September 2019 Trademark Fee Proposal Detailed Appendices Presented
September, 2019 Trademark Fee Proposal Detailed Appendices Presented to: Trademark Public Advisory Committee
Introduction This document includes appendices that provide background information and explain details supporting the Executive Summary of the Trademark Fee Proposal, presented separately. The following additional documents are an integral part of the proposal: § Transmittal letter; § Trademark Fee Proposal: Executive Summary; § Attachment 1 ‐ Table of Trademark Fee Adjustments; and § Attachment 2 ‐ Table of Trademark Fees – Current, Proposed and Unit Cost. 2
Table of Contents Appendices: Appendix A – Background on USPTO Funding Model …………………… 4 Appendix B – Background on Fee Setting Methodology and Analyses ……………. 6 Appendix C – Background on Activity Based Information (ABI) Costing Methodology (Unit Cost Calculation)………………. 18 Appendix D – Background on Trademark Fees ………………. . 26 Appendix E – Aggregate Cost Information …………………………… 35 Appendix F – Aggregate Revenue Information ……………………. . …… 41 Appendix G – Rationale for Specific Fee Changes ……………………. . …. 43 Appendix H – Paper vs Electronic Trademark Filings. ……………. …… 62 Appendix J – Operating Reserve (Carryover of Fees) …………………… 64 3
Appendix A Background on USPTO Funding Model The information included in this appendix provides details on the manner in which the USPTO plans and estimates fee collections that fund operations and the relationship between fees, costs, application filings, and workloads. 4
USPTO Funding Model The USPTO operates like a business in certain respects: • Stakeholders pay fees that fund the costs of providing products and services they request. • The aggregate cost [see Appendix E for details] of providing the products and services (budgetary requirements) are funded from the aggregate revenue [see Appendix F for details] derived from trademark fees. • Trademark fees that are not used to support current year operations are maintained as an operating reserve. The Leahy‐Smith America Invents Act (AIA), as amended by the Study of Underrepresented Classes Chasing Engineering and Science Success Act of 2018 (SUCCESS Act), mandates that trademark fees be set to recover the prospective aggregate cost of trademark operations ‐ with a zero net cost to general taxpayers. Therefore, fees must be set at levels projected to cover the cost of future budgetary requirements. 5
Appendix B Background on Fee Setting Methodology and Analysis The information included in this appendix describes the framework and philosophy of USPTO fee setting, the methodology used to adjust the fee structure, and an overview of the proposed fee structure. 6
Authority and Requirements for Fee Setting Section 10 of AIA authorizes the Director of the USPTO to set or adjust by rule all patent and trademark fees established, authorized, or charged under Title 35 of the U. S. Code and the Trademark Act of 1946 (15 U. S. C. § 1051 et seq. ), respectively. • Authority effective on date of enactment (9/16/2011); Sec. 10 (i)(1) • Amended by the SUCCESS Act Pub. L. 115‐ 273, 132 Stat. 4158 to extend authority until September 16, 2026 • Prescribes that fees may be set or adjusted to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to trademarks, including administrative costs to the Office with respect to such trademark operations; Sec. 10(a)(2) • Authority includes flexibility to set individual fees in a way that furthers key policy considerations, while taking into account the cost of the respective services. 7
Authority and Requirements for Fee Setting (cont. ) Fee Setting Authority Process • Annually, the USPTO shall consult with the Trademark Public Advisory Committee (TPAC) on the advisability of reducing fees; Sec. 10(c) • USPTO shall provide TPAC proposed fees not less than 45 days prior to publishing the proposed fee(s) in the Federal Register; Sec. 10 (d)(1) • TPAC shall hold a public hearing related to the proposed fee(s) during the first 30 days of the 45 day period; Sec. 10(d)(2)(B) • TPAC shall make a written report with comments, advice, and recommendations related to the proposed fees available to the public; Sec. 10(d)(3) • USPTO shall consider and analyze the report before setting or adjusting the proposed fee(s); Sec. 10(d)(4) 8
Authority and Requirements for Fee Setting (cont. ) Fee Setting Authority Process • USPTO shall publish any proposed fee change in the Federal Register; Sec. 10(e)(1)(A) • The proposal shall include the rationale and purpose for the proposal, including possible expectations or benefits; Sec. 10(e)(1)(B) • No later than the date published, the USPTO shall notify Congress of the proposed change; Sec. 10(e)(1)(C) • The public comment period will be not less than 45 days; Sec. 10(e)(2) • The final rule will be published in the Federal Register and Official Gazette; Sec. 10(e)(3) • The new or adjusted fee(s) may not become effective before 45 days after publishing the final rule; Sec. 10(e)(4)(A) • Congress may pass a law to disapprove the new or adjusted fee(s); Sec. 10(e)(4)(B) 9
Biennial Fee Review At least biennially, The USPTO reviews the fee schedule with the goal to provide sufficient financial resources to facilitate the effective administration of the United States intellectual property system. As warranted, fee adjustment proposals are developed to align with the goal and the Office’s fee structure philosophy. The following objectives have been established in support of this goal: • Align fees with the full cost of products and services • Offer application processing options • Promote Administration innovation strategies During the biennial fee review, the USPTO follows the defined fee structure philosophy, which includes a goal, objectives, and guiding principles. This philosophy provides the framework upon which analysis and decisions are based. 10
Biennial Fee Review Process OCFO Jan – July 2019 Conduct preliminary analysis and issue call for fee adjustment proposals July Consolidate and review proposals. Draft preliminary recommendations External Stakeholders Director Business Units Review and develop recommendations August Present recommendations to Executive Committee and Director Prepare and Submit Proposals September Notify and engage Stakeholders; Consult with Public Advisory Committees Conduct Public Advisory Committee Hearings 30 days after Formal Notification Approve/Modify Recommendations Provide Comments and Questions 11 Proceed with Rulemaking Process
Rulemaking Timeline Considerations The trademark fee proposal rulemaking process currently assumes the following timeline: • A Notice of Proposed Rulemaking (NPRM) including updated budget plans, and workload and fee estimates; as well as regulatory and economic impact assessments, and paperwork reduction act compliance will be published in the Federal Register in March 2020. • There will be a 45 day period to allow for comments to the NPRM and accompanying materials. • A final rule, including responses to all comments received during the public comment period, will be published in the Federal Register in July 2020. • Implementation of the final rule is expected in August 2020 at the earliest. 12
Objectives Promote Administration Innovation Strategies Align fees with the full cost of products and services. Set fees to facilitate the effective administration of the patent and trademark systems. Goal USPTO Fee Structure Philosophy Guiding Principles Self-Sustaining Transparent Streamlined Balanced Dynamic Agile Provide sufficient financial resources to facilitate the effective administration of the United States intellectual property system. Explanation of Objectives (a) Promoting competitive markets that spur productive entrepreneurship; (b) Fostering innovation that will lead to technologies of the future; and (c) Encouraging high-growth and innovation-based small business entrepreneurship. Analyzing the full cost of USPTO processes compared to the fee amount. Aggregate fees should recover the full prospective cost of aggregate costs of the patent or trademark business. Total fees should be sufficient to address workload input on a steady-state basis, plus the necessary costs to achieve strategic objectives such as reducing the backlog, process improvements, multi-year initiatives, capital improvements, and maintain an operating reserve. (a) submitting applications or taking actions which help to facilitate efficient processing; (b) encouraging the prompt conclusion of application prosecution; or (c) recovering costs for actions that are strenuous on the patent and trademark systems (i. e. , increased fees for certain rework, large applications, missing parts). Setting fees for certain processes that provide special (unique) value or advantages for the applicant. Includes processing choices for submitting trademark filings electronically via TEAS. Offer application processing options. “Innovation IP Protection Jobs Economic Growth” 13
Fee Setting Components Filings forecast, existing inventory, workflow and production capacity are considered in developing estimates. The relative cost of operations to support examination capacity and IT systems and investments are factors in developing the multiyear budget plans. Production Workloads The data output from ABI cost analyses of fees will be used for the baseline historical cost. Economic Analysis Historical ABI Cost Economic data and data related to the elasticity of certain fees will provide a frame of reference for the balance between setting fee rates. USPTO Fee Structure Fee Setting Information from the established process will Budget provide the planned Formulation (prospective) cost of sustaining and improving the USPTO. Fees should be set at a rate to recover the cost of the multi-year budget plan. Legal & Policy Analysis Strategic Planning Understanding USPTO priorities and plans for the future permits prospective fee amounts to be set at the appropriate level to pay for achieving strategic objectives and improvements. Legal and policy considerations are factors in analyzing the relationships between fees and operational processes. 14
Fee Setting Methodology Forecast total aggregate revenue and refine Activity based historical cost and aggregate cost from budget plans Escalate for prospective aggregate cost Calculate operating reserve needs Review and readjust fee rates USPTO Fee Setting Methodology Forecast total aggregate revenue and refine +/- for changes to USPTO production input/output The fee setting process uses a complex and iterative methodology until the optimal balance between aggregate revenue and aggregate cost is achieved +/- for changes to Strategic Priorities, Plans, and Processes Apply economic elasticity analysis Initial forecast of fees Review and readjust fee rates Review economic impact of intellectual property fee changes 15
Factors Considered in Formulating the Fee Structure Complete calculations and analyses of: • Historical cost using an activity‐based information cost accounting results [see Appendix C for details]; • Identify the full historical cost associated with the activities supporting fees as a reference point to set fees based on both cost and policy factors. • Full cost includes all costs that directly support an individual activity, such as filing a trademark application, allocating an appropriate share of direct (e. g. Information Technology (IT) systems, space and facilities costs) and indirect costs (e. g. , general, financial, administrative, and legal expenses). • Aggregate prospective costs beginning in the year fees will be effective [see Appendix E for details]; 16
Factors Considered in Formulating the Fee Structure (cont. ) • • • Maintain a sufficient operating reserve [see Appendix J for details]; Fee Proposal Objectives: • Targeted changes to fees where the gap between cost and current fee rate is greatest. • Fee changes that could administratively improve application processing by encouraging more electronic filing. • Fee changes to encourage more timely filing to improve the accuracy of the trademark register. Amount of aggregate revenue [see Appendix F for details] required to fund the aggregate cost of operations [see Appendix E for details] over multiple years. 17
Appendix C Background on Activity-Based Information (ABI) Costing Methodology (Unit Cost Calculation) The information included in this appendix provides an overview of the methodology used by USPTO to determine the unit cost of the trademark fees provided in Attachment 2 –Table of Trademark Fees – Current, Proposed and Unit Cost 18
USPTO Activity Based Information • The Office uses the activity‐based costing (ABC) methodology, referred to as activity‐based information (ABI) at the USPTO, to determine historical costs for Trademark‐related activities and outputs. This includes allocating an appropriate share of administrative costs to determine aggregate cost. • • The USPTO’s ABI program has been in place for more than 20 years. • USPTO’s ABI program is widely recognized to be one of the best in the Federal government and also compares well with commercial implementations of ABC. • The USPTO ABI program has been the subject of a special Inspector General study, and is examined each year as part of the financial statement audit. There has never been a material weakness in internal controls reported concerning the ABI methodology or data. The ABI methodology follows the full cost guidance outlined in Federal managerial cost accounting and fee setting standards and is used for developing, maintaining and updating cost information for all USPTO organizations. 19
USPTO Activity Based Information (cont. ) • • • The Trademark fee structure is integrated into the modeling process and cost information is updated quarterly. The fee cost model provides analytical capabilities to enable the Trademark organization to understand the cost of their services. The fee cost calculations are presented to TPAC on a regular basis. Since the inception of the program, ABI methodologies have continuously improved and have been used budgeting, performance reporting, financial statement (Statement of Net Cost) preparation, and ad‐hoc cost analyses and studies in addition to fee setting. To facilitate agency‐wide collaboration in the ABI program, the ABI Steering Committee was established and is the official rulemaking body for all issues related to ABI at the USPTO. This committee is comprised of representatives from all organizations at the USPTO and all changes to ABI methodology or ABI models are approved by the Steering Committee. 20
USPTO Activity Based Information (cont. ) • ABI uses a two‐step methodology to assign costs to activities and related outputs to determine the share of patent and trademark costs on a fiscal year basis for total USPTO expenses. • Expenses (also referred to as costs) are those things which an organization spends from its budget, such as salaries and benefits for employees, contractor costs, rent, equipment, etc. • Activities represent the work that people in the organization undertake (e. g. , examining a trademark application, fee processing). • Outputs are the goods or services that the organization produces through its activities (e. g. , issuing trademark registrations). • The cost analysis and all historical expenses referenced in this proposal are based upon FY 2018, the most recent fiscal year for which complete cost and production measure information was available when the analysis was prepared. 21
USPTO Activity Based Information (cont. ) • ABI analysis is based on expense information from the USPTO’s core financial system. This information is “tagged” with identifiers such as the source organization code, the amount spent, the activities performed, and the type of expense (e. g. , salaries, benefits, printing, rent). • Direct expenses are spending by the Patent or Trademark organizations, and Patent or Trademark Trial and Appeal Boards. These expenses do not require any type of allocation methodology. • Direct allocations originate in another organization on behalf of the Patent or Trademark operations, (e. g. IT systems, rent and facilities). • Indirect allocations require a “driver” to determine the appropriate share of expenses (e. g. , surveys, help desk calls by organization, number of hires, or invoices processed). • Direct expenses are compiled into “categories” of spending called processes and activities – “examination” is an example of a process and “perform initial search” is an example of an activity. 22
USPTO Activity Based Information (cont. ) • The direct costs for an activity plus the indirect costs is known as the “fully burdened” cost for that activity. • The “fully burdened” cost for an activity is then divided by workload measures (number of outputs for that particular activity completed) to arrive at the fully burdened unit cost for that activity. • In some cases, the cost for a particular process is determined by ascertaining which activities occur for the process, and how often each activity occurs. This is known as the “equivalent unit of production” (EUP) and is based on a statistical analysis of a one year set of completed applications. • During the last five years (FY 2014 thru FY 2018), on average, direct and allocated direct expenses accounted for 68. 6% of the Trademark organization’s costs while the remaining 31. 4% were classified as indirect. • Examples of the unit cost calculations can be found on the following pages. 23
USPTO ABI Costing Results Example: Trademark Filings 24
USPTO ABI Costing Results Example: Trademark Filings (cont. ) 25
Appendix D Background on Trademark Fees The information included in this appendix provides an overview of the current Trademark fee structure, including historical trends of fees and fee collections. 26
Basic Trademark Process and Relative Fee Payments Fees collected for trademark activities occur at different intervals over the life of a trademark application filing • The blue boxes display a high‐level overview of the trademark lifecycle • The gray boxes identify the fees associated with each element of the trademark lifecycle For Use 27
Trademark Application Filings Classes Filed on a Monthly Basis 69 000 64 000 59 000 54 000 49 000 44 000 39 000 34 000 29 000 FY 2015 FY 2016 r Se pt em be st Au gu Ju ly ne Ju ay M ril Ap M ar ch y ar ru Fe b Ja nu ar y r be em D ec be em N ov O ct ob er r 24 000 FY 2017 FY 2018 FY 2019 28
Trademark Fee Collections FY 2018 trademark fee collections were $329. 0 million. 1, 2%2, 4% 0, 8% 0, 0% 3, 3% 14, 3% 53, 8% 24, 3% Application Filings Madrid Protocol Fees Trademark Processing Fees Maintaining Exclusive Rights Trademark Trial and Appeal Board Finance Service Fees Intent to Use/Use Fees Other Trademark Fees 29
Trademark Application Filings FY 2016 • • Application filing fees are the source of more than one‐half of trademark fee collections. Filing fees are not refunded, even if the application is later refused registration on legal grounds. FY 2018 All Other Trademark Fees $152. 0 M 46. 2% FY 2017 All Other Trademark Fees $142. 5 M 46. 7% All Other Trademark Fees $132. 5 M 47. 7% Application Filings $162. 5 M 53. 3% Application Filings $176. 9 M 53. 8% 30 Application Filings $145. 1 M 52. 3%
Maintaining Exclusive Rights • Affidavit of use, renewal, and amendment fees make up about one‐quarter of trademark filing fees. • Failure to maintain use and file these documents on a timely basis will result in the cancellation of the registration. FY 2018 All Other Trademark Fees $249. 1 M 75. 7% FY 2016 All Other Trademark Fees $211. 9 M 76. 3% FY 2017 Maintaining Exclusive Rights $79. 9 M 24. 3% All Other Trademark Fees $231. 9 M 76. 0% Maintaining Exclusive Rights $73. 2 M 24. 0% 31 Maintaining Exclusive Rights $65. 7 M 23. 7%
Intent to Use Fees • • Applications initially filed and approved based upon the applicant's bona fide intention to use the mark in commerce require additional filings to demonstrate use and proceed to registration. An applicant may file a statement of use prior to approval for publication or within six months from the date of the notice of allowance to either: (1) use the mark in commerce and submit a statement of use (SOU) with the applicable fee; or (2) pay a fee to request a six‐month extension of time to file a statement of use. FY 2016 FY 2017 All Other Trademark Fees $229. 7 M 82. 8% Intent to Use $46. 1 M 15. 1% All Other Trademark Fees $258. 9 M 84. 9% Intent to Use $47. 9 M 17. 2% FY 2018 Intent to Use $47. 0 M 14. 3% All Other Trademark Fees $282. 0 M 85. 7% 32
Trademark Trial and Appeal Fees • • • The Trademark Trial and Appeal Board (TTAB), an administrative tribunal within the USPTO addresses inter and ex parte appeals. When an applicant does not agree with the examining attorney’s decision that a mark should not be registered, the applicant may appeal to the TTAB’s ruling may overturn or affirm the examining attorney’s decision. TTAB $4. 1 M 1. 5% FY 2016 TTAB $6. 6 M 2. 2% FY 2017 All Other Trademark Fees $298. 4 M 97. 8% All Other Trademark Fees $273. 5 M 98. 5% TTAB $8. 0 M 2. 4% FY 2018 All Other Trademark Fees $321. 0 M 97. 6% Third parties may file an opposition before registration of a trademark. In a similar fashion, trademarks that have been registered may be challenged for cancellation. 33
Trademark Fee Collections Monthly Trademark Fees By Category: Sept 2017 -June 2019 Millions $35, 0 $30, 0 $25, 0 $20, 0 $15, 0 $10, 0 $5, 0 ‐ 1 8 Ju n‐ 18 Ju l‐ 1 Au 8 g‐ 18 Se p‐ 18 O ct ‐ 1 N 8 ov ‐ 1 8 De c‐ 18 Ja n‐ 19 Fe b‐ 19 M ar ‐ 1 9 Ap r‐ 1 M 9 ay ‐ 1 9 Ju n‐ 19 18 ay r‐ M ‐ 1 8 Ap 8 ar ‐ 1 M 18 7 Application Filings Madrid Protocol Fees Trademark Processing Fees Fe b n‐ Ja ‐ 1 De c ‐ 1 7 7 ov ‐ 1 N ct O Se p‐ 17 $0, 0 Maintaining Exclusive Rights Trademark Trial and Appeal Board Finance Service Fees Intent to Use/Use Fees Other Trademark Fees Total Trademark Fees 34
Appendix E Aggregate Cost Information The information included in this appendix provides additional details related to the proposed fee structure. This appendix also outlines the assumptions for trademark filing, workload, production, and performance, which provide the underlying foundation for calculating aggregate cost. 35
USPTO 2018 – 2022 Strategic Plan Priorities The USPTO spends trademark fees in support of the following strategic priorities: • Optimize Trademark Application Pendency • Issue High‐Quality Trademarks • Foster Business Effectiveness • Enhance Operations of the Trademark Trial and Appeal Board (TTAB) • Provide Leadership and Education on Domestic and International Intellectual Property Policy and Awareness • Deliver Organizational Excellence 36
Aggregate Cost-Revenue Balance • During FY 2019, the USPTO has focused on financial risk management, priorities for spending including the agency’s critical IT needs, revenue estimates and collections, and the size of operating reserves to mitigate financial and operational risk. This includes: • Conducting a comprehensive review of all USPTO operating requirements, • Initiating the biennial patent and trademark fee review process, and • Committing to maintaining a minimal trademark operating reserve of $75 million [see Appendix J for details]. • A comprehensive funding review is currently under way and the results will be presented in the FY 2021 President’s Budget. 37
Aggregate Cost-Revenue Balance (cont. ) • The biennial fee review has resulted in the proposed fee schedule addressed in this briefing. Under this proposed schedule, targeted fees would be adjusted, as well as trademark fee revenue [see Attachment – Table of Trademark Fee Adjustments and Appendix F and for details]. • To ensure the USPTO’s core operations are able to sustain financial risk, the USPTO has identified an optimal operating reserve balance and a minimum or lower bound of operating reserve balance [see Appendix J for details]. 38
Aggregate Cost Distribution A majority of the fees used to support the trademark operation are spent on activities that directly support trademark examination and information technology (trademark information resources and IT infrastructure). External Affairs Executive Direction and Communications 21% Financial Management Services Human Resource Management and Administrative Services Legal Services Management Information Resources IT Infrastructure and IT Support Services Miscellaneous General Expense 47% * [VALUE] 47% Trademark Examining 5% Trademark Appeals and Inter Partes Proceedings Trademark 12%Information Resources Indirect Allocated 37% 2% 4% 5% 3% 6% A percentage of trademark fees are used to support underlying mission support services. MGE includes cross‐cutting expenses such as rent, utilities, telecommunications, and lease management. 39
Breakdown of Aggregate Costs The vast majority of USPTO’s spending is for items that the Office has little discretion in choosing to pay in order to sustain operations. Low discretion items Compensation and Benefits Contracts Rent and Utilities Supplies and Materials Higher discretion items Equipment Other ($M) $243. 7 $67. 5 $15. 3 $2. 5 66. 4% 18. 4% 4. 2% 0. 7% $36. 8 $1. 3 10. 0% 0. 4% Higher discretion items, 10% 40
Appendix F Aggregate Revenue Information The information included in this appendix provides an overview of the methodology used to forecast aggregate revenue. 41
Fee Collection Forecasting Components When forecasting fees to calculate aggregate revenue, the USPTO considers many factors, such as: • The global and national economic outlook, by analyzing forecasts of Gross Domestic Product (GDP), research and development (R&D), consumer price index (CPI), and venture capital investments as indicators of future applicant demand; • The future of the IP environment, by examining legislative, regulatory and judicial actions/changes and procedural/process improvements that may affect demand for IP rights. This includes strategic initiatives, management of resources, and fee rate adjustments; • The Office’s historical experience by analyzing events and trends to help predict future demand for IP and applicant behavior; and • Stakeholder input. 42
Appendix G Rationale for Specific Fee Changes The information included in this appendix outlines the rationale for the trademark fee changes. 43
Investing in the Future Adjusting the trademark fee schedule allows the Agency to implement the trademark‐related strategic objectives and initiatives as documented in the USPTO 2018 – 2022 Strategic Plan. This includes: Optimize Trademark Application Pendency • Align production capacity with incoming workload and inventory. • Work with customers to develop pendency goals that increase examination efficiency, maintain an optimal pendency level, and meet the expectations of IP community. • Optimize pendencies for all types of actions throughout the trademark process. 44
Investing in the Future (cont. ) Issue High Quality Trademarks • Continually improve quality measurements. • Provide targeted training (including legal training and education) to address quality issues • Leverage analytics to drive training, process improvements, and consistency. • Leverage state‐of‐the art technologies that support high‐quality examination and registration. 45
Investing in the Future (cont. ) Foster Business Effectiveness • Develop innovative recruitment strategies for staffing trademark positions. • Develop leadership programs for succession planning, knowledge management, and employee engagement. • Develop the workforce to support IT modernization. • Focus IT efforts on improving efficiencies in core business operations. • Enhance the customer experience. • Explore artificial and business intelligence to assist trademark customers. • Partner with customers to define and address needs. 46
Investing in the Future (cont. ) Enhance Operations of the Trademark Trial and Appeal Board (TTAB) • Resolve appeals and inter partes matters in a timely manner. • Streamline processes and procedures where feasible and appropriate, and ensure procedural predictability. • Emphasize overall written quality, well‐supported reasoning of orders and opinions, and decisional consistency. • Maintain increased internal and external engagement on TTAB operations to promote customer understanding of process and procedure. • Document clear and comprehensive business requirements to facilitate enhancement of legacy IT systems and prepare for next generation IT systems. • Retain and leverage nationwide talent. 47
Benefits For Stakeholders • An incentive for broader adoption of the cost‐effective electronic filing, communication, and processing • A better and fairer cost recovery system more closely aligning fees and costs • A balance between subsidizing costs for a relative few, promoting a strong incentive for electronic filing, and ensuring an accurate federal register as a reliable indicator of marks in use • A solution to changes in filing behaviors • A solution to the need for more and more IT solutions to solve challenges • A stable financial foundation to fulfill the USPTO mission and maintain performance with disciplined cost‐effectiveness. 48
Proposed Trademark Fee Changes The proposed changes impact the following Trademark Fees: • Applications for Registration Fees • Petitions and New Fees for Letter of Protest and Request for Reconsideration • Post Registration Maintenance Fees • New Fees for Deletion of Goods and Services Following Audit or Adverse Decision • Trademark Trial and Appeal Board Fees 49
Application Filing Fees Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Application Filing Fees 6001 Filing an Application on Paper, per Class $774 $600 $750 7001 7933 Filing and Application through TEAS, per Class Electronic Application filed @ WIPO, per Class Electronic Subsequent Designation filed @ WIPO, per Class $489 $697 $682 $400 $500 $100 25% 7009 Filing a TEAS Reduced Fee (RF) Application through TEAS under § 2. 23, per Class $421 $275 $350 $75 27% 7007 Filings a TEAS Plus Application through TEAS under § 2. 22, per Class $336 $225 $250 $25 11% 6006 Request to Divide an Application Filed on Paper, per New Application Created $216 7006 Request to Divide an Application Filed through TEAS, per New Application Created $160 6008 Additional Processing Fee under § 2. 22(c) or § 2. 223(c), per Class $20 7008 Additional Processing Fee under § 2. 22(c) or § 2. 223(c), per Class $5 $200 $150 $200 $125 $0 0% $100 $125 25% $0 $0 0% 0% $125 $0 50 0%
Trademark Petition Fees Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Trademark Processing Fees 6005 Petitions to the Director Filed on Paper $3, 006 7005 Petitions to the Director Filed through TEAS New Letter of Protest on Paper n/a New Letter of Protest n/a New Request for Reconsideration, Prior to Appeal, on Paper n/a New Request for Reconsideration, Prior to Appeal n/a $108 $200 $350 $100 $150 75% $250 $200 $100 $500 $400 51 150%
Maintaining Exclusive Rights Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Maintaining Exclusive Rights Fees 6201 Filing an Application for Renewal of a Registration on Paper, per Class $59 7201 Filing an Application for Renewal of a Registration through TEAS, per Class $30 6203 Additional Fee for Filing a Renewal Application During the Grace Period on Paper, per Class $43 7203 Additional Fee for Filing a Renewal Application During the Grace Period through TEAS, per Class 6204 Correcting a Deficiency in a Renewal Application via Paper Filing $77 7204 Correcting a Deficiency in a Renewal Application via TEAS Filing $28 6205 Filing an Affidavit under § 8 of the Act on Paper, per Class $60 7205 Filing an Affidavit under § 8 of the Act through TEAS, per Class $30 6206 Additional Fee for Filing a § 8 Affidavit During the Grace Period on Paper, per Class $43 7206 Additional Fee for Filing a § 8 Affidavit During Grace Period through TEAS, per Class $8 6207 Correcting a Deficiency in a § 8 Affidavit via Paper Filing $79 7207 Correcting a Deficiency in a § 8 Affidavit via TEAS Filing $28 6208 Filing an Affidavit under § 15 of the Act on Paper, per Class $60 $500 $300 $200 $8 $200 $0 $100 $0 $0 0% 0% $100 $325 80% 0% $100 $200 0% 44% $225 $200 0% 0% $100 $125 $200 $0 $0 $325 0% 0% $100 $200 $0 $0 $200 $225 0% $300 $100 $300 $0 $0 $25 0% 8% 52
Maintaining Exclusive Rights Fees (cont) Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Maintaining Exclusive Rights Fees (cont) 7208 Filing an Affidavit under § 15 of the Act through TEASt, per Class $30 6210 Filing to Publish a Mark Under § 12(c) on Paper, per Class n/a 7210 Filing to Publish a Mark Under § 12(c) through TEAS, per Class $24 6211 Issuing New Certificate of Registration upon Request of Registrant, Request Filed on Paper n/a 7211 Issuing New Certificate of Registration upon Request of Registrant, Request Filed through TEAS $442 6212 Certificate of Correction of Registrant's Error, Request Filed on Paper $820 7212 Certificate of Correction of Registrant's Error, Request Filed through TEAS $444 6213 Filing a Disclaimer to a Registration, on Paper n/a 7213 Filing a Disclaimer to a Registration, through TEAS n/a 6214 Filing an Amendment to a Registration, on Paper $820 7214 Filing an Amendment to a Registration, through TEAS or ESTTA $41 New Deletion of Goods or Services, Prior to or with § 8 Filing, on Paper n/a New Deletion of Goods or Services, Prior to or with § 8 Filing n/a New Deletion of Goods or Services as a Result of a Post Registration Audit, per Good or Service Deleted on Paper n/a New Deletion of Goods or Services as a Result of a Post Registration Audit, per Good or Service Deleted n/a $200 $225 $200 $100 $200 $0 $100 $0 $0 $0 $200 0% 0% $100 $100 $200 $0 $0 $200 13% 0% $100 $200 $25 $0 $200 $100 53 0%
Intent to Use/Use Fees Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Intent to Use/Use Fees 6002 Filing an Amendment to Allege Use under § 1(c) of the Act on Paper, per Class $202 7002 Filing an Amendment to Allege Use under § 1(c) of the Act through TEAS, per Class $85 6003 Filing a Statement of Use under § 1(d)(1) of the Act on Paper, per Class $124 7003 Filing a Statement of Use under § 1(d)(1) of the Act through TEAS, per Class $108 6004 Filing a Request under § 1(d)(2) of the Act for a Six-Month Extension of Time for Filing a Statement of Use under § 1(d)(1) of the Act on Paper, per Class $30 7004 Filing a Request under § 1(d)(2) of the Act for a Six-Month Extension of Time for Filing a Statement of Use under § 1(d)(1) of the Act through TEAS, per Class $13 $200 $100 $200 $0 $100 $200 $100 $225 $0 $0 0% 0% $100 $225 $125 0% $0 $0 0% 0% $125 $0 54 0%
Madrid Protocol Fees Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Madrid Protocol Fees 6901 Certifying an International Application Based on a Single Application or Registration, Filed on Paper, per Class $66 7901 Certifying an International Application Based on a Single Application or Registration, Filed through TEAS, per Class $44 6902 Certifying an International Application Based on More Than One Basic Application or Registration Filed on Paper, per Class $105 7902 Certifying an International Application Based on More Than One Basic Application or Registration Filed through TEAS, per Class $44 6903 Transmitting a Request to Record an Assignment or Restriction, or Release of a Restriction, under § 7. 23 or § 7. 24 Filed on Paper $43 7903 Transmitting a Request to Record an Assignment or Restriction, or Release of a Restriction, under § 7. 23 or § 7. 24 Filed through TEAS n/a 6904 Filing a Notice of Replacement under § 7. 28 on Paper, per Class n/a 7904 Filing a Notice of Replacement under § 7. 28 through TEAS, per Class n/a $200 $100 $250 $0 $100 $250 $150 $200 $0 $0 0% 0% $100 $200 0% 0% $150 $100 $0 $0 $200 0% $0 $0 0% 0% $100 $0 55 0%
Madrid Protocol Fees (cont) Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Madrid Protocol Fees (cont) 6905 Filing an Affidavit Under § 71 of the Act on Paper, per Class $47 7905 Filing an Affidavit Under § 71 of the Act through TEAS, per Class $13 6906 Surcharge for Filing an Affidavit Under § 71 of the Act During Grace Period on Paper, per Class $45 7906 Surcharge for Filing an Affidavit Under § 71 of the Act During Grace Period through TEAS, per Class $13 6907 Transmitting a Subsequent Designation under § 7. 21, Filed on Paper n/a 7907 Transmitting a Subsequent Designation under § 7. 21, Filed through TEAS $29 6908 Correcting a Deficiency in a § 71 Affidavit Filed on Paper n/a 7908 Correcting a Deficiency in a § 71 Affidavit Filed through TEAS New Deletion of Goods or Services, Prior to or with a § 71 Filing on Paper n/a New Deletion of Goods or Services, Prior to or with a § 71 Filing through TEAS n/a $6 $225 $325 $125 $200 $100 $0 $0 $100 $0 $0 0% 0% $100 $200 80% 0% $100 $200 44% $0 $0 56 0%
Trademark Trial and Appeal Board Fees Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Trademark Trial and Appeal Board Fees 6401 Filing a Petition to Cancel on Paper, per Class $124 7401 Filing a Petition to Cancel through ESTTA, per Class 6402 Filing a Notice of Opposition on Paper, per Class 7402 Filing a Notice of Opposition through ESTTA, per Class $2, 217 6403 Ex Parte Appeal to the Trademark Trial and Appeal Board Filed on Paper, per Class $2, 654 7403 Ex Parte Appeal to the Trademark Trial and Appeal Board Filed through ESTTA, per Class $2, 728 6404 Filing a Request for an Extension of Time to File a Notice of Opposition under § 2. 102(c)(3) on Paper n/a 7404 Filing a Request for an Extension of Time to File a Notice of Opposition under § 2. 102(c)(3) through ESTTA $112 6405 Filing a Request for an Extension of Time to File a Notice of Opposition under § 2. 102(c)(1)(ii) or (c)(2) on Paper n/a 7405 Filing a Request for an Extension of Time to File a Notice of Opposition under § 2. 102(c)(1)(ii) or (c)(2) through ESTTA $112 $500 $2, 740 $275 $700 $400 $500 $200 $600 $700 $400 $300 $200 100% $200 $500 50% 67% $400 $100 $200 $400 50% 40% $600 $200 $300 $200 $500 $200 40% $100 $200 100% 67% $400 $200 57 100%
Trademark Trial and Appeal Board Fees (cont) Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Trademark Trial and Appeal Board Fees (cont) New Filing a Request for Reconsideration Concurrent with a Notice of Appeal on Paper, per Application n/a $500 New Filing a Request for Reconsideration Concurrent with a Notice of Appeal, per Application n/a New Filing a Request for Suspension and Remand Concurrent with a Notice of Appeal on Paper, per Application n/a New Filing a Request for Suspension and Remand Concurrent with a Notice of Appeal, per Application n/a New Deletion of Goods or Services as a Result of an Adverse Finding in a Trademark Trial and Appeal Board Case on Paper, per Class n/a New Deletion of Goods or Services as a Result of an Adverse Finding in a Trademark Trial and Appeal Board Case, per Class n/a New Filing a First Request for an Extension of. Ttime to File an Appeal Brief on Paper, per Application n/a New Filing a First Request for an Extension of Time to File an Appeal Brief, per Application n/a New Filing a Second or Subsequent Request for an Extension of Time to File an Appeal Brief on Paper, per Application n/a New Filing a Second or Subsequest Request for an Extension of Time to File an Appeal Brief, per Application n/a $100 New Request Motion for Summary Judgment n/a $500 New Request for an Oral Hearing, per Application n/a $500 $400 $200 $100 $0 $0 $200 58 Percentage Change Paper Electronic
Other Trademark Fees Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Other Trademark Fees 6991 Recordal Application Fee $659 $20 $20 $0 $0 0% 6992 Renewal Application Fee $659 $20 $20 $0 $0 0% 6993 Late Fee for Renewal Application Fee $659 $20 $20 $0 $0 0% 6994 Application Fee for Reactivation of Insignia, per Request $659 $20 $20 $0 $0 0% 8501 Printed Copy of Registered Mark, Copy Only. Service Includes Preparation of Copies by the Office within Two to Three Business Days and Delivery by USPS; and Preparation of Copies by the Office within One Business Day of Receipt and Delivery to an Office Box, or by Electronic Means n/a $3 $3 $0 0% 8503 Certified Copy of Registered Mark, Showing Title and/or Status, Regular Service n/a $15 $0 0% 8504 Certified Copy of Registered Mark, Showing Title and/or Status, Expedited Local Service n/a $30 $0 0% 59
Other Trademark Fees (cont) Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Other Trademark Fees (cont) 8507 Certified or Uncertified Copy of Trademark Application as Filed Processed within Seven Calendar Days n/a $15 $0 0% 8508 Certified or Uncertified Copy of Trademark-Related Official Record n/a $50 $0 0% 8513 Certified or Uncertified Copy of Trademark Records, per Document Except as Otherwise Provided in this Section n/a $25 $0 0% 8514 For Assignment Records, Abstracts of Title and Certification, per Registration n/a $25 $0 0% 8521 Recording Each Trademark Assignment, Agreement or Other Document Relating to the Property in a Registration or Application, First Property in a Document n/a $40 $0 0% 8522 Recording Each Trademark Assignment, Agreement or Other Document Relating to the Property in a Registration or Application, for Each Additional Property in the Same Document n/a $25 $0 0% 8533 Additional Fee for Overnight Delivery n/a $40 $0 0% 8534 Additional Fee for Expedited Service n/a $160 $0 0% 60
Finance Service Fees Fee Code Description Unit Cost FY 2018 Current Fees Paper Electronic Proposed Fees Paper Electronic Increase/(Decrease) Paper Electronic Percentage Change Paper Electronic Finance Service Fees 9101 Processing Each Payment Refused or Charged Back by a Financial Institution n/a $50 $0 0% 9202 Deposit Account Service Charge for Each Month when the Balance at the End of the Month is below $1, 000 n/a $25 $0 0% 61
Appendix H Paper vs Electronic Trademark Fees The information included in this appendix provides an overview of the fees eligible for electronic discounts. A complete listing of paper and electronic fees can be found in Attachment 1 – Table of Trademark Fee Adjustments. 62
Paper and Electronic Filings The following table shows the percentages of paper versus electronic modes for paired Trademark fees in FY 2018. Mode Paper TEAS RF TEAS Plus Application Fees <0. 1% 1. 3% 56. 0% 42. 7% Other Groups of Fees Paper Electronic Fees for Statement of Use or to Allege Use Petition for Cancellation, Notice of Opposition, and Appeal related fees 0. 1% 99. 9% 0. 2% 99. 8% Fees for Renewal 0. 2% 99. 8% Section 8 Declaration of Continued Use related fees 0. 2% 99. 8% Petitions to the Director 0. 1% 99. 9% Certifying an International Application related fees 0. 1% 99. 9% 63
Appendix J Operating Reserve Assumptions (Carryover of Fees) The information included in this appendix provides more details on rationale, purpose, and size determination of the USPTO operating reserve to carry over unspent fee revenues into future years. 64
Operating Reserve – Definition and Purpose The trademark operating reserve is funded from trademark fee collections that have been appropriated but unobligated and carried over from the prior year. The operating reserve is intended to sustain operations in the event of short term lapses in appropriation authority, unanticipated lower fee collections and/or increases in operating expenses, or for long term investments. Overall, the operating reserve is intended to: • Improve long‐term financial stability and response to immediate and temporary changes. • Protect against unexpected increases in requirements or unexpected declines in fee collections. • Mitigate the risk of a cash flow shortage. • Provide a contingency to minimize the impact of normal fluctuations in fee collections. 65
Operating Reserve – Size The USPTO manages the trademark operating reserve within a range of acceptable balances. • The USPTO has defined an optimal balance and a minimal acceptable balance for the trademark funded operating reserve. • The optimal balance sets the upper goal for the operating reserves. It is stated in terms of the amount of budgetary requirements sufficient to fund six months of trademark operations. • The minimum acceptable balance establishes a lower bound of operating reserve the USPTO will use in planning budgetary requirements. It is set at $75 million for trademark operations. 66
Operating Reserve – Optimal Level The USPTO assesses, at least every two years, environmental risks to determine the optimal operating reserve size. • The routine evaluation is necessary because an environmental risk or risk score that was appropriate in a previous year may not be appropriate in the future due to changing circumstances, to ensure that it continues to represent the USPTO risk appetite. • A change in circumstance may cause the USPTO to reevaluate the optimal operating reserve size more frequently. The results of the most recent evaluation will be used to inform the USPTO comprehensive fee review, fee setting, and the requirements‐based budget formulation processes. 67
Operating Reserve – Minimum Level • The USPTO recognizes that it may take a significant amount of time to achieve optimal operating reserve balance and, once achieved, the occurrence of any number of environmental risk factors could cause the balances to drop below the optimal level. • The minimum acceptable balance is defined to address immediate unplanned changes in the economic and operating environment or circumstances. Unlike the significant uncertainty associated with the environmental factors used to assess the size of the optimal operating reserve, the considerations for the minimum acceptable balance are more operational in nature. 68
Operating Reserve – Minimum Level (cont. ) The most significant operational risk factors that could contribute to using the contingency provided by the minimum operating reserve are: • If the USPTO does not receive a timely authorization to spend the fees collected, then operations could be reduced or closed. A minimum acceptable balance will allow for continuing operations over a limited period of time. • If the ratio of fixed versus discretionary budgetary requirements is high, then the USPTO has few levers to immediately reduce the cost of operations. • If the USPTO determines that there is a high likelihood of new and specific operational risk factors (e. g. , expected regulatory, legal, Congressional, or operational actions), then the minimum acceptable balance should be increased by the estimated impact of risk occurrence. 69
Operating Reserve - Management A comprehensive review of the five‐year projected operating reserve balances is completed as a part of the annual requirements‐based budget formulation process. • This is accomplished by estimating fee collections for each of the five years, subtracting the respective budgetary requirements for each of the five years, and accumulating the excess of fees or costs into the beginning operating reserve balance to calculate an estimated ending balance in each of the five years (projected annual operating reserve balance). • The projected annual operating reserve balance is evaluated against the current minimum and optimal operating reserve amounts. Variances between the projected annual operating reserve balances and the minimum acceptable and optimal operating reserve sizes are reviewed and reassessed. 70
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