Here's one way to trim your IP spending without sacrificing protection for your key patents
Updated: Apr 15
In today’s environment, we’re all having to cut costs. At home, and at work.
Looking at your IP budget, your patent maintenance fees are probably costing you more than you realize. This is one place to look for some savings right now.
After your patent issues, you still have to make regular payments to keep the patent active. And these fees are not trivial. The USPTO requires maintenance fee payments on the following schedule for large entities:
3.5 years after issue : $1600
7.5 years after issue : $3600
11.5 years after issue : $7400
That’s a total of $12,600 over the life of the patent. If you have even a relatively modest portfolio of just 80 patents, that's an additional $1 million in maintenance fees if you want to keep that portfolio active for the full 20 year term. As I like to say, "that's real money".
But what’s the alternative? Don’t pay the fees.
Yes, your patents will expire, but this is quite typical. About 50% of all patents are allowed to expire due to unpaid maintenance fees. If you simply pay all those maintenance fees without doing any analysis, you're wasting your valuable IP budget by maintaining patents that provide very little value. And those budget dollars are even more critical today.
So, how do you decide which fees to pay? Here are three questions you need to ask:
1. How much product revenue does this patent support?
You should collect some data to identify how much revenue is tied to each patent that's up for a maintenance fee payment. Don't worry about getting numbers down to the last dollar. Even rough revenue data such as, 'None', 'Some', and 'Lots' are helpful. And don’t focus on products that simply contain the invention. Is the customer buying the product specifically for your patented invention? You’re not interested in products where the invention is merely present, perhaps legacy from an older generation. You want to focus on cases where the patented invention is critical to making the sale.
If the patent is supporting little or no revenue, you should strongly consider not paying that next maintenance fee.
2. Are my competitors citing this patent in their recent applications?
All published patent applications and granted patents list the prior art references uncovered by the applicant during the inventive process, and also the references cited by the patent examiner in their evaluation of the application. These citations are a rich source of information on how your patent is viewed within your technology space.
If your patent is cited many times by your competitors, that is a strong indication that your invention is seen as a key innovation in an area with strong inventive activity. Your competitors are trying to build on what you’ve started. Conversely, if your patent has generated few (or zero) citations, you should ask yourself why no one else seems to be operating in this space. Perhaps the technology has moved on.
Looking for citation information at the time of the 3.5 year maintenance fee payment may be too early, but at the 7.5 year milestone, any key patent in an active technical area should be generating citations. You still have $11,000 in maintenance fees remaining once you reach this 7.5 year payment, so it’s worth spending some time and money to decide if those larger maintenance payments are warranted.
If a patent has generated no citations at the 7.5 year milestone, you should strongly consider foregoing that maintenance fee payment. And conversely, even in tough times, you should make payments on any patents that have strong citation records. Those are valuable assets.
3. Is this patent creating rejections of my competitor’s filings?
When patents are evaluated by the USPTO, the examiner will frequently reject portions of a patent application because it fails the requirement of novelty or the requirement of non-obviousness. In these cases, the examiner will cite the patent or application number which is generating the rejection and give an explanation of their reasoning. This information is all publicly accessible 18 months after filing. You should be looking at this information when maintenance fees come due.
These rejections are the best data you have that your patent is putting up obstacles to your competitors. You will know exactly whose patent is being rejected, and why. Patents that generate rejections of your key competitors are the most valuable patents in your portfolio. They cost your competitors time and money as they try to work around those rejections. You should definitely pay the maintenance fees on any such patents in your portfolio. This is not the place to look for savings.
Where you should look for savings is in any patent families that have failed to generate any rejections of other applications. If you've spent years building a
Patent maintenance fees require significant expenses long after your patent has issued. If you are not making data-driven decisions, you are wasting money maintaining patents that have very little value. And no one can afford to be wasting money right now.
Be sure you have a formal process to look at revenue, citations and rejections in your portfolio before you pay a maintenance fee on any of your patents.