The differences in the complexities of the procedures followed by the agencies are mirrored by differences in the fees and related expenses. The patent process is totally funded through user fees. The trademark process can also be lengthy. He asked that we address fees as they relate specifically to patents, trademarks, and copyrights and, where applicable, determine (1) how fees are set for the services provided by PTO and the Copyright Office, (2) the extent to which intellectual property fees are recovering the costs of the services provided, (3) whether different users of the same services pay different fees, (4) whether patent fees encourage or discourage the completeness and accuracy of applications, and (5) the potential effects of increasing copyright fees. Despite the self-sufficiency of the patent process overall, however, individual fees are not necessarily commensurate with the costs of the services for which they are assessed. Again, this is by design because (1) the largest fees are paid at the back end of the process, while most costs occur at the front end of the process; (2) large and small entities generally are charged different fees for the same service; (3) costs vary by invention type, while fees do not; and (4) delays caused by the applicants generate more costs than fees. Actually, patent fees are structured so that in effect (1) successful applicants pay more than unsuccessful applicants, (2) large entities pay more than small entities, (3) applicants with less complicated applications pay the same as those with more complicated applications, and (4) applicants who create delays in the examination process do not pay fees commensurate with the additional pendency caused by those delays. There are no differences in filing fees, however, for different types of inventions within the utility patent category, which accounts for over 90 percent of all patent applications. However, unlike patents, trademark fees do not vary on the basis of the size of the entity applying, and most fees are paid at the beginning of the process before PTO begins to incur costs. Consequently, while PTO believes some adjustments may be needed, fees in the trademark process appear to be more closely aligned with the costs of services. Unlike patent regulations, trademark regulations do not require acceptance of incomplete applications and, as a result, PTO does not accept and process incomplete trademark applications. Conclusions

Trademark fees are more streamlined than patent fees. Copyright Fees Do Not Recover the Costs of Copyright Services

Unlike the patent and trademark process, the copyright process is not self-sustaining, and copyright fees have been adjusted infrequently since the 1950s. Most applicants pay a one-time fee of $20, or about half the cost the Copyright Office incurs to register a copyright. Our disagreement is based on the Copyright Office’s own study. While the law permits the Copyright Office to raise fees periodically to account for the effects of inflation, it chose not to do so in fiscal year 1995, the last year it had the authority to do so. Concerning the Library’s comments regarding the Copyright Office’s position on fee increases, we added information to the report showing that the Copyright Office has supported the need for fee increases in the past, believes a fee increase is needed currently, and supports proposed legislation that would allow the Register to raise fees to cover the costs of copyright registration and services.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed issues related to intellectual property fees charged by the Patent and Trademark Office (PTO) and the Copyright Office, focusing on: (1) how fees are set for the services provided by the federal agencies; (2) the extent to which intellectual property fees are recovering the costs of the services provided; (3) whether different users of the same services pay different fees; (4) whether patent fees encourage or discourage the completeness and accuracy of applications; and (5) the potential effects of increasing copyright fees.

What GAO Found

GAO noted that: (1) patent fees, like trademark and copyright fees, are set primarily by statute; (2) overall, patent fees recover the costs of the patent process within PTO and, by law, can be adjusted annually for inflation; (3) despite this self-sufficiency overall, fees for individual services are not necessarily commensurate with the costs of those services because the largest fees are paid at the back end of the patent process, while PTO incurs most of its costs at the front end, and different categories of applicants pay different fees for the same service; (4) generally, successful applicants and large entities tend to pay more than unsuccessful applicants and small entities for the same services; (5) because fees do not differ on the basis of the complexity of the invention and because fees do little to discourage the submission of inaccurate and incomplete applications, applicants with complicated inventions and applicants who create delays in the process may not pay fees sufficient to recover the additional costs they create; (6) trademark fees also recover the overall costs of the trademark process and can be adjusted annually for inflation; (7) trademark fees are smaller and fewer in number than patent fees; (8) fees and costs tend to be more closely aligned in the trademark process because most income is received prior to the examination of the application; (9) there are no differences in trademark fees based on the size of the entity applying, no significant differences in the costs for different types of trademark applications, and fewer costs and delays caused by inaccurate and incomplete applications; (10) copyright fees are the smallest and simplest of all the federal intellectual property fees; (11) most applicants pay only an up-front, one-time registration fee, with no differences based on entity size, the accuracy or completeness of the application, or the type of copyright being registered; (12) copyright fees do not recover costs and, as a result, the Copyright Office receives about $10 million a year in appropriations; (13) copyright fees have not been increased since fiscal year (FY) 1991 because the Copyright Office chose not to raise fees to adjust for inflation in FY 1995; (14) the Copyright Office has supported fee increases in the past and supports legislative proposals that would give the Register of Copyrights the authority to raise fees to recover costs; and (15) Copyright Office officials do not believe that the Copyright Office should be fully self-sustaining through fees because it performs other functions that the officials believe are more appropriately funded through appropriations.