Patent Fees and Pricing: Structures and Policies

Nikolaus

Thumm, EPOChief Economist

Sevilla24 May, 2012

The Output of R&D activities: Harnessing the Power of Patent Data

JRC-IPTS 4th

Workshop

Background

0

50 000

100 000

150 000

200 000

250 000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

European Patent Filings (1991-

2011)

Total Filings 244 372

Euro PCT Int. Phase 181 813

Euro Direct 62 559

GRANTED; ≤15 YEARS AFTER FILING

Proportionally less granted patents

44,640 49,680

PATENTING TRENDS

2008(207,000)

16%

60%

1998(124,000)

13%

36%

51%

GRANTED; ≥16 YEARS AFTER FILING

Twice as many granted patents

last very long

16,120 33,120

63,240 124,200

NOT GRANTED

Twice as many casesend up not granted

24%

Uncertainty by filing practice (1)Practice Description

1. Drafting of applications with too broad claims from the start

Applications are drafted with claims that are non-inventive and unclear. Basis is created in the description that can establish inventive step/clarity, if necessary.

2. Amendment(s) creating new deficiencies / Multiple amendments

In reply to the examiner's communication, amendments are filed that meet the objection but that create new deficiencies such as lack of clarity or new deficiencies under Art. 123(2) EPC.

The examiner has to write another communication in reply to which another amendment is filed that may give rise to yet other deficiencies (multiple amendments).

3. No constructive reaction until summoned for oral proceedings

Frequently, constructive responses, such as claim restrictions or the filing of experimental data are not submitted until oral proceedings are summoned.

4. Filing of divisionals applications with similar scope than parent

One or more divisionals are filed claiming subject-matter similar to that of the parent application. Very often, the divisional creates problems with Article 76(1) EPC (not supported entirely on parent).

Often, the parent is withdrawn before a final decision is taken (often a day before the oral proceedings for the parent).

Alternatively the parent is not withdrawn and therefore refused, and goes to the Board of Appeals. That means that the same subject matter is treated in parallel by the Board of Appeals (the refused parent) and the Examining Division (the divisional, filed before refusal).

Proceedings for the divisionals are very often delayed by the applicant.

Uncertainty by filing practice (2)Practice Description

5. Auxiliary request(s) in examination and opposition proceedings

Auxiliary requests are filed in examination and opposition proceedings. The filing of auxiliary requests occurs very late, typically after summons to oral proceedings.

The number of requests is felt by examiners to be high and very often without reasoning.

The requests are very often filed by the attorney while knowing that his main request is not allowable.

6. Appeal against refusal and immediately filing of new/amended claims

First instance is not considered. Some applicants do not bring all arguments in the examination phase. They go for a straight refusal and an appeal.

At appeal, amendments are submitted for the first time.

7. Filing of a bundle of similar to overlapping applications in parallel and such that spread among many directorates

Filing of applications with similar but not identical scope or appearing to relate to different technical fields due to wording.

Frequency Effect on Office Resources

Effect on Pendency Time

Development over time

Fees at EPO amount in EUR Filing (online) 115 European search 1165 International search 1875 Renewal for European application (3rd year) 445 Renewal for European application (10th year) 1495 Examination 1555 Opposition 745 Appeal 1240 Further processing (late payment) (50%) Further processing (other) 240 Claim fee (claim 16- 50) 225

Fees charged over the patent life-cycle

early procedural

fees

late procedural fees

TRADITIONAL FEE STRUCTURE: ACCUMULATED CASH FLOWS OVER PATENT LIFE TIME

-€300

-€250

-€200

-€150

-€100

-€50

€0

€50

€100

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Filing feesvs.

Initial costs

Search feesvs.

Search costs

Examination fees & internal

renewals

Internal renewal fees vs.

Exam, Opposition,Appeal costs

External renewal feesvs. Opposition and Appeal

costs

Externalrenewal

fees

millions

Final gap -

excluding Patent Inf. costs etc.

Fee related changes at EPO

Year Fee-related changes Type of fee Direction of change

1996 Reduction of the search fee for EPO applications and where the EPO acts as International Searching Authority (ISA) in 1996

EARLY procedur

al fees

decrease

1997 Reduction of the filing fee by more than 50% in 1997 EARLY procedur

al fees

decrease

1999 Newly structured payment of the designation fee in 1999 -

originally, applicants were obliged to pay a designation fee for each designated contracting state. As of July 1, 1999 designation fees are being deemed paid for all contracting states upon payment of

seven times the amount of this fee

LATE procedur

al fees

decrease

1999 Reduction of the search fee for EPO applications and where the EPO acts as ISA in 1999

EARLY procedur

al fees

decrease

Year Fee-related changes (continued) Type of feeDirection of

chang

e

2004 Introduction of the reduced fee for online filings in April 2004 EARLY procedur

al fees

decrease

2004 Introduction of the written opinion for PCT international searches with higher search fees in January 2004

EARLY procedur

al fees

increase

2005 Introduction of the Extended European Search Report with higher search fees in July 2005

EARLY procedur

al fees

increase

2005 Introduction of the Extended European Search Report with lower examination fees in July 2005

LATE procedur

al fees

decrease

2008 Abolition of the translation requirement for countries which signed the London Agreement, which came into force in 2008 leading to lower validation costs

LATE procedur

al fees

decrease

2008 Change in the structure of internal renewal fees in April 2008, except for the 3rd

yearRenewal fees increase

2008 Introduction of new claim fees at the EPO, from April 2008, applicants had to pay 200 €

per claim after the 15th

claim (before: 45 €

for the 11th

and each subsequent claim)

EARLY procedur

al fees

increase

2009 From April 2009, for each claim after the 50th, the excess claim fee has been 500 €

rather than 200 €EARLY

procedur

al fees

increase

2009 Introduction of the payment of the page-based fee for the application document at the time of application rather than at grant in April 2009

EARLY procedur

al fees

increase

2009 Change in the structure of the designation fees in April 2009 such that a flat designation fee amounting to 500 €

provides protection in all EPC member states

LATE procedur

al fees

decrease

EPC national renewal fees -

absolute fee levels

National renewal fees - absolute fee level

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

AT BEBGCHCYCZDEDKEEES FI FRGBGRHRHU IE IS IT LT LULV MCMKMT NLNO PL PTROSE SI SKSMTR

Euro

year 16-20year 11-15year 6-10year 3 - 5

EPC National Renewal Fees: National Fee Policies

•

Fee policies pursued over the last ten years by six European NPOs:–

Swiss Federal Institute of Intellectual Property (CH)

–

Norwegian Industrial Property Office (NO)–

Netherlands Patent Office (NL)

–

Hungarian Patent Office (HU)–

UK Intellectual Property Office (UK)

–

Italian Patent and Trademark Office (IT)

EPC National Renewal Fees: Method

•

Survey: Data on procedural and renewal fees charged in the last ten years was gathered

•

Phone interviews (approx. 1 hr.): –

Rationale behind individual changes in fees in the past

–

General objectives of national fee policies–

Main motivations for setting procedural and renewal fees

EPC National Renewal Fees: Key Findings -

Similarities

•

The majority of NPOs

adopt, to varying degrees, the 'traditional fee policy' approach:–

Procedural fees generate less income than renewal fees

–

Renewal fees are progressive (except at the Swiss Federal Institute of Intellectual Property)

•

A move away from this traditional system is highly unlikely

EPC National Renewal Fees: Key Findings -

Differences

•

Despite high-level similarities in fee-policies, some features are distinctive to each NPO:–

Financing structure of the NPO

–

Relative and absolute levels of procedural and renewal fees

–

Intended goals of procedural and renewal fees

EPC National Renewal Fees: Key Findings –

Financing

•

Fully financed by the state ― does not retain any income from procedural and renewal fees (NO, NL)

•

Partially financed by the state ― publicly financed but retains some income from procedural and renewal fees (IT)

•

Self-financed ― the income is generated from procedural and renewal fee payments (CH, HU, UK)

EPC National Renewal Fees: Key Findings –

Procedural Fees

•

Self-funding NPOs

tend to have a larger procedural fees-to-renewal fees ratio than fully (or partially) funded offices

0%

20%

40%

60%

80%

100%

120%

Netherlands Norway Italy Hungray UK Swiss

Procedural fees as a % of renewal fees over 10 years

EPC National Renewal Fees: Key Findings –

Renewal Fees

•

Self-funding NPOs

have a ‘flatter’

renewal fee schedule than fully (or partly) funded offices

Key Findings –

Primary Motivations for Setting Procedural Fees

•

The Hungarian Patent Office provides a particularly interesting example:

–

It has a progressive structure of the fees for amendments and for requesting extensions to time limits

–

The rationale for having progressively increasing fees for amendments and extension requests could be very similar to that for having progressive renewal fees (revelation principle)

•

Further investigation is required

Key Findings –

Primary Motivations for Setting Renewal Fees

•

Most NPOs

recognise the cost-recovery role. Self-financed NPOs indicated that welfare considerations are not the primary motivation.

Maximise welfare Cost recovery Steering income

NO X X NL X X ITA X HU X X UK X CH X X

1.1

EPC National Renewal Fees: Conclusion

•

Even if all NPOs

adopt a traditional fee policy based on low procedural fees, the relatively sophisticated procedural fees set by some offices

indicate that they recognise the important role that procedural fees can play in shaping applicants’

behaviour.•

The NPOs’

financing status appear to influence fee policy. In the given sample of NPOs, renewal fees are more progressive over the years of patent lifetime with state-financed NPOs

than with self-funded NPOs.

EMPIRICAL EVIDENCE ON EPO FEES

FINANCE(COST COVERAGE)

POLICY(STEER APPLICANT*)

FILING AND SEARCH

EXAMINATION

FURTHER PROCESSING

NATIONAL RENEWAL FEES

*propensity to proceed to the next stage

The 'Traditional Fee Policy'

•

Assumptions:•

Demand for patents should be encouraged (more patents are better

for the economy).

•

Patents should be properly designed (i.e. through the right mix of breadth/length).

•

Patentees file applications with genuine intent searching protection for inventions.

•

Patent offices have unlimited resources.•

Patent offices are concerned about social welfare.•

Single patent authority and single representative market for patent protection.•

Reality:•

The scarce resource is patent offices’

capacity to process applications.•

Economic benefits from patent pending status. •

Patent backlogs, strategic patenting and uncertainty make patents less predictable.

•

Self-funding status of offices may imply that welfare considerations are not taken into account when fee policies are set.

•

The reality of the European patent system is extremely complex because of the multitude of institutional players involved, and the possibility

of misalignment of incentives associated with it.

Key facts•

Basic principles–

a European patent granted under the EPC

–

unitary effect

for the territories of the 25 EU member states currently participating, at the applicant's request

–

co-existence with the existing European patent and national patents

–

validated in one single administrative step by the EPO

for all the participating states in the language in which it was granted

–

language regime being finalised; transition measures foreseen

•

Objective European Council Presidency and

EU Commission intend to have the first unitary patent

granted in 2014

The Unitary patent

The Unitary Patent: Advantages•

For inventors–

protection in one single step for the 25 states

currently participating

–

significant cost savings

(translation, validation, administration)–

simplified validation procedure

(instead of up to 25 different procedures)

–

simplified and more cost-efficient renewal

procedure–

increased legal certainty

due to uniform litigation system

•

For Europe–

optimal protection

in the participating states as a whole

–

better framework conditions for innovative companies

and organisations

–

simplified European protection mechanism

for companies from outside Europe

–

improved competitiveness

of the European patent system

Europeanpatentapplication

Filing andformalitiesexamination

Search report with preliminaryopinion onpatentability

Grant ofEuropeanpatent

Refusal or withdrawal of application

Substantiveexamination

The unitary patent as a European patent

UNITARY PATENT

for the territories of the 25 participating states

At the request

of the patent proprietor

Limitation/revocation/oppositionproceedings

Appealproceedings

Same grant procedure as for classic European patent

The unitary patent replaces the individual effects of the European patent

in the 25 participating states

THANK YOU FOR YOUR ATTENTION

www.european-patent-office.orgNikolaus

Thumm

nthumm@epo.org