by Dennis Crouch
The Trump administration is reportedly considering a radical transformation of the US patent system that would replace the current flat-fee maintenance structure with a percentage-based “property tax” on patent value, according to a recent Wall Street Journal report. Howard Lutnick and his Commerce Department team are discussing a tax of between 1% and 5% of overall patent value annually, a shift that could dramatically increase costs for certain patent holders while making the US an international anomaly among major patent systems. The report led to market drops – especially in biotech.
Under the current system established by the Patent Act, patent holders pay three flat maintenance fees: at 3.5 years, 7.5 years, and 11.5 years after patent issuance. The final fee is the largest (currently $8,280), and almost half of all patents are abandoned without paying this final fee. For patents that have become virtually worthless by their 11.5-year mark, owners might actually prefer a value-based tax (2% of nothing…). However, any new proposal would likely be additional to existing maintenance fees rather than a replacement.
Implementation Strategy: Targeting High-Value Patents
One potential approach would focus revenue collection on patents that are demonstrably high-value, using existing public mechanisms for identification. This targeted system could include:
