Fee-related support measures for small entities

A new regime of “fee-related support measures for small entities” has been introduced. Some of these entities are not small, just politically favoured, and all may be better supported by government measures than from European Patent Office (EPO) resources. However, the following summarises these support measures and the effect they may have on applicants and practice.

Background

Fee reductions for specified classes of applicant are not new to the EPO. From the beginning, reductions in certain fees were available in some circumstances to applicants who had appropriate language/nationality qualification [Article 14, Rule 6].

In 2014CA/D 19/13 OJ EPO 2014, A4 - and Notice OJ EPO 2014, A23, the scope of the Rule 6 reduction was limited to reductions in filing and examination fees, and applicability limited to applicants in one of the categories:-

• (a) small and medium-sized enterprises;
• (b) natural persons; or
• (c) non-profit organisations, universities or public research organisations.

In 2018CA/D 17/17 OJ EPO 2018, A4 - and Notice OJ EPO 2018, A5, a reduced (or rather not increased) appeal fee was introduced for applicants falling in these categories, regardless of language/residency.

Now in 2024 a decision (the Decision) and accompanying noticeCA/D16/23 OJ EPO 2024, A3 - and Notice OJ EPO 2024, A8 ( the Notice) will become operational 1^st April 2024. The Decision makes changes to the Rules and Rules Relating to Fees ( RRF) which alter the scope and applicability of fee reductions. The Notice supplies some explanatory remarks but is not totally clear.

Under the Decision former Rules 6(3)-6(7) are deleted and replaced by two Rules 7a and 7b (why not 6a and 6b is just one of those mysteries). Rule 7a prescribes reductions available, and Rule 7b prescribes the requirement for a declaration of entitlement under Rule 7a and the consequences of an incorrect declaration.

In addition, Articles 11 and 14 of the Rules Relating to Fees (RRF) are amended as discussed below where relevant.

Entitlement to, and scope of fee reductions

Rules 7a(1)-(2) relate to Article 14 EPC related fee reductions and preserve the scope (filing fee and examination fee) and applicability of the current language related fee reductions.

Rule 7a(3) introduces a new general fee reduction for applicants in the categories

• (a) microenterprises;
• (b) natural persons; or
• (c) non-profit organisations, universities or public research organisations

and is applicable to such applicants regardless of language and location.

The fees eligible for reduction are:-

• (a) filing fee;
• (b) fee for a European or supplementary European search;
• (c) examination fee, and in addition the previously paid international search fee where the European Patent Office acted as International Searching Authority;
• (d) designation fee;
• (e) fee for grant;
• (f) renewal fees for the European patent application.

Rule 7a(4) excludes the availability of the Rule 7a(3) reductions where the same person has filed five or more European patent applications or Euro-PCT applications within a period of five years preceding:

• the date of filing of the European patent application concerned or

• the date of entry into the European phase of the Euro-PCT application concerned

Rule 7a(5) indicates that where there are multiple applicants, each applicant has to be eligible for a fee reduction of whatever sort to apply.

Rule 7a(6) confirms that the eligibility criteria must be met by the day of payment of a fee for the reduction to apply.

Amended Article 11 RRF states that a reduced appeal fee is available for applicants who meet the conditions of Rules 7a(2)(a)-(d).

Amended Article 14(1) RRF states that the reduction laid down in Rules 7a(1)&(3) shall be 30% of the relevant fee.

New Article 14(3) RRF states that if more than one reduction applies to the same fee for the same application, the reductions shall be calculated sequentially.

Effect of changes in scope and applicability

SMEs who are not microenterprises lose the current fee reduction on appeal fee, but are otherwise not directly affected.

Applicants previously eligible for language related fee reductions retain that eligibility, and this is not limited if they have filed 5 or more applications in the previous five years.

Those who are eligible for the Rule 7a(3) reductions get a significant reduction which can be cumulative with any language related fee reduction [e.g. filing fee would be reduced by 30% under language regime and then a further 30% reduction would be applied to the reduced fee – a 51% reduction in total].

Regardless of language, those who are eligible for the Rule 7a(3) reductions who go via the PCT route with ISA=EP could see a reduction of near 50% in official fees on entering the European regional phase, since the PCT search fee will be subject to a retrospective fee reduction applied at time of entering the European regional phase.

Comment on eligibility

Unlike US provisions for claiming micro entity reductions, the EP provisions contain no income limit for eligibility. [Insert billionaire’s name here] could claim the fee reduction.

Under the current Rule 6, small and medium-sized enterprises were defined by reference to Commission recommendation 2003/361/EC of 6 May 2003. That recommendation is complex, particularly concerning related enterprises, and although previous notices from the EPO concerning this only discussed size, some wondered whether this was correct.

The new provisions deals with this issue by comprising no definition of these terms. The Notice from the EPO indicates how the EPO will interpret these terms, and in particular points to Article 2 of the Commission recommendation, perhaps limiting any scope for doubtArticle 2(3) of the recommendation states “…, a microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million”. However, the absence of definitions explicitly in the rules is perhaps unfortunate.

The Notice indicates that the reduction in fees will apply to fee payments made on or after 1^st April for European patent applications and Euro-PCT applications which have entered the European phase, irrespective of their filing date.

Eligibility is required at the point of filing the European patent application or entering the regional phase.

Requirement for a declaration

Rule 7b(1) provides that applicants wishing to benefit from a reduction of fees under Rule 7a shall declare themselves to be a person within the meaning of Rule 7a(2) or (3), at the latest when the first reduced payment is made.

Rule 7b(2) requires applicants to inform the European Patent Office of any change of status affecting eligibility for a reduction of fees at the latest when the fee concerned is paid.

Rule 7b(3) gives the EPO power to ask for evidence of status in the event of reasonable doubt as to the veracity of the declaration or, subsequently, as to the applicant’s eligibility for a reduction of fees

Rule 7b(4) Indicates that if it becomes apparent that an incorrect declaration has been filed, or the EPO has not been informed of a change of status and a reduced payment is made, the fee shall be deemed not to have been paid and the application shall be deemed to be withdrawn.

Comment on declarations and incorrect declarations

Although the Notice indicates that declarations may be made on Form 1001/1200 when filing, or if made separately on Form 1011, the latter at least will not be available until 1^st April 2024. This is unfortunate for those who want to pay a fee 1^st April and may want the applicant to sign the form rather than sign as representative.

The Notice states that if a patent application is transferred, fee reductions will continue to apply only if the new applicant is also eligible for fee reductions and that the new applicant must file a new declaration. The Notice indicates that “transfer” in this context means the date of legal effect of registration of the transfer. This is a useful safeguard against the risk that an unrecorded transfer (of which the representative may be unaware) might cause problems.

The penalty for an incorrect declaration (fee deemed not paid and application deemed to be withdrawn) is severe. Although the Notice indicates normal remedies of further processing or re-establishment of rights apply extreme care would appear appropriate to check each time a fee is paid that eligibility remains. For example, a microenterprise may have 9 employees and turnover/balance sheet meeting the definition when it enters the European regional phase. If it then recruits one person it would fall outside the definition. If this only becomes evident several years on, the consequences could be fatal, because the legal remedies would no longer be available.

Commentary on practice overall

The fee reductions may be helpful to the smallest applicants or least active clients, but the greatest ongoing care is required, particularly with microenterprises, where it would be easy to drift out of eligibility.

The limitation to eligibility by requiring less than 5 applications filed in the previous 5 years would appear intended to limit scope to those with little involvement in the patent system: but one application a year is not what some would consider little involvement.

It will be interesting to see whether there is an increase in the number of applications filed by individual inventors who happen to be employed by enterprises not eligible for fee reductions.

Those of a devious disposition might consider whether there will be an increase in the number of applications filed by microenterprises whose sole purpose is to prosecute one or more (but less than 5) applications to grant.

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