Patent Attacks Unlikely to Drop Despite 56 Percent Fee Hike

The U.S. Patent and Trademark Office’s upcoming 56 percent increase in the cost of challenging the validity of an existing patent is unlikely to put a dent in filings, practitioners told Bloomberg Law.

Petitioners before the Patent Trial and Appeal Board will have to pay a minimum of $30,500 as of Jan. 16 to initiate inter partes review, the popular proceeding allowing alleged infringers and others to challenge patent claims for being non-novel or obvious at the time of their original examination. That’s $7,500 more than an IPR petition costs under the current fee schedule.

The PTO made the fee hike announcement Nov. 14.

“Given the high stakes and budgets that parties already face in IPRs, I do not expect the PTAB fee increase to deter filings,” Erika H. Arner of Finnegan, Henderson, Farabow, Garrett & Dunner LLP, Reston, told Bloomberg Law.

In a 2017 report on patent dispute costs, the American Intellectual Property Law Association said the costs from beginning to end of post-grant challenges averaged about $450,000. The fee increase represents less than 2 percent of the total cost of an IPR through a final written decision from the PTAB.

“Anyone looking at a $300-$500k legal spend is not going blink at this increase,” Scott A. McKeown of Ropes & Gray LLP, Washington told Bloomberg Law.

And even with the increase, the IPR proceeding is economically preferable to an invalidity defense in federal court, he said. “The increased costs are negligible given the comparative savings the PTAB offers relative to district court proceedings.”

The petition filing fee can become substantial for patents with a large number of claims, though, as the PTO also increased the per-claim fee above certain thresholds. “I do suspect, though, that petitioners will think a bit more strategically about which claims to challenge in larger patents where maybe only a handful of claims have been asserted,” Arner said.

For example, it would cost $105,500 to challenge 100 claims of a patent if the PTAB instituted trial on all 100. That compares to a $73,000 charge under the current schedule.

However, both attorneys still predicted a surge in filings prior to the new rates take effect in January to take advantage of the lower fees.

Slight Increases for Most Other Fees

The America Invents Act of 2011 is best known for creating the post-grant challenges like IPR, but it also gave the PTO the authority to set its own fees for the first time. Congress set patent-related fees prior to the AIA.

The PTO created a fee schedule for post-grant proceedings prior to the first AIA-enabled petition filing date, Sept. 16, 2012. The office went through the notice-and-comment period for changes to the full fee schedule in 2013. The new schedule is its second and possibly last exercise of this authority. Under AIA Section 10, the authority expires Sept. 16, 2018. There has been no discussion in Congress to date as to whether it will be extended.

The office’s Federal Register notice (RIN 0651-AD02) authorizes changes to 202 separate fees, almost all slight increases other than the PTAB fees. For example, the filing fee for a utility patent will increase only $20, to $300, and the combined search and examination fees will jump only $100, to $1,420.

The AIA allowed the PTO to set fees as it wishes with the only constraint that it must “recover the aggregate estimated costs” of operations. That is, the office doesn’t have to price each of the 202 line items to equal its cost. The PTO’s new fee schedule sticks with the philosophy that patent application and original search fees should remain well below the office’s costs to encourage filings, with the fees upon issuance and maintenance fees on patent owners subsidizing the pre-issuance cost shortfall.

Delay for Approval by Trump Administration

The final rule reflected substantially the same fee schedule first proposed Oct. 3, 2016. The only changes from that proposal were an increase in the refund IPR petitioners get if no trial is instituted, and reductions from the proposed increases in issuing plant and design patents and for appeals by applicants when examiners reject some proposed patent claims.

Implementation of the new schedule was delayed as the PTO sought guidance from the Office of Management and Budget on whether the planned increases were subject to President Donald Trump’s order to trim regulations. The PTO said in the Nov. 14 notice that it has received “review, discussion, and feedback” from the OMB and that the final rule “has the approval of the current administration.”

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com