For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

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Monday, 28 July 2014

Daylight robbery, value for money and patent renewals: it's time to talk

The IPKat and Merpel regularly receive vast quantities of marketing literature. Much of it is plainly irrelevant to the content of an IP weblog and some of it, while relevant to the subject, is of insufficient interest or significance to mention to our readership. However, the following piece of marketing literature is not only relevant but a little cheeky, if not perhaps a bit offensive.  In relevant part it runs like this:

Daylight Robbery: the hidden fees charged for annual patent renewals
This is how the usual patent
renewal businesses are portrayed
Over eight million patents are held worldwide by many thousands of businesses. All have to pay regular renewal fees, usually every year, to the Patent Office for each country to keep their patents in force.

The amount payable is usually modest (£100 or so) – varying from country to country and with the age of the patent. But you can be charged up to 4 times the actual cost to make these payments! [Goodness! Merpel exclaims: but where does this assertion come from?] This extra cost quickly mounts up when multiple patents are involved in many countries.

How does this happen? Initially patent agents (or the specialist renewals companies like CPA Global, Dennemeyer and Patrafee that they appoint) assume responsibility for making these payments – often without explaining what they are about.

Fees charged for everything in the patent world are high – in most cases justifiably because patent laws are complex. As a patent owner you get used to regular bills – and they are difficult to challenge because of this complexity.

But making renewal payments is essentially a straight forward and recurring exercise and does not justify the charges currently being levied.

Why do most businesses put up with this situation? For two reasons, firstly because it is difficult to find out exactly how much is payable and secondly because they do not trust themselves to make this important payment on time each year.

So RenewalsDesk.com has come up with a simple solution. It has collated all of the information about these renewal costs on a freely accessible website.

And if you wish, you can set up an auto-pay arrangement to ensure the payments are made every year until you decide to stop them. The charges levied for this service are a fraction of the current costs and are clearly shown.

You would not normally accept paying up to 4 times the true cost of your bills. Why put up with it any longer for your patent renewal charges? ...
RenewalsDesk.com is run by RenewalsDesk Ltd, a company based in London. The website does not lead visitors in the direction of any particular named individual, but the email received by this Kat offers an interview with Katherine Hedley, with whom this Kat thinks he has yet to be acquainted.

This Kat is not in a position to make a value-for-money comparison of specialist renewals companies like CPA Global, Dennemeyer and Patrafee with each other or with web-based systems such as RenewalsDesk (though his sure that many of his readers will have plenty to say on the subject). He is however decidedly uncomfortable with the designation of their services and pricing as being "daylight robbery", or indeed any other kind of robbery, in what had struck him as being a genuinely competitive market for services that patent owner are quite welcome to dispense with.

Merpel notes the covering email which introduces the text quoted above, in which the author writes:
"In the UK, businesses hold onto their patents for less time than in almost any other part of the world (according to research by the WIPO) and that may be due to these fees which are plagued with hidden fees often resulting in patent holders paying 4x more than they need to for each patent they hold". 
She suspects that there may be other, more cogent reasons and, again, would love to hear from readers on this issue.

29 comments:

Anonymous said...

This post should be removed.

Anonymous said...

One reason might be the desire of corporate finance departments to reduce the number of payees to whom they make payments. One former employer had a system whereby to get a new payee authorised, it was necessary to send a lengthy document by email as a Word document and get the recipient to fill in the form and print it on their own stationery before mailing it back. Apart from the fact that many email systems strip out attached Word documents, in many cases suppliers "helpdesks" operated on the basis of reading from scripts or the electronic equivalent of posting paragraphs into an email. Complex enquiries like this would simply be "lost" or "forgotten". This is particularly true in organisations which have an effective monopoly such as government departments or magazine publishers.
It therefore becomes easier for staff to bypass the Finance department and set up one "supplier" for patent renewals which is capable of dealing with the requirements of the Finance department and then charges handsomely for the service. Similar arrangements can often be found in areas like magazine subscriptions and corporate travel.
Ironically, the Finance department of that employer was notoriously bad at responding to similar requests from its own customers.

Jeremy said...

Perhaps the Anonymous who thinks this post should be removed would be kind enough to articulate his or her concern. What's your problem?

Anonymous said...

You pay your money and take your choice. An excerpt from Renewalsdesk's T&C's:

The Account Holder is entirely responsible for the use it makes of the Service. The Account Holder acknowledges and agrees that the Service is an aid to the Account Holder to managing and administering its Patent Renewals but that the Account Holder retains ultimate responsibility for ensuring the relevant patents and/or applications (as the case may be) are renewed correctly and on time. Use of the Service does not avoid the need for the Account Holder to oversee and take responsibility for its Patent Renewals.

We warrant that we have the right to provide the Service and that it will substantially conform to the description set out in these Terms of Service and on the Website (the former prevailing in the event of any conflict). If the foregoing warranty is breached, the Account Holder must notify us as soon as possible and give us a reasonable time to remedy the problem. If we are able to do this within a reasonable time, this shall be the Account Holder’s sole and exclusive remedy in relation to such breach.

Except as expressly set out in these Terms of Service, no implied conditions, warranties or other terms, including any implied terms relating to satisfactory quality or fitness for any purpose, will apply to the Service or Website or to anything supplied or provided by us under these Terms of Service. In particular, we do not warrant that the Service will meet the Account Holder’s requirements or will be virus-free.

Anonymous said...

Jeeps! Next you'll be lifting the lid on how much patent firms charge for validating European patents in the designated states.

Anonymous said...

As an industrial practitioner, I am happy with out renewal agency, whose charges I find quite reasonable. I'm not sure whether it is still the practice, but some private attorney firms used to charge steadily higher fees for higher year number renewals, even though exactly the same work is involved for year 20 as for year 3. I can understand this as it provides a way of reducing drafting charges (always the most time-consuming and expensive bit of patent work) by spreading the charges over other work. Must confess I don't ever remember being charged 4 times the true cost, so a bit of hyperbole there, I think.

Mark said...

Whenever I have seen renewal agents' invoices or details, it always seems to be CPA Global. Do all the main UK patent agents' firms use them? If so, perhaps there isn't much competition.

Anonymous said...

Two thoughts:

1) any business that finds it too difficult to keep track of an annuity payment on a fixed asset should think twice about being in business in the first place.

2) perhaps the first anonymous felt that any further explanation might hurt someone's "sensitivities" and be struck down by the censor's stamp. I still find it difficult to know where the line is between an acceptable "cheeky" comment and one that goes over the line (wherever that line is) of being unacceptable. Perhaps, the first anonymous bare expression was a reflection of restraint brought on by certain editorial choices of late.

Or perhaps, first Anonymous has no reason at all to his views.

Jeremy Nicholls said...

Well, it is certainly true that there are some attorney firms (no names) whose charges for making the payment are as much as four times the payment itself. Some firms even increase their charges as the fees increase over the patent's lifetime. What surprises me is how many clients simply accept that patents are a mysteriously expensive activity.

Mark Summerfield said...

I share the disquiet of "Anonymous who thinks this post should be removed".

I would not reproduce anybody's marketing material on my blog, unless I was in a position to critically assess its claims. Nothing in my experience suggests that the "four times" assertion has any basis in reality (assuming we are talking about reputable organisations, and not scam artists operating out of dubious jurisdictions). The firm I work for is getting out of the renewals game: the margins are too low, and smaller organisations do not have the scale to compete profitably in a market that has essentially become commoditized.

Of course, I have far fewer readers than the IPKat, so it probably makes very little difference what I do, or do not do! But if you want to do free promotional work for commercial entities, just because they have piqued your interest with sensational claims, by all means go ahead. Just don't be surprised when people suggest the resulting post should be removed.

Anonymous said...

I deny the 4x but suspect that the cost does put some off.

If firms did not have renewals departments I suspect the cost of other services would be higher...

Anonymous said...

What is daylight robbery is paying renewals to year 14 for a pending patent application at the EPO.


The "service" identified looks decidedly suspect and not just because of the shi*e marketing spin

Anonymous said...

Recently switched to a renewals service run by a reasonably well-known company mostly known in the patenting world for their search tools. It's a lot cheaper (a flat fee of £35 a renewal plus official fees), but it is also a bureaucratic nightmare to manage, has poorly-integrated components (the IP payments part is essentially a different product to the IP management part), results in us getting late-payment notices from the previously-used local associates (the service insists on using its own local associates), and support consists of shouting down the line at harrassed-sounding staff in Chicago.

Anonymous said...

"some private attorney firms used to charge steadily higher fees for higher year number renewals, even though exactly the same work is involved for year 20 as for year 3."

Are you sure this isn't just the result of escalating official fees, either directly or simply through calculating their handling fee as a percentage of the official fee?

Anonymous said...

"What surprises me is how many clients simply accept that patents are a mysteriously expensive activity."

That's because they are! Also, I'm not surprised as a lot of clients are ignorant. That is why they will use Cheap as Chips Inc and Reassuringly Expensive LLP at the same time.

The firms of patent attorneys I like are those that still charge fees per designations for European patent applications. That takes some balls. Just imagine trying to explain that one away when the proverbial hits the fan.

Anonymous said...

Running an SME with a very small portfolio of patents and with an eye always on keeping outgoings low, I have found this string useful but I'm still unsure whether to take my renewal business away from the renewals company (one of the above-named). Partly it is because the cost of learning what to do with one's patents and then working out how to do to it is something that also comes at a cost, the cost of one's time and in terms of having more things to diarise and/or worry about. We also feel comforted by the idea that, if there is any foul-up in renewals, there is someone other than us to blame, and to sue. Is all this worth the money? I still don't know.

Japser said...

Let me see... fee for fourth year in the Netherlands is EUR 40 (year three is for free).

Four times, that is EUR 160. Not unreasonable, depending on the amount of administration.

But that would be an exception, I'd say.

I have additional thoughts on this matter, but none of which mentioning them would bring additional value to what has been already said.

MaxDrei said...

The SME anon just above, at 15:54 set me thinking about how firms set their Tariff fees.

I suspect that patent attorney firms set a fee related to the amount of the official fee. Surely it is reasonable to charge more for paying a EUR 1500 annuity than a EUR 150 annuity?

The big annuity fee Service Providers surely charge a fee per event that varies with the size of the client's Portfolio. Samsung(say) surely pays less per renewal event than does a client with only 10 renewal events per year. In fact, I wonder whether owners of tiny patent portfolios find themselves paying more per renewal to one of the "Global" Providers than they would do to a little local patent attorney firm that does its own renewals direct with the involved UK and foreign Patent Offices.

Barbara Cookson said...

Well if anyone wants to check whether they can get a patent renewal done more cheaply is welcome to use my services at the Filemot site

The price is portfolio independent which is as Max Drei points out a problem for the holder of smaller portfolios.

Now that the EPO provide links to many national registers using alternative renewal service providers is a plausible option.

Katherine Hedley, RenewalsDesk said...

Thank you all for your comments and to IPKat for bringing this issue to light.

On behalf of RenewalsDesk I just wanted to add that we made the statement "but you can be charged up to 4 times the actual cost to make these payments" having been quoted figures by CPA and others as the fees charged to patent holders with less than 25 patents.

As an example let's say that you have a large entity patent for Canada that's up for its fifth year renewal and you use CPA Global. In year 5 you'll pay 2.5x more than the patent office fee and in year 6 - 10 you'll pay 4x as much as the patent office fee.

In year 6 - 10 the official patent office fee to be paid in GBP is only £59.00 (this fluctuates slightly with the exchange rate).

But CPA quotes £236.51. Even taking fluctuations in exchange rates into account this is a big difference and it appears that a lot of extra fees are being bundled under the quote for the patent office fee.

As another example let's look at the renewals fee for a granted patent in year 4 - 6 for South Korea. The actual patent office fee, when converted into GBP (again fluctuating slightly with exchange rates), is £23.20. But if you renew with CPA you'll be paying over 6x that, £143.85. It should be noted that in South Korea and Japan CPA will have to pay local attorney fees in the region.

We've put together the following blog post which explains this in more detail but would encourage people to get in touch if they'd like a quote to compare how our rates stack up against other renewals agencies:

http://www.renewalsdesk.com/blog/published-articles/4x-patent-office-fee-to-renew/

Anonymous said...

"if not a bit offensive". Yes, it is to the renewal agents concerned who are accused of daylight robbery.

Anonymous said...

I am original anon and most previous anon. Now I have read the additional comments, my position is expressed quite adequately by Mark Summerfield. I did not believe my original post required explanation as that which is obvious in patents does not.

There is plenty of competition in renewal fee payments. Feel free to deal with them yourself rather than pay a modest fee to have a large portfolio competently dealt with on time. Feel free to take that huge gamble on a a key product portfolio just to save a few pennies. I've had a client try and move their renewals to an Indian firm who promised them low fees. Our charges were accused of being excessive. If someone can explain to me how the Indian firm could charge the client less than the actual renewal fee involved I'd be interest to know. I never did find out.

Anonymous said...

I hope these statements about CPA are correct. If not, it was nice reading this blog while it lasted.

Anonymous said...

When Renewals Desk first launched they featured a customer testimonial on their website (their only one) from a chap called Lawrence Mallinson from James White Drinks. Interestingly, Lawrence Mallinson is listed as one of the Directors of the company. But hey, if you can't blow your own trumpet then who can?!

Anonymous said...

Katherine,
If, as you say, charging 4x the official fee is daylight robbery, surely charging 7x as much to renew a US patent than you charge to renew a UK patent is murder. After all, your blog says that paying renewals "is essentially a straight forward and recurring exercise".
It is difficult to understand how the RenewalsDesk service would be attractive to a company who might have spent tens of thousands of pounds on obtaining a small portfolio of patents when the terms of business limit liability to £2k in the event something goes wrong. Most UK firms of patent attorneys carry insurance of more than £10m so that a mistake by them is covered.

Anonymous said...

This is not true. Renewals prices have dropped significantly these days. I would like to share the price list of one company which clearly provides much cheaper and reliable service than CPA Global. You can visit the pricing at https://www.ipannuity.com/patentrenewalcost?currency=1. This company is much cheaper than the renewalsdesk.com

Anonymous said...

Well, where do I start?
I work for one of the biggest renewals provider and I can say that what is said is the truth !
Hidden costs are added to the official fee under made up names such as "country fee" for countries where you can pay direct at the patent Office without the use of an agent.
Also, a lot of money gets generated by foreign exchange (up to 30% on top of your bill! and sometimes even twice if you are billed in a different currency that the one used by the payer)
It is a shame as most clients expect the price to be a simple mathematics operation (official fee + service fee)

Anonymous said...

Noting anon of 18:26 I know that some patent firms charge a huge amount for currency exchange. I've noticed for the first time some clients actually wanting to specifically know this rate and additional tariffs charged on foreign attorney charges as they've realised what's happening.

Anonymous said...

Too bad the fee payment is not considered a "legal event" in the meaning of ethics laws.

In the US, most every state bars attorneys from making a profit on such things**.

The fact that this is a ministerial act., and is thus performed as a non-legal service, opens the door to profiting on the various aspects (including excess exchange rate charges).

A somewhat ironic turn from common notion then is that the lawyers would be more "honest" in these types of transactions.

**recoup of fixed costs in a fee basis is allowed.

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