Budgeting Maintenance Fees

We frequently are asked by in-house counsel about budgeting for development and maintenance of their US patent portfolio.  At least among US Applicants, these portfolio budgets often are considered to include maintenance fees.  These fees generally are a better starting point than are prosecution fees to reduce portfolio fees.

Three maintenance fees are due during a US patent’s lifetime: at 3.5, 7.5, and 11.5 years after issue.  These fees progressively increase, both in terms of amount and in terms of cost-per-year.  So, the 3.5 year maintenance fee currently is a fairly reasonable $2000.  On the other hand, the 11.5 year maintenance fee is a fairly steep $7700.

Maintenance fees are foreseeable, unlike unexpected fees for extensions of time, Examiner-initiated interviews, and petitions.  Therefore, an IP department’s budget reasonably includes maintenance fees.

So, to reduce costs, many Applicants decline to pay maintenance fees.  This decision is technology-specific, of course.  On one hand, a patent protecting a pharmaceutical product could be worth millions of dollars per day.  In such a case, the maintenance fees are trivial.  Similarly, if a patent is being infringed, the maintenance fees are insubstantial.

On the other hand, industries sometimes never adopt particular technologies, or the industries advance beyond specific technologies.  For example, there are probably many digital-rights management (DRM) patents that are due for maintenance fees, although many industries have abandoned DRM technology.

Of course, decisions are not always so clear.  In some cases, the value of the patent must be assessed based on the likelihood of infringement and the value of such infringement.  Still, the most expensive decisions are at the end: the patentee has had 11 years to accumulate and evaluate this information.

As one final point, there is a 6-month grace period for paying maintenance fees, upon the payment of a $500 surcharge.  This surcharge is quite efficient: consider that a 2-month extension of time during prosecution is $640.  So, if an additional 6 months are necessary to make a more informed decision, then the cost is fairly reasonable.

If Modal PLLC can assist you in managing your portfolio budget, please contact us.

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