After you get your Notice of Allowance, you still need to pay the issue fee and maintenance fees. The issue fee is due within 3 months after the mail date of the Notice of Allowance. The maintenance fees are due at specific intervals: 3.5, 7.5 and 11.7 years after the patent is granted.
To keep your patent enforceable for its full term, you’ll need pay those maintenance fees. While it might feel like an ongoing expense, it’s relatively small compared to the significant market power it grants you. If it’s not because you invention isn’t making you a lot of money, then it might be time to let your patent expire. Without paying these fees, your patent will expire prematurely, cutting short the 20-year term that utility patents offer.
I recommend that each time you have to pay a fee, analyze whether its still worth keeping the patent. If not, don’t pay.
The Other Side: Maintenance Fees as a Strategic Opportunity
While paying maintenance fees might seem burdensome, there’s a strategic upside—especially when you’re eyeing your competitors’ technology. Companies often let some of their patents expire when they no longer see sufficient value in maintaining them. This occurs when businesses decide not to pay the maintenance fees required to keep their patents enforceable. When a patent lapses, the once-protected technology enters the public domain, and anyone, including competitors, can freely use or build upon that technology without infringing on the patent.
This dynamic creates a unique advantage for businesses. The same fees that help you protect your patent also ensure that technology that is no longer actively used by others becomes available for use. If you’re looking to incorporate new innovations into your products or services, keeping an eye on expired patents can reveal opportunities to utilize free technology that was once protected by competitors.
Drop-Off Rates for Maintenance Fees
A significant percentage of patents expire at each maintenance fee stage, often due to companies deciding not to pay for their upkeep. Here’s a closer look at the drop-off rates:
- At 3.5 years: Approximately 20-30% of patents lapse due to nonpayment of the first maintenance fee.
- At 7.5 years: The percentage of expired patents increases to around 40-50%, as companies reevaluate the cost of maintaining older patents.
- At 11.5 years: The drop-off rate reaches 60-70%, as many patents are no longer maintained due to reduced relevance or profitability.
These expiration rates highlight the high turnover of patents over time, providing substantial opportunities for businesses seeking to leverage previously patented technology that has entered the public domain.
The Dual Purpose of Maintenance Fees
Maintenance fees serve two key functions in the patent system. First, they act as a natural filter, forcing companies to make a strategic decision about whether their patented technology is still worth maintaining. If the technology is no longer profitable or central to a company’s operations, businesses often choose to stop paying the fees, allowing the patent to expire. This expiration frees up the technology, making it available for public use. Once in the public domain, competitors and innovators can build upon or incorporate the formerly protected inventions into their own products without risk of infringement.
Second, maintenance fees help fund the operation of the USPTO. The USPTO is a self-funded agency that relies on these fees, along with filing and issue fees, to cover its costs. By requiring patent holders to periodically pay for the upkeep of their patents, the USPTO ensures that only valuable patents stay in force while securing the necessary resources to process new applications and manage the patent system efficiently. This fee structure ensures that the patent office remains financially sustainable, without needing federal funding, while continuing to foster innovation through intellectual property protection.
Conclusion
Maintenance fees are both a burden and a benefit, depending on how you look at them. For patent holders, they are a small price to pay to maintain control over their inventions and prevent others from copying them. They allow you to enjoy the right to exclude your competitors from copying your invention for its full term, so long as you keep up with the maintenance fee payments. However, on the flip side, maintenance fees can also benefit you when competitors let their patents lapse. Once a patent expires, the technology becomes available for others to use, creating opportunities for businesses looking to replicate or build upon those inventions.
Whether you are protecting your own intellectual property or watching for expired patents in your industry, understanding the role and strategic importance of maintenance fees is crucial in navigating the patent system effectively.
If you have questions about establishing reasonable royalty rates or need assistance in patent litigation, feel free to contact me at (949) 433-0900. As an experienced patent attorney serving Orange County, Irvine, Los Angeles, San Diego, and surrounding areas, I’m here to help with all your intellectual property needs.