Getting back your $400 penalty for failing to e-file

Update:  the USPTO web site now says:

Applicants affected by this outage will have an option to avoid or receive a refund of paper filing fees. For such applicants, the director will prescribe a procedure for re-submitting applications electronically to receive a refund of the paper filing fee (or to not incur a fee if not yet paid). Applicants who follow this procedure will maintain their original filing dates for applications filed by paper during the outage. Details of this procedure will be identified on this page when they are ready. In the meantime, applicants should continue to file and pay associated fees pursuant to current laws and regulations.

I have posted a new blog article about this.

The EFS-Web system crashed early in the morning of Wednesday August 15, 2018.  Many filers will be forced to pay the $400 penalty for failing to e-file, despite the fault lying with the USPTO.  What, if anything, can be done about this?

As has happened all too often in the past, what happened on August 15 was that the EFS-Web Contingency server (the one that is supposed to be available whenever the main EFS-Web server is broken) also crashed.

It was not until late in the day on August 17 that the EFS-Web Contingency server was (supposedly) returned to service. As far as I know it still does not work for entry into the US national phase.

There was thus a stretch of several days during which it was flatly impossible to e-file any patent-related filing in the USPTO.  In particular for several days it was impossible to e-file a new US patent application.  Practitioners who needed to file a new US patent application for a client during this time had no choice but to do it by paper filing.  (Paper filing, in this context, means either hand-carrying the application to 401 Dulaney Street or taking it to your local post office and making use of Rule 10.)  See my recorded webinar about this.

The problem is that there is a $400 penalty for paper filing.  By this we mean a $400 penalty for failing to e-file.

(The penalty is cut in half for small entities and is cut in half again for micro entities.)

It is of course quite a slap in the face to be punished for failing to e-file if the failure is the fault of the USPTO rather than the fault of the practitioner.

Many readers will recall the period of several days between Christmas and New Year’s 2015 when, as now, both of USPTO’s patent e-filing servers (EFS-Web and EFS-Web Contingency) were broken.  Filers who filed during that time period were penalized for failing to e-file, even though it was USPTO’s fault.

Some readers will also recall the massive crash that happened on May 14, 2014, during which both EFS-Web and EFS-Web Contingency were both broken for some eighteen hours.  In our office we had to pay the $400 penalty for one of the applications that we filed that day, even though it was not our fault.  I personally wrote to the Director asking that the $400 be refunded to us since it was not our fault.  The USPTO did not refund that money to us.

The reason for the USPTO’s failure to refund the money is simple.  The $400 penalty is statutory, not rule-based.  The Director is thus not able to waive the penalty.

I filed a FOIA request asking USPTO to reveal how many times the $400 penalty got charged during one of those EFS-Web outages.  USPTO fought and fought and never did reveal the number to me.  I wish I had had the time and energy to litigate that FOIA request.

Now once again we have a period of several days during which practitioners have paid the $400 penalty (or will be required to pay it) for failure to e-file, during a time when the failure to e-file was the fault of the USPTO, not the fault of the practitioner.

On August 17, 2018, Director Iancu wrote:

We know you have questions about paper filing fees, and we are examining our options to see how we can address those concerns.

It will be very interesting to see how the Director addresses the need to be fair about this penalty.  Given that the penalty is (as mentioned above) a statutory penalty, I do not see how the Director can do the right thing about this by any means other than going to Congress and getting a special bill passed.

Back in 2015 I told the USPTO (see blog article) about the need to get such a special bill passed.  During the more than two years that have passed, USPTO did not attend to this.  Maybe now the USPTO will attend to this.