What 52% tells us about the Unitary Patent discussions

Yes, that’s right: the UK IPO makes more money from renewing EP(UK) patents than from all its other activities put together. According to the Office’s three-year plan, published this month, EP (UK) renewals are expected to bring in just over £42 million ($70 million) – that is 52% of total income – in 2014-15.

This will not be news to patent owners, particularly those who have to pay the extensive renewal fees for each member state in which their European patent is designated. There’s also no reason to think the UK is exceptional – I expect most European offices make a similar proportion of their income from EP renewals, if not more (though they may not be as transparent about it).

But it is worth thinking about as the 25 EU member states that have signed up to the Unitary Patent haggle over the fees to be charged.

Unlike European patents, Unitary Patents will be renewed centrally at the EPO. You might think therefore that little or no money will be distributed to national offices. But the EU Regulation specifically sets out that 50% of fees will be distributed to national offices based on “fair, equitable and relevant criteria”.

That was the result of a political compromise. And you can see why: if applicants switch away from European patents to Unitary Patents in large numbers, that will leave a big hole in the income of many national offices.

My understanding is that the UK’s position is that change is inevitable, and the system should be designed to offer value to users rather than revenue to national offices, even if that means a big drop in revenue. The Corporate Plan in fact notes that the Unitary Patent may have an effect on demand towards the latter part of the three-year plan.

But that will not be true of other offices in Europe.

And that tension explains why discussions over the renewal fees are still continuing, and we do not yet have any light on what they will be. As EPO President Benoit Battistelli told us last year, keeping fees down while trying to maintain national office revenues is “like trying to transform a circle into a square”.

But as we have argued before (Unitary Patent figures don’t add up; The importance of getting Unitary Patent fees right, Patent practitioners call for cost clarity), if the price of a Unitary Patent isn’t right, there’s no good reason why applicants should use it.