1Patent offices in a variety of countries have become self-funding in recent years.In other words, the patent office must raise revenue from the fees that it charges forintellectual property (IP) services to at least cover its variable operating costs and, insome cases, to provide government with a return on capital. For example, in the UK, thePatent Office was made a ‘trading fund’ in 1991, meaning that it must be self-financing.In particular, it must achieve a rate of return on capital that is set by Treasury. From 1April 2000 to 31 March 2005, this rate of return has been set at 6%.
Similarly, theCanadian Intellectual Property Office is a “revenue-generating agency … financed …entirely from fees for intellectual property (IP) services provided”.
In the United States,the
Patent and Trademark Office Corporation Act (1995)
‘corporatised’ the US PatentOffice including the requirement that it uses its various fees to cover ongoing costs.At first glance, it might be expected that although self-funding requirementsmight alter the level of fees charged by patent offices it would not alter its structure. Themix of initial and renewal fees and how these relate to patent length would be set tomaximise the social returns from innovative activity. Imposing a budget constraint mightbe expected to have the same effect that a similar constraint might have on the pricingstructure of a regulated multi-product firm; changing levels but not relative prices.The chief finding of this paper, however, is that this is not the case. Self-fundingrequirements create strong pressures to change fee structure. This is because the feestructure to maximise revenue is distinct from that designed to maximise the social valueof innovative activity. Indeed, in fee setting those goals may conflict.
The Patent Office (UK), Annual report 2003, p.22.
Intellectual property – innovation on a global
scale” Annual report 2001-02, p.2.