Setting and Adjusting Trademark Fees During Fiscal Year 2025
| Published date | 26 March 2024 |
| Record Number | 2024-06186 |
| Citation | 89 FR 20897 |
| Court | Patent And Trademark Office |
| Section | Proposed rules |
Federal Register, Volume 89 Issue 59 (Tuesday, March 26, 2024)
[Federal Register Volume 89, Number 59 (Tuesday, March 26, 2024)]
[Proposed Rules]
[Pages 20897-20915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06186]
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DEPARTMENT OF COMMERCE
Patent and Trademark Office
37 CFR Parts 2 and 7
[Docket No. PTO-T-2022-0034]
RIN 0651-AD65
Setting and Adjusting Trademark Fees During Fiscal Year 2025
AGENCY: United States Patent and Trademark Office, Department of
Commerce.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The United States Patent and Trademark Office (USPTO) proposes
to set and adjust trademark fees, as authorized by 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). The proposed fee adjustments will provide the USPTO sufficient
aggregate revenue to recover the aggregate costs of trademark
operations in future years (based on assumptions and estimates found in
the agency's Fiscal Year 2025 Congressional Justification (FY 2025
Budget)), including implementing the USPTO 2022-2026 Strategic Plan
(Strategic Plan).
DATES: The USPTO solicits comments from the public on this proposed
rule. Written comments must be received on or before May 28, 2024 to
ensure consideration.
ADDRESSES: Written comments on proposed trademark fees must be
submitted through the Federal eRulemaking Portal at https://www.regulations.gov.
To submit comments via the portal, commenters should go to https://www.regulations.gov/docket/PTO-T-2022-0034 or enter docket number PTO-
T-2022-0034 on the homepage and select the ``Search'' button. The site
will provide search results listing all documents associated with this
docket. Commenters can find a reference to this notice and select the
``Comment'' button, complete the required fields, and enter or attach
their comments. Attachments to electronic comments will be accepted in
Adobe portable document format (PDF) or Microsoft Word format. Because
comments will be made available for public inspection, information that
the submitter does not desire to make public, such as an address or
phone number, should not be included in the comments.
Visit the Federal eRulemaking Portal for additional instructions on
providing comments via the portal. If electronic
[[Page 20898]]
submission of comments is not possible, please contact the USPTO using
the contact information below in the FOR FURTHER INFORMATION CONTACT
section of this notice for special instructions.
FOR FURTHER INFORMATION CONTACT: Brendan Hourigan, Director, Office of
Planning and Budget, at 571-272-8966, or [email protected]; or
C. Brett Lockard, Director, Forecasting and Analysis Division, at 571-
272-0928. [email protected].
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Introduction
The USPTO publishes this notice of proposed rulemaking (NPRM or
proposed rule) under section 10 of the AIA (section 10), Public Law
112-29, 125 Stat. 284, as amended by the SUCCESS Act, Public Law 115-
273, 132 Stat. 4158, which authorizes the Under Secretary of Commerce
for Intellectual Property and Director of the USPTO to set or adjust by
rule any trademark fee established, authorized, or charged under the
Trademark Act of 1946 (the Trademark Act), 15 U.S.C. 1051 et seq., as
amended, for any services performed or materials furnished by the
agency. Section 10 prescribes that trademark fees may be set or
adjusted only to recover the aggregate estimated costs to the USPTO for
processing, activities, services, and materials relating to trademarks,
including administrative costs of the agency with respect to such
trademark fees. Section 10 authority includes flexibility to set
individual fees in a way that furthers key policy factors, while
considering the cost of the respective services. Section 10 also
establishes certain procedural requirements for setting or adjusting
fee regulations, such as public hearings and input from the Trademark
Public Advisory Committee (TPAC) and congressional oversight. TPAC held
a public hearing on the USPTO's preliminary trademark fee proposals on
June 5, 2023, and issued a report (TPAC Report) on August 14, 2023,
containing its comments, advice, and recommendations on the preliminary
fee proposals. The USPTO considered and analyzed the TPAC Report before
publishing the fee proposals in this NPRM. See Part IV: Rulemaking
Goals and Strategies for further discussion of the TPAC Report.
B. Purpose of This Action
Based on a biennial review of fees, costs, and revenues that began
in fiscal year (FY) 2021, the USPTO concluded that fee adjustments are
necessary to provide the agency with sufficient financial resources to
facilitate the effective administration of the U.S. trademark system,
including implementing the Strategic Plan, available on the agency
website at https://www.uspto.gov/StrategicPlan. The individual fee
proposals align with the USPTO's fee structure philosophy, including
the agency's four key fee setting policy factors: (1) promote
innovation strategies; (2) align fees with the full cost of trademark
services; (3) set fees to facilitate the effective administration of
the trademark system; and (4) offer application processing options. The
proposed fee adjustments will enable the USPTO to accomplish its
mission to drive U.S. innovation, inclusive capitalism, and global
competitiveness by delivering high-quality and timely trademark
examination and review proceedings that produce accurate and reliable
trademark rights for domestic and international stakeholders.
C. Summary of Provisions Impacted by This Action
The USPTO proposes to set and adjust 31 trademark fees, including
the introduction of 12 new fees. The agency also proposes discontinuing
6 fees.
Under the proposed fee schedule in this NPRM, the routine fees to
obtain and maintain a trademark registration (e.g., application filing,
intent-to-use/use (ITU) filings, and post-registration maintenance
fees) will increase relative to the current fee schedule, in order to
ensure financial sustainability and provide for improvements needed
relative to trademark filings and registration. Additional information
describing the proposed fee adjustments is included in Part V:
Individual Fee Rationale in this rulemaking and in the Table of
Trademark Fees--Current, Proposed, and Unit Cost (Table of Trademark
Fees), available on the fee setting section of the USPTO website at
https://www.uspto.gov/FeeSettingAndAdjusting.
II. Legal Framework
A. Leahy-Smith America Invents Act--Section 10
The AIA was enacted on September 16, 2011. See Public Law 112-29,
125 Stat. 284, 316-17. Section 10(a) of the AIA authorizes the Director
of the USPTO (Director) to set or adjust by rule any fee established,
authorized, or charged under the Trademark Act for any services
performed or materials furnished by the agency. Section 10 provides
that trademark fees may be set or adjusted only to recover the
aggregate estimated costs to the USPTO for processing, activities,
services, and materials relating to trademarks, including
administrative costs of the agency with respect to such trademark fees.
Provided that the fees in the aggregate achieve overall aggregate cost
recovery, the Director may set individual fees under section 10 at,
below, or above their respective cost. Section 10(e) requires the
Director to publish the final fee rule in the Federal Register and the
USPTO's Official Gazette at least 45 days before the final fees become
effective.
B. The Study of Underrepresented Classes Chasing Engineering and
Science Success Act of 2018
The SUCCESS Act was enacted on October 31, 2018. See Public Law
115-273, 132 Stat. 4158. Section 4 of the SUCCESS Act amended section
10(i)(2) of the AIA by striking ``7-year'' and inserting ``15-year'' in
reference to the expiration of fee setting authority. Therefore,
updated section 10(i) terminates the Director's authority to set or
adjust any fee under section 10 upon the expiration of the 15-year
period that began on September 16, 2011, and ends on September 16,
2026.
C. Trademark Public Advisory Committee Role
The Secretary of Commerce established TPAC under the American
Inventors Protection Act of 1999. TPAC advises the Director of the
USPTO on the management, policies, goals, performance, budget, and user
fees of trademark operations.
When adopting fees under section 10 of the AIA, the Director must
provide the proposed fees to TPAC at least 45 days prior to publishing
the proposed fees in the Federal Register. TPAC then has 30 days within
which to deliberate, consider, and comment on the proposal, as well as
hold a public hearing on the proposed fees. Then, TPAC must publish a
written report setting forth in detail the comments, advice, and
recommendations of the committee regarding the proposed fees. The USPTO
must consider and analyze any comments, advice, or recommendations
received from TPAC before setting or adjusting fees.
Accordingly, on May 8, 2023, the Director notified TPAC of the
USPTO's intent to set and adjust trademark fees and submitted a
preliminary trademark fee proposal with supporting materials. The
preliminary trademark fee proposal and associated materials are
available on the fee setting section of the USPTO website at https://www.uspto.gov/FeeSettingAndAdjusting.
[[Page 20899]]
TPAC held a public hearing at the USPTO's headquarters in
Alexandria, Virginia, on June 5, 2023, and members of the public were
given an opportunity to provide oral testimony. Transcripts of the
hearing are available for review on the USPTO website at https://www.uspto.gov/sites/default/files/documents/TPAC-Fee-Setting-Hearing-Transcript-20230605.pdf. Members of the public were also given an
opportunity to submit written comments for TPAC to consider, and these
comments are available on Regulations.gov at https://www.regulations.gov/docket/PTO-T-2023-0016. On August 14, 2023, TPAC
issued a written report setting forth their comments, advice, and
recommendations regarding the preliminary proposed fees. The report is
available on the USPTO website at https://www.uspto.gov/sites/default/files/documents/TPAC-Report-on-2023-Fee-Proposal.docx. The USPTO
considered and analyzed all comments, advice, and recommendations
received from TPAC before publishing this NPRM. See Part IV: Rulemaking
Goals and Strategies for further discussion of the TPAC Report.
III. Estimating Aggregate Costs and Revenue
Section 10 provides that trademark fees may be set or adjusted only
to recover the aggregate estimated costs to the USPTO for processing,
activities, services, and materials relating to trademarks, including
administrative costs with respect to such trademark fees. The following
is a description of how the agency estimates aggregate costs and
revenue.
Step 1: Estimating Aggregate Costs
Estimating prospective aggregate costs is accomplished primarily
through the annual budget formulation process. The annual budget is a
five-year plan for carrying out base programs and new initiatives to
deliver on the USPTO's statutory mission and implement the agency's
strategic goals and objectives.
First, the USPTO projects the level of demand for trademark
services, which depends on many factors that are subject to change,
including domestic and global economic activity. The agency also
considers non-US trademark-related activities, policies, and
legislation, and known process efficiencies. The number of trademark
application filings (i.e., incoming work to the USPTO) drives
examination costs, which make up the largest share of trademark
operating costs. The USPTO looks at indicators including the expected
growth in real gross domestic product (RGDP), a leading indicator of
incoming trademark applications, to estimate prospective workloads.
RGDP is reported by the Bureau of Economic Analysis (www.bea.gov) and
forecasted each February by the Office of Management and Budget (OMB)
(www.omb.gov) in the Economic and Budget Analyses section of the
Analytical Perspectives, and twice annually by the Congressional Budget
Office (CBO) (www.cbo.gov) in the Budget and Economic Outlook.
The expected production workload is then compared to the current
examination production capacity to determine any required staffing and
operating costs (e.g., salaries, workload processing contracts, and
publication) adjustments. The agency uses a trademark pendency model
that estimates trademark production output based on actual historical
data and input assumptions, such as incoming trademark applications,
number of examining attorneys on board, and overtime hours. Key
statistics regarding pendency, filing and application metrics, and
current inventory used to inform the model can be viewed on the data
visualization center section of the USPTO website at https://www.uspto.gov/dashboard/trademarks.
Next, the USPTO calculates budgetary spending requirements based on
the prospective aggregate costs of trademark operations. First, the
agency estimates the costs of status quo operations (base
requirements), then adjusts that figure for anticipated pay increases
and inflationary increases for the budget year and four out years. The
USPTO then estimates the prospective costs for expected changes in
production workload and new initiatives over the same period. The
agency then reduces cost estimates for completed initiatives and known
cost savings expected over the same five-year horizon. A detailed
description of budgetary requirements, aggregate costs, and related
assumptions for the Trademarks program is available in the FY 2025
Budget.
The USPTO estimates that trademark operations will cost $594
million in FY 2025, including $293 million for trademark examining; $24
million for trademark trials and appeals; $50 million for trademark
information resources; $22 million for activities related to
intellectual property (IP) protection, policy, and enforcement; and
$204 million for general support costs necessary for trademark
operations (e.g., the trademark share of rent, utilities, legal,
financial, human resources, other administrative services, and agency-
wide information technology (IT) infrastructure and support costs). See
Appendix II of the FY 2025 Budget. In addition, the agency will
transfer $280 thousand to the Department of Commerce, Inspector
General, for audit support for the Trademarks program.
Table 1 below provides key underlying production workload
projections and assumptions from the FY 2025 Budget used to calculate
aggregate costs. Table 2 (see Step 2) presents the total budgetary
requirements (prospective aggregate costs) for FY 2025 through FY 2029
and the estimated collections and operating reserve balances that would
result from the proposed adjustments contained in this NPRM. These
projections are based on point-in-time estimates and assumptions that
are subject to change. There is considerable uncertainty in outyear
budgetary requirements. There are risks that could materialize over the
next several years (e.g., adjustments to examination capacity, time
allotted to examining attorneys and other personnel to perform their
work, recompetitions of contracts, changes in workload, and
inflationary increases, etc.) that could increase the USPTO's budgetary
requirements in the short- to medium-term. These estimates are
refreshed annually during the formulation of USPTO's budget.
Table 1--Trademark Production Workload Projections, FY 2025-2029
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Production measures FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
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Applications.................... 774,000 817,000 863,000 912,000 964,000
Application growth rate......... 4.6% 5.5% 5.6% 5.7% 5.7%
Balanced disposals.............. 1,552,600 1,680,000 1,740,000 1,850,000 1,930,000
Unexamined trademark application 463,756 442,627 418,438 402,622 401,645
backlog........................
Examination capacity **......... 806 841 876 913 948
Performance measures:
Avg. first action pendency 7.5 6.3 5.9 5.5 4.9
(months)...................
[[Page 20900]]
Avg. total pendency (months) 13.5 11.3 10.9 9.5 8.9
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* In this table, examination capacity is the number of examining attorneys on board at end of year, as described
in the FY 2025 Budget.
Step 2: Estimating Prospective Aggregate Revenue
As described above in Step 1, the USPTO's prospective aggregate
costs (as presented in the FY 2025 Budget) include budgetary
requirements related to planned production, anticipated initiatives,
and a contribution to the trademark operating reserve required for the
agency to maintain trademark operations and realize its strategic goals
and objectives for the next five years. Prospective aggregate costs
become the target aggregate revenue level that the new fee schedule
must generate in a given year and over the five-year planning horizon.
To estimate aggregate revenue, the USPTO references production models
used to estimate aggregate costs and analyzes relevant factors and
indicators to calculate prospective fee workloads (e.g., number of
applications and requests for services and products).
The same economic indicators used to forecast incoming workloads
also provide insight into market conditions and the management of IP
portfolios, which influence application processing requests and post-
registration decisions to maintain trademark protection. When
developing fee workload forecasts, the USPTO also considers other
factors including fraud and scams impacting trademark filings, overseas
activity, policies and legislation, court decisions, process
efficiencies, and anticipated applicant behavior.
The USPTO collects fees for trademark-related services and products
at different points in time within the application examination process
and over the life of the pending trademark application and resulting
registration. Trademark application filings are a key driver of
trademark fee collections, as initial filing fees account for more than
half of total trademark fee collections. Changes in application filing
levels immediately impact current year fee collections because fewer
application filings mean the USPTO collects fewer fees to devote to
production-related costs. The resulting reduction in production
activities also creates an outyear revenue impact because less
production output in one year leads to fewer ITU and maintenance fee
payments in future years. Historically, fee collections from ITU and
maintenance fees account for about one third of total trademark fee
collections, which the agency uses to subsidize costs for filing and
examination activities not fully covered by initial filing fees.
The USPTO's five-year estimated aggregate trademark fee revenue
(see Table 2) is based on, for each fiscal year, the number of
trademark applications it expects to receive, work it expects to
process (an indicator of the ITU fee workloads), expected examination
and process requests, and the expected number of post-registration
filings to maintain trademark registrations. The USPTO forecasts the
same number of future year applications filed under the proposed fee
schedule compared to the current fee schedule because outside research
suggests that demand for trademark applications is inelastic. The USPTO
does anticipate a larger share of filers will take measures to avoid
the proposed surcharges compared to the share of filers that take
advantage of the TEAS Plus option under the current fee schedule. The
USPTO's Office of the Chief Economist periodically conducts economic
studies and may, in the future, develop trademark fee price elasticity
estimates for use in rulemakings.
Within the iterative process for estimating aggregate revenue, the
USPTO adjusts individual fee rates up or down based on cost and policy
decisions, estimates the effective dates of new fee rates, and then
multiplies the resulting fee rates by appropriate workload volumes to
calculate a revenue estimate for each fee. In the aggregate revenue
estimates presented below, the agency assumes that all proposed fee
rates will become effective on November 15, 2024. Using these figures,
the USPTO sums the individual fee revenue estimates, and the result is
a total aggregate revenue estimate for a given year (see Table 2). The
aggregate revenue estimate also includes collecting $10 million
annually in other income associated with recoveries and reimbursements
from other Federal agencies (offsets to spending).
Table 2--Trademark Financial Outlook, FY 2025-2029
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FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
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Dollars in millions
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Projected fee collections....... 583 640 666 694 721
Other income.................... 10 10 10 10 10
Total projected fee collections 593 650 676 704 731
and other income...............
Budgetary requirements.......... 594 611 635 664 690
Funding to (+) and from (-) (1) 40 40 40 41
operating reserve..............
End-of-year operating reserve 85 125 165 205 246
balance........................
Over/(under) minimum level...... (52) (16) 19 52 87
Over/(under) optimal level...... (212) (181) (153) (127) (99)
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IV. Rulemaking Goals and Strategies
A. Fee Setting Strategy
The strategy of this proposed rule is to establish a fee schedule
that generates sufficient multi-year revenue to recover the aggregate
costs of maintaining USPTO trademark operations. The overriding
principles behind this strategy are to operate within a sustainable
funding model that supports the USPTO's strategic goals and objectives,
such as optimizing trademark application pendency through the promotion
of efficient operations and filing behaviors, issuing accurate and
reliable trademark registrations, and encouraging access to
[[Page 20901]]
the trademark system for all stakeholders.
The USPTO assessed this proposed rule's alignment with four key fee
setting policy factors that promote a particular aspect of the U.S.
trademark system. (1) Promoting innovation strategies seeks to ensure
barriers to entry into the U.S. trademark system remain low, encourage
high-growth and innovation-based entrepreneurship, and incentivize
innovation and entrepreneurship by issuing registrations to stimulate
additional entrepreneurial activity. (2) Aligning fees with the full
costs of products and services recognizes that some applicants may use
particular services in a more costly manner than other applicants
(e.g., trademark applications cost more and take longer to examine when
identifications of goods and services include thousands of characters),
and charges those applicants appropriately rather than sharing the
costs among all applicants. (3) Facilitating the effective
administration of the trademark system seeks to encourage efficient
prosecution of trademark applications, reducing the time it takes to
obtain a registration. (4) Offering application processing options
provides multiple paths, where feasible, in recognition that trademark
prosecution is not a one-size-fits-all process. The reasoning for
setting and adjusting individual fees is described in Part V:
Individual Fee Rationale.
B. Fee Setting Considerations
The balance of this sub-section presents the specific fee setting
considerations the USPTO reviewed in developing the proposed trademark
fee schedule: (1) historical cost of providing individual services; (2)
the balance between projected costs and revenue to meet the USPTO's
operational needs and strategic goals; (3) ensuring sustainable
funding; and (4) TPAC's comments, advice, and recommendations on the
USPTO's initial fee setting proposal. Collectively, these
considerations informed the USPTO's chosen rulemaking strategy.
1. Historical Cost of Providing Individual Services
The USPTO sets individual fee rates to further key policy
considerations while considering the cost of a particular service. For
instance, the USPTO has a longstanding practice of setting application
filing fees below the actual cost of processing and examining
applications to encourage brand owners to take advantage of the
protections and rights offered by trademark registration.
The USPTO considers unit cost data provided by its Activity Based
Information (ABI) program to decide how to best align fees with the
full cost of products and services. Using historical cost data, the
USPTO can align fees to the costs of specific trademark products and
services. When the USPTO implements a new process or service,
historical activity-based information (ABI) data is typically not
available. However, the USPTO will use the historical cost of a similar
process or procedure as a starting point to estimate the full cost of a
new activity or service.
The document entitled ``USPTO Setting and Adjusting Trademark Fees
During Fiscal Year 2025--Activity Based Information and Trademark Fee
Unit Expense Methodology,'' available on the fee setting section of the
USPTO website at https://www.uspto.gov/FeeSettingAndAdjusting, provides
additional information on the agency's costing methodology in addition
to the last three years of historical cost data. Part V: Individual Fee
Rationale of this proposed rule describes the reasoning and anticipated
benefits for setting some individual fees at cost, below cost, or above
cost such that the USPTO recovers the aggregate cost of providing
services through fees.
2. Balancing Projected Costs and Revenue
In developing the proposed trademark fee schedule, the USPTO
considered its current estimates of future year workload demands, fee
collections, and costs to maintain core USPTO operations and meet its
strategic goals, as found in the FY 2025 Budget and the Strategic Plan.
The USPTO's strategic goals include: (1) driving inclusive U.S.
innovation and global competitiveness; (2) promoting the efficient
delivery of reliable IP rights; (3) promoting the protection of IP
against new and persistent threats; (4) bringing innovation to impact;
and (5) generating impactful employee and customer experiences by
maximizing agency operations. The following subsections provide details
regarding updated revenue and cost estimates, cost saving efforts taken
by the USPTO, and planned strategic improvements.
a. Updated Revenue and Cost Estimates
Projected revenue from the current fee schedule is insufficient to
meet future budgetary requirements (costs) due largely to lower-than-
expected demand for trademark services compared to prior forecasts and
higher-than-expected inflation in the broader U.S. economy that has
increased the USPTO's operating costs. Consequently, aggregate
operating costs will exceed aggregate revenue for the Trademarks
program under the current schedule. Absent the proposed increase in
fees or an unsustainable reduction in operating costs, the USPTO would
deplete its operating reserves and significantly increase financial
risk.
Forecasts for aggregate revenue using current demand estimates are
lower than prior forecasts. This lower-than-expected demand has
coincided with changes to trademark owners' filing and renewal
patterns, resulting in some imbalances in the overall fee structure.
The USPTO sets application filing fees below its examination costs to
maintain a low barrier to entry into the trademark registration system
and relies on fees collected for post-registration maintenance and ITU
extensions to subsidize the agency's losses on each application
examined. However, changes in the mix of filers and their preferences
have upset the traditional balance of the trademark fee structure. The
share of applicants filing ITU applications is declining. Also, the
percentage of registrants that choose to maintain their trademark
registration is declining as a larger share of filers are groups that
are historically less likely to renew their registrations at a rate
that would be sufficient to recover examination costs. The USPTO
believes these changes in the mix of filers are systemic and will
continue.
Following an unprecedented application surge in FY 2021, trademark
application filings declined and began returning to historic filing
levels in FY 2022, in line with the USPTO's expectations. Application
filings were largely unchanged in FY 2023. Given the current economic
outlook for the broader economy and filing activity over the past two
years, the USPTO projects trademark application filings to decline
slightly in FY 2024 and increase in line with historic growth rates in
FY 2025.
Higher-than-expected inflation starting in 2021 in the broader U.S.
economy increased the USPTO's operating costs above previous estimates
for labor and nonlabor activities such as benefits, service contracts,
and equipment. Salaries and benefits comprise about two-thirds of all
trademark-related costs, and employee pay raises enacted across all
U.S. government agencies in FY 2023-24--including the USPTO--were much
larger than previously budgeted. Federal General Schedule (GS) pay was
raised by 4.6% in 2023 and 5.2% in 2024; before 2023 the last time GS
pay was raised by at least 4% was in 2004. The FY 2025 Budget includes
an estimated 2.0% civilian pay raise planned in calendar year (CY) 2025
and assumed 3.0% civilian pay raises in CY 2026-29,
[[Page 20902]]
as well as inflationary increases for other labor and nonlabor
activities.
b. Cost-Saving Measures
The USPTO recognizes that fees cannot simply increase for every
improvement deemed desirable. The USPTO has a responsibility to
stakeholders to pursue strategic opportunities for improvement in an
efficient, cost-conscious manner. Likewise, the USPTO recognizes its
obligation to reduce spending when appropriate.
The USPTO's FY 2025 Budget submission includes cost reducing
measures such as releasing leased space in Northern Virginia and a
moderate reduction in overall IT spending. In FY 2025, the USPTO
estimates $4,569 million in total spending for patent and trademark
operations. This is a $122 million net increase from the agency's FY
2024 estimated spending level of $4,447 million. The net increase
includes a $224 million upward adjustment for prescribed inflation and
other adjustments, and a $102 million downward adjustment in program
spending and other realized efficiencies. This estimate builds on the
$40 million in annual real estate savings assumed in the FY 2024 Budget
submission to include additional annual cost savings of $12 million
through releasing more leased space in Northern Virginia. The combined
reduction in real estate space amounts to almost 1 million square feet
and an estimated annual cost savings of approximately $52 million.
Also, the USPTO is actively pursuing IT cost containment. The FY 2025
budget includes a relatively flat IT spending profile despite upward
pressure from inflation, supply chain disruptions, and government-wide
pay raises; ongoing IT improvements that offer business value to fee-
paying customers; and data storage costs increasing proportionally with
the USPTO's forecasted growth in patent and trademark applications. The
USPTO will achieve this cost containment goal via modern equipment in a
new data center that will cost less to maintain and by retiring legacy
IT systems. These cost containment measures will also improve the
USPTO's cybersecurity posture and increase system resiliency.
c. Efficient Delivery of Reliable IP Rights: Quality, Backlog, and
Pendency
The USPTO's strategic goal to ``promote the efficient delivery of
reliable IP rights'' recognizes the importance of innovation as the
foundation of American economic growth and global competitiveness.
Toward this end, the USPTO is committed to continuously improving
trademark quality, as well as the accuracy and reliability of the
trademark register. The agency will continue equipping trademark
examining attorneys with updated tools, procedures, and clarifying
guidance to effectively examine all applications. The USPTO will also
retire legacy systems and integrate the use of emerging technologies to
streamline work processes for greater efficiencies; adjust staffing
levels; and refine core duties to ensure its ability to meet
significant changes in filing volumes and a variety of improper filing
behaviors.
The USPTO is also committed to improving trademark application
pendency. The agency recognizes that applying for trademark
registration is a key step for creators, entrepreneurs, and established
brand owners as they move from generating ideas for new products and
services to commercializing the resulting innovations in the
marketplace. The USPTO is focused on incentivizing creativity and
product innovation by removing unnecessary impediments or delays in
securing IP rights, thereby bringing goods and services to impact for
the public good more quickly.
The agency's recent trademark pendency challenge is the result of
several years of sustained increases in trademark application filings
punctuated by an unprecedented, year-long influx during FY 2021 that
created a significant examination backlog. In addressing these
challenges, the USPTO will: (1) reevaluate its operating posture to
maximize efficiency; (2) set data-driven pendency goals; (3) realign
the trademark workforce to maintain stability during workload
fluctuations and optimize pendency goals; and (4) use available
technology solutions to streamline and automate trademark work
processes.
The agency is working diligently to balance timely examination with
trademark quality. Improvements include the deployment of a new
browser-based, end-to-end examination system (TM Exam) designed to
improve examination quality and efficiency, and establishment of a
dedicated Trademark Academy to improve the training experience for new
examiners.
The USPTO is also developing and implementing several strategies to
combat IP violations and protect the Trademark Register via
legislation, IT enhancements, and tactical management programs. For
example, the agency is implementing robotic process automation to
validate trademark application addresses against the U.S. Postal
Service's database, mitigating a key fraud risk. In addition, the USPTO
recently formed the Register Protection Office (RPO), a new
organization within the Office of the Deputy Commissioner for Trademark
Examination Policy dedicated to register protection through efforts
like scam education and prevention.
The USPTO is also leveraging Trademark Modernization Act (TMA)
cancellation provisions to help clear the Trademark Register of
registrations not in use. See Public Law 116-260. The agency
implemented the TMA nonuse cancellation provisions in December 2021,
and in December 2022, implemented additional provisions that shortened
the applicant response period for office actions from six to three
months. See Changes To Implement Provisions of the Trademark
Modernization Act of 2020, 86 FR 64300 (Nov. 17, 2021). The USPTO will
finish implementing the TMA in spring or early summer 2024, when
additional provisions to shorten the period for registrants to respond
to post-registration office actions from six to three months take
effect. See Changes To Implement Provisions of the Trademark
Modernization Act of 2020; Delay of Effective Date, 88 FR 62463 (Sep.
12, 2023).
The USPTO is also committed to generating impactful employee and
customer experiences by maximizing agency operations. The USPTO strives
to be a model employer through its diversity, equity, inclusion, and
accessibility (DEIA) practices. The agency will build upon its existing
diversity and foster greater inclusion to empower the USPTO workforce
to serve the IP community successfully. To accomplish this, the USPTO
will research and implement leading-edge practices related to hiring,
development, advancement, accessibility, and retention, based on
behavioral science research and data, to better integrate DEIA
practices throughout the agency.
The USPTO recognizes that its core operating costs may increase in
future years as the agency works to reduce trademark pendency, improve
examination processes, enhance trademark quality and accuracy, and
protect entrepreneurs and innovators from fraud.
3. Sustainable Funding
The USPTO's five-year forecasts of aggregate trademark costs,
aggregate trademark revenue, and the trademark operating reserve are
inherently uncertain. The Government Accountability Office (GAO)
recommends operating reserves as a best practice for fee-funded
agencies like the
[[Page 20903]]
USPTO, and the trademark operating reserve allows the agency to align
long-term fees and costs and manage fluctuations in actual fee
collections and spending.
The USPTO manages the trademark operating reserve within a range of
acceptable balances and assesses options when projected balances fall
either below or above the range. The agency develops minimum planning
targets to address immediate, unplanned changes in the economic or
operating environment as the reserve builds toward the optimal level.
The USPTO reviews both its minimum and optimal planning targets every
three years to ensure the reserve's operating range mitigates an array
of financial risks. Based on the current risk environment, including
various factors such as economic and funding uncertainty and the
Trademarks program's high percentage of fixed costs, the agency
recently established a minimum operating reserve planning level at 23%
of total spending--about three months' operating expenses (estimated at
$137 million and $159 million from FY 2025 through FY 2029)--and an
optimal long-range target of 50% of total spending--about six months'
operating expenses (estimated at $297 million and $345 million from FY
2025 through FY 2029).
Based on cost and revenue assumptions in the FY 2025 Budget, the
USPTO forecasts that aggregate trademark costs will exceed aggregate
trademark revenue during FY 2024. The agency will finance the shortfall
in trademark operations via the trademark operating reserve. The USPTO
projects that the fee proposals contained in this NPRM will increase
trademark fee collections to sufficiently recover budgeted spending
requirements; modest fee collections above budgeted spending
requirements will replenish and grow the operating reserve each year
from FY 2025 to FY 2029.
These projections are point-in-time estimates and subject to
change. For example, the FY 2025 Budget includes assumptions regarding
filing levels, renewal rates, federally mandated employee pay raises,
workforce productivity, and many other factors. A change in any one of
these variables could have a significant cumulative impact on the
trademark operating reserve balance. As shown in Table 2, presented in
Part III: Estimating Aggregate Costs and Revenue, the operating reserve
balance can change significantly over a five-year planning horizon.
This highlights the agency's financial vulnerability to various risk
factors and the importance of its fee setting authority.
The USPTO will continue assessing the trademark operating reserve
balance against its target balance annually, and at least every three
years, the agency will evaluate whether the minimum and optimal target
balances remain sufficient to provide stable funding. Per USPTO policy,
the agency will consider fee reductions if projections show the
operating reserve balance will exceed its optimal level by 25% for two
consecutive years. In addition, the USPTO will continue to regularly
review its operating budgets and long-range plans to ensure the prudent
use of trademark fees.
4. Comments, Advice, and Recommendations From TPAC
In its report prepared in accordance with the AIA fee setting
authority, TPAC conveyed overall support for the USPTO's efforts to
secure adequate revenue to recover the aggregate estimated costs of
trademark operations. Specifically, the report states, ``[w]e [TPAC]
have no doubt that overall increases are needed to ensure that the
USPTO complies with its statutory mandate to set fees at a level
commensurate with anticipated aggregate costs.'' TPAC Report at 3. TPAC
also expressed general support for the USPTO's stated goals and methods
for achieving aggregate cost recovery but was concerned about some
individual fee adjustments and their potential impacts on trademark
applicants and owners. This NPRM includes additional information that
addresses these comments and additional feedback from the public.
TPAC expressed support for the proposed adjustments to application
filing fees but noted that many public comments centered on proposed
surcharges. TPAC asked the USPTO to consider how it will implement any
surcharges and whether entity discounts may be possible. To address
these concerns, the USPTO includes in this NPRM: (1) information on
specific deficiencies that will trigger the insufficient information
surcharge; (2) additional details that explain the agency's rationale
for the Custom ID proposal; and (3) additional details regarding the ID
character limit proposal. See Part V: Individual Fee Rationale for
additional details. With respect to entity discounts, section 10(a) of
the AIA authorizes the Director to set or adjust any fee established,
authorized, or charged under the Trademark Act but, but it does not
include the authority to provide entity discounts for trademark fees.
TPAC supported proposed fee increases for filing an amendment to
allege use (AAU) and statement of use (SOU) but recommended that the
USPTO modify the initial proposal to make the AAU fee less than the SOU
fee to ``better align incentives for efficiency, because fewer
resources are required to process an AAU.'' TPAC Report at 5. Based on
this recommendation, the USPTO proposes setting the fees for both an
AAU and SOU at $150. While the agency incurs different processing costs
for these services, they have historically had identical fee rates;
maintaining this symmetry will alleviate potential confusion among
stakeholders and future USPTO customers.
TPAC did not support increased fees for fourth and fifth extensions
of time to file an SOU. The committee stated that filers in highly
regulated industries with long product launch timelines, as well as
resource-constrained startups and small businesses, often need
additional extensions. Weighing the need for timely ITU decisions
against potential adverse impacts on innovators and small filers, the
USPTO has opted to not further pursue this proposal.
TPAC expressed a general lack of support for increasing fees for
renewals, declarations of use, and declarations of incontestability.
TPAC is concerned the proposed increases could discourage registrants
from maintaining their registrations and will likely lead to more
common law investigations and higher clearance costs for many trademark
owners. The USPTO acknowledges these concerns. However, the agency has
an obligation to recover the aggregate costs of trademark operations
through user fees, and above-cost post-registration maintenance fees
recover costs incurred by the USPTO during examination. The share of
applications from groups that have been historically less likely to
maintain their registrations has increased. Therefore, the balance
between aggregate revenue derived from application fees and post-
registration maintenance fees must be adjusted to sustain low barriers
to filing new applications.
Although TPAC did not favor higher maintenance fees in general, the
committee offered support for increased fees for foreign and
international registrants under sections 66, 44, and 71, noting that
``[o]wners of these registrations have not been required to prove use
prior to registration'' and ``are more likely to describe an excessive
list of goods and services, to offer suspect specimens and
declarations, and to require auditing.'' TPAC Report at 6. TPAC
recognized that such a proposal could ``implicate many factors,
including compliance with international treaty obligations.'' TPAC
Report at 6.
[[Page 20904]]
The USPTO decided not to charge foreign or international registrants a
higher fee than domestic registrants for these services. The agency
notes that proposed and existing fees address some TPAC concerns
regarding foreign and international registrants. All applications and
registrants are subject to fees for deleting goods, services, and/or
classes following a post-registration audit and would be subject to the
proposed surcharge for each additional group of 1,000 characters.
TPAC supported the proposals for petitions to revive and petitions
to the Director as justified and appropriate.
TPAC expressed support for the USPTO directly recovering a larger
portion of the cost associated with processing letters of protest but
objected to the size of the proposed fee increase, noting that most
public commenters were opposed. TPAC recommended a smaller increase,
given the perceived value of meritorious letters in the examination
process and as a cost-effective mechanism for members of the public to
provide information to examining attorneys. In response, the USPTO has
revised the proposed letter of protest fee downward to $150. See Part
V: Individual Fee Rationale for additional details.
In summary, the USPTO appreciates the overall support and advice
provided by TPAC and stakeholders to increase trademark fees to recover
aggregate cost. After careful consideration of the comments, concerns,
and advice provided in the TPAC Report, and keeping in mind the goals
of this proposed rule, the USPTO elected to adjust two fee proposals
and drop one proposal. The proposed fee structure will allow the USPTO
to maintain trademark operations and pursue the goals and objectives
outlined in its Strategic Plan. The agency looks forward to receiving
additional feedback on this revised proposal during the public comment
period.
C. Summary of Rulemaking Goals and Strategies
The USPTO estimates that the proposed trademark fee schedule will
produce sufficient aggregate revenue to recover the aggregate costs of
trademark operations and ensure financial sustainability for effective
administration of the trademark system. This proposed rule aligns with
the USPTO's four key fee setting policy factors and supports the
agency's mission-focused strategic goals.
V. Individual Fee Rationale
Where unit cost data is available, the USPTO sets some fees at,
above, or below their unit costs to balance the agency's four key fee
setting policy factors as described in Part IV: Rulemaking Goals and
Strategies. The USPTO does not maintain individual historical cost data
for all fees, and therefore some fees are set solely based on the
policy factors. For example, the USPTO sets initial filing fees below
unit cost to promote innovation strategies by reducing barriers to
entry for applicants. To balance the aggregate revenue loss of fees set
below cost, the USPTO must set other fees above unit cost in areas less
likely to impact entrepreneurship (e.g., renewal fees). By setting fees
at particular levels to facilitate effective administration of the
trademark system, the USPTO aims to foster an environment where
examining attorneys can provide, and applicants can receive, prompt,
high-quality examination decisions while recovering costs for workload-
intensive activities.
This proposed rule maintains existing cost differentials for all
paper filings; their processing is generally more costly than
electronic submissions, and current fees do not recover these costs.
1. Trademark Application Filing Fees
Table 3--Trademark Application Filing Fees
----------------------------------------------------------------------------------------------------------------
FY 2022 unit
Description Current fee Proposed fee Dollar change Percent change cost
----------------------------------------------------------------------------------------------------------------
Application (paper), per $750 $850............. $100 13 $1,526
class.
Base application n/a 350.............. n/a n/a n/a
(electronic), per class.
Base application filed with n/a 350.............. n/a n/a n/a
WIPO (Sec. 66(a)), per
class.
Base application filed with n/a 350.............. n/a n/a n/a
WIPO (Sec. 66(a))
(subsequent designation),
per class.
Application (TEAS Plus), per 250 Discontinue...... n/a n/a 373
class.
Application (TEAS Standard), 350 Discontinue...... n/a n/a 504
per class.
Fee for failing to meet TEAS 100 Discontinue...... n/a n/a 3
Plus requirements, per class.
Application fee filed with 500 Discontinue...... n/a n/a 852
WIPO (Sec. 66(a)), per
class.
Subsequent designation fee 500 Discontinue...... n/a n/a 819
filed with WIPO (Sec.
66(a)), per class.
----------------------------------------------------------------------------------------------------------------
The USPTO is proposing changes to application filing fees to
incentivize more complete and timely filings and improve prosecution.
Trademark applicants currently have two filing options via the
Trademark Electronic Application System (TEAS): TEAS Plus and TEAS
Standard. TEAS Plus is the lowest-cost filing option currently provided
by the USPTO but comes with more stringent initial filing requirements.
These applications reduce manual processing and potential for data
entry errors, making them more efficient and complete for both the
filer and the agency. The USPTO incurs fewer costs and impediments
during their examination, thereby expediting processing and reducing
pendency. About half of all trademark applications are filed using TEAS
Plus. TEAS Standard fees are higher than those for TEAS Plus and offer
applicants more options during filing; the higher fees relate to the
higher costs incurred by the USPTO in processing and examining the
application.
The USPTO proposes implementing a single electronic application
filing option with most of the same requirements as TEAS Plus and
eliminating TEAS Standard. In effect, the proposed fee schedule would
discontinue both TEAS Plus and TEAS Standard filing fees, as well as
fees for failing to meet the requirements of a TEAS Plus application,
replacing them with a single electronic filing option. Similar to TEAS,
applicants willing to comply with the proposed requirements in their
initial filing (comparable to TEAS Plus) will pay the lowest fees under
the proposed fee schedule, compared to applicants who fail to meet all
of those requirements (comparable to TEAS Standard). The USPTO does not
anticipate the total number of applications filed each year will change
under the proposed schedule compared
[[Page 20905]]
to the current schedule. The USPTO does anticipate that a larger share
of applicants will take measures to avoid the proposed surcharges
compared to the share of applicants who use the TEAS Plus option under
the current fee schedule. Applications that do not meet all
requirements for the lowest cost electronic filing option are discussed
below.
The proposed fee schedule sets the fee for a base application,
filed electronically, at $350, $100 more than a TEAS Plus application,
to help the agency recover its costs. The USPTO proposes increasing the
paper application fee by $100 to maintain the existing cost
differential between a paper filing and the lowest cost electronic
application.
The USPTO proposes discontinuing current fees for filing an
application under section 66(a) (Madrid Protocol) of the Trademark Act
and setting new fees at $350 per class, as paid in Swiss francs to the
World Intellectual Property Organization (WIPO), in line with the
proposed base application fee under the new single electronic
application filing option.
The USPTO proposes administrative revisions to the regulatory text
in 37 CFR to incorporate the proposed base application fee and
discontinuation of TEAS application fees. These proposed revisions
include replacing references to ``TEAS'' and ``ESTTA'' with
``electronically'' in sections 2.6 and 7.6 to reflect the
discontinuation of TEAS fees under this proposed rule. These
generalized references for electronic filings are more dynamic and will
more easily accommodate any future changes to the USPTO's electronic
filing system.
2. Trademark Application Filing Surcharge Fees
Table 4--Trademark Application Filing Surcharge Fees
----------------------------------------------------------------------------------------------------------------
FY 2022 unit
Description Current fee Proposed fee Dollar change Percent change cost
----------------------------------------------------------------------------------------------------------------
Fee for insufficient information n/a $100 n/a n/a n/a
(Sec. Sec. 1 and 44), per
class..........................
Fee for using the free-form text n/a 200 n/a n/a n/a
box to enter the identification
of goods/services (Sec. Sec.
1 and 44), per class...........
For each additional group of n/a 200 n/a n/a n/a
1,000 characters beyond the
first 1,000 (Sec. Sec. 1 and
44), per class.................
Fee for insufficient information n/a 100 n/a n/a n/a
(Sec. 66(a)), per class......
Fee for using the free-form text n/a 200 n/a n/a n/a
box to enter the identification
of goods/services (Sec.
66(a)), per class..............
For each additional group of n/a 200 n/a n/a n/a
1,000 characters beyond the
first 1,000 (Sec. 66(a)), per
class..........................
----------------------------------------------------------------------------------------------------------------
The USPTO also proposes surcharges to the base application filing
fee to enhance the quality of incoming applications, encourage
efficient application processing, ensure additional examination costs
are paid by those submitting more time-consuming applications, and
reduce pendency. Only those applicants submitting applications that do
not comply with the base filing requirements would pay the proposed
surcharges. Compared to the current TEAS Standard fee that is charged
for applications when one or more TEAS Plus requirements are not met,
the proposed system would impose individual surcharges when certain
requirements are not met.
(i) Insufficient Information Fee
Trademark applications that include the information listed below
allow for more efficient prosecution. Accordingly, applicants who
submit more complete applications benefit from the proposed fee
schedule by avoiding this proposed surcharge, as the USPTO and its
stakeholders benefit from efficient delivery of reliable IP rights.
This proposed rule would impose a $100 fee per class, in addition to
the base fee, on applications that do not include required information
at the time of filing. The information required for a base application
is similar to current TEAS Plus requirements and therefore applicants
are not expected to expend more than a de minimis amount of additional
resources compared to the current TEAS system. The USPTO proposes
reordering and retitling these as ``Requirements for a base
application,'' as provided in 37 CFR 2.22:
(1) The applicant's name and domicile address;
(2) The applicant's legal entity;
(3) The citizenship of each individual applicant, or the state or
country of incorporation or organization of each juristic applicant;
(4) If the applicant is a domestic partnership, the names and
citizenship of the general partners, or if the applicant is a domestic
joint venture, the names and citizenship of the active members of the
joint venture;
(5) If the applicant is a sole proprietorship, the state of
organization of the sole proprietorship and the name and citizenship of
the sole proprietor;
(6) One or more bases for filing that satisfy all the requirements
of Sec. 2.34. If more than one basis is set forth, the applicant must
comply with the requirements of Sec. 2.34 for each asserted basis;
(7) If the application contains goods and/or services in more than
one class, compliance with Sec. 2.86;
(8) A filing fee for each class of goods and/or services, as
required by Sec. 2.6(a)(1)(ii) or (iii);
(9) A verified statement that meets the requirements of Sec. 2.33,
dated and signed by a person properly authorized to sign on behalf of
the owner pursuant to Sec. 2.193(e)(1);
(10) If the applicant does not claim standard characters, the
applicant must attach a digitized image of the mark. If the mark
includes color, the drawing must show the mark in color;
(11) If the mark is in standard characters, a mark comprised only
of characters in the Office's standard character set, typed in the
appropriate field of the application;
(12) If the mark includes color, a statement naming the color(s)
and describing where the color(s) appears on the mark, and a claim that
the color(s) is a feature of the mark;
(13) If the mark is not in standard characters, a description of
the mark;
(14) If the mark includes non-English wording, an English
translation of that wording;
(15) If the mark includes non-Latin characters, a transliteration
of those characters;
(16) If the mark includes an individual's name or likeness, either
(i) a statement that identifies the living individual whose name or
likeness the mark comprises and written consent of
[[Page 20906]]
the individual, or (ii) a statement that the name or likeness does not
identify a living individual (see section 2(c) of the Act);
(17) If the applicant owns one or more registrations for the same
mark, and the owner(s) last listed in Office records of the prior
registration(s) for the same mark differs from the owner(s) listed in
the application, a claim of ownership of the registration(s) identified
by the registration number(s), pursuant to Sec. 2.36;
(18) If the application is a concurrent use application, compliance
with Sec. 2.42;
(19) An applicant whose domicile is not located within the United
States or its territories must designate an attorney as the applicant's
representative, pursuant to Sec. 2.11(a), and include the attorney's
name, postal address, email address, and bar information; and
(20) Correctly classified goods and/or services, with an
identification of goods and/or services from the Office's Acceptable
Identification of Goods and Services Manual within the electronic form.
See Part VI: Discussion of Specific Rules for more information.
The agency will not impose this fee on applications denied a filing
date for failure to satisfy the requirements under 37 CFR 2.21.
(ii) Entering Identifications of Goods and/or Services in the Free-Form
Text Field Fee
Applicants may choose goods and/or services identifications by
selecting them directly from the Trademark Next Generation ID Manual
(ID Manual) in the electronic application or enter them manually in a
free-form text box. The USPTO proposes a $200 fee per class for
descriptions of goods and services entered in the free-form text field.
Generally, examining attorneys do not need to review
identifications of goods and/or services selected directly from the ID
Manual within the electronic application form. Conversely, examining
attorneys must carefully consider identifications entered in a free-
form text box to determine whether the descriptions are acceptable as
written or require amendment to sufficiently specify the nature of the
goods and/or services. Examining attorneys must review each entry to
determine its acceptability, even in situations where an applicant
types or pastes the ID Manual identification, because they do not know
if wording in the free-form text field came from the ID Manual.
Identifying an applicant's goods and/or services with sufficient
specificity is necessary to provide adequate notice to third parties
regarding the goods and/or services in connection with which the
applicant intends to use, or is using, the mark. It also ensures the
applicant pays the corresponding fee for each class of goods and/or
services. Examining attorneys often spend substantial time reviewing
identifications provided in the free-form text field and may initiate
multiple communications with the applicant before determining an
acceptable identification and collecting the appropriate fees. The
proposed surcharge would help recover the additional costs associated
with these more extensive reviews.
(iii) Each Additional 1,000 Characters Beyond 1,000, per Class Fee
In addition to entering identifications in the free-form text
field, some applicants submit extensive lists of goods and/or services.
In more egregious cases, a list may comprise multiple pages and include
goods and services in multiple classes. To ensure that applicants who
submit lengthy identifications pay the costs of reviewing them, the
USPTO proposes a fee of $200 for each additional group of 1,000
characters beyond the first 1,000 characters in the free-form text
field, including punctuation and spaces. The fee would also apply to
amended identifications that exceed the character limit in a response
to an office action. Approximately 9% of trademark applications contain
identifications of goods and/or services that exceed 1,000 characters
per class. Applicants who enter identifications directly from the ID
Manual within the electronic application would not incur this fee, even
if the identification exceeds 1,000 characters.
The USPTO selected a character-based limit for operational
efficiency, as the electronic application system can perform character
counts in real time and alert the applicant when the limit has been
exceeded. A limit based on other criteria, such as a count of separate
goods and/or services, would require examiner review, as automating
such counts is not technologically feasible. Such reviews by an
examining attorney would increase the cost of examination,
counteracting the purpose of the proposed fee, which is to ensure that
applicants who submit lengthy identifications pay the costs of
reviewing them.
3. Amendment To Allege Use and Statement of Use Fees
Table 5--AAU and SOU Fees
----------------------------------------------------------------------------------------------------------------
FY 2022 unit
Description Current fee Proposed fee Dollar change Percent change cost
----------------------------------------------------------------------------------------------------------------
Amendment to allege use (AAU), $200 $250 $50 25 n/a
per class (paper)..............
Statement of use (SOU), per 200 250 50 25 n/a
class (paper)..................
Amendment to allege use (AAU), 100 150 50 50 $117
per class (electronic).........
Statement of use (SOU), per 100 150 50 50 240
class (electronic).............
----------------------------------------------------------------------------------------------------------------
The USPTO proposes a $50 fee increase for AAUs and SOUs (from $100
to $150 per class for electronic filings and $200 to $250 per class for
paper filings). The agency has not adjusted AAU and SOU fees since
2002, even as processing costs increased during the subsequent two
decades. This proposal improves cost recovery and helps rebalance the
fee structure.
4. Post-Registration Maintenance Fees
Table 6--Post-Registration Maintenance Fees
----------------------------------------------------------------------------------------------------------------
FY 2022 unit
Description Current fee Proposed fee Dollar change Percent change cost
----------------------------------------------------------------------------------------------------------------
Sec. 9 registration renewal $500 $550 $50 10 $106
application, per class (paper).
Sec. 8 declaration, per class 325 400 75 23 152
(paper)........................
Sec. 15 declaration, per class 300 350 50 17 152
(paper)........................
[[Page 20907]]
Sec. 71 declaration, per class 325 400 75 23 n/a
(paper)........................
Sec. 9 registration renewal 300 350 50 17 24
application, per class
(electronic)...................
Sec. 8 declaration, per class 225 300 75 33 25
(electronic)...................
Sec. 15 declaration, per class 200 250 50 25 25
(electronic)...................
Sec. 71 declaration, per class 225 300 75 33 6
(electronic)...................
Renewal fee filed at WIPO....... 300 350 50 17 n/a
----------------------------------------------------------------------------------------------------------------
The percentage of trademark registrants choosing to maintain their
registrations is declining. The USPTO expects this trend to continue
due to anticipated growth in application submissions from groups
historically less likely to maintain a registration. Given these
changes in demand and filing behaviors, the agency proposes rebalancing
aggregate revenue derived from renewals and other post-registration
maintenance fees, including declarations of use and incontestability,
to keep barriers to entry low for new applicants.
5. Letter of Protest Fee
Table 7--Letter of Protest Fee
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2022 unit
Description Current fee Proposed fee Dollar change Percent change cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Letter of protest.................................................. $50 $150 $100 200 $312
--------------------------------------------------------------------------------------------------------------------------------------------------------
The USPTO proposes a $100 fee increase for filing a letter of
protest (from $50 to $150). The proposed fee is less than half the
agency's cost of processing a letter of protest, which allows a third
party to bring evidence to the USPTO on the registrability of a mark in
a pending application without filing an opposition with the Trademark
Trial and Appeal Board (TTAB). The letter of protest procedure is not a
substitute for the statutory opposition and cancellation procedures
available to third parties who believe they would be damaged by
registration of the involved mark. Instead, it is intended to assist
examination without causing undue delay or compromising the integrity
and objectivity of the ex parte examination process, which involves
only the applicant and the USPTO.
The USPTO's costs for reviewing and processing each letter of
protest are more than six times the current fee. This imbalance between
the fee collected and the cost to perform the service are compounded by
a substantial increase in letters of protest forwarded to the USPTO
each year, which have risen from about 2,300 in FY 2016 to nearly 4,000
in FY 2023. The agency estimates this volume will grow to more than
5,000 letters annually by FY 2029, further increasing the USPTO's
overall associated costs.
When viewed in the context of USPTO actions because of letters of
protest, the agency's costs are considerable, while the letters have a
minor impact on examination outcomes. During FY 2022, the USPTO decided
4,557 letters of protest, of which 1,433 (31%) were not in compliance
with 37 CFR 2.149 and therefore not included in the record of
examination. Of the letters entered into the record, examining
attorneys issued a refusal based on the asserted ground(s) in 1,213
cases (27% of letters decided). Examining attorneys likely would have
issued a refusal in these cases even without a letter of protest. The
USPTO only identified 27 (0.59%) letters in FY 2022 that corresponded
to an error in publishing a mark for opposition, similar to historical
shares of letters decided each year.
Table 8--Letters of Protest Filed and Letters Corresponding to Situations Where the USPTO Published a Mark for
Opposition in Error, by Fiscal Year
----------------------------------------------------------------------------------------------------------------
Letters
Letters of corresponding to Share of total
Fiscal year protest decided a mark published letters decided
in error (%)
----------------------------------------------------------------------------------------------------------------
2016................................................... 2,258 17 0.75
2017................................................... 2,726 13 0.48
2018................................................... 3,386 28 0.83
2019................................................... 4,106 43 1.05
2020................................................... 3,534 22 0.62
2021................................................... 3,756 39 1.04
2022................................................... 4,557 27 0.59
----------------------------------------------------------------------------------------------------------------
In accordance with the USPTO's fee setting policy factors, this
proposal recovers more of the costs associated with letters of protest,
although the fee remains below the agency's full costs.
[[Page 20908]]
6. Other Petition Fees
Table 9--Other Petition Fees
----------------------------------------------------------------------------------------------------------------
FY 2022 unit
Description Current fee Proposed fee Dollar change Percent change cost
----------------------------------------------------------------------------------------------------------------
Petition to the Director (paper) $350 $500 $150 43 n/a
Petition to revive an 250 350 100 40 n/a
application (paper)............
Petition to the Director 250 400 150 60 886
(electronic)...................
Petition to revive an 150 250 100 67 94
application (electronic).......
----------------------------------------------------------------------------------------------------------------
Optional petitions are a valuable, though costly, part of the
trademark registration process, and other trademark fees subsidize the
USPTO's processing costs. The proposed fee schedule would recover more
costs associated with the extensive and lengthy review these services
require, while also encouraging more timely and efficient filing
behaviors.
VI. Discussion of Specific Rules
The following section describes the changes proposed in this
rulemaking, including all proposed fee amendments, fee
discontinuations, and changes to the regulatory text.
Section 2.6
Section 2.6 is proposed to be amended by revising paragraph (a), to
set forth trademark process fees as authorized under section 10 of the
AIA. The changes to the fee amounts indicated in Sec. 2.6 are shown in
Table 10.
The USPTO proposes to revise the text to (a)(1)(iii) to provide for
filing ``an application electronically'' rather than filing ``a TEAS
Standard application.''
The USPTO proposes to revise (a)(1)(iv) to provide for the proposed
surcharge for insufficient information.
The USPTO proposes to revise (a)(1)(v) to provide for the proposed
surcharge for adding goods and/or services in the free-form text field.
The USPTO proposes adding (a)(1)(vi) to provide for the proposed
surcharge for each additional 1,000 characters.
The USPTO proposes to revise the text to (a)(2)(ii), (a)(3)(ii),
(a)(4)(ii), (a)(5)(ii), (a)(6)(ii), (a)(7)(ii), (a)(8)(ii), (a)(9)(ii),
(a)(10)(ii), (a)(11)(ii), (a)(12)(ii) and (iv), (a)(13)(ii),
(a)(14)(ii), (a)(15)(ii) and (iv), (a)(16)(ii), (a)(17)(ii),
(a)(18)(ii), (v), and (vii), (a)(19)(ii), (a)(20)(ii), (a)(21)(ii),
(a)(22)(ii), (a)(23)(ii), (a)(27), and (a)(28)(ii) and by replacing
references to ``TEAS'' or ``ESTTA'' with ``electronically.''
To clarify fees paid for services provided by the TTAB, the USPTO
proposes to revise the text to (a)(18)(i) and (a)(18)(ii) by removing
references to the TTAB and adding references to the TTAB to (a)(16),
(a)(17), and (a)(18).
Table 10--CFR 2.6 Fee Changes
----------------------------------------------------------------------------------------------------------------
Paper or
CFR section Fee code Description electronic Current fee Proposed fee
----------------------------------------------------------------------------------------------------------------
2.6(a)(1)(i)................. 6001......... Application Paper.......... $750 $850.
(paper), per
class.
2.6(a)(1)(ii)................ 7931......... Application fee Electronic..... 500 Discontinue.
filed with
WIPO (Sec.
66(a)), per
class.
2.6(a)(1)(ii)................ 7933......... Subsequent Electronic..... 500 Discontinue.
designation
fee filed with
WIPO (Sec.
66(a)), per
class.
2.6(a)(1)(ii)................ New.......... Base Electronic..... n/a $350.
application
filed with
WIPO (Sec.
66(a)), per
class.
2.6(a)(1)(ii)................ New.......... Base Electronic..... n/a $350.
application
filed with
WIPO (Sec.
66(a))
(subsequent
designation),
per class.
2.6(a)(1)(iii)............... 7009......... Application Electronic..... 350 Discontinue.
(TEAS
Standard), per
class.
2.6(a)(1)(iii)............... New.......... Base Electronic..... n/a $350.
application,
per class.
2.6(a)(1)(iv)................ 7007......... Application Electronic..... 250 Discontinue.
(TEAS Plus),
per class.
2.6(a)(1)(iv)................ New.......... Fee for Paper.......... n/a $100.
insufficient
information
(Sec. Sec.
1 and 44), per
class.
2.6(a)(1)(iv)................ New.......... Fee for Electronic..... n/a $100.
insufficient
information
(Sec. Sec.
1 and 44), per
class.
2.6(a)(1)(iv)................ New.......... Fee for Electronic..... n/a $100.
insufficient
information
(Sec.
66(a)), per
class.
2.6(a)(1)(v)................. 6008......... Fee for failing Paper.......... 100 Discontinue.
to meet TEAS
Plus
requirements,
per class.
2.6(a)(1)(v)................. 7008......... Fee for failing Electronic..... 100 Discontinue.
to meet TEAS
Plus
requirements,
per class.
2.6(a)(1)(v)................. New.......... Fee for using Paper.......... n/a $200.
the free-form
text box to
enter the
identification
of goods/
services (Sec.
Sec. 1 and
44), per class.
2.6(a)(1)(v)................. New.......... Fee for using Electronic..... n/a $200.
the free-form
text box to
enter the
identification
of goods/
services (Sec.
Sec. 1 and
44), per class.
[[Page 20909]]
2.6(a)(1)(v)................. New.......... Fee for using Electronic..... n/a $200.
the free-form
text box to
enter the
identification
of goods/
services (Sec.
66(a)), per
class.
2.6(a)(1)(vi)................ New.......... For each Paper.......... n/a $200.
additional
group of 1,000
characters
beyond the
first 1,000
(Sec. Sec.
1 and 44), per
class (paper).
2.6(a)(1)(vi)................ New.......... For each Electronic..... n/a $200.
additional
group of 1,000
characters
beyond the
first 1,000
(Sec. Sec.
1 and 44), per
class.
2.6(a)(1)(vi)................ New.......... For each Electronic..... n/a $200.
additional
group of 1,000
characters
beyond the
first 1,000
(Sec.
66(a)), per
class.
2.6(a)(2)(i)................. 6002......... Amendment to Paper.......... 200 $250.
allege use
(AAU), per
class.
2.6(a)(2)(ii)................ 7002......... Amendment to Electronic..... 100 $150.
allege use
(AAU), per
class.
2.6(a)(3)(i)................. 6003......... Statement of Paper.......... 200 $250.
use (SOU), per
class.
2.6(a)(3)(ii)................ 7003......... Statement of Electronic..... 100 $150.
use (SOU), per
class.
2.6(a)(5)(i)................. 6201......... Sec. 9 Paper.......... 500 $550.
registration
renewal
application,
per class.
2.6(a)(5)(ii)................ 7201......... Sec. 9 Electronic..... 300 $350.
registration
renewal
application,
per class.
2.6(a)(12)(i)................ 6205......... Sec. 8 Paper.......... 325 $400.
declaration,
per class.
2.6(a)(12)(ii)............... 7205......... Sec. 8 Electronic..... 225 $300.
declaration,
per class.
2.6(a)(13)(i)................ 6208......... Sec. 15 Paper.......... 300 $350.
declaration,
per class.
2.6(a)(13)(ii)............... 7208......... Sec. 15 Electronic..... 200 $250.
declaration,
per class.
2.6(a)(15)(i)................ 6005......... Petition to the Paper.......... 350 $500.
Director.
2.6(a)(15)(ii)............... 7005......... Petition to the Electronic..... 250 $400.
Director.
2.6(a)(15)(iii).............. 6010......... Petition to Paper.......... 250 $350.
revive an
application.
2.6(a)(15)(iv)............... 7010......... Petition to Electronic..... 150 $250.
revive an
application.
2.6(a)(25)................... 7011......... Letter of Electronic..... 50 $150.
protest.
----------------------------------------------------------------------------------------------------------------
Section 2.22
Section 2.22 is proposed to be amended by revising the section
heading and paragraph (a) to set forth the requirements for a base
application fee.
The USPTO proposes to revise the section heading to read
``Requirements for base application fee.''
The USPTO proposes to revise the introductory text to paragraph (a)
to reflect the requirements for an application for registration under
section 1 or section 44 of the Act that meet the requirements for a
filing date under Sec. 2.21 to pay the base application fee.
The USPTO proposes to remove paragraph (a)(7) and redesignate
paragraphs (a)(8) through (a)(20) as paragraphs (a)(7) through (a)(19).
The USPTO proposes to revise the text to redesignated paragraph
(a)(11) by replacing the reference to ``TEAS Plus form'' with
``application.''
The USPTO proposes to revise the text in paragraph (17)
introductory text and (17)(ii) by replacing references to ``portrait''
with ``likeness'' to maintain consistency within the paragraph.
The USPTO proposes adding paragraph (a)(20) which establishes the
requirement of using correctly classified goods and/or services from
the ID Manual.
The USPTO proposes to revise paragraph (b) to provide that an
applicant must pay the proposed fee for insufficient information, per
class if the application fails to satisfy any of the requirements in
paragraph (a)(1) through (19) of this section.
The USPTO proposes to revise paragraph (c) to provide that an
applicant must pay the proposed fee for using the free-form text box to
enter the identification of goods/services, per class if the
application fails to satisfy the requirements of paragraph (a)(20) of
this section.
The USPTO proposes to revise paragraph (d) to provide that an
applicant must pay the proposed fee for each additional group of 1,000
characters beyond the first 1,000, per class, if the application fails
to satisfy the requirements of paragraph (a)(20) of this section, and
the identification of goods and/or services in any class exceeds 1,000
characters.
Section 2.71
Section 2.71 is proposed to be amended by revising the introductory
text and paragraph (a) to set forth amendments to correct
informalities.
The USPTO proposes to revise the introductory text by replacing the
period at the end of the paragraph with a colon.
The USPTO proposes to revise paragraph (a) by redesignating
paragraph (a) as paragraph (a)(1). The USPTO proposes adding paragraph
(a)(2) to provide that amendments to the identification of goods and/or
services
[[Page 20910]]
that result in the identification exceeding 1,000 characters in any
class will be subject to the proposed fee for each additional 1,000
characters beyond the first 1,000, per class.
Section 7.6
Section 7.6 is proposed to be amended by revising paragraph (a) to
set forth the schedule of U.S. process fees as authorized under section
10 of the AIA. The changes to the fee amounts indicated in Sec. 7.6
are shown in Table 11.
The USPTO proposes to revise the text to (a)(1)(ii), (a)(2)(ii),
(a)(3)(ii), (a)(4)(ii), (a)(5)(ii), and (a)(6)(ii) and (iv) and replace
references to ``TEAS'' or ``ESTTA'' with ``electronically.''
Table 11--CFR Section 7.6 Fee Changes
----------------------------------------------------------------------------------------------------------------
Paper or
CFR section Fee code Description electronic Current fee Proposed fee
----------------------------------------------------------------------------------------------------------------
7.6(a)(6)(i)................. 6905 Sec. 71 Paper.......... $325 $400
declaration,
per class.
7.6(a)(6)(ii)................ 7905 Sec. 71 Electronic..... 225 300
declaration,
per class.
----------------------------------------------------------------------------------------------------------------
VII. Rulemaking Considerations
A. America Invents Act
This proposed rule seeks to set and adjust fees under section 10(a)
of the AIA as amended by the SUCCESS Act. Section 10(a) authorizes the
Director to set or adjust by rule any trademark fee established,
authorized, or charged under the Trademark Act for any services
performed by, or materials furnished by, the USPTO (see section 10 of
the AIA, Pub. L. 112-29, 125 Stat. 284, 316-17, as amended by Pub. L.
115-273, 132 Stat. 4158). Section 10 authority includes flexibility to
set individual fees in a way that furthers key policy factors, while
taking into account the cost of the respective services.
Section 10(e) sets forth the general requirements for rulemakings
that set or adjust fees under this authority. In particular, section
10(e)(1) requires the Director to publish in the Federal Register any
proposed fee change under section 10 and include in such publication
the specific rationale and purpose for the proposal, including the
possible expectations or benefits resulting from the proposed change.
For such rulemakings, the AIA requires that the USPTO provide a public
comment period of not less than 45 days.
TPAC advises the Under Secretary of Commerce for Intellectual
Property and Director of the USPTO on the management, policies, goals,
performance, budget, and user fees of trademark operations. When
adopting fees under section 10, the AIA requires the Director to
provide TPAC with the proposed fees at least 45 days prior to
publishing them in the Federal Register. TPAC then has at least 30 days
within which to deliberate, consider, and comment on the proposal, as
well as hold a public hearing(s) on the proposed fees. TPAC must make a
written report available to the public of the comments, advice, and
recommendations of the committee regarding the proposed fees before the
USPTO issues any final fees. The USPTO is required to consider and
analyze any comments, advice, or recommendations received from TPAC
before finally setting or adjusting fees.
Consistent with this framework, on May 8, 2023, the Director
notified TPAC of the USPTO's intent to set and adjust trademark fees
and submitted a preliminary trademark fee proposal with supporting
materials. The preliminary trademark fee proposal and associated
materials are available on the fee setting section of the USPTO website
at https://www.uspto.gov/FeeSettingAndAdjusting. TPAC held a public
hearing at the USPTO's headquarters in Alexandria, Virginia, on June 5,
2023, and members of the public were given the opportunity to provide
oral testimony. A transcript of the hearing is available on the USPTO
website at https://www.uspto.gov/sites/default/files/documents/TPAC-Fee-Setting-Hearing-Transcript-20230605.pdf. Members of the public were
also given the opportunity to submit written comments for TPAC to
consider, and these comments are available on Regulations.gov at
https://www.regulations.gov/docket/PTO-T-2023-0016. On August 14, 2023,
TPAC issued a written report setting forth in detail its comments,
advice, and recommendations regarding the preliminary proposed fees.
The TPAC Report is available on the USPTO website at https://www.uspto.gov/sites/default/files/documents/TPAC-Report-on-2023-Fee-Proposal.docx. The USPTO considered and analyzed all comments, advice,
and recommendations received from TPAC before publishing this NPRM.
Further discussion of the TPAC Report can be found in the section
titled ``Fee Setting Considerations.''
B. Regulatory Flexibility Act (RFA)
The USPTO publishes this Initial Regulatory Flexibility Analysis
(IRFA) as required by the RFA (5 U.S.C. 601 et seq.) to examine the
impact of the USPTO's proposed changes to trademark fees on small
entities and to seek the public's views. Under the RFA, whenever an
agency is required by 5 U.S.C. 553 (or any other law) to publish an
NPRM, the agency must prepare and make available for public comment an
IRFA, unless the agency certifies under 5 U.S.C. 605(b) that the
proposed rule, if implemented, will not have a significant economic
impact on a substantial number of small entities (see 5 U.S.C. 603,
605). This IRFA incorporates discussion of the proposed changes in Part
VI: Discussion of Proposed Rule Changes above.
Items 1-5 below discuss the five items specified in 5 U.S.C.
603(b)(1)-(5) to be addressed in an IRFA. Item 6 below discusses
alternatives to this proposal that the USPTO considered, as specified
in 5 U.S.C. 603(c).
1. A Description of the Reasons Why the Action by the Agency Is Being
Considered
Section 10 of the AIA authorizes the Director of the USPTO to set
or adjust by rule any trademark fee established, authorized, or charged
under title 35, U.S.C., for any services performed, or materials
furnished, by the USPTO. Section 10 prescribes that trademark fees may
be set or adjusted only to recover the aggregate estimated costs for
processing, activities, services, and materials relating to trademarks,
including USPTO administrative costs with respect to such trademark
fees. The proposed fee schedule will recover the aggregate costs of
trademark operations while enabling the USPTO to predictably finance
the agency's daily operations and mitigate financial risks.
2. The Objectives of, and Legal Basis for, the Proposed Rule
The policy objectives of this proposed rule are to: (1) recover
aggregate costs to finance the mission, strategic goals, and priorities
of the USPTO; (2) enable financial sustainability; (3) better align
fees with costs of provided services; (4) improve processing
efficiencies; (5) enhance the quality of incoming
[[Page 20911]]
applications; and (6) offer affordable processing options to
stakeholders. Additional information on the USPTO's goals and operating
requirements may be found in the ``USPTO FY 2025 President's Budget
Request,'' available on the USPTO website at https://www.uspto.gov/about-us/performance-and-planning/budget-and-financial-information. The
legal basis for this proposed rule is section 10 of the AIA, as
amended, which provides authority for the Director to set or adjust by
rule any fee established, authorized, or charged under the Trademark
Act. See also section 31 of the Trademark Act, 15 U.S.C. 1113.
3. A Description of and, Where Feasible, an Estimate of the Number of
Affected Small Entities to Which the Proposed Rule Will Apply
The USPTO does not collect or maintain statistics in trademark
cases on small-versus large-entity applicants, and this information
would be required to determine the number of small entities that would
be affected by this proposed rule.
This proposed rule would apply to any entity filing trademark
documents with the USPTO. The USPTO estimates, based on the assumptions
in the FY 2025 Budget, that during the first full fiscal year under the
fees as proposed (FY 2026), the USPTO would collect approximately $144
million more in trademark processing and TTAB fees compared to
projected fee collections under the current fee schedule. The USPTO
would receive an additional $99 million in application filing fees,
including applications filed through the Madrid Protocol and
application surcharges; $4 million more from petitions, letters of
protest, and requests for reconsideration; $7 million more from SOU and
AAU fees; and $35 million more for post-registration maintenance fees,
including sections 9 and 66 renewals and sections 8, 71, and 15
declarations.
The USPTO collects fees for trademark-related services at different
points in the trademark application examination process and over the
registration life cycle. In FY 2023, application filing fees made up
about 54% of all trademark fee collections. Fees for proceedings and
appeals before the TTAB comprised 3% of revenues. Fees from other
trademark activities, petitions, assignments and certifications, and
Madrid processing totaled approximately 5% of revenues. Fees for post-
registration and intent-to-use filings, which subsidize the costs of
filing, search, examination, and the TTAB, comprised 38%.
The USPTO bases its five-year estimated aggregate trademark fee
revenue on the number of trademark applications and other fee-related
filings it expects for a given fiscal year; work it expects to process
in a given fiscal year (an indicator of fees paid after the agency
performs work, such as SOU fees); expected examination and process
requests in a given fiscal year; and the expected number of post-grant
decisions to maintain trademark protection in a given fiscal year.
Within its iterative process for estimating aggregate revenue, the
USPTO adjusts individual fee rates up or down based on policy and cost
considerations and then multiplies the resulting fee rates by
appropriate workload volumes to calculate a revenue estimate for each
fee, which is then used to calculate aggregate revenue. Additional
details about the USPTO's aggregate revenue, including projected
workloads by fee, are available on the fee setting section of the USPTO
website at https://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
4. A Description of the Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Proposed Rule, Including an Estimate of
the Classes of Small Entities Which Will Be Subject to the Requirement
and the Type of Professional Skills Necessary for Preparation of the
Report or Record
This proposed rule imposes no new reporting or recordkeeping
requirements. The main purpose of this proposed rule is to set and
adjust trademark fees.
5. Identification, to the Extent Practicable, of All Relevant Federal
Rules Which May Duplicate, Overlap, or Conflict With the Proposed Rules
This proposed rule would not duplicate, overlap, or conflict with
any other Federal rules.
6. A Description of Any Significant Alternatives to the Proposed Rules
Which Accomplish the Stated Objectives of Applicable Statutes and Which
Minimize Any Significant Economic Impact of the Proposed Rules on Small
Entities
The USPTO considered four alternatives, based on the assumptions
found in the FY 2025 Budget, before recommending this proposal: (1) the
adjustments included in this proposal; (2) fees set at the unit cost of
providing individual services based on FY 2022 costs; (3) an across-
the-board fee adjustment of 27%; and (4) no change to the baseline of
current fees. The four alternatives are explained here with additional
information regarding the development of each proposal and aggregate
revenue estimate. A description of the Aggregate Revenue Estimating
Methodology is available on the fee setting section of the USPTO
website at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
a. Alternative 1: Proposed Alternative--Set and Adjust Trademark Fees
The USPTO proposes to set and adjust trademark fees codified in 37
CFR parts 2 and 7. This proposal adjusts fees for all application
filing types (i.e., paper applications, electronic applications, and
requests for extension of protection under section 66(a) of the
Trademark Act (15 U.S.C. 1141f)), including new surcharge fees. The
USPTO also proposes to increase other trademark fees to promote
effective administration of the trademark system, including fees for
post-registration maintenance under sections 8, 9, and 71, certain
petitions to the Director, and filing a letter of protest.
The USPTO chose the alternative proposed in this rule because it
will enable the agency to achieve its goals effectively and efficiently
without unduly burdening small entities, erecting barriers to entry, or
stifling incentives to innovate. The alternative proposed here finances
the USPTO's objectives for meeting its goals outlined in the Strategic
Plan. These goals include optimizing trademark application pendency
through the promotion of efficient operations and filing behaviors,
issuing accurate and reliable trademark registrations, and encouraging
access to the trademark system for all stakeholders. The proposed
alternative will benefit all applicants and registrants by allowing the
agency to grant registrations sooner and more efficiently. All
trademark applicants should benefit from the efficiencies realized
under the proposed alternative.
The USPTO anticipates that the impact of an increased fee on letter
of protest filers would be small. The proposed fee of $150 is set at a
level low enough to enable the filing of relevant, well-supported
letters, but high enough to recover some additional processing costs.
The USPTO enacted the current fee for letters of protest on November
17, 2020 (85 FR 73197) and implemented it on January 2, 2021. Despite
this fee, the USPTO received almost 4,000 letters in each of the last
two fiscal years and expects the volume will grow to more than 5,000
letters per year by FY 2029.
[[Page 20912]]
The proposed fee schedule for this alternative is available on the
fee setting section of the USPTO website at https://www.uspto.gov/FeeSettingAndAdjusting, in the document titled ``Setting and Adjusting
Trademark Fees During Fiscal Year 2025-IRFA Tables.''
b. Other Alternatives Considered
In addition to the proposed fee schedule set forth in Alternative
1, the USPTO considered three other alternative approaches. The agency
calculated proposed fees and the resulting revenue derived from each
alternative scenario. The proposed fees and their corresponding revenue
tables are available on the fee setting section of the USPTO website at
https://www.uspto.gov/FeeSettingAndAdjusting. Please note, only the
fees outlined in Alternative 1 are proposed in this NPRM; other
alternative scenarios are shown only to demonstrate the analysis of
other options.
Alternative 2: Unit Cost Recovery
The USPTO considered an alternative that would set all trademark
fees to recover 100% of unit costs associated with each service, based
on historical unit costs. The USPTO uses the ABI to determine the unit
costs of activities that contribute to the services and processes
associated with individual fees. It is common practice in the Federal
Government to set a particular fee at a level that recovers the cost of
a given good or service. OMB Circular A-25, User Charges, states that
user charges (fees) should be sufficient to recover the full cost to
the Federal Government of providing the particular service, resource,
or good when the Government is acting in its capacity as sovereign.
Under the USPTO's unit cost recovery alternative, fees are generally
set in line with the FY 2022 costs of providing the service. The agency
recognizes that this approach does not account for changes in the fee
structure or inflationary factors that could likely increase the costs
of certain trademark services and necessitate higher fees in the
outyears. However, the USPTO contends that FY 2022 data is the best
available to inform this analysis.
This alternative does not align well with the strategic and policy
goals of this proposed rule. It would produce a structure in which
application and processing fees would increase significantly for all
applicants, and post-registration maintenance filing fees would
decrease dramatically when compared with current fees. The USPTO
rejected this alternative because it does not address improvements in
fee design to accomplish the agency's stated objectives of encouraging
broader usage of IP rights-protection mechanisms and participation by
more trademark owners, as well as practices that improve process
efficiency.
The fee schedule for this alternative is available on the fee
setting section of the USPTO website at https://www.uspto.gov/FeeSettingAndAdjusting, in the document titled ``Setting and Adjusting
Trademark Fees During Fiscal Year 2025--IRFA Tables.''
Alternative 3: Across-the-Board Adjustment
The USPTO considered a 27% across-the-board increase for all fees.
This alternative would maintain the status quo structure of cost
recovery, where processing and examination costs are subsidized by fees
for ITU extensions and post-registration maintenance filings (which
exceed the cost of performing these services), given that all fees
would be adjusted by the same escalation factor. This fee schedule
would continue to promote innovation strategies and allow applicants to
gain access to the trademark system through fees set below cost, while
registrants pay maintenance fees above cost to subsidize the below-cost
front-end fees. This alternative would also generate sufficient
aggregate revenue to recover aggregate operating costs.
The agency ultimately rejected this proposal. Unlike the proposed
fee schedule, it would not enhance the efficiency of trademark
processing and offer no new incentives for users to file more efficient
and complete applications.
The proposed fee schedule for this alternative is available in the
document titled ``Initial Regulatory Flexibility Act Tables'' at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.
Alternative 4: Baseline (Current Fee Schedule)
The final alternative the agency considered would leave all
trademark fees as currently set. The USPTO rejected this alternative
because, due to changes in demand for certain services and rising
costs, a fee increase is necessary to meet future budgetary
requirements as described in the FY 2025 Budget. Under this
alternative, the USPTO would expect to collect sufficient revenue to
continue executing only some, but not all, trademark priorities. This
approach would not provide sufficient aggregate revenue to accomplish
the USPTO's rulemaking goals as stated in Part IV: Rulemaking Goals and
Strategies. Improvement activities, including better protecting the
Trademark Register through legislation, enhanced IT, and tactical
management programs would continue, but at a significantly slower rate
as increases in core trademark examination costs crowd out funding for
other improvements. Likewise, without a fee increase, the USPTO would
deplete its trademark operating reserve, leaving the agency vulnerable
to fiscal and economic events. This alternative would expose core
operations to unacceptable levels of financial risk and position the
USPTO to return to making inefficient, short-term funding decisions.
The fee schedule for this alternative is available on the fee
setting section of the USPTO website at https://www.uspto.gov/FeeSettingAndAdjusting, in the document titled ``Setting and Adjusting
Trademark Fees During Fiscal Year 2025--IRFA Tables.''
C. Executive Order 12866 (Regulatory Planning and Review)
This rulemaking has been determined to be Significant for purposes
of Executive Order (E.O.) 12866 (Sept. 30, 1993), as amended by E.O.
14094 (April 6, 2023), Modernizing Regulatory Review.
D. Executive Order 13563 (Improving Regulation and Regulatory Review)
The USPTO has complied with E.O. 13563 (Jan. 18, 2011).
Specifically, the USPTO has, to the extent feasible and applicable: (1)
made a reasoned determination that the benefits justify the costs of
this proposed rule; (2) tailored this proposed rule to impose the least
burden on society consistent with obtaining the regulatory objectives;
(3) selected a regulatory approach that maximizes net benefits; (4)
specified performance objectives; (5) identified and assessed available
alternatives; (6) involved the public in an open exchange of
information and perspectives among experts in relevant disciplines,
affected stakeholders in the private sector, and the public as a whole,
and provided online access to the rulemaking docket; (7) attempted to
promote coordination, simplification, and harmonization across
government agencies and identified goals designed to promote
innovation; (8) considered approaches that reduce burdens and maintain
flexibility and freedom of choice for the public; and (9) ensured the
objectivity of scientific and technological information and processes.
[[Page 20913]]
E. Executive Order 13132 (Federalism)
This rulemaking does not contain policies with federalism
implications sufficient to warrant preparation of a Federalism
Assessment under E.O. 13132 (Aug. 4, 1999).
F. Executive Order 13175 (Tribal Consultation)
This rulemaking will not: (1) have substantial direct effects on
one or more Indian tribes; (2) impose substantial direct compliance
costs on Indian tribal governments; or (3) preempt tribal law.
Therefore, a tribal summary impact statement is not required under E.O.
13175 (Nov. 6, 2000).
G. Executive Order 13211 (Energy Effects)
This rulemaking is not a significant energy action under E.O. 13211
because this proposed rulemaking is not likely to have a significant
adverse effect on the supply, distribution, or use of energy.
Therefore, a Statement of Energy Effects is not required under E.O.
13211 (May 18, 2001).
H. Executive Order 12988 (Civil Justice Reform)
This rulemaking meets applicable standards to minimize litigation,
eliminate ambiguity, and reduce burden as set forth in sections 3(a)
and 3(b)(2) of E.O. 12988 (Feb. 5, 1996).
I. Executive Order 13045 (Protection of Children)
This rulemaking does not concern an environmental risk to health or
safety that may disproportionately affect children under E.O. 13045
(Apr. 21, 1997).
J. Executive Order 12630 (Taking of Private Property)
This rulemaking will not affect a taking of private property or
otherwise have taking implications under E.O. 12630 (Mar. 15, 1988).
K. Congressional Review Act
Under the Congressional Review Act provisions of the Small Business
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.),
prior to issuing any final rule, the USPTO will submit a report
containing the rule and other required information to the United States
Senate, the United States House of Representatives, and the Comptroller
General of the GAO. The changes in this proposed rule are expected to
result in an annual effect on the economy of $100 million or more, a
major increase in costs or prices, or significant adverse effects on
competition, employment, investment, productivity, innovation, or the
ability of United States-based enterprises to compete with foreign-
based enterprises in domestic and export markets. Therefore, this
proposed rule is a ``major rule'' as defined in 5 U.S.C. 804(2).
L. Unfunded Mandates Reform Act of 1995
The proposed changes set forth in this rulemaking do not involve a
Federal intergovernmental mandate that will result in the expenditure
by State, local, and tribal governments, in the aggregate, of $100
million (as adjusted) or more in any one year, or a Federal private
sector mandate that will result in the expenditure by the private
sector of $100 million (as adjusted) or more in any one year and will
not significantly or uniquely affect small governments. Therefore, no
actions are necessary under the provisions of the Unfunded Mandates
Reform Act of 1995. See 2 U.S.C. 1501 et seq.
M. National Environmental Policy Act
This rulemaking will not have any effect on the quality of the
environment and is thus categorically excluded from review under the
National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.
N. National Technology Transfer and Advancement Act
The requirements of section 12(d) of the National Technology
Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not
applicable because this rulemaking does not contain provisions that
involve the use of technical standards.
O. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.)
requires that the USPTO consider the impact of paperwork and other
information collection burdens imposed on the public. This proposed
rule involves information collection requirements which are subject to
review by the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3549). The collection of information involved in this proposed
rule has been reviewed and previously approved by OMB under control
numbers 0651-0009, 0651-0050, 0651-0051, 0651-0054, 0651-0055, 0651-
0056, 0651-0061, and 0651-0086.
Notwithstanding any other provision of law, no person is required
to respond to nor shall any person be subject to a penalty for failure
to comply with a collection of information subject to the requirements
of the Paperwork Reduction Act unless that collection of information
displays a currently valid OMB control number.
P. E-Government Act Compliance
The USPTO is committed to compliance with the E-Government Act to
promote the use of the internet and other information technologies, to
provide increased opportunities for citizen access to government
information and services, and for other purposes.
List of Subjects
37 CFR Part 2
Administrative practice and procedure, Courts, Lawyers, Trademarks.
37 CFR Part 7
Administrative practice and procedure, Trademarks.
For the reasons set forth in the preamble, and under the authority
contained in section 10(a) of the AIA, 15 U.S.C. 1113, 1123, and 35
U.S.C. 2, as amended, 37 CFR parts 2 and 7 are proposed to be amended
as follows:
PART 2--RULES OF PRACTICE IN TRADEMARK CASES
0
1. The authority citation for part 2 continues to read as follows:
Authority: 15 U.S.C. 1113, 1123; 35 U.S.C. 2; sec. 10, Pub. L.
112-29, 125 Stat. 284; Pub. L. 116-260, 134 Stat. 1182, unless
otherwise noted. Sec. 2.99 also issued under secs. 16, 17, 60 Stat.
434; 15 U.S.C. 1066, 1067.
0
2. Section 2.6 is amended by:
0
a. Revising paragraphs (a)(1)(i) through (v);
0
b. Adding paragraph (a)(1)(vi); and
0
c. Revising paragraphs (a)(2)(i) and (ii), (3)(i) and (ii), (4)(ii),
(5)(i) and (ii), (6)(ii), (7)(ii), (8)(ii), (9)(ii), (10)(ii),
(11)(ii), (12)(i), (ii), and (iv), (13)(i) and (ii), (14)(ii), (15)(i)
through (iv), (16) introductory text, (16)(ii), (17) introductory text,
(17)(ii), (18) introductory text, (18)(i), (ii), (v), (vii), (19)(ii),
(20)(ii), (21)(ii), (22)(ii), (23)(ii), (25), (27), and (28)(ii).
The revisions and additions read as follows:
Sec. 2.6 Trademark fees.
(a) * * *
(1) * * *
(i) For filing an application on paper, per class--$850.00.
(ii) For filing an application under section 66(a) of the Act, per
class--$350.00.
(iii) For filing an application electronically, per class--$350.00.
(iv) Additional fee under Sec. 2.22(b), per class--$100.00.
(v) Additional fee under Sec. 2.22(c), per class--$200.00.
[[Page 20914]]
(vi) Additional fee under Sec. 2.22(d) for each additional 1,000
characters in identifications of goods/services beyond the first 1,000
characters, per class--$200.00.
(2) * * *
(i) For filing an amendment to allege use under section 1(c) of the
Act on paper, per class--$250.00.
(ii) For filing an amendment to allege use under section 1(c) of
the Act electronically, per class--$150.00.
(3) * * *
(i) For filing a statement of use under section 1(d)(1) of the Act
on paper, per class--$250.00.
(ii) For filing a statement of use under section 1(d)(1) of the Act
electronically, per class--$150.00.
(4) * * *
(ii) For filing a request under section 1(d)(2) of the Act for a
six-month extension of time for filing a statement of use under section
1(d)(1) of the Act electronically, per class--$125.00.
(5) * * *
(i) For filing an application for renewal of a registration on
paper, per class--$550.00.
(ii) For filing an application for renewal of a registration
electronically, per class--$350.00.
(6) * * *
(ii) Additional fee for filing a renewal application during the
grace period electronically, per class--$100.00.
(7) * * *
(ii) For filing to publish a mark under section 12(c), per class
electronically--$100.00.
(8) * * *
(ii) For issuing a new certificate of registration upon request of
registrant, request filed electronically--$100.00.
(9) * * *
(ii) For a certificate of correction of registrant's error, request
filed electronically--$100.00.
(10) * * *
(ii) For filing a disclaimer to a registration electronically--
$100.00.
(11) * * *
(ii) For filing an amendment to a registration electronically--
$100.00.
(12) * * *
(i) For filing an affidavit under section 8 of the Act on paper,
per class--$400.00.
(ii) For filing an affidavit under section 8 of the Act
electronically, per class--$300.00.
(iv) For deleting goods, services, and/or classes after submission
and prior to acceptance of an affidavit under section 8 of the Act
electronically, per class--$250.00.
(13) * * *
(i) For filing an affidavit under section 15 of the Act on paper,
per class--$350.00.
(ii) For filing an affidavit under section 15 of the Act
electronically, per class--$250.00.
(14) * * *
(ii) Additional fee for filing a section 8 affidavit during the
grace period electronically, per class--$100.00.
(15) * * *
(i) For filing a petition under Sec. 2.146 or Sec. 2.147 on
paper--$500.00.
(ii) For filing a petition under Sec. 2.146 or Sec. 2.147
electronically--$400.00.
(iii) For filing a petition under Sec. 2.66 on paper--$350.00.
(iv) For filing a petition under Sec. 2.66 electronically--
$250.00.
(16) Petition to cancel to the Trademark Trial and Appeal Board.
* * * * *
(ii) For filing a petition to cancel electronically, per class--
$600.00.
(17) Notice of opposition to the Trademark Trial and Appeal Board.
* * * * *
(ii) For filing a notice of opposition electronically, per class--
$600.00.
(18) Ex parte appeal to the Trademark Trial and Appeal Board.
(i) For filing an ex parte appeal on paper, per class--$325.00.
(ii) For filing an ex parte appeal electronically, per class--
$225.00.
* * * * *
(v) For filing a second or subsequent request for an extension of
time to file an appeal brief electronically, per application--$100.00.
* * * * *
(vii) For filing an appeal brief electronically, per class--
$200.00.
(19) * * *
(ii) Request to divide an application filed electronically, per new
application created--$100.00.
(20) * * *
(ii) For correcting a deficiency in a section 8 affidavit via
electronic filing--$100.00.
(21) * * *
(ii) For correcting a deficiency in a renewal application via
electronic filing--$100.00.
(22) * * *
(ii) For filing a request for an extension of time to file a notice
of opposition under Sec. 2.102(c)(1)(ii) or (c)(2) electronically--
$200.00.
(23) * * *
(ii) For filing a request for an extension of time to file a notice
of opposition under Sec. 2.102(c)(3) electronically--$400.00.
* * * * *
(25) Letter of protest. For filing a letter of protest, per subject
application--$150.00.
* * * * *
(27) Extension of time for filing a response to a non-final Office
action under Sec. 2.93(b)(1). For filing a request for extension of
time for filing a response to a non-final Office action under Sec.
2.93(b)(1) electronically--$125.00.
(28) * * *
(ii) For filing a request for an extension of time for filing a
response to an Office action under Sec. 2.62(a)(2) electronically--
$125.00.
* * * * *
0
3. Section 2.22 is amended by:
0
a. Revising the section heading; and
0
b. Revising paragraph (a) introductory text, and (a)(7) through (20),
and (b) through (d).
The revisions read as follows:
Sec. 2.22 Requirements for base application fee.
(a) An application for registration under section 1 and/or section
44 of the Act that meets the requirements for a filing date under Sec.
2.21 will be subject only to the filing fee under Sec. 2.6(a)(1)(iii),
and an application under section 66(a) of the Act will be subject only
to the filing fee under Sec. 2.6(a)(1)(ii), if it includes:
* * * * *
(7) If the application contains goods and/or services in more than
one class, compliance with Sec. 2.86;
(8) A filing fee for each class of goods and/or services, as
required by Sec. 2.6(a)(1)(ii) or (iii);
(9) A verified statement that meets the requirements of Sec. 2.33,
dated and signed by a person properly authorized to sign on behalf of
the owner pursuant to Sec. 2.193(e)(1);
(10) If the applicant does not claim standard characters, the
applicant must attach a digitized image of the mark. If the mark
includes color, the drawing must show the mark in color;
(11) If the mark is in standard characters, a mark comprised only
of characters in the Office's standard character set, typed in the
appropriate field of the application;
(12) If the mark includes color, a statement naming the color(s)
and describing where the color(s) appears on the mark, and a claim that
the color(s) is a feature of the mark;
(13) If the mark is not in standard characters, a description of
the mark;
(14) If the mark includes non-English wording, an English
translation of that wording;
(15) If the mark includes non-Latin characters, a transliteration
of those characters;
(16) If the mark includes an individual's name or likeness, either
(i) a statement that identifies the living
[[Page 20915]]
individual whose name or likeness the mark comprises and written
consent of the individual, or (ii) a statement that the name or
likeness does not identify a living individual (see section 2(c) of the
Act);
(17) If the applicant owns one or more registrations for the same
mark, and the owner(s) last listed in Office records of the prior
registration(s) for the same mark differs from the owner(s) listed in
the application, a claim of ownership of the registration(s) identified
by the registration number(s), pursuant to Sec. 2.36;
(18) If the application is a concurrent use application, compliance
with Sec. 2.42;
(19) An applicant whose domicile is not located within the United
States or its territories must designate an attorney as the applicant's
representative, pursuant to Sec. 2.11(a), and include the attorney's
name, postal address, email address, and bar information; and
(20) Correctly classified goods and/or services, with an
identification of goods and/or services from the Office's Acceptable
Identification of Goods and Services Manual within the electronic form.
(b) If an application fails to satisfy any of the requirements of
paragraph (a)(1)-(19) of this section, the applicant must pay the fee
required by Sec. 2.6(a)(1)(iv).
(c) If an application fails to satisfy the requirements of
paragraph (a)(20) of this section, the applicant must pay the fee
required by Sec. 2.6(a)(1)(v).
(d) If an application fails to satisfy the requirements of
paragraph (a)(20) of this section, and the identification of goods and/
or services in any class exceeds 1,000 characters, the applicant must
pay the fee required by Sec. 2.6(a)(1)(vi) for each affected class.
0
4. Section 2.71 is amended by:
0
a. Revising introductory text,
0
b. Redesignating paragraph (a) as paragraph (a)(1); and
0
c. Adding paragraph (a)(2).
The revisions read as follows:
Sec. 2.71 Amendments to correct informalities.
The applicant may amend the application during the course of
examination, when required by the Office or for other reasons:
(a)(1) The applicant may amend the application to clarify or limit,
but not to broaden, the identification of goods and/or services or the
description of the nature of the collective membership organization.
(2) An amendment to the identification of goods and/or services
that results in the identification exceeding 1,000 characters in any
class is subject to payment of the fee required by Sec. 2.6(a)(1)(vi)
for each affected class.
* * * * *
PART 7--RULES OF PRACTICE IN FILINGS PURSUANT TO THE PROTOCOL
RELATING TO THE MADRID AGREEMENT CONCERNING THE INTERNATIONAL
REGISTRATION OF MARKS
0
1. The authority citation for 37 CFR part 7 continues to read as
follows:
Authority: 15 U.S.C. 1123, 35 U.S.C. 2, Pub. L. 116-260, 134
Stat. 1182, unless otherwise noted.
0
2. Section 7.6 is amended by revising paragraphs (a)(1)(ii), (2)(ii),
(3)(ii), (4)(ii), (5)(ii), (6)(i), (ii) and (iv), (7)(ii), and (8)(ii)
to read as follows:
Sec. 7.6 Schedule of U.S. process fees.
(a) * * *
(1) * * *
(ii) For certifying an international application based on a single
basic application or registration filed electronically, per class--
$100.00.
(2) * * *
(ii) For certifying an international application based on more than
one basic application or registration filed electronically, per class--
$150.00.
(3) * * *
(ii) For transmitting a subsequent designation under Sec. 7.21,
filed electronically--$100.00.
(4) * * *
(ii) For transmitting a request to record an assignment or
restriction, or release of a restriction, under Sec. 7.23 or Sec.
7.24 filed electronically--$100.00.
(5) * * *
(ii) For filing a notice of replacement under Sec. 7.28
electronically, per class--$100.00.
(6) * * *
(i) For filing an affidavit under section 71 of the Act on paper,
per class--$400.00.
(ii) For filing an affidavit under section 71 of the Act
electronically, per class--$300.00.
* * * * *
(iv) For deleting goods, services, and/or classes after submission
and prior to acceptance of an affidavit under section 71 of the Act
electronically, per class--$250.00.
(7) * * *
(ii) Surcharge for filing an affidavit under section 71 of the Act
during the grace period electronically, per class--$100.00.
(8) * * *
(ii) For correcting a deficiency in a section 71 affidavit filed
electronically--$100.00.
* * * * *
Katherine Kelly Vidal,
Under Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.
[FR Doc. 2024-06186 Filed 3-25-24; 8:45 am]
BILLING CODE 3510-16-P
