On 24 June 2015, the Select Committee of the Administrative Council of the EPO endorsed the "true TOP 4" proposal for the annuity fees payable after the grant of a Unitary Patent (UP) in Europe. We previously discussed the true TOP 4 proposal in another of our articles. It means that the single annuity payable for a UP after grant will be equal to the sum of the annuities payable in the four most commonly designated European Union (EU) Member States, the UK, France, Germany and the Netherlands. In exchange, UP proprietors gain patent protection across almost all EU Member States.
The route to this decision was not straightforward. As is well known, the UP itself has been a long time in the making and some feel that its mere existence in spite of a number of abortive attempts is a strong testimony to the political will to create a patent system allowing pan-European patent protection and enforcement. Late constitutional challenges by Spain having been dismissed recently, all eyes have recently been on the decision regarding the level of annuities payable for a UP.
Two initial annuity fee proposals made in March 2015, named TOP4 and TOP5 because from year 10 the annuities payable mirrored the sum of the annuities payable in the four or five most validated in countries in Europe, were criticised in the strongest terms as, up to year 10, the fees payable mirrored those payable pre-grant at the EPO or provided for a "transition" from these fees to the year 10 level. Had this proposal been accepted, it would have meant that, for a UP granted very quickly, the annuities payable in the first 10 years would have been 50 per cent higher than they are now under the accepted true TOP 4 system. Business associations and IP professional bodies went as far as predicting that, if one of the early proposed fee levels was adopted businesses would simply not use the UP system.
The now accepted true TOP4 proposal had been suggested by the EPO in May 2015 (alongside a "true TOP5" proposal, which was not been chosen by the Select Committee), following strong criticism from industry, including from Business Europe, which has observer status on the Select Committee, of the original "TOP 4" and "TOP 5" proposals. The European Parliament's Legal Affairs Committee had previously endorsed the true TOP4 and true TOP5 proposals. This is significant, as part of the UP annuity fee income is distributed to the UP Member States, all of which are represented in the European Parliament.
The Select Committees' decision is a welcome step forward for all patent proprietors, although requests by industry for a TOP3 fee level have not been adopted. In practice, this means for applicants and patent proprietors that, if the EPO grants the UP early in its life, then the amount of (high) EPO pre-grant annuities payable is limited. As the true TOP4 annuity level is, up to year 10, lower than the EPO pre-grant annuity level, applicants will experience a drop in the annuity fee burden in this time period. To save annuities, early grant by the EPO is consequently desirable and applicants may wish to consider the various routes to gain accelerated consideration of their patent applications pending at the EPO.
The UP system has not yet been ratified by the required number of Member States to come into force, although a number of States are presently working on ratification, including the UK and Germany (with the third member that must ratify before the system can come into force, France, having ratified already). In parallel, selection and training of judges for the Unified Patent Court is proceeding and levels of court fees for use of the Unified Patent Court system are also under consideration.
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.
