Wednesday, June 24, 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.

Friday, June 19, 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, Benoît 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.

Friday, May 29, 2015 New proposal renewal fees unitary patent

The EPO has made a new proposal for the level of the renewal fees that would be payable for a unitary patent. Accompanying the proposal is a document with costs comparisons between a classic European patent and a unitary patent.

According to the document, the new proposal is in response to requests that the level of the renewal fees payable during the first few years of a unitary patent's life be adjusted. The adjusted proposals, bases the fees for the first ten years on the sum of the national renewal fees payable in the countries in which European patents are most frequently validated.

The previous two proposals had names TOP4 and TOP5. The TOP5 proposal is higher than the TOP4 proposal but has a fee reduction for small and medium sized enterprises (SMEs). The new proposals are named true TOP 4 and true TOP5.

The new true TOP 4 renewal fee scheme level is based on the sum of the renewal fees paid today for the four most frequently validated countries. The true TOP 5 level is based on the sum of renewal fees paid today for the five most frequently validated countries.


The new renewal fees are in the table below, together with the previous proposal.

	Top4	True  Top4	Top5	True Top5
2nd year:	350	35	350	85
3rd year:	465	105	465	165
4th year:	580	145	580	255
5th year:	810	315	810	455
6th year:	855	475	880	645
7th year:	900	630	950	825
8th year:	970	815	1110	1050
9th year:	1020	990	1260	1255
10th year:	1175	1175	1475	1475
11th year:	1460	1460	1790	1790
12th year:	1775	1775	2140	2140
13th year:	2105	2105	2510	2510
14th year:	2455	2455	2895	2895
15th year:	2830	2830	3300	3300
16th year:	3240	3240	3740	3740
17th year:	3640	3640	4175	4175
18th year:	4055	4055	4630	4630
19th year:	4455	4455	5065	5065
20th year:	4855	4855	5500	5500
Total over 20 years	37995	35555	43625	41955
Total over 10 years	7125	4685	7880	6210

As you can see the renewal fees are considerably less in the early years. This means that the price increase after grant of patent has disappeared. The total renewal cost over the first 10 year is thus reduced: 34% for Top4, 21% for Top5.

Over the total 20 years patent can remain in force, the total cost reduction is less in percentage. (The table does not show the renewal fees for SMEs in case of the TOP5 proposals. Both in case of TOP5 and in case of True TOP5, some entities receive a 25% cost reduction).

The graph below shows the accumulated costs in euro for the Top4, True Top4, Top5, and True Top 5.  

Thursday, March 26, 2015 Renewal fees discussed in Select Committee at EPO

On 23 and 24 March 2015 the Select Committee held its 13th meeting at the EPO in Munich.

According to a leaked document, reported earlier, the EPO President Battistelli had proposed two different renewal fees schedules for the unitary patent. These schedules are referred to as TOP4 and TOP5. In the TOP4 and TOP5 proposal the level of the renewal fee of the unitary patent would be equal to the sum of the national renewal fees payable in the 4 or 5 states in which European patents are most frequently validated. In the TOP5 proposal there is a 25% reduction for the early renewal for some applicant, e.g., the SMEs.

In a communiqué of the select commission these proposals for the renewal fees have now been confirmed. 

There have been complaints from the industry  that these proposals are too expensive. On the other hand the renewal fees are a major source of income for the patent offices. All (participating) national patent offices are represented in the Select Committee.

The Member States debated the level of the renewal fees and how these renewal fees should be distributed among the participating member states.

In a traditionally European patent only a state in which the patent is validated benefits from renewal fees paid after grant. In a unitary patent this natural distribution method is unavailable, as the unitary patent will be valid in all participating member states--no separate validation is needed.

Nothing has been decided, neither on the level nor on the distribution of the renewal fees, but,  the Select Committee confirmed a commitment to take these decisions by the end of June 2015.

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.

Monday, July 14, 2014 Is Hungary getting cold feet for unitary patent?

Although, Hungary has not yet ratified the critical Agreement on the Unified Patent Court, they were on course for it. Hungary has signed the agreement, is part of the EU unitary patent regulations, and will host one of the unified patent court's institutions, the Training Centre for Judges in Budapest. But now, Hungary apparently has some reservation about joining the unitary patent system, at least for just now.

Mr. Mihály Ficso, the Vice President for Legal Affairs of the IP office of Hungary, has given a presentation at the Premier Cercle's Unitary Patent & Unified Patent Court 2014. According to a report of Mark Richardson at Ipcopy, Hungary has a number of reservations:

- Ratification of Hungary will increase the number of valid patents in Hungary,
- Hungary may benefit from the unitary patent system without taking part in it,
- There are concerns about machine translations
- Renewal and court fees are not yet known


Mr. Ficso added that there is still a political will in Hungary to ratify the agreement. If I am not representing the Hungarian position fairly, I do apologize. Anybody who was actually at the presentation should feel free to correct me in the comments.


In part I can sympathize with the comments made by Mr. Ficso. All four reservations are true, yet I do not think they should block joining the unitary patent system.

The number of patent rights valid in Hungary will surely increase if the unitary patent is a success. This will hold for all participating countries though (perhaps excluding Germany). I'm not sure I agree with the underlying assumption that having a patent system that encourages not to protect your innovations would be an advantage for an economy.

Indeed, Hungary would benefit from the unitary patent system, even if it didn't take part in it. In fact the whole world will benefit from an improved European patent system. Also Hungarian companies could protect their innovation in a large part of Europe at low cost. Nevertheless, it would be even better for Hungarian companies if they could also protect their home market at the same time.

The concerns about machine translations are also valid. On the other hand, working with many languages is a reality of the patent profession. Machine translations have made life a lot easier. Although a human translation is (almost) always better, machine translations have advantages though. They are less costly, and are immediately available when needed. Should controversy arise, a human translation can always be made.

After the introduction of the London Agreement (of which Hungary is a member), translation requirements were greatly reduced. For example, a few years ago Hungary abolished the requirement that a full translation was needed. At present only the claims of a European patent need to be translation into Hungarian for validation.

As to the renewal fees. That we do not know their level is annoying. We only have Battistelli's enigmatic "They will be higher than many would hope, but lower than some might fear." On the other hand, Hungary takes part in the discussions regarding the level of these fees. If there are concerns as to their level, Hungary can influence the discussion.

I wish Mr. Ficso good luck in addressing these concerns, and I hope that in future I will be able to offer protection in Hungary to my clients as part of the unitary patent.

Monday, June 02, 2014 Expected timeline for unitary patent and unified patent court

I noticed that recently a progress report on the implementing of the unitary patent and unified patent court  has been filed with the Council of the European Union.

The document contains quite a number of expected dates for various milestones. I've created a rudimentary timeline by listing these dates in order. 

Both the EPO and the UPC have set up a committee to prepare these institutes: the Preparatory Committee for the unified patent court and the Select Committee for EPO.  I've also included a few dates from the updated timeline of the Select Committee.  These documents seem to agree well with each other.

This timeline does not include the ratifications of the member states, which are of course a requirement for the system to become operational.

Timeline 2014

Wednesday, May 07, 2014 EPO board issues a statement on the Unitary Patent and Unified Patent Court.

The Economic and Scientific Advisory Board (ESAB) of the EPO has issued a statement on the Unitary Patent and Unified Patent Court.

The statement is generally positive, and points out a number of advantages of the new system. According to the Board:

Benefits of the unitary patent include:

• Administrative simplification of patenting in Europe, 
• Potential for saving costs, including validation, translation, and post-grant administration costs, 
• Geographic extension of patent protection. 

 
 Benefits of the unified patent court include:

• Reduction in the high cost of enforcement for firms that validate in many or all member states
• Developing harmonized and consistent jurisprudence throughout the territory of the member states

Concerns include

• Unitary patent renewal fees and the costs related to litigation before the Unified Patent Court
• Increased complexity due to the additional tier added to the patent system
• Non-Practising Entities may become more active in Europe

The findings of the Board are based on a workshop they organized in December 2013, and a study they commissioned to Europe Economics.

Wednesday, December 11, 2013 Level of Renewal fees not expected soon

One of the open question regarding the unitary patent is the level of the fees. Of immediate concern is the level of the renewal fee. After a unitary patent has been granted, one does not pay individual renewals for all participating states, but instead one central renewal fee, to be paid to EPO.

The level of the renewal fee will determine where the break-even point will be, cost-wise, between classic validation and a unitary patent.