In the November 20, 2024 Federal Register Notice, the United States Patent and Trademark Office (USPTO or the “Office”) released its final rule on patent fee adjustments (“Final Rule”). These fee adjustments, set to take effect on January 19, 2025, aim to promote efficient patent prosecution practices while also generating sufficient revenue to recover the Office’s patent operational costs. Here, we examine some important changes that patent applicants should understand when they consider patent filing and prosecution strategies while balancing the impact of the fee increases.
Prolonged Prosecution Will Cost More
The Office has introduced new surcharges for continuing applications, including continuations, divisionals, and continuations-in-part. These include a $2,700 fee for continuing applications filed more than six years after the earliest benefit date, and a $4,000 fee for filings more than nine years after the earliest benefit date. The Federal Register Notice defines “earliest benefit date” as the date from which the 20-year patent term is calculated and does not include priority claims to provisional applications. These new fees appear to be designed to discourage prolonged prosecution through continuing application practice, allegedly because the volume and rapid increase of continuing applications negatively impacts the Office’s workload and docketing practices. Up until now, it is generally recommended to maintain pendency within a family wherever feasible in order to preserve the opportunity for prosecuting additional claims until very late in the 20-year patent term, especially if the patent family covers a product such as a drug or biologic. For example, serial no-fee continuation applications can be used to keep a patent family open. With the new fees, one clear adjustment for applicants and their counsel is to monitor the six-year and nine-year deadlines from the earliest priority date and perform a cost-benefit analysis considering these additional fees to decide whether a patent family should be kept open. Applicants may also wish to consider filing continuing applications earlier, for instance by parallel filings instead of serial filings, in order to avoid the new time-based increased fees while advancing overall family prosecution.
Another major change that will make prolonged prosecution of the same application more costly is the increase in Request for Continued Examination (RCE) fees. The Office will increase the undiscounted fee for filing a first RCE by 10% from $1360 to $1500, and for a second RCE by 43% from $2000 to $2860. The Office has justified these changes as intended to help promote more compact prosecutions by reducing RCE filings in favor of appeal or reaching agreement with an examiner. It is also worth noting that the Final Rule officially sets the expiration of the After Final Consideration Pilot Program 2.0 (AFCP 2.0) for December 14, 2024, which was discussed here. With the discontinuation of the AFCP 2.0, which provides more time for an examiner and includes an interview component, the examiner may have less incentive to consider a standard After Final Response or grant an interview. Considering the increased RCE costs, applicants should consider engaging an examiner early during prosecution, for instance, before and/or after filing a response to a non-final rejection, in order to attempt to resolve issues prior to receiving a final rejection. If an RCE is necessary, applicants should consider the first RCE as a “last” opportunity to put the application in the best condition for a Pre-Appeal Brief Request for Conference or a full appeal. This may include ensuring all potential claim amendments, arguments, and evidence are of record in the submission of the first RCE, including declarations that can help bolster applicant arguments in the Pre-Appeal Brief Request for Review or the complete appeal brief.
Information Disclosure Statement (IDS) Submission Will Be More Expensive (and More Complicated)
The Office has introduced new IDS size fees based on a cumulative number of references cited and imposed a new IDS certification requirement. An IDS with more than 50 references will now trigger a $200 fee, with more than 100 references will result in a $500 fee, and more than 200 references will require an $800 fee. IDS sizes are measured based on the cumulative number of references cited for a particular application, rather than the number of references filed in any single IDS. Additional filings that increase the reference count from one fee tier to another require payments of the difference between the new size fee and what has previously been paid. It is worth noting that references cited in parent applications will not count toward these thresholds unless resubmitted in child applications. If applicants choose not to resubmit references in a child application, however, these references will not appear on the face of the patent issued from the child application.
The new IDS size fees are accompanied by the requirement that an IDS must contain “a clear written assertion” by the applicant and patent owner that the IDS is accompanied by an appropriate IDS size fee or that no IDS size fee is required. It should be noted that under the new requirement, an authorization to charge fees to a deposit account is not a compliant “clear written assertion” unless it specifically refers to the particular IDS fee that should be charged.
The Office stated that the new IDS size fees are intended to encourage applicants to avoid filing large IDS submissions by eliminating clearly irrelevant, marginally relevant, or cumulative information. While IDS submission has always required anyone substantively involved in prosecution to determine a reference’s materiality, which in some cases involves judgment calls, the new fees and assertion requirement will undoubtedly make the preparation of IDSes more expensive and more complicated. Applicants should more actively consider materiality and cumulativeness of references in order to avoid unnecessary citation. However, while applicants balance the duty of disclosure and cost considerations, care should be taken not to inadvertently exclude material and noncumulative information from an IDS submission, and documentation of the decision to not cite a particular reference may be recommended.
Other Increases in Prosecution Costs
The Office has introduced fee increases to several other aspects of application filing and prosecution. One increase is in fees associated with design patent applications, including filing, search, examination, and issue fees for design applications. The Office alleges these increases are necessary to account for inflationary cost increases and recover design costs associated with handling and examination in view of surging design applications since 2014. The Office has also increased excess claim fees to recover additional search and examination costs associated with larger claim sets, including a 50% increase from $100 to $200 for each claim in excess of 20, as well as a 25% increase from $480 to $600 for each independent claim in excess of three. Finally, the Office has drastically increased fees associated with applications for Patent Term Extension (PTE) from $1180 to $2500 in order to reflect the full cost of PTE services. While this increase is lower than the previously proposed increase to $6700, it nevertheless represents a greater cost for seeking regulatory approval for a patented invention, such as FDA approval for a drug or biologic.
With January 19, 2025 less than two months away, a comprehensive review of patent portfolios is recommended to determine whether an action can be taken now to avoid the increased fees. The budget impact of the fee changes on prosecution costs in 2025 should also be discussed.
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