How to get your $400 paper-filing penalty refunded

When the America Invents Act became law, it established a statutory penalty of $400 for the practitioner who failed to e-file a new patent application.  ($200 for small entities.)  This might best be understood as a Congressional mandate to the USPTO to do whatever was needed to ensure that a backup e-filing server would always be available even if the main e-filing server were to crash.

It will be recalled that there was a massive system outage at the USPTO starting on August 15, 2018.   Despite numerous reminders in 2014, 2015, and 2016 to the USPTO to take steps to move the backup server physically away from the main server, USPTO failed to do so, and as a consequence the system outage took down the backup server as well as the main server.  During the massive system outage, practitioners thus had no choice but to file their new patent applications on paper.  These applications were filed by Priority Mail Express (Rule 10) or were hand-carried to the USPTO.  Each such application thus incurred the $400 penalty.

Of course one wishes that USPTO would refund the penalty given that it was USPTO’s fault, not that of the practitioner, that the filer failed to e-file.  But during the previous outages, the USPTO had taken the position that because the $400 was statutory, not rule-based, then its hands were tied and it was impossible to refund the $400.  During the August 2018 outage, however, Director Iancu posted a message that the USPTO was working on a way to give back the $400.  I wondered (blog article) how the USPTO would finesse this.

Now USPTO has posted a Federal Register notice that establishes a policy for getting the $400 back.  This blog article discusses the notice and explains how to actually get the money back.

So here are the detailed steps to follow to get the $400 back.

  1. First, you have to make sure that the outage that forced you to pay the $400 was an outage for which the USPTO has posted a mea culpa on its web site.  The August 2018 outage is such an outage.  And, common sense tells you, you have to make sure your paper-filed case was filed during the specified mea culpa time period (here, August 15-23).
  2. Second, you have to wait until USPTO gets around to telling you the actual application number of your paper-filed patent application.  In this webinar I describe how to find out your application number.  Briefly, the options that might work include:
    • looking in Financial Manager,
    • looking at your credit card bill,
    • looking at the back of your canceled check,
    • waiting for the application to turn up in Private PAIR, and
    • waiting for a physical Filing Receipt or Notice of Missing Parts to show up in the mail.
  3. Once you find out the application number, then you e-file the application all over again.  You e-file it in EFS-Web (or, if the outage is a long time from now, in the successor system which is going to be called Patent Center).  Importantly, you e-file it as a follow-on filing (in the same application number as your paper case), not as a new application.  You also file a statement that the e-filed application is a true and correct copy of the paper-filed application.
  4. USPTO now has a form PTO/SB/448 for this purpose.  The document description should be “Refund Request for Papers Filed During a Designated Outage”.
  5. At this point, you request a refund of the $400.  Or if you have not yet paid the $400 but USPTO has mailed a Notice that you must pay it, you request that the Notice be canceled.
  6. You cannot wait forever to do this e-filing and this requesting.  If the situation is that you already paid the $400, then you must do the e-filing and the requesting within one month of the mailing date of the Filing Receipt.  If the situation is that you have not yet paid the $400, then you must do the e-filing and the requesting within the period for reply from the Notice asking for the $400.
  7. You will then need to docket to check for USPTO refunding the $400 or expressly withdrawing the Notice, following up with the USPTO as necessary.

Keep in mind that there are actually at least two possible fees for which this procedure might be helpful.  One is the $400 penalty for failing to e-file.  The other is the excess-pages fee where an e-filed page counts as ¾ of a paper-filed page.

What Director Iancu says is that USPTO will treat the paper-filed case as if it had been e-filed.  The idea is that this hopefully finesses the Congressional mandate that the $400 penalty be paid for a paper-filed case.

I am torn between thinking that this finesse is too clever and will blow up TYFNIL, and thinking that maybe it is just barely clever enough and will not blow up TYFNIL.  I must express grudging admiration that Director Iancu has at least tried to finesse this problem, a thing that had not been attempted at the USPTO with the previous outages.  It would be fun to learn who exactly it was at the USPTO who thought of this finesse.  I would like to shake his or her hand and give him or her a kudos in this blog, if I could.  But I expect that nobody outside of the USPTO will ever get to learn who it was that thought of this.

It will be appreciated that the massive outage of August 2018 was not the first such massive outage.  Previous crashes that knocked out both the main server and the backup server happened in November of 2016 and December of 2015 and May of 2014.  Plenty of practitioners incurred $400 penalties during those crashes.  In our office, for example, we incurred that $400 penalty during the May 2014 crash.  Of course one wishes that today’s new policy would permit the practitioner to follow the same steps — e-file the patent application all over again in EFS-Web, and then ask for a refund of the $400.  Unfortunately the way the policy is worded, it expressly disallows refunds for those past crashes.  The policy says that the practitioner’s refund request must arrive at the USPTO within just a short time from when the USPTO imposed the penalty.  So it is far too late for our firm to get back that $400 now which we incurred during the May 2014 crash.

While the policy fails to address previous crashes at the USPTO, what can be said is that the policy is forward-looking as to possible future crashes.  It expressly contemplates that if there were a future crash, USPTO would post a mea culpa on the USPTO web site, and the practitioner who got dinged for the $400 penalty during that future crash could then obtain a refund (or avoid having to pay the penalty).

What one hopes, of course, is that USPTO will belatedly comply with the Congressional mandate of the AIA to make sure that a backup server is working even if the main server has crashed.  If USPTO were to do so, then the happy result would be that today’s policy would not actually need to be called upon in the future.  Everyone — the practitioners and the USPTO itself — would benefit greatly if USPTO were to do so.

With this in mind, let’s hope the USPTO moves the EFS-Web Contingency server away from Virginia (see blog article).  Let’s hope the USPTO, in an open and candid process, explains to the customer community the steps that it will do to reduce SPFs (single points of failure).  This would include, but not be limited to, connecting the backup server to the power grid in a different way, connecting it to the Internet in a different way, and eliminating internal data cross-feeds between the two servers that could lead to a single software mistake crashing both systems at the same time.

8 Replies to “How to get your $400 paper-filing penalty refunded”

  1. With respect to the statement, “Despite numerous reminders in 2014, 2015, and 2016 to the USPTO to take steps to move the backup server physically away from the main server, USPTO failed to do so, and as a consequence the system outage took down the backup server as well as the main server,” I’m not sure that the outage was a consequences of the PTO’s failure to move the backup server (alone).

    Perhaps you have access to information about the outage, that I didn’t, but from public announcements, I understand a nearly-root cause of the problem to have been a problem with the PALM database, which had to be checked for consistency, 2 TB worth, slowly. IIRC, the announcements did not state whether the database had been restored, e.g., from back-up media or a checkpoint. If the backup server had merely been moved, but retained its dependency on PALM, whether a local or remote copy, I’m not sure the backup server would have been operational. Suppose the backup server were in Denver. If the backup server also relied on the Arlington copy of PALM, it would have been down for the same reason the main server was. And if the backup server were dependent on a local copy of PALM, and that copy was updated by real-time replication from the Arlington copy, that copy of PALM might also be unreliable and have to be checked. For this outage, it may be that what would have been needed for the backup server to have worked, wherever it might be located, would have been that the dependency on PALM would have had to have been removed.

    Of course, in prior outages due to other causes, a remotely-located backup server might have remained in service assuming PALM and other dependencies were also remotely-located or still up at the primary location.

  2. I believe the fee for micro is $200, not $100 (

    It is worth noting that the prescribed procedure extends beyond the non-electronic filing fee for nonprovisional utility applications and it also applies to the application size fee discount one would have received for electronically filing the application (multiply the size of your application by .75 to determine how many pages the application is considered for fee calculation purposes). This application size fee discount extends beyond just nonprovisional utility applications and pertains to Design/Plant/Reissue/Provisional applications as well.

    On the statement/request for refund, I learned from OPLA the office will be providing a form this week that meets their requirements you can fill out and submit.

    I was also informed that the application parts (Spec, Claims, Abstract, Drawings) + any preliminary amendments should be refiled electronically and there is no need to resubmit other items that accompanied your application. Index everything as individual items in your electronic submission.

    Hopefully this is helpful information for the community.

    1. Thank you for posting. This is very helpful.

      To emphasize one of your points … the $400 penalty does not apply to design or plant or provisional or reissue. And one might thus assume that today’s procedure would never have relevance to a paper-filed case that was filed during the recent outage, if it is a design or plant or provisional or reissue case. But (thanks to you!) we realize that such a case might hit 101 pages, and thus an excess-pages fee. And so if we manage to use today’s procedure we might end up getting back some money so far as excess-page fees are concerned.

      Again thank you for posting.

  3. Pace Neil Ormos, the contingency EFS MUST be made capable of accepting filings when any or all of the main systems are down, and synching them to the main PALM/PAIR later.

    Because the synch system will not be reliable, every filing should be stored under its receipt number, and there should be a one-page form available, saying, in effect: “During the outage we filed for application X a filing with receipt no. Y. You should by now have added filing Y to the IFW for application X, and you haven’t. Go and find it.

  4. Just tweeted about your posting. But looks like you overlooked a critical question: how much will it cost clients to have their attorneys do all the required steps to get a refund? While $400 is a lot of money, many IP attorneys charge well over $400/hr. So unless an attorney agrees to waive their fees (even if $400 penalties were not their fault), it could easily cost more than $400 in legal fees to seek a $400 refund. So seeking refunds seems like a bad use of an attorney’s time and focus.

    1. I agree that the refund will get burned up by attorney time in determining and executing best practices on a low-volume procedure like this that can’t be amortized over a bunch of applications.

      But there may still be value in electronically submitting a paper-filed application, and that is publication accuracy. I would assume the USPTO OCR will be far more effective on a clean PDF (especially if it contains text data) than a scan of paper.

  5. Slightly off topic but still related to the most recent crash, the PTO issued a notice today regarding the outage the entire notice is posted at:

    I’ve pasted the sections below which I believe is a change in how they have previously handled the filings submitted by mail during outages and was surprised to see it stuck all the way at the end of the document and it should be brought to everyone’s attention.

    “The alternative electronic filing means during designated significant unplanned electronic business system outages is as follows: The applicant must file the patent application during a designated significant unplanned electronic business system outage by an alternative filing method permitted by 37 CFR 1.6, such as by the Priority Mail Express® service of the U.S. Postal Service under 37 CFR 1.10 or hand delivery [2] to the USPTO. See MPEP § 502.05; see also Legal Framework for Electronic Filing System—Web (EFS-Web), 74 FR 55200, 55204 (Oct. 27, 2009).[3] Applicants are reminded that unless an application is filed by the Priority Mail Express® service of the U.S. Postal Service in accordance with 37 CFR 1.10, the filing date of the application will be the date on which the application is received at the USPTO headquarters in Alexandria, Virginia. Se e 37 CFR 1.6. In addition, a copy of the application must be filed via EFS-Web (or Patent Center [4] ) no later than: (1) One month from the date a filing receipt [5] is first issued for the application, and be accompanied by a request for refund, if the non-electronic filing fee has been paid; or (2) the expiration of the period for reply to a notice requiring payment of the non-electronic filing fee (e.g., a notice to file missing parts under 37 CFR 1.53(f)) if the non-electronic filing fee has not been paid.

    The copy of the application filed via EFS-Web (or Patent Center) must be accompanied by a statement that it is a true copy of the original application as filed by the alternative filing method during the designated significant unplanned electronic business system outage. The copy of the application also must be filed via EFS-Web (or Patent Center) as a follow-on paper in the application, and not as a new application. If the copy of the application is filed via EFS-Web (or Patent Center) as a new application, the copy will be treated as a new application, and the application filed by an alternative filing method will not be treated as an application filed by the prescribed alternative electronic filing means. The copy of the application should not be filed until applicant has received either a filing receipt or other USPTO notice identifying the application number assigned to the application.”

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