U.S. Patent Office Maintenance Fees: Everything You Need to Know
U.S. Patent Office maintenance fees are a crucial part of the patent process.8 min read
U.S. Patent Office Maintenance Fees
U.S. Patent Office maintenance fees are a crucial part of the patent process. If you are not careful, your patent could be in jeopardy just because you miss a critical payment deadline.
U.S. Patent Renewal Rules
When renewing a patent, there are strict rules you must adhere to. All patent renewal and maintenance fees are due three times during the life of the patent. They are only payable after you have been granted a patent.
The first fee is due three years and six months after receiving a patent. This payment allows the patent to stay viable past the fourth year of grant.
The second fee must be paid by seven years and six months after receipt of the patent. The third and final fee is due by eleven years and six months after getting a patent.
All fees are payable up to six months before they are due. There are penalty fees for paying late. These fees will begin immediately after the payment due date has passed. If you fail to pay within six months after the payment due date, you patent will lapse.
There are three different classifications for types of entity. They include large, small, and micro.
- Small entities are individuals or a business with less than 500 employees. Non-profits are also considered small entities. They pay 50 percent of the large entity fees. It should not have licensed patent rights to a large entity, nor can it be under any obligation to do so.
- Micro entities are a subset of small entities and pay just 25 percent of the large entity fees. To be named a micro entity, the application cannot be named on greater than four prior applications. Income must also not exceed three times the previous years’ median household income.
USPTO Patent Fees
You can find a copy of the United States Patent and Trademark Office’s fee schedule on their website.
Note on Fees for Filing PCT Applications
Not all of the fees that are in the PCT sections will be paid in an application. When you file an International State PCT application, the following fees are required at a minimum:
- Basic application fee
- Transmittal fee
- Search fee, which will depend on which search authority is utilized
When you enter a PCT application within the National State in the USPTO, the following fees are required at a minimum:
- Basic National Stage fee
- National Stage Examination fee
- National Stage Search fee
Additional application fees may apply based on your application type. These fees are the only fees paid with every PCT application filed with the USPTO. Any and all attorney’s fees will need to be paid as well.
What Are Patent Maintenance Fees?
Patent maintenance fees are also referred to as patent renewal fees. These fees are paid to the USPTO to maintain a current patent in place. Certain foreign patents will also require patent maintenance fees for pending applications.
Patent maintenance fees are not always mandatory with all patents. Other patents have laws regarding maintenance fees that are required and the frequency at which they should be paid.
Patent Maintenance Fees in the United States
Patent maintenance fees are required for utility patents in the United States during the course of a 20-year period. The fees are paid in three separate payments. This 20- year period starts at the time you file the patent or during the priority date. Patent maintenance fees are neither necessary nor required for design patents.
The maintenance fees must be paid at the fourth, eighth, and 12th anniversary from the time you receive the patent. There is a window of time when the patent maintenance fees must be paid, which is a six-month timeframe before the fee is due.
The USPTO has the following breakdown for the fee schedule:
- Four years or more- $1,600 for large entity, $800/$400 for small or micro
- Eight years or more- $3,600 for large entity, $1,800/$900 for small or micro
- Twelve years or more- $7,400 for large entity, $3,700/$1850 for small or micro
In addition, the patent office will charge a penalty for any late payments made within six after the due date. This will be $160 for a large entity, $80 for a small entity, and $40 for a micro entity.
If the payment is delinquent for an unintentional reason beyond your patent’s expiration date, there will be a fee of $1,700 for a large entity, $850 for a small entity, and $850 for a micro entity.
Foreign Patent Maintenance Fees
Foreign patent maintenance fees are much different that fees required by the United States. They solely depend on the country where the patent application was filed. In general, foreign patents will require yearly maintenance fees. These are referred to as patent annuities.
The payments will be required after the first application, but it is not when the patent will be approved. Foreign patent annuities can get larger as each year passes. It will increase until the maximum maintenance fee has been reached.
Because of this, you can start paying a small fee, but it will increase until you reach a certain point, typically around ten years. After this time, the fee will remain the same for the life of the patent.
There are a variety of patent maintenance fees with foreign patents just as there are with domestic. They fall into three categories:
- Government fees
- Foreign associates fee
- Local agent professional fee
The fees will vary in cost among different countries. The fees in smaller countries are smaller than larger ones. However, they are just as important everywhere. Not paying the fees can result in a cancelled patent.
If you intend to work with a firm on your annuity payments, you should take the time to fully understand the fees that you will be responsible for to avoid a lapse in your patent.
Why Are Patent Maintenance Fees Important?
Unfortunately, approximately half of patents expire because the owner failed to make the maintenance payments. This allows another inventor to move forward on a product that another inventor put countless hours of work into.
If you fail to make your maintenance fee payments, the patent will expire and you will no longer have a patented product with the USPTO.
The process is in place in this fashion so that there is a continual flow of new patents while clearing out older patents that the owners are not actively pursuing. This prevents the entire system from becoming too bogged down and overly complicated.
Reasons to Consider Not Paying Patent Maintenance Fees
There can be some instances in which you may want to consider not paying maintenance fees. It is very expensive to file and maintain a patent. Cost estimates for patents and associated maintenance fees can reach nearly half a million dollars in some cases.
Patents are very much worth the investment for the right invention, but it is not always worth it if your invention does not connect with consumers or other targeted entities.
It is a good practice to evaluate your patent and the fees you will need to pay each renewal period to determine if the investment is still worth the money. Working with a patent review committee is a great way to help you determine if a patent is valuable enough to hold onto.
When going through this evaluation process, professional reviewers use different criteria to determine if a patent is worth paying maintenance fees, including the following:
- Whether or not holding the patent is important to continue the development of the product
- Whether or not the patent is necessary to prevent competitors from developing the same product, which can cause problems for the business plan
Reasons to Consider Paying Patent Maintenance Fees
Although maintenance fees can create additional costs in order to hold onto the rights of a patent, it is often very good money spent. Paying these fees continually prevents anyone from infringing on your rights as the holder of the patent.
There are some situations in which is questionable if the fees are worth it. Although, many attorneys specializing in patents find that investors consider the fees an easy choice in most cases.
The best way to think about paying the fees is that you can always make more money after making a payment. But you cannot get your invention back if someone else patents it before you can.
There are some ways to lower the maintenance fee costs. In some countries, you can have the patent endorsed with a License of Right. This endorsement demonstrates that you are willing to provide the patent to anyone who may be interested in licensing it. You can often have a drastic drop in maintenance fee costs of up to 50 percent.
What Happens When You Pay Patent Maintenance Fees vs. When You Do Not
Once you are given a patent, it is important that you pay attention to the maintenance fee schedule. Although some inventors intentionally allow the fees to go unpaid because they are no longer pursuing the product, others miss out because they were not adhering to the fee payment schedule.
As long as the fee is paid, you will always have the right to utilize your patent.
Common Mistakes with Patent Maintenance Fees
There are some mistakes that need to be avoided with regard to maintenance fees. Mistakes are not unlikely, no matter the size of the entity. Some of the richest corporations in the world have made a mistake or two at some point where patent maintenance fees are concerned.
Some of the most common mistakes include:
- Failing to pay patent maintenance fees due to improper record keeping
- Simple clerical or careless errors
- Not considering the differences between foreign patent and domestic patent maintenance fees
- Taking too long to ask the USPTO any questions or provide insight when needed
- Not knowing the amount you should pay based on the size of your entity
Since there are so many ways to make an error with maintenance fees that could ultimately cost you your patent, it is important to rely on a competent patent attorney to pay your fees.
Patent Maintenance Fees
Approximately half of patents will expire because the owner of the patent either forget or choose to not pay the maintenance fees. This can flesh out those who have given up on projects or have found research does not show the worth of the invention. However, there is considerable analysis and consideration that should be done when conducting a freedom to operate search.
By the time maintenance fees are due each period, the patentee should know the value of the invention to the market in order to make an informed decision about if they want to pay the maintenance fees or not.
A significant percentage of USPTO revenue is made through maintenance fee payments. The payments do not require any additional work on behalf of processing the money. It can be used to subsidize examining the patents that have been filed more recently.
In 2008 and 2009, the USPTO encountered a drop in maintenance fee payments. This was largely in part to the economic downturn at the time. However, payments have again risen and are experiencing an all-time high.
The USPTO is currently revising its fee structure that is based on newly discovered authority under the America Invents Act. These changes included an increase in the fees, such as a 55 percent increase in the fees in the third stage of payments.
In recent research, the USPTO official advisory committee agreed with an increase in the maintenance fees in the third phase. However, they suggested that it could have a negative impact on the USPTO revenue.
Therefore, the USPTO does not record a patent as expired until after year four, eight, or twelve. Important to the freedom to operate a search includes the question if patents have expired and are available to the public domain. The current patent information is ineffective at linking patent expiration to searches.
If you need help with your patent maintenance fees, you can post your legal need
on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.