outage and indicate the dates during which the alternative electronic 
filing means are available due to such an outage. An application filed 
via the alternative electronic means during a designated significant 
unplanned electronic business system outage will be considered to have 
been filed by the USPTO's electronic filing system and thus will not 
incur the non-DOCX surcharge or the fee required by section 10(h) of 
the AIA for a patent application not filed by the USPTO's electronic 
filing system.
    Comment 50: One commenter stated that PDF format is the best and 
safest format for ensuring that no text becomes garbled or otherwise 
corrupted by the USPTO system.
    Response: There have been cases where an applicant submitted PDF 
documents that have been corrupted or garbled that were traced back to 
specific PDF creation software. By submitting in text format, the extra 
step to convert to a PDF copy is no longer necessary, which eliminates 
issues associated with that conversion process.
    Another advantage of submitting in DOCX format directly is that 
submitted files from applicants are validated and converted to PDF by 
USPTO systems in a consistent manner. The USPTO continuously performs 
rigorous testing to ensure that document integrity is preserved.
    Comment 51: One commenter wrote that PDF files are easier to manage 
when filing, are better for long-term archival use, can be generated in 
text-searchable form, will not require fragmented filings using both 
PDF and DOCX files, carry fewer concerns with respect to malware and 
viruses, and carry no licensing concerns. The commenter expressed that 
the DOCX file format is intended for facile editing and by design is 
not suited for archival purposes, will require fragmented filing with 
different file formats, will require archiving of files in multiple 
file formats, carries increased risk of malware and viruses, is no 
better than other editable file formats, and carries some uncertainty 
regarding licensing status.
    Response: DOCX is a word-processing file format that is part of 
Office Open XML (OOXML), an XML-based open standard approved by the 
Ecma International[supreg] consortium and subsequently by the ISO/IEC 
joint technical committee.
    For more information about the OOXML standard, please see:

 ECMA-376 at http://www.ecma-international.org/publications/standards/Ecma-376.htm
 ISO/IEC 29500 at https://www.iso.org/committee/45374/x/catalogue/
 NIST votes for US. Approval of OOXML at https://www.nist.gov/news-events/news/2008/03/nist-votes-us-approval-modified-office-open-xml-standard

    The USPTO conducted a yearlong study of the feasibility of 
processing text in PDF documents. The results showed that searchable 
text data is available in some PDFs, but the order and accuracy of the 
content could not be preserved. With DOCX, the Office is able to use 
the text directly and pass it on to USPTO downstream systems, which 
results in increased data accuracy and a more streamlined patent 
process.
    PDFs are not immune to viruses or hidden malware. However, the 
USPTO filing system is equipped with malware and virus detection.
    DOCX is supported by many popular word-processing applications, 
such as Microsoft Word, Google Docs, Pages, and LibreOffice.
    Comment 52: One commenter asked if the USPTO has facts to support 
the statement that the DOCX to PDF conversion process will work 
flawlessly 100 percent of the time. If not, the commenter asserted that 
moving to DOCX is simply not justifiable from a technical perspective.
    Response: By submitting in DOCX format directly to USPTO systems, 
submitted files from all applicants are validated and converted to PDF 
by USPTO systems in a consistent manner. The USPTO continuously 
performs rigorous testing to ensure that document integrity is 
preserved. To date, the Office has not received notifications of any 
issues resulting from the filing of applications in DOCX format. If 
there is an instance in which an error occurs, the EBC should be 
contacted for investigation at 1-866-217-9197 (toll-free), 571-272-4100 
(local), or [email protected]. The EBC is open from 6:00 a.m. to 12:00 
midnight ET, Monday through Friday.
    Comment 53: One commenter asked about a situation in which the 
USPTO's rendering engine has changed the result relative to what the 
practitioner saw on a word processor. The commenter expressed concerns 
about how to rectify such a situation and stated that knowing that 
there is a problem and being able to fix the problem in a timely manner 
may be two completely different things.
    Response: If there is an instance in which an error occurs, the EBC 
should be contacted for investigation at 1-866-217-9197 (toll-free), 
571-272-4100 (local), or [email protected]. The EBC is open from 6:00 a.m. 
to 12:00 midnight ET, Monday through Friday.
    Comment 54: A few commenters noted that the USPTO places the 
responsibility on the practitioner to check the generated PDF for 
accuracy. One commenter wanted to confirm that the authoritative 
document will be the USPTO-generated PDF rather than the DOCX that was 
submitted. Another commenter felt that USPTO-generated PDFs remove the 
applicant's ability to control accuracy, and applicants who choose to 
guarantee accuracy by filing a self-generated PDF should not be 
penalized with increased fees.
    Response: The authoritative document will be the PDF that the USPTO 
systems generate from the DOCX. The filer has always been responsible 
for the accuracy of the documents being submitted. According to surveys 
conducted by the USPTO, the majority of applicants use word-processing 
software, such as Microsoft Office and LibreOffice, which can produce a 
DOCX file.
    Currently, most applicants convert their DOCX documents to PDF and 
review the PDF documents before submission. Allowing applicants the 
ability to upload the specification, claims, and abstract in DOCX 
format reduces the applicants' burden to convert the document to PDF. 
With this new and improved process, applicants have the ability to 
upload DOCX documents directly to the USPTO filing system, which will 
automatically generate PDF documents for the uploaded DOCX files. At 
this time, applicants are encouraged to review the PDF documents before 
submission. The step of applicants reviewing their self-generated PDF 
is being replaced with their review of the USPTO-generated PDF 
document. The amount of time required by an applicant to review the 
self-generated PDF is comparable to the time to review the USPTO-
generated PDF.
    As a part of the DOCX intake process, preliminary validation is 
performed on DOCX documents at the time of upload. The system 
immediately detects and supplies the applicant with useful error and 
warning messages, allowing for adjustments to patent applications early

[[Page 46958]]

in the process. This saves time, reduces potential costs, and prevents 
delays in processing by minimizing notices from the Office of missing 
parts or incomplete applications.
    The USPTO continuously performs rigorous testing to ensure that 
document integrity is preserved. To date, the USPTO has not received 
notifications of any issues resulting from the filing of applications 
in DOCX format. If there is an instance in which an error occurs, the 
EBC should be contacted for investigation at 1-866-217-9197 (toll-
free), 571-272-4100 (local), or [email protected]. The EBC is open from 
6:00 a.m. to 12:00 midnight ET, Monday through Friday.
    Comment 55: One commenter wrote that instead of DOCX, applicants 
could upload most of their submissions as text-based PDFs. The 
commenter further stated that, currently, the USPTO's computer systems 
degrade files to flatten them to unstructured bitmaps. The commenter 
contends the problem is caused by the USPTO.
    Response: The USPTO conducted a yearlong study of the feasibility 
of processing text in PDF documents. The results showed that searchable 
text data is available in some PDFs, but the order and accuracy of the 
content could not be preserved. With DOCX, the Office is able to use 
the text directly and pass it on to USPTO downstream systems, which 
results in increased data accuracy and a more streamlined patent 
process.
    Comment 56: One commenter stated that for lengthy, complex 
specifications, the 60-minute timeout in EFS-Web would preclude 
effective review. In the case of a timeout, the subsequent re-
submission would still require the filer to review the entire 
conversion result from the beginning.
    Response: This concern can be mitigated by keeping a session 
active. The timeout process complies with National Institute of 
Standards and Technology (NIST) guidelines.
    Comment 57: One commenter recommended that no surcharge would be 
due if a substitute specification is filed after payment of a surcharge 
for filing a non-DOCX specification, claims, and/or abstract. Further, 
the commenter recommended only charging this fee once per application 
to avoid burdening those individuals who are unable to file DOCX 
documents.
    Response: Substitute specifications are considered follow-on 
documents to an existing application and would not be assessed the non-
DOCX surcharge. There will only be one fee per application because the 
surcharge only applies to initial filings of the non-provisional 
utility application filed under 35 U.S.C. 111.
    Comment 58: One commenter suggested that this surcharge be limited 
to filing of utility applications and not be extended to the filings of 
additional documents (e.g., responses, amendments, etc.) to avoid it 
unduly burdening small businesses and independent inventors by charging 
this surcharge every time a non-DOCX document is filed.
    Response: At this time, the surcharge only applies to initial 
filings of the non-provisional utility application filed under 35 
U.S.C. 111.
    Comment 59: Two commenters stated that there is no single DOCX 
standard to which Microsoft Word and the other word processors are all 
compliant.
    Response: DOCX is a word-processing file format that is part of 
Office Open XML (OOXML), an XML-based open standard approved by the 
Ecma International[supreg] consortium and subsequently by the ISO/IEC 
joint technical committee.
    For more information about the OOXML standard, please see:

 ECMA-376 at http://www.ecma-international.org/publications/standards/Ecma-376.htm
 ISO/IEC 29500 at https://www.iso.org/committee/45374/x/catalogue/
 NIST votes for U.S. Approval of OOXML at https://www.nist.gov/news-events/news/2008/03/nist-votes-us-approval-modified-office-open-xml-standard

    Comment 60: A few commenters were concerned that DOCX files that 
contain mathematical equations, chemical formulas, tables, or special 
fonts would get corrupted by the USPTO system.
    Response: When a DOCX file is uploaded to the USPTO filing system, 
a PDF equivalent document is generated for applicant review. The USPTO 
performs continuous testing of DOCX format files, including sample 
files that include mathematical equations, chemical formulas, tables, 
and special fonts. The past results have shown no issues with the 
conversion of these data types. The Office is working on advanced 
solutions so that complicated structures in chemical and biochemical 
patent applications are properly captured in DOCX format.
    After submission, applicants have the opportunity to download the 
associated XML of the submission document, which contains mathematical 
markup language (MathML) of the mathematical formulas and the content 
and structure of tables. The USPTO continuously performs rigorous 
testing to ensure that document integrity is preserved.
    To date, the Office has not received notifications of any issues 
resulting from the filing of applications in DOCX format. If there is 
an instance in which the mathematical formulas or tables are corrupted 
in the DOCX and PDF generated by USPTO systems, the EBC should be 
contacted for investigation at 1-866-217-9197 (toll-free), 571-272-4100 
(local), or [email protected]. The EBC is open from 6:00 a.m. to 12:00 
midnight ET, Monday through Friday. The USPTO's DOCX support web page 
located at https://www.uspto.gov/patent/docx contains a complete list 
of approved fonts. If there is a font that is not supported, the EBC 
should be contacted. Pending thorough analysis of the proposed font, it 
may be added to the supported font list as allowable.
    Comment 61: A few commenters suggested that requiring a 
subscription to Microsoft Word to produce DOCX files or payment of a 
significant surcharge would especially impact individual inventors and 
start-ups, who are the least able to afford it.
    Response: Microsoft Word is not required to file in DOCX format. 
Listed below are word-processing applications that can be used to file 
in DOCX format.

 Microsoft Word 2007 or higher
 Google Docs
 Office Online
 LibreOffice
 Pages for Mac

    Comment 62: One commenter stated that the USPTO's current DOCX 
system breaks page numbering and other automatic formatting features 
provided by Word because it splits a single document into three 
documents: The specification, claims, and abstract. The commenter 
further stated that the shift from PDF to DOCX will affect applicants' 
recordkeeping requirements and costs. The commenter contends the 
USPTO's Paperwork Reduction Act of 1995 (PRA) analysis fails to 
consider this and similar costs.
    Response: The USPTO considered the impact of the conversion to 
DOCX, including the aspects raised by the commenter. Applicants can 
submit one single DOCX document for the specification, including the 
written description, claims, and abstract. Alternatively, they can 
submit three separate DOCX documents (specification, claims, abstract). 
Regardless, this will not affect page numbering or recordkeeping. 
Therefore, the Office does not believe that this will increase the 
overall burden and/or costs to applicants.
    Comment 63: One commenter wrote that in the NPRM, the USPTO claims 
that over 80 percent of applicants draft

[[Page 46959]]

their patent applications in DOCX. The commenter wishes to understand 
where this data originated and submits that this does not eliminate 
document integrity issues with the USPTO receiving DOCX filings 
properly.
    Response: A survey was conducted by the USPTO to obtain this data. 
An advantage of submitting in DOCX format directly is that submitted 
files from all applicants are validated and converted to PDF by USPTO 
systems in a consistent manner. The USPTO continuously performs 
rigorous testing to ensure that document integrity is preserved.
    Comment 64: One commenter stated that no reliable process exists in 
which errors introduced by EFS-Web in its rendering of DOCX files into 
PDF files may be corrected without being subject to the risk of 
rejection for new matter.
    Response: Applicants are encouraged to review the PDF documents 
generated by the USPTO filing system before submission. The step of 
applicants reviewing their self-generated PDF is being replaced with 
their review of the USPTO-generated PDF document. The amount of time 
required by the applicant to review the self-generated PDF is 
comparable to the time to review the USPTO-generated PDF.
    To date, the Office has not received notifications of any issues 
resulting from the filing of applications in DOCX format. If there is 
an instance in which an error occurs, the EBC should be contacted for 
investigation at 1-866-217-9197 (toll-free), 571-272-4100 (local), or 
[email protected]. The EBC is open from 6:00 a.m. to 12:00 midnight ET, 
Monday through Friday.
    Comment 65: One commenter suggested that the USPTO could extract 
the convenience text from PDF documents, which, as in current practice, 
are uploaded by filers without penalty and are intended to be the 
``official'' filing artifacts. Almost all PDF files directly produced 
from word-processing software contain extractable text. (The USPTO 
states in the NPRM that more than 80 percent of filings use DOCX 
authoring tools; it is reasonable to extrapolate that a high fraction 
of non-drawing PDF files uploaded to EFS-Web could be directly produced 
by word-processing software and could contain extractable text.) Many 
PDF files created by other means also contain extractable text.
    Response: The USPTO conducted a yearlong study of the feasibility 
of processing text in PDF documents. The results showed that searchable 
text data is available in some PDFs, but the order and accuracy of the 
content could not be preserved. With DOCX, the Office is able to use 
the text directly and pass it on to USPTO downstream systems, which 
results in increased data accuracy and a more streamlined patent 
process.
    Comment 66: One commenter suggested modifying the filing system so 
that if a DOCX document contains a discrepancy, it can be corrected 
after the filing date without losing priority to the filing date.
    Response: The ability for correction after the filing date depends 
on whether it was an applicant error or Office error. If the applicant 
makes an error, there is the potential to lose priority to the filing 
date depending on the type of correction. For example, for applications 
filed on or after September 16, 2012, if there is a discrepancy between 
the information submitted in an application data sheet and the 
information submitted elsewhere in the application, the application 
data sheet will control except for the naming of inventors. The naming 
of the inventorship is governed by 37 CFR 1.41, and changes to 
inventorship or the names of inventors is governed by 37 CFR 1.48. In 
addition, for applications filed on or after September 16, 2012, the 
most recent application data sheet in compliance with 37 CFR 1.76 will 
govern with respect to foreign priority claims or domestic benefit 
claims. See 37 CFR 1.76(d) and MPEP Sec.  601.05(a). If it is the 
Office's error, applicants are encouraged to contact the Patent 
Electronic Business Center ([email protected]) or file a petition.
    Comment 67: One commenter suggested that the Office should reduce 
fees for those who file an ISO 19005-1-compliant PDF/A document, which 
is fully text searchable and accessible. The commenter also suggested 
that the Office could further reduce fees for those who file a DOCX 
version of the application with a certification of its accuracy in 
addition to their own PDF. The supplemental DOCX file would provide the 
Office with the structured text without jeopardizing the official 
application filed in PDF.
    Response: The USPTO conducted a yearlong study of the feasibility 
of processing text in PDF documents. The results showed that searchable 
text data is available in some PDFs, but the order and accuracy of the 
content could not be preserved. The USPTO has determined that increased 
data accuracy and a more streamlined patent process will result from 
DOCX submissions.
    Comment 68: One commenter suggested that the USPTO reduce the 
surcharge to reflect the true cost to the Office of processing non-DOCX 
applications (the current cost of OCR of approximately $3.15 per new 
submission) or offer a rebate for applicants filing in DOCX.
    Response: The cited cost only covers the initial OCR. The use of 
image-based PDFs incurs many costs over the lifetime of an application. 
There are large costs associated with the USPTO's systems and 
personnel, from pre-examination, examination, and publication, due to 
the need to apply OCR to convert image-based PDFs to structured text 
that can be leveraged by downstream systems. The surcharge is applied 
not only to account for these inefficiencies, but also to address 
rising expenses. Alternatively, to achieve these goals, the filing fee 
could be increased by $400 and a $400 rebate could be offered for 
filing in DOCX, but a lower filing fee with a non-DOCX surcharge makes 
the fee schedule more streamlined than a higher fee with a rebate.
    Comment 69: Several commenters asked how the Office will handle 
metadata retention to assure applicants' interests will not be harmed. 
A commenter wanted to know whether metadata would be irretrievably 
removed upon filing or if the Office would maintain multiple versions 
of an application.
    Response: Generally, applicants remove metadata from their 
applications prior to submission. However, if metadata is still 
contained in the document when uploaded, EFS-Web (and the next 
generation Patent Center tool) will automatically remove unnecessary 
document properties such as author, last modified by, etc. The only 
metadata that remains part of the document is the size, number of 
pages, and word count. The pre-scrubbed document will not be stored by 
the USPTO. Only submitted documents are stored in the USPTO repository.
    Comment 70: One commenter was concerned that the process for 
submitting a DOCX file is uncertain and unclear. When the user uploads 
a DOCX file, the USPTO system runs it through a rendering engine to 
yield a PDF file. Further, while the DOCX web page indicates that the 
submission of a DOCX file generates a unique hash based on the content 
of the file to ensure that the DOCX file cannot be changed post-
submission, there is no indication as to when and how this hash is 
checked to determine whether a document has been modified or whether it 
would matter if it had been modified, as the converted PDF document is 
the official record. Because the converted PDF document is the official 
record, it appears that any discrepancies discovered after submission 
cannot be corrected.

[[Page 46960]]

    Response: The message digest (hash) is generated to ensure non-
repudiation of the DOCX. The benefit of this generated message digest 
to the applicant is that they can verify that the submitted DOCX is 
identical to the file in their records. Additionally, the applicant is 
given an opportunity to review the generated PDF to verify that it is 
accurate prior to submission. If there is an instance in which an error 
occurs, the EBC should be contacted for investigation at 1-866-217-9197 
(toll-free), 571-272-4100 (local), or [email protected]. The EBC is open 
from 6:00 a.m. to 12:00 midnight ET, Monday through Friday.
    Comment 71: One commenter wanted the USPTO to consider the effects 
of breaking up sections of a single-source document (this is presently 
required of applicants who submit DOCX files, but the USPTO will do it 
in the future when it allows a single specification/claims/abstract 
file to be uploaded).
    Response: The next generation Patent Center tool will be available 
to the public before the non-DOCX surcharge is implemented and will 
support the ability to upload a single file that contains all three 
application parts: Specification, claims, and abstract.
    Comment 72: One commenter wrote that the USPTO stated 
``Applications filed using DOCX will be more accessible in future 
searches of publication materials.'' The commenter wanted to know what 
this statement meant, relative to OCR.
    Response: Structured text coming directly from DOCX submissions can 
be used for future initiatives to help streamline the patent process. 
The current publication process involves human intervention and text 
OCR'ed from images, which may contain errors. The goal is to leverage 
the structured text submitted by applicants, which will be more 
accurate than OCR'ed text, in downstream business processes.
    Comment 73: One commenter asked if the non-DOCX filing surcharge 
will apply to divisional and continuation applications.
    Response: Yes, the surcharge applies to divisional and continuation 
applications.
    Comment 74: One commenter wanted to know if the non-DOCX surcharge 
fee can be avoided in continuing applications by ``filing by 
reference,'' as provided in MPEP 601.01(a)(III).
    Response: No, the surcharge cannot be avoided by filing by 
reference in a continuing application.
    Comment 75: One commenter asked if the surcharge will apply to PCT 
applications at national stage entry.
    Response: No, the surcharge does not apply to a PCT application at 
national stage entry.
    Comment 76: One commenter wanted to know if the surcharge applies 
to any other filings beyond filing the initial application (such as: 
Office action responses, preliminary amendments, a response with a 
replacement specification, etc.).
    Response: No, the surcharge will not apply at this time.
    Comment 77: One commenter questioned whether the surcharge will 
apply if, at filing, the applicant included both a DOCX and a PDF 
version of the application.
    Response: Applicants should not file both the DOCX and a PDF 
version of the application, as this may delay the processing of their 
application. The copy of the specification not filed in DOCX would 
require the surcharge, as the entire application capable of being filed 
in DOCX was not filed in DOCX.
    Comment 78: One commenter wanted to know whether the non-DOCX 
surcharge would be imposed in addition to the paper-filing surcharge 
for an application filed on paper.
    Response: Yes, both surcharges would be imposed.
    Comment 79: One commenter noted that plant patent applications have 
been required to be filed on paper and wondered whether the non-DOCX 
surcharge would apply to all plant patent applications.
    Response: No, the non-DOCX filing surcharge would not apply to 
plant patent applications. At this time, the surcharge only applies to 
initial filings of non-provisional utility applications filed under 35 
U.S.C. 111.
Pro Hac Vice
    Comment 80: One commenter requested that the Office clarify the 
specifics of the fee to request pro hac vice admission in an AIA trial 
proceeding.
    Response: The pro hac vice admission fee is per attorney, per AIA 
trial proceeding. Once the request is granted, the attorney is admitted 
for the entire duration of the AIA trial proceeding, which may extend 
for several years. Individuals not seeking to be recognized as an 
attorney of record in the AIA trial proceeding, such as expert 
witnesses, are not required to pay the fee.
Annual Active Patent Practitioner Fee
    Comment 81: Multiple commenters oppose any practitioner fee. Three 
of the commenters stated that the USPTO should be able to fund itself, 
including the costs of OED, with other revenue sources such as patent 
fees, and not practitioner fees. One of the commenters suggested that 
the USPTO cut costs elsewhere to compensate for the costs to be covered 
by the proposed annual active patent practitioner fee. One other 
commenter opposed funding OED through an annual active patent 
practitioner fee as established in the NPRM. Another commenter asserted 
that the justification provided for the fee is inadequate.
    Response: The USPTO received a number of comments on the proposed 
annual active patent practitioner fee. As discussed above, having 
further considered the public feedback on this proposal, the USPTO has 
determined that it will not implement the proposed annual active patent 
practitioner fee at this time.
    Comment 82: One commenter suggested the materials provided by the 
USPTO identify no statutory authorization. The commenter contended 
Sec.  41(d)(2)(A) permits the director to ``establish fees for all 
other processing, services, or materials,'' but the USPTO has failed to 
identify a specific ``processing, service, or material'' that is 
provided. The commenter also contended Sec.  2(a)(2)(D) authorizes the 
director to ``govern recognition and conduct of agents [and] 
attorneys,'' but no fee is authorized as part of Sec.  2(a)(2)(D).
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 83: Two commenters wanted the USPTO to remove the annual 
active patent practitioner fee and CLE discount from the NPRM and to 
issue one or more separate NPRMs for any proposed annual active patent 
practitioner and CLE discount or requirement. A commenter argued that 
as a new fee, the newly proposed practitioner fee (and rules) likely 
must be implemented, if at all, only after issuing a Federal Register 
notice under the Administrative Procedures Act (APA).
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 84: One commenter stated that section 3(b)(1) of Executive 
Order (E.O.) 12866 (Regulatory Planning and Review) requires that the 
USPTO ``identify the problem that it intends to address (including, 
where applicable, the failures of private markets or public 
institutions that warrant new agency action) as well as assess the 
significance of that problem.'' The commenter

[[Page 46961]]

further stated that the APA requires a statement of rationale at the 
proposal stage.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 85: One commenter stated that the annual active patent 
practitioner fee is not in compliance with E.O. 12866, in part, because 
the NPRM did not include an estimate of either costs or benefits of the 
intended regulation and thus no balancing against the status quo. 
Another commenter similarly stated that the USPTO has not quantified 
and monetized the benefits and costs and evaluated non-quantified and 
non-monetized benefits and costs as required by OMB Circular A-4.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 86: One commenter wrote that the USPTO must analyze costs 
for all patent agents and patent attorneys who do not have an existing 
CLE requirement that would overlap with any USPTO requirement.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. Under this Final Rule, completion of CLE remains 
voluntary. However, the Final Rule provides that patent practitioners 
who have completed six credits of CLE within the preceding 24 months 
may certify such completion to the OED director. The USPTO intends to 
issue proposed CLE guidelines, with a request for public comment on the 
proposed guidelines.
    Comment 87: One commenter claimed the Regulatory Flexibility 
Analysis must analyze the effect of the annual active patent 
practitioner fee on small entities because a great number of 
practitioners work for small entities.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 88: One commenter stated the USPTO must be able to certify 
that the annual active patent practitioner fee requirement is 
``necessary for the proper performance of the functions of the 
agency.'' 44 U.S.C. 3506(c)(3)(A).
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 89: One commenter stated that the USPTO must be able to 
certify that the annual active patent practitioner fee requirement is 
implemented in ways ``consistent and compatible, to the maximum extent 
practicable, with the existing reporting and recordkeeping practices of 
those who are to respond,'' including those attorneys in states that do 
not have existing CLE requirements, and for all agents.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. Under the Final Rule, completion of CLE remains 
voluntary.
    Comment 90: One commenter argued the statement in 84 FR 37422 at 
col. 1 that, ``The USPTO proposes to add paragraph (d) to Sec.  11.8 to 
establish a new fee to be paid annually by practitioners'' and the 
statement in E.O. 13771 certification, at 84 FR 37430 that states 
``this proposed rule is expected to involve a transfer payment'' cannot 
both be true. The commenter contended the annual active patent 
practitioner fee does not fit any of the applicable definitions of 
``transfer payment.''
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 91: One commenter claimed the USPTO's proposed $100 annual 
fee discount, as well as recognition on OED's public practitioner 
search page for completed CLE, are encouragements that make the annual 
active patent practitioner fee an unconstitutional tax.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. In addition, under the Final Rule, completion of CLE 
remains voluntary. However, practitioners may be recognized in the 
online practitioner directory if they certify completion of six credit 
hours of CLE (five in patent law and practice; one in legal ethics) in 
the preceding 24 months.
    Comment 92: One commenter stated that the USPTO needs to account 
for the costs of reporting and recordkeeping and other compliance costs 
for the annual active patent practitioner fee under the PRA, including 
a discussion of the lowest burden alternative, and that the public 
benefit is in the same range. The commenter suggested that the annual 
fee must be the least costly way to achieve the benefit.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 93: One commenter stated that the USPTO does not specify in 
the NPRM what the ``qualitative benefits'' are for the annual active 
patent practitioner fee.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 94: A few commenters requested that the USPTO identify the 
statutory authority allowing for defraying the patent-related costs of 
operating OED by imposition of an annual active patent practitioner fee 
and also for the CLE requirement. One of the commenters stated that the 
NPRM is not explicit about the basis for setting the fee but that it is 
suggested that it is being set under the ``Other fees'' provisions of 
35 U.S.C. 41(d)(2)(A). The commenter requested the USPTO explain how 
the proposed fees involve a service to the person being charged the fee 
in accordance with 31 U.S.C. 9701 (specifying that user fees must be 
set based on ``the value of the service or thing to the recipient''). 
One of the commenters stated that section 10 of the AIA prohibits the 
creation of new fees, such as the annual active patent practitioner 
fee.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. Under the Final Rule, completion of CLE remains 
voluntary.
    Comment 95: One commenter requested that the Office consider 
approving USPTO CLE courses for on-duty training of patent examiners. 
Another two commenters requested that the Office consider making the 
USPTO CLE courses required for Office employees, including patent 
examiners. One of these commenters requested that the USPTO have 
employees pay an annual employee fee as a pilot program prior to 
instituting the Final Rule to at least partially fund the USPTO.
    Response: Patent examiners receive extensive on-duty training for 
the performance of their official duties on a continual basis. Patent 
examiner training is specifically tailored to the requirements of the 
position and includes examiner guidance based on changes in the law and 
regulations. However, CLE courses offered by the USPTO are generally 
available to employees, just as they are available to other members of 
the public. The USPTO is not requiring that any member of the patent 
bar complete CLE and will not be requiring CLE of USPTO

[[Page 46962]]

employees who happen to be members of the patent bar.
    Comment 96: One commenter suggested that the first three to five 
years of the annual active patent practitioner fee be waived to 
alleviate the cost burden for those who become registered patent 
practitioners before attending law school.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 97: A few commenters suggested that the annual active 
patent practitioner fee is a tax, specifically a tax on innovation. Two 
of these commenters and three other commenters stated the annual active 
patent practitioner fee would particularly affect smaller law firms or 
part-time practitioners who represent smaller entities and independent 
inventors. The commenters further asserted that if individuals are 
deterred from patent practice, some patent applicants may be priced out 
of legal services. It is postured that this would increase the volume 
of pro se filings, inefficiency, cost, and use of USPTO resources.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 98: One commenter suggested that the annual active patent 
practitioner fees will be siphoned off to Treasury funds, 
disincentivizing innovation by misallocating funds. Another two 
commenters questioned what the funds collected from the annual active 
patent practitioner fee would be used for. One of these commenters 
requested that the funds collected be used to fund pro se services.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 99: Two commenters stated that the new annual active patent 
practitioner rules seem to require unneeded CLE where state bar 
associations already provide ample training. One commenter inquired 
whether the CLE reporting period would align with the reporting periods 
used by state bars.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. In addition, under the Final Rule, completion of CLE 
remains voluntary. However, patent practitioners who certify completion 
of six credit hours of CLE in the preceding 24 months, including five 
hours of patent law and practice and one hour of ethics, may be 
recognized in the online practitioner directory. Generally, the same 
types of courses and activities that qualify for CLE credit for a state 
bar will qualify for credit for purposes of the CLE recognition in the 
online practitioner directory, so long as it covers the appropriate 
topics. It is expected that these CLE reporting periods will not align 
with all state bar reporting periods, as they vary from state to state. 
Each CLE certification for the purposes of recognition in USPTO's 
online practitioner directory should be supported by the completion of 
different CLE courses. In other words, practitioners may not use the 
same courses to certify to the USPTO more than once that they have 
completed the six credits of CLE.
    Comment 100: One commenter stated that there was no explanation in 
the NPRM for the: (1) Manner of collecting the payment for the annual 
active patent practitioner fee, (2) different classes of practitioners 
having different fee requirements, (3) penalties for non-compliance, 
and (4) options for reinstatement. Another commenter inquired as to the 
process for reinstatement.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 101: One commenter stated that once the annual active 
patent practitioner fee is imposed, the fee will be increased over 
time, which will change the dynamics of practicing in patent matters 
before the USPTO.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 102: One commenter stated that, regarding the annual active 
patent practitioner fee, taxpayers, not patent practitioners, should 
pay for the Patent Pro Bono Program because taxpayers benefit from the 
program. Additionally, the commenter stated that there are already pro 
bono programs operated by law schools and non-governmental 
organizations that address this need.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 103: A few commenters stated that, regarding the annual 
active patent practitioner fee, as attorneys, they already pay state 
bar dues and attend CLE, and the USPTO needs to account for those costs 
when charging the fee. One additional commenter stated that the USPTO 
must analyze costs for all patent attorneys who are admitted to the 
bars of any state that does not impose an existing CLE requirement that 
would overlap with any USPTO CLE requirement.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. The Office appreciates that CLE is required by other 
state bar organizations. Under this Final Rule, completion of CLE 
remains voluntary, but in taking six hours of CLE, practitioners may be 
recognized in the online practitioner directory. Additionally, 
practitioners may avoid duplicate expenses, as some or all of the CLE 
courses attended by practitioners as required by their state bar 
membership may count toward the six hours of CLE necessary to qualify 
for the USPTO CLE recognition.
    Comment 104: One commenter inquired about the implications of an 
administratively suspended or voluntarily suspended practitioner giving 
advice on a patent matter versus signing documents before the Office, 
and whether giving advice on a patent matter would be considered 
practice before the Office.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. However, the Final Rule requires patent practitioners 
to biennially file a registration statement. If a patent practitioner 
fails to timely file a registration statement, the patent practitioner 
may be administratively suspended, as is the case for patent 
practitioners who fail to respond to the practitioner survey. 37 CFR 
11.5(b)(1) states, in part, that, ``Practice before the Office in 
patent matters includes, but is not limited to . . . consulting with or 
giving advice to a client in contemplation of filing a patent 
application or other document with the Office.'' Thus, practice before 
the Office is not limited to signing documents. An administratively 
suspended practitioner is under the disciplinary jurisdiction of the 
Office. See 37 CFR 11.19(a). Those who engage in the practice of patent 
law before the Office without being in active status may be engaging in 
the unauthorized practice of law and can be subject to discipline. See 
37 CFR 11.10, 11.11(a)(6), and 11.505. Under this Final Rule, there is 
no ``voluntarily

[[Page 46963]]

suspended'' status. Voluntary inactive status, which is currently 
governed by 37 CFR 11.11(d), is unchanged by this Final Rule.
    Comment 105: Two commenters inquired if an administratively 
suspended or voluntarily suspended patent agent will lose attorney-
client privilege due to their suspended status.
    Response: Under this Final Rule, there is no voluntary suspended 
status. All practitioners, including suspended patent agents, must 
comply with the USPTO Rules of Professional Conduct, including those 
pertaining to confidentiality of information. See 37 CFR 11.106. 
Attorney-client privilege is an evidentiary rule regarding 
communications. See e.g., Fed. R. Evid. 501. The right to assert 
attorney-client privilege belongs to the client, and the privilege 
exists for the client's benefit. See e.g., Magnetar Techs. Corp. v. Six 
Flags Theme Park Inc., 886 F.Supp.2d 466 (D. Del. 2012). Patent agents 
are not attorneys in that they are not active members in good standing 
of the bar of the highest court of any state. See 37 CFR 11.1. The 
scope of the privilege as it applies to communications between clients 
and patent agents has been discussed or determined by some tribunals. 
See e.g., In re Queen's Univ. at Kingston, 820 F.3d 1287 (Fed. Cir. 
2016); In re Silver, 540 SW3d 530 (Tex. 2018); and Privilege for Patent 
Practitioners, 37 CFR 42.57. The scope of the privilege as it applies 
to communications between a client and an administratively suspended 
attorney, in general, is a matter of state law and has been addressed 
by some courts. See, e.g., Gucci America, Inc. v. Guess?, Inc., No. 09 
Civ. 4373, 2011 WL 9375 (S.D.N.Y. Jan. 3, 2011); Safety Mgmt. Sys. v. 
Safety Software Ltd., No. 10 Civ. 1593, 2011 WL 4898085 (S.D.N.Y. Oct. 
5, 2011); Restatement (Third) of the Law Governing Lawyers Sec.  72, 
cmt. e, reporter's note cmt. e (2000) (citing cases).
    Comment 106: Two commenters stated that the statuses for patent 
practitioners discussed in the NPRM, including administratively 
suspended, suspended due to discipline, voluntary inactive, emeritus, 
and resigned, are too numerous and complex for section 10 of the AIA 
fee setting authority and should be implemented in a separate rule 
package because each status has separate fee and reinstatement 
requirements.
    Response: No new statuses for patent practitioners are created by 
this Final Rule.
    Comment 107: Two commenters inquired why someone would opt for 
voluntary suspension status over emeritus status, as there are no fees 
for emeritus status and reactivation is easier.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
this fee. Accordingly, emeritus status has been eliminated from the 
Final Rule. Furthermore, no ``voluntary suspension status'' was 
proposed by the NPRM or included in the Final Rule.
    Comment 108: One commenter inquired if the Office considered that 
an inadvertently administratively suspended attorney may need to report 
the suspension to their state bar.
    Response: If a patent practitioner is a member of a state bar, it 
is expected that the practitioner comply with the USPTO Rules of 
Professional Conduct, as well as any applicable state ethics rules, 
which may include any applicable reporting requirements in state bar 
rules.
    Comment 109: A few commenters stated that the CLE discount is not 
much of an incentive, given the cost of CLE programs, including out-of-
pocket expenses and lost productivity, and it is likely that 
practitioners will choose not to make the certification and instead pay 
the undiscounted annual active patent practitioner fee. One commenter 
concluded that the discount therefore seems to be a tax. Another 
commenter stated that if the proposed discount and online recognition 
are meant to encourage CLE, then the proposal constitutes a tax that is 
being used to set policy.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time, and thus, there is no CLE discount in this Final 
Rule. Under this Final Rule, completion of CLE remains voluntary. 
However, this rule provides that practitioners may be recognized in the 
online practitioner directory for completing six credits of CLE in the 
preceding 24 months, including five credits in patent law and practice 
and one credit in ethics. CLE comports with the goal and spirit of 37 
CFR 11.101: The USPTO requires the practitioner to be competent in the 
legal, scientific, and technical knowledge and skills reasonably 
necessary for client representation. This rule also provides that 
practitioners may obtain up to two of the five credits in patent law 
and practice by completing patent pro bono work.
    Comment 110: A few commenters stated that the annual active patent 
practitioner fee would disproportionately affect patent agents because 
they do not currently have a CLE requirement, and they would therefore 
incur an extra expense as compared to patent attorneys. Two of these 
commenters additionally stated that publication of the CLE 
certification status of practitioners by the OED director may be 
equivalent to a public shaming of those patent practitioners who do not 
have a state CLE requirement or who opt to pay the full fee, resulting 
in unfair prejudice toward those who do not certify completion of CLE 
and essentially making CLE mandatory.
    Response: In this Final Rule, there is no active patent 
practitioner fee, and thus there is no CLE discount. In addition, under 
the Final Rule completion of CLE remains voluntary. Separately, this 
rule provides for publication of a patent practitioner's CLE 
certification status, which is intended to encourage patent 
practitioners to participate in CLE and provide information to the 
public regarding the patent practitioner's CLE status. The USPTO also 
intends to provide additional free CLE courses to patent practitioners, 
thus alleviating the financial burden of obtaining CLE credits.
    Comment 111: Two commenters stated that unless the USPTO, in 
advance, actively commits resources to providing free, regular, and 
frequent qualifying CLE courses in the required areas, some 
practitioners, particularly solo practitioners and patent agents, will 
bear an additional financial burden or cost of doing business. One 
commenter requested that the Office explain how the USPTO will 
alleviate future CLE burden and cost.
    Response: The USPTO intends to provide additional free CLE courses 
for patent practitioners.
    Comment 112: One commenter inquired if, in determining a proper fee 
amount for the projected number of registered practitioners expected to 
pay each type of fee, factors such as the historical trends of active 
practitioner populations by registration year, including both estimated 
new practitioner registration as well as likely attrition rates from 
older subsets, were taken into consideration.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 113: One commenter stated that there is currently no 
mechanism for CLE to be recorded for non-attorney patent agents. This 
commenter inquired how patent agents would be able to avoid paying the 
full fee in the first year

[[Page 46964]]

without procedures or a mechanism established well in advance for 
patent agents to secure qualifying CLE credits. This commenter further 
inquired whether practitioners would be able to reference a training or 
workshop they attended even if they were not able to receive CLE 
credits at the time of participation.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time, thus, there is no CLE discount. However, patent 
practitioners who wish to receive recognition in the online 
practitioner directory for the completion of CLE are responsible for 
tracking their own CLE course attendance and credits, regardless of the 
method in which such credits are recorded (or not recorded) by a state 
bar or other organization. In order for the CLE credit to count toward 
recognition in the online practitioner directory, the credit must be 
acquired in the 24 months preceding the certification. The USPTO 
intends to coordinate the delivery of CLE programs, and make the 
completion of CLE--whether offered by the USPTO or third parties--as 
convenient as possible for practitioners to complete, while enhancing 
practitioner access to, and opportunities for, the training necessary 
to stay up-to-date with current ethics and patent law and practice.
    Comment 114: One commenter inquired how practitioners will be able 
to determine, in advance, which third-party CLE programs will be 
adequate for meeting the CLE requirement.
    Response: Under this Final Rule, the completion of CLE is 
voluntary. For patent practitioners who wish to complete CLE and obtain 
recognition in the online practitioner directory, the USPTO intends to 
coordinate the delivery of CLE programs, and make the completion of 
CLE--whether offered by the USPTO or third parties--as convenient as 
possible for practitioners to complete, while enhancing practitioner 
access to, and opportunities for, the training necessary to stay up-to-
date with current ethics and patent law and practice. Additionally, in 
the near future, the USPTO intends to issue proposed CLE guidelines, 
with a request for public comment, as to the types of CLE programs, 
including those offered by third parties, which may qualify for the CLE 
certification and the form of recognition in the online practitioner 
directory.
    Comment 115: One commenter inquired if practitioners will be 
required to submit formal documentation of their CLE training on an 
annual basis or if each practitioner would have to maintain their own 
CLE documentation records to certify they have completed the CLE. 
Another commenter requested clarification on the recordkeeping 
requirements for CLE, including what type of proof is sufficient to 
demonstrate CLE completion. Another commenter requested clarification 
on what CLE would be tracked and how long it would be tracked.
    Response: In the near future, the USPTO intends to issue proposed 
CLE guidelines, with a request for public comment on the proposed 
guidelines. The proposed CLE guidelines will address recordkeeping 
standards for practitioners who wish to certify completion of CLE and 
obtain recognition in the online practitioner directory. In general, it 
is contemplated that the proposed CLE guidelines will provide that 
practitioners are to retain their own CLE documentation records for a 
period of time.
    Comment 116: Two commenters stated that they are supportive of the 
notion to incentivize active practitioners to enhance and maintain 
their ongoing legal education awareness and skills by providing a $100 
discount for registered practitioners who certify completion of CLE.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. Thus, there is no discount associated with the 
completion of CLE. However, the Office may recognize patent 
practitioners in the online practitioner directory if they have 
completed six credits of CLE in the preceding 24 months. The Office 
believes that this will similarly incentivize active patent 
practitioners to enhance and maintain their skills.
    Comment 117: Two commenters inquired if the Office considered that 
imposing the annual active patent practitioner fee may result in an 
increase in practitioner malpractice premiums, especially if the USPTO 
does not actively notify practitioners of their due dates by both USPS 
mail and email. One of these commenters suggested that notification by 
mail alone may be insufficient, and the Office should encourage 
practitioners to register multiple mailing and email addresses with 
OED. One other commenter encouraged OED to use both practitioners' 
addresses in the register and those in other USPTO databases to send 
out notices regarding payment, deadlines, and non-payment. The same 
commenter requested that OED telephone practitioners regarding non-
payment of the annual active patent practitioner fee.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the active patent practitioner fee at this 
time. Under the Final Rule, patent practitioners are required to submit 
an electronic registration statement, which takes the place of the 
practitioner survey. Prior to this Final Rule, patent practitioners 
were subject to administrative suspension for failure to respond to the 
practitioner survey. Likewise, under the Final Rule, patent 
practitioners who fail to submit a registration statement are subject 
to administrative suspension. The Office intends to notify patent 
practitioners of the due date of the registration statement at least 
120 days before such date. Additionally, 37 CFR 11.11(a) requires 
practitioners to provide OED with at least one and up to three email 
addresses where the practitioner receives email. Patent practitioners 
are encouraged to make updates in a timely manner to and ensure the 
accuracy of their contact information in accordance with 37 CFR 
11.11(a) so that OED may timely communicate with practitioners 
regarding any applicable deadline.
    Comment 118: Multiple commenters stated the annual active patent 
practitioner fee is too high. One commenter stated that the fee will 
deter some practitioners and add a barrier to entry. One commenter 
suggested setting the fee to the CLE discount level and providing a 
discount to solo practitioners, or patent practitioners employed by a 
small law firm, non-profit, and/or the government because, otherwise, 
payment of the fee may become prohibitively expensive. Another 
commenter stated that instead of providing the CLE discount, the Office 
should provide a discount to practitioners who provide pro bono 
services via the Patent Pro Bono Program. The commenter also stated 
that the annual active patent practitioner fee is substantially higher 
than some state bar fees. One of these commenters concluded the fee was 
too high to just cover administrative costs and aiding the pro bono 
programs. Additionally, the commenter would like the CLE discount to be 
greater than $100. The other commenter stated that most practitioners 
do not work in large city firms and therefore cannot afford the fee. 
Another commenter stated that the annual active patent practitioner fee 
should only be high enough to maintain the roster and should not be 
used to administer CLE, pro bono activities, or outreach, such as 
speaking engagements, as there are already

[[Page 46965]]

mandatory fee schedules in place (i.e., small entity and micro entity) 
to aid financially under-resourced inventors. Other commenters 
questioned whether the annual active patent practitioner fee should be 
used to fund activities outside of practitioner discipline.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 119: A few commenters stated that the annual active patent 
practitioner fee will be passed on as overhead to applicants and that 
it is illusory to suggest that applicants will not eventually bear the 
cost of the fees.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 120: One commenter suggested that there should be no 
``voluntary inactive'' or ``emeritus'' status because it seems to 
indicate that the USPTO is encouraging inactivity of practitioners who 
should always have a professional obligation to remain apprised of the 
current rules, case law, and filing procedures.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. As a result, the USPTO is not implementing the 
proposed emeritus status. Voluntary inactive status, which is currently 
available to practitioners pursuant to 37 CFR 11.11(d), is not altered 
by this Final Rule.
    Comment 121: Multiple commenters opposed offering a discount on the 
annual active patent practitioner fee for completion of CLE. One of the 
commenters asserted that by doing so, the USPTO is implying that it is 
permissible not to take CLE, as long as the USPTO gets paid more money. 
Commenters stated that any CLE requirement should be decoupled from the 
annual active patent practitioner fee.
    Response: This comment has been adopted in part. As noted in 
response to Comment 81 above, the USPTO has elected not to implement 
the proposed annual active patent practitioner fee at this time. Under 
this Final Rule, patent practitioners are not required to complete any 
CLE. However, patent practitioners may be able to obtain recognition in 
the online practitioner directory by certifying that they completed six 
credits of CLE within the 24 months prior to the certification 
(including five credits of patent-related CLE and one credit of ethics 
CLE). The Office believes that CLE serves to enhance patent 
practitioners' legal skills and encourages patent practitioners to 
enhance their knowledge in the areas of patent and ethics legal skills. 
Competency in these areas is expected pursuant to the USPTO Rules of 
Professional Conduct.
    Comment 122: Two commenters questioned the value of CLE. One of 
these commenters questioned the statement, ``CLE serves to enhance 
practitioners' legal skills.'' 84 FR 37415. One of these commenters 
stated that the present burden on attorneys of complying with CLE 
requirements is already onerous.
    Response: At least 46 states have implemented mandatory CLE for 
attorneys. Consistent with USPTO's past statements regarding the 
completion of CLE, the primary purposes of CLE are to ensure lawyer 
competence, maintain public confidence in the legal profession, and 
support the fair administration of justice. See 78 FR 20188; Report of 
the Standing Committee on Continuing Legal Education of the American 
Bar Association (February 2017); and ABA Model Rule on Continuing Legal 
Education, February 2017, ``Purpose.'' Recognition in the online 
practitioner directory will also serve to provide information to the 
public regarding a patent practitioner's CLE status. The USPTO intends 
to coordinate the delivery of CLE programs and make the completion of 
CLE--whether offered by the USPTO or third parties--as convenient as 
possible for patent practitioners to complete, while enhancing patent 
practitioner access to, and opportunities for, the training necessary 
to stay up-to-date with current ethics and patent law and practice. 
Thus, completion of CLE for state bar purposes may also satisfy the 
requirements to receive recognition in the online practitioner 
directory.
    Comment 123: One commenter stated that the proposed practitioner 
fee is not in compliance with E.O. 12866, in part, because the NPRM did 
not include an estimate of either costs or benefits of the intended 
regulation and thus no balancing against the status quo.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 124: One commenter stated that the USPTO needs to account 
for the costs of reporting and recordkeeping and other compliance costs 
for the annual active patent practitioner fee under the PRA, including 
a discussion of the lowest burden alternative and that the public 
benefit is in the same range. The commenters suggested that the annual 
active patent practitioner fee must be the least costly way to achieve 
the stated benefit.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 125: One commenter stated that the USPTO must be able to 
certify that the annual active practitioner fee requirement is 
implemented in ways ``consistent and compatible, to the maximum extent 
practicable, with the existing reporting and recordkeeping practices of 
those who are to respond,'' including for those attorneys in states 
that do not have existing CLE requirements, and for all agents.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. Additionally, under the Final Rule, patent 
practitioners are not required to complete CLE.
    Comment 126: One commenter stated that, regarding the annual active 
patent practitioner fee, the USPTO has not quantified and monetized the 
benefits and costs and evaluated non-quantified and non-monetized 
benefits and costs as required by OMB Circular A-4.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 127: Two commenters stated that the USPTO does not need to 
engage in activities similar to state bars because either there is no 
similar activity at the USPTO, or such activities would be redundant 
with what is provided by state bars. Another commenter stated that 
state bar associations provide more distinct services to member 
attorneys than OED provides to patent practitioners.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. However, the USPTO engages in activities that are of 
concern to its stakeholders, who include patent practitioners. 
Activities provided by state bars are generally provided to attorneys 
registered with the state bar or to the clients of such attorneys. Most 
state bars do not provide patent agents access to such activities, as 
they are not registered with state bars. Thus, USPTO activities 
governed by this Final Rule address, in part, a gap in services to 
practitioners and their clients. Additionally, the USPTO provides free 
patent legal training to practitioners, a

[[Page 46966]]

service that is distinct to patent practitioners.
    Comment 128: Two commenters inquired whether the USPTO should 
impose surcharges for pro se applicants due to the cost of examining 
pro se applications.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 129: Two commenters stated that the USPTO has not provided 
an accounting of the costs of the services provided for by the proposed 
annual active patent practitioner fee and needs to do so. The commenter 
stated that without a detailed cost accounting, the annual active 
patent practitioner fee seems excessive to fund the current services 
provided by the OED, especially when considered as an increase to 
existing fees collected pursuant to 37 CFR 1.21(a)(1)-(10).
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 130: Two commenters stated that OED has been in existence 
without the annual active patent practitioner fee and has never needed 
the annual active patent practitioner fee, unlike state bars, which are 
only funded by fee revenue from practicing attorneys. One of the 
commenters stated the USPTO must be able to certify that the 
requirement is ``necessary for the proper performance of the functions 
of the agency.'' 44 U.S.C. 3506(c)(3)(A). One of the commenters 
additionally stated that it is not a valid reason to impose the fee 
because other jurisdictions do so. One commenter requested that the 
USPTO provide a justification or reasoning for why establishing an 
annual active patent practitioner fee is being implemented now, when a 
similar proposal was made and not adopted in the 2000s.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 131: Two commenters stated that ensuring the accuracy of 
OED's records can be accomplished by a periodic registration 
requirement that does not require a fee, and OED already has the 
authority under 37 CFR 11.11 to conduct periodic surveys of registered 
practitioners, which would accomplish that goal.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. The USPTO must maintain accurate records regarding 
the patent practitioners who practice before it for the benefit and 
protection of the public. Patent practitioners are required under 37 
CFR 11.11(a) to update their contact information within 30 days of the 
date such information changed; however, many fail to do so. This 
provision was in effect prior to this Final Rule and continues to be in 
effect. Patent practitioner surveys have been conducted in the past, 
and many patent practitioners have failed to respond at great expense 
to the public and the USPTO. Thus, under this Final Rule, OED will be 
able to maintain accurate records by having patent practitioners 
electronically submit registration statements on which practitioners 
will indicate whether they are currently in active status and list 
their current contact information.
    Comment 132: One commenter requested that, regarding the CLE 
option, the Office state (1) whether the Office feels that there exist 
major deficiencies in the corpus of practitioners in its practice 
before the Office, (2) how CLE will solve these deficiencies, and (3) 
any other justification for requiring CLE.
    Response: This Final Rule does not require practitioners to 
complete any CLE.
    Comment 133: One commenter requested that the Office allow the 
requirement to take CLE to expire after one or two years if the 
benefits and goals of CLE are not attained.
    Response: This Final Rule does not require patent practitioners to 
complete CLE courses. Thus, it is left up to the individual patent 
practitioner to evaluate the relative costs and benefits of taking CLE 
courses to improve his or her patent legal skills and/or obtain 
recognition in the online practitioner directory for completing CLE.
    Comment 134: One commenter requested that the Office offer its own 
free CLE programs in an electronically accessible format, such as a 
web-based presentation, and ensure that such CLE programs complied with 
each state bar's CLE requirements (for those states requiring CLE).
    Response: The Office currently offers free CLE programs that 
qualify for state bar credit in electronically accessible format. At 
present, they are available under the ``Learning and Resources'' tab on 
the uspto.gov web page. The Office will endeavor, where feasible, to 
structure programs that would meet both the requirements for USPTO CLE 
credit and the traditional requirements for CLE credit in other 
jurisdictions.
    Comment 135: Two commenters requested that, prior to instituting 
the annual active patent practitioner fee and CLE option, the Office 
analyze the option under the PRA. The commenters specifically requested 
that the Office analyze the technical, administrative, and paperwork 
burden imposed, as well as the justifications for such burdens, and 
that the cost of the burdens would at least equal the benefits, and 
that the practitioner fee is the least costly way to achieve those 
benefits. Additionally, the commenters noted that the NPRM states that 
the information collection requirements were reviewed under OMB control 
nos. 0651-0012, 0651-0016, 0651-0020, 0651-0021, 0651-0031, 0651-0032, 
0651-0033, 0651-0059, 0651-0063, 0651-0064, 0651-0069, and 0651-0075, 
but none of these appear to relate to annual active patent practitioner 
fees or CLE requirements. One of the commenters stated that such 
collection requirements should be reviewed under 0651-0012, ``Admission 
to Practice and Roster of Registered Patent Attorneys and Agents.''
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 136: One commenter inquired whether OED is prepared to 
qualify seminars in the same manner that state bar associations qualify 
seminars for both substantive and ethics-based CLE credits. The 
commenter inquired whether OED will submit the materials to all 50 
states and the District of Columbia for certification. One commenter 
inquired as to whether, like state bars, the Office intends to charge 
institutions for offering CLE programs that are in compliance with the 
expectations and requirements of the Office for CLE certification.
    Response: In the near future, the USPTO intends to issue proposed 
CLE guidelines, with a request for public comments on them. It is 
anticipated that the proposed guidelines will address issues including 
qualification of CLE programs. However, the Office will endeavor, where 
feasible, to structure programs it provides in accordance with the 
traditional requirements for CLE credit in other jurisdictions.
    Comment 137: A few commenters requested that the Office identify 
the statutory authority allowing for defraying the patent-related costs 
of operating OED by imposition of an annual active patent practitioner 
fee, and also for the CLE requirement. One of the commenters states 
that the NPRM is not explicit about the basis for setting the fee but 
that it is suggested that it is

[[Page 46967]]

being set under the ``Other fees'' provisions of 35 U.S.C. 41(d)(2)(A). 
The commenter requested the USPTO explain how the proposed fees involve 
a service to the person being charged the fee in accordance with 31 
U.S.C. 9701 (specifying that user fees must be set based on ``the value 
of the service or thing to the recipient''). One of the commenters 
stated that section 10 of the AIA prohibits the creation of new fees, 
such as the annual active patent practitioner fee. One of the 
commenters opined that the annual active patent practitioner fee and 
CLE rules are not in compliance with E.O. 13771 (Reducing Regulation 
and Controlling Regulatory Costs) (January 30, 2017). One of the other 
commenters opined that the Independent Offices Appropriations Act of 
1952 (IOAA) prohibits fees for general operating costs and that the 
annual active patent practitioner fee does not meet the qualifications 
for a ``transfer payment.''
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 138: Two commenters requested clarification of the scope of 
acceptable patent and ethics CLE topics. One of these commenters 
inquired as to where CLE credit could be obtained, and the projected 
costs of attaining CLE credit. One commenter specifically inquired as 
to whether patent law and practice courses could include courses on 
estates and trusts, corporate regulation, and litigation-related 
topics, and whether ethics courses could include those related to 
substance abuse.
    Response: In the near future, the USPTO intends to issue proposed 
CLE guidelines, along with a request for public comment on them. It is 
anticipated that the proposed guidelines will address the types of CLE 
courses that may qualify for recognition in the online practitioner 
directory. Generally, it is anticipated that a patent practitioner may 
obtain eligible patent CLE credit for courses or activities on any 
topic covered under 37 CFR 11.5(b)(1), including legal training which 
relates to: Preparation and prosecution of patent applications, 
patentability determinations and opinions, and drafting documents to be 
presented for any patent-related proceeding before the USPTO. Other 
topics that a practitioner may count toward the five patent CLE credits 
include PTAB proceedings and patent litigation. Any course or activity 
that is counted for ethics credit by any U.S. state or territorial bar, 
including those of which the practitioner is not a member, may be 
applied toward meeting the one hour of ethics CLE required for CLE 
recognition in the online practitioner directory.
    Comment 139: One commenter requested clarification on whether CLE 
credit can be earned for giving presentations or writing an article or 
paper on CLE topics.
    Response: In the near future, the USPTO intends to issue proposed 
CLE guidelines, along with a request for public comment on them. It is 
anticipated that the proposed guidelines will address the specific 
types of presentations or scholarly writing that may qualify for CLE 
credit that counts toward recognition in the online practitioner 
directory.
    Comment 140: One commenter requested clarification on what is 
considered pro bono work for the purposes of CLE certification. The 
commenter additionally stated that pro bono service should not count 
towards any CLE requirement because the pro bono patent client, unlike 
other types of pro bono clients, is not facing an unaffordable 
hardship; rather, the client is seeking an alternate form of venture 
funding, and as a part of CLE, pro bono work does not enhance a 
practitioner's legal skills any more than work for hire. Another 
commenter stated that it is unclear how pro bono activities increase 
legal acumen in order for it to justify those activities counting as 
CLE credit in the CLE discount.
    Response: The Final Rule provides that a registered practitioner or 
person granted limited recognition may earn up to two of the five hours 
of CLE in patent law and practice by participating in the USPTO Patent 
Pro Bono Program. For every three hours of pro bono service, a patent 
practitioner may earn one hour of CLE credit toward the five credits in 
patent law and practice required for recognition in the online 
practitioner directory. Section 32 of the AIA calls on the USPTO to 
work with and support IP law associations to establish pro bono 
programs. A pro bono patent client is generally not accepted into the 
Patent Pro Bono Program unless their gross household income is less 
than three times the federal poverty level guidelines. Moreover, the 
Patent Pro Bono Program provides valuable learning opportunities for 
less experienced and experienced practitioners alike by providing 
volunteers the ability to obtain practical patent prosecution 
experience representing under-resourced inventors who would otherwise 
be unable to prosecute their patent applications. In addition, working 
with patent pro bono clients provides an opportunity to gain experience 
with clients who are less sophisticated in patent practice and 
procedure than typical corporate clients. Under the Final Rule, taking 
CLE courses or performing pro bono services as a part of the Patent Pro 
Bono Program by patent practitioners is not required. Information 
regarding the Patent Pro Bono Program is accessible at www.uspto.gov/probonopatents.
    Comment 141: Two commenters questioned whether the Office will 
audit practitioners for CLE compliance if they certify they have 
completed CLE and, if so, what the statute of limitations on the audit 
will be. One commenter opined that there is no limitation specified in 
the NPRM, so a practitioner presumably must keep CLE records 
indefinitely until retirement.
    Response: The Office does not plan to audit practitioners who 
certify they have completed CLE. If, however, a registered 
practitioner's CLE compliance comes into question as part of a 
grievance or a disciplinary investigation, then that practitioner may 
be called upon to provide records of CLE completion. In the near 
future, the USPTO intends to issue proposed CLE guidelines, with a 
request for public comment on them. The proposed CLE guidelines will 
address recommended standards of recordkeeping for practitioners who 
wish to certify completion of CLE and obtain recognition in the online 
practitioner directory.
    Comment 142: One commenter requested clarification on whether the 
annual active patent practitioner fee would be due on different dates 
for each practitioner or by one date for all practitioners.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 143: One commenter inquired whether the annual active 
patent practitioner fee could be paid and forms filled out by 
administrative assistants or if each attorney would have to complete 
some yet-to-be-designed electronic certification form.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. Correspondence with the Office must comply with the 
requirements of 37 CFR 1.4.
    Comment 144: One commenter inquired as to whether administratively 
suspended practitioners would be locked out of accessing their files in 
the PAIR system or in EFS-Web or both.

[[Page 46968]]

Commenters also inquired whether a response or application filed during 
a period of non-compliance would be invalid and, if so, whether there 
would be a mechanism for retroactively validating the documents to 
prevent unintentional abandonment of applications or whether the remedy 
would be to file an expensive request for revival of an unintentionally 
abandoned application. Additionally, commenters questioned how 
administrative suspension of a practitioner would affect clients' 
rights and whether prosecution by an inadvertently suspended 
practitioner would cause a patent resulting from that prosecution to be 
invalid or unenforceable. The commenter further stated that any such 
corrections would be administratively burdensome on the Office and the 
practitioner.
    Response: Administratively suspended practitioners would not be 
able to access their USPTO online accounts and would be advised to 
contact OED to resolve the suspension. Thus, if administratively 
suspended, a practitioner would not be able to file documents 
electronically. Filing documents while administratively suspended may 
indicate the practitioner has engaged in the unauthorized practice of 
law. If an application were to go abandoned due to a practitioner's 
inability to file documents while administratively suspended, then 
revival of the application may be necessary under 37 CFR 1.137. 
Invalidity and unenforceability of patents are matters determined by 
tribunals in particular litigations.
    Comment 145: One commenter inquired as to what metrics indicate 
that the annual active patent practitioner fee would improve patent 
quality. Another commenter suggested that the USPTO's resources would 
be better spent in the interest of the patent community on issues that 
the USPTO is in the best position to address, such as assuring patent 
quality. Another commenter suggested that by practitioners passing the 
fee onto applicants, some applicants may reduce their reliance on 
patent practitioners, resulting in a decrease in patent quality.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 146: One commenter requested an explanation of how the 
annual active patent practitioner fee was calculated.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 147: Two commenters opined that the proposed $70 fee 
charged of practitioners in voluntary inactive status is too high for 
maintaining a database and updating it once a year and that 
practitioners would not get a benefit equal to the fee. Two commenters 
do not support charging a voluntary inactive fee. One commenter stated 
that imposing an inactive patent practitioner fee is bad public policy 
because many semi-retired practitioners volunteer to mentor younger 
attorneys or to advise small businesses, and the fee would discourage 
semi-retired practitioners from staying active in the profession.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time. Accordingly, the USPTO also will not implement the 
proposed fee for patent practitioners in voluntary inactive status.
    Comment 148: One commenter stated that the beneficiaries of the OED 
disciplinary system are the Office and patent applicants, not the 
registered practitioners.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the proposed annual active patent practitioner 
fee at this time.
    Comment 149: One commenter stated that the USPTO argued to be an 
exception to the requirements of 5 U.S.C. 500(e), not because of the 
need for a second disciplinary authority to regulate conduct, but by 
reasoning that the USPTO and patent applicants would be better served 
by placing additional skill requirements on patent practitioners. H.R. 
Rep. No. 1141, 89th Cong., 1st Sess. (1965), reprinted in 1965 
U.S.C.C.A.N. 4170, 4172-74, 4176-77, 4179; William H. Sager & Leslie S. 
Shapiro, Administrative Practice Before Federal Agencies, 4 U. Rich. L. 
Rev. 76, 82 (1969).
    Response: Pursuant to 35 U.S.C. 2(b) and 35 U.S.C. 32, the Office 
has statutory authority to promulgate regulations governing the conduct 
of patent practitioners and suspend or exclude them for misconduct.
    Comment 150: One commenter stated that trademark attorneys should 
pay the same annual active patent practitioner fee that patent 
practitioners are being asked to pay because OED administers 
disciplinary proceedings against trademark attorneys.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
    Comment 151: One commenter strongly supports an adequately and 
properly funded OED.
    Response: The Office appreciates the comment. The patent fee 
adjustments in this Final Rule are intended to provide the Office with 
a sufficient amount of aggregate revenue to recover the aggregate cost 
of patent operations, including the costs of OED services related to 
patent matters.
    Comment 152: One commenter stated that the annual active patent 
practitioner fee would provide increased funding to OED and would like 
to know what issues OED intends to address with the increased funding. 
The commenter also indicated that funding from the annual active patent 
practitioner fee should not be used to expand the role of OED per se to 
include any active investigation of practitioners that is not linked to 
a complaint or to a notification from a state bar association. The 
commenter also stated that since the annual active patent practitioner 
fee eliminates the need for the Office to perform surveys of 
practitioners, the cost of conducting the survey should be reflected as 
a savings to the Office and should be reflected in any cost accounting 
justifying the annual active patent practitioner fee.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
    Comment 153: One commenter inquired whether OED could recover some 
of its funding by increasing the fees it already charges instead of 
charging the annual active patent practitioner fee. The commenter gave 
examples of an application fee for admission to the examination for 
registration, a fee for administering the registration examination, and 
a fee for recognition or registration after disbarment or suspension on 
ethical grounds.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time. In addition, the fees cited by the commenter are enrollment 
fees, which are only being adjusted by the approximately 5 percent 
across-the-board adjustment to patent fees. A larger targeted 
adjustment of enrollment fees went into effect in the January 2018 
Final Rule.
    Comment 154: One commenter requested that the USPTO address the 
specific OED services and other services that will be funded by the 
annual active

[[Page 46969]]

patent practitioner fee and how the collected funds will be applied to 
those services.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
    Comment 155: One commenter stated that the Office estimates that 
the annual active patent practitioner fee will raise $10-$11 million 
per year and that this amount seems excessive to fund the patent-
related services provided by the OED, especially when considered as an 
increase to the existing fees collected pursuant to 37 CFR 1.21(a)(1)-
(10).
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
    Comment 156: Two commenters requested details on the expenses for 
the Law School Clinic Certification Program and the Patent Pro Bono 
Program and on how the funds from the annual active patent practitioner 
fee will be applied to these expenses.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
    Comment 157: One commenter stated that funds collected from the 
annual active patent practitioner fee will be used both for existing 
OED programs and to implement new programs and inquired to what extent 
would the expense of administrating the annual active patent 
practitioner fee take resources away from other programs.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
    Comment 158: Two commenters welcomed the provision in the NPRM that 
states that only practitioners who have been resigned for more than two 
years would need to retake the registration exam.
    Response: As noted in the comment, the Final Rule eliminates the 
requirement that a registered practitioner who is administratively 
suspended for more than two years take and pass the registration 
examination in order to be reinstated. Under the Final Rule, resigned 
practitioners will only have to retake and pass the registration 
examination if they have been resigned for more than five years and 
cannot provide other objective evidence that they continue to possess 
the necessary legal qualifications to render valuable service to patent 
applicants.
    Comment 159: One commenter stated that many practitioners will 
forego the CLE discount in order to avoid determining how to comply and 
document CLE compliance.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time and thus, there is no CLE discount in this Final Rule.
    Comment 160: One commenter questioned what the consequences would 
be for a CLE certification that does not meet OED's standards and how 
disagreements regarding the challenged certification would be resolved.
    Response: Practitioners will self-certify their completion of six 
credits of CLE, including five credits of CLE in patent law and 
practice and one credit of CLE in ethics. In the near future, the 
Office plans to issue proposed CLE guidelines, with a request for 
public comment on them that will address what types of CLE may qualify 
for CLE recognition. OED does not intend to audit practitioners who 
certify completion of CLE or review whether courses completed by a 
practitioner who certified completion of CLE in fact qualify for the 
certification. It is anticipated that such review would only take place 
for cases in which OED receives a grievance alleging that a patent 
practitioner falsely or fraudulently certified completion of CLE or 
where the submission was obviously noncompliant. Registered patent 
practitioners and those granted limited recognition to practice before 
the Office in patent matters are subject to the USPTO Rules of 
Professional Conduct, including 37 CFR 11.804(c), which prohibits 
conduct that involves dishonesty, fraud, deceit, or misrepresentation.
    Comment 161: One commenter questioned what effect an invalid CLE 
certification would have on patent validity or enforceability.
    Response: It appears that the comment anticipates a scenario in 
which a patent practitioner claims the CLE credit but is subsequently 
found not to have satisfied the requirements for claiming the credit. 
Under the Final Rule, a practitioner may certify completion of CLE in 
order to obtain recognition in the online patent practitioner 
directory. No administrative suspension would result from an 
``invalid'' or mistaken CLE certification. Thus, it is not anticipated 
that an ``invalid'' or mistaken CLE certification would affect patent 
validity or enforceability.
    Comment 162: One commenter inquired how the regulatory and 
compliance costs of the CLE discount will affect the annual active 
patent practitioner fee. One commenter was concerned that the Office 
will use oversight of the CLE certification as justification for the 
annual active patent practitioner fee and any future increases thereto.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
    Comment 163: One commenter is concerned that the Office's proposed 
model of three hours of pro bono service to obtain one hour of CLE 
credit does not sufficiently reflect the importance and value of pro 
bono service and recommends providing one hour of CLE credit for each 
hour of pro bono service in the USPTO Patent Pro Bono Program.
    Response: This comment has not been adopted. According to the 
Standing Committee on Pro Bono & Public Service of the American Bar 
Association, of the states that offer CLE credit for pro bono service, 
the most common rate that is used for earning such credits is five 
hours of service for each CLE credit. No state offers one hour of CLE 
credit for each hour of pro bono service. Thus, one hour of CLE credit 
for every three hours of pro bono service is generally above the amount 
of CLE credit that states offer for pro bono service. In the near 
future, the USPTO intends to issue proposed CLE guidelines, with a 
request for public comments on them.
    Comment 164: One commenter stated that requiring a practitioner to 
retake the registration examination for failure to update their 
information with OED is equivalent to the penalty of disbarment and 
therefore grossly disproportionate to the offense. Instead, the 
commenter requests that the penalty for failing to update contact 
information be an extra charge to reinstate, based on the back fees 
missed and extra administration costs incurred.
    Response: Administratively suspended practitioners will only have 
to retake the examination if they have been suspended for more than 
five years and cannot provide other objective evidence that they 
continue to possess the necessary legal qualifications to render 
valuable service to patent applicants.
Legal Considerations
    Comment 165: One commenter stated that RCE fees are governed by the 
IOAA, except for the one requirement that is carved out by section 10 
of the AIA. Thus, the USPTO may charge actual cost, plus a proportional 
share of

[[Page 46970]]

general administrative costs, reduced by a proportional share of issue 
and maintenance fees, but no more than that. The excess charge for 
second and subsequent RCEs is unlawful.
    Response: The IOAA provides federal agencies the authority to 
charge user fees where the agencies do not have their own specific 
statutory authority to charge fees. Fees collected under the IOAA are 
deposited in the general fund of the U.S. Treasury and not available to 
the charging agency for its use. OMB Circular A-25, User Charges, 
provides guidance on IOAA authority. This has no relevance to the fee 
setting authority provided to the USPTO, as the USPTO has specific 
statutory authority to charge fees under title 35 of the U.S.C. and the 
Trademark Act of 1946. The USPTO further has specific authority to set 
and adjust those fees as in the current rulemaking under section 10 of 
the AIA. Fees collected by the USPTO are made available to the USPTO 
through annual appropriations and are available to use for the 
activities that generated the fee (patent and trademark examination and 
proportionate administrative expenses). The general authority described 
in the IOAA and OMB Circular A-25 is not relevant to the USPTO's 
specific fee setting authority.
    Comment 166: One commenter disagreed with the RIA regarding the 
annual active patent practitioner fee and non-DOCX surcharge fee. The 
commenter stated that the point of the rule is to raise fees and 
disagreed with findings of ``No identified costs.'' The commenter 
suggested comment letters sent to PPAC identified substantial costs to 
the public for the annual active patent practitioner fee and non-DOCX 
surcharge fee. The commenter further wrote that the OMB's Implementing 
Guidance puts the annual active patent practitioner fee and non-DOCX 
surcharge fee within the scope of E.O. 13771, which states: 
``Regulatory actions [that] impose requirements apart from transfers . 
. . need to be offset to the extent they impose more than de minimis 
costs.''
    Response: Guidance in OMB Circular A-4, Regulatory Analysis, and 
concerning RIAs provides that fees to government agencies for goods or 
services are considered transfer payments. The fee adjustments concern 
increases of fees for USPTO services, which are transfers, not costs. 
The non-DOCX surcharge fee is based on the services provided by the 
USPTO to patent applicants and, consequently, qualifies as a transfer 
payment under OMB's guidance. As noted in response to Comment 81 above, 
the USPTO has elected not to implement the annual active patent 
practitioner fee at this time.
    Comment 167: One commenter stated that the legislative history of 
the AIA makes abundantly clear that the USPTO may not use fee setting 
as a policy lever. Fee setting may only be used to recover aggregate 
costs. The commenter further stated that the U.S. Constitution denies 
agencies the authority to set fees for anything other than cost 
recovery--setting fee levels to ``encourage or discourage'' is a 
``tax''; agencies do not have the authority to tax, and, therefore, 
fees being set to incentivize, disincentivize, and ``to facilitate the 
effective administration of the patent and trademark systems,'' are not 
within the statutory authority of the USPTO.
    Response: The AIA permits individual patent fees to be set or 
adjusted to encourage or discourage particular services, so long as the 
aggregate revenues for all patent fees recover the aggregate costs of 
the patent operation. The comment would read into the AIA limitations 
that do not exist and that are inconsistent with the AIA.
    Comment 168: One commenter wanted to know why the USPTO has never 
issued any legal analysis of the AIA's legislative history. The 
commenter cited two examples: The removal of ``notwithstanding the fee 
amounts established or charged'' from the AIA and the discussion in the 
House report (H.R. Rep. No. 112-98), and the effect of the word 
``only'' in the phrase ``only to recover the aggregate estimated 
costs.'' The commenter believed the legislative history makes clear 
that Congress intended ``only'' to apply to purpose as well as amount.
    Response: A legal analysis of legislative history is unnecessary in 
light of the plain language of the AIA, which permits individual patent 
fees to be set or adjusted to encourage or discourage particular 
services, so long as the aggregate revenues for all patent fees recover 
the aggregate costs of the patent operation.
    Comment 169: One commenter expressed that the fee setting efforts 
of the USPTO are unconstitutional because the U.S. Constitution denies 
agencies the authority to set fees for anything other than cost 
recovery--setting fee levels to ``encourage or discourage'' behavior is 
a ``tax,'' and agencies do not have the authority to tax (see 
Sec. Sec.  I.B.1 and I.C). Even with authority under the AIA, the USPTO 
may not ``adjust assessments to encourage or discourage a particular 
activity'' because the U.S. Constitution provides that the power to 
``lay and collect taxes'' lies with the U.S. Congress, not the 
executive branch.
    Response: Patent fees are paid for receiving and maintaining a 
patent grant. Courts have held that the payment of such fees should not 
be viewed as taxes but rather payments for a service.
    Comment 170: One commenter wrote that the USPTO may not create new 
fees where no fees are ``established, authorized, or charged'' in title 
35 and there is no affirmative material, service, or processing 
provided. Similarly, the commenter wrote that the USPTO may not re-
allocate fees among the categories specified in Sec.  41; new fees may 
be created only where the USPTO has a specific statutory authorization 
(see Sec.  I.B.2).
    Response: The AIA permits individual patent fees to be set or 
adjusted to encourage or discourage particular services, so long as the 
aggregate revenues for all patent fees recover the aggregate costs of 
the patent operation. The comment would read into the AIA limitations 
that do not exist and that are inconsistent with the AIA.
    Comment 171: One commenter stated that this rulemaking exceeds the 
authority of the USPTO because it overrides a policy decision made by 
the U.S. Congress in favor of something the USPTO prefers. The 
commenter contended the U.S. Congress made a policy choice: Initial 
filings should be cross-subsidized by maintenance fees at approximately 
50 percent. The U.S. Congress (by inference) felt it important to 
encourage filing and allow successful patentees to cross-subsidize 
filing. The commenter also felt the USPTO is exceeding its authority 
because it is second-guessing the U.S. Congress's policy balances 
encoded in the appeal fee line. The commenter suggested this rulemaking 
relies on ``factors which Congress has not intended [the agency] to 
consider,'' making it an arbitrary and capricious agency action under 
the APA. The commenter believed the USPTO departed from the intent of 
the U.S. Congress in 2013 and should revert to the pre-2013 fee 
structure.
    Response: The USPTO has specific statutory authority to charge fees 
under title 35 of the U.S.C. and the Trademark Act of 1946. The USPTO 
further has specific authority to set and adjust those fees as in this 
Final Rule under section 10 of the AIA. The AIA permits individual 
patent fees to be set or adjusted to encourage or discourage particular 
services, so long as the aggregate revenues for all patent fees recover 
the aggregate costs of the patent operation. However, the USPTO notes 
that the adjustments to the fee schedule

[[Page 46971]]

do not significantly impact the balance between front-end and back-end 
fees.
    Comment 172: One commenter agreed in principle with the operating 
reserve of the USPTO but saw no statutory authorization for it. The 
commenter contended the operating reserve is not fairly within the text 
of section 10 of the AIA, which limits USPTO fee collections to 
``only'' aggregate costs.
    Response: The AIA permits individual patent fees to be set or 
adjusted to encourage or discourage particular services, so long as the 
aggregate revenues for all patent fees recover the aggregate costs of 
the patent operation. One of these aggregate costs is the growth of an 
operating reserve to allow effective management of the U.S. patent 
system and responsiveness to changes in the economy, unanticipated 
production workload, and revenue changes, while maintaining operations 
and effectuating long-term strategies.
    Comment 173: One commenter stated that the NPRM for this rulemaking 
ignores the IOAA and OMB Circular A-25, which are the general framework 
statute and Presidential interpretation, respectively, for agencies 
that charge user fees. The commenter claimed the IOAA limits user fees 
to cover services to a specific ``identifiable recipient,'' at the cost 
of providing that service or the value to the recipient, but may not 
recover agency general operating costs. The commenter also stated that 
fees without statutory grounding are not within section 10 of the AIA 
and thus are either barred outright or are subject to the constraints 
of the IOAA. The commenter suggested that relevant Supreme Court and 
D.C. Circuit case law holdings--especially Seafarers International 
Union of North America v. U.S. Coast Guard, 81 F.3d 179, 183 (D.C. Cir. 
1996)--are opposite to the position the USPTO takes in the NPRM.
    Response: The IOAA provides federal agencies the authority to 
charge user fees where the agencies do not have their own specific 
statutory authority to charge fees. Fees collected under the IOAA are 
deposited in the general fund of the U.S. Treasury and not available to 
the charging agency for its use. OMB Circular A-25 provides guidance on 
IOAA authority. This has no relevance to the fee setting authority of 
the USPTO, as the USPTO has specific statutory authority to charge fees 
under title 35 of the U.S.C. and the Trademark Act of 1946. The USPTO 
further has specific authority to set and adjust those fees as in this 
Final Rule under section 10 of the AIA. Fees collected by the USPTO are 
made available to the USPTO through annual appropriations and are 
available to use for the activities that generated the fee (patent and 
trademark services and proportionate administrative expenses). The 
general authority described in the IOAA and OMB Circular A-25 is not 
relevant to the USPTO's specific fee setting authority.
    Comment 174: One commenter expressed that a change undertaken in a 
previous rulemaking, changing ``notice of appeal'' and ``filing a brief 
in support of an appeal'' of Sec.  41(a)(6), was unlawfully 
restructured into ``notice of appeal'' and ``forwarding an appeal to 
the Board'' as in 37 CFR 41.20(b)(1) and (4).
    Response: The USPTO has specific authority to set and adjust fees, 
as in the current rulemaking, under section 10 of the AIA. The AIA 
permits individual patent fees to be set or adjusted so long as the 
aggregate revenues for all patent fees recover the aggregate costs of 
the patent operation.
    Comment 175: One commenter wrote that section 1(b)(2) of E.O. 12866 
requires the USPTO to ``examine whether existing regulations (or other 
law) have created, or contributed to, the problem that a new regulation 
is intended to correct.'' Most of the policy goals of the fee schedule 
could be addressed by internal reforms to reduce costs, as an 
alternative to raised fees. For example, internal USPTO processes and 
incentives could be restructured to reduce costs to the USPTO and 
applicants. The commenter contends that the NPRM identifies no 
exemption from E.O. 12866 that permits the USPTO to forego this 
examination.
    Response: The USPTO is in compliance with all procedural and 
analytical requirements of E.O. 12866. The USPTO identified no existing 
regulation that created or contributed to the need for this Final Rule. 
In this Final Rule, the USPTO is not creating any new regulation. 
Rather, the USPTO is setting and adjusting patent fees based on 
assumptions found in the FY 20201 Budget in order to recover the 
aggregate cost of patent operations in future years and to allow the 
Office to continue progress towards achieving strategic goals. Also, 
contrary to the assertion made in the comment, the Office is constantly 
considering its operations, policies, and processes to identify ways to 
improve its operations. As an example, the Office recently issued a 
Notice of Proposed Rulemaking, Removal of Regulations Governing 
Requests for Presidential Proclamations under the Semiconductor Chip 
Protection Act of 1984 and Certain Rules of Practice Relating to 
Registration to Practice and Discipline, 84 FR 64800 (November 25, 
2019), that eliminated unnecessary regulations. To support this 
regulatory reform effort, the Office assembled a working group 
consisting of subject-matter experts from each of the business units 
that implement the Office's regulations. The working group considered, 
reviewed, and recommended ways that the regulations could be improved, 
revised, and streamlined so as to improve the operation of the Office. 
The working group reviewed existing regulations, both discretionary 
rules and those required by statute or judicial order. The USPTO also 
solicited comments from stakeholders through a web page established to 
provide information on the USPTO's regulatory reform efforts. These 
efforts led to the development of candidate regulations for removal, 
based on the USPTO's assessment that these regulations were not needed 
and/or that elimination could improve the USPTO's body of regulations. 
As an additional example, the Office recently implemented adjustments 
to examination time to improve the examination process and examination 
quality. These time adjustments include increasing baseline examination 
time and providing additional examination time based on newly developed 
application attributes, such as the number of claims, size of the 
specification, number of pages of prior art citations submitted, etc. 
Additional examples of how the USPTO is constantly taking steps to 
improve processes, increase efficiency, and reduce costs, for both 
applicants and the USPTO, include our international cooperation 
programs, such as the Electronic Priority Document Exchange Program and 
the Global Dossier Program. Furthermore, efficiencies and cost savings 
have been realized as a result of the USPTO implementing ePetitions and 
the Access to Relevant Prior Art Initiative.
    Comment 176: One commenter stated section 1(b)(2) of E.O. 12866 
directs agencies to ``examine whether existing regulations (or other 
law) have created, or contributed to, the problem that a new regulation 
is intended to correct.'' In 2012, the USPTO requested comment on RCE 
practice. Several of the comment letters noted that, at least in part, 
extended RCE practice was driven by a breakdown of ``compact 
prosecution''--Office actions were less complete, less careful, and 
less responsive to applicants' arguments. The commenter observed no 
effort by the USPTO to address its ``existing regulation'' half of the 
problem--for example, the USPTO has not recalibrated the count system 
to remove

[[Page 46972]]

incentives for gaming by examiners or provided sound supervision to 
ensure completeness of Office actions. E.O. 12866 suggests that it is 
inappropriate to shift costs to the public for a failure of the USPTO 
to implement its own self-regulatory obligations.
    Response: In this Final Rule, the USPTO is not creating any new 
regulations; rather, the USPTO is setting and adjusting patent fees in 
order to recover its increasing aggregate costs. Contrary to the 
position set forth in the comments, the Office is not shifting costs to 
the public. Since 2012, the Office has made considerable efforts to 
improve patent quality, including establishing the Office of the Deputy 
Commissioner for Patent Quality (DCPQ) within the Patents organization. 
The DCPQ is responsible for optimizing the quality of patent products, 
processes, and services to build a culture of process improvement and 
enhanced patent quality for the Patents organization. In addition to 
establishing this new office within the Patents organization, patent 
examiners have received extensive training on how to improve the 
quality of their Office actions. These trainings include a three-part 
training on how to evaluate, analyze, and respond to arguments 
presented by applicants. They also include training on interpreting 
claims, establishing a clear prosecution record in an application, and 
writing proper reasons for allowance. Also, contrary to the comments, 
the Office recently implemented adjustments to examination time to 
improve the examination process and examination quality. These time 
adjustments include increasing baseline examination time and providing 
additional examination time based on newly developed application 
attributes, such as the number of claims, size of specification, number 
of pages of prior art citations submitted, etc.
    Comment 177: One commenter stated that the USPTO did not meet its 
rulemaking obligation to disclose rationale. The commenter contended 
that even if there is a sound cause-and-effect relationship between the 
proposal and the asserted benefits, it is not explained in the NPRM, 
making it arbitrary and capricious under the APA.
    Response: The Office disagrees that it failed to disclose the 
rationale for the rulemaking or that the rulemaking is arbitrary and 
capricious under the APA. The preamble and regulatory text clearly set 
forth the new costs and explain the rationale for each change in 
compliance with the requirements of the APA.
    Comment 178: One commenter disagreed with the finding that this 
rulemaking is a ``transfer payment from one group to another.'' The 
commenter wrote that the definition of ``transfer payment'' is in OMB 
Circular A-4 and the original definition involved cash payments to 
private sector actors, and the definition has grown to cover other 
direct cash transfers among private sector entities. The commenter 
continued that the NPRM calls for funds to be paid from private sector 
persons to government for government consumption and discusses no 
monetary payout to any private sector party.
    Response: Guidance in OMB Circular A-4 and concerning RIAs provides 
that fees to government agencies for goods or services are considered 
transfer payments. The fee adjustments concern increases of fees for 
USPTO services, which are transfers, not costs. Pursuant to the 
requirements of E.O. 12886, the USPTO submitted both the NPRM and RIA 
to the OMB for review prior to publication. The OMB determined that 
this rulemaking consisted entirely of transfer payments from one group 
to another, as defined in OMB Circular A-4.
    Comment 179: One commenter wondered why there was not an analysis 
of raising all fees proportionally from the baseline set by Congress, 
with deviations only where the USPTO has specific data to support a 
deviation. The commenter contended that this analysis is required by 
statute and the U.S. Constitution.
    Response: The alternatives considered in the RIA are reasonable 
alternatives that are consistent with guidance in OMB Circular A-4. 
Among the alternatives considered was an across-the-board adjustment to 
the current baseline fee schedule.
    Comment 180: One commenter stated the RIA accompanying the NPRM 
only considers non-starter alternatives like not raising fees at all, 
setting all fees at actual cost, and applying only an inflation 
adjustment. The commenter contended these are unrealistic strawmen, 
against which the USPTO's preferred alternative appears favorable. 
Considering only unrealistic strawmen as ``alternatives'' is not 
compliant with the USPTO's obligations under the letter of the law and 
cannot be reconciled with the ``regulatory philosophy'' or spirit of 
the law. Artificially narrowing the options is arbitrary and capricious 
per se.
    Response: The alternatives considered in the RIA are reasonable 
alternatives that are consistent with guidance in OMB Circular A-4.
    Comment 181: One commenter questioned why there was no analysis of 
the proportional lockstep fee hike relative to Sec.  41 as a baseline.
    Response: Among the alternatives considered in the RIA is a 
lockstep, across-the-board adjustment to the current baseline fee 
schedule.
    Comment 182: One commenter stated that the USPTO may not set fees 
without a benefit-cost analysis under the PRA and E.O. 12866--for 
example, the USPTO may not reduce its own costs if that would increase 
costs on the public disproportionately (see Sec.  I.F).
    Response: The USPTO must comply with all rulemaking requirements 
when setting fees using the authority provided by section 10 of the 
AIA. As demonstrated in the Rulemaking Considerations section of this 
Final Rule, and in this rulemaking as a whole, the USPTO has complied 
with these requirements.
    Comment 183: One commenter expressed that several components of 
this rulemaking implicate the PRA (e.g., the DOCX proposal and the 
annual active patent practitioner fee). The NPRM asserts that the USPTO 
has obtained PRA clearance, but the commenter contends this assertion 
is false, and the USPTO has never even applied for clearance.
    Response: The USPTO must comply with the PRA in setting fees using 
the authority provided by section 10 of the AIA. The USPTO has filed 
with the OMB a worksheet addressing costs in compliance with the 
requirement of the statute.
    Comment 184: One commenter claimed the USPTO has made no filing 
seeking any substantive change to 0651-0012 since 2014.
    Response: The USPTO has complied with the PRA in considering the 
paperwork burdens associated with this Final Rule. The USPTO has 
previously received OMB approval for associated burdens and submitted 
additional statements to address revisions.

VII. Discussion of Specific Rules

    The following section shows the Code of Federal Regulations (CFR) 
for all fees set or adjusted in this Final Rule. The discussion below 
includes all fee amendments, all fee discontinuations, and all changes 
to the CFR text.
    Title 37 of the CFR, parts 1, 11, 41, and 42, are amended as 
follows:
    Section 1.16: Section 1.16 is amended by revising paragraphs (a) 
through (e), (h), (j), (k), and (m) through (s) and adding paragraph 
(u) to set forth the application filing, excess claims, search, and 
examination fees for patent applications filed as authorized under 
section 10 of the Act. The changes to the

[[Page 46973]]

fee amounts indicated in Sec.  1.16 are shown in Table 11.

                                                         Table 11--CFR Section 1.16 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Current fees  (dollars)        Final rule fees
                                                                                                   ---------------------------         (dollars)
            CFR section                           Fee code                       Description                                  --------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.16(a)...........................  1011/2011/3011......................  Basic filing fee--            300      150       75      320      160       80
                                                                           Utility (paper filing
                                                                           also requires non-
                                                                           electronic filing fee
                                                                           under 1.16(t)).
1.16(a)...........................  4011................................  Basic filing fee--            n/a       75      n/a      n/a       80      n/a
                                                                           Utility (electronic
                                                                           filing for small
                                                                           entities).
1.16(b)...........................  1012/2012/3012......................  Basic filing fee--Design      200      100       50      220      110       55
1.16(b)...........................  1017/2017/3017......................  Basic filing fee--Design      200      100       50      220      110       55
                                                                           (CPA).
1.16(c)...........................  1013/2013/3013......................  Basic filing fee--Plant.      200      100       50      220      110       55
1.16(d)...........................  1005/2005/3005......................  Provisional application       280      140       70      300      150       75
                                                                           filing fee.
1.16(e)...........................  1014/2014/3014......................  Basic filing fee--            300      150       75      320      160       80
                                                                           Reissue.
1.16(e)...........................  1019/2019/3019......................  Basic filing fee--            300      150       75      320      160       80
                                                                           Reissue (Design CPA).
1.16(h)...........................  1201/2201/3201......................  Each independent claim        460      230      115      480      240      120
                                                                           in excess of three.
1.16(h)...........................  1204/2204/3204......................  Each reissue independent      460      230      115      480      240      120
                                                                           claim in excess of
                                                                           three.
1.16(j)...........................  1203/2203/3203......................  Multiple dependent claim      820      410      205      860      430      215
1.16(k)...........................  1111/2111/3111......................  Utility Search Fee......      660      330      165      700      350      175
1.16(m)...........................  1113/2113/3113......................  Plant Search Fee........      420      210      105      440      220      110
1.16(n)...........................  1114/2114/3114......................  Reissue Search Fee or         660      330      165      700      350      175
                                                                           Reissue (Design CPA)
                                                                           Search Fee.
1.16(o)...........................  1311/2311/3311......................  Utility Examination Fee.      760      380      190      800      400      200
1.16(p)...........................  1312/2312/3312......................  Design Examination Fee        600      300      150      640      320      160
                                                                           or Design CPA
                                                                           Examination Fee.
1.16(q)...........................  1313/2313/3313......................  Plant Examination Fee...      620      310      155      660      330      165
1.16(r)...........................  1314/2314/3314......................  Reissue Examination Fee     2,200    1,100      550    2,320    1,160      580
                                                                           or Reissue (Design CPA)
                                                                           Examination Fee.
1.16(s)...........................  1081/2081/3081......................  Utility Application Size      400      200      100      420      210      105
                                                                           Fee--for each
                                                                           additional 50 sheets
                                                                           that exceeds 100 sheets.
1.16(s)...........................  1081/2081/3081......................  Design Application Size       400      200      100      420      210      105
                                                                           Fee--for each
                                                                           additional 50 sheets
                                                                           that exceeds 100 sheets.
1.16(s)...........................  1081/2081/3081......................  Plant Application Size        400      200      100      420      210      105
                                                                           Fee--for each
                                                                           additional 50 sheets
                                                                           that exceeds 100 sheets.
1.16(s)...........................  1081/2081/3081......................  Reissue Application Size      400      200      100      420      210      105
                                                                           Fee--for each
                                                                           additional 50 sheets
                                                                           that exceeds 100 sheets.
1.16(s)...........................  1081/2081/3081......................  Provisional Application       400      200      100      420      210      105
                                                                           Size Fee--for each
                                                                           additional 50 sheets
                                                                           that exceeds 100 sheets.
1.16(u)...........................  NEW.................................  Non-DOCX Filing               n/a      n/a      n/a      400      200      100
                                                                           Surcharge Fee.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.17: Section 1.17 is amended by revising paragraphs (a), 
(c) through (g), (i)(2), (k), (m), (p), (q), (r), and (s) to set forth 
the application processing fees as authorized under section 10 of the 
Act. The changes to the fee amounts indicated in Sec.  1.17 are shown 
in Table 12. In this Final Rule, an existing fee code has been added to 
Table 12 for the petition for the extension of the twelve-month (six-
month for designs) period for filing a subsequent application. This is 
not a new fee code created in this rule; rather, it reflects existing 
practice. In this section, table headers were added to make formatting 
consistent.

                                                         Table 12--CFR Section 1.17 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Current fees  (dollars)        Final rule fees
                                                                                                   ---------------------------         (dollars)
            CFR section                           Fee code                       Description                                  --------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.17(a)(1)........................  1251/2251/3251......................  Extension for response        200      100       50      220      110       55
                                                                           within first month.
1.17(a)(2)........................  1252/2252/3252......................  Extension for response        600      300      150      640      320      160
                                                                           within second month.
1.17(a)(3)........................  1253/2253/3253......................  Extension for response      1,400      700      350    1,480      740      370
                                                                           within third month.
1.17(a)(4)........................  1254/2254/3254......................  Extension for response      2,200    1,100      550    2,320    1,160      580
                                                                           within fourth month.
1.17(a)(5)........................  1255/2255/3255......................  Extension for response      3,000    1,500      750    3,160    1,580      790
                                                                           within fifth month.
1.17(c)...........................  1817/2817/3817......................  Request for prioritized     4,000    2,000    1,000    4,200    2,100    1,050
                                                                           examination.
1.17(d)...........................  1819/2819/3819......................  Correction of                 600      300      150      640      320      160
                                                                           inventorship after
                                                                           first action on merits.
1.17(e)(1)........................  1801/2801/3801......................  Request for continued       1,300      650      325    1,360      680      340
                                                                           examination (RCE)--1st
                                                                           request (see 37 CFR
                                                                           1.114).
1.17(e)(2)........................  1820/2820/3820......................  Request for continued       1,900      950      475    2,000    1,000      500
                                                                           examination (RCE)--2nd
                                                                           and subsequent requests
                                                                           (see 37 CFR 1.114).
1.17(f)...........................  1462/2462/3462......................  Petitions requiring the       400      200      100      420      210      105
                                                                           petition fee set forth
                                                                           in 37 CFR 1.17(f)
                                                                           (Group I).
1.17(g)...........................  1463/2463/3463......................  Petitions requiring the       200      100       50      220      110       55
                                                                           petition fee set forth
                                                                           in 37 CFR 1.17(g)
                                                                           (Group II).
1.17(i)(2)........................  1803/2803/3803......................  Request for voluntary         130      130      130      140      140      140
                                                                           publication or
                                                                           republication.
1.17(i)(2)........................  1808/2808/3808......................  Other publication             130      130      130      140      140      140
                                                                           processing fee.
1.17(k)...........................  1802/2802/3802......................  Request for expedited         900      450      225    1,600      800      400
                                                                           examination of a design
                                                                           application.

[[Page 46974]]

 
1.17(m)...........................  1453/2453/3453......................  Petition for revival of     2,000    1,000      500    2,100    1,050      525
                                                                           an abandoned
                                                                           application for a
                                                                           patent, for the delayed
                                                                           payment of the fee for
                                                                           issuing each patent, or
                                                                           for the delayed
                                                                           response by the patent
                                                                           owner in any
                                                                           reexamination
                                                                           proceeding.
1.17(m)...........................  1454/2454/3454......................  Petition for the delayed    2,000    1,000      500    2,100    1,050      525
                                                                           submission of a
                                                                           priority or benefit
                                                                           claim.
1.17(m)...........................  1784/2784/3784......................  Petition to excuse          2,000    1,000      500    2,100    1,050      525
                                                                           applicant's failure to
                                                                           act within prescribed
                                                                           time limits in an
                                                                           international design
                                                                           application.
1.17(m)...........................  1558/2558/3558......................  Petition for the delayed    2,000    1,000      500    2,100    1,050      525
                                                                           payment of the fee for
                                                                           maintaining a patent in
                                                                           force.
1.17(m)...........................  1628/2628/3628......................  Petition for the            2,000    1,000      500    2,100    1,050      525
                                                                           extension of the twelve-
                                                                           month (six-month for
                                                                           designs) period for
                                                                           filing a subsequent
                                                                           application.
1.17(p)...........................  1806/2806/3806......................  Submission of an              240      120       60      260      130       65
                                                                           Information Disclosure
                                                                           Statement.
1.17(r)...........................  1809/2809/3809......................  Filing a submission           840      420      210      880      440      220
                                                                           after final rejection
                                                                           (see 37 CFR 1.129(a)).
1.17(s)...........................  1810/2810/3810......................  For each additional           840      420      210      880      440      220
                                                                           invention to be
                                                                           examined (see 37 CFR
                                                                           1.129(b)).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.18: Section 1.18 is amended by revising paragraphs (a) 
through (f) to set forth the patent issue fees as authorized under 
section 10 of the Act. The changes to the fee amounts indicated in 
Sec.  1.18 are shown in Table 13.

                                                         Table 13--CFR Section 1.18 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Current fees  (dollars)        Final rule fees
                                                                                                   ---------------------------         (dollars)
            CFR section                           Fee code                       Description                                  --------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.18(a)(1)........................  1501/2501/3501......................  Utility issue Fee.......    1,000      500      250    1,200      600      300
1.18(a)(1)........................  1511/2511/3511......................  Reissue issue Fee.......    1,000      500      250    1,200      600      300
1.18(b)(1)........................  1502/2502/3502......................  Design issue Fee........      700      350      175      740      370      185
1.18(c)(1)........................  1503/2503/3503......................  Plant Issue Fee.........      800      400      200      840      420      210
1.18(d)(3)........................  1505/2505/3505......................  Publication fee for           300      300      300      320      320      320
                                                                           republication.
1.18(e)...........................  1455/2455/3455......................  Filing an application         200      200      200      210      210      210
                                                                           for patent term
                                                                           adjustment.
1.18(f)...........................  1456/2456/3456......................  Request for                   400      400      400      420      420      420
                                                                           reinstatement of term
                                                                           reduced.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.19: Section 1.19 is amended by revising paragraphs 
(b)(1)(i)(B) and (b)(1)(ii)(B) and by removing and reserving paragraphs 
(j) through (l) to set forth the patent document supply fees as 
authorized under section 10 of the Act. The changes to the fee amounts 
indicated in Sec.  1.19 are shown in Table 14.

                                                         Table 14--CFR Section 1.19 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Current fees (dollars)              Final rule fees (dollars)
        CFR section                     Fee code               Description    --------------------------------------------------------------------------
                                                                                Large    Small    Micro        Large           Small           Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.19(b)(1) (i)(B)..........  8051.........................  Copy patent file       280      280      280             290             290             290
                                                             wrapper, paper
                                                             medium, any
                                                             number of sheets.
1.19(b)(1) (ii)(B).........  8052.........................  Copy patent file        55       55       55              60              60              60
                                                             wrapper,
                                                             electronic
                                                             medium, any size
                                                             or provided
                                                             electronically.
1.19(j)....................  8057.........................  Copy of Patent          50       50       50    discontinued    discontinued    discontinued
                                                             Technology
                                                             Monitoring Team
                                                             (PTMT) patent
                                                             bibliographic
                                                             extract and
                                                             other DVD
                                                             (optical disc).
1.19(k)....................  8058.........................  Copy of U.S.           100      100      100    discontinued    discontinued    discontinued
                                                             patent custom
                                                             data extracts.
1.19(l)....................  8059.........................  Copy of selected        30       30       30    discontinued    discontinued    discontinued
                                                             technology
                                                             reports,
                                                             miscellaneous
                                                             technology areas.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.20: Section 1.20 is revised to set forth post-issuance 
fees as authorized under section 10 of the Act. In this section, (c)(5) 
through (7) are being reinstated due to an inadvertent deletion. The 
changes to the fee amounts indicated in Sec.  1.20 are shown in Table 
15.

[[Page 46975]]



                                                         Table 15--CFR Section 1.20 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Current fees (dollars)   Final rule fees (dollars)
            CFR section                           Fee code                       Description       -----------------------------------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.20(a)...........................  1811/2811/3811......................  Certificate of                150      150      150      160      160      160
                                                                           correction.
1.20(b)...........................  1816/2816/3816......................  Processing fee for            150      150      150      160      160      160
                                                                           correcting inventorship
                                                                           in a patent.
1.20(c)(1)........................  1831/2831/3831......................  Ex parte reexamination      6,000    3,000    1,500    6,300    3,150    1,575
                                                                           (Sec.   1.510(a))
                                                                           Streamlined.
1.20(c)(2)........................  1812/2812/3812......................  Ex parte reexamination     12,000    6,000    3,000   12,600    6,300    3,150
                                                                           (Sec.   1.510(a)) Non-
                                                                           streamlined.
1.20(c)(7)........................  1812/2812/3812......................  Refused request for ex      3,600    1,800      900    3,780    1,890      945
                                                                           parte reexamination.
1.20(c)(3)........................  1821/2821/3821......................  Each reexamination            460      230      115      480      240      120
                                                                           independent claim in
                                                                           excess of three and
                                                                           also in excess of the
                                                                           number of such claims
                                                                           in the patent under
                                                                           reexamination.
1.20(c)(6)........................  1824/2824/3824......................  Petitions in a              1,940      970      485    2,040    1,020      510
                                                                           reexamination
                                                                           proceeding, except for
                                                                           those specifically
                                                                           enumerated in 37 CFR
                                                                           1.550(i) and 1.937(d).
1.20(d)...........................  1814/2814/3814......................  Statutory disclaimer,         160      160      160      170      170      170
                                                                           including terminal
                                                                           disclaimer.
1.20(e)...........................  1551/2551/3551......................  For maintaining an          1,600      800      400    2,000    1,000      500
                                                                           original or any reissue
                                                                           patent, due at 3.5
                                                                           years.
1.20(f)...........................  1552/2552/3552......................  For maintaining an          3,600    1,800      900    3,760    1,880      940
                                                                           original or any reissue
                                                                           patent, due at 7.5
                                                                           years.
1.20(g)...........................  1553/2553/3553......................  For maintaining an          7,400    3,700    1,850    7,700    3,850    1,925
                                                                           original or any reissue
                                                                           patent, due at 11.5
                                                                           years.
1.20(h)...........................  1554/2554/3554......................  Surcharge--3.5 year--         160       80       40      500      250      125
                                                                           Late payment within 6
                                                                           months.
1.20(h)...........................  1555/2555/3555......................  Surcharge--7.5 year--         160       80       40      500      250      125
                                                                           Late payment within 6
                                                                           months.
1.20(h)...........................  1556/2556/3556......................  Surcharge--11.5 year--        160       80       40      500      250      125
                                                                           Late payment within 6
                                                                           months.
1.20(j)(1)........................  1457/2457/3457......................  Extension of term of        1,120    1,120    1,120    1,180    1,180    1,180
                                                                           patent.
1.20(j)(2)........................  1458/2458/3458......................  Initial application for       420      420      420      440      440      440
                                                                           interim extension (see
                                                                           37 CFR 1.790).
1.20(j)(3)........................  1459/2459/3459......................  Subsequent application        220      220      220      230      230      230
                                                                           for interim extension
                                                                           (see 37 CFR 1.790).
1.20(k)(1)........................  1826/2826/3826......................  Request for supplemental    4,400    2,200    1,100    4,620    2,310    1,155
                                                                           examination.
1.20(k)(2)........................  1827/2827/3827......................  Reexamination ordered as   12,100    6,050    3,025   12,700    6,350    3,175
                                                                           a result of
                                                                           supplemental
                                                                           examination.
1.20(k)(3)(ii)....................  1829/2829/3829......................  Supplemental Examination      280      140       70      300      150       75
                                                                           Document Size Fee--for
                                                                           each additional 50
                                                                           sheets or a fraction
                                                                           thereof in a nonpatent
                                                                           document.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.21: Section 1.21 is amended by adding paragraph (a)(8) 
and revising paragraphs (a)(1), (2), and (5), (9)(ii), (10); (k); (n); 
(o); and (q) to set forth miscellaneous fees and charges as authorized 
under section 10 of the Act. Section 1.21(a)(6)(i) is being revised to 
remove and reserve the fee for the USPTO-assisted recovery of ID or 
reset of password for the Office of Enrollment and Discipline 
Information System. The changes to the fee amounts indicated in Sec.  
1.21 are shown in Table 16.
    The USPTO amends paragraph (o) of Sec.  1.21 to clarify the 
applicability of its provisions. The USPTO specifies that the mega-
sequence listing fee applies to an application filed under 35 U.S.C. 
111 or 371 to clarify that the fee applies to both provisional and 
nonprovisional applications filed under 35 U.S.C. 111, as well as to 
national stage applications under 35 U.S.C. 371. The fee does not apply 
to international applications filed with the U.S. Receiving Office (RO/
US) that do not enter the U.S. national stage under 35 U.S.C. 371. 
Furthermore, the rule clarifies that it is the receipt by the Office of 
a mega-sequence listing in an application that is subject to the fee. A 
sequence listing in a national stage application may be received by the 
USPTO from the International Bureau in accordance with PCT Article 20 
rather than directly submitted to the USPTO by the applicant. Thus, the 
clarification makes clear that the mega-sequence listing fee applies to 
such receipt. The USPTO further clarifies that the fee applies to only 
the first receipt of a sequence listing in electronic form having a 
size ranging from 300MB to 800MB and to the first receipt of a sequence 
listing in electronic form having a size over 800MB. Thus, an applicant 
will not be charged the mega-sequence listing fee for the submission of 
a substitute or replacement electronic form of the sequence listing 
(see 37 CFR 1.825) unless the size of the substitute or replacement 
electronic form sequence listing is subject to the provisions of a 
different paragraph of Sec.  1.21(o) (e.g., the first sequence listing 
in an application is between 300MB and 800MB and a replacement sequence 
listing is greater than 800MB). Finally, the USPTO specifies that for 
purposes of determining the fee required under Sec.  1.21(o), the size 
of the electronic form of the sequence listing is measured without file 
compression.

                                                         Table 16--CFR Section 1.21 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Current fees (dollars)              Final rule fees (dollars)
        CFR section                     Fee code               Description    --------------------------------------------------------------------------
                                                                                Large    Small    Micro        Large           Small           Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.21(a)(1)(i)..............  9001.........................  Application fee        100      100      100             110             110             110
                                                             (non-refundable).
1.21(a)(1)(ii)(A)..........  9010.........................  For test               200      200      200             210             210             210
                                                             administration
                                                             by commercial
                                                             entity.
1.21(a)(1)(ii)(B)..........  9011.........................  For test               450      450      450             470             470             470
                                                             administration
                                                             by the USPTO.

[[Page 46976]]

 
1.21(a)(1)(iii)............  9029.........................  For USPTO-             450      450      450             470             470             470
                                                             administered
                                                             review of
                                                             registration
                                                             examination.
1.21(a)(2)(i)..............  9003.........................  On registration        200      200      200             210             210             210
                                                             to practice
                                                             under Sec.
                                                             11.6.
1.21(a)(2)(ii).............  9026.........................  On grant of            200      200      200             210             210             210
                                                             limited
                                                             recognition
                                                             under Sec.
                                                             11.9(b).
1.21(a)(2)(iii)............  9025.........................  On change of           100      100      100             110             110             110
                                                             registration
                                                             from agent to
                                                             attorney.
1.21(a)(5)(i)..............  9012.........................  Review of              400      400      400             420             420             420
                                                             decision by the
                                                             Director of
                                                             Enrollment and
                                                             Discipline under
                                                             Sec.   11.2(c).
1.21(a)(5)(ii).............  9013.........................  Review of              400      400      400             420             420             420
                                                             decision of the
                                                             Director of
                                                             Enrollment and
                                                             Discipline under
                                                             Sec.   11.2(d).
1.21(a)(6)(i)..............  9027.........................  For USPTO-              70       70       70    discontinued    discontinued    discontinued
                                                             assisted
                                                             recovery of ID
                                                             or reset of
                                                             password for the
                                                             Office of
                                                             Enrollment and
                                                             Discipline
                                                             Information
                                                             System.
1.21(a)(9)(ii).............  9004.........................  Administrative         200      200      200             210             210             210
                                                             reinstatement
                                                             fee.
1.21(a)(10)................  9014.........................  On petition for      1,600    1,600    1,600           1,680           1,680           1,680
                                                             reinstatement by
                                                             a person
                                                             excluded or
                                                             suspended on
                                                             ethical grounds,
                                                             or excluded on
                                                             consent from
                                                             practice before
                                                             the Office.
1.21(k)....................  9024.........................  Unspecified other  AT COST  AT COST  AT COST         AT COST         AT COST         AT COST
                                                             services,
                                                             excluding labor.
1.21(n)....................  8026.........................  Handling fee for       130      130      130             140             140             140
                                                             incomplete or
                                                             improper
                                                             application.
1.21(o)(1).................  1091/2091/3091...............  Submission of        1,000      500      250           1,060             530             265
                                                             sequence
                                                             listings of
                                                             300MB to 800MB.
1.21(o)(2).................  1092/2092/3092...............  Submission of       10,000    5,000    2,500          10,500           5,250           2,625
                                                             sequence
                                                             listings of more
                                                             than 800MB.
1.21(q)....................  8054.........................  Additional fee         160      160      160             170             170             170
                                                             for expedited
                                                             service.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.27: Section 1.27 is amended by revising the introductory 
text of paragraph (c)(3) to provide that the payment, by any party, of 
the exact amount of the small entity transmittal fee set forth in Sec.  
1.1031(a) will be treated as a written assertion of entitlement to 
small entity status. The change to Sec.  1.27(c)(3) will make it easier 
for applicants filing an international design application through the 
USPTO as an office of indirect filing to establish small entity status.
    Section 1.431: Section 1.431 is amended by revising paragraph (c) 
to remove the reference to the late payment fee calculation under PCT 
Rule 16bis.2. The late payment fee pursuant to PCT Rule 16bis.2 is 
added to Sec.  1.445, as that provision concerns international 
application filing, processing, and search fees.
    Section 1.445: Section 1.445 is amended by revising paragraph (a) 
to set forth international filing, processing, and search fees and 
charges as authorized under section 10 of the Act. The changes to the 
fee amounts indicated in 37 CFR 1.445 are shown in Table 17. Section 
1.445(a) is also amended to include the late payment fee pursuant to 
PCT Rule 16bis.2. See discussion of Sec.  1.431, supra.

                                                         Table 17--CFR Section 1.445 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Current fees (dollars)   Final rule fees (dollars)
            CFR section                           Fee code                       Description       -----------------------------------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.445(a)(1) (i)(A)................  1601/2601/3601......................  Transmittal fee.........      240      120       60      260      130       65
1.445(a)(2) (i)...................  1602/2602/3602......................  Search fee--regardless      2,080    1,040      520    2,180    1,090      545
                                                                           of whether there is a
                                                                           corresponding
                                                                           application (see 35
                                                                           U.S.C. 361(d) and PCT
                                                                           Rule 16).
1.445(a)(3) (i)...................  1604/2604/3604......................  Supplemental search fee     2,080    1,040      520    2,180    1,090      545
                                                                           when required, per
                                                                           additional invention.
1.445(a)(4).......................  1621/2621/3621......................  Transmitting application      240      120       60      260      130       65
                                                                           to Intl. Bureau to act
                                                                           as receiving office.
1.445(a)(5).......................  1627/2627/3627......................  Late furnishing fee for       300      150       75      320      160       80
                                                                           providing a sequence
                                                                           listing in response to
                                                                           an invitation under PCT
                                                                           rule 13ter.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.482: Section 1.482 is amended by revising paragraphs (a) 
through (c) to read as set out in the regulatory text at the end of 
this document. The changes to the fee

[[Page 46977]]

amounts indicated in Sec.  1.482 are shown in Table 18.

                                                         Table 18--CFR Section 1.482 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Current fees (dollars)   Final rule fees (dollars)
            CFR section                           Fee code                       Description       -----------------------------------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.482(a)(1)(i)....................  1605/2605/3605......................  Preliminary examination       600      300      150      640      320      160
                                                                           fee--U.S. was the ISA.
1.482(a)(1)(ii)...................  1606/2606/3606......................  Preliminary examination       760      380      190      800      400      200
                                                                           fee--U.S. was not the
                                                                           ISA.
1.482(a)(2).......................  1607/2607/3607......................  Supplemental examination      600      300      150      640      320      160
                                                                           fee per additional
                                                                           invention.
1.482(c)..........................  1627/2627/3627......................  Late furnishing fee for       300      150       75      320      160       80
                                                                           providing a sequence
                                                                           listing in response to
                                                                           an invitation under PCT
                                                                           rule 13ter.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 1.492: Section 1.492 is amended by revising paragraphs (a), 
(b)(3) and (4), (c)(2), (d), (f), (h), and (j) to set forth the 
application filing, excess claims, search, and examination fees for 
international patent applications entering the national stage as 
authorized under section 10 of the Act. The changes to the fee amounts 
indicated in Sec.  1.492 are shown in Table 19. In this section, table 
headers were added to make formatting consistent.

                                                         Table 19--CFR Section 1.492 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Current fees (dollars)   Final rule fees (dollars)
            CFR section                           Fee code                       Description       -----------------------------------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.492(a)..........................  1631/2631/3631......................  Basic National Stage Fee      300      150       75      320      160       80
1.492(b)(3).......................  1642/2642/3642......................  National Stage Search         520      260      130      540      270      135
                                                                           Fee--search report
                                                                           prepared and provided
                                                                           to USPTO.
1.492(b)(4).......................  1632/2632/3632......................  National Stage Search         660      330      165      700      350      175
                                                                           Fee--all other
                                                                           situations.
1.492(c)(2).......................  1633/2633/3633......................  National Stage                760      380      190      800      400      200
                                                                           Examination Fee--all
                                                                           other situations.
1.492(d)..........................  1614/2614/3614......................  Each independent claim        460      230      115      480      240      120
                                                                           in excess of three.
1.492(f)..........................  1616/2616/3616......................  Multiple dependent claim      820      410      205      860      430      215
1.492(h)..........................  1617/2617/3617......................  Search fee, examination       140       70       35      160       80       40
                                                                           fee or oath or
                                                                           declaration after the
                                                                           date of commencement of
                                                                           the national stage.
1.492(j)..........................  1681/2681/3681......................  National Stage                400      200      100      420      210      105
                                                                           Application Size Fee--
                                                                           for each additional 50
                                                                           sheets that exceeds 100
                                                                           sheets.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 11.11: The USPTO amends paragraph (a)(1) to provide that 
the OED director may publish a practitioner's CLE certification status. 
Paragraph (a)(1) has also been amended to require that persons granted 
limited recognition pursuant to Sec.  11.9 provide the contact 
information listed in Sec.  11.11(a)(1).
    The USPTO amends paragraph (a)(2) to provide that registered 
practitioners and persons granted limited recognition under Sec.  
11.9(b) are required to biennially file a registration statement. It 
further provides that failure to file the mandatory registration 
statement may result in administrative suspension as set forth in Sec.  
11.11(b).
    The USPTO adds paragraph (a)(3) to Sec.  11.11 to provide that 
registered practitioners and persons granted limited recognition under 
Sec.  11.9(b) may certify to the OED director that they have completed 
six credits of CLE in the preceding 24 months, with five of the credits 
in patent law and practice and one of the credits in ethics.
    The USPTO amends paragraph (b)(1) in Sec.  11.11 to apply to those 
failing to comply with Sec.  11.11(a)(2), which refers to the 
registration statement.
    The USPTO amends paragraph (e) in Sec.  11.11 to provide that 
resigned practitioners are subject to investigation for their conduct 
that occurred prior to, during, or after the period of their 
resignation.
    The USPTO amends paragraph (f)(1) in Sec.  11.11 to remove any 
references to resigned practitioners, remove the requirement that a 
practitioner who was administratively suspended for two or more years 
before the date the Office receives a completed application from the 
person must also pass the registration examination under Sec.  
11.7(b)(1)(ii), and add the requirement that any practitioner who 
remains administratively suspended for more than five years shall be 
required to file a petition to the OED director requesting 
reinstatement and providing objective evidence that the practitioner 
continues to possess the necessary legal qualifications to render 
valuable service to patent applicants.
    The USPTO adds paragraph (f)(3) to Sec.  11.11, which sets forth 
the process by which a practitioner who has resigned may apply to be 
reinstated to the register in active status.
    Section 41.20: Section 41.20 is amended by revising paragraphs (a), 
(b)(1), (b)(2)(ii), and (b)(3) and (4) to set forth the appeal fees as 
authorized under section 10 of the Act. The changes to the fee amounts 
indicated in Sec.  41.20 are shown in Table 20.

                                                         Table 20--CFR Section 41.20 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Current fees (dollars)   Final rule fees (dollars)
            CFR section                           Fee code                       Description       -----------------------------------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
41.20(a)..........................  1405/2405/3405......................  Petitions to the Chief        400      400      400      420      420      420
                                                                           Administrative Patent
                                                                           Judge under 37 CFR 41.3.

[[Page 46978]]

 
41.20(b)(1).......................  1401/2401/3401......................  Notice of appeal........      800      400      200      840      420      210
41.20(b)(2)(ii)...................  1404/2404/3404......................  Filing a brief in           2,000    1,000      500    2,100    1,050      525
                                                                           support of an appeal in
                                                                           an inter partes
                                                                           reexamination
                                                                           proceeding.
41.20(b)(3).......................  1403/2403/3403......................  Request for oral hearing    1,300      650      325    1,360      680      340
41.20(b)(4).......................  1413/2413/3413......................  Forwarding an appeal in     2,240    1,120      560    2,360    1,180      590
                                                                           an application or ex
                                                                           parte reexamination
                                                                           proceeding to the Board.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Section 42.15: Section 42.15 is amended by revising paragraphs (a) 
through (e) to set forth the inter partes review and post-grant review 
or covered business method patent review fees as authorized under 
section 10 of the Act. The changes to the fee amounts indicated in 
Sec.  42.15 are shown in Table 21.

                                                         Table 21--CFR Section 42.15 Fee Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Current fees (dollars)   Final rule fees (dollars)
            CFR section                           Fee code                       Description       -----------------------------------------------------
                                                                                                     Large    Small    Micro    Large    Small    Micro
--------------------------------------------------------------------------------------------------------------------------------------------------------
42.15(a)(1).......................  1406................................  Inter partes review        15,500   15,500   15,500   19,000   19,000   19,000
                                                                           request fee--Up to 20
                                                                           Claims.
42.15(a)(2).......................  1414................................  Inter partes review post-  15,000   15,000   15,000      n/a      n/a      n/a
                                                                           institution fee--Up to
                                                                           15 Claims.
42.15(a)(2).......................  1414................................  Inter partes review post-     n/a      n/a      n/a   22,500   22,500   22,500
                                                                           institution fee--Up to
                                                                           20 Claims.
42.15(a)(3).......................  1407................................  Inter partes review           300      300      300      375      375      375
                                                                           request of each claim
                                                                           in excess of 20.
42.15(a)(4).......................  1415................................  Inter partes post-            600      600      600      750      750      750
                                                                           institution request of
                                                                           each claim in excess of
                                                                           20.
42.15(b)(1).......................  1408................................  Post-grant or covered      16,000   16,000   16,000   20,000   20,000   20,000
                                                                           business method patent
                                                                           review request fee--Up
                                                                           to 20 Claims.
42.15(b)(2).......................  1416................................  Post-grant or covered      22,000   22,000   22,000      n/a      n/a      n/a
                                                                           business method patent
                                                                           review post-institution
                                                                           fee--Up to 15 Claims.
42.15(b)(2).......................  1416................................  Post-grant or covered         n/a      n/a      n/a   27,500   27,500   27,500
                                                                           business method patent
                                                                           review post-institution
                                                                           fee--Up to 20 Claims.
42.15(b)(3).......................  1409................................  Post-grant or covered         375      375      375      475      475      475
                                                                           business method review
                                                                           request of each claim
                                                                           in excess of 20.
42.15(b)(4).......................  1417................................  Post-grant or covered         825      825      825    1,050    1,050    1,050
                                                                           business method review
                                                                           post-institution
                                                                           request of each claim
                                                                           in excess of 20.
42.15(c)(1).......................  1412................................  Petition for a                400      400      400      420      420      420
                                                                           derivation proceeding.
42.15(d)..........................  1411................................  Request to make a             400      400      400      420      420      420
                                                                           settlement agreement
                                                                           available and other
                                                                           requests filed in a
                                                                           patent trial proceeding.
42.15(e)..........................  NEW.................................  Pro hac vice admission        n/a      n/a      n/a      250      250      250
                                                                           fee.
--------------------------------------------------------------------------------------------------------------------------------------------------------

VIII. Rulemaking Considerations

A. AIA: America Invents Act

    This Final Rule sets and adjusts fees under section 10(a) of the 
AIA as amended by the SUCCESS Act, Public Law 115-273, 132 Stat. 4158. 
Section 10(a) of the AIA authorizes the director of the USPTO to set or 
adjust by rule any patent fee established, authorized, or charged under 
title 35 of the U.S.C. for any services performed, or materials 
furnished, by the Office. The SUCCESS Act extends the USPTO fee setting 
authority until September 2026. Section 10 of the AIA prescribes that 
fees may be set or adjusted only to recover the aggregate estimated 
cost to the Office for processing, activities, services, and materials 
relating to patents, including administrative costs of the Office with 
respect to such patent fees. Section 10 authority includes flexibility 
to set individual fees in a way that furthers key policy factors, while 
taking into account the cost of the respective services. Section 10(e) 
of the AIA sets forth the general requirements for rulemakings that set 
or adjust fees under this authority. In particular, section 10(e)(1) 
requires the director to publish in the Federal Register any proposed 
fee change under section 10 and include in such publication the 
specific rationale and purpose for the proposal, including the possible 
expectations or benefits resulting from the proposed change. For such 
rulemakings, the AIA requires that the Office provide a public comment 
period of no less than 45 days.
    The PPAC advises the Under Secretary of Commerce for Intellectual 
Property and Director of the USPTO on the management, policies, goals, 
performance, budget, and user fees of patent operations. When proposing 
fees under section 10 of the Act, the director must provide the PPAC 
with the proposed fees at least 45 days prior to publishing them in the 
Federal Register. The PPAC then has at least 30 days within which to 
deliberate, consider, and comment on the proposal, as well as hold 
public hearing(s) on the proposed fees. The PPAC must make a written 
report available to the public of the comments, advice, and 
recommendations of the committee regarding the proposed fees before the 
Office issues any final fees. The Office considers and analyzes any 
comments, advice, or recommendations received from the PPAC before 
finally setting or adjusting fees.
    Consistent with this framework, on August 8, 2018, the director 
notified the PPAC of the Office's intent to set or adjust patent fees 
and submitted a preliminary patent fee proposal with supporting 
materials. The preliminary patent fee proposal and associated materials 
are available at https://www.uspto.gov/FeeSettingAndAdjusting. The PPAC 
held a public hearing in Alexandria, Virginia, on

[[Page 46979]]

September 6, 2018. Transcripts of the hearing are available for review 
at https://www.uspto.gov/sites/default/files/documents/PPAC_Hearing_Transcript_20180906.pdf. Members of the public were 
invited to the hearing and given the opportunity to submit written and/
or oral testimony for the PPAC to consider. The PPAC considered such 
public comments from the hearing and made all comments available to the 
public via the Fee Setting website, https://www.uspto.gov/FeeSettingAndAdjusting. The PPAC also provided a written report setting 
forth in detail the comments, advice, and recommendations of the 
committee regarding the preliminary proposed fees. The report regarding 
the preliminary proposed fees was released on October 29, 2018, and can 
be found online at https://www.uspto.gov/sites/default/files/documents/PPAC_Fee_Setting_Report_Oct2018_1.pdf. The Office considered and 
analyzed all comments, advice, and recommendations received from the 
PPAC before publishing the NPRM on July 31, 2019 (84 FR 37398). The 
NPRM comment period closed on September 30, 2019. Section 10(e) of the 
Act requires the director to publish the final fee rule in the Federal 
Register and the Official Gazette of the USPTO at least 45 days before 
the final fees become effective. Pursuant to this requirement, this 
rule is effective on [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN 
THE Federal Register], except for the amendment to Sec.  1.16(u), which 
is effective on January 1, 2022.

B. Regulatory Flexibility Act

    The USPTO publishes this Final Regulatory Flexibility Analysis 
(FRFA) as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601, et seq.) to examine the impact of the Office's rule to implement 
the fee setting provisions of the Leahy-Smith America Invents Act (Pub. 
L. 112-29, 125 Stat. 284) (AIA or the Act) on small entities. Under the 
RFA, whenever an agency is required by 5 U.S.C. 553 (or any other law) 
to publish an NPRM, the agency must prepare and make available for 
public comment an Initial Regulatory Flexibility Analysis (IRFA), 
unless the agency certifies under 5 U.S.C. 605(b) that the rule, if 
implemented, will not have a significant impact on a substantial number 
of small entities (5 U.S.C. 603, 605). The Office published an IRFA, 
along with the NPRM, on July 31, 2019 (84 FR 37398). Given that the 
final patent fee schedule, based on the assumptions found in the FY 
2021 Budget, is projected to result in $1.2 billion in additional 
aggregate revenue over the current fee schedule (baseline) for the 
period including FY 2020 to FY 2024, the Office acknowledges that the 
fee adjustments will impact all entities seeking patent protection. The 
$1,205.1 million in additional aggregate revenue results from an 
additional $267.9 million in FY 2020, $39.1 million in FY 2021, $293.7 
million in FY 2022, $297.8 million in FY 2023, and $306.7 million in FY 
2024.
    Items 1-6 below discuss the five items specified in 5 U.S.C. 
604(a)(1)-(6) to be addressed in an FRFA. Item 6 below discusses 
alternatives to this proposal that the Office considered.
1. A Statement of the Need for, and Objectives of, the Rule
    Section 10 of the AIA, as amended by the SUCCESS Act, authorizes 
the director of the USPTO to set or adjust by rule any patent fee 
established, authorized, or charged under title 35, U.S.C., for any 
services performed, or materials furnished, by the Office. The 
objective of the final patent fee schedule is for patent fees to 
recover the aggregate cost of patent operations, including 
administrative costs, while facilitating effective administration of 
the U.S. patent system. Since its inception, the Act strengthened the 
patent system by affording the USPTO the ``resources it requires to 
clear the still sizeable backlog of patent applications and move 
forward to deliver to all American inventors the first rate service 
they deserve.'' H.R. Rep. No. 112-98(I), at 163 (2011). In setting and 
adjusting fees under the Act, the Office will secure a sufficient 
amount of aggregate revenue to recover the aggregate cost of patent 
operations, including revenue needed to achieve strategic and 
operational goals. Additional information on the Office's strategic 
goals may be found in the Strategic Plan, available at www.uspto.gov/strategicplan. Additional information on the Office's operating 
requirements to achieve the strategic goals may be found in the ``USPTO 
FY 2021 President's Budget Request,'' available at https://www.uspto.gov/about-us/performance-and-planning/budget-and-financial-information.
2. A Statement of the Significant Issues Raised by the Public Comments 
in Response to the Initial Regulatory Flexibility Analysis, a Statement 
of the Assessment of the Agency of Such Issues, and a Statement of Any 
Changes Made in the Final Rule as a Result of Such Comments
    The Office received two public comments in response to the IRFA. 
Details of those comments are discussed and analyzed above in Part VI: 
Discussion of Comments and are summarized here.
    Comment: One commenter wrote that the increase in the second and 
subsequent RCE fee would hurt small entity applicants and small entity 
law firms. The Initial Regulatory Flexibility Analysis offered no 
explanation justifying that differential effect on small entities.
    Response: The USPTO is not targeting the RCE fees for a specific 
increase. Instead, the fees for RCEs--both for the first request and 
for second and subsequent requests--are being adjusted by the across-
the-board adjustment to patent fees. The USPTO would like to note that 
small and micro entity applicants will continue to receive the small 
and micro entity discounts, which set the fee rates significantly below 
cost to examine second and subsequent RCE filings. Additionally, the 
Regulatory Flexibility Analysis analyzed applicants' sensitivity to 
changes in fee rates by entity size, including RCE fees for small 
entities. This impact is also included in the RIA completed for this 
rulemaking, which is available at https://www.uspto.gov/FeeSettingAndAdjusting.
    Comment: One commenter claimed the Regulatory Flexibility Analysis 
must analyze the effect of the annual active patent practitioner fee on 
small entities because a great number of practitioners work for small 
entities.
    Response: As noted in response to Comment 81 above, the USPTO has 
elected not to implement the annual active patent practitioner fee at 
this time.
3. The Response of the Agency to Any Comments Filed by the Chief 
Counsel for Advocacy of the Small Business Administration in Response 
to the Proposed Rule, and a Detailed Statement of Any Change Made to 
the Proposed Rule in the Final Rule as a Result of the Comments
    The Office did not receive any comments filed by the Chief Counsel 
for Advocacy of the Small Business Administration in response to the 
proposed rule.
4. A Description of and, Where Feasible, an Estimate of the Number of 
Small Entities To Which the Rule Will Apply or an Explanation of Why No 
Such Estimate Is Available
(a) SBA Size Standard
    The Small Business Act (SBA) size standards applicable to most 
analyses conducted to comply with the RFA are set forth in 13 CFR 
121.201. These

[[Page 46980]]

regulations generally define small businesses as those with less than a 
specified maximum number of employees or less than a specified level of 
annual receipts for the entity's industrial sector or North American 
Industry Classification System (NAICS) code. As provided by the RFA, 
and after consulting with the Small Business Administration, the Office 
formally adopted an alternate size standard for the purpose of 
conducting an analysis or making a certification under the RFA for 
patent-related regulations. See Business Size Standard for Purposes of 
United States Patent and Trademark Office Regulatory Flexibility 
Analysis for Patent-Related Regulations, 71 FR 67109, 67109 (Nov. 20, 
2006), 1313 Off. Gaz. Pat. Office 37, 60 (Dec. 12, 2006). The Office's 
alternate small business size standard consists of the SBA's previously 
established size standard for entities entitled to pay reduced patent 
fees. See 13 CFR 121.802.
    Unlike the SBA's generally applicable small business size 
standards, the size standard for the USPTO is not industry-specific. 
The Office's definition of a small business concern for RFA purposes is 
a business or other concern that: (1) Meets the SBA's definition of a 
``business concern or concern'' set forth in 13 CFR 121.105, and (2) 
meets the size standards set forth in 13 CFR 121.802 for the purpose of 
paying reduced patent fees, namely, an entity: (a) Whose number of 
employees, including affiliates, does not exceed 500 persons, and (b) 
that has not assigned, granted, conveyed, or licensed (and is under no 
obligation to do so) any rights in the invention to any person who made 
it and could not be classified as an independent inventor, or to any 
concern that would not qualify as a nonprofit organization or a small 
business concern under this definition. See 71 FR at 67109, 1313 Off. 
Gaz. Pat. Office 60.
    If a patent applicant self-identifies on a patent application as 
qualifying as a small entity or provides certification of micro entity 
status for reduced patent fees under the Office's alternative size 
standard, the Office captures this data in the Patent Application 
Location and Monitoring (PALM) database system, which tracks 
information on each patent application submitted to the Office.
Small Entity Defined
    The Act provides that fees set or adjusted under section 10(a) 
``for filing, searching, examining, issuing, appealing, and maintaining 
patent applications and patents shall be reduced by 50 percent'' with 
respect to the application of such fees to any ``small entity'' (as 
defined in 37 CFR 1.27) that qualifies for reduced fees under 35 U.S.C. 
41(h)(1). In turn, 125 Stat. at 316-17. 35 U.S.C. 41(h)(1) provides 
that certain patent fees ``shall be reduced by 50 percent'' for a small 
business concern as defined by section 3 of the SBA, and to any 
independent inventor or nonprofit organization as defined in 
regulations described by the director.
Micro Entity Defined
    Section 10(g) of the Act created a new category of entity called a 
``micro entity.'' 35 U.S.C. 123; see also 125 Stat. at 318-19. Section 
10(b) of the Act provides that the fees set or adjusted under section 
10(a) ``for filing, searching, examining, issuing, appealing, and 
maintaining patent applications and patents shall be reduced by 75 
percent with respect to the application of such fees to any micro 
entity as defined by 35 U.S. Code 123.'' 125 Stat. at 315-17. 35 U.S.C. 
123(a) defines a ``micro entity'' as an applicant that makes a 
certification that the applicant: (1) Qualifies as a small entity as 
defined in 37 CFR 1.27; (2) has not been named as an inventor on more 
than four previously filed patent applications, other than applications 
filed in another country, provisional applications under 35 U.S.C. 
111(b), or PCT applications for which the basic national fee under 35 
U.S.C. 41(a) was not paid; (3) did not, in the calendar year preceding 
the calendar year in which the applicable fee is being paid, have a 
gross income, as defined in section 61(a) of the Internal Revenue Code 
of 1986 (26 U.S.C. 61(a)), exceeding three times the median household 
income for that preceding calendar year, as most recently reported by 
the Bureau of the Census; \2\ and (4) has not assigned, granted, or 
conveyed, and is not under an obligation by contract or law to assign, 
grant, or convey, a license or other ownership interest in the 
application concerned to an entity exceeding the income limit set forth 
in (3) above. See 125 Stat. at 318. 35 U.S.C. 123(d) also defines a 
``micro entity'' as an applicant that certifies that: (1) The 
applicant's employer, from which the applicant obtains the majority of 
the applicant's income, is an institution of higher education as 
defined in section 101(a) of the Higher Education Act of 1965 (20 
U.S.C. 1001(a)); or (2) the applicant has assigned, granted, conveyed, 
or is under an obligation by contract or law to assign, grant, or 
convey, a license or other ownership interest in the particular 
applications to such an institution of higher education.
---------------------------------------------------------------------------

    \2\ For more information, see https://www.uspto.gov/PatentMicroentity.
---------------------------------------------------------------------------

Estimate of Number of Small Entities Affected
    The changes in this Final Rule will apply to any entity, including 
small and micro entities, that pays any patent fee set forth in this 
Final Rule. The reduced fee rates (50 percent for small entities and 75 
percent for micro entities) will continue to apply to any small entity 
asserting small entity status and to any micro entity certifying micro 
entity status for filing, searching, examining, issuing, appealing, and 
maintaining patent applications and patents.
    The Office reviews historical data to estimate the percentages of 
application filings asserting small entity status. Table 22 presents a 
summary of such small entity filings by type of application (utility, 
reissue, plant, design) over the last five years.

                       Table 22--Number of Patent Applications Filed In Last Five Years *
----------------------------------------------------------------------------------------------------------------
                                     FY 2019 **    FY 2018      FY 2017      FY 2016      FY 2015      Average
----------------------------------------------------------------------------------------------------------------
Utility:
    All...........................      619,186      597,952      604,655      609,063      579,358      602,043
    Small.........................      140,097      135,307      134,393      131,617      125,991      133,481
    % Small.......................         22.6         22.6         22.2         21.6         21.7         22.2
    Micro.........................       19,844       20,314       20,359       20,652       19,119       20,058
    % Micro.......................          3.2          3.4          3.4          3.4          3.3          3.3
Reissue:
    All...........................        1,131        1,023        1,086        1,123        1,154        1,103

[[Page 46981]]

 
    Small.........................          241          219          237          237          217          230
    % Small.......................         21.3         21.4         21.8         21.1         18.8         20.9
    Micro.........................           33           20           23           21           12           22
    % Micro.......................          2.9          2.0          2.1          1.9          1.0          2.0
Plant:
    All...........................        1,168        1,043        1,076        1,181        1,095        1,113
    Small.........................          594          467          536          563          577          547
    % Small.......................         50.9         44.8         49.8         47.7         52.7         49.2
    Micro.........................            7            7           18           10            6           10
    % Micro.......................          0.6          0.7          1.7          0.8          0.5          0.9
Design:
    All...........................       45,945       46,433       44,048       42,298       38,183       43,381
    Small.........................       18,628       18,992       18,014       16,723       14,709       17,413
    % Small.......................         40.5         40.9         40.9         39.5         38.5         40.1
    Micro.........................        6,464        5,459        4,983        4,289        3,879        5,015
    % Micro.......................         14.1         11.8         11.3         10.1         10.2         11.6
----------------------------------------------------------------------------------------------------------------
* The patent application filing data in this table includes RCEs.
** FY 2019 application filing data are preliminary and will be finalized in the FY 2020 Performance and
  Accountability Report (PAR).

    Because the percentage of small entity filings varies widely 
between application types, the Office has averaged the small entity 
filing rates over the past five years for those application types in 
order to estimate future filing rates by small and micro entities. 
Those average rates appear in the last column of Table 22.
    The USPTO continuously updates both patent fee collections 
projections and workload projections based on the latest data. The 
estimated number of patent applications has been updated since the NPRM 
was published in July 2019. UPR filings growth projections were revised 
upward during the FY 2021 budget formulation process due to revised 
RGDP estimates and historical trends. As found in the FY 2021 Budget, 
the Office estimates that serialized UPR patent application growth 
rates will be 2.5 percent in FY 2020, 2.0 percent in FY 2021, 1.5 
percent in FY 2022, and 1.0 percent in FYs 2023 and 2024. The Office 
forecasts design patent applications independently of UPR applications 
because they exhibit different behavior.
    Using the estimated filings for the next five years and the average 
historic rates of small entity filings, Table 23 presents the Office's 
estimates of the number of patent application filings by all 
applicants, including small and micro entities, over the next five 
fiscal years by application type.

                      Table 23--Estimated Numbers of Patent Applications in FY 2020-FY 2024
----------------------------------------------------------------------------------------------------------------
                                                   FY 2020      FY 2021      FY 2022      FY 2023      FY 2024
----------------------------------------------------------------------------------------------------------------
Utility........................................      632,402      632,105      642,729      652,922      662,489
Reissue........................................          899          899          899          899          899
Plant..........................................        1,300        1,300        1,300        1,300        1,300
Design.........................................       45,751       47,581       49,484       51,464       53,521
                                                ----------------------------------------------------------------
    Total......................................      680,352      681,885      694,412      706,585      718,209
----------------------------------------------------------------------------------------------------------------

    The Office has undertaken an elasticity analysis to examine if fee 
adjustments may impact small entities and, in particular, whether 
increases in fees would result in some such entities not submitting 
applications. Elasticity measures how sensitive demand for services by 
patent applicants and patentees is to fee changes. If elasticity is low 
enough (demand is inelastic), then fee increases will not reduce 
patenting activity enough to negatively impact overall revenues. If 
elasticity is high enough (demand is elastic), then increasing fees 
will decrease patenting activity enough to decrease revenue. The Office 
analyzed elasticity at the overall filing level across all patent 
applicants with regard to entity size and estimated the potential 
impact to patent application filings across entities. Additional 
information about elasticity estimates is available at https://www.uspto.gov/FeeSettingAndAdjusting in the document entitled ``Setting 
and Adjusting Patent Fees during Fiscal Year 2020--Description of 
Elasticity Estimates.''
5. A Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Rule, Including an Estimate of the 
Classes of Small Entities Which Will be Subject to the Requirement and 
Type of Professional Skills Necessary for Preparation of the Report or 
Record
    When implemented, this rule will not change the burden of existing 
reporting and recordkeeping requirements for payment of fees. The 
current requirements for small and micro entities will continue to 
apply. Therefore, the professional skills necessary to file and 
prosecute an application through issue and maintenance remain unchanged 
under this rule. This action only adjusts patent fees and does not set 
procedures for asserting small entity status or certifying micro entity 
status, as previously discussed. There are no new compliance 
requirements in this rule.
    The full fee schedule (see Part VII: Discussion of Specific Rules) 
is set forth in this Final Rule. The fee schedule sets or adjusts 296 
patent fees in total. This includes four fees that will be discontinued 
and five new fees.

[[Page 46982]]

6. A Description of the Steps the Agency Has Taken To Minimize the 
Significant Economic Impact on Small Entities Consistent With the 
Stated Objectives of Applicable Statutes, Including a Statement of the 
Factual, Policy, and Legal Reasons for Selecting the Alternative 
Adopted in the Final Rule and Why Each One of the Other Significant 
Alternatives to the Rule Considered by the Agency Which Affect the 
Impact on Small Entities Was Rejected
    The USPTO considered several alternative approaches to this Final 
Rule, discussed below, including full cost recovery for individual 
services, an across-the-board adjustment to fees, and a baseline 
(current fee rates). The discussion begins with Alternative 1, a 
description of the fee schedule adopted in this Final Rule. A full 
discussion of the costs and benefits of all four alternatives and the 
methodology used for that analysis is contained in the RIA, available 
at https://www.uspto.gov/FeeSettingAndAdjusting.
(a) Alternative 1: Final Patent Fee Schedule--Setting and Adjusting 
Patent Fees During Fiscal Year 2020
    The USPTO chose the patent fee schedule in this Final Rule because 
it achieves the aggregate revenue needed for the Office to offset 
aggregate costs, based on the assumptions found in the FY 2021 Budget, 
and is therefore beneficial to all entities that seek patent 
protection. Also, the alternative selected here benefits from 
improvements in the design of the fee schedule. The final patent fee 
schedule herein secures the Office's required revenue to recover its 
aggregate costs, while progressing towards high-quality and timely 
patent examination and review proceedings in order to produce reliable 
and predictable IP rights. This will benefit all applicants, including 
small and micro entities, without undue burden to patent applicants and 
holders, barriers to entry, or reduced incentives to innovate. This 
alternative maintains small and micro entity discounts. Compared to the 
current fee schedule, there are no new small or micro entity fee codes 
being extended to existing large entity fee rates, and none are being 
eliminated. All entities will benefit from the Office's proposal to 
discontinue four fees. Three patent service fees are being eliminated 
in order to focus USPTO workforce efforts on producing products that 
benefit the general public rather than producing outputs for individual 
customers that can be obtained through other, more efficient means. 
Additionally, the Office is eliminating the fee for assisting with the 
recovery of identification or reset of a password for the Office of 
Enrollment and Discipline Information System. This fee is being removed 
because it is unnecessary.
    As discussed throughout this document, the fee changes in this 
alternative are moderate compared to other alternatives. Given that the 
final patent fee schedule will result in increased aggregate revenue, 
small and micro entities will pay some higher fees when compared to the 
current fee schedule (Alternative 4).
    In summary, the fees to obtain a patent will increase. All patent 
fees not covered by the targeted adjustments as discussed in section B 
of Part V, or to be discontinued, as discussed in section C of Part V, 
are subject to the approximately 5 percent across the board increase. 
In addition to the across the board increase, some fees will be subject 
to a larger increase. For example, the issue fee and first stage 
maintenance fee rate will increase by 20 and 25 percent, respectively. 
However, second and third stage maintenance fees will only increase by 
4 percent, less than the across-the-board increase. This alternative 
includes a new surcharge fee for applications not filed in DOCX format, 
which aims to improve the electronic application process for patent 
applicants by modernizing the USPTO's filing and viewing systems. This 
streamlines the application and publication processes, which benefits 
both the applicants and examiners. In an effort to enable the PTAB to 
continue high-quality, timely, and efficient proceedings with the 
expected increase in work following the Supreme Court decision in SAS 
Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), AIA trial fees will 
increase by at least 23.0 percent. Finally, in response to feedback 
from members of the public, the fee for a request for the expedited 
examination of a design application has been reduced to $1,600. Under 
the NPRM, the fee was proposed to be $2,000.
    Adjusting the patent fee schedule as prescribed in this alternative 
allows the Office to implement the patent-related strategic goals and 
objectives documented in the Strategic Plan and to carry out 
requirements as described in the FY 2021 Budget. Specifically, this 
final patent fee schedule is estimated to generate sufficient revenue 
to support increases in core examination costs that are necessary to 
implement strategic initiatives to issue highly reliable patents, such 
as increasing the time examiners are provided to work on each 
application. This final patent fee schedule also supports the Strategic 
Plan's mission support goal to deliver organizational excellence (which 
includes optimizing the speed, quality, and cost-effectiveness of IT 
delivery to achieve business value and ensuring financial 
sustainability to facilitate effective USPTO operations) by allowing 
the Office to continue to make necessary business improvements. While 
all of the other alternatives discussed facilitate progress toward some 
of the Office's goals, the final patent fee schedule is the only one 
that does so in a way that does not impose undue costs on patent 
applicants and holders.
    A comparison between the final patent fee schedule for this rule 
and existing fees (labeled Alternative 1--Final Patent Fee Schedule--
Setting and Adjusting Patent Fees during Fiscal Year 2020) is available 
at https://www.uspto.gov/FeeSettingAndAdjusting in the document 
entitled ``Final Regulatory Flexibility Analysis Tables.'' Fee changes 
for small and micro entities are included in the tables. For the 
comparison between the fees in the final patent fee schedule and 
current fees, as noted above, the ``current fees'' column displays the 
fees that were in effect as of January 2018.
(b) Other Alternatives Considered
    In addition to the final patent fee schedule set forth in 
Alternative 1, above, the Office considered several other alternative 
approaches. For each alternative considered, the Office calculated fee 
rates and the resulting revenue derived by each alternative scenario. 
The fees and their corresponding revenue tables are available at 
https://www.uspto.gov/FeeSettingAndAdjusting. Please note, only the 
fees outlined in Alternative 1 are being implemented in the Final Rule; 
other scenarios are discussed only to present the Office's analysis of 
other options.
Alternative 2: Unit Cost Recovery
    It is common practice in the federal government to set individual 
fees at a level sufficient to recover the cost of that single service. 
In fact, official guidance on user fees, as cited in OMB Circular A-25: 
User Charges, states that user charges (fees) should be sufficient to 
recover the full cost to the federal government of providing the 
particular service, resource, or good when the government is acting in 
its capacity as sovereign.
    As such, the USPTO considered setting most individual large entity 
fees at the historical cost of performing the activities related to the 
particular service in FY 2018. (While more recent FY 2019 cost data is 
now available, for

[[Page 46983]]

consistency with information presented in the NPRM, the Office 
continues to base the fee rates displayed under Alternative 2 in the 
IRFA and the RIA on FY 2018 unit cost data). There are several 
complexities in achieving individual fee unit cost recovery for the 
patent fee schedule. The most significant is the AIA requirement to 
provide a 50 percent discount on fees to small entities and a 75 
percent discount on fees to micro entities. To account for this 
requirement, this alternative continues existing small and micro entity 
discounts where eligible under AIA authority. Thus, in order to 
continue the small and micro entity discounts and generate sufficient 
revenue to recover the Office's anticipated budgetary requirements over 
the five-year period with the assumptions found in the FY 2021 Budget, 
for this alternative, maintenance fees must be set significantly above 
unit cost.
    With the exception of maintenance fees, fees for which there is no 
FY 2018 cost data would be set at current rates under this alternative. 
The Office no longer collects activity-based information for 
maintenance fees, and previous year unit costs were negligible. For the 
small number of services that have a variable fee, the aggregate 
revenue table does not list a fee. Instead, for those services with an 
estimated workload, the workload is listed in dollars rather than units 
to develop revenue estimates. Fees without either a fixed fee rate or a 
workload estimate are assumed to provide zero revenue to the Office. 
Note, this alternative bases fee rates for FY 2020 through FY 2024 on 
FY 2018 historical costs. The Office recognizes that this approach does 
not account for inflationary factors that would likely increase costs 
and necessitate higher fees in the out-years.
    Alternative 2 could present significant barriers to those seeking 
patent protection because front-end fees would increase significantly 
for all applicants, even with small and micro entity fee reductions. 
Further, this alternative is counter to the Office's general philosophy 
to charge applicants and holders lower fees when they have less 
information about the relative value of their innovation. This 
alternative does not align well with the strategic and policy goals of 
this Final Rule. Both the current and final patent fee schedule are 
structured to collect more fees further along in the process (i.e., 
issue fees and maintenance fees), when the patent owner has better 
information about a patent's value, rather than up front (i.e., filing 
fees, search fees, and examination fees), when applicants are less 
certain about the value of their innovation, even though the front-end 
services are costlier to the Office. This alternative presents 
significant barriers to those seeking patent protection because if the 
Office were to immediately shift from the current front-end/back-end 
balance to a unit cost recovery structure, front-end fees would 
increase significantly, nearly tripling in some cases (e.g., search 
fees).
    The Office has estimated the potential quantitative elasticity 
impacts for application filings (e.g., filing, search, and examination 
fees), maintenance renewals (all stages), and other major fee 
categories. Results of this analysis indicate that a high cost of entry 
into the patent system could lead to a significant decrease in the 
incentives to invest in innovative activities among all entities, 
especially for small and micro entities. Under the current fee 
schedule, maintenance fees subsidize all applications, including those 
applications for which no claims are allowed. By insisting on unit cost 
payment at each point in the application process, the Office is 
effectively charging high fees for every attempted patent, meaning 
those applicants who have less information about the patentability of 
their claims or the market value of their invention may be less likely 
to pursue initial prosecution (e.g., filing, search, and examination) 
or subsequent actions to continue prosecution (e.g., RCE). The ultimate 
effect of these changes in behavior is likely to stifle innovation. In 
sum, this alternative is inadequate to accomplish the goals and 
strategies as stated in Part III of this Final Rule.
    The Office theorizes that the high costs of entry into the patent 
system could lead to a decrease in the incentives to invest in 
innovative activities among all entities, and especially small and 
micro entities. There is a strong possibility that funds previously 
used for issue and maintenance fee payments could offset the higher 
front-end costs for some users, but the front-end costs could prove 
insurmountable for other innovators.
    The fee schedule for Alternative 2: Unit Cost Recovery is available 
at https://www.uspto.gov/FeeSettingAndAdjusting in the document 
entitled ``Final Regulatory Flexibility Analysis Tables.'' For the 
comparison between unit cost recovery fees and current fees, the 
``current fees'' column displays the fees that are in effect as of 
January 2018. This column is used to calculate dollar and percent fee 
change compared to unit cost recovery fees.
Alternative 3: Across-the Board-Adjustment
    In years past, the USPTO used its authority to adjust statutory 
fees annually according to increases in the consumer price index (CPI), 
which is a commonly used measure of inflation. Building on this prior 
approach and incorporating the additional authority under the AIA to 
set small and micro entity fees, Alternative 3 would set fees by 
applying a one-time 10 percent, across the board inflationary increase 
to the baseline (current fees) beginning in July 2020. Ten percent 
represents the change in revenue needed to achieve the aggregate 
revenue needed to cover future budgetary requirements based on the 
assumptions found in the FY 2021 Budget. All entities (large, small, 
and micro) would pay 10 percent higher fees for every product and 
service.
    As estimated by the CBO in 2019, projected CPI rates by fiscal year 
are: 2.3 percent in FY 2020, 2.5 percent in FY 2021 through FY 2023, 
and 2.4 percent in FY 2024. The Office elected not to apply the 
estimated cumulative inflationary adjustment (12.8 percent), from FY 
2020 through FY 2024 because doing so would result in significantly 
greater fee revenue than needed to meet the Office's core mission and 
strategic priorities. Under this alternative, nearly every existing fee 
would be increased, and no fees would be discontinued or reduced. But 
this alternative maintains the status quo ratio of front-end and back-
end fees, given that all fees would be adjusted by the same escalation 
factor, thereby promoting innovation strategies and allowing applicants 
to gain access to the patent system through fees set below cost while 
patent holders pay issue and maintenance fees above cost to subsidize 
the below cost front-end fees. Alternative 3 nevertheless fails to 
implement policy factors and deliver benefits beyond what exists in the 
baseline fee schedule (e.g., no fee adjustments to offer new patent 
prosecution options or facilitate more effective administration of the 
patent system). Given that all entities (large, small, and micro) would 
pay 10.0 percent higher fees for every product and service, especially 
the fees due at the time of filing, this alternative does not 
adequately support the Office's policy factor to promote innovation 
strategies.
    The fee schedule for Alternative 3: Across-the-Board Adjustment is 
available at https://www.uspto.gov/FeeSettingAndAdjusting in the 
document entitled ``Final Regulatory Flexibility Analysis Tables.'' For 
the comparison between the across-the-

[[Page 46984]]

board adjustment fees and current fees, the ``current fees'' column 
displays the fees that are in effect as of January 2018.
Alternative 4: Baseline (Current Fee Schedule)
    The Office considered a no-action alternative. This alternative 
would retain the status quo, meaning that the Office would continue the 
small and micro entity discounts that Congress provided in section 10 
of the Act and maintain fees as of January 2018.
    This approach would not provide sufficient aggregate revenue, based 
on the assumptions found in the FY 2021 Budget, to accomplish the 
Office's rulemaking goals as set forth in Part III of this Final Rule 
or the Strategic Plan. IT improvement, progress on backlog and 
pendency, and other improvement activities would continue, but at a 
significantly slower rate, as increases in core patent examination 
costs that are necessary to implement the strategic objective to issue 
highly reliable patents--such as increasing the time examiners are 
provided to work on each application--crowd out funding for other 
improvements. Likewise, without a fee increase, the USPTO would deplete 
its operating reserves, leaving the Office vulnerable to fiscal and 
economic events. This would expose core operations to unacceptable 
levels of financial risk and would position the Office to have to 
return to making inefficient, short-term funding decisions.
    The fee schedule for Alternative 4: Baseline (Current Fee Schedule) 
is available at https://www.uspto.gov/FeeSettingAndAdjusting in the 
document entitled ``Final Regulatory Flexibility Analysis Tables.''
Alternatives Specified by the RFA
    The RFA provides that an agency should also consider four specified 
``alternatives'' or approaches, namely: (1) Establishing different 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) clarifying, 
consolidating, or simplifying compliance and reporting requirements 
under the rule for small entities; (3) using performance rather than 
design standards; and (4) exempting small entities from coverage of the 
rule, or any part thereof (5 U.S.C. 604(c)). The USPTO discusses each 
of these specified alternatives or approaches below and describes how 
this Final Rule is adopting these approaches.
Differing Requirements
    As discussed above, the changes in this Final Rule would continue 
existing fee discounts for small and micro entities that take into 
account the reduced resources available to them as well as offer new 
discounts when applicable under AIA authority. Specifically, micro 
entities would continue to receive a 75 percent reduction in patent 
fees under this proposal and non-micro, small entities would continue 
to pay 50 percent of the fee.
    This Final Rule sets fee levels but does not set or alter 
procedural requirements for asserting small or micro entity status. To 
pay reduced patent fees, small entities must merely assert small entity 
status to pay reduced patent fees. The small entity may make this 
assertion by either checking a box on the transmittal form, ``Applicant 
claims small entity status,'' or by paying the basic filing or basic 
national small entity fee exactly. The process to claim micro entity 
status is similar in that eligible entities need only submit a written 
certification of their status prior to or at the time a reduced fee is 
paid. This Final Rule does not change any reporting requirements for 
any small or micro entity. For both small and micro entities, the 
burden to establish their status is nominal (making an assertion or 
submitting a certification), and the benefit of the fee reductions (50 
percent for small entities and 75 percent for micro entities) is 
significant.
    This Final Rule makes the best use of differing requirements for 
small and micro entities. It also makes the best use of the redesigned 
fee structure, as discussed further below.
Clarification, Consolidation, or Simplification of Requirements
    This Final Rule pertains to setting or adjusting patent fees. Any 
compliance or reporting requirements in this rule are de minimis and 
necessary to implement lower fees. Therefore, any clarifications, 
consolidations, or simplifications to compliance and reporting 
requirements for small entities are not applicable or would not achieve 
the objectives of this rulemaking.
Performance Standards
    Performance standards do not apply to the Final Rule.
Exemption for Small and Micro Entities
    The final patent fee schedule maintains a 50 percent reduction in 
fees for small entities and a 75 percent reduction in fees for micro 
entities. The Office considered exempting small and micro entities from 
paying increased patent fees but determined that the USPTO would lack 
statutory authority for this approach. Section 10(b) of the Act 
provides that ``fees set or adjusted under subsection (a) for filing, 
searching, examining, issuing, appealing, and maintaining patent 
applications and patents shall be reduced by 50 percent [for small 
entities] and shall be reduced by 75 percent [for micro entities]'' 
(emphasis added). Neither the AIA nor any other statute authorizes the 
USPTO simply to exempt small or micro entities, as a class of 
applicants, from paying increased patent fees.

C. Executive Order 12866 (Regulatory Planning and Review)

    This Final Rule has been determined to be economically significant 
for purposes of Executive Order 12866 (Sept. 30, 1993). The Office has 
developed an RIA as required for rulemakings deemed to be economically 
significant. The complete RIA is available at https://www.uspto.gov/FeeSettingAndAdjusting.

D. Executive Order 13563 (Improving Regulation and Regulatory Review)

    The Office has complied with Executive Order 13563 (Jan. 18, 2011). 
Specifically, the Office has, to the extent feasible and applicable: 
(1) Made a reasoned determination that the benefits justify the costs 
of this Final Rule; (2) tailored this Final Rule to impose the least 
burden on society consistent with obtaining the regulatory objectives; 
(3) selected a regulatory approach that maximizes net benefits; (4) 
specified performance objectives; (5) identified and assessed available 
alternatives; (6) involved the public in an open exchange of 
information and perspectives among experts in relevant disciplines, 
affected stakeholders in the private sector, and the public as a whole, 
and provided online access to the rulemaking docket; (7) attempted to 
promote coordination, simplification, and harmonization across 
government agencies and identified goals designed to promote 
innovation; (8) considered approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public; and (9) ensured the 
objectivity of scientific and technological information and processes.

E. Executive Order 13771 (Reducing Regulation and Controlling 
Regulatory Costs)

    This Final Rule is not subject to the requirements of Executive 
Order 13771 (Jan. 30, 2017) because this Final Rule involves a transfer 
payment.

[[Page 46985]]

F. Executive Order 13132 (Federalism)

    This rulemaking does not contain policies with federalism 
implications sufficient to warrant preparation of a Federalism 
Assessment under Executive Order 13132 (Aug. 4, 1999).

G. Executive Order 13175 (Tribal Consultation)

    This rulemaking will not: (1) Have substantial direct effects on 
one or more Indian tribes, (2) impose substantial direct compliance 
costs on Indian tribal governments, or (3) preempt tribal law. 
Therefore, a tribal summary impact statement is not required under 
Executive Order 13175 (Nov. 6, 2000).

H. Executive Order 13211 (Energy Effects)

    This rulemaking is not a significant energy action under Executive 
Order 13211 (May 18, 2001) because this final rulemaking is not likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy. Therefore, a Statement of Energy Effects is not required 
under Executive Order 13211.

I. Executive Order 12988 (Civil Justice Reform)

    This rulemaking meets applicable standards to minimize litigation, 
eliminate ambiguity, and reduce burden as set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996).

J. Executive Order 13045 (Protection of Children)

    This rulemaking does not concern an environmental risk to health or 
safety that may disproportionately affect children under Executive 
Order 13045 (Apr. 21, 1997).

K. Executive Order 12630 (Taking of Private Property)

    This rulemaking will not affect a taking of private property or 
otherwise have taking implications under Executive Order 12630 (Mar. 
15, 1988).

L. Congressional Review Act

    Under the Congressional Review Act provisions of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), 
prior to issuing any final rule, the United States Patent and Trademark 
Office will submit a report containing the rule and other required 
information to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the Government 
Accountability Office. The changes in this Final Rule are expected to 
result in an annual effect on the economy of $100 million or more, a 
major increase in costs or prices, or significant adverse effects on 
competition, employment, investment, productivity, innovation, or the 
ability of United States-based enterprises to compete with foreign-
based enterprises in domestic and export markets. Therefore, this Final 
Rule is a ``major rule'' as defined in 5 U.S.C. 804(2).

M. Unfunded Mandates Reform Act of 1995

    The changes set forth in this rulemaking do not involve a federal 
intergovernmental mandate that will result in the expenditure by state, 
local, and tribal governments, in the aggregate, of $100 million (as 
adjusted) or more in any one year, or a federal private sector mandate 
that will result in the expenditure by the private sector of $100 
million (as adjusted) or more in any one year, and will not 
significantly or uniquely affect small governments. Therefore, no 
actions are necessary under the provisions of the Unfunded Mandates 
Reform Act of 1995. See 2 U.S.C. 1501 et seq.

N. National Environmental Policy Act

    This rulemaking will not have any effect on the quality of the 
environment and is thus categorically excluded from review under the 
National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.

O. National Technology Transfer and Advancement Act

    The requirements of section 12(d) of the National Technology 
Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not 
applicable because this rulemaking does not contain provisions that 
involve the use of technical standards.

P. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) 
requires that the Office consider the impact of paperwork and other 
information collection burdens imposed on the public. This Final Rule 
involves information collection requirements that are subject to review 
by the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3549). The collection of information involved in this Final Rule have 
been reviewed and previously approved by the OMB under control numbers 
0651-0012, 0651-0016, 0651-0020, 0651-0021, 0651-0031, 0651-0032, 0651-
0033, 0651-0059, 0651-0063, 0651-0064, 0651-0069, and 0651-0075. In 
addition, updates to the aforementioned information collections as a 
result of this Final Rule have been submitted to the OMB as non-
substantive change requests.
    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act unless that collection of information 
has a currently valid OMB control number.

List of Subjects

37 CFR Part 1

    Administrative practice and procedure, Biologics, Courts, Freedom 
of information, Inventions and patents, Reporting and recordkeeping 
requirements, Small businesses.

37 CFR Part 11

    Administrative practice and procedure, Inventions and patents, 
Lawyers, Reporting and recordkeeping requirements.

37 CFR Part 41

    Administrative practice and procedure, Inventions and patents, 
Lawyers, Reporting and recordkeeping requirements.

37 CFR Part 42

    Administrative practice and procedure, Inventions and patents, 
Lawyers.

    For the reasons set forth in the preamble, 37 CFR parts 1, 11, 41, 
and 42 are amended as follows:

PART 1--RULES OF PRACTICE IN PATENT CASES

0
1. The authority citation for 37 CFR part 1 continues to read as 
follows:

    Authority:  35 U.S.C. 2(b)(2), unless otherwise noted.

0
2. Section 1.16 is amended by:
0
a. Revising paragraphs (a) through (e);
0
b. Adding table headings to the tables in paragraphs (f) and (g);
0
c. Revising paragraph (h);
0
d. Adding a heading to the table in paragraph (i);
0
e. Revising paragraphs (j) and (k);
0
f. Adding a heading to the table in paragraph (l);
0
g. Revising paragraphs (m) through (s);
0
h. Adding a heading to the table in paragraph (t); and
0
i. Adding paragraph (u).
    The revisions and additions read as follows:


Sec.  1.16   National application filing, search, and examination fees.

    (a) Basic fee for filing each application under 35 U.S.C. 111 for 
an original patent, except design, plant, or provisional applications:

[[Page 46986]]



                        Table 1 to Paragraph (a)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $80.00
By a small entity (Sec.   1.27(a)).........................       160.00
By a small entity (Sec.   1.27(a)) if the application is           80.00
 submitted in compliance with the Office electronic filing
 system (Sec.   1.27(b)(2))................................
By other than a small or micro entity......................       320.00
------------------------------------------------------------------------

    (b) Basic fee for filing each application under 35 U.S.C. 111 for 
an original design patent:

                        Table 2 to Paragraph (b)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $55.00
By a small entity (Sec.   1.27(a)).........................       110.00
By other than a small or micro entity......................       220.00
------------------------------------------------------------------------

    (c) Basic fee for filing each application for an original plant 
patent:

                        Table 3 to Paragraph (c)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $55.00
By a small entity (Sec.   1.27(a)).........................       110.00
By other than a small or micro entity......................       220.00
------------------------------------------------------------------------

    (d) Basic fee for filing each provisional application:

                        Table 4 to Paragraph (d)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $75.00
By a small entity (Sec.   1.27(a)).........................       150.00
By other than a small or micro entity......................       300.00
------------------------------------------------------------------------

    (e) Basic fee for filing each application for the reissue of a 
patent:

                        Table 5 to Paragraph (e)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $80.00
By a small entity (Sec.   1.27(a)).........................       160.00
By other than a small or micro entity......................       320.00
------------------------------------------------------------------------

    (f) * * *

                        Table 6 to Paragraph (f)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (g) * * *

                        Table 7 to Paragraph (g)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (h) In addition to the basic filing fee in an application, other 
than a provisional application, for filing or later presentation at any 
other time of each claim in independent form in excess of three:

                        Table 8 to Paragraph (h)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $120.00
By a small entity (Sec.   1.27(a)).........................       240.00
By other than a small or micro entity......................       480.00
------------------------------------------------------------------------

    (i) * * *

                        Table 9 to Paragraph (i)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (j) In addition to the basic filing fee in an application, other 
than a provisional application, that contains, or is amended to 
contain, a multiple dependent claim, per application:

                        Table 10 to Paragraph (j)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $215.00
By a small entity (Sec.   1.27(a)).........................       430.00
By other than a small or micro entity......................       860.00
------------------------------------------------------------------------

    (k) Search fee for each application filed under 35 U.S.C. 111 for 
an original patent, except design, plant, or provisional applications:

                        Table 11 to Paragraph (k)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $175.00
By a small entity (Sec.   1.27(a)).........................       350.00
By other than a small or micro entity......................       700.00
------------------------------------------------------------------------

    (l) * * *

                        Table 12 to Paragraph (l)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (m) Search fee for each application for an original plant patent:

                        Table 13 to Paragraph (m)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $110.00
By a small entity (Sec.   1.27(a)).........................       220.00
By other than a small or micro entity......................       440.00
------------------------------------------------------------------------

    (n) Search fee for each application for the reissue of a patent:

                        Table 14 to Paragraph (n)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $175.00
By a small entity (Sec.   1.27(a)).........................       350.00
By other than a small or micro entity......................       700.00
------------------------------------------------------------------------

    (o) Examination fee for each application filed under 35 U.S.C. 111 
for an original patent, except design, plant, or provisional 
applications:

                        Table 15 to Paragraph (o)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $200.00
By a small entity (Sec.   1.27(a)).........................       400.00
By other than a small or micro entity......................       800.00
------------------------------------------------------------------------

    (p) Examination fee for each application under 35 U.S.C. 111 for an 
original design patent:

                        Table 16 to Paragraph (p)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $160.00
By a small entity (Sec.   1.27(a)).........................       320.00
By other than a small or micro entity......................       640.00
------------------------------------------------------------------------

    (q) Examination fee for each application for an original plant 
patent:

                        Table 17 to Paragraph (q)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $165.00
By a small entity (Sec.   1.27(a)).........................       330.00
By other than a small or micro entit.......................       660.00
------------------------------------------------------------------------

    (r) Examination fee for each application for the reissue of a 
patent:

                        Table 18 to Paragraph (r)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $580.00
By a small entity (Sec.   1.27(a)).........................     1,160.00
By other than a small or micro entity......................     2,320.00
------------------------------------------------------------------------

    (s) Application size fee for any application filed under 35 
U.S.C.111 for the specification and drawings which exceed 100 sheets of 
paper, for each additional 50 sheets or fraction thereof:

                        Table 19 to Paragraph (s)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $105.00
By a small entity (Sec.   1.27(a)).........................       210.00
By other than a small or micro entity......................       420.00
------------------------------------------------------------------------

    (t) * * *

                        Table 20 to Paragraph (t)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (u) Additional fee for any application filed on or after January 1, 
2022 under 35 U.S.C.111 for an original patent, except design, plant, 
or provisional applications, where the specification, claims, and/or 
abstract does not conform to the USPTO requirements for submission in 
DOCX format:

                        Table 21 to Paragraph (u)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $100.00
By a small entity (Sec.   1.27(a)).........................       200.00
By a small entity (Sec.   1.27(a)) if the application is          200.00
 submitted in compliance with the Office electronic filing
 system (Sec.   1.27(b)(2))................................
By other than a small or micro entity......................       400.00
------------------------------------------------------------------------


0
3. Section 1.17 is amended by:
0
a. Revising paragraph (a) and (c) through (g);
0
c. Revising paragraph (h) introductory text and adding heading to the 
table in paragraph (h);
0
d. Revising paragraph (i)(1) introductory text and adding a heading to 
the table in paragraph (i)(1);
0
e. Revising paragraphs (i)(2) and (k);
0
f. Revising paragraph (m);
0
g. Adding a heading to the table in paragraph (o);

[[Page 46987]]

0
h. Revising paragraphs (p) through (s); and
0
i. Adding a heading to the table in paragraph (t).
    The revisions and additions read as follows:


Sec.  1.17   Patent application and reexamination processing fees.

    (a) Extension fees pursuant to Sec.  1.136(a):
    (1) For reply within first month:

                       Table 1 to Paragraph (a)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $55.00
By a small entity (Sec.   1.27(a)).........................       110.00
By other than a small or micro entity......................       220.00
------------------------------------------------------------------------

    (2) For reply within second month:

                       Table 2 to Paragraph (a)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $160.00
By a small entity (Sec.   1.27(a)).........................        320.0
By other than a small or micro entity......................       640.00
------------------------------------------------------------------------

    (3) For reply within third month:

                       Table 3 to Paragraph (a)(3)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $370.00
By a small entity (Sec.   1.27(a)).........................       740.00
By other than a small or micro entity......................     1,480.00
------------------------------------------------------------------------

    (4) For reply within fourth month:

                       Table 4 to Paragraph (a)(4)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $580.00
By a small entity (Sec.   1.27(a)).........................     1,160.00
By other than a small or micro entity......................    $2,320.00
------------------------------------------------------------------------

    (5) For reply within fifth month:

                       Table 5 to Paragraph (a)(5)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $790.00
By a small entity (Sec.   1.27(a)).........................     1,580.00
By other than a small or micro entity......................     3,160.00
------------------------------------------------------------------------

* * * * *
    (c) For filing a request for prioritized examination under Sec.  
1.102(e):

                        Table 6 to Paragraph (c)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $1,050.00
By a small entity (Sec.   1.27(a)).........................     2,100.00
By other than a small or micro entity......................     4,200.00
------------------------------------------------------------------------

    (d) For correction of inventorship in an application after the 
first action on the merits:

                        Table 7 to Paragraph (d)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $160.00
By a small entity (Sec.   1.27(a)).........................       320.00
By other than a small or micro entity......................       640.00
------------------------------------------------------------------------

    (e) To request continued examination pursuant to Sec.  1.114:
    (1) For filing a first request for continued examination pursuant 
to Sec.  1.114 in an application:

                       Table 8 to Paragraph (e)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $340.00
By a small entity (Sec.   1.27(a)).........................       680.00
By other than a small or micro entity......................     1,360.00
------------------------------------------------------------------------

    (2) For filing a second or subsequent request for continued 
examination pursuant to Sec.  1.114 in an application:

                       Table 9 to Paragraph (e)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $500.00
By a small entity (Sec.   1.27(a)).........................     1,000.00
By other than a small or micro entity......................     2,000.00
------------------------------------------------------------------------

    (f) For filing a petition under one of the sections in paragraphs 
(f)(1) through (6) of this section that refers to this paragraph (f):

                        Table 10 to Paragraph (f)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $105.00
By a small entity (Sec.   1.27(a)).........................       210.00
By other than a small or micro entity......................       420.00
------------------------------------------------------------------------

Sec.  1.36(a)--for revocation of a power of attorney by fewer than all 
of the applicants
Sec.  1.53(e)--to accord a filing date
Sec.  1.182--for a decision on a question not specifically provided for 
in an application for a patent
Sec.  1.183--to suspend the rules in an application for a patent
Sec.  1.741(b)--to accord a filing date to an application under Sec.  
1.740 for an extension of a patent term
Sec.  1.1023--to review the filing date of an international design 
application

    (g) For filing a petition under one of the following sections that 
refers to this paragraph (g):

                        Table 11 to Paragraph (g)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $55.00
By a small entity (Sec.   1.27(a)).........................       110.00
By other than a small or micro entity......................       220.00
------------------------------------------------------------------------

Sec.  1.12--for access to an assignment record
Sec.  1.14--for access to an application
Sec.  1.46--for filing an application on behalf of an inventor by a 
person who otherwise shows sufficient proprietary interest in the 
matter
Sec.  1.55(f)--for filing a belated certified copy of a foreign 
application
Sec.  1.55(g)--for filing a belated certified copy of a foreign 
application
Sec.  1.57(a)--for filing a belated certified copy of a foreign 
application
Sec.  1.59--for expungement of information
Sec.  1.103(a)--to suspend action in an application
Sec.  1.136(b)--for review of a request for an extension of time when 
the provisions of Sec.  1.136(a) are not available
Sec.  1.377--for review of a decision refusing to accept and record 
payment of a maintenance fee filed prior to the expiration of a patent
Sec.  1.550(c)--for patent owner requests for an extension of time in 
ex parte reexamination proceedings
Sec.  1.956--for patent owner requests for an extension of time in 
inter partes reexamination proceedings
Sec.  5.12 of this chapter--for expedited handling of a foreign filing 
license
Sec.  5.15 of this chapter--for changing the scope of a license
Sec.  5.25 of this chapter--for a retroactive license

    (h) For filing a petition under one of the following sections that 
refers to this paragraph (h):

                        Table 12 to Paragraph (h)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (i) * * *
    (1) For taking action under one of the following sections that 
refers to this paragraph (i)(1):

                      Table 13 to Paragraph (i)(1)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (2) For taking action under one of the sections in paragraphs 
(i)(2)(i) and (ii) of this section that refers to this paragraph 
(i)(2):

                      Table 14 to Paragraph (i)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $140.00
By a small entity (Sec.   1.27(a)).........................       140.00
By other than a small or micro entity......................       140.00
------------------------------------------------------------------------

Sec.  1.217--for processing a redacted copy of a paper submitted in the 
file of an application in which a redacted copy was submitted for the 
patent application publication
Sec.  1.221--for requesting voluntary publication or republication of 
an application
* * * * *
    (k) For filing a request for expedited examination under Sec.  
1.155(a):

                        Table 15 to Paragraph (k)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $400.00
By a small entity (Sec.   1.27(a)).........................       800.00
By other than a small or micro entity......................     1,600.00
------------------------------------------------------------------------

* * * * *
    (m) For filing a petition for the revival of an abandoned 
application for a

[[Page 46988]]

patent, for the delayed payment of the fee for issuing each patent, for 
the delayed response by the patent owner in any reexamination 
proceeding, for the delayed payment of the fee for maintaining a patent 
in force, for the delayed submission of a priority or benefit claim, 
for the extension of the 12-month (six-month for designs) period for 
filing a subsequent application (Sec. Sec.  1.55(c) and (e); 1.78(b), 
(c), and (e); 1.137; 1.378; and 1.452), or for filing a petition to 
excuse an applicant's failure to act within prescribed time limits in 
an international design application (Sec.  1.1051):

                        Table 16 to Paragraph (m)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $525.00
By a small entity (Sec.   1.27(a)).........................     1,050.00
By other than a small or micro entity......................     2,100.00
------------------------------------------------------------------------

* * * * *
    (o) * * *

                        Table 17 to Paragraph (o)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (p) For an information disclosure statement under Sec.  1.97(c) or 
(d):

                        Table 18 to Paragraph (p)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $65.00
By a small entity (Sec.   1.27(a)).........................       130.00
By other than a small or micro entity......................       260.00
------------------------------------------------------------------------

    (q) Processing fee for taking action under one of the sections in 
paragraphs (q)(1) through (3) of this section that refers to this 
paragraph (q): $50.00

Sec.  1.41--to supply the name or names of the inventor or inventors 
after the filing date without a cover sheet as prescribed by Sec.  
1.51(c)(1) in a provisional application
Sec.  1.48--for correction of inventorship in a provisional application
Sec.  1.53(c)(2)--to convert a nonprovisional application filed under 
Sec.  1.53(b) to a provisional application under Sec.  1.53(c)

    (r) For entry of a submission after final rejection under Sec.  
1.129(a):

                        Table 19 to Paragraph (r)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $220.00
By a small entity (Sec.   1.27(a)).........................       440.00
By other than a small or micro entity......................       880.00
------------------------------------------------------------------------

    (s) For each additional invention requested to be examined under 
Sec.  1.129(b):

                        Table 20 to Paragraph (s)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $220.00
By a small entity (Sec.   1.27(a)).........................       440.00
By other than a small or micro entity......................       880.00
------------------------------------------------------------------------

    (t) * * *

                        Table 21 to Paragraph (t)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------


0
4. Section 1.18 is amended by revising paragraphs (a), (b)(1), (c), 
(d)(3), (e), and (f) to read as follows:


Sec.  1.18   Patent post allowance (including issue) fees.

    (a) Issue fee for issuing each original patent, except a design or 
plant patent, or for issuing each reissue patent:

                        Table 1 to Paragraph (a)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $300.00
By a small entity (Sec.   1.27(a)).........................       600.00
By other than a small or micro entity......................     1,200.00
------------------------------------------------------------------------

    (b)(1) Issue fee for issuing an original design patent:

                       Table 2 to Paragraph (b)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $185.00
By a small entity (Sec.   1.27(a)).........................       370.00
By other than a small or micro entity......................       740.00
------------------------------------------------------------------------

* * * * *
    (c) Issue fee for issuing an original plant patent:

                        Table 3 to Paragraph (c)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $210.00
By a small entity (Sec.   1.27(a)).........................       420.00
By other than a small or micro entity......................       840.00
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
(d) * * *
(3) Republication fee (Sec.   1.221(a))....................      $320.00
(e) For filing an application for patent term adjustment          210.00
 under Sec.   1.705........................................
(f) For filing a request for reinstatement of all or part         420.00
 of the term reduced pursuant to Sec.   1.704(b) in an
 application for a patent term adjustment under Sec.
 1.705.....................................................
------------------------------------------------------------------------


0
5. Section 1.19 is amended by revising paragraphs (b)(1)(i)(B) and 
(b)(1)(ii)(B) and removing paragraphs (j) through (l).
    The revisions read as follows:


Sec.  1.19   Document supply fees.

* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (B) Copy Patent File Wrapper, Any Number of Sheets: $290.00
* * * * *
    (ii) * * *
    (B) Copy Patent File Wrapper, Electronic, Any Size: $60.00
* * * * *

0
6. Section 1.20 is revised to read as follows:


Sec.  1.20   Post-issuance fees.

    (a) For providing a certificate of correction for an applicant's 
mistake (Sec.  1.323): $160.00
    (b) Processing fee for correcting inventorship in a patent (Sec.  
1.324): $160.00
    (c) In reexamination proceedings:
    (1)(i) For filing a request for ex parte reexamination (Sec.  
1.510(a)) having:
    (A) 40 or fewer pages
    (B) Lines that are double-spaced or one-and-a-half spaced
    (C) Text written in a non-script type font such as Arial, Times New 
Roman, or Courier
    (D) A font size no smaller than 12 point
    (E) Margins that conform to the requirements of Sec.  
1.52(a)(1)(ii)
    (F) Sufficient clarity and contrast to permit direct reproduction 
and electronic capture by use of digital imaging and optical character 
recognition

                     Table 1 to Paragraph (c)(1)(i)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $1,575.00
By a small entity (Sec.   1.27(a)).........................     3,150.00
By other than a small or micro entity......................     6,300.00
------------------------------------------------------------------------

    (ii) The following parts of an ex parte reexamination request are 
excluded from paragraphs (c)(1)(i)(A) through (F) of this section:
    (A) The copies of every patent or printed publication relied upon 
in the request pursuant to Sec.  1.510(b)(3)
    (B) The copy of the entire patent for which reexamination is 
requested pursuant to Sec.  1.510(b)(4)
    (C) The certifications required pursuant to Sec.  1.510(b)(5) and 
(6)
    (2) For filing a request for ex parte reexamination (Sec.  
1.510(b)) that has sufficient clarity and contrast to permit direct 
reproduction and electronic capture by use of digital imaging and 
optical character recognition, and which otherwise does not comply with 
the provisions of paragraph (c)(1) of this section:

                       Table 2 to Paragraph (c)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $3,150.00
By a small entity (Sec.   1.27(a)).........................     6,300.00
By other than a small or micro entity......................    12,600.00
------------------------------------------------------------------------

    (3) For filing with a request for reexamination or later 
presentation at any other time of each claim in independent form in 
excess of three and

[[Page 46989]]

also in excess of the number of claims in independent form in the 
patent under reexamination:

                       Table 3 to Paragraph (c)(3)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $120.00
By a small entity (Sec.   1.27(a)).........................       240.00
By other than a small or micro entity......................       480.00
------------------------------------------------------------------------

    (4) For filing with a request for reexamination or later 
presentation at any other time of each claim (whether dependent or 
independent) in excess of 20 and also in excess of the number of claims 
in the patent under reexamination (note that Sec.  1.75(c) indicates 
how multiple dependent claims are considered for fee calculation 
purposes):

                       Table 4 to Paragraph (c)(4)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $25.00
By a small entity (Sec.   1.27(a)).........................        50.00
By other than a small or micro entity......................       100.00
------------------------------------------------------------------------

    (5) If the excess claims fees required by paragraphs (c)(3) and (4) 
of this section are not paid with the request for reexamination or on 
later presentation of the claims for which the excess claims fees are 
due, the fees required by paragraphs (c)(3) and (4) must be paid or the 
claims canceled by amendment prior to the expiration of the time period 
set for reply by the Office in any notice of fee deficiency in order to 
avoid abandonment.
    (6) For filing a petition in a reexamination proceeding, except for 
those specifically enumerated in Sec. Sec.  1.550(i) and 1.937(d):

                       Table 5 to Paragraph (c)(6)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $510.00
By a small entity (Sec.   1.27(a)).........................     1,020.00
By other than a small or micro entity......................     2,040.00
------------------------------------------------------------------------

    (7) For a refused request for ex parte reexamination under Sec.  
1.510 (included in the request for ex parte reexamination fee at Sec.  
1.20(c)(1) or (2)):

                       Table 6 to Paragraph (c)(7)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $1,890.00
By a small entity (Sec.   1.27(a)).........................       945.00
By other than a small or micro entity......................     3,780.00
------------------------------------------------------------------------

    (d) For filing each statutory disclaimer (Sec.  1.321): $170.00
    (e) For maintaining an original or any reissue patent, except a 
design or plant patent, based on an application filed on or after 
December 12, 1980, in force beyond four years, the fee being due by 
three years and six months after the original grant:

                        Table 7 to Paragraph (e)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $500.00
By a small entity (Sec.   1.27(a)).........................     1,000.00
By other than a small or micro entity......................     2,000.00
------------------------------------------------------------------------

    (f) For maintaining an original or any reissue patent, except a 
design or plant patent, based on an application filed on or after 
December 12, 1980, in force beyond eight years, the fee being due by 
seven years and six months after the original grant:

                        Table 8 to Paragraph (f)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $940.00
By a small entity (Sec.   1.27(a)).........................     1,880.00
By other than a small or micro entity......................     3,760.00
------------------------------------------------------------------------

    (g) For maintaining an original or any reissue patent, except a 
design or plant patent, based on an application filed on or after 
December 12, 1980, in force beyond twelve years, the fee being due by 
eleven years and six months after the original grant:

                        Table 9 to Paragraph (g)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $1,925.00
By a small entity (Sec.   1.27(a)).........................     3,850.00
By other than a small or micro entity......................     7,700.00
------------------------------------------------------------------------

    (h) Surcharge for paying a maintenance fee during the six-month 
grace period following the expiration of three years and six months, 
seven years and six months, and eleven years and six months after the 
date of the original grant of a patent based on an application filed on 
or after December 12, 1980:

                        Table 10 to Paragraph (h)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $125.00
By a small entity (Sec.   1.27(a)).........................       250.00
By other than a small or micro entity......................       500.00
------------------------------------------------------------------------

    (i) [Reserved]
    (j) For filing an application for extension of the term of a 
patent:

                        Table 11 to Paragraph (j)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
(1) Application for extension under Sec.   1.740...........    $1,180.00
(2) Initial application for interim extension under Sec.          440.00
 1.790.....................................................
(3) Subsequent application for interim extension under Sec.       230.00
   1.790...................................................
------------------------------------------------------------------------

    (k) In supplemental examination proceedings:
    (1) For processing and treating a request for supplemental 
examination:

                      Table 12 to Paragraph (k)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $1,155.00
By a small entity (Sec.   1.27(a)).........................     2,310.00
By other than a small or micro entity......................     4,620.00
------------------------------------------------------------------------

    (2) For ex parte reexamination ordered as a result of a 
supplemental examination proceeding:

                      Table 13 to Paragraph (k)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $3,175.00
By a small entity (Sec.   1.27(a)).........................     6,350.00
By other than a small or micro entity......................    12,700.00
------------------------------------------------------------------------

    (3) For processing and treating, in a supplemental examination 
proceeding, a non-patent document over 20 sheets in length, per 
document:
    (i) Between 21 and 50 sheets:

                     Table 14 to Paragraph (k)(3)(i)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $45.00
By a small entity (Sec.   1.27(a)).........................        90.00
By other than a small or micro entity......................       180.00
------------------------------------------------------------------------

    (ii) For each additional 50 sheets or a fraction thereof:

                    Table 15 to Paragraph (k)(3)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $75.00
By a small entity (Sec.   1.27(a)).........................       150.00
By other than a small or micro entity......................       300.00
------------------------------------------------------------------------


0
7. Section 1.21 is amended by:
0
a. Revising paragraphs (a)(1), (2), and (5);
0
b. Removing and reserving paragraph (a)(6)(i);
0
c. Adding paragraph (a)(8);
0
d. Revising paragraphs (a)(9)(ii) and (a)(10);
0
e. Adding paragraph (k); and
0
f. Revising paragraphs (n), (o), and (q).
    The revisions and addition read as follows:


Sec.  1.21   Miscellaneous fees and charges.

* * * * *
    (a) * * *
    (1) For admission to examination for registration to practice:
    (i) Application fee (non-refundable): $110.00
    (ii) Registration examination fee
    (A) For test administration by commercial entity: $210.00
    (B) For test administration by the USPTO: $470.00
    (iii) For USPTO-administered review of registration examination: 
$470.00
    (2) On registration to practice or grant of limited recognition:
    (i) On registration to practice under Sec.  11.6 of this chapter: 
$210.00
    (ii) On grant of limited recognition under Sec.  11.9(b) of this 
chapter: $210.00
    (iii) On change of registration from agent to attorney: $110.00
* * * * *
    (5) For review of decision:
    (i) By the Director of Enrollment and Discipline under Sec.  
11.2(c) of this chapter: $420.00

[[Page 46990]]

    (ii) Of the Director of Enrollment and Discipline under Sec.  
11.2(d) of this chapter: $420.00
* * * * *
    (9) * * *
    (ii) Administrative reinstatement fee: $210.00
    (10) On application by a person for recognition or registration 
after disbarment or suspension on ethical grounds, or resignation 
pending disciplinary proceedings in any other jurisdiction; on 
application by a person for recognition or registration who is 
asserting rehabilitation from prior conduct that resulted in an adverse 
decision in the Office regarding the person's moral character; on 
application by a person for recognition or registration after being 
convicted of a felony or crime involving moral turpitude or breach of 
fiduciary duty; and on petition for reinstatement by a person excluded 
or suspended on ethical grounds, or excluded on consent from practice 
before the Office: $1,680.00
* * * * *
    (k) For items and services that the director finds may be supplied, 
for which fees are not specified by statute or by this part, such 
charges as may be determined by the director with respect to each such 
item or service: Actual cost
* * * * *
    (n) For handling an application in which proceedings are terminated 
pursuant to Sec.  1.53(e): $140.00
    (o) The receipt of a very lengthy sequence listing (mega-sequence 
listing) in an application under 35 U.S.C. 111 or 371 is subject to the 
following fee:
    (1) First receipt by the Office of a sequence listing in electronic 
form ranging in size from 300MB to 800MB (without file compression):

                       Table 1 to Paragraph (o)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $265.00
By a small entity (Sec.   1.27(a)).........................       530.00
By other than a small or micro entity......................     1,060.00
------------------------------------------------------------------------

    (2) First receipt by the Office of a sequence listing in electronic 
form exceeding 800MB in size (without file compression):

                       Table 2 to Paragraph (o)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................    $2,625.00
By a small entity (Sec.   1.27(a)).........................     5,250.00
By other than a small or micro entity......................    10,500.00
------------------------------------------------------------------------

* * * * *
    (q) Additional fee for expedited service: $170.00.

0
8. Section 1.27 is amended by revising paragraph (c)(3) introductory 
text as follows:


Sec.  1.27   Definition of small entities and establishing status as a 
small entity to permit payment of small entity fees; when a 
determination of entitlement to small entity status and notification of 
loss of entitlement to small entity status are required; fraud on the 
Office.

* * * * *
    (c) * * *
    (3) Assertion by payment of the small entity basic filing, basic 
transmittal, basic national fee, international search fee, or 
individual designation fee in an international design application. The 
payment, by any party, of the exact amount of one of the small entity 
basic filing fees set forth in Sec.  1.16(a), (b), (c), (d), or (e), 
the small entity transmittal fee set forth in Sec.  1.445(a)(1) or 
Sec.  1.1031(a), the small entity international search fee set forth in 
Sec.  1.445(a)(2) to a Receiving Office other than the United States 
Receiving Office in the exact amount established for that Receiving 
Office pursuant to PCT Rule 16, or the small entity basic national fee 
set forth in Sec.  1.492(a), will be treated as a written assertion of 
entitlement to small entity status even if the type of basic filing, 
basic transmittal, or basic national fee is inadvertently selected in 
error. The payment, by any party, of the small entity first part of the 
individual designation fee for the United States to the International 
Bureau (Sec.  1.1031) will be treated as a written assertion of 
entitlement to small entity status.
* * * * *

0
9. Section 1.431 is amended by revising paragraph (c) to read as 
follows:


Sec.  1.431   International application requirements.

* * * * *
    (c) Payment of the international filing fee (PCT Rule 15.2) and the 
transmittal and search fees (Sec.  1.445) may be made in full at the 
time the international application papers required by paragraph (b) of 
this section are deposited or within one month thereafter. The 
international filing, transmittal, and search fee payable is the 
international filing, transmittal, and search fee in effect on the 
receipt date of the international application. If the international 
filing, transmittal, and search fees are not paid within one month from 
the date of receipt of the international application and prior to the 
sending of a notice of deficiency, which imposes a late payment fee 
(Sec.  1.445(a)(6)), the applicant will be notified and given a one-
month non-extendable time limit within which to pay the deficient fees 
plus the late payment fee.
* * * * *

0
10. Section 1.445 is amended by revising paragraph (a) to read as 
follows:


Sec.  1.445   International application filing, processing and search 
fees.

    (a) The following fees and charges for international applications 
are established by law or by the director under the authority of 35 
U.S.C. 376:
    (1) A transmittal fee (see 35 U.S.C. 361(d) and PCT Rule 14) 
consisting of:
    (i) A basic portion:
    (A) For an international application having a receipt date that is 
on or after October 2, 2020:

                    Table 1 to Paragraph (a)(1)(i)(A)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $65.00
By a small entity (Sec.   1.27(a)).........................       130.00
By other than a small or micro entity......................       260.00
------------------------------------------------------------------------

    (B) For an international application having a receipt date that is 
on or after January 1, 2014, and before October 2, 2020:

                    Table 2 to Paragraph (a)(1)(i)(B)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $60.00
By a small entity (Sec.   1.27(a)).........................       120.00
By other than a small or micro entity......................       240.00
------------------------------------------------------------------------

    (C) For an international application having a receipt date that is 
before January 1, 2014: $240.00.
    (ii) A non-electronic filing fee portion for any international 
application designating the United States of America that is filed on 
or after November 15, 2011, other than by the Office electronic filing 
system, except for a plant application:

                     Table 3 to Paragraph (a)(1)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a small entity (Sec.   1.27(a)).........................      $200.00
By other than a small entity...............................       400.00
------------------------------------------------------------------------

    (2) A search fee (see 35 U.S.C. 361(d) and PCT Rule 16):
    (i) For an international application having a receipt date that is 
on or after October 2, 2020:

                     Table 4 to Paragraph (a)(2)(i)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $545.00
By a small entity (Sec.   1.27(a)).........................     1,090.00
By other than a small or micro entity......................     2,180.00
------------------------------------------------------------------------

    (ii) For an international application having a receipt date that is 
on or after January 1, 2014, and before October 2, 2020:

                     Table 5 to Paragraph (a)(2)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $520.00
By a small entity (Sec.   1.27(a)).........................     1,040.00
By other than a small or micro entity......................     2,080.00
------------------------------------------------------------------------


[[Page 46991]]

    (iii) For an international application having a receipt date that 
is before January 1, 2014: $2,080.00.
    (3) A supplemental search fee when required, per additional 
invention:
    (i) For an international application having a receipt date that is 
on or after October 2, 2020:

                     Table 6 to Paragraph (a)(3)(i)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $545.00
By a small entity (Sec.   1.27(a)).........................     1,090.00
By other than a small or micro entity......................     2,180.00
------------------------------------------------------------------------

    (ii) For an international application having a receipt date that is 
on or after January 1, 2014, and before October 2, 2020:

                     Table 7 to Paragraph (a)(3)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $520.00
By a small entity (Sec.   1.27(a)).........................     1,040.00
By other than a small or micro entity......................     2,080.00
------------------------------------------------------------------------

    (iii) For an international application having a receipt date that 
is before January 1, 2014: $2,080.00.
    (4) A fee equivalent to the transmittal fee in paragraph (a)(1) of 
this section that would apply if the USPTO was the Receiving Office for 
transmittal of an international application to the International Bureau 
for processing in its capacity as a Receiving Office (PCT Rule 19.4).
    (5) Late furnishing fee for providing a sequence listing in 
response to an invitation under PCT Rule 13ter:

                       Table 8 to Paragraph (a)(5)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $80.00
By a small entity (Sec.   1.27(a)).........................       160.00
By other than a small or micro entity......................       320.00
------------------------------------------------------------------------

    (6) Late payment fee pursuant to PCT Rule 16bis.2

0
11. Section 1.482 is revised to read as follows:


Sec.  1.482   International preliminary examination and processing 
fees.

    (a) The following fees and charges for international preliminary 
examination are established by the director under the authority of 35 
U.S.C. 376:
    (1) The following preliminary examination fee is due on filing the 
demand:
    (i) If an international search fee as set forth in Sec.  
1.445(a)(2) has been paid on the international application to the 
United States Patent and Trademark Office as an International Searching 
Authority:

                     Table 1 to Paragraph (a)(1)(i)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $160.00
By a small entity (Sec.   1.27(a)).........................       320.00
By other than a small or micro entity......................       640.00
------------------------------------------------------------------------

    (ii) If the International Searching Authority for the international 
application was an authority other than the United States Patent and 
Trademark Office:

                     Table 2 to Paragraph (a)(1)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $200.00
By a small entity (Sec.   1.27(a)).........................       400.00
By other than a small or micro entity......................       800.00
------------------------------------------------------------------------

    (2) An additional preliminary examination fee when required, per 
additional invention:

                       Table 3 to Paragraph (a)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $160.00
By a small entity (Sec.   1.27(a)).........................       320.00
By other than a small or micro entity......................       640.00
------------------------------------------------------------------------

    (b) The handling fee is due on filing the demand and shall be as 
prescribed in PCT Rule 57.
    (c) Late furnishing fee for providing a sequence listing in 
response to an invitation under PCT Rule 13ter:

                        Table 4 to Paragraph (c)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $80.00
By a small entity (Sec.   1.27(a)).........................       160.00
By other than a small or micro entity......................       320.00
------------------------------------------------------------------------


0
12. Section 1.492 is amended by:
0
a. Revising paragraph (a);
0
b. Adding headings to the tables in paragraphs (b)(1) and (2);
0
c. Revising paragraphs (b)(3) and (4);
0
d. Adding a heading to the table in paragraph (c)(1);
0
e. Revising paragraphs (c)(2) and (d);
0
f. Adding a heading to the table in paragraph (e);
0
g. Revising paragraphs (f) and (h);
0
h. Adding a heading to the table in paragraph (i); and
0
i. Revising paragraph (j).
    The revisions and additions read as follows:


Sec.  1.492   National stage fees.

* * * * *
    (a) The basic national fee for an international application 
entering the national stage under 35 U.S.C. 371:

                        Table 1 to Paragraph (a)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $80.00
By a small entity (Sec.   1.27(a)).........................       160.00
By other than a small or micro entity......................       320.00
------------------------------------------------------------------------

    (b) * * *
    (1) * * *

                       Table 2 to Paragraph (b)(1)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (2) * * *

                       Table 3 to Paragraph (b)(2)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (3) If an international search report on the international 
application has been prepared by an International Searching Authority 
other than the United States International Searching Authority and is 
provided, or has been previously communicated by the International 
Bureau, to the Office:

                       Table 4 to Paragraph (b)(3)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $135.00
By a small entity (Sec.   1.27(a)).........................       270.00
By other than a small or micro entity......................       540.00
------------------------------------------------------------------------

    (4) In all situations not provided for in paragraph (b)(1), (2), or 
(3) of this section:

                       Table 5 to Paragraph (b)(4)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $175.00
By a small entity (Sec.   1.27(a)).........................       350.00
By other than a small or micro entity......................       700.00
------------------------------------------------------------------------

    (c) * * *
    (1) * * *

                       Table 6 to Paragraph (c)(1)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (2) In all situations not provided for in paragraph (c)(1) of this 
section:

                       Table 7 to Paragraph (c)(2)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $200.00
By a small entity (Sec.   1.27(a)).........................       400.00
By other than a small or micro entity......................       800.00
------------------------------------------------------------------------

    (d) In addition to the basic national fee, for filing or on later 
presentation at any other time of each claim in independent form in 
excess of three:

                        Table 8 to Paragraph (d)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $120.00
By a small entity (Sec.   1.27(a)).........................       240.00
By other than a small or micro entity......................       480.00
------------------------------------------------------------------------

    (e) * * *

                        Table 9 to Paragraph (e)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (f) In addition to the basic national fee, if the application 
contains, or is

[[Page 46992]]

amended to contain, a multiple dependent claim, per application:

                        Table 10 to Paragraph (f)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $215.00
By a small entity (Sec.   1.27(a)).........................       430.00
By other than a small or micro entity......................       860.00
------------------------------------------------------------------------

* * * * *
    (h) Surcharge for filing the search fee, the examination fee, or 
the oath or declaration after the date of the commencement of the 
national stage (Sec.  1.491(a)) pursuant to Sec.  1.495(c):

                        Table 11 to Paragraph (h)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................       $40.00
By a small entity (Sec.   1.27(a)).........................        80.00
By other than a small or micro entity......................       160.00
------------------------------------------------------------------------

    (i) * * *

                        Table 12 to Paragraph (i)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
 
                                * * * * *
------------------------------------------------------------------------

    (j) Application size fee for any international application, the 
specification and drawings of which exceed 100 sheets of paper, for 
each additional 50 sheets or fraction thereof:

                        Table 13 to Paragraph (j)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $105.00
By a small entity (Sec.   1.27(a)).........................       210.00
By other than a small or micro entity......................       420.00
------------------------------------------------------------------------

PART 11--REPRESENTATION OF OTHERS BEFORE THE UNITED STATES PATENT 
AND TRADEMARK OFFICE

0
13. The authority citation for 37 CFR part 11 continues to read as 
follows:

    Authority:  5 U.S.C. 500; 15 U.S.C. 1123; 35 U.S.C. 2(b)(2), 32, 
41; sec. 1, Pub. L. 113-227, 128 Stat. 2114.

0
14. Section 11.11 is amended by revising the section heading and 
paragraphs (a)(1) and (2), adding paragraph (a)(3), revising paragraphs 
(b)(1), (e), and (f)(1), and adding paragraph (f)(3) to read as 
follows:


Sec.  11.11   Administrative suspension, inactivation, resignation, 
reinstatement, and revocation.

    (a) * * *
    (1) A registered practitioner, or person granted limited 
recognition under Sec.  11.9(b), must notify the OED director of the 
postal address for their office, at least one and up to three email 
addresses where they receive email, and a business telephone number, as 
well as every change to each of said addresses and telephone number 
within thirty days of the date of the change. A registered 
practitioner, or person granted limited recognition under Sec.  
11.9(b), shall, in addition to any notice of change of address and 
telephone number filed in individual patent applications, separately 
file written notice of the change of address or telephone number with 
the OED director. A registered practitioner, or person granted limited 
recognition under Sec.  11.9(b), who is an attorney in good standing 
with the bar of the highest court of one or more states shall provide 
the OED director with the identification number associated with each 
bar membership. The OED director shall publish a list containing the 
name, postal business addresses, business telephone number, 
registration number or limited recognition number, and registration 
status as an attorney or agent of each registered practitioner, or 
person granted limited recognition under 11.9(b), recognized to 
practice before the Office in patent matters. The OED director may also 
publish the continuing legal education certification status of each 
registered practitioner, or person granted limited recognition under 
Sec.  11.9(b).
    (2) Biennially, registered practitioners and persons granted 
limited recognition may be required to file a registration statement 
with the OED director for the purpose of ascertaining whether such 
practitioner desires to remain in an active status. Any registered 
practitioner, or person granted limited recognition under Sec.  
11.9(b), failing to file the registration statement or give any 
information requested by the OED director within a time limit specified 
shall be subject to administrative suspension under paragraph (b) of 
this section.
    (3)(i) A registered practitioner, or person granted limited 
recognition under Sec.  11.9(b), who has completed, in the past 24 
months, five hours of continuing legal education credits in patent law 
and practice and one hour of continuing legal education credit in 
ethics, may certify such completion to the OED director.
    (ii) A registered practitioner, or person granted limited 
recognition under Sec.  11.9(b), may earn up to two of the five hours 
of continuing legal education credit in patent law and practice by 
providing patent pro bono legal services through the USPTO Patent Pro 
Bono Program. One hour of continuing legal education credit in patent 
law and practice may be earned for every three hours of patent pro bono 
legal service.
    (b) * * *
    (1) Whenever it appears that a registered practitioner, or person 
granted limited recognition under Sec.  11.9(b), has failed to comply 
with paragraph (a)(2) of this section, the OED director shall publish 
and send a notice to the registered practitioner, or person granted 
limited recognition, advising of the noncompliance, the consequence of 
being administratively suspended set forth in paragraph (b)(6) of this 
section if noncompliance is not timely remedied, and the requirements 
for reinstatement under paragraph (f) of this section. The notice shall 
be published and sent to the registered practitioner, or person granted 
limited recognition, by mail to the last postal address furnished under 
paragraph (a) of this section or by email addressed to the last email 
address furnished under paragraph (a) of this section. The notice shall 
demand compliance and payment of a delinquency fee set forth in Sec.  
1.21(a)(9)(i) of this chapter within 60 days after the date of such 
notice.
* * * * *
    (e) Resignation. A registered practitioner who is not under 
investigation under Sec.  11.22 for a possible violation of the USPTO 
Rules of Professional Conduct, is not subject to discipline under Sec.  
11.24 or Sec.  11.25, or against whom probable cause has not been found 
by a panel of the Committee on Discipline under Sec.  11.23(b), may 
resign by notifying the OED director in writing that they desire to 
resign. Upon acceptance in writing by the OED director of such notice, 
that registered practitioner shall no longer be eligible to practice 
before the Office in patent matters but shall continue to file a change 
of address for five years thereafter in order that they may be located 
in the event information regarding the practitioner's conduct comes to 
the attention of the OED director or any grievance is made about their 
conduct while they engaged in practice before the Office. The name of 
any registered practitioner whose resignation is accepted shall be 
removed from active status, endorsed as resigned, and notice thereof 
published in the Official Gazette. Upon acceptance of the resignation 
by the OED director, the resigned practitioner must comply with the 
provisions of Sec.  11.116. A resigned practitioner is subject to 
investigation and discipline for their conduct that occurred prior to, 
during, or after the period of their resignation.
    (f) * * *
    (1)(i) Any administratively suspended registered practitioner, or 
person granted limited recognition under

[[Page 46993]]

Sec.  11.9(b), may be reinstated provided the practitioner:
    (A) Is not the subject of a disciplinary investigation or a party 
to a disciplinary proceeding;
    (B) Has applied for reinstatement on an application form supplied 
by the OED director;
    (C) Has demonstrated good moral character and reputation and 
competence in advising and assisting patent applicants in the 
presentation and prosecution of their applications before the Office;
    (D) Has submitted a declaration or affidavit attesting to the fact 
that the practitioner has read the most recent revisions of the patent 
laws and the rules of practice before the Office;
    (E) Has paid the fees set forth in Sec.  1.21(a)(9)(ii) of this 
chapter; and
    (F) Has paid all applicable delinquency fees as set forth in Sec.  
1.21(a)(9)(i) of this chapter.
    (ii) Any administratively suspended registered practitioner, or 
person granted limited recognition, who applies for reinstatement more 
than five years after the effective date of the administrative 
suspension, additionally shall be required to file a petition to the 
OED director requesting reinstatement and providing objective evidence 
that they continue to possess the necessary legal qualifications to 
render valuable service to patent applicants.
* * * * *
    (3)(i) Any registered practitioner who has been endorsed as 
resigned pursuant to paragraph (e) of this section may be reinstated on 
the register provided the practitioner:
    (A) Is not the subject of a disciplinary investigation or a party 
to a disciplinary proceeding;
    (B) Has applied for reinstatement on an application form supplied 
by the OED director;
    (C) Has demonstrated good moral character and reputation and 
competence in advising and assisting patent applicants in the 
presentation and prosecution of their applications before the Office;
    (D) Has submitted a declaration or affidavit attesting to the fact 
that the practitioner has read the most recent revisions of the patent 
laws and the rules of practice before the Office;
    (E) Has paid the fees set forth in Sec.  1.21(a)(9)(ii) of this 
chapter; and
    (F) Has paid all applicable delinquency fees as set forth in Sec.  
1.21(a)(9)(i) of this chapter.
    (ii) Any resigned registered practitioner who applies for 
reinstatement more than five years after the effective date of the 
resignation additionally shall be required to file a petition to the 
OED director requesting reinstatement and providing objective evidence 
that they continue to possess the necessary legal qualifications to 
render valuable service to patent applicants.

PART 41--PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

0
15. The authority citation for part 41 continues to read as follows:

    Authority:  35 U.S.C. 2(b)(2), 3(a)(2)(A), 21, 23, 32, 41, 134, 
135, and Pub. L. 112-29.


0
16. Section 41.20 is amended by revising paragraphs (a), (b)(1), 
(b)(2)(ii), and (b)(3) and (4) to read as follows:


Sec.  41.20   Fees.

    (a) Petition fee. The fee for filing a petition under this part is: 
$420.00.
    (b) * * *
    (1) For filing a notice of appeal from the examiner to the Patent 
Trial and Appeal Board:

                       Table 1 to Paragraph (b)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $210.00
By a small entity (Sec.   1.27(a)).........................       420.00
By other than a small or micro entity......................       840.00
------------------------------------------------------------------------

    (2) * * *
    (ii) In addition to the fee for filing a notice of appeal, for 
filing a brief in support of an appeal in an inter partes reexamination 
proceeding:

                     Table 2 to Paragraph (b)(2)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $525.00
By a small entity (Sec.   1.27(a)).........................     1,050.00
By other than a small or micro entity......................     2,100.00
------------------------------------------------------------------------

    (3) For filing a request for an oral hearing before the Board in an 
appeal under 35 U.S.C. 134:

                       Table 3 to Paragraph (b)(3)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $340.00
By a small entity (Sec.   1.27(a)).........................       680.00
By other than a small or micro entity......................     1,360.00
------------------------------------------------------------------------

    (4) In addition to the fee for filing a notice of appeal, for 
forwarding an appeal in an application or ex parte reexamination 
proceeding to the Board:

                       Table 4 to Paragraph (b)(4)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
By a micro entity (Sec.   1.29)............................      $590.00
By a small entity (Sec.   1.27(a)).........................     1,180.00
By other than a small or micro entity......................     2,360.00
------------------------------------------------------------------------

PART 42--TRIAL PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

0
17. The authority citation for 37 CFR part 42 continues to read as 
follows:

    Authority:  35 U.S.C. 2(b)(2), 6, 21, 23, 41, 135, 311, 312, 
316, 321-326; Pub. L. 112-29, 125 Stat. 284; and Pub. L. 112-274, 
126 Stat. 2456.


0
18. Section 42.15 is revised to read as follows:


Sec.  42.15   Fees.

    (a) On filing a petition for inter partes review of a patent, 
payment of the following fees are due:
    (1) Inter Partes Review request fee: $19,000.00
    (2) Inter Partes Review Post-Institution fee: $22,500.00
    (3) In addition to the Inter Partes Review request fee, for 
requesting a review of each claim in excess of 20: $375.00
    (4) In addition to the Inter Partes Post-Institution request fee, 
for requesting a review of each claim in excess of 20: $750.00
    (b) On filing a petition for post-grant review or covered business 
method patent review of a patent, payment of the following fees are 
due:
    (1) Post-Grant or Covered Business Method Patent Review request 
fee: $20,000.00
    (2) Post-Grant or Covered Business Method Patent Review Post-
Institution fee: $27,500.00
    (3) In addition to the Post-Grant or Covered Business Method Patent 
Review request fee, for requesting a review of each claim in excess of 
20: $475.00
    (4) In addition to the Post-Grant or Covered Business Method Patent 
Review Post-Institution fee, for requesting a review of each claim in 
excess of 20: $1,050.00
    (c) On the filing of a petition for a derivation proceeding, 
payment of the following fee is due:
    (1) Derivation petition fee: $420.00.
    (2) [Reserved]
    (d) Any request requiring payment of a fee under this part, 
including a written request to make a settlement agreement available: 
$420.00.
    (e) Fee for non-registered practitioners to appear pro hac vice 
before the Patent Trial and Appeal Board: $250.00.

Andrei Iancu,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2020-16559 Filed 7-31-20; 8:45 am]
BILLING CODE 3510-16-P