Lutnick Denies Plan to Add Value-Based Fee on US-Issued Patents

Commerce Secretary Howard Lutnick doesn’t plan to move ahead with a reported proposal to impose a new fee on US patents based on their value, he said at a Senate hearing Tuesday.

Adding a value-based fee on US patents is “not a plan” and it’s “not going anywhere,” Lutnick said in response to a senator’s question during a hearing related to Commerce Department funding for deploying high-speed internet.

The proposal—reported by the Wall Street Journal in July last year—floated a 1% to 5% fee on the value of patents in force. Attorneys and business groups lambasted the idea, calling it impractical and a potential overreach of the executive branch’s powers. Attorneys have highlighted how patent valuation can be subjective and fluctuates over time.

Lutnick’s comments came in response to a question from Sen. Chris Coons (D-Del.), a member of the Senate Judiciary Subcommittee on Intellectual Property. Coons said he was “very concerned” with reports about the proposal.

“This proposal would be a real negative,” Coons said at the hearing before the Senate Appropriations Subcommittee on Commerce, Justice, and Science. “So, could you just update me on whether or not the consideration of a value-based patent fee system is live, and how it would roll out if so, and how you would avoid harming innovation?”

“We will avoid harming innovation by not doing a valuation, or any valuation fee or tax on patents,” Lutnick responded.

Coons had raised concerns about the value-based tax proposal when it was first reported on, saying it would deter US innovation and encourage cutting-edge research and development to move overseas.

Lutnick responded to those concerns Tuesday, saying the US Patent and Trademark Office wouldn’t try to determine how much a particular patent is worth.

“How in the world could we do that?” he said. “How in the world could anyone reasonably do that?”