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As biotech stocks falling today shows, Commerce Secretary Lutnick’s boneheaded idea of charging patent holders between 1% and 5% of their overall patent value annually is, to put it more politely, fundamentally problematic.
Valuing Patents is Subjective and Complex
One of the most significant hurdles with charging fees based on patent value is the subjective and unpredictable nature of patent valuation. There simply aren’t universally accepted standards for assigning concrete monetary values to patents. Intellectual property valuations often fluctuate dramatically based on market conditions, legal interpretations, and evolving technologies. Therefore, creating a fair, transparent, and consistent valuation framework for fee-setting purposes is inherently challenging, if not impossible. Trying to have AI do it won’t work as well as these cabinet members who don’t have a clue how AI actually works seem to think it might.
Increased Uncertainty for Inventors and Businesses
Imagine you’re a small startup or an independent inventor. You’ve spent considerable resources obtaining a patent, only to face unpredictable future costs due to shifting valuations. This unpredictability can discourage innovation, especially among smaller entities and individual inventors who often operate under tight budgets. The possibility of fees increasing unexpectedly based on revised patent valuations could lead to greater financial uncertainty and deter inventors from investing in innovation in the first place. Large corporations wouldn’t enjoy this either.
Disincentivizing Commercialization
Charging fees based on patent value could unintentionally discourage patent holders from actively promoting and commercializing their inventions. Successful commercialization often increases a patent’s market value—leading to potentially higher fees. This paradoxically penalizes inventors who do exactly what the patent system aims to encourage: bringing innovations to market to benefit the public. The resulting disincentive undermines the core mission of the patent system, which is to stimulate innovation and economic growth.
A Low Blow to USPTO Morale? Administrative Challenges
Implementing a valuation-based fee structure would impose significant administrative burdens on the USPTO. It would require substantial resources to continually assess, monitor, and update patent valuations. These added complexities could divert resources away from the USPTO’s core responsibilities, such as examining patent applications, improving examination quality, and reducing backlog times. The USPTO is already under a great deal of strain with the attempt to force out union members and train new hires with AI rather than mentoring, as well as the other standard fears agencies have under this administration. This is not how to make the USPTO great.
Equity and Fairness Concerns
I know equity and fairness are the antithesis of the current administration, and this is no exception. It would take a system currently designed to help even the playing field for obtaining and maintaining a patent for small-time inventors through lowered filing and maintenance costs and destroy it with unpredictable ongoing financial burdens. Determining patent fees based on value disproportionately impacts startups and individual inventors, who typically have fewer resources to manage increased fees or engage in costly disputes over patent valuations. Larger corporations with substantial resources are be better positioned to navigate or challenge valuations (and ooh boy I bet they’re just thrilled at the prospect of doing so).
The Decline and Fall of Patents in the United States
Rather than increasing revenue for the government, this would end up generating less revenue from the USPTO, which is currently self-funding via its fees. This taxation would incentivize businesses to protect their ideas via trade secret protection rather than patents. That means information that would be public via publication of applications and patents would be kept private, further stifling opportunity for innovation and awareness of what not to do lest you run afoul of someone else’s rights. Here’s a better idea for increasing government revenue without all these problems: just tax billionaires like those of us who actually feel how much we pay in taxes.
No Other Country or Region Does This
If this were a good idea, you’d think some other country or region would have implemented it. Of course, none of them have, because it’s a ridiculous idea. This move would undermine the value of having a US patent and make the US patent system a pariah internationally. Does that make us great again? In the immortal words of drive-in enthusiast Joe Bob Briggs, I think not!
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