UPC Renewal Fees

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Following publication of a first proposal for renewal fees under the UPC, the EPO have now issued revised proposals taking on board commentary saying the original amounts were too high. The article below has been updated to reflect the latest proposals, as at May 2015.

Background

A key point of contention in the development of the Unitary Patent has been the level of renewal fees to be paid for each Unitary Patent.

Under the current system a renewal fee is paid in each country in which protection is required. Renewal costs therefore increase with the number of countries covered. Patentees routinely select countries in which to maintain patents to focus budgets on countries with the most commercial value. However, the Unitary Patent is a single patent across all participating member states which cannot be subdivided and for which a single renewal fee is paid each year. The amount of that renewal fee is thus key to the economics of using the Unified Patent System.

Analysis

The selection of countries in which patents are maintained is strongly divided between industries. In the pharmaceutical industries it is common to maintain patents in nearly every possible country due to the high value associated with each case. However, in the electronics industries it is common to select only a very small number of countries; for example, just the UK, France, and Germany are often chosen.

There is no doubt that the Unitary Patent renewal fees will be significantly lower than the total of fees currently paid for all countries. It was also thought likely that the fees would be higher than the fees for the UK, France, and Germany. The level of fees between these extremes defines how attractive the Unitary System will be to many patentees. A higher fee will be a greater expense for patentees who usually only choose a few countries. Some parties will argue that for the increased fee those patentees are actually getting vastly larger coverage - for example an increase from 3 to 25 countries. However, those other 22 countries are ones in which the patentees have little commercial interest and so the additional countries are of little value. If the increment is too large it is likely that patentees will opt out and choose to continue selecting a small number of individual countries.

The European Patent Office (EPO) have been tasked with investigating and proposing the renewal fees payable for Unitary Patents and in May 2015 made their second round proposals. Two systems have been proposed, one based on the total of the fees in the four most-selected countries (Germany, France, the UK, and the Netherlands) and one on the five most-selected countries (additionally Sweden). For the second system a reduction for small entities (SMEs, individuals, and universities) of 25% for the first 10 years is also proposed.

The table below shows the proposed fees under the TOP4 and TOP5 systems, and as a comparison the current total for the UK, France, and Germany.

From around year 10 the TOP4 fees are roughly 50% higher than the fees for the three countries, and the TOP5 fees significantly higher still.

The EPO President summarised the proposed levels as "higher than hoped, but less than feared" and at the moment that appears a fair reflection. It is unsurprising that the cost of a Unitary Patent is significantly higher than the current cost of protection in three countries, and unsurprising that there have been numerous calls of "too expensive" from industry, but whether the additional cost is attractive to patentees in reality remains to be seen.