SECTION-BY-SECTION ANALYSIS

SECTION ONE

Section One sets forth the short title of the bill, the “United States Patent and Trademark Office Fee Modernization Act of 2003.”

SECTION TWO

Section Two prescribes the dollar amounts for certain corresponding “general” patent and patent application fees set forth in 35 U.S.C. § 41(a) and (b). Section Two also provides for the establishment of a search fee under § 41(d). Section 41 now specifies a search fee (subsection (d)(1)) and an examination fee (subsection (a)(3)) that are separate from the filing fee (subsection (a)(1)).

Section 41(a)(1) sets out the filing fees for applications filed under § 111 of the patent code (original or reissue) and the basic national fee for Patent Cooperation Treaty (PCT) international applications (filed under the treaty defined in § 351(a) of the patent code) entering the national stage under § 371 of the patent code. Under § 41(a)(1), the filing fees for applications filed under § 111 are as follows: (1) the filing fee for an application for an original patent, except for design, plant, or provisional applications, is $300; (2) the filing fee for an application for an original plant patent is $200; (3) the filing fee for an application for an original design patent is $200; (4) the filing fee for a provisional application is $200; and (5) the filing fee for an application for the reissue of a patent is $300. Under § 41(a)(1), the basic national fee for any PCT international application entering the national stage under § 371 is $300.

Under § 41(a)(1)(G), there is an additional fee for any application whose specification and drawings, excluding any sequence listing or computer program listing filed in an electronic medium as prescribed by the Director, exceed 100 sheets of paper (or equivalent as prescribed by the Director if filed in an electronic medium). The additional fee under § 41(a)(1)(G) is $250 for each additional 50 sheets of paper (or equivalent as prescribed by the Director if filed in an electronic medium, excluding any sequence listing or computer program listing) or fraction thereof. Sequence listings or computer program listings filed in an electronic medium as prescribed by the Director are excluded to encourage applicants to file any sequence listing or computer program listing in the appropriate electronic medium.

Section 41(a)(2) sets out the excess claims fees for each independent claim in excess of 3 and for each claim (whether dependent or independent) in excess of 20, and the fee for an application containing a multiple dependent claim. The excess claims fees required by § 41(a)(2) are due at the time of presentation of the claim for which payment is required (whether on filing or at a later time) in the application or reexamination proceeding.

Under § 41(a)(2)(A), the excess claims fee for each claim in independent form in excess of 3 is $200. Under § 41(a)(2)(B), the excess claims fee for each claim (whether dependent or independent) in excess of 20 is $50. Under § 41(a)(2)(C), the fee for each application containing a multiple dependent claim is $360.

Section 41(a)(2) provides that for the purpose of computing fees under § 41(a)(2), a multiple dependent claim as referred to in section 112 of the patent code or any claim depending therefrom is considered as separate dependent claims in accordance with the number of claims to which reference is made. Section 41(a)(2) also provides that the Director may prescribe regulations to provide a refund of any part of the excess claims fees specified in § 41(a)(2) for any claim that is canceled before an examination on the merits as prescribed by the Director has been made of the application under § 131. The language “an examination on the merits, as prescribed by the Director,” was chosen to give the Director greater latitude in determining the point in the examination process (e.g., after a requirement for restriction under § 121 of the patent code but before an examination on the merits of the elected invention) by which a claim must be canceled for the applicant to obtain a refund of a portion of the excess claims fee. Finally, section 41(a)(2) provides that errors in payment of the additional fees under § 41(a)(2) may be rectified in accordance with regulations prescribed by the Director.

Section 41(a)(3) sets out the examination fees for all applications (except for provisional applications), including PCT international applications entering the national stage under § 371. The examination fee for each application for an original patent, except for a design, plant, or international application, is $200. The examination fee for each original design patent is $130. The examination fee for each original plant patent is $160. The examination fee for the national stage of an international application is $200. And, the examination fee for each reissue application is $600. The examination fees for patent applications are set at amounts that do not recover the USPTO’s costs of examining patent applications. The USPTO’s costs of examining applications are subsidized by issue and maintenance fees under §§ 41(a)(4) and 41(b)).

Under § 41(a)(3), the provisions of § 111(a)(3) for payment of the fee for filing the application apply to the payment of the examination fee specified in § 41(a)(3) with respect to an application filed under § 111(a), and the provisions of § 371(d) for the payment of the national fee apply to the payment of the examination fee specified in § 41(a)(3) with respect to a PCT international application entering the national stage under § 371. Thus, the examination fee is due on filing for an application filed under § 111(a) or on commencement of the national stage for a PCT international application. The examination fee, however, may be paid at a later time if paid within such period and under such conditions (including payment of a surcharge) as may be prescribed by the Director.

Section 41(a)(3) provides that the Director may prescribe regulations to provide a refund of any part of the examination fee specified in § 41(a)(3) for any applicant who files a written declaration of express abandonment as prescribed by the Director before an examination has been made of the application under § 131. Under the former patent fee structure, an applicant who after paying the filing fee had determined that it was not worthwhile to proceed with the application had no motivation to terminate the application process prior to receiving a first Office action by the USPTO because the entire filing fee was a sunk cost under that fee structure. Under the revised patent fee structure, such an applicant will be motivated to terminate the application process before an examination of the application under § 131 because the applicant may obtain a refund of the examination fee under § 41(a)(3) (as well as the search fee under § 41(d)(1)), less any portion retained by the USPTO, if the applicant terminates the application process by filing a written declaration of express abandonment as prescribed by the Director before an examination (including any search) has been made of the application under § 131. This provision authorizes the USPTO to fix (based upon when an application is expected to be taken up for search and examination) a time by which a written declaration of express abandonment must be filed for an application to obtain such a refund, and develop procedures for informing applicants of when this time will occur.

The revised patent fee structure will permit the applicant to use the period between the filing date of an application and when the application is about to be taken up for action by the examiner to determine whether the invention claimed in the application has sufficient commercial viability to make it worthwhile to proceed with search and examination. The applicant may decide to terminate the application process because the invention does not have sufficient commercial viability by filing a written declaration of express abandonment as prescribed by the Director before an examination (including any search) has been made of the application under § 131 (to obtain any refund provided for by the regulations prescribed by the Director). This would abandon the application and obviate the need for the USPTO to proceed with the examination of the patent application.

Section 41(a)(4) sets out the fees for issuing a patent. Under § 41(a)(4), the fee for issuing each original patent, except for design or plant patents, is $1,400; the fee for issuing each original design patent is $800; the fee for issuing each original plant patent is $1,100; and the fee for issuing each reissue patent is $1,400.

Section 41(a)(5) sets out the fee due upon filing a disclaimer under section 253 of the patent code in a patent or a patent application, which is $130.

Section 41(a)(6) sets out the appeal fees. Under § 41(a)(6), the fee due upon filing an appeal from the examiner to the Board of Patent Appeals and Interferences is $500, the fee due upon filing a brief in support of the appeal is an additional $500, and the fee due for requesting an oral hearing in the appeal before the Board of Patent Appeals and Interferences is an additional $1,000.

Section 41(a)(7) sets out the fees due upon filing a petition to revive an abandoned application or to accept a delayed response by the patent owner in a reexamination proceeding, which is $1,500, unless the petition is filed under § 133 or § 151 of the patent code, in which case the fee is $500.

Section 41(a)(8) sets out the fees due upon filing a petition for one-month extensions of time. Under § 41(a)(8), the fee for filing the first one-month petition is $120; the fee for filing the second one-month petition is $330; and the fee for filing the third or each subsequent one-month petition is $570.

Section 41(b) sets out the fee for maintaining in force a patent based on applications filed on or after December 12, 1980. Under § 41(b), the maintenance fee due at 3 years and 6 months after grant is $900; the maintenance fee due 7 years and 6 months after grant is $2,300; and the maintenance fee due 11 years and 6 months after grant is $3,800. Section 41(b) also provides that unless payment of the applicable maintenance fee is received in the USPTO on or before the date on which the fee is due or within a grace period of 6 months thereafter, the patent will expire as of the end of such grace period, that the Director may require the payment of a surcharge as a condition of accepting within such 6-month grace period the payment of an applicable maintenance fee, and that no fee may be established for maintaining a design or plant patent in force.

Section 41(d)(1) provides that the Director will establish fees for requesting a search of an application for a patent (except for provisional applications), including PCT international applications entering the national stage under § 371. The search fees established under § 41(d)(1) are to be set so as to recover an amount not to exceed the estimated average cost to the USPTO of searching applications for patent either by acquiring a search report from a qualified search authority, or by causing a search by Office personnel to be made, of each application for a patent. The USPTO is expected to test the concept of exploitation of search reports obtained from qualified search contractors during examination to determine whether such a procedure is a feasible means of addressing the USPTO increasing patent workload. It is expected that exploitation of search reports obtained from qualified search contractors during examination will be tested and piloted in a step-by-step process to ensure proof of concept prior to any full implementation of such a practice.

Section 41(d)(1)(A) provides that for purposes of determining the fees to be established under § 41(d)(1), the cost to the USPTO of causing a search to be made of an application by USPTO personnel is deemed to be the transitional search fee set forth in Section Five of this Act: (1) $500 for each application for an original patent, except for a design, plant, or international application; (2) $100 for each application for an original design patent; (3) $300 for each application for an original plant patent; (4) $500 for each national stage of an international application; and (4) $500 for each application for the reissue of a patent. This provision is designed to simplify the process of determining the search fee under § 41(d)(1).

Under § 41(d)(1)(B), the provisions of § 111(a)(3) for payment of the fee for filing the application apply to the payment of the search fee specified in § 41(d)(1) with respect to an application filed under § 111(a), and the provisions of § 371(d) for the payment of the national fee apply to the payment of the search fee specified in § 41(d)(1) with respect to a PCT international application entering the national stage under § 371.

Under § 41(d)(1)(C), the Director may, by regulation, provide for a refund of any part of the search fee specified in § 41(d)(1) for any applicant who files a written declaration of express abandonment as prescribed by the Director before an examination has been made of the application under § 131, as well as for any applicant who provides a search report that meets the conditions prescribed by the Director (as discussed above).

SECTION THREE

Section Three provides that the fee under section 31(a) of the Trademark Act of 1946 (15 U.S.C. 1113(a)) for filing an electronic application for the registration of a trademark shall be $325. If the trademark application filing is done on paper the fee shall be $375. Section Three also provides that the Director may reduce the $325 fee for filing an application for the registration of a trademark in an electronic form prescribed by the Director to $275 for any applicant who also prosecutes the application through electronic means under such conditions as may be prescribed by the Director. Section Three also provides that beginning in fiscal year 2004, the provisions of the second and third sentence of section 31(a) of the Trademark Act of 1946 shall apply to the fees for filing an application for the registration of a trademark established under Section Three. Thus, the fees for filing an application for the registration of a trademark established under Section Three may be adjusted once each year (beginning on October 1, 2003) to reflect, in the aggregate, any fluctuations occurring during the preceding twelve months in the Consumer Price Index, as determined by the Secretary of Labor.

SECTION FOUR

Section Four corrects a clerical error in the Intellectual Property and High Technology Technical Amendments Act of 2002 (Title III, Subtitle B, of Public Law 107-273 (116 Stat. 1758)). Specifically, Section Four amends § 13203 of Public Law 107-273 to make the Deputy Director (and not the “Deputy Commissioner”) of the USPTO a member of the Board of Patent Appeals and Interferences and the Trademark Trial and Appeal Board, as was the intended result of § 13203(a) of Public Law 107-273 (see H.R. Conf. Rep. No. 107-685, at 220 (2002)).

SECTION FIVE

Section Five sets forth the effective date of this bill: the later of March 30, 2003 or the date of enactment of this Act, except that Section Four takes effect as of November 2, 2002 (the effective date of Public Law 107-273).

Section Five also provides that the amendments made by Section Two apply to all patents, whenever granted, and to all patent applications pending on or filed after the effective date of this Act. Since applications pending before the effective date of this Act paid filing or basic national fees based upon former § 41(a), Section Five also provides that the filing, examination, and search fees specified in §§ 41(a)(1), 41(a)(3), and 41(d)(1), respectively (and the refund provisions of §§ 41(a)(3), and 41(d)(1)), apply only to all applications for patent filed under § 111(a) on or after the effective date of this Act, and to all PCT international applications entering the national stage after compliance with § 371 on or after the effective date of this Act, except that the provisional application filing fee specified in § 41(a)(1)(D) applies to all provisional applications for which the filing fee specified in § 41 was not paid before the effective date of this Act. Section Five also provides that the excess claims fees specified in § 41(a)(2) (and its refund provisions) apply only to the extent that the number of claims in independent form, after giving effect to any cancellation of claims, is in excess of the number of claims in independent form for which the excess claims fee specified in § 41 was paid before the effective date of this Act, and that the number of total claims (whether independent or dependent), again after giving effect to any cancellation of claims, is in excess of the number of total claims (whether independent or dependent) for which the excess claims fee specified in § 41 was paid before the effective date of this Act.

Section Five also provides that the amendments made by Section Three shall apply to all applications for the registration of a trademark and classes added to an existing trademark application filed after the effective date of this Act. The last sentence of § 31(a) will pertain to the trademark fees established herein. That sentence states that: "No fee established under this section shall take effect until at least 30 days after the notice of the fee has been published in the Federal Register and in the Official Gazette of the United States Patent and Trademark Office."

Section Five also provides a transitional provision concerning the search fees established under § 41(d). Section Five establishes a transitional search fee of: (1) $500 for the search of each application for an original patent, except for a design, plant, provisional, or international application; (2) $160 for the search of each application for an original design patent; (3) $300 for the search of each application for an original plant patent; (4) $500 for the national stage of an international application; and (5) $500 for the search of each application for the reissue of a patent. Section Five also provides that the provisions of § 111(a)(3) for payment of the fee for filing the application apply to the payment of the transitional search fees specified in Section Five with respect to an application filed under § 111(a), and that the provisions of § 371(d) for payment of the national fee apply to the payment of the transitional search fees specified in Section Five with respect to a PCT international application. Section Five also provides that the Director may, by regulation, provide for a refund of any part of the transitional search fees specified in Section Five for any applicant who files a written declaration of express abandonment as prescribed by the Director before an examination has been made of the application under section 131 of the patent code, as well as for any applicant who provides a search report that meets the conditions prescribed by the Director (as discussed above).

* Refundable in part depending upon stage of express abandonment
** Refundable in part depending upon standing of prior search