An Innovation Cafe® article by Gary Shuster, patent litigator and prolific inventor.
This article looks at patent maintenance fees. They might not be thrilling, but if you own a patent, understanding them is absolutely essential.
What are patent maintenance fees?
Patent maintenance fees are payments required to keep a granted patent in force, because you don’t want to be the person who let a multi-billion-dollar patent lapse. These fees are intended to incentivize companies to abandon patents so that only patents with ongoing value remain enforceable. If you don’t pay the fees on time, your patent will expire, allowing anyone to use the invention without needing your permission. Patent offices outside of the United States often require payments of fees similar to maintenance fees prior to patent issuance.
When are maintenance fees due?
In the United States, patent maintenance fees are due at three intervals during the 20-year life of the patent: 3.5 years after the patent is issued, 7.5 years after issuance, and 11.5 years after issuance. These are the first, second, and third maintenance fees, respectively. Each fee increases in cost as the patent matures. There is a 50% discount for smaller companies and for individuals—a rounding error in the balance sheets of big tech companies, but potentially a cash flow disaster for startups.
Why are maintenance fees necessary?
The theory behind maintenance fees is simple. First, they encourage innovation: if a patent owner isn’t actively using their invention, letting the patent lapse lets others build upon the idea without rewarding the original inventor. In practice, though, the crushing impact of inter partes review and efficient infringement can mean that monetizing a patent that is actively infringed may be beyond the financial reach of the patentee—which can leave inventors without the resources to pay the fees in the first place. Second, maintenance fees reduce clutter in the patent system. By eliminating dormant patents, the system stays more relevant and efficient; with millions of patents in force at any given time, anyone trying to clear a new product for sale needs the total pool of live patents to stay as manageable as automated search tools allow.
Helpful advice for managing maintenance fees
Set reminders. Missing a maintenance fee deadline can result in the expiration of your patent. Use calendar alerts or software tools to stay on top of due dates. This is a very big deal.
Understand the value of your patent, and don’t assume the value won’t change. Evaluate whether the patent still has value before paying fees, especially the later ones, which can be expensive.
Consider small entity discounts. If you qualify as a small entity or micro entity, you may be eligible for significantly reduced fees. Universities, as a bonus, get to pay the micro-entity fee—usually 25% of the full fee.
Use the grace period if you miss the deadline. If you miss a deadline, there’s typically a six-month grace period during which you can pay the fee with a late surcharge.
Delegate responsibility. There are professional services and law firms that will monitor and pay maintenance fees for you.
Closing thoughts
Patent maintenance fees are a key part of owning a patent. They are a true cash flow impediment to startups and independent inventors, but they ensure your intellectual property remains protected.