Will the Commerce Department Rewrite the USPTO Rules of Innovation?

There are currently a variety of proposals being floated around the USPTO that could either fundamentally change the landscape of intellectual property law or disappear into the vacuum of ideas that never materialized but inspired plenty of concern.

In a September meeting with the current administration, Commerce Secretary Lutnick reported recent discussions with universities concerning the U.S. Government receiving and owning the patents for innovation that stems from their federally funded research. Although once unheard of by free-market conservative ideology, the shift seems more plausible following the recent announcement that the federal government would be given a 10 percent stake in Intel, a private company producing computer chips.

There are plenty of outstanding questions concerning this revelation. Would this move eradicate the Bayh–Dole Act, which has been in effect since the 1980s? The bipartisan Act was meant to invigorate the economy by assigning rights of ownership to inventors, universities, small businesses, and non-profit beneficiaries of federally funded research.

By many accounts, the desired effect of this Act was reached, spurring a boom in technology transfers and university spin-offs. A return to government exclusively holding these patents could ignore lessons from the past, in which U.S. federal agencies held around 28,000 patents and fewer than 5% had been licensed for commercialization. Currently, the United States doesn’t have the resources to develop, refine, and market products.

Another concern with this proposal is the potential conflict-of-interest arising from the federal government not only controlling the prosecution of patents through the USPTO but also standing to benefit financially. Would neutrality in the granting of intellectual property rights be compromised by this arrangement?

In another proposed change, the U.S. Department of Commerce is contemplating a value-based change to maintenance fees to replace the current fixed fee amounts due at 3 ½, 7 ½, and 11 ½ years. The change proposed would institute a 1–5% tax on the value of the patent reported in regulatory filings and other publicly available disclosures. With the USPTO’s recent focus on efficiency, one might wonder how another layer of complexity in portfolio maintenance would affect the efforts of the government organization.

In a letter to Commerce Secretary Howard Lutnick, a coalition of conservative organizations argued that a proposed patent tax would erode the benefits of the President’s recent tax cuts. The groups described the tax as “counterproductive in the extreme” and “fraught with peril and unintended consequences.” They also warn that the tax could discourage investment in high-value technologies and divert funds away from companies’ research and development efforts, weakening U.S. global leadership and putting American jobs and domestic investment at risk.

A value-based maintenance tax on patents has the potential to dramatically reshape the landscape of U.S. intellectual property law. While there is concern about discouraging innovators from choosing the American system and uncertainty over how this could influence how U.S. industry manages its IP and R&D priorities, these are still only proposed changes.

Renner Otto will continue to monitor these and other potential policy developments at the USPTO as they (hopefully) progress through the established process. Should the Federal Register public inspection and comment period be offered, we will take the opportunity to share our opinions on the proposed reforms. Should the proposals become reality, you can count on the attorneys at Renner Otto to provide intellectual property strategies to reduce their impact.

The attorneys at Renner Otto strive to be authorities in all matters concerning the ever-evolving landscape of Intellectual Property; however, the information provided on our website is not intended to be legal advice, nor does it create an attorney-client relationship.

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