Most patent-issuing authorities charge maintenance fees or annuities to maintain a patent after it issues. In the U.S. these fees are due 3 1/2, 7 1/2, and 11 1/2 years after issuance, and are $1600, $3600, and $7400. In most other countries these fees are charged annually, typically starting low and quickly escalating to a thousand dollars or more per year.
Early on the fees are low and the technology is new, and paying the fees seems a no-brainer. But after several years, if the technology hasn’t proven itself, and as the maintenance fees begin to claim, the decision is not so clear cut. A business can realize substantial savings by dropping patents on technologies that are not adding value to the business. However, there is significant resistance to do so, because after all so much as been already spent, what’s another thousand dollars? And, no one wants to be responsible for dropping that one patent that — against all odds — suddenly becomes valuable in its twilight years.
However a smart business will periodically review its patent portfolios, and drop the patents that are not likely to contribute value. These resources are better directed toward the protection of new, promising technologies. It is for this reason that each year between about 15% and 20% of U.S patents due for maintenance fees are abandoned.
As the charge above, illustrates fewer than 20% of Korean and European patents are maintained through their full 20 year terms, fewer than 30% of Japanese patents are maintained for their full 20 year terms, and only about 50% of U.S. patents are maintained for their full 20 year terms. (The higher U.S. Maintenance rates are an artifact of the fact that the last maintenance fee is due 11 1/2 years of issuance, and optimistic patent owners are unwilling to make the difficult decision at that point to allow the patent to lapse. But the maintenance rates of patents in other countries, suggest that they should.
The above chart of cumulative maintenance fee costs shows that maintaining a patent through its entire life dwarfs’ the cost of obtaining the patent, and should be reserved only for those patents that are actively adding value to the business.
