Wednesday, 24 June 2015

Epo sets level of renewal fee for unitary patent

The EPO announced that the level of the renewal fees for a unitary patent will be set according to the 'true Top 4' level. This makes this the first of the new fees that have been definitely decided and is out of the draft phase. As to the EPO, they remain on course for granting the first unitary patent in 2016 (if all other parties will also remain on course remains to be seen, as discussed earlier.)

Not knowing what the renewal fees would be was frequently cited as the major stumbling block for applicants in planning their filing strategy. Ignoring the fees for eventual litigation, there are three fees that will be relevant when deciding for or against the unitary patent: the opt-out fee, the renewal fee, and the cost of requesting unitary effect. The renewal fees are now decided. I'm not sure the cost for requesting unitary effect has been formally, but is has been known for some time that this will be free. In the current draft, an opt-out for a patent or patent application will cost €80.

Based on these fees, an applicant can take a look at its patent portfolio and run the numbers.

The true top 4 renewal fee are based on the sum of the renewal fees currently paid for the four most frequently validated countries (Germany, France, UK and the Netherlands). Speaking purely financially, this would make the unitary patent attractive for:

  • Applicants who currently validate in four or more countries
  • Applicants who currently validate in fewer than four countries, but who expect that the reduced validation and renewal overhead compensate for increased renewal fees
  • Applicants who currently validate in fewer than four countries, but who want 'more protection per renewal euro'
The renewal fees cover 'the territory of the participating 25 EU Member States'; so I do not expect the renewal fee to increase if more countries ratify. However, the renewal fees may be revised after four years. (I presume this means in 2019, not necessarily after four years of unitary patents.)

Battistelli commented that
"I am confident that today's decision strikes a positive balance, ensuring that the fees represent a real cost saving to the user and also providing a healthy operating budget for the EPO and the participating Member States. This is another major step in achieving truly uniform patent protection in Europe." 
The Select Committee now needs to decide how the renewal fee income will be distributed between the member states. For sure this will not be an easy discussion, but this will not make as much of an impact on the end users of the new system.

Uncertainty about unitary patent in 2016

Both the unified patent court and the EPO are optimistic about 2016 to start the unitary patent system. Kevin Mooney, who chaired the Drafting Committee of the unified patent court, said that the unified patent court could start taking its first cases in October 2016. Batistelli, the president of EPO has recently said that he expects the EPO to grant the first unitary patent in 2016.

On the ratification side, there is progress as well. Currently 7 out of the required 13 countries have notified the Council of the European Union of their ratification. 

On the other hand some countries are indicating delay in their ratification.

David Cameron said he wants the have an 'in-out' referendum at the end of 2017. It seems unlikely, that the UK will ratify a major new European project on the brink of deciding if they want to stay in the EU at all. Without the UK, the unitary patent cannot start. This would mean that the unitary patent would be postponed to 2018. Assuming of course that the UK decides to stay in the EU. If they would leave the EU, it is unclear what will happen.

Ireland has previously said that they will have a referendum on the unitary patent. But recently, Irish minister James Reilly indicated that there would be no more referenda during this Parliament.This means that Ireland cannot decide on the unitary patent until after the next elections. This would push an Irish ratification well into 2016. Poland has indicated that it will not ratify at all.

Monday, 22 June 2015

Reduced renewal fees unitary patent in exchange for willingness to license

Part of the renewal fees proposal that EPO made (we wrote previously) is also a proposed reduction in the reduction fees of 15% if a patent proprietor is willing to license his patent. Assuming true Top 4 proposal, favored by Batistelli, renewal costs for a patent could be reduced over the maximum 20-yearlifetime of a patent by about 5000.

There are two requirements to get the fee reduction. First of all the patent must be granted with unitary effect. Second, the proprietor should file a statement with EPO stating that he is prepared to allow any person to use the invention as a licensee in return for appropriate consideration.

The draft  rules of the EPO for the unitary patent add that the offer may be withdrawn at any time, though you'll have the pay back all renewal fee reductions.

Apparently, such a 'license of right' already exists in the UK and Germany. However, these schemes give a renewal fee reduction of 50% instead of 15%. According to the EPO proposal this fee reduction was chosen because:

This percentage would be attractive enough to help SMEs or universities looking for licensing partners, without creating a purely financial instrument for firms already engaged wholly or partly in licensing activities.

According to the article "The License of Right, Compulsory Licensing and the Value of Exclusivity" by, Ilja Rudyk (2012), the license of rights is declared for 6% of all German patents. He also gives the following percentages broken down to technology and applicant type:

Technology areas:

 Electrical engineering: 11%
Chemistry and biotechnology: 1.3%

Applicant type

Large corporations: 12%
Small corporations: 2%

The unitary patent renewal fee reduction was intended for SMEs. If the situation in Germany is representative, it seems that large electrical engineering corporations will make the most use of this feature of the unitary patent system. 

Whether a 15% price cut will be attractive enough for those companies to make use of the fee reduction system, remains to be seen though. I suppose the main question is how an offer to license will affect litigation. My fear would be that this license offer will reduce the likelihood to get an injunction; If you offer to license, you may give the impression that exclusivity is not that important to you.

Friday, 19 June 2015

EPO favours lower renewal fees

 Last Monday  the Committee on Legal Affairs of the European Parliament had an 'Exchange of views the President of the European Patent Office, BenoĆ®t Batistelli' (here is the agenda of the meeting).

I haven't seen meeting notes of that meeting, but according to Intellectual Property Watch
the EPO favors the so-called Top 4 proposal for the renewal fees. Currently discussions around the unitary patent renewal fees focus on two proposals made by the EPO: the "Top 4" and the "Top 5" proposal.

In the "Top 4" and "Top 5" proposal, the renewal fees are based on the current renewal fees that would be due for a validation in four, or five countries respectively. In the Top 5 proposal there is a reduction for some patent proprietors, in particular SMEs.

The Top 4 proposal has lower renewal fees and fewer rules; There is no need to keep track if an applicant is still small enough to fall under the SME definition. Apparently, it is also what the EPO favors.