USPTO Anticipates Slight Decline In Patent Filings, Including For PCT

The United States Patent and Trademark Office (USPTO) is predicting a slight decline in some patent filings for 2018 and 2019, including through the international Patent Cooperation Treaty (PCT) managed by the World Intellectual Property Organization. Trademarks, meanwhile, will likely see slowing growth.

The lower patent filings will affect revenues at the US patent agency, it said in its annual Congressional Budget Justification for fiscal year 2019, and comes in contrast to a general upward trend of global filings under the PCT at WIPO.

“Projected PCT fee collections fall 2.5 percent in FY [fiscal year] 2018 and 1.2 percent in FY 2019,” the USPTO budget states. “In sum, modelling assumption changes and updates for FY 2017 actual workloads lead to $18 million less revenue over the period of FY 2018-2022.”

By contrast, the WIPO secretariat reported to members in October: “The PCT System continues to go from strength to strength,” WIPO reported. In its first year, starting in 1978, it had 459 applications filed. In 2016, the number was 233,000 applications filed (by some 50,838 different applicants), which was a 7.3 percent increase over the previous year. It has gone up every year of its existence except 2009, during the global financial crisis.

WIPO noted the continued US leadership, as well as its slight decline: “For receiving PCT application, the United States is the longstanding leader and again topped the list with 56,679, but this was actually a decline of 1.6 percent over the previous year.” WIPO noted that the US was followed by Japan (44,513, a 3.3 percent increase), and China right behind at 44,473, a remarkable 48.3 percent increase.

Meanwhile, the proposed 2019 budget references differences in growth in two distinct filing groups: serialized filings and total filings. Serialized filings, which exclude requests for continuing examination (RCEs), are seen as growing at .8 percent in fiscal year 2018 to fiscal 2023. However, total applications filings (includes RCEs) decline .8 percent in FY17 and .3 percent in FY18 as a result of the impact of the decline in RCE filings in those years.

A new USPTO director, Andrei Iancu, was named this month (IPW, North America, 5 February 2018), and stakeholders will be watching to see what moves he makes to address the decline and other concerns. It has been noted that revenues tend to follow volume of patent filings, but many have tried in recent years to focus on patent quality instead of volume.

Another area in which the USPTO budget foresees lower revenue is in users paying fees to extend the period of time an applicant has to reply to an action by the patent office. The amount of the fee is dependent on the length of extension, it says.

“Extensions of time have been on the decline,” and the proposed 2018 budget assumed this would continue in 2017 but it turned out to decline even faster than expected, it said. “Taking into account the lower rates of requests for extensions of time, combined with lower filing growth rates, estimated collections, when compared with the FY 2018 President’s Budget, are lower in each projected year, ranging from $19 million to $24 million.”

Meanwhile, a continued revenue source is expected to be the Patent Trial and Appeal Board (PTAB) proceedings, which is related to challenges of patentability and was established in 2012 by the America Invents Act (AIA). Revenues are expected to drop somewhat over the next few years compared with temporarily higher numbers in 2018.

There was an anomaly growth of 29 percent in forwarding appeals to the Board in 2017 due to “a change in how the Board manages its workload and balances specific tasks between itself and the Patents organization,” it said. This is expected to drop by 10.2 percent in 2018, and then for the years 2019-2023 settle at a steady 1 percent increase per year.

The office said that “year-on-year” workload growth for trial proceedings under the AIA is “projected to be positive” for both the inter partes reviews and post-grant or covered business method reviews from fiscal 2018 to fiscal 2023. As a result – and with fee increases planned for 2019 – the 2019 budget projects PTAB fee collections to increase by 7.3 percent over 2017 and 4.8 percent over the estimated 2018 numbers. It is predicted that growth will continue at 3.2 percent annually from fiscal 2020 to 2022, and increase slightly to 3.8 percent in 2023.

Trademarks

Separately, trademark filings in fiscal year 2018 are expected to grow 8.7 percent, after seeing 12 percent growth in fiscal 2017. Then in fiscal 2019, it should be 5.4 percent “based on consensus economic growth assumptions (lower gross domestic product growth) and lower demand for intellectual property rights,” it said.

One notable item is that projections for renewals were lowered from fiscal 2018 to 2019 “to account for recent behavior and shorter product lifecycles,” it said.

Overall, the USPTO said: “For Fiscal Year (FY) 2019, the USPTO requests the authority to spend fee collections of $3,516M. Along with $39M from other income and the use of $5M from the operating reserve balance; these fee collections will fund operating requirements of $3,561M, including 13,148 positions; a transfer of $2M to the Department of Commerce Office of the Inspector General. With full access to its fee collections to offset its funding requirements, the USPTO’s FY 2019 net appropriation would be $0.”

Other USPTO Budget Notes

In fiscal year 2019, the USPTO expects to employ approximately 13,148 federal employees including patent examiners, trademark examining attorneys, computer scientists, attorneys, and administrative staff, according to the budget. The office aims to hire 390 examiners (or roughly 50 over attrition levels).

The Office of Policy and International Affairs (OPIA), which handles IP policy and disputes at the World Intellectual Property Organization, World Trade Organization, World Health Organization, and in trade agreements, is on track to receive about a half-million dollar increase every year from 2019 to 2023, after taking a leap in 2018. In 2019, the request is $28 million for OPIA.

Industry Concerned by Further Decline in US Patent System

Separately, the Licensing Executives Society (USA and Canada), Inc. (LES) issued a statement last week that it is “deeply concerned by recent evidence of further decline in the effectiveness of the U.S. patent system.”

It referred the US Chamber of Commerce Global Innovation Policy Center 8 February release its 6th edition of its International IP Index. The Index found the US patent system has fallen to 12th place in the world. “It’s lowest ranking in the six years of the history of the Index,” LES said. “This comes after last year’s surprising fall from first to 10th place, tied with Hungary.”

“The U.S. Chamber attributes the decline to a ‘growing level of uncertainty for innovators, particularly in relation to patent protection and technology licensing,’” LES said. “The Index specifically cites uncertainties resulting from inconsistent interpretation of Supreme Court attempts to define patent-eligible subject matter by lower courts and the U.S. Patent and Trademark Office. The Index further cites challenges innovators face in post-grant opposition proceedings, which ‘involve a great deal of cost and lack of predictability for patent owners compared with other post-grant opposition systems.’”

LES said it support legislation to “restore the vitality of our patent and licensing system.”

 

Image Credits: USPTO