Unitary patent: the cost of renewal
All eyes have been on the European Patent Office (EPO), the organisation that will grant the unitary patents, to provide some indication of what the costs for renewal will be.
The EPO’s president, Benoît Battistelli, has explained his thinking on renewal fees before.
“First and foremost it is necessary for the patent to be attractive, which means the fees should not to be too high,” he told WIPR in a September 2013 interview.
Two models
In March this year, 18 months after that interview, two fee models produced by Battistelli and his organisation were finally revealed.
The proposals were sent to the select committee of the EPO’s supervisory body, the Administrative Council (AC), and Battistelli has asked for the AC’s opinion on them. They are called ‘Top 4’ and ‘Top 5’. The names Top 4 and Top 5 refer to fees after ten years equalling the current combined renewal prices set in the four or five most popular EPO jurisdictions for filing European patents.
Both proposals would require patentees to start paying renewal fees in the second year of the patent. Under Top 4, the renewal price would start at €350 ($371) and increase each year until the 20th year, when it would be €4,855. If adopted, Top 4 would cost patentees €37,995 after 20 years, with €43,625 being spent under Top 5 in the same period. Top 5, under which renewals would also start at €350, would make the fees more expensive as they continued, reaching €5,500 in the 20th year.
However, Top 5 provides an incentive for small and-medium-sized enterprises (SMEs), non-profit organisations and universities in the form of a 25% fee reduction between the second and tenth year, at which point it would end.
At the moment, the EPO starts charging patentees renewal fees from the third year after their European patent was filed until it is granted. The fees start at €465 and reach €1,560 in the tenth year, after which they remain the same. But once the EPO grants a patent, it must then be validated in the chosen member states, which charge varying levels of renewal fees.
The top five EPO states for filings, according to the EPO’s most recent statistics, are: Germany (31,647), France (12,873), the Netherlands (8,104), Switzerland (7,890), and the UK (6,823).
Kay Rupprecht, an attorney at German intellectual property boutique firm Meissner Bolte, says “the costs are too high” and would, if enacted, “perhaps be counter-productive”.
Rupprecht predicts that people may be tempted to stay with the old system based on consideration of the costs.
“The equation is quite easy,” he tells WIPR. “If a European patent portfolio holder has to decide whether to choose a unitary patent or a European patent and whether to expose it to the Unified Patent Court or to remain within the old system, there are three things to consider: vulnerabilty, enforceabilty and costs.”
He adds that even if the first two aspects are not an issue, then the costs would be.
“If the portfolio holder cannot realise cost savings, he will stay within the old system as long as possible,” he says.
US scepticism
Aside from the combined EPO member states, the most popular filer of European patents last year by jurisdiction was the US, from where 71,745 applications were made.
John Pegram, senior principal at law firm Fish & Richardson in New York, says he is also sceptical about the current proposals. He says the most significant thing he has learned from US users of the EPO is that renewal conduct is primarily driven by budgets.
“The possibility of not renewing in some countries is an important tool in renewal budget management that will not be available with a unitary patent,” he says.
“I have urged the EPO to set the renewal fees at a lower level, preferably ‘Top 3’, and review the situation after five years. There could not be a significant loss in renewal fee income during that time [for the EPO] and the fees could be adjusted—if necessary.”
That view was echoed by the American Intellectual Property Law Association (AIPLA), which sent a letter to Battistelli and Jérôme Debrulle, chair of the AC’s select committee, in response to the proposals.
In its letter, the AIPLA said it also preferred a Top 3 proposal and that it “continued to object” to the Top 4 and Top 5 models “even with a reduction for SMEs”, as the proposals are “too costly to be attractive for a significant number” of users.
“The possibility of not renewing in some countries is an important tool in renewal budget management that will not be available with a unitary patent.”
The letter, sent on March 19, said: “Unfortunately, we have not seen any analysis that would support the assertion that the level of unitary patent renewal fees suggested in the proposal would be attractive to SMEs, even with the proposed reduction.
“As with other users, validation of a European patent in individual states participating in the London Agreement, with the opportunity to selectively abandon in some states to control costs, is likely to be more attractive to patentees in those categories than either alternative in the proposals.”
But Debrulle tells WIPR that while Top 4 and Top 5 are the two current proposals, alternative models are “of course possible”.
“Member states will need to conduct their consultations on the proposals, and it does need to be attractive for users.”
Debrulle says a final decision is expected by the end of June.
