Patent Maintenance Fees and Annuities

A utility patent in the United States has a term of 20 years, which is generally measured from its filing date or priority date (i.e., to a non-provisional patent application).  To keep utility patents in force, maintenance fee payments are required (design patents are not subject to maintenance fees). 

Utility patents are subject to the payment of maintenance fees every fourth, eighth and twelfth year anniversary, which is measured from the issue or grant date of the patent.  The maintenance fee payment window opens every 3, 7 and 11 years after the grant of a patent and is payable up to 3-1/2, 7-1/2 and 11-1/2 years.  With the payment of a surcharge, the maintenance fees may be paid for six months thereafter, or up to the fourth, eighth and twelfth year anniversary

Most countries outside of the US require the annual payment or renewal fee, also referred to as an annuity, during the pendency of the patent application and during the life of the patent.  There is a surcharge for paying the annuity during the six-month period following its due date. 

Maintenance and annuities fees increase over time, so the cost of keeping a patent in force becomes greater over the life of the patent.  At the time of this publication, the maintenance fee for a US patent during the first payment window (i.e., 3 to 3-1/2 years from the patent grant date) is $1,130 USD.  During the second payment window (i.e., 7 to 7-1/2 years from the patent grant date), the maintenance fee is $2,850 USD.  During the third payment window (i.e., 11 to 11-1/2 years from the patent grant date), it is $4,730 USD.  There is a surcharge in the amount of $150 USD for making the payment in the six-month period following these payment windows.  These fees are all subject to a 50 percent reduction for a small entity (e.g., a business with less than 500 employees). 

Compare these fees with the annuities required for a European patent application.  At the time of this publication, the third-year annuity is about $590 USD.  In the fifth year, it is about $730 USD.  In the sixth year, it is about $1315 USD.  The annuity peeks out in the tenth year at about $1980 USD, and remains the same through the twentieth year.  There is a hefty 50 percent surcharge for an extension if the annuity is paid within the six-month period following its due date. 

Maintaining patent families with multiple patent family members (i.e., patents relating back to the same original patent application) can be costly.  For example, at the time of this publication, the estimated cost to maintain patent family members in Canada, China, France, Germany, Japan and the United States in the fourth year is about $2,500 USD.  This is an estimated cost for maintaining just one patent family for one year. 

Patent owners should take care to adequately budget for the maintenance of pending applications and patents, because a growing number of applications and patents, with increasing maintenance fees and annuities, can have a grave consequence on an intellectual property budget

Proper management of maintenance fee and annuity payments can also be task intensive.  Annuity services, such as Computer Packages Inc. and Computer Patent Annuities Global, assist in maintaining maintenance fee and annuity records, and notify the client when fees are due.  Notices are typically sent out on a quarterly basis, generally six months before the fees are due.  These services attend to the payment of fees for a fee, which generally depends on the number of records maintained.  Such a service can often provide information of the cost of applications and patents over their life cycle. 

A good time to valuate an application or patent is when the maintenance or annuity fees are due.  This can be more readily done by associating patents with corresponding products or services.  As products and services are developed and patent applications are filed, the products and patent applications can be entered into a database and correspondingly linked to one another.  As patent applications mature into patents, the database may be updated accordingly, linking the patents to the products and patent applications.  Maintenance fees and annuities can be reviewed periodically (i.e., quarterly, semi-annually, annually) by reviewing this data.  When a product is no longer in production, the applicant or patent owner may decide not to pay the maintenance fee or annuity to allow the application or patent to lapse.  If there is some defensive use for an application or patent (i.e., to prevent another from making, using or selling an invention), then the applicant or patent owner may wish to keep the application in force even if a product is no longer in production. 

If you have a question about maintenance fees and annuities, askme at thedford@askmeip.com.