On the level of the appeal fee
J. Boff (GB), Chair of the EPO Finances Committee
New appeal fees came into effect 1st April 2018. An accessible appeal fee system is an essential part of providing justice, and serves a quality control function.
Article 6 § 1 of the ECHR provides the right to a fair hearing in the determination of civil rights and obligations. The right of access to a court must be "practical and effective". The practical and effective nature of this right can be impaired, for instance, by excessive court fees.
The 50% increase of the appeal fee implemented in 2014 (CA/D14/13) had a significant effect on the number of appeals. It dramatically reduced ex parte appeals. During the last full year before the increase (2013), 24.6% of refusals of applications were appealed (ex parte appeals), but in 2016, there were only 17.1%, i.e. a drop of 30% in ex parte appeals (see Table 1). It is unclear whether the increase in appeal rate in 2017 represents a partial recovery from the shock of the fee increase, or a change in the nature of refusals.
Ex parte appeal rates - 2010-2017
|Year||ex parte appeals||From number of refusals||Appeal rate|
|2014||996||4211||23.7%||Appeal fee increase introduced 1st April 2014|
|2015||864||4613||18.7%||First full year following appeal fee increase|
The amended Rules Relating to Fees froze the appeal fee for SMEs, natural persons, non-profit organisations, universities and public research centres at the previous appeal fee level. This freeze is welcome for small entities and individuals: but it is at first sight perplexing in its application to larger entities. It is not immediately clear what the rationale is for a system in which a business having 250 employees and a turnover of €50m has to pay the increased appeal fee: whereas a university with a faculty of around 2,400 and total revenues of over $4 billion can pay the frozen appeal fee.
Part of the reasoning behind the appeal fee increase was to provide increased cost coverage for the costs of running the Boards. Leaving aside the question of whether cost coverage is an appropriate measure to be applied to a judicial and quality control function, the cost coverage calculations used in deciding on the fee increase appear erroneous, in not taking into account fee income related to the fact of the appeal.
When a patent application is refused, or a patent revoked, and there is no appeal, then the Office and the Member States receive no further income from that application or patent.
When there is an appeal against a refusal or a revocation, the Office receives internal renewal fees, or a share in national renewal fees, during the pendency of the appeal.
Where a decision to refuse an application or to revoke a patent is overturned following appeal, then the Office gets grant fees (for applications) and benefits in a share in ongoing national renewal fees.
This additional income is income the Office and Member States would never have had, had the appeal not been filed, and so should be taken into account in assessing cost coverage.
Taking these factors into account, and with some reasonable (conservative) assumptions where numbers are not available, the cost coverage of the Boards of Appeal prior to the change in appeal fees appears to have been more than double the 6.8% quoted in CA/102/17 which was the basis for the decision to raise the appeal fee.
The cost coverage for ex parte appeals (for which extra income is the direct result of an appeal) would be considerably higher (possibly over 40% for successful ex parte appeals).
The increase in appeal fees will increase cost coverage still further.
In considering any future increase in appeal fees, calculations of cost coverage should take into account all income related to the fact of appeal, and not simply the appeal fee paid.
If differential fees are to be applied, it is more logical to provide a lower appeal fee for ex parte appeals in comparison with inter partes appeals, than to provide differential fees on the basis of criteria that provide benefits not only to SMEs, but also to selected large entities that can well afford to pay their way.
- Amended Article 2, paragraph 1, item 11, of the Rules relating to Fees http://www.epo.org/law-practice/legal-texts/official-journal/2018/01/a4.html
- Criterion under 2003/361/EC referred to in Rule 6(5) EPC
- Name withheld to excite your curiosity