The arithmetic of unitary patents: does more mean less for those who pay?

An important side-issue arising from the forthcoming introduction of a brand-new unitary patent for system for most of Europe is that of how much it will cost patent applicants to use.  Even in the absence of litigation and office actions -- the expense of which cannot readily be predicted, and even when not taking professional fees into account for much the same reason, there remain costs that are firmly embedded in the patent system and of which applicants will take careful note: one is the cost of translations; another is the cost of official fees, including fees for renewal.

In the letter to the IPKat which is reproduced below, Andrew Mackenzie (Principal,  Scott & York Intellectual Property Law, but writing here in his individual capacity) asks some questions about the likely cost to applicants of the new systems and, like many other good folk with whom this Kat has spoken, would dearly like to know with more clarity and certainty what the oft-vaunted and indeed axiomatic savings of the new system might be.  He writes:

"I was very interested to read the post on Tuesday by Taylor Wessing and indeed have discussed and read quite a lot about the litigation angle on the Unitary Patent (UP). However, l've seen very little on the costs of obtaining the patent other than an assumption that it'll be cheaper, e.g. the TW comment: 

"Obtaining a single Unitary Patent for the whole of Europe ought to be considerably less expensive than the current systems with national rights that have to be maintained in each country." 

[This Kat is bound to agree. He has seen numerous assertions that the UP will be cheaper, but no sums based on typical day-to-day scenarios. There may well be some, and it would be good if they were conveniently accessible, online or otherwise. Can readers point to any?] The important point here is "for the whole of Europe ". However, most applicants only validate in Gemany (DE), France (FR), and the UK (GB), with Spain (ES) and Italy (IT) coming a distant second. This is not surprising when one considers these countries make up about 70% of the entire EU GDP.

Accurate public figures are hard (impossible?) to obtain for where European patents are validated but, in our own practice, over the past five years, 65% of applicants validate in just DE, FR and GB rising to 80% with ES and IT. Our practice does not include big pharma but has a good spread across all other technical areas. Big pharma will typically validate in many more countries.

Marmite and the unitary patent:
love them or loathe them?

For those who validate just in DE, FR and GB an extra translation into an EU official language will be required for the unitary patent. ES and IT are out of the unitary patent system so will still require translations (although when going for the Big Five, one of the IT or ES translation could be used to supply the extra translation for the UP countries). So on validation there is no benefit for most (80%) patentees and probably extra costs for a significant proportion (65%) of the users of the system and who are probably the most cost-sensitive. So validation would appear only to save money for those relatively few users who routinely validate in many countries [This Kat seems to recall the argument being raised that, for the sake of a level playing playing field in the Single Market, patent protection -- like Marmite -- is best enjoyed when thinly but evenly spread across the entire surface area, rather than being concentrated in great lumps in some places but entirely absent in others: accordingly, any system for patent protection in the EU Member States should make any many-country solution more appealing.  Is this right?].

The big issue, though, is renewal fees. These typically make up about two-thirds of a patent portfolio's lifetime costs so are very significant. The level of renewal fee for the unitary patent is yet to be decided by the EPO Administrative Council, but given that Council's propensity for large fee hikes and penal fee structures (maintenance fees on Divisional Applications, anyone?), I somehow doubt this will be set at or below the level of the combined national fees due to the DE, FR, GB offices (separate ES and IT fees will presumably still be due anyway). So renewal fees could be significantly more expensive for most patentees, and this will be the deciding factor for most applicants, in whether to seek a unitary patent.

When one remembers that virtually all patents are never litigated [one of this Kat's favourite points -- our view of the patent system should not be a pathological one, looking only or mainly at the bits that go wrong and the problems that arise], are we in danger of losing sight of the likely significant increase in European patenting costs for most real applicants, with no significant matching benefit? One dare not suggest that the unitary patent is merely a shiny political bauble for the Commission's mantle piece, but is the litigation tail perhaps wagging the dog?"

The IPKat would be delighted to hear from patent attorneys, policy-makers, SMes and, yes, even economists who either have a useful insight into Andrew's points, or who know where to find one.