From a letter penned by David Boundy, VP of IP at Cantor Fitzgerald, with a little help from his friends, and a lot of support from a wide variety of knowledgeable interests, sent to Stephen S. McMillin, Deputy Director, Office of Management and Budget, and Michael Bopp, Associate Director with budget oversight over Commerce Department agencies.

USPTO will admit that these two rules [limiting examination claims and continuations] would (a) immediately reduce revenues on adoption, and (b) forfeit revenues of approximately $70 million per year within 3 years, growing by about 10% per year thereafter. We believe that the rules will also substantially increase costs for the USPTO.

Ironically, the USPTO is proposing to reduce its most profitable products.  USPTO’s projections... reveal no consideration given to the adverse budget effects of the proposed revenue cuts (some of which cannot be restored without congressional action to increase user fees), the selective effect on USPTO’s highest-revenue and lowest-cost-per-revenue-dollar applications, and the adverse affects of this budget impairment on future patent quality or pendency... Note that USPTO's patent operations are fully funded by user fees - thus the USPTO's intended reduction in patent applications translates directly to top line revenue loss. We estimate, based on USPTO's own figures, that the revenue loss will be some tens of millions in the first year, growing to about $70 million per year by FY 2010, and thereafter grow by about 10% per year... Strikingly, the... applications that USPTO proposes to do away with are the highest profit applications - the average revenues are significantly higher , and they are the applications that are least expensive for USPTO to examine.

USPTO will concede that the [limits on claims] rule [would have] an immediate downward effect on revenue... Four factors that USPTO did not consider (at least not in any document that USPTO made available during the rulemaking process or by FOIA request), suggest that the Limits on Claims rule will be revenue-negative, and that the loss in revenue will be significantly greater than the costs USPTO hopes to save.

Alternatives exist that would likely cut USPTO's costs with literally no adverse effect, but USPTO failed to consider them... At the request of USPTO, Congress authorized "examination on request," a procedure long used in Japan and Canada, which would allow USPTO to let applications lie fallow until the applicant expressly requested examination and paid a fee. Experience in other countries suggests that a substantial fraction of applications are abandoned with no expenditure of effort by the Office, reflecting a potential immediate savings of 20-25% in workload and financial efficiency... USPTO has not even floated a proposed a rule to implement this authority.

The deal goes down by July 10. If the rule changes saunter on, Cheney-style, as expected, court challenges await.