What the Heck are Patent Maintenance Fees?

“Maintenance fees,” “renewals,” and “annuities”

Your patent was approved! Congratulations! Now there’s nothing left to do but enjoy a government-mandated monopoly on your innovation for a whole twenty years, right?

Well, no.

Unfortunately, unless you want your patent to expire early, you are on the hook to pay some pesky fees to the government called “maintenance fees.” These fees come at regular intervals throughout a patent’s lifetime and, in theory, ensure that patent owners are actually applying their patents in the marketplace.

In virtually all major jurisdictions across the globe —From the US to the EU to China to Japan — the maximum term for a patent is 20 years. However, for the patent to remain in effect for its full term, the patent owner (or manager) must regularly pay what are called “maintenance fees” which are colloquially also referred to as “renewals” or “annuities” within the intellectual property (IP) industry.

How often do I need to pay these maintenance fees?

Jurisdictions vary on when in a patent’s lifetime these fees will be applied. For instance, while many jurisdictions require payments annually, the US has an oddly irregular schedule, requiring the first maintenance fee to be paid 3.5 years after the patent is granted; the second is due 7.5 years from the date of approval; and the third is due 11.5 years from the date of grant of the patent at which point the patent remains in effect until its full term!

Another variation is the anchor date from which the fee schedule is calculated. As previously mentioned, the United States only begins requiring maintenance payments once a patent is approved. However, the European Patent Office, conversely, begins charging maintenance fees before your patent is granted, based on the filing date rather than the grant date — and maintenance fees only begin to be applied in the third year.

How much do these maintenance fees cost?

Unsurprisingly, maintenance fee costs vary from jurisdiction to jurisdiction. One commonality across jurisdictions, however, is that maintenance fee structures tend to increase in cost the longer the patent is in effect. In other words, the fee for renewing a patent for the fifth year, will almost always be significantly lower than the fee for renewing a patent for the fifteenth year.

Jurisdictions may also have other factors that contribute to how a maintenance fee is calculated. For example, in Japan and South Korea, the amount due for a given renewal is affected by the number of claims asserted within the patent (with more claims increasing the cost). In the US and Canada, the size of the organization controlling the patent dramatically effects the cost (significantly lower fees are charged to “small” or “micro” entities).

Do I have to pay them right on the deadline or is there a window? What happens if I miss the due date?

Generally speaking, jurisdictions will accept maintenance fee payments for a window of time prior to the due date. If a patent owner fails to pay the maintenance fee by the due date, there is usually a window after the due date (called a “grace period”) that a jurisdiction will still accept payments. However, in such cases, there is usually an additional late fee attached. If the patent owner fails to pay the appropriate maintenance fee within the grace period, then the patent lapses. In some limited cases, it is possible to apply to have the patent reinstated but that is often a long, complicated, — expensive — process.

I don’t want to have to worry about due dates. Can I pay these fees in advance?

In many jurisdictions — but not all — patent owners are able to pay maintenance fees in advance. In fact, there are some strategic benefits (beyond simple piece of mind) to paying maintenance fees in advance. Most commonly, this is to take advantage of a favorable exchange rate between two currencies. However, as mentioned, not all jurisdictions permit patent owners to pay maintenance fees in advance. For example, Canada does allow patent owners to pay maintenance fees in advance, whereas the US does not.

I don’t think you heard me. I really don’t want to worry about due dates. What else can I do to avoid the headache of keeping track of so many fees due on different days?

That is where our company comes in. Hexos IP Renewals is a company that will take care of your IP portfolio, track all the maintenance payments due globally, and send you a quarterly bill in advance of upcoming fees. There are many companies that offer similar services, and we recommend shopping around for the fit that will work best for you and your organization. If you decide to shop around for a renewals provider, you can use this handy list of questions as you evaluate!