With the Unitary Patent now almost certain to become a reality, and with many commentators anticipating that this will be as soon as next year, focus has turned to the level of fees to be levied. Both the cost of opting out of the Unitary Patent Court’s jurisdiction, the level of court fees and the cost of renewing a single, pan-EU patent (with the exception of Spain and Italy) are considered critical to the success or otherwise of the Unitary Patent.
After months of anticipation, the President of the EPO has now proposed some fee schedules for the renewal of Unitary Patents. Article 11 of the Unitary Patent Regulation (EU 1257/2012) requires that renewal fees be paid in respect of a Unitary Patent once the EPO has granted a European Patent application. Article 12 provides a framework of considerations to be followed in setting the level of those fees. The President’s announcement indicates that the obligations of Article 12 of the Regulation have been taken into account in drawing up the proposals.
Although there are apparently two schemes proposed – so called TOP4 and TOP5 – in fact for one of these there is a separate fee reduction for SMEs and private individuals so that there are effectively three different schemes proposed. However, broadly speaking, the fees fall into three phases:
- years 3 to 5, counted from the filing date of the European Patent application: the Unitary Patent renewal fees are to be the same as the level of the EPO’s internal renewal fees (IRF) for pending applications;
- years 6 to 9: a transitional level between the IRF level and the year 10 level
- from year 10, a level equivalent to the total sum of the national renewal fees payable in the 4 or 5 countries in which European patents are most frequently validated (this is complicated by the fact that Italy represents one of these countries but has refused to join the Unitary Patent Convention).
For the TOP4 scheme, the renewal scheme sets the fees to be simply the sum of the fees for renewing patents in the FOUR most popular Unitary Patent signatory countries.
For the TOP5 scheme, the renewal scheme sets the fees to be the sum of the fees for renewing patents in the FIVE most popular Unitary Patent signatory countries. However, in that case, a 25% discount is proposed for SMEs, natural persons, non-profit organisations, universities and public research organisations.
Up to year 10, the renewal fees proposed in both of the schemes are similar to those that would be payable in other major jurisdictions (US, Japan, China etc). However, after year 10, the renewal fees accelerate rapidly and, by the final year of the patent, the renewal fees are EUR4,855 (TOP4) or EUR5,500 (TOP5, without discount). Such fees are substantially in excess of the 20th year renewal fees in countries of similar economic size to the European Union once Italy and Spain have been excluded.
It may also be observed that – outside of the pharmaceutical sector – a significant majority of patent applicants in Europe validate their patent in three countries or fewer (typically, the UK, France and Germany or even a subset of those). For those applicants who pursue more countries upon grant of their European patent, again a large majority will be interested in Italy, Spain and Switzerland, none of which are signatories to the UPC nor are likely to be in the foreseeable future (Switzerland cannot ever join as it is not an EU member state). In all such cases, undoubtedly over the lifetime of the patent, the official fees payable by validating EP patents in individual countries will be less (and, probably, quite significantly less) than the official fees payable to the EPO for a Unitary Patent.
Only if a European patent is to cover half a dozen or more EU countries (outside of Italy and Spain) will the Unitary patent thus start to make economic sense.
In general, the proposals from the EPO President are not unexpected, given the specific requirements of Article 12 of the Unitary Patent Regulation. Moreover, the proposals now put forward by the President may of course be rejected by the Administrative Council of the EPO. However there is no doubt that the proposed renewal fee costs will be a disappointment to a majority of European patent applicants, who routinely validate their patents in only three or fewer EU countries.
For a discussion of the legal (rather than economic) considerations of the pros and cons of the Unitary Patent, please see our earlier bulletin here.