Is The Trump Administration Coming for Our Patents?

by Dale Salton

No.         

However, the Senate Committee on Finance recently sent a bipartisan letter to the Secretary of Commerce conveying “significant concerns” regarding the administration’s announcement that it is exploring a new policy to impose fees on U.S. patentholders, ranging from 1% to 5% of the patent’s value.  On the surface, the administration’s proposal raises more questions than it answers—to start, how will “value” be determined?  But setting aside the mechanics of the policy, it’s interesting to consider how companies might respond to such a change.  While large enterprises may have the scale and strategic flexibility to absorb or offset higher costs—through patent-pooling alliances, licensing strategies, or even by emphasizing their international IP portfolios—small and medium-sized businesses would likely feel the burden more acutely. 

For many SMBs, patents are less about building large defensive portfolios and more about protecting a small number of core innovations.  Adding new, higher fees could alter how these firms approach both patenting and monetizing intellectual property.   

Pending any concrete proposals for actual implementation, we imagine several strategic responses that businesses may consider:  

1. A “Sniper Rifle” Approach to Patent Coverage 

Historically, some companies have taken a “shotgun” approach to IP, filing broadly across products and geographies to achieve diverse coverage.  However, this approach could become unsustainable under the new fee structure.  Instead, businesses would need to file with more precision: seeking patents only in areas where they are likely to have the greatest strategic or commercial value, and only on “crown jewel” products. 

2. Maximize the Value of Existing Patents 

Earlier this year, the WIPO’s IP Finance Dialogue 2025 emphasized the growing prominence of IP-backed financing, a tactic which often allows young companies to take on non-dilutive capital by collateralizing their patent holdings.  Unfortunately, the addition of new patent fees could increase the effective cost of this capital past the point of economic viability.  Assuming the proposed fees are implemented on all patents rather than just “earning” patents, companies cannot afford to let them sit idle.  Instead, they would need to pursue traditional monetization strategies: 

• Licensing deals with new entrants (or large incumbents) that can generate recurring revenue. 

• Enforcement strategies that ensure patent rights are fully exercised against infringers.  

• Cross-licensing arrangements that reduce litigation risk and enhance bargaining power, extracting potentially unrealized value from them (albeit not direct monetary value). 

• Evaluating and incorporating patents in other business transactions, making them a lever for investment or partnerships. 

3. Trim and Refocus IP Portfolios 

The new fees could force businesses to re-examine whether every patent in their portfolio is pulling its weight.  Businesses may need to prune weaker or analogous patents and double down on those that contribute directly to growth, profits or limit competition.  In some cases, it may make more sense to let more ancillary patents lapse rather than pay ongoing fees tied to a theoretical patent valuation that the holder does not, or cannot, recoup. 

4. Explore Alternative IP Protections 

Companies may also look beyond patents and consider alternative forms of IP to protect their products where feasible.  Asset-light, tech-focused businesses may consider trade secrets or copyrights as alternative, and often lower-cost, tools to protect key software or computing innovations—particularly those that are difficult to reverse-engineer.  Interestingly, we are already seeing new AI companies forgo patent protection in lieu of simply maintaining the confidentiality of key algorithms.   

Meanwhile, B2C, and even some B2B companies may refocus investment on establishing and cementing their trademarks and branding to differentiate their products. 

Is this plan happening? 

Also probably no (but honestly, who can say). 

At minimum, the plan faces severe headwinds.  The U.S. Chamber of Commerce already warned the Judiciary Committee about the potential negative consequences of the proposal on American innovation.  Certainly, one would expect the policy to have an immediate impact on the hurdle rates companies apply when evaluating potential R&D investment.   

Nevertheless, in a recent statement, acting director of the USPTO Coke Morgan Stewart noted the potential disconnect between the current, relatively low costs for IP filings and the massive value these filings often represent for American companies.  It is certainly true that addressing this issue by increasing fees would be a potentially deficit-narrowing plan that could appear attractive to the current administration. 

We will save those types of macroeconomic questions for another day.  At minimum, these new fees would represent a significant shift in U.S. patent policy, one that could reshape how businesses think about IP strategy.  While large corporations have multiple levers to manage the impact, mid-market companies will need to adopt a leaner, more deliberate approach—filing fewer but more valuable patents, ensuring they are fully monetized, aligning decisions with the valuation framework used, and exploring complementary protections.  For now, we wait.  

How Patent Valuation Methods Will Shape Strategy

The biggest unknown in the proposed fee structure is how the government would assign and track patent “value.”  One would assume that limiting the regulatory burden and overhead/oversight costs would be a major concern if this were actually implemented.  Some type of automated, AI-infused analysis could potentially be useful, however, the way in which the standard valuation approaches are applied could impact how businesses evaluate the decision to file for new patents.

Income Approach: Calculate the present value of expected future revenue, profits, or cost savings attributable to the patented technology. 

• Impact: Pushes companies to track, forecast and prove the revenue impact of their IP.  Regardless of patent portfolio size, establishing the reliability of these forecasts may be difficult.  However, such estimates could also provide useful perspective should litigation around the patents arise later.  

Cost Approach: Often based on the R&D expenses incurred to develop the invention, or the costs that the patentholder (or potential infringer) would face to develop an innovation with comparable technical benefits. 

• Impact: Lean R&D teams may benefit, but businesses investing heavily in innovation could be penalized, especially if the technology isn’t yet commercialized.  Non-profit or university researchers will likely compete for a smaller available pool of funding.  The cost approach alone often does not reflect the full value of an invention. 

Market Approach: Uses comparable licensing deals or patent sales. 

• Impact: Limited public comparables that are unlikely to hold up to litigation scrutiny.  Patents in hot sectors (AI, software, pharma/biotech) become the most expensive to hold.  SMBs in these industries may cut back on broad filings.