“Inter partes review is a primary tool used by defendants in litigation to invalidate patents, and the Director has helped to guard against its overreach. However, there is nothing to stop a future Director from taking a different approach.”
U.S. Patent and Trademark Office (USPTO) Director John Squires stated in his Senate confirmation hearing last year that “with born strong patents and robust quality marks we can reclaim America’s primacy, revitalize industry and growth, proudly export our culture, boost national security and improve our lives.” If the goal is to have “born strong patents”, we must be honest about what is born with patents and what is not. For instance, a credible mark of novelty is born with every patent—that much is clear. However, novelty is not just technical newness—it is also market impression. If novelty were only technical newness, people would own patents without their technology ever being used in the market. There would be no point to the patent system. This means that the rest of patents—their assertion power, damages recovery power, term limitation, claim bundling provision, inter partes review (IPR) fee requirement, and more—must also be part of the birth. This is how to create born strong patents.
Two Big Steps Forward
Recently, the USPTO has taken two steps to help inventors. One step addresses claim bundling by accounting for market impression, while another addresses IPR overreach without accounting for market impression. While both steps should be applauded by inventors, only the step that accounts for market impression has the potential to survive different administrations. In a recent article, I discussed how the USPTO’s Streamlined Claim Set Pilot Program offers an incentive to inventors who filed patent applications with one independent claim and ten or fewer total claims. Inventions that do not leave a significant impression on the market do not need large numbers of claims. Here, the USPTO has begun to recognize a right to have an exact number of claims, rather than forcing inventors into the 3/20 bundle. This step has staying power.
On the other hand, several months ago Director Squires issued an open letter to colleagues, inventors, and Americans, in which he reclaimed his statutory role to institute IPR and post grant review (PGR). He invoked 35 U.S.C. § 314, which provides that the “Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition…shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” The Director’s move here is a great one for inventors. IPR is a primary tool used by defendants in litigation to invalidate patents, and the Director has helped to guard against its overreach. However, there is nothing to stop a future Director from taking a different approach. This means that while the solution is great, it does not address the core issue when it comes to IPR, and likely does not have staying power.
Inventors Can Determine Value of Their Patents
Inventions that leave deep impressions on the market have greater need to guard against IPR overreach. Patent law today does not account for this because the right to require future defendants to pay for IPR is currently not born with patents. Instead, it is the same for all patents. Defendants in litigation all have to pay a fixed IPR request fee of $23,750 and a fixed IPR post-institution fee of $28,125. These fees are a nominal expense for many defendants, which is the real problem with IPR.
The solution is simple—the right to require future defendants to pay fees for IPR must be variable by accounting for market impression. This would involve allowing inventors to increase these fees for future defendants in exchange for increased payment to the USPTO. The increases may be in filing fees, maintenance fees, or another form of payment. For example, a small entity might pay $3,650 and $28,940 in filing and maintenance fees instead of $730 and $5,788, respectively, and in exchange a future defendant would be forced to pay $118,750 and $140,625 for IPR request and post-institution fees, respectively. Importantly, the exchange would happen at the birth of a patent—its filing date. As a result, patents would be given a measure of net present value early on, which would be the difference between being disciplined and being a gambler. Inventors do know how to make these determinations. It is insulting to think they are incapable of figuring out how much firepower they need in their patents, particularly if they have competent counsel and modern software to guide them.
Commerce Secretary Howard Lutnick was lambasted in 2025 for offering to tax patents 1-5% of their value. His intent was very noble and should be applauded. Inventors must pay less for less valuable patents and pay more for more valuable patents. Period. However, his execution was poor and deserving of criticism for two reasons. First, patents should not be taxed–this would result in some inventors paying more than they should. Second, if you are going to make inventors pay based on value, you need a reliable value-based mechanism. Lutnick admitted recently that his plan did not have such a mechanism. He stated to Senator Chris Coons in last month’s Senate Appropriations Committee hearing that: “That is not a thing the Patent Office is going to do, is to try to say, ‘This patent is worth X.’ How in the world could we do that? How in the world could anyone reasonably do that?”
Although it may make some uncomfortable, the truth is that patent value is very discernible. We don’t live in the stone age.
Take the case of the Streamlined Claim Set Pilot Program–this is an experiment in value-based assessment of patents. The USPTO has recognized that less valuable patents do not need large numbers of claims, and in response, they offer inventors prioritized examination, a $2,000 discount for small-entity inventors and a $4,000 discount for large entity inventors. In the case of IPR, an increase in future request and post-institution fees in exchange for increased filing and maintenance fees is a logical extension of this experiment, and one in which an inventor’s inside knowledge of market impression would again be factored in.
Valuing a patent involves a simple connecting of USPTO fees (e.g., not a tax) to metrics associated with the bundle of rights that comprises patents. That’s all patents are–a bundle of rights that can be quantified and aggregated–actuaries, insurance agents, doctors, and many other professionals do this every day. Patents are not special. Refusing to put them under a microscope, whether intentionally or otherwise, by asserting that their value is somehow mysterious (it is certainly not) is incredibly harmful to inventors.
Making Patents More Durable
Eliminating the 3/20 bundle and making IPR fees variable are part of the broader reform called Patent Durability, outlined in earlier articles. Patent Durability is not only geared for indigent inventors and inventors of low value inventions—it is also geared for inventors of high value inventions. Its mechanism is an actuarial tailoring of patent durability (e.g., strength) to cost in order to provide inventors with large numbers of solutions to their invention needs. It is how the value of patents can be determined, and in the case of IPR, the USPTO and Congress would be tightening securities around the flow of money by giving inventors the option of paying more in exchange for a patent with more teeth. This would be a more permanent solution to address IPR overreach, and would result in more complete, born strong patents.
A draft version of this article was initially published in error – it was updated on 3/20 at 2:35PM.