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July 2015

On 24 June 2015 the Select Committee of the Administrative Council of the European Patent Office ("EPO") has endorsed with the required 3/4 majority the so-called "True Top 4 proposal" for a set of uniform renewal fees applicable to the Unitary Patent, thereby clearing one of the major hurdles for the implementation of the Unitary Patent in Europe.

According to this fee model, the annual renewal fee for the Unitary Patent (providing patent protection for the 25 participating EU member states) will correspond to the combined renewal fees of the four EU countries in which, under the current system, classical European patents are most frequently validated by patent applicants, i.e. Germany, UK, France and the Netherlands. The True Top 4 proposal was made by the EPO at the beginning of May 2015 after its first renewal fee proposals (made in March 2015) had provoked severe criticism for being too high.

More specifically, under the adopted regime, the renewal fees start at €35 in the 2nd year, escalating to €1,175 in the 10th year and finally €4,855 in the 20th year. Hence, for the first ten years the costs of renewing a Unitary Patent will be €4,685 in total, while maintaining it over the full 20-year term will amount to €35,555 (for further details, please refer to the table in the EPO press release).

In comparison, under the current system, the total renewal fees payable in the same 25 member states add up to €29,500 for the first ten years and nearly €159,000 for the full 20 years. Furthermore, due to the necessity of validation in each individual member state, additional transaction costs (for translations, local patent agents etc.) accrue, adding up to considerably higher total costs which proved to discourage companies from seeking patent protection throughout the whole of Europe in the past.

By adopting this fee regime, the EPO opted for the fee proposal which provided for the lowest level of fees. It took into account the fact that an affordable level of renewal fees is crucial for ensuring the attractiveness of the Unitary Patent to companies, especially SMEs, and, thus, a critical factor of its success. It is hoped that the new regime strikes the right balance between ensuring an appropriate budget for the EPO and the aim of facilitating innovation and fostering the competitiveness of European businesses, in particular with competitors in the US and Japan, which can access their national or regional markets at lower costs.

From a purely financial perspective, the new regime will obviously be particularly attractive for applicants who currently validate their European patents in 4 or more countries. It will, however, also be attractive for applicants who currently only validate in fewer than four countries because of the high costs involved, but who would in the future be happy to get patent protection in 25 Member States for the price of four.

What next?

Now that the decision on renewal fees has been made, the next step will be to define how the renewal fee income is to be shared amongst the participating member states. While this decision will not be an easy one, it will, however, not have much of an impact on the end users of the new system. Pursuant to the EPO, the Select Committee has already made good progress in defining a possible distribution key, so that it can be expected that the whole package, comprising the level of renewal fees and the distribution key can be finalised and adopted this autumn.

For patent applicants and owners, the endorsement of this fee model removes one major uncertainty with regard to the new Unitary patent regime enabling them to start taking decisions on their individual filing strategy and on whether to opt-out existing patents or not.

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