Patents: The Art of Spending and Saving
The board meeting has been dragging on for hours. When the CTO finally gets the opportunity to speak, he flashes his best smile, proud to announce the good news. “Our engineers just made that breakthrough invention,” he says. “We need to patent it.”
The CEO shakes her head. “Sorry, we can’t. It’s September, and we’ve already burned through our annual IP budget.”
The CTO’s jaw drops. “What? Where did that money go? We haven’t patented anything this year yet!”
“True. But we had to pay renewal fees…”
Sounds familiar? It is a fact that many companies spend more on patent renewal fees than on filing new patent applications and getting them granted. This does not come as a surprise, though. The graph below notably shows the costs (in blue) for a typical European patent in seven countries, cumulated over its maximum lifetime (twenty years). Basically, you need about 25 kCHF to get it drafted, examined, and granted, and then you may well have to pay another 70 kCHF on renewals until it expires.
This illustrates the importance of monitoring your patent portfolio. In most countries, maintenance fees are progressive, i.e. they increase each year. Now, does it really make sense to maintain all your patents in all countries for their maximum duration?
Not necessarily. Timely portfolio monitoring can make you save up to 40 kCHF per patent. Let us, for instance, look at an alternative scenario where you drop protection in three countries after ten years (e.g. in Spain, Italy, and Sweden) and then in another three after fifteen years (e.g. in France, UK, and Germany), maintaining the patent only in your key market (Switzerland) for its full twenty years. The above graph shows the accumulated costs for this second scenario (in green), compared to the original scenario (in blue). As you can see, you can save up to 40 kCHF per patent, which is almost half of the patent lifetime costs.
Hence, reviewing your IP portfolio regularly (e.g. every two years) can help you make substantial savings. Go through all your patent families. Review what they actually protect (i.e. what the granted claims look like) and what they are going to cost you per year. If needed, your patent attorney can help in assessing the scope of the claims and evaluating the upcoming costs. Then, decide how to prune your portfolio.
Spend your money where it really counts, such as on generating new IP for that breakthrough invention.