Wednesday, March 11, 2015 Battistelli makes proposal for unitary patent renewal fees

The unitary patent changes the way renewal fees are paid.

If you choose for classic EP validation, then after grant you cease to pay renewal fees to the EPO, but start to pay national renewal fees.  In case of a unitary patent, then after grant you will continue to pay renewal fees to the EPO, but do not start to pay national renewal fees. [Except of course for non-participating countries like Spain or Italy, where one would still do national validation and pay a national renewal fee].

One of the main open questions regarding the unitary patent is the level of the renewal fees.
 
Discussions about the renewal fee have been ongoing for some time, but are not public. Fortunately, IpKat has now leaked portions of a document  "Proposals for the level of renewal fees for European patents with unitary effect" that, apparently, Battistelli,  the president of the EPO, has sent to the Select Committee. I haven't seen the document myself yet, and am basing myself on what IpKat shared with us.

The first impression is that the document is not very surprising. For a long time, it was expected that the level of the unitary renewal fee would be based on the sum of about 4 or 5 national renewal fees. This document confirms that rumor. 

For patent proprietors who have license income based on the size of the economies their patents cover, it seems the unitary patent could be a good deal. For the price of a medium sized portfolio (4 or 5 validated countries) the area covered will be much increased.

In the document, two detailed plans for the unitary renewal fee are proposed. Both proposals have the same structure, in three phases:

Years 3 to 5:                 same as the current EPO renewal fees for patent applications (the "internal renewal fees (IRF)"

Years 6 to 9:                 a transitional level between the IRF level and the year 10 level

Years 10 and beyond:  a level equivalent to the total sum of the national renewal fees payable in the states in which European patents are most frequently validated (TOP level).

It is in the TOP level where the two proposals diverge. 

In a first proposal the Year 10 onwards level is based on current renewal fee levels for FOUR European countries (TOP 4 level). In the second proposal the Year 10 onwards level is based on current renewal fee levels for FIVE European countries (TOP 5 level) but with a reduction for certain categories of patentees, namely SMEs, natural persons, non-profit organisations, universities and public research organisations.

The following table gives the level of the proposed fees. The table is copied from the IpKat posting:

The first thing to notice is that both of the proposed renewal fees (Top4 and Top5) are actually lower than the EPO's current internal renewal fees for the first 10 years. So getting a grant within these first 10 year would lower your renewal fee cost compared to the renewal fee you would have to pay if your application was not yet granted. 

To put these numbers into perspective I compared the renewal costs for years 6 and 15 for traditional validations of three different sizes to a unitary patent using the TOP4 or TOP5 fee level.

The three validations that I've compared consisted of the following countries: Large (13 countries DE, UK, FR, AT, NL, BE, LU, IE, SE, DK, FI, GR, PT), Medium (5 countries: DE, UK, FR,NL, SE) and Small (3 countries: DE, UK, FR).

For the year 6 renewal fee, I get the following numbers:

Large EP validation:    1585

Medium EP validation: 651

Small EP validation:    309

Unitary Patent, Top4:   855

Unitary Patent, Top5:   880

For the year 15 renewal fee, I get the following numbers

Large EP validation:     7482

Medium EP validation: 3307

Small EP validation:     1906

Unitary Patent, Top4:    2830

Unitary Patent, Top5:    3300

As expected, for large validations the unitary patent is less expensive, while for a small validation the unitary patent is more expensive. The more interesting case is the medium validation. For the year 6 renewal fee, the unitary patent is more expensive, but for the year 15 renewal fee the TOP5 unitary patent is almost exactly the same. 

Agent costs and translation costs have not been taken into account. My first impression is that these proposals are not that bad. Especially, the TOP4 scenario seems like a good deal. Even compared to a modest portfolio, you get coverage for a much large area for the same amount of money. On top of this, you save on translation and administrative overhead.