For those of you following the trials and tribulations of the Patent Office, they are reporting a significant decline income because of the reduction of issue fees being paid. It is even rumored that they may be laying off examiners (denied by PTO management). So we perform a more rigorous examination, and the number of patents issued goes down then we get laid off.... the incentives in the system are completely inappropriate.
Under the Patent Demand model, the $50,000 application fee (for large entities only) covers all fees related to the application, prosecution, appeal to the Board and life of the patent. Applicants pay only once and the USPTO is fully funded by the application fees. Denial or allowance of a patent application becomes irrelevant to the financial health of the USPTO (and the Examination Corp).