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Patent Annuity Payments in the shadow of Coronavirus

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While the world confronts an unprecedented crisis, throwing our health systems and economy into turmoil, some areas of our economy are forced to remain open. People still need food, medicine and toilet paper, and they still need to make maintenance fee payments on their patents.

While a few patent offices have pushed off deadlines, including maintenance fee deadlines, for a short period, and while many patent offices have made certain concessions to the pandemic with respect to filings and other actions, most patent offices have adopted a business-as-usual approach toward maintenance fee deadlines.

Although we expect that many patent offices will consider requests for extensions favorably on a case-by-case basis, we do not advise risking non-payment of maintenance fees with the expectation that the relevant office will take a lenient approach, especially if non-payment is not connected to a specific reason due to the pandemic.

Our firm has been involved in strategy discussions with clients who simply do not know where the economy and their business is going, and therefore need to make difficult decisions with respect to outlaying cash for maintenance fees. At the moment, cash-flow is a huge issue for many companies, and while this affects every area of their business, they will need to make tough decisions with respect to their patent portfolios. Many companies have chosen to enter into the surcharge period, hoping that they’ll have better visibility in a few months, when they will be able to make better decisions. The fact that no one has really seen a situation like this does not help – no one knows where this is going to go, and while it’s possible to take a ‘wait-and-see’ approach with respect to other cost items, maintenance fee deadline come when they come, and very tough decisions have to be made.

So how are maintenance fee providers helping in this time of crisis?

1. Ensuring Payment

It may sound simple, but the most basic job for anyone tasked with patent annuity payments is to ensure that these payments are not missed. For companies or law firms who are making payments themselves through agents in different jurisdictions they know or have encountered, they need to make sure that their contacts are actually working and available to take instructions – especially as many decisions about payments will be made last minute. This is not a simple project, especially in a time when manpower is not to be taken for granted. Moving maintenance duties to an outside firm ensures that best practices will be followed, including multiple options for local agents, and that the system is undergoing regular audit procedures.

2. Cost Savings

During normal times, there are a number of factors that go into a company or a law firm’s decision regarding how to maintain their patent portfolio, with cost being one of many factors. These are not normal times. Patent-holders will be looking to cut costs in any way they can, and if moving to an outside provider means they can save up to 20% on their bill, this will be a great incentive to change the way they’ve been doing things until now.

3. Variable vs. Fixed Costs

Aside from the issue of the official fee costs, many business and law firms are unfortunately forced to lay off workers who would otherwise be managing their maintenance fee portfolio. The fact that they can outsource these services can be extremely helpful during this time. In this way, patent-holders know they’re paying only for the actual renewals of relevant patents, rather than keeping additional fixed costs on their books, whether they choose to renew or not. If they choose not to renew, or to renew only partially, those savings will accrue to their bottom line and help to pull the firm and its employees, out of this situation. As companies are shifting to ‘resilience’ mode, rather than their usual growth mode, everything from employees to their supply chains is affected, and maintaining their patent portfolios without regular fixed costs may be exactly what companies need during this time.

4. A shift online

We certainly do not know what the business landscape will look like following this crisis. What we do know is that things are not simply going to go back to the way they were. Consumer behavior will change, but we don’t yet know how. A reasonable assumption is that there will be an even greater shift to online activity where possible. Personal relationships are of course still important, but if a company is given the opportunity to check a few boxes and make payments, that will be an attractive option, rather than getting in touch with each individual contact in each individual country, maintaining those contacts at conventions and in-person meetings, and auditing the benefits of those relationships on a regular basis. 

Patent annuity payments are continuing, despite major shutdowns around the world. Companies and firms need to be sure that they are ready for what’s coming.

About the author

Ariel Davis

VP of New Products and Services

Azami Global

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