Fees Applicable to the European Unitary Patent: Facts & Considerations
Dr. Andreas Popp Senior Vice President Global Intellectual Property , BASF SE September 2014
Agenda Introduction of the unitary patent system (UPS) Next steps Considerations by the applicant Legal considerations User behavior Current Under UP system Conclusion & recommendation
September 2014
Dr. Andreas Popp
2
UPS: The alternative in European Union after granting an EP Existing patent system in Europe National route: Individual patent applications and granted patents country by country; EP route: – common application and grant procedure; – after grant (and opposition) same as national route Before grant: Mainly independent and parallel systems UPS System After grant in EP route: alternative option for some EU states September 2014
Dr. Andreas Popp
3
The Unitary Patent System – UPS I: Status 9/2014
The Regulation on Unitary Patent Protection (1257/2012 EU) & the UP Translation Regime(1260/2012) in force Applicable with date of entry into force: Agreement on a Unified Patent Court (UPC Agreement, Council EU 16351/12) Territorial scope – enhanced cooperation; UP regulations: EU ex ES & IT; – UPC Agreement: EU ex ES & PL; – HR did not join UPS after becoming member of the EU Minimum list of ratification: 13 EU States including DE, FR, GB – Ratification: AT (8/2013); FR (3/2014); SE, BE, DK (all 6/2014) – Missing DE, GB and 6 further EU states September 2014
Dr. Andreas Popp
4
The Unitary Patent System – UPS II: Status 9/2014
UPC-Applicable law Harmonized law with exceptions – Warning letters, evidentiary proceeding, ... Patent applicants from US (UPS non-member state) governed by German law (seat of the European Patent Office) EUCJ Rulings & Law Suits 2013 EUCJ: permissibility of enhanced cooperation 2013 pending law suits (C147/12 & C147/13) filed by ES on the construction of the regulations & the UPC Agreement – Oral proceedings: 1 July 2014 – Opinion of the Advocate General: scheduled for 21 October 2014 September 2014
Dr. Andreas Popp
5
The Unitary Patent System – UPS III: Status 9/2014
Further steps: Rules, Judges, Fees UPC Agreement: Judges, Rules & Fees => Decision EP/UP or national procedures – Preparatory Committee for the UPC has progressed well – Selection of UPC Judges: 1300 candidacies, including well experienced judges from German courts handling patent matters Renewal fees UP => Decision: EP with or without UP Relevant political decisions external to UPS Referendum in Scotland EU referendum in GB 2015 ? September 2014
Dr. Andreas Popp
6
Case study Wish-list of countries to file from research function: market size, competition (actual & potential) mid term strategy Not so much cost oriented Optimistic regarding potential of invention
September 2014
Dr. Andreas Popp
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Case study Wish-list of countries to file from research function: market size, competition (actual & potential) mid term strategy Not so much cost oriented Optimistic regarding potential of invention
Focus of controlling: costs & resources September 2014
Dr. Andreas Popp
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Case study Wish-list of countries to file from research function: market size, competition (actual & potential) mid term strategy Not so much cost oriented Optimistic regarding potential of invention
Focus of controlling: costs & resources Final decision: balanced approach
September 2014
Dr. Andreas Popp
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Economic considerations for costs of UPS – applicants view Business Considerations Market: additional regional coverage of countries of some or minor interest Applicant internal processes & resources: Minor complexity reduction, additional costs ? Legal Considerations: Mid/long term: enforcement better and faster outside litigation hotspots DE, GB, NL ? costs ? Competition of IP budget with other needs Within IP budget: competition of jurisdictions and inventions Reduction of country list during patent term Translation costs: UPS vs. Dr.London Agreement Andreas Popp
September 2014
10
The Legislators view on UP renewal fees Regulation 1257/2012 Article 12
Verordung 1257/2012 Artikel 12
Level of renewal fees 1. Renewal fees for [unitary patents]
Höhe der Jahresgebühren shall be:
(1) Die Jahresgebühren für [einheitliche Patente]
(b) sufficient to cover all costs associated with the grant of the European patent and the administration of the unitary patent protection; 2. The level of the renewal fees shall be set, [taking into account among others SMEs] with the aim of: (a) facilitating innovation and fostering the competitiveness of European businesses; (c) being similar to the level of the national renewal fees for an average European patent taking effect in the participating Member States at the time the level of the renewal fees is first set. 3. In order to attain the objectives set out in this Chapter, the level of renewal fees shall be set at a level that: (a) is equivalent to the level of the renewal fee to be paid for the average geographical coverage of current European patents;
b) sind ausreichend, um sämtliche Kosten für die Erteilung und Verwaltung des einheitlichen Patentschutzes abzudecken, (2) Die Höhe der Jahresgebühren ist [u.a. unter Berücksichtigung von KMUs] auf folgende Ziele festzulegen: a) Erleichterung von Innovationen und Stärkung der Wettbewerbsfähigkeit europäischer Unternehmen, c) Anlehnung an die Höhe der nationalen Jahresgebühren für ein durchschnittliches Europäisches Patent, das in den teilnehmenden Mitgliedstaaten zu dem Zeitpunkt wirksam wird, zu dem die Höhe der Jahresgebühren erstmals festgelegt wird. (3) Zur Erreichung der in diesem Kapitel festgelegten Ziele wird die Höhe der Jahresgebühren so festgesetzt, dass: a) sie der Höhe der Jahresgebühren entspricht, die für die durchschnittliche geografische Abdeckung der üblichen Europäischen Patente zu entrichten sind,
(b) reflects the renewal rate of current European patents; and
b) sie die Verlängerungsrate gegenwärtiger Europäischer Patente widerspiegelt und
(c) reflects the number of requests for unitary effect.
c) die Zahl der Anträge auf einheitliche Wirkung widerspiegelt.
September 2014
Dr. Andreas Popp
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Current Validation Behavior Statistical Data I EP: time until grant: ~ 5 years; slight upward trend Average EP lifetime in the UP member states: 8.5 years +/- 1 year Potential UPs at the date of grant of EP > 99% (Valid. DE, GB or FR) Average validation rate in the UP member states: 4.1; slight downward trend 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1
2
3
4
5
6
7
8
9
10
10+: 5% Number of validations
September 2014
Dr. Andreas Popp
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Current Validation Behavior – Influence of Translation Costs >80% of validations of potential UPS countries are performed in member states with no substantial translation cost incurred ( London Agreement or national regulations) Validierungsverhalten 25%
statistische Daten III 20%
15%
10%
5%
0% AT
September 2014
BE
BG
CY
CZ
DE
DK
EE
FI
FR
GB
GR
HU
Dr. Andreas Popp
IE
LT
LU
LV
MT
NL
PL
PT
RO
SE
SI
SK 13
Flexibility in country scope During patent term: gradual laps of countries to contain costs.
High impact on annuities to pay 10000
5000
0 1 2 3 4 5 6 7 8 9 10 11 12 13
September 2014
14 15 16
17 18 19 20 Dr. Andreas Popp
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Advantages and Disadvantages of the UP System
Grant procedure and cost
EP only (“bundle patent“) +
EP with UP (Assessment UP) +
National route -
0
0 (+ after transitional period)
-
Point of reference
???
same
Flexibility of cost management after grant
+
?
+
“Complexity costs“
0
Slightly better
-
+ (in case of opting out) +
Selection and training of judges -
0 +
-
??? & +
-
Translation cost in transitional period Patent renewal fees
Existing courts Court fees for 1 procedure Cost & consistency in multi-national procedures
September 2014
Dr. Andreas Popp
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Projected User Behavior in the UP System - Fee Structure Based on: Fees applicable in years 6 – 14
10000
Acceptance of fees depends on the number of potential validations in the bundle patent Fee models according to Pottelsberghe (VCOM) roughly correspond to the fees for 4 or 6 validations
5000
0 1 2 3 4 5 6 7 8 9 10 11 12 13
14 15 16
35000
17 18 19 20
30000 25000 20000 15000 10000
reasonably priced translations
5000 0 Number of vaildations additional countries
September 2014
Dr. Andreas Popp
16
Projected User Behavior in the UP System - Model & Result Maximum cash inflow regarding renewal fees in the order of 2 or 3 validations Regarding 56,000 granted EPs annually and current costs & fees 20% of the current volume does not depend on UP fees as it originates from non-EU countries (particularly CH, TR) or ES, IT
30% 20% 10%
Mio€
0% AT BE BG CY CZ DE DK EE FI FR GB GR HU IE LT LU LV MT NL PL PT RO SE SI SK
300 250
50%
200
35000
40%
30000 25000
30%
150
20000
20%
15000
10%
5000
100
10000
1
2
3
September 2014
4
5
6
7
8
9 10
DE DE,GB +FR +NL +SE +BE +IE +AT +DK +FI VCOM(200) VCOM(300)
0
0%
Dr. Andreas Popp
50 0
During the transitional period After the abandonment of the translation requirement
Current Validation Behavior Statistical Data Patent renewal fee income from granted EPs Renewal fees for patent years 6-14, validation frequency of grants: 2007-2011, 56,000 EP-B p.a.
Model Sum: 757m €, enhanced cooperation (UP): 612m € DE 212m €, FR 86m €, GB 85m €, IT 66m €, CH 35m €, ES 31m € Real income 680m € DE FR GB NL AT SE FI DK BE IE Others IT CH ES TR
September 2014
Dr. Andreas Popp
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Projected User Behaviour in the UP System. Model & Result Model: same portion of Users preferring the UP System when level of renewal fees does not change Cost-sensitive users (renewal fees & translations) Users who would only use the UP System at a cost advantage The acceptance of the system significantly increases after the abandonment of the translation requirement 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
September 2014
Acceptance during the transitional period for translations (6-12 years) Acceptance after the abandonment of the translation requirement
Amount of fees for the UP in fees for the number of national validations Dr. Andreas Popp
Conclusion Nearly all granted European Patents can participate in the Unitary Patent System (UPS) Requirements for translations make UPS less attractive than current system including London Agreement Expected participation rate in UPS is sensitive to renewal fees Renewal fees as high as for 3 validations: expected participation 50% Renewal fees as high as for 4 validations: expected participation 25% Renewal fees as high as for 7 validations: expected participation 11% Additional advantages of court proceedings may increase participation rates
September 2014
Dr. Andreas Popp
Recommendation to both make the system attractive and finance the system Expected participation rate in UPS means less participation in current system Renewal fees as high as for 3 validations: unchanged fee income 50% Renewal fees as high as for 4 validations: unchanged fee income 75% Renewal fees as high as for 7 validations: unchanged fee income 89% Lower fees in the higher years => generate more annuities longer patent term, less pressure form lower flexibility Include IT (validation in 45% of granted EPs, save translation costs) extension of UP to CH (validation in 31% of granted EPs)
September 2014
Dr. Andreas Popp
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* Pascal Griset 2013 Das Europäische Patent
Februar 2013
22
Februar 2013
Verordung 1257/2012 Artikel 12 Höhe der Jahresgebühren (1) Die Jahresgebühren für Europäische Patente mit einheitlicher Wirkung a) sind über die gesamte Laufzeit des Patents hinweg progressiv gestaltet, b) sind ausreichend, um sämtliche Kosten für die Erteilung und Verwaltung des einheitlichen Patentschutzes abzudecken, und c) sind ausreichend, damit sie zusammen mit den an die Europäische Patentorganisation in der Antragsphase zu entrichtenden Gebühren einen ausgeglichenen Haushalt der Organisation sicherstellen. (2) Die Höhe der Jahresgebühren ist unter anderem unter Berücksichtigung der Situation bestimmter Einheiten wie kleiner und mittlerer Unternehmen im Hinblick auf folgende Ziele festzulegen: a) Erleichterung von Innovationen und Stärkung der Wettbewerbsfähigkeit europäischer Unternehmen, b) Orientierung an der Größe des durch das Patent abgedeckten Marktes, und c) Anlehnung an die Höhe der nationalen Jahresgebühren für ein durchschnittliches Europäisches Patent, das in den teilnehmenden Mitgliedstaaten zu dem Zeitpunkt wirksam wird, zu dem die Höhe der Jahresgebühren erstmals festgelegt wird. (3) Zur Erreichung der in diesem Kapitel festgelegten Ziele wird die Höhe der Jahresgebühren so festgesetzt, dass: a) sie der Höhe der Jahresgebühren entspricht, die für die durchschnittliche geografische Abdeckung der üblichen Europäischen Patente zu entrichten sind, b) sie die Verlängerungsrate gegenwärtiger Europäischer Patente widerspiegelt und c) die Zahl der Anträge auf einheitliche Wirkung widerspiegelt.
September 2014
Dr. Andreas Popp
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Regulation 1257/2012 Article 12 Level of renewal fees 1. Renewal fees for European patents with unitary effect shall be: (a) progressive throughout the term of the unitary patent protection; (b) sufficient to cover all costs associated with the grant of the European patent and the administration of the unitary patent protection; and (c) sufficient, together with the fees to be paid to the European Patent Organisation during the pre-grant stage, to ensure a balanced budget of the European Patent Organisation. 2. The level of the renewal fees shall be set, taking into account, among others, the situation of specific entities such as small and medium-sized enterprises, with the aim of: (a) facilitating innovation and fostering the competitiveness of European businesses; (b) reflecting the size of the market covered by the patent; and (c) being similar to the level of the national renewal fees for an average European patent taking effect in the participating Member States at the time the level of the renewal fees is first set. 3. In order to attain the objectives set out in this Chapter, the level of renewal fees shall be set at a level that: (a) is equivalent to the level of the renewal fee to be paid for the average geographical coverage of current European patents; (b) reflects the renewal rate of current European patents; and (c) reflects the number of requests for unitary effect.
September 2014
Dr. Andreas Popp
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