Earlier this year, as we discussed here, here, and here, the United States Patent and Trademark Office (USPTO or Office) proposed a number of sweeping changes to the Office’s patent fees, including a very steep set of fees for filing terminal disclaimers, later continuation applications, and three or more requests for continued examination (RCEs). The USPTO also proposed a 25 percent hike in America Invents Act (AIA) trial fees.

The new fees, announced last month and going into effect January 19, 2025, include some, but not all of these fee hikes. The ones that remain still may well affect patent prosecution strategies. We discuss some of the most prominent fee increases here.

Background

As we discussed in our prior blogs, in an April 3, 2024 Notice of Proposed Rulemaking (NPRM), the USPTO proposed a number of fee increases, ostensibly to help the Office recover its costs. The proposal would have increased terminal disclaimer fees by as much as 700 percent and received tremendous pushback, so the USPTO backed down. Likewise, because of strong objections, the USPTO withdrew its proposal for a very substantial fee for a third RCE.

The Fee Increases

New and Additional Late-filed Continuation Fees

The USPTO will implement substantial new fees for continuation applications filed more than six years or more than nine years after the earliest date for which the continuation applications can claim benefit. This is an additional fee, on top of the regular continuation application filing fee.

The USPTO based part of its justification for the new fees on costs to the Office, because Examiners are allowed the same amount of time to examine such applications as for regular applications, even though that time may not be needed. This means that the USPTO uses the regular application examination cost for continuation applications in its cost calculations, even though the actual examination cost is likely to be less.

The larger part of the USPTO’s justification, however, comes from late-filed continuations issuing after maintenance fees normally would be due. With late filed continuations, the USPTO misses out on those maintenance fees, on which the Office relies to recover examination costs, which filing and issue fees do not cover.

The new undiscounted additional fee for filing a continuation application after six years will be $2,700, and the new undiscounted additional fee for filing after nine years will be $4,000.

No Huge Third RCE Fee Tier, but Much Larger Second Fee Tier

The USPTO’s current fee schedule splits the RCE fee into two tiers: a fee for a first RCE at a lower cost, and a fee for a second or subsequent RCE at a higher cost. The impending fee increases raise the first RCE fee by 10 percent, and the second and subsequent RCE fees by 43 percent. The USPTO’s rationale has been that larger RCE fees later in an application’s pendency would promote more compact prosecution.

Ending Subsidy of Examination of Design Patents

Unlike utility patents, which require maintenance fees over their lives, design patents do not require payment of additional fees to remain in force. As a result, the USPTO does not have an opportunity to recover costs post-issuance of design patents. In addition, according to the Office, small entities and micro entities take more substantial advantage of design patents, as a proportion of overall filings, than they do of utility patents. Consequently, the Office has been losing money on its effective subsidization of design patent costs.

To address the increasing differential between fees and costs, the Office is increasing filing, search, and issue fees for design patents by between 36 and 88 percent. By contrast, the increase in filing, search, and issue fees for utility patents is on the order of 10 percent.

Higher and New Patent Term Extension Application Fees

The USPTO is raising fees for applications for patent term extension (PTE) by up to 200 percent, to cover the costs involved in handling PTE applications.

The Office also is implementing a new service fee of $1,440 on PTE applications in which the user files a response that includes a terminal disclaimer after receiving the notice of final determination. The USPTO explained that submission of terminal disclaimers at this late stage in the review process affects patent term, requiring the USPTO to engage in a substantial amount of work to recalculate the applicable PTE. The USPTO cited In re Cellect, 81 F.4th 1216 (Fed. Cir. 2023), in which the Federal Circuit explained that patent term adjustment and PTE are treated differently with respect to non-statutory double patenting and terminal disclaimers.

The Office did note that, because a notice of final determination comes out late in the PTE review process, PTE applicants will have several years during the review process to submit terminal disclaimers without incurring this additional fee.

Significant AIA Fee Increase

Fees for AIA petitions will go up by 25%. The USPTO justified the fee increase on cost recovery, as Office costs for handling AIA petitions and trial proceedings well exceeds the revenue coming in from petition fees.

Effects on Patent Prosecution and USPTO Litigation

The substantial new fees for late continuation applications and second and subsequent RCEs may make applicants reconsider their approach to building patent families. However, where the increases start to compare to the forgone maintenance fees that patentees with later-issuing patents do not have to pay, it may not be any more expensive to file a late continuation and pay a fee, than to file the continuation earlier, and pay one or more maintenance fees.

The significantly higher AIA fees are unlikely to make a significant difference in the strategies of patent challengers filing AIA petitions, unless for some reason the increase starts to make AIA proceeding costs approach costs of pursuing invalidity in district court. In the relatively unusual circumstance that a patent challenger is not also involved in infringement litigation in district court, the increase might prompt the challenger to reconsider filing a petition. The value of early filing of AIA petitions and the corresponding higher likelihood of staying the district court litigation could keep the balance where it is, however.

Takeaways

The Office’s fee increases for continued patent prosecution are another example of the USPTO proposing and implementing higher fees for prolonged and repeated examination in order to keep the costs of applying for a first patent manageable. The downside to this strategy is the need to evaluate how much to charge beyond the initial application fee.

The new fee structure for utility patents may prompt patent applicants to modify their prosecution strategies, especially with respect to continuations. Applicants could consider accepting earlier allowances of narrower claims, filing continuations to chase broader claims, and getting those broader claims more promptly in condition for appeal, instead of filing multiple RCEs.

The new design patent fees for small entity and micro entity (discounted) filers are closer to the utility patent fees than before. Whether that smaller differential will make a difference in whether the discounted filers file utility patents instead of design patents, or just file fewer design patents, remains to be seen.

Since we will be getting a new USPTO director, it will be interesting to see whether the new director gives any thought to up-front fee recovery. There are ways to approach recovering fees up front that could contribute to the Office’s larger strategic goals.