UNDERSTANDING MAINTENANCE FEES
To many, the concept of maintenance fees and the time periods for paying them is somewhat vague. In reality, it is a fairly simple process and easy to remember, if you reduce the concept to its simplest form. The following information outlines most of what you need to know about Maintenance Fees.
1. Maintenance Fees versus Annuities
In most other countries of the world, Annuities must be paid for every patent application and patent. As the name implies, these are annual fees, usually paid on the anniversary date of filing. While the fees are somewhat smaller than US Maintenance Fees, since they occur every year, the overall cost can be greater. In addition, many overseas Attorneys charge fairly heft sums just to docket and pay these fees.
In the United States, there are no Annuities, at least as of the time of this writing. Instead, we have a series of three Maintenance Fees which are payable AFTER the Patent issues, in order to keep the Patent in force. If these fees are not paid, the Patent “expires” for failure to pay maintenance fees.
2. When are Maintenance Fees due?
This is the first area of confusion for many. The fees are officially due at 3½, 7½, and 11½ years from the date of ISSUE of the Patent. Counting to half-years gets kind of confusing, so folks have a hard time figuring out exactly when their fees are due. I know I did! However, there is a way to simplify this calculation – simply round-down to the nearest full year (3, 7, and 11 years).
The fees are actually payable during a year-long “window” starting at 3, 7, and 11 years from the date of issue. These even numbers are a lot easier to remember! Each fee can be paid for the first six months of this year-long “window” without any surcharge. In the latter six months, the fee is considered “late” and a small surcharge fee ($65 at the time of this writing) is additionally due.
So for example, at the 3-year mark, you can pay the maintenance fee due any time from 3 years to 3½ years without any surcharge. From 3 ½ to the 4 year mark, the fee can be paid with the $65 “late fee”. After 4 years, the Patent is deemed to have Expired.
So rather than docket at half-years, it is much easier to docket at the 3, 7, and 11 year marks. If you set a reminder at the ½ year marks, you might not realize that the fee is due until you are already into the “late fee” period. Docket at the beginning of the window, not the end!
3. What are the amounts of the Maintenance Fees?
U.S. Maintenance fees are progressive, so each successive fee is much more than the previous one. The idea is to encourage inventors to allow their Patents to expire unless they are actually being used. The Government does not want inventors to “sit on” Patents with the hope that maybe somebody will someday infringe, and then they can sue. With the Maintenance Fees, it is “use it or lose it”.
Maintenance Fees are raised periodically along with all other Patent Fees, so it is hard to say exactly what they will be. At the time of this writing (July, 2005) the fees are as follows:
YEAR Large Entity Small Entity
3 Years: $900 $450
7 Years: $2,300 $1,150
11 Years: $3,800 $1,900
As you can see, the fees increase steeply after the first fee at year 3. Consult http://www.uspto.gov/ for current fee levels. Note that “Small Entity” pricing applies to most small companies, start-ups, and solo inventors. Consult your Attorney if you are unsure if you are a small entity or not.
4. What happens if I don’t pay the Maintenance Fee?
If the Maintenance Fee is not paid in a timely manner, the Patent is deemed to have EXPIRED (note, not “abandoned”, which is a term that applies only to pending applications). Unless it was your intention to allow the Patent to Expire, this is not a good thing.
It is possible to PETITION to REINSTATE your Patent on “Unintentional Grounds” by filing the necessary Petition (Form PTO/SB/66, available on the http://www.uspto.com/ website) and paying the hefty Petition Fee ($1640 at the time of this writing). However, there are some pitfalls to such Petitions.
To begin with, you cannot intentionally allow the Patent to Expire and then Petition to reinstate on “unintentional expiration” grounds. This sounds rather obvious, but I have had clients ask if they can do this. In case I am not being clear, the answer is NO.
The second problem is that if someone starts making your invention in the interim, and relies upon your Patent having expired to start his business, you might find your rights to sue that person have been damaged or destroyed. The would-be infringer can claim “intervening rights” and you might not be able to collect as much in damages, if anything from that infringer.
Note also that you cannot delay in filing such a Petition. Once you become aware that the fee was not paid on time, you must immediately file the petition. If you intentionally delay in filing the Petition, you lose. In addition, you cannot go back and reinstate Patents that expired years ago. Generally speaking, such a Petition should be filed within one year of the expiration date of the Patent.
So it is not a good idea to let your Patent Expire unless you really want it to.
I should note that it is also theoretically possible to reinstate your Patent by filing a Petition to Reinstate on UNAVOIDABLE grounds. The fee for such a petition is less ($700) but such Petitions are hardly EVER granted. You must show with clear evidence that there was no way you could have paid the maintenance fee on time. And by this, I don’t mean that you “forgot” or your attorney didn’t remind you. It has to be some catastrophic event that would prevent you from paying the fee whatsoever. Frankly, I can think of very few instances where such a Petition would be effective. So forget about it!
5. What is the “Official Patent Maintenance Fee Payment Company”?
Many solo inventors and small companies receive postcards from organizations with official-sounding names such as the “Official Patent Maintenance Fee Payment Company”, or something similar to that. The postcard sounds official and warns the recipient that their Patent will expire unless the Patentee sends the company $125.
These companies are not sanctioned or authorized by the United States Patent & Trademark Office, and moreover, will not pay the maintenance fees for you. If you read the fine print on the back of the post card, they are agreeing only to send you the FORM to pay the maintenance fee for the $125 fee you send them. Responsibility for paying the maintenance fees still rests with you.
Paying $125 for a form is kind of pricey, especially considering that the form PTO/SB/45 can be downloaded for free from http://www.uspto.gov/. Moreover, you can even pay these fees on-line at http://www.uspto.gov/, without using any form at all.
However, what these companies are expecting (and what actually happens) is that the inventor, thinking that the postcard is from the Patent Office, pays the $125, thinking it is the actual maintenance fee, not a service fee for mailing a form. While you might think this is too easy a trap to fall into, I have had at least two clients fall for this scam, both of whom were quite well educated and astute people.
In one instance, an inventor called me, after I had sent a reminder about the maintenance fee, saying “I already paid the fee directly to the Patent Office, and it wasn’t $450 like you said, it was only $125!” While I was disappointed that my client had fallen for this scam, I was also a little chagrined that he would think I would overcharge him for a maintenance fee by more than $300.
Like any other scam, these maintenance fee postcard companies rely upon the greed of the “mark” – by enticing people to think they can get “something for nothing” or in this case, a $450 fee paid for only $125.
If you send $125 to these companies, your Maintenance fee will NOT be paid, and your Patent WILL Expire. Note that falling for a con artist is not sufficient for a Petition on Unavoidable grounds, either.
6. Should I pay the Maintenance Fee on my Patent or let it Expire?
This is as tough a question as “should I get a Patent?” I can’t answer it for you, either. Maintenance fees are expensive, and whether a Patent is worth maintaining depends upon whether you are profiting from it, have plans to profit from it, or are making products covered by the Patent.
The whole idea of the Maintenance fee system is to encourage inventors to let Patents expire if they are not being “worked”. So if you have essentially abandoned your invention at this point, maybe paying maintenance fees doesn’t make any sense.
But that is a business decision, not a legal question. Whether or not you should keep your Patent in force is a judgment call that YOU have to make. Balance the costs with the potential returns. If it doesn’t add up, let it go.
7. Will the Patent Office or my Attorney send me reminders of Maintenance Fees?
The answer to this question is: maybe. The Patent Office SOMETIMES sends out maintenance fee reminder letters to the last address of record in the file. However, the Patent Office does not guarantee to do so, and explicitly states in the Manual of Patent Examination and Procedure that failure to send out such reminders is NOT grounds for a Petition to Reinstate on unavoidable grounds.
Since the last address of record might be your Attorney, the chances of you receiving a reminder from the Patent Office are pretty slim. I would not rely upon this as a means of docketing your maintenance fees.
Some Attorneys might agree to remind of you Maintenance Fee due dates. Some do not. I do not. The reason is very simple. For the very low fees I charge, I cannot take on the responsibility for payment of fees over a period of 12 years from the date of issue. It is just too large a liability and too much clerical work over a long period of time.
Since it is so easy to pay the fees yourself on-line, I find that in the instances where I do remind a client of the fees due, they go ahead and pay it themselves on the USPTO website. So it is not worthwhile for me to docket these fees, pull the files, type, print, and mail reminder letters, only to end up not getting paid.
And with the open-ended liability involved, it certainly is not worthwhile. I cannot assume a potential risk of a million-dollar Patent expiring on my watch in exchange for the possibility of making $175 or so paying a maintenance fee. The risk and rewards just don’t balance out.
There are annuity companies such as Computer Patent Annuities, which, for a fee, will docket your maintenance fees and send you a reminder. For a larger fee, they will even agree to pay them for you. Since these commercial companies are available to assume the risks and liabilities for paying maintenance fees, there is no need for me to duplicate their efforts. And there is certainly no need for me to assume these risks for free, either! If you want someone to remind you of the fees due and pay them on your behalf if you forget, you will have to pay for this service, period.
If you decide to pay the fees yourself, it might be a good idea to file a change of address form with the Patent Office, directing all future correspondence to you. At least this way, you might receive the Maintenance fee reminders and payment notifications if they are sent out.
It is also a good idea to notify your Attorney of any changes of address. While I do no guarantee to remind clients of Maintenance fees, I may send out courtesy reminders from time to time. If a client does not provide me with a current address, there is no way I can send out such reminders. 12 years is a long time, and people do tend to move. In more than one instance, I have tried to remind a client of a Maintenance fee, only to have my letter returned, stamped “no forwarding address”.
Note that you can check the status of your Patent’s maintenance fees, when the “windows” open and close, and whether past fees have been paid by going to the USPTO website at http://www.uspto.gov/ and clicking on the electronic business center.
8. Can I copy technology from an Expired Patent when the Maintenance fee has not been paid?
See my comments above regarding Petitions to Reinstate. Since a Patent Owner can pay the maintenance fee anytime during the yearlong window, we have no idea of whether the Patent has expired until at least the end of that period. In addition, since an applicant can Petition to reinstate on unintentional or unavoidable grounds, it is always possible that the Patent could be reinstated months later.
If you do act in reliance on a Patent having expired, you might be able to claim “intervening rights” if the Patent is later reinstated. However, such rights might not eliminate all of your liabilities, and moreover, you have to go to court to assert such rights.
Whether or not a particular Patent has truly “expired” is a fact-specific situation, and I would recommend consulting an Attorney before taking any actions in reliance of an “expired” Patent.
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As you can see, Maintenance fees are not all that complicated to figure out. Just remember the mantra of “3, 7, 11” as the years to pay the fees. Mark down these dates and make sure the fees are actually paid – if you want to keep your Patent in force.
