Washington Editor

WASHINGTON - If the U.S. Patent and Trademark Office wins approval of its proposed fee structure increase, biotechnology companies filing applications for patents could see their costs skyrocket.

The patent office (PTO) wants the new fee schedule to take effect Oct. 1 as part of the fiscal year 2003 budget. However, the proposal has not been introduced to Congress in the form of legislation. And given that the month-long summer recess is under way, it's not certain whether a bill will be drawn up and submitted.

In his upcoming budget, President Bush had sought to raise $162 million through imposition of a one-year, 19 percent surcharge on patent fees and a 10 percent surcharge on trademark fees. Those fees, as well as numerous others, would be directed toward helping the PTO raise $1.527 billion in revenue as targeted by the president's fiscal 2003 budget, according to intellectual property experts who spoke last month at a House subcommittee hearing on the subject.

The PTO wants a fee bill approved that would permit separate filing and examination fees as well as higher costs for longer applications with more claims. Even if higher fees were approved, James Rogan, PTO director, told the subcommittee that it would still be cheaper to file an application in the U.S. than in Europe or Japan. For example, he said, for equivalent filing, issue and maintenance fees, the European Patent Office would charge $54,000; the Japan Patent Office would charge $24,000; and under the proposal, the U.S. would charge $12,000 (under current U.S. law the fee would be $1,500.)

No one seems to be arguing that that patent office needs more money. In fact, last fall when the House was considering legislation that included the PTO's five-year 21st Century Strategic Plan to restructure the office, the Washington-based Biotechnology Industry Organization (BIO) said additional funding would help streamline the patent and trademark filing processes. (See BioWorld Today, Nov. 9, 2001.)

As part of House legislation (HR2047) authorizing the strategic plan, the PTO would be allowed to retain all user fees it collects rather than sharing the millions of dollars with other government offices. Using PTO fees to fund other programs has always been a sticking point for the overburdened office.

But the House legislation, and a companion bill approved in the Senate earlier this summer, would help the PTO hold on to its money to use in other areas such as transforming the office from a paper system to an electronic system.

Before the office can begin to implement the strategic plan, it says it needs more money.

As for how the increases would impact the industry, Lila Feisee, BIO's director of intellectual property, said it would hit the biotechnology industry especially hard because "the burden of claiming a therapeutic protein or DNA is a lot different than claiming a hammer."

She added, "We would like to work with them to change this so that it is more equitable for our industry. We're not going to slam them, but we're not going to roll over, either."

In his testimony, Michael Kirk, executive director of the Arlington, Va.-based American Intellectual Property Law Association, said, "Establishing fees to ensure that applicants will pay the actual costs of the effort required on the part of the PTO to examine the applications could have the salutary effect of discouraging applicants from needlessly filing inordinately large numbers of claims and excessively long patent specifications."

Others said some of the fee increase would be "punitive" and "arbitrary."

According to testimony provided by Charles Baker, chair of the American Bar Association's Section of Intellectual Property Law, one part of the proposal seeks to raise the cost of an appeal brief from $300 to $1,600. "Historically the office has not charged for an appeal, since it is frequently necessary to correct an error of the office," Baker said. "Such a charge, if any, should not be required until after submission of the examiner's brief in opposition because many appeals are settled in the applicant's favor before the examiner's brief is filed, essentially conceding that the applicant was correct."