Tuesday, 19 March 2013

Unitary patent renewal fees

What is a “fair” renewal fee for a unitary patent?

Council working document 13752/08 and 13752/08 Cor 1 in October 2008 published eight scenarios for possible renewal fees, these scenarios ranging from lifetime renewal fees amounting to €36152 to €89902 for the (then) 27 potential countries. 

Even the lowest hypothesis is 50% more than the accumulated lifetime fees for DE, FR and GB.  A 50% increase in fees for a 90% increase in covered population and 66% increase in covered GDP does not sound a bad bargain.

The average of the eight scenarios had lifetime renewal fees amounting to €60735, a 153% increase in fees. Not so good a bargain. Anything above that average would be extortionate and probably guarantee a low take up for the unitary patent.

However the proposed methods for the calculation of renewal fees do not take into account the significantly different value for money of national renewal fees.  As can be seen from the following chart, there is an extremely good fit between value for money and population.

Looking in more detail, the following table shows a distinct difference in value for money between the larger EPC countries [Germany, Turkey, France, United Kingdom, Italy, Spain and Poland – only three of which might (must) participate in the unitary patent] and the rest. The graph shows both cost per million population and cost per billion GDP [pre-crash figures I fear - and I have left out Monaco because that is ridiculously poor value].

So far as the applicant is concerned,  value for money would best be represented by fees giving roughly the same cost per million population as the cost for Germany, France and  United Kingdom (or even less as Germany has very high fees at the end of patent term). 

The average for Germany, France and  United Kingdom  works out at about €115 per million population. With a total potential population of about 360m for those countries that might yet sign up for a unitary patent, this gives total lifetime renewal fees of about €41,000, around the lower end of the Council estimates. 

What is fair for participating states?

One’s first thought would be that the distribution key for renewal fee income should be simply based on population. However the gross overcharging of many countries would make that a significant drop in per patent fees. 

But what do not appear factored into the Council working documents are the difference in validation and maintenance rates from country to country. Not surprisingly, those countries where patents are not good value have lower validation and maintenance rates than those where patents are good value. 

Roughly, the smaller the country, the lower the validation rate and the earlier patents are abandoned. 

Applicants are not stupid and value for money is a major factor in deciding whether to validate or maintain a patent. A common strategy is to reduce the number of validations towards the end of patent life.  So getting a small slice on a lot of unitary patents may be of better value to some countries than getting a big slice on a few bundle patents. 

Of course politics intervenes, and it will be interesting to see what is eventually decided.

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