U.S. Chamber of Commerce and coalition question Trump administration’s patent ‘fines’ on owners

U.S. Chamber of Commerce and coalition question Trump administration’s patent ‘fines’ on owners

CEO of IPWatchdog terms the valuation as black magic than science

Led by the U.S. Chamber of Commerce, a coalition of business organizations and policy experts has raised concerns related to potential new patent fees that would amount to ‘fines’ on patent owners.

Addressed to the bipartisan leadership of the Judiciary Committees for both houses of Congress, they stated the warnings from industry insiders about the inherent difficulties of patent valuation.

In a letter, the U.S. Chamber questioned the Donald Trump Administration’s legal authority to implement such fees. It added that the valuation-based fee framework would be ‘administratively unworkable’.

Earlier, U.S. Secretary of Commerce Howard Lutnick, a named inventor on about 400 patents, had remarked at the National Inventors Hall of Fame induction ceremony that “inventors have a friend” in him, who “for the first time… understands the Patent Office.”

It seems the Trump administration and the Commerce Department are considering a new system of fees, charging between 1 percent and 5 percent of the overall value of each U.S. patent.

The valuation-based framework has ignited controversy before an official draft proposal has even been released.

Recently, Gene Quinn, Founder and CEO, IPWatchdog, mentioned that a patent valuation framework for fees would be ‘catastrophically stupid’. He pointed out that “patent valuation is more black magic than it is science.”

Quinn added that the Office had no experience with patent valuation, and if implemented, the framework would do much to continue the dismantling of the U.S. patent system in favor of large corporations that patent for defensive purposes and against R&D companies driving innovation forward.

The coalition’s letter echoed the same concerns. A valuation-based framework for patent fees would upend the innovation ecosystem, keeping America at the forefront of emerging technologies for generations in three concrete ways.

The signatories to the letter joined those recognizing the unpredictability and subjectivity of patent valuation. They warned that many popular consumer products could be protected by dozens or even hundreds of patents. Each of those had multiple claims defining the patent’s scope, isolating the contribution of a single patent to a product’s overall value, which became ‘incredibly difficult, if not impossible’.

The signatories challenged the U.S. Patent and Trademark Office’s (USPTO) legal authority for implementing such a valuation-based framework for patent fees.

Meanwhile, under Section 10 of the America Invents Act (AIA) of 2011, the USPTO has authority to set fees “only to recover the aggregated estimated costs to the Office” of the agency’s patent and trademark operations. However, “imposing fees as a penalty for perceived patent value is outside that mandate and would likely invite serious legal challenges,” the Chamber warned.

Importantly, the coalition stated that the proposed framework would trigger severe unintended consequences in semiconductors, pharmaceuticals and other sectors for which the Trump administration worked to attract new investment.

It added that many R&D firms relied on patent licensing revenues to remain free from federal subsidies for their research programs. The letter stated that valuation-based fees would disproportionately burden the finances of tax-paying property owners.

They stated, “Many of the undersigned organizations and individuals have supported efforts to appropriately increase patent fees,” provided those funds are allocated to hire and train examiners, upgrade technology and reduce pendency. The coalition said the potential shift would achieve none of those goals. It would slow America’s innovation ecosystem at a time when the nation was facing significant competition from major foreign economic and innovation rival, China.

The signatories to the letter included Small Business & Entrepreneurship Council; Consumer Technology Association; IEEE-USA; former Federal Circuit Chief Judge Paul Michel; James Edwards, Executive Director, Conservatives for Property Rights; Economics Professor Kristina Acri, Professor Kristen Jacobsen Osenga, University of Richmond School of Law; Robert Stoll, former Commissioner for Patents, USPTO; Suzanne Harrison, former Chair, Patent Public Advisory Committee, and Alliance of U.S. Startups & Inventors for Jobs.