SENT VIA EMAIL TO TMFRNotices@uspto.

gov

Commissioner for Trademarks,
Attn: Cynthia C. Lynch
P.O. Box 1451
Alexandria, VA 22313-1451

Comments of Erik M. Pelton & Associates, PLLC

to
Notice of Inquiry Regarding Adjustment of Fees for Trademark Applications

The following are the comments of the law firm of Erik M. Pelton & Associates, PLLC

of Falls
Church, Virginia (EMP&A), in response to the Notice of Proposed Rulemaking, published on
May 9, 2014, in Volume 79, No. 90 of the Federal Register (Notice of Rulemaking). Over the
last decade, EMP&A has represented hundreds of clients, including many small businesses, in
U.S. trademark prosecution, maintenance, and disputes. EMP&A clients have been issued more
than 2,000 U.S. trademark registrations. Erik M. Pelton, the firms founder, worked as a USPTO
Examiner from 1997 to 1999.

Summary

The USPTOs proposed fee reductions consist of three main proposals related to filings
submitted through Trademark Electronic Application System (TEAS). TEAS allows applicants
to fill out an application form and check it for completeness, and then submit the application
directly to the USPTO over the Internet. There are presently two choices for filing through
TEAS, filing a regular TEAS application or filing a TEAS Plus application.

A regular TEAS application for trademark registration is presently $325 per class of goods
and/or services. At a minimum, the regular TEAS application must include: the name of the
applicant, a name and address for correspondence, a clear drawing of the mark, a listing of the
goods/services, and a filing fee for at least one class of goods or services.

A TEAS Plus application, on the other hand, is presently $275 per class of goods and/or services
but includes certain additional requirements beyond the minimum filing requirements. A TEAS
Plus application requires the applicant to select entries from the USPTOs Acceptable
Identification of Goods and Services Manual (ID Manual) that accurately describe(s) the
applicants goods/services. Additionally, the applicant must file communications regarding the
application through TEAS, and receive communications concerning the application by email. If
an applicant fails to meet the TEAS Plus requirements, the USPTO will require an additional
payment of $50 per class.

The first proposal of the USPTO for reducing fees is to create a new application filing option
TEAS Reduced Fee (TEAS RF). The filing fee for a TEAS RF application will be $275 per
class, and this option features the regular TEAS filing requirements, but also requires the
applicant to authorize email communication and agree to file all responses and other documents
electronically during prosecution of the application.

Next, the USPTO proposes reducing the filing fee for a TEAS Plus application from $275 to
$225 per class, without changing any of the procedural requirements for such applications. Last,
the USPTO proposes reducing the ten-year registration renewal fee from $400 to $300 per class,
when renewal applications are filed electronically. The filing and ten-year renewal fees for paper
applications, however, will remain unchanged.

Current Options Proposed Options
TEAS
$325 per class
TEAS
No change
TEAS RF (*Newly created)
$275 per class requires applicant to authorize
email communication and electronic filing
during prosecution
TEAS Plus
$275 per class
TEAS Plus
$225 per class no other changes
Paper
$375 per class
Paper
No change
Ten-Year Renewal Fees
$400 per class
Ten-Year Renewal Fees Through TEAS
$300 per class
Ten-Year Renewal Fees Paper Application
No change

We support the USPTOs strategic objective to increase the volume of end-to-end electronic
processing of trademark applications, including online filing, electronic file management, and
workflow. While we agree that the proposed fee reductions will promote greater efficiency
through electronic filing and communication, we urge that additional steps could be taken,
including offering non-financial incentives, in order to help further the USPTOs goal. Overall,
reducing the fees for filing and renewals will encourage more trademark owners to file federal
applications, resulting in a more complete register. Reducing renewal fees will lessen the burden
of renewing registrations, helping to maintain an accurate and up-to-date register.

While the USPTO has considered how to reduce the burden on small businesses, and while the
proposed rules are a positive step in this direction, we believe that more can be done to assist and
benefit small businesses.

Importance of Trademarks to Small Businesses and The U.S. Economy

Intellectual property is a key driver of the U.S. economy, accounting for many of the jobs created
in the U.S.
1
Small businesses make up a large portion of the American economy, and intellectual
property is a key asset to all businesses today. Trademarks, in particular, are used more widely
than any other form of intellectual property, and WIPO finds that small and medium-sized
enterprises (SMEs) are heavily reliant on trademarks.
2



1
Office of Management and Budget: http://www.whitehouse.gov/blog/2013/06/20/intellectual-property-key-driver-
our-economy.
2
WIPO, World Intellectual Property Report 2013, available at: http://www.wipo.int/econ_stat/en/economics/wipr/.

WIPOs 2013 report on world intellectual property noted that trademarks are the most widely
used form of IP, used by companies in every sector of the economy.
3
According to the WIPO
Report, small and medium-sized enterprises (SMEs) rely much more on trademarks than
patents.
4


Small businesses rely heavily upon trademark protection, and small businesses are important to
the health of the U.S. economy. Therefore, an efficient and accessible trademark regime benefits
small businesses and the economy at large.

Impact of Reduced Fees on Small Businesses

While the proposed fee reductions are a definite and clear benefit to all, including small
businesses, we believe the USPTO could take additional steps that would further both the
USPTOs strategic objective to increase end-to-end electronic processing of trademark
applications and reduce burdens on small businesses.

We recognize the USPTO has taken steps to help educate small businesses, particularly with
respect to trademark litigation practices and bullying. In the proposal for reducing certain
trademark filing and renewal fees, the USPTO again specifically considered the potential impact
on small businesses.
5
Presently, the USPTO does not collect or maintain statistics in trademark
cases on small versus large entity applications. The differences between small and large entities
go far beyond just their size. Their budgets, geographic location, market sizes, etc., all uniquely
influence the trademark filing and renewal strategies of companies and these factors vary
widely among small and large businesses. Collecting and tracking the filing and renewal
information related to small businesses will help the USPTO better understand the needs of small
business applicants, which will help the Office to provide more flexible options, and thereby
better align the USPTO with its goal of reducing the burden on small businesses.

The USPTO provides reduced fees to small entities for patent filings. If the USPTO were to
collect information on small versus large entities regarding trademark matters, a similar
reduction could be made for small entity trademark filers. Another incentive to encourage early
filing would be to provide reduced fees for applicants that are part of business incubators and
other such organizations.

In addition, policies that will help the Register more accurately reflect the reality of trademarks
that are actually in use will better serve the USPTO and the public. A more accurate and
complete Register will make it easier to avoid conflicts, as examiners and applicants will know
better what marks are actually being used.

Meanwhile, the USPTO notes that the cost of maintaining and renewing registrations is nominal,
and thus the use requirement is the primary driver for maintenance and renewal decisions. The

3
WIPO, World Intellectual Property Report 2013, available at: http://www.wipo.int/econ_stat/en/economics/wipr/.
4
WIPO, World Intellectual Property Report 2013, available at: http://www.wipo.int/econ_stat/en/economics/wipr/.
5
Federal Register / Vol. 79, No. 90, May 9, 2014, Notice of Proposed Rulemaking, Reduction of Fees for
Trademark Applications and Renewals, at 26667.
USPTO has also recognized that approximately half of all trademark registrations are cancelled
in the 6
th
year for failure to establish continued use, and thus the commercially useful life of
many new marks may be of limited duration.
6
However, providing small entities with reduced
fees for renewals and maintenance would help incentivize registrants to maintain and renew their
marks.

EMP&As clients generally file using TEAS, authorize email communication, and file all
responses and documents electronically. The new TEAS RF application addresses many of the
concerns our clients have with the TEAS Plus application and presents an option that our clients,
many of which are small businesses, will likely use and benefit from. Meanwhile, our clients are
unlikely to increase their use of TEAS Plus because of the identification requirement. While
lowering the TEAS Plus fee may benefit some and provide further incentive for applicants to use
TEAS Plus, we believe other options, such as lifting the identification requirement or providing
expedited processing, would provide a better incentive to promote the other benefits of TEAS
Plus.

If the difference in cost between TEAS Plus and the proposed TEAS RF were greater than $50,
clients and applicants may be more likely to ask about and to be concerned about the differences
and choices offered for filing. It is our experience, however, that a majority of those who do not
use TEAS Plus choose not to use it because of the issues surrounding the identification of goods
and services and/or the accounting and other difficulties that may ensue if TEAS Plus status is
lost during the application process. Considering the overall costs of a trademark application and
the benefits it provides, the potential $50 savings is insignificant, and, in our opinion, does not
justify the constraints of TEAS Plus. Thus, a non-financial incentive, such as expedited
processing, may prove more enticing to applicants.

The current limitations of the online identification manual, which will remain unchanged
according to the proposals, make the filing of TEAS Plus applications impracticable for many of
our clients. Moreover, explaining the different filing fee options and their different requirements
to clients and potential clients is burdensome and problematic, and it often creates more of a
hassle and time drain than the benefit of saving $50. While savings are always preferred, when
they lead to more confusion and more work for a relatively small savings, the intended incentive
may backfire. This is especially true when having to explain to a client after an application has
been filed that it did not sufficiently meet the TEAS Plus requirements, and thus an additional
$50 fee is due to the USPTO. This is difficult to communicate to clients, and it is more
burdensome to small businesses that oftentimes operate on very strict and detailed budgets.

Additional Comments Regarding USPTO Trademark Fees

Since registration is not mandatory, many trademarks that are used are never the subject of
applications at the USPTO. As a result, the Federal Trademark Register will always be a subset
of all trademarks in use in the United States. Reducing trademark application fees should lead to
more applications being filed, which in turn would result in a more accurate Federal Register. A
more accurate and complete Register will increase efficiency and value for everyone. Therefore,

6
USPTO Economic Working Paper No. 2013-1: http://www.uspto.gov/ip/officechiefecon/OCE_WP_2013-1.pdf.
if registration of trademarks that are in use in the United States increases, the register will be
more complete and accurate, and thus even more valuable to all stakeholders.

Another way to encourage efficiency and help promote a more accurate Register would be to
provide filing fee discounts when an applicant files companion applications together that feature
overlapping information, such as, different descriptions of goods and/or services for the same
mark, or different marks with the same description of goods and services. If the USPTO were to
reduce filing fees for these types of companion applications, it could provide incentives for
businesses to file trademark applications that they may otherwise not invest in and that would
otherwise never become part of the pending application database or the Register.

Similarly, the fees for multiple classes in the same application could be reduced. The filing fees
for subsequent classes could be reduced by $100 since the burden on the USPTO is presumably
less than that of an entirely new application. This would encourage applicants to be
comprehensive in listing the goods and services with which they use or intend to use their marks,
making for a more accurate and complete Register.

Another possible incentive to increase the percentage of trademarks that are filed with the
USPTO would be to provide new businesses with a discounted filing fee. Details regarding the
specific qualifications and proof necessary for the discount, as well as the amount of the
discount, would need to be explored.

Additionally, we would not object to increasing the fees for paper filing while further reducing
the fees for electronic filing in order to further incentivize filing electronically. As the marginal
cost of filing by paper increases, so does the incentive to switch to electronic filing. Thus,
increasing paper filing fees may provide a more direct incentive for paper filers to switch to
filing electronically.

Last, we note that the 10-year renewal fees, even at a TEAS reduced rate of $400 per class,
appear out of line with the initial application filing fees and the 6-year Section 8 filing fees. The
processing of the 10-year renewal by the USPTO is not nearly as substantial or complex as the
handling of initial applications. Thus, we support a further reconsideration and reduction of the
10-year renewal fee.

Conclusion

We support the USPTOs strategic objective to increase the entire electronic processing of
trademark applications. While the USPTO has considered how to reduce the burden on small
businesses, and while the proposed fee reductions, especially the newly created TEAS RF option,
are a terrific step in this direction, more can be done to assist small businesses through increasing
flexibility with the USPTO, particularly for TEAS Plus, and further reducing renewal fees.