Patent Fees and Pricing: Structures and Policies The Output of R&D activities: Harnessing the Power of Patent Data JRC-IPTS 4 th Workshop Nikolaus Thumm, EPO Chief Economist Sevilla 24 May, 2012
Background European Patent Filings (1991-2011) 250 000 Total Filings 244 372 200 000 150 000 Euro PCT Int. Phase 181 813 100 000 50 000 Euro Direct 62 559 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
PATENTING TRENDS 1998 (124,000) 2008 (207,000) 13% 16,120 33,120 16% GRANTED; 16 YEARS AFTER FILING Twice as many granted patents last very long 36% 44,640 49,680 24% GRANTED; 15 YEARS AFTER FILING Proportionally less granted patents NOT GRANTED 51% 63,240 124,200 60% Twice as many cases end up not granted
Uncertainty by filing practice (1) Practice 1. Drafting of applications with too broad claims from the start 2. Amendment(s) creating new deficiencies / Multiple amendments 3. No constructive reaction until summoned for oral proceedings 4. Filing of divisionals applications with similar scope than parent Description Applications are drafted with claims that are noninventive and unclear. Basis is created in the description that can establish inventive step/clarity, if necessary. 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). Frequently, constructive responses, such as claim restrictions or the filing of experimental data are not submitted until oral proceedings are summoned. One or more divisionals are filed claiming subjectmatter 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 Often, the parent is withdrawn before a final decision is taken (often a day before the oral proceedings for the parent). Alternatively the parent is not withdrawn and therefore refused, and goes to the Board of Appeals.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 6. Appeal against refusal and immediately filing of new/amended claims 7. Filing of a bundle of similar to overlapping applications in parallel and such that spread among many directorates 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. 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. Filing of applications with similar but not identical scope or appearing to relate to different technical fields due to wording. Frequency Effect on Pendency Time Effect on Office Resources 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
Filing fees vs. 100 Initial costs 50 TRADITIONAL FEE STRUCTURE: ACCUMULATED CASH FLOWS OVER PATENT LIFE TIME Examination fees & internal renewals millions 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20-50 - 100-150 - 200 Search fees vs. Search costs Internal renewal fees vs. Exam, Opposition, Appeal costs External renewal fees Final gap - excluding Patent Inf. costs etc. - 250-300 External renewal fees vs. Opposition and Appeal costs
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 fee 2004 Introduction of the reduced fee for online filings in April 2004 EARLY procedur al fees Direction of chang e decrease 2004 Introduction of the written opinion for PCT international searches with higher search fees in January 2004 2005 Introduction of the Extended European Search Report with higher search fees in July 2005 2005 Introduction of the Extended European Search Report with lower examination fees in July 2005 2008 Abolition of the translation requirement for countries which signed the London Agreement, which came into force in 2008 leading to lower validation costs 2008 Change in the structure of internal renewal fees in April 2008, except for the 3 rd year 2008 Introduction of new claim fees at the EPO, from April 2008, applicants had to pay 200 per claim after the 15 th claim (before: 45 for the 11 th and each subsequent claim) 2009 From April 2009, for each claim after the 50 th, the excess claim fee has been 500 rather than 200 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 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 EARLY procedur al fees EARLY procedur al fees LATE procedur al fees LATE procedur al fees Renewal fees EARLY procedur al fees EARLY procedur al fees EARLY procedur al fees LATE procedur al fees increase increase decrease decrease increase increase increase increase decrease
EPC national renewal fees - absolute fee levels Euro 14.000 National renewal fees - absolute fee level 12.000 10.000 8.000 6.000 4.000 year 16-20 year 11-15 year 6-10 year 3-5 2.000 0 AT BEBGCHCYCZ DEDKEE ES FI FRGBGRHRHU IE IS IT LT LULV MCMKMT NLNO PL PT ROSE SI SKSMTR
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 120% 100% 80% 60% 40% 20% 0% 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.
The Unitary patent 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: 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
The unitary patent as a European patent Same grant procedure as for classic European patent Appeal proceedings European patent application Refusal or withdrawal of application Limitation/ revocation/ opposition proceedings Filing and formalities examination Search report with preliminary opinion on patentability Substantive examination Grant of European patent At the request of the patent proprietor UNITARY PATENT for the territories of the 25 participating states 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.org Nikolaus Thumm nthumm@epo.org