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The draft  rules of the EPO for the unitary patent add that the offer may be withdrawn at any time, though you'll have the pay back all renewal fee reductions.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

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