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In an innocuously titled bill called the U.S. Patent and Trademark Office Reauthorization Act of 2002, the government is poised to “sneak in” a number of significant substantive changes to the nation’s patent laws. The proposed law, which has been well below the radar screens of many practitioners, appears to be on a fast track toward enactment and would become effective Oct. 1. The proposed new law envisions substantial changes, both procedural and financial, to the methodology by which patents are examined and processed in the United States. The law would significantly impact the strategy and decision-making process of most patent applicants. SEPARATE EXAMINATION On a substantive level, the most significant proposed change is that under the new law, there would be a legal division between the act of patent filing and patent examination. Under existing law, when a regular patent is filed, it is automatically examined and processed through to completion for a single, modest fee. This proposal would bring the U.S. law in conformity with other countries of the world which divide the filing and examination procedures. Under the proposed change, patent applicants who file regular applications would be required to request separate examination, including the payment of an “examination fee.” While the basic filing fee would be lowered, the applicant in an original application would be required to request examination and pay the examination fee within 18 months. If no examination is requested, the application goes abandoned. According to the Web site of the U.S. Patent and Trademark Office, the change is intended to provide patent applicants with a reduced filing fee and an opportunity to evaluate the commercial merits of the invention before having to pay a fee to cover the cost of examination. The change thus would eliminate the need for the PTO to examine all patent applications based on a determination that the invention is of sufficient commercial value to justify prosecution. The fee, anticipated to be at least $800, is more than twice the present filing fee for small businesses and individuals. Under the proposed law, the PTO may reduce the examination fees specified for independent vendors who meet the conditions prescribed by the PTO commissioner (anticipated to be based upon economic need) and for applicants who provide a search report which meets certain legal and technical criteria. FEE INCREASE The second major change is in the size of fees, which would increase substantially in a number of critical areas. The increases would be felt most by applicants who file patents with significant numbers of claims and who file related co-pending applications. Under the present system, the basic filing fee covers 20 total claims, including three independent claims. Additional claims can be added for a modest fee. There is no penalty for filing additional continuation applications. Under the proposed change, these fees would increase approximately tenfold. For example, independent claims in excess of three would cost $160 for the fourth claim, $320 for the fifth claim and $640 for the sixth claim. The present fee is $42 for independent claims in excess of three. In addition, applicants who file more than 20 claims total would pay a surcharge of $80 per claim, between 21 and 25, and as high as $1,250 each, for applications with more than 50 claims. These fees represent exorbitant and prohibitive increases. The present fee is $9 per claim for 20 for a small-business entity. The patent issue fees and periodic maintenance fees would also rise significantly. A further area of substantial change is in new fees which would be charged for “cross-referencing” other applications. Many inventors file such continuing or related applications. Under the proposed law, an application that contains or is amended to contain a specific reference to three earlier filed applications would be surcharged $1,000. References to five patent applications would cost $4,000. Finally, applicants who file multiple, largely identical patent applications (often done to protect an invention’s flanks) would be priced out of the market. These applications would be hit with penalties of $10,000 to $15,000. As the PTO site states, the purpose of these changes is to “modify applicant behavior.” The cross-referencing penalty is expected to motivate applicants to complete prosecution in fewer than three continuing applications. The “indistinct claims” penalty is intended to force applicants to include all patently identical inventions in a single application. TIMING Although the most critical issues — namely, the separate examination and most onerous fee increases — would become effective Oct. 1, patents filed before then would be grandfathered under the old rule and would largely be unaffected. Transitional periods are provided for the fee increases related to indistinct inventions and multiple applications. Any company or inventor with an intention to protect an invention should be aware of these patent changes. If patent filings are in the offing, they should be prepared and filed now. Scott J. Fields is a partner with Obermayer Rebmann Maxwell & Hippel, www.obermayer.com. He heads the firm’s intellectual property group and is a member of its business and finance department.

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