Speak to anyone familiar with the system of unitary effect for European Patents (EPs), and they will, with near certainty, remark that one of its advantages is its favorable fee regime. This assertion is grounded in the logic that its maintenance fees were aligned with the equivalent cost of validating an EP in the four most popular jurisdictions as of 2015.
Yet, almost a decade has passed since then, carrying with it everything from Brexit to a global pandemic and macroeconomic turbulence. Now that the Agreement on a Unified Patent Court (UPCA) is in force, the time is right to examine old axioms and see how wise conventional wisdom really is.
Top 10 filing destinations
Our starting point is a chart with the ten offices that received the most patent applications in 2022:
Yet, almost a decade has passed since then, carrying with it everything from Brexit to a global pandemic and macroeconomic turbulence. Now that the Agreement on a Unified Patent Court (UPCA) is in force, the time is right to examine old axioms and see how wise conventional wisdom really is.
Top 10 filing destinations
Our starting point is a chart with the ten offices that received the most patent applications in 2022:
This graph shows the sum of the maintenance fees if all years, including the 20th, are paid. The calculation does not account for fee changes in the Russian Federation, effective October 5, 2024.
The European Patent Office (EPO) collects maintenance fees for a pending patent application. Once the patent is granted, the obligation to pay annuities must be fulfilled before the offices of the countries in which the EP has been validated. This means that the maintenance fees will change once an EP application has matured into a grant that is subsequently validated in any number of member states.
Let us consider an EP that is granted in its fourth patent year and for which unitary effect is requested, resulting in the conferral of a Unitary Patent (UP). The UP system has 24 participating states, of which eighteen are already full members. European Union countries Croatia, Poland and Spain are not participants, while Cyprus, the Czech Republic, Greece, Hungary, Ireland and Slovakia have acceded to but not yet ratified the Agreement. This means that the fee situation changes for eighteen countries, not 24. For this reason, we have put the six signatory countries mentioned among the rest of the European Patent Convention (EPC) member- and extension states that require validation. On the other hand, the fee situation will change for the EPO and Germany since Germany is among those EU countries that have ratified the UPCA and thus is covered by a UP.
For the purpose of this study, we will no longer analyze Germany as a separate patent application and will assume that the EP will be validated in every other country besides those that are covered by the unitary effect. We shall also disregard the EPC validation states (Cambodia, Georgia, Moldova, Morocco and Tunisia) but include Bosnia and Herzegovina as the sole remaining extension state.
What will be the same in the following scenarios is that we must pay two annuities to the EPO for the third and fourth years of the application's pendency. The fees for the validation countries, i.e., those that are not members of the UPCA and who are not participating, will also remain the same. The fee changes in Serbia (effective August 1, 2024) have not been considered, although the entry into force of the UPCA in Romania on September 1, 2024, has been factored in. Hence, 40 EPC members (including Bosnia and Herzegovina) - 18 UPCA members = 22 validating territories.
The tables clearly indicate that it is much cheaper to maintain a UP across the participating states. As discussed before, this conclusion is hardly new because it was written into the UPCA's creation.
License of right
A further fee reduction may be possible if you opt to make your patent available for licensing to any interested party. Among the 18 member states of the UPCA, there are five countries that grant fee reductions if a "license of right" (LOR) is endorsed on the patent register: Bulgaria, Germany, Italy, Lithuania and Latvia.
Among the EPC member states that are not part of the UPCA, there are six countries that allow fee reductions if an LOR is endorsed: the Czech Republic, Ireland, San Marino, Slovakia, Spain and the United Kingdom.
In any of these countries, the reduction is 50% off the regular annuity fees, though the main venues for LORs are, by far, Germany and the United Kingdom.
Significantly, the UP also allows for a fee reduction with an LOR, amounting to a 15% discount.
The following tables show the influence of LORs on maintenance fees:
As licenses must be granted to all petitioners, the monetary benefits of LORs need to be weighed against the loss of strategic control they entail.
Rest of the world
Let us now examine the maintenance costs for the remaining eight of the top 10 patent filing venues (having reviewed Germany and the EPO):
Although maintaining patents for their maximum term across the most popular jurisdictions is notably expensive, this duration is often not necessary or pursued. (See: World Intellectual Property Indicators 2024)
Thus, for a UP where no LOR is declared, the total sum of official maintenance fees in all of the top ten patent jurisdictions (inclusive of the 40 EPC member- and extension states) amounts to €205,648. This does not include any handling costs, such as for agents, translations, etc. It is important to understand that the advantage of the UP lies not only in the reduction of maintenance costs but in its lower fee structure overall compared to a classic EP because of the lack of a national validation stage.
Filing scenarios
The monetary picture is incomplete without a look at the costs of filing and following up on an application during the prosecution stage. However, the structure of official fees, variable charges for agents and the timeframes such payments are due vary so widely, and there are so many other influences on a variety of actions to be performed, that it is not feasible to provide an absolute cost comparison. This must be inspected on a case-by-case basis since an obstacle that appears in one country might not necessarily occur in another.
As we have demonstrated, the UP is indeed cost-effective and the common knowledge surrounding its benefits is sound. Whether or not unitary effect is requested for an EP, it is worth checking if the exclusive rights should be made available for licensing in order to save money and generate passive revenue.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
