No, that won't work - the USPTO is already a profit center, so why aren't they doing a better job right now?
Being paid more to approve more patents is a perverse incentive so egregious it's incredible the system was setup like it was.
No matter what the fees are, decreasing the percentage of patents granted will effectively cut the budget of the agency. Even upper management that is sympathetic to the cause of increasing patent quality is going to find raising standards very painful.
Their budget needs to be completely decoupled from their revenue.
Nah, they're just doing it wrong. Let it work like this: You file a patent application, you pay all the fees you'll ever pay to the patent office, up front. No refunds if your patent is not approved, and the number of appeals/filings/whatever is limited to prevent large corporations from throwing lawyers at denials until they're approved.
Then they have an incentive for more applications, but little perverse incentive to approve them.
Of course, if they get a reputation for denying spurious claims then they won't get as many applications from spurious applicants, but that's true regardless of their funding source -- you can't produce a sensible budget without considering the number of applications they're expected to process. If the PTO's goal is budget maximization then they'll want to maximize the number of applications, which means providing incentives (in the form of low standards for patentability) for applicants to file more applications. You can't really fix that without creating some powerful incentives for not approving bad patents, like fining the head of the PTO $100K personally for every patent the PTO approved and the courts have to invalidate.
