The Unitary Patent (UP) will allow inventors to acquire pan-European protection without having to “validate” the granted European patent in every country of interest. Validation involves preparing partial or complete translations of the granted patent for each country. Additionally, annual renewal fees are payable for each country in which the granted patent has been validated. Since the London Agreement came into force the translation requirements are less onerous but the renewal fee burden still exists. The Unitary Patent as proposed dispenses with the need for validation, but still requires the payment of a single renewal fee.
After much speculation the EPO released two proposals for the level of renewal fees for the Unitary patent in March of this year. These proposals were referred to as the ‘UP TOP4’ and ‘UP TOP5’ as, from the 10th year, the UP renewal fees matched the cumulative renewal fees payable respectively in the four and five most commonly validated in countries. In the first half of the patent term, however, both of these early proposals first matched the current EPO internal (pre-grant) renewal fee level (in years 3-5) and then provided a “transitional level” (in years 6-9) between this initial fee level and the cumulative fee level for the most commonly validated countries.
Stakeholders criticised this proposal for setting the fee level in the first half of the term very high and requested that the level in the first nine years be reduced to the sum of the national renewal fees that would be payable in the four and five most validated in countries. The same parties predicted that, despite the many other attractions of the proposed UP, applicants would be unlikely to use the UP if it is more expensive than the European patent protection already available.
These concerns did not go unheeded. The president of the EPO has, on 7 May 2015, sent two “adjusted” proposal for UP renewal fees to the Select Committee of the Administrative Council of the European Patent Organisation for consideration. In the document containing these proposals (SC/18/15), emphasis is placed on the above mentioned concerns raised by stakeholders and on the EPO’s reaction to them. The two new proposals are named “true TOP4” and “true TOP5” and track the sum of the renewal fees that would be payable in the respective four and five most commonly validated in countries over the entire patent term and not just over the second half thereof. Both proposals retain the previously proposed annuity payment for the second patent year to cater for the rare situation where the EPO grants a patent that early in its term. Some national patent offices do require a payment at this early stage while the EPO pre-grant annuity regime does not.
At a fee level of €35 (true TOP4) and €85 (true TOP5) the extra costs added to the lifetime costs of a patent are relatively small. Both proposals retain the 15 per cent fee reduction for patents offering licenses as of right and the true TOP5 proposal retains the 25 per cent fee reduction for SMEs, natural persons, non-profit organisations, universities and public research organisations.
In making these proposals the EPO has reacted directly to the criticism levelled against the high fee level that had been proposed in the original proposals for the first half of the patent term. The overall fee level payable under true TOP4/true TOP5 is €2,440/€1,660 lower than proposed under the original TOP4/TOP5 proposals. Although this amounts to only an overall fee reduction of 6.4 per cent/3.8 per cent over the patent term it should be noted that these savings are all made during the first nine years of the term. Over this time period, the adjusted proposals are 41 per cent/26 per cent cheaper than the original proposals. As most patents are not maintained to the end of their term most patent owners will consequently benefit from these cost reductions during the all-important earlier part of the patent term. It will be appreciated though that, as the proposed fee levels apply post-grant only, the benefits applicants can derive from the proposed fee reductions, depend on the speed at which a patent is granted by the EPO, with EPO pre-grant renewal fees being considerably higher than the UP post-grant renewal fees.
One of the criteria used for setting the renewal fee levels is “to ensure a balanced budget of the European Patent Organisation” (Art. 12(1)(c) of EU Regulation 1257/2012). The EPO had argued that the originally proposed initial fee level was needed to recoup pre-grant costs of search and examination. This criterion has of course also found its way into the current considerations. An important factor influencing the fee income of the EPO is not only the absolute level of the fees but also the number of patents for which these fees are paid. Both the original proposals and the now pursued “adjusted” proposals are based on extensive simulations that try to investigate the impact the proposals have on the budgets of the EPO. Some of the simulations underpinning the current proposals are based on a level of UP take up that is higher than the previously assumed level of take up, making up for the reduction in proposed fee level.
Nonetheless, a large proportion of granted European patents, not least in the electronics/high tech sector, are only validated in France, Germany and the UK. Some stakeholders had, in reaction to the original fee proposals of March 2015 requested that the UP renewal fees be reduced to a “true TOP3” level at which the fees track the sum of the annuities payable in the UK, France and Germany. This suggestion was not implemented in the proposals. The “true TOP4” proposal is approximately €11,000 (45 per cent) more costly than the sum of annuities payable in the UK, France and Germany, but does come with the advantage of conferring protection across all UP signatory states.
The adjusted fee proposal is clearly a step in the right direction and will be welcomed by many. It is to the EPO’s credit that stakeholders’ views have been listened to, despite the many constraints governing the setting of the annuity fees. Concerns that uptake of the UP may be stifled by excessive fee levels will be reduced, although only time will tell how much use the UP will find.
It is now up to the Select Committee to choose a renewal fee level in view of the input provided to it. This choice is expected to be made by summer 2015.