Every so often, Washington cooks up an idea so outside the bounds of good patent policy that you have to check the calendar to make sure it’s not April 1st. The latest? A proposal from Commerce Secretary Howard Lutnick that would slap a property tax on patents—1% to 5% of their “value” every year. Yes, you read that right: instead of the flat maintenance fees we’ve had for decades, this would be an annual tithe to the federal coffers, calculated on what your patent is supposedly worth.
Now, if this were about making the patent system better—streamlining quality, funding examination, driving innovation—I’d at least hear them out. But no. This is about plugging a budget hole. That’s like selling the family car to pay for the electric bill—you’ll keep the lights on for a while, but you’ve just shot your transportation in the foot.
The targets are obvious: pharmaceutical patents in the FDA’s Orange Book, standards-essential patents, patents that have been litigated, licensed, marked, or otherwise proven to be commercially valuable. Translation: the more your patent is worth, the more they’ll charge you for the privilege of keeping it. And don’t expect this to replace current maintenance fees—it’s far more likely to be on top of them.
We’ve been here before—sort of. Escalating fees have long been used to weed out deadwood patents. Half of all U.S. patents are abandoned before their final maintenance fee. But that’s policy, not punishment. The purpose was to encourage owners to drop low-value patents, not to milk the productive ones for general-revenue cash.
And there’s history here too. For decades, the USPTO has fought for financial independence, only to watch Congress siphon off about a billion dollars of its collected fees for unrelated spending. Turning the USPTO into a patent tax collector puts us right back into that mess, undoing 40 years of work to keep the office self-funded.
The real kicker? If this goes through, high-value inventions might skip the patent system entirely. Why stake your crown jewels in a system that makes you pay for their success every year, when you could lock them away as trade secrets? That’s not innovation policy—that’s a slow-motion train wreck.