DRAFT Changing Behavior: Applicant Sensitivity to Patent Fees

Abstract: The America Invents Act (AIA) gave the US Patent and Trademark Office (PTO) authority over the setting of fees for all patent and trademark applications. Fee collections are required to be set at aggregate cost recovery, but the act gives the PTO significant autonomy in the composition of fees. Thus, fee-setting authority contains both a responsibility and an opportunity. First, in order to make conscientious policy choices, the PTO has the responsibility to understand how applicants respond to fees. Second, the PTO has an opportunity to influence patent pendency through wise choices in the pricing of fees throughout patent prosecution. This paper represents the first large-scale analysis of patent prosecution fees. In particular, we focus on how applicants respond to changes in fees with regard to their filing of requests for continued examination (RCEs). The use of RCEs has risen dramatically since their introduction in the late 1990s. RCEs represent an important way for applicants to extend patent prosecution. As such, they have been found to be a primary source of delay in the patent system (Mitra-Kahn, et al (2013)). Despite this growth and the importance of RCEs as part of the patent prosecution process, their use has received relatively little attention from scholars. In this paper, we examine the sensitivity of RCE filing behavior to several environmental factors, focusing on the fees that applicants must pay for an RCE, or its primary alternatives (appeals and traditional continuations). We use micro-level patent prosecution data to estimate duration models of time-to-RCE filing. We find that applicants are sensitive to RCE fees, with applicants becoming mor