Patent costs can be overwhelming, we all know that, and the biggest part of these costs for most companies are patent renewal service costs. So the question is: how can we decrease them?
We felt the urge to find a solution to this question and gathered in this guide the cost categories associated with patent renewal and potential solutions for creating a cost-efficient solution.
Patent renewal cost breakdown
Let’s take a look at what a firm pays for when renewing its patents. Based on our experience in the industry and the thousands of collected patent renewal invoices, we found that these cost categories are the significant ones:
- Official Fees: Covering around 25% of the full invoice, this is the fee, which is to be sent to the local or regional patent office in order to renew your patent.
How can we decrease Official Fees? Unfortunately, in most cases you can’t. This is a fee you must pay to keep your patent active and is decided by the local or regional patent office.
- Transaction Costs: Taking up to 8% of the full invoice, transaction fees are associated with transferring the official fee to foreign countries and patent offices.
How can we decrease Transaction Costs?
Choose a provider, which works digitalized. You can always ask your IP law firm which Transaction Provider they use and how much they charge for it. You can also take matters into your own hands and make your own transactions.
- Handling Fees: The biggest proportion of the patent renewal invoice (up to 35%) is what we call “Handling Fees”. This is our invented terminology, simplifying what is an umbrella of many fees with many names like "surveillance fee" "input fee" or "country fee" that either a IP law firm or a IP Renewal Service Provider is charging. This is in general, the service fee you pay to your provider, which they use to outsource the patent renewal process (making your invoice even more expensive) or do the process themselves.
How can we decrease Handling Fees?
Choose a provider who doesn’t outsource the patent renewal process. It sounds very challenging to find one, however if you search for digitalized IP management solutions instead of the traditional IP law firms, you have a big chance of getting rid of many extra costs. Even though some providers can have higher service fees than traditional IP law firms, they are still much cheaper since they have a much shorter value-chain, by not being the middlemen.
- Hedging Markup: On average 6% of the invoice covers the exchange rate fluctuations. The fluctuation is caused by two factors: 1) the difference between the currency and 2) the time between your invoice payment to your Renewal Service Provider and their payment to the local patent office. Usually, the Renewal Service Provider will not use part of the Hedging Markup and instead keep the difference as profits.
How can we decrease Hedging Markup?
Many IP renewal service providers, like PatentRenewal.com, give you back the excess hedging fee you paid after the renewal process is finished. If you don’t get back anything after the renewal, then you know you have the wrong provider.
- Local Agent Fees: Covering 25% of the full invoice is the fee your Renewal Service Provider pays to local law offices. This needs to be paid, because in some countries or jurisdictions the patent renewal fee can only be paid by a local law office. These offices have costs and unless you have a corporate entity in the country, you need to use their services.
How can we decrease Local Agent Fees?
In order to reduce local agent fees, you either do the renewal process yourself and pay to the patent office directly (most of the jurisdictions it is possible to do online) or you choose a new provider who works with cheaper Local Agents. You can always ask your IP renewal provider how much it costs to renew a patent in a certain country and how much is the local agent fee to compare with other solutions on the market.
- Postal Fees: In a very few jurisdictions the patent holders still need to post official patent letters. This takes up around 1% of the full invoice.
How can I decrease Postal Fees?
In most cases, you can’t reduce the postal fee. If a patent office asks for an official letter, then you have to send an official letter. In most cases, the local agent can do this for you at a cheaper price.
The percentages vary a lot depending on jurisdictions, annuity year and setup, but almost all categories have a solution to decrease your costs and it all starts with you mapping out the current solutions on the market.
If you want to start cutting your patent costs by up to 60%, get in touch with our experts for a free consultation and invoice analysis.