Trademark Fee Proposal Comments by EMP&A Focus on Impact on Small Businesses and USPTO IT Expenditures

Last week, Erik provided comments to the USPTO’s Trademark Public Advisory Committee regarding proposed changes (increases) to many trademark fees. My comments touched on numerous topics, but focused in large part on the impact that USPTO trademark filing fee increases will have on small businesses, as well as the USPTO’s IT expenditures.

Below are the remarks Erik presented at the hearing last week. More details on the fee proposal can be found on the USPTO website here.

For more details regarding about the proposal and all the fee changes, see: https://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting#tmfee-info

You can submit comments of your own by June 12, 2023 here: https://www.regulations.gov/document/PTO-T-2023-0016-0001 Comments of Erik M. Pelton & Associates, PLLC Regarding “Trademark Public Advisory Committee Public Hearing on the Proposed Trademark Fee Schedule”

The following are comments provided by Erik M. Pelton of Erik M. Pelton & Associates, PLLC in person on Monday June 5, 2023, at the Trademark Public Advisory Committee Public Hearing on the Proposed Trademark Fee Schedule.

Thank for you for the opportunity to speak today. I’m Erik Pelton, the founder of Erik M. Pelton & Associates, which I started after working as an examiner at the USPTO. Since 1999, our firm has registered more than 4,000 trademarks for clients who are overwhelmingly small businesses, and the firm itself is a small business that owns more than a dozen of its own trademark registrations. I also am the supervisor of the Trademark Clinic at Howard University School of Law and an adjunct trademark law professor at Georgetown University. The comments today, however, are made solely on behalf of our firm.

I imagine that other speakers today, and written comments, will touch on specifics in the fee proposal and their potential impact on both applicants and practitioners. We certainly have concerns about some of the specifics, but those are not my focus today.

Small businesses make up a huge portion of the American economy. Over 99% of employers are small businesses, and in recent decades small businesses have created more than 60% of new jobs. Small businesses don’t have associations or in-house counsel or the resources to comment on agency proposals like these. But don’t let their silence fool you – small businesses will be the most impacted by the fee increases.

The investment in trademark clearance and registration for a small business is even more important and more valuable; it helps to guard them against the risks and expenses of trademark disputes and litigation. It would thus be desirable to ensure that the fee structure of the USPTO provides an incentive for small businesses to protect trademarks. This would create a more complete Register and ensure that all types of entities benefit from our IP infrastructure. Perhaps it would be beneficial to explore different fee levels for small and large applicants – akin to the patent side of the USPTO.

The proposed increases are also inconsistent with the Office’s goal of increasing access for individuals from underserved and disadvantaged communities. USPTO’s efforts to narrow the gender gap, and to support inventors and rights holders from minority communities should be applauded. But across the board trademark fee increases could set back those efforts.

I also note that the recent pendency delays and resulting uncertainties impact small businesses even more; We encourage the USPTO to share more information about the anticipated impact that the fee proposal will have on pendency.

We understand that the USPTO needs to ensure proper funding and that filing levels have dropped from recent all-time highs. But details on where and how the USPTO trademark operation spends its money have been largely absent from the proposal materials. To my knowledge, there has been no discussion of other possibilities to ensure a balanced budget while filings are lower – such as cuts to some spending, reducing overtime, or a hiring freeze.

About 4 years ago, I stood here testifying on the previous fee proposal, and I referenced some of the planned IT enhancements that are important to help both USPTO employees and users – such as upgrades to TESS, TEAS, and TTAB systems, more user-friendly interfaces; and much more. Four years later, many of those improvements – at least public facing ones – are still missing. And lapses in systems such as TSDR, TEAS, and TESS are not infrequent. Certainly there have been some IT improvements, and legacy systems are a huge challenge, but more transparency about where money on IT programs is being spent, and what improvements can be expected and when are needed.

Although I realize there will be more chances to comment as the proposal moves forward, I also note that the process seems rushed. There were few, if any, discussions with stakeholders or in public TPAC meetings prior to the proposal’s release. The proposal was announced just weeks ago, providing limited time for stakeholders to prepare comments for today or for the written comment deadline.

There is no doubt that ensuring quality examination and maintaining a register with millions of records and hundreds of millions of data points is a tremendous undertaking, but a worthy and valuable one. Know that users appreciate and understand the difficult job faced by the USPTO and the challenges that COVID brought, followed by filing increases and now decreases. And know that the thousands of trademark practitioners are also invested in the success of the USPTO. We recognize how important and valuable the USPTO’s trademark protections and processes are to the public and to our clients, and I offer these comments in an effort to be constructive.

Those of us who work with small businesses recognize that they will unquestionably be more burdened by increased and new fees, and by the increased unpredictability in the proposed fee structure changes.

I did not come here today to say that fees should not be increased, but rather to advocate that the process, justifications, and implications of any fee adjustments be considered through the lenses of small businesses, the pendency delays, and the IT expenditures.