Thursday, May 8, 2014

Current Status of USPTO Silicon Valley Office Developments

SCCBA Blog - May 6, 2014

City of San Jose approves USPTO Silicon Valley Office lease; satellite office expected to open after July 2015

The City of San Jose revealed in an April 1 memorandum that construction of the United States Patent and Trademark Office’s (“USPTO”) Silicon Valley Office is scheduled to start in May 2015 and be completed in phases by July 2015. The USPTO will lease 35,194 square feet of space in City Hall for the office.  The San Jose City Council unanimously approved the terms and conditions of the lease on April 15.
After numerous delays caused by the U.S. government budget sequestration, the USPTO finally selected City Hall as the venue for the Silicon Valley Office in November 2013. The office will be located in the City Hall Wing, occupying three floors. The space will encompass the 4th Street retail space, which is currently vacant and undeveloped; all of the 2nd floor of the wing; and a portion of the 3rd floor of the wing that faces 4th Street. The 4th Street retail space (the first floor) will be the public facing community outreach space, allowing local inventors and entrepreneurs to have convenient access to databases, resources, and experts. The space will also include training and meeting areas.

The estimated cost of construction is $6 million, to be paid by the USPTO. To make room for the Office, the City will relocate some of its employees to other parts of City Hall. This will cost the City $4.66 million, including the cost of design, construction, and employee relocation. The City expects the cost to be covered by the first five years of rent payments under the lease.
According to the lease terms, the USPTO will pay market rate rent to the City for the first five years. Thereafter, the USPTO has five one-year options to extend the lease at 50% of the market rate. After the initial ten years, the City will decide whether to extend options for another ten years, with rent to be at the market rate. Included in the rent will be utilities, maintenance, and repairs. The USPTO will cover its own security and janitorial expenses.

The USPTO and the City of San Jose expect that the new satellite office will greatly assist in accelerating the patent process. The establishment of satellite offices stemmed from the need to reduce the USPTO’s backlog. According to the City’s April 1 memorandum, approximately 110 new jobs will be created: 80 patent examiners, 20 administrative judges, and 10 management, administrative, and IT staff. The City expects that the City Hall location will help draw more law firms and search firms to the area as well.  The lease is thus expected to generate a significant amount of revenue for the City and provide a boost to local business.
The USPTO has requested that the City, through its Public Works Department, manage this project pursuant to a joint procurement of design-build services for both the Patent Office and the relocation of City employees. The USPTO has agreed to pay the City for the project management services.