The timely payment of maintenance fees is crucial to ensuring that a patent application stays active until a notice of allowance is issued to the applicant. Once a patent is granted, the asset management aspect does not go away; instead patent owners must pay renewal fees at regular intervals, often annually, which is why they are typically called "annuities."
Not only do these payments fund important patent office activities, but they also force patent owners to decide whether their rights are worth protecting or if they should release them into the public domain. Do you want to find out what you are really paying for patent annuities?
Patent office rule changes create ripple effects in patent annuities
National patent offices each have their own sets of rules regarding the payment of patent annuities, and international agreements often add to these frameworks. For example, the Paris Convention establishes that signatories countries must provide a grace period of at least six months whenever a patent annuity is missed. If the payment is still not made after that grace period, the patent right lapses retroactively so that enforcement rights are lost as of the day of the missed payment. The Paris Convention is incorporated into the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), so member countries adhering to that treaty continue to honor the annuity grace period.
Patent offices adjust their fees regularly, and annuity payments or maintenance fees are often impacted. For example, fee changes approved by New Zealand last September, which went into effect this February, doubled many of the maintenance and renewal fees collected by that country's patent office. In all, the approved fee adjustments included six changes to patent annuity payments applicable at different points of a patent's life cycle. For a company that has patent rights in multiple countries, this kind of change to one country's patent annuity structure can create a great deal of IP management work.
Sometimes fee changes can create legal uncertainties. Last July, for example, the United Arab Emirates issued a rule change affecting many of the fees collected by the nation's patent office, including a reduction of all annuity payments for a patent, utility model and industrial design applications down to 0 (zero) dirhams (AED). However, under UAE patent law, rights to patents and utility models are canceled if annuity payments are not paid, creating an unusual situation in which patent owners faced the cancellation of patent rights because of an annuity that they could not pay. Lawmakers in the UAE solved this conundrum by creating an option to process a 0 (zero) AED transaction for the annuity payment through the patent office's online portal. Without making that free transaction, patent rights still lapse in the UAE, supporting the intense interest that the UAE patent office has in decluttering its register and advancing scientific progress by releasing previously patented technology to the public domain.
Maintenance and renewal fees vary widely from country to country
The patent annuity regime enforced within any individual nation's patent office is often very complex, and fees can vary from country to country. A survey of eight national patent offices published this January shows that, even in a small collection of jurisdictions, the total estimated maintenance fees paid during the life cycle of a patent asset ranges from USD 1,533 up to USD 5,980. The survey also shows that patent offices in these jurisdictions collect payments at different intervals and may begin receiving payments at dates ranging from a few months to more than a year after the patent issue date.
Clearly, following the rules regarding patent annuities becomes increasingly tricky, depending on the number of foreign markets that a company wants to enter. Although such forays into international commerce were once the exclusive province of large conglomerates, even startups can and should be contemplating where foreign sales work into their business plans.
Today, businesses have a few options for the management of patent annuities that might suit them depending on their size and needs. A company with a few patent assets registered in only one country may be able to cut costs for a little while by personally managing the annuities on those assets. Before long, however, a business that grows its patent portfolio will want to obtain legal services to help them manage annuities for many assets that are active in multiple countries. Companies having the most significant patent portfolios tend to contract with a third-party patent annuity service provider that specializes in handling maintenance and renewal fees according to the rule frameworks enforced by different patent offices.
Why a patent annuity management service makes sense
While it may sound like a good idea to save some money by choosing not to procure additional IP management services, there are many horror stories about firms that have lost important patent rights after missing a payment date. Such an unfortunate result can come from the most seemingly insignificant of mistakes, such as forgetting to include an annuity deadline date into a calendar. This small slip-up can cost a pretty penny if it knocks out a patent vital to a major product line.
There are numerous benefits to contracting with a patent annuity service provider, not the least of which is working with a staff dedicated to ensuring that you stay ahead of your payment deadlines. These service providers typically have a sophisticated understanding of annuity payment frameworks and maintain a good awareness of country law updates. Further, patent annuity services are often very knowledgeable about maintenance and renewal fees for other forms of Intellectual Property, including trademarks and copyrights.
If your future business plans include scaling up your patent filing activities, consider working with Dennemeyer, a global partner with a great deal of experience in managing patent annuities. Our professionals are focused on keeping your patent portfolio secure in support of your business' commercial success.
Originally published 14 May 2020
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.