Thursday, 14 May 2015

Patent fees: do they make a difference? CIPA speaks out

EPO's fee policy?
Do official patent fees make much of a difference to the overall cost of protecting innovation?  It can be argued that, against the cost of professional charges incurred in drafting and processing applications in the first place, the cost is relatively trivial.  This is not however the case for many SMEs and individual applicants, who may have limited resources and borrowing power and little or no inward cash flow.

Put in simple terms, there are two sets of fees. The first relate to the cost of filing and dealing with a patent application and these are incurred by all applicants.  The second relate to the cost of renewal of a granted patent. While these are in theory incurred only by successful applicants, they are higher and are regarded as being more burdensome since it may be many years (or never at all) before a patent generates any sort of income, but non-payment of maintenance fees will lose protection in the relevant market.

In March of this year the European Patent Office (EPO) released its proposals for renewal fees, discussed on the IPKat weblog here.

On the assumption that the level at which official fees are pitched may determine the number of countries in which patent protection is sought or renewed, at least one influential body believes that the scale at which those fees are set may be sending out a message regarding domestic competitiveness.  The following media release was issued by the Chartered Institute of Patent Attorneys (CIPA) in the UK, one of the largest and most articulate professional bodies within the patent profession. This is how it reads:
High fees could destabilise the European patent system, warn attorneys

UK Patent attorneys are warning that setting high fees for the new European Unitary Patent risks destabilising the patent system across the continent. “If fees are too high they could send a message to the world that Europe is uncompetitive,” said Jim Boff, Chairman of the CIPA Patents Committee:
“Lower fees are far more likely to attract businesses that currently only file patents at their national offices, thus increasing the number of European applications, fostering competitiveness, stabilising the new system, and helping small and medium size businesses become big businesses.”
The Court of Justice of the European Union last week dismissed the final legal obstacles to the setting up of a new patent system for Europe. However, the level of court and renewal fees for the new system remains a major issue for agreement among member states.

The lowest of the proposals so far made public is for patent renewal fees to be set at the equivalent of the combined cost of filing in the four countries with the highest number of patent validations (Britain, France, Germany and Netherlands). CIPA believes that setting fees at this level (or higher) risks destabilising the entire European patent system.

Netherlands is the third most expensive country in which to file after Germany (1st) and Austria (2nd), which means that a true “Top 4” calculation for renewal fees based on GB + FR + DE + NL would result in a fee level much higher than average patenting costs.

CIPA is proposing that at the outset renewal fees be set at a near “Top 3½” level as approximating the true average of renewal fees across all Member State signatories to the Unitary Patent Agreement).

Various considerations underpin applicants’ preference for GB, France and Germany among the Member States, but the provisions of the London Agreement, which make patenting in these countries financially attractive and easier as there are no translation requirements, is a key factor.

In CIPA’s view, the fees in these three countries offer a reasonable base line for setting out the Unitary Patent (UP) renewal fees level (even though Germany has the highest fees in Europe – a privilege it enjoys through being the biggest economy in Europe).

Under the Unitary Patent Court (UPC) Agreement, an inventor applying for a UP will be able to enforce this patent in the 25 Member States. Given the geographical scope covered by the patent, it would be understandable to charge more than the basic rate of GB + FR + DE.

CIPA also believes that this formula would align renewal fees with the objectives of the UP system, as set out in Article 12 of Regulation 1257/2012 which addresses various aspects of UP implementation.

In accordance to Article 12(1), the level of renewal fees should be high enough to cover the grant and administrative costs of the unitary patent and ensure that the budget of the EPO is balanced. Article 12(2) explicitly states that the renewal fees should be set at a level which makes the UP accessible to SMEs, facilitates innovation, fosters the competitiveness of European businesses, reflects the size of the market, and is similar to the level of national renewal fees for an average European patent. Our proposal meets these requirements.

If fees were set any higher than our proposal, we fear that: many SMEs would choose to spend their limited budgets on filing at their national office, rather than take the opportunity for broad European protection; and that a message would be sent to the world that Europe is not competitive.

CIPA’s proposal is for renewal fees during the initial stage of the UP. In the light of experience with take up of the UP the fees should be adjusted to ensure that they meet the requirements of the regulation and of European and UK businesses.

CIPA believes that setting fees at our proposed level would:

  • encourage more users into the European patent system,
  • increase income to the EPO
  • stabilise the new UP system
  • have a positive impact on innovation,
  • increase the competitiveness of European businesses.
This blogger is not aware of other professional bodies in the EU having issued their own statements concerning renewal fee levels, and would be grateful if any knowledgeable reader(s) could supplement his knowledge.

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