From: Carl Oppedahl <0001811496@mcimail.com>
Subject: [INFO] expiring patents
Organization: Basser Dept of Computer Science, University of Sydney, Australia
Date: Mon, 17 Aug 1992 03:51:00 GMT

Gregory Aharonian (srctran@world.std.com) writes:
 
>An interesting observation about patents and recessions.  The March
>24th issue of the Official Gazette of the US Patent Office listed about
>2000 patents that had expired because the assignee failed to pay the
>maintenance fees.
 
Well, yes, that is commonplace nowadays.  You pay an issue fee for the
patent to issue, then after 3.5 years a maintenance fee, then after
7.5 years another maintenance fee, then after 11.5 years a final maintenance
fee.  If you fail to pay a maintenance fee the patent lapses.
 
The idea, of course, is to try to extract money from patent owners
in some relationship to how lucrative the individual patents are.
The other choice (which was the practice in the U.S. up until the
last decade) was to charge all the money in application fees and issue
fees, which came down pretty heavily in favor of moneyed inventors.
Now, if your patent happens not to have panned out, you just meekly fail
to pay the maintenance fee, and spend less money than if it had all
been packed into the application fee and the issue fee.  As an
individual or small business this makes it easier (less costly) to
get a patent in the first place.  You, the individual or small
business inventor, are being subsidized, when you apply for a patent,
by others whose patents happen to be making lots of money (which prompts
them to pay the maintenance fees).
 
A further public benefit of the maintenance fee system is that it "clears
the deadwood", reducing the number of patents you would have to worry
about if you are searching patents because you are afraid you might
infringe one.  Suppose you are planning to enter technological area X,
and search all patents finding three of them in area X.  Suppose further
that two of them have expired due to failure of the owner to pay the
maintenance fee.  Now you need only worry about whether you infringe
the remaining one.
 
>[mod- this may not be so unusual.  In the past the US did not have
>renewal fees, now they have them every 4 years.  This would result in a
>lot higher number of patents actually lapsing were as in the past
>they would have not showed up...]
 
Yes, the moderator has the right idea here.  To elaborate on the moderator's
comment, here are excerpts from 37 CFR 1.20, the regulation covering
post issuance fees:
 
     (e) For maintaining an original or reissue patent,
     except a design or plant patent, based on an
     application filed on or after December 12, 1980
     and before August 27, 1982, in force beyond
     four years;  the fees is due by three years and six
     months after the original grant                        $ 245.00
 
     (f) For maintaining an original or reissue patent,
     except a design or plant patent, based on an
     application filed on or after December 12, 1980
     and before August 27, 1982, in force beyond
     eight years;  the fee is due by seven years and
     six months after the original grant                    $ 495.00
 
     (g) For maintaining an original or reissue patent,
     except a design or plant patent, based on an
     application filed on or after December 12, 1980
     and before August 27, 1982, in force beyond
     twelve years;  the fee is due by eleven years
     and six months after the original grant                $ 740.00
 
     (h) For maintaining an original or reissue patent,
     except a design or plant patent, based on an
     application filed on or after August 27, 1982, in
     force beyond four years;  the fee is due by three
     years and six months after the original grant:
      By a small entity                                     $ 415.00
      By other than a small entity                          $ 830.00
 
     (i) For maintaining an original or reissue patent,
     except a design or plant patent, based on an
     application, filed on or after August 27, 1982, in
     force beyond eight years;  the fee is due to
     seven years and six months after the original
     grant:
      By a small entity                                       835.00
      By other than a small entity                          1,670.00
 
     (j) For maintaining an original or reissue patent,
     except a design or plant patent, based on an
     application filed on or after August 27, 1982, in
     force beyond twelve years;  the fee is due by
     eleven years and six months after the original
     grant:
      By a small entity                                     1,250.00
      By other than a small entity                          2,500.00
 
     (k) Surcharge for paying a maintenance fee during
     the six-month grace period following the expira-
     tion of three years and six months, seven years
     and six months, and eleven years and six
     months after the date of the original grant of a
     patent based on an application:
      Filed on or after December 12, 1980, and
       before August 27, 1982                               $ 120.00
 
     (l) Surcharge for paying a maintenance fee during
     the six-month grace beyond following the expira-
     tion of three years and six months, seven years
     and six months, and eleven years-and six
     months after the date of the original grant of a
     patent based on an application filed on or after
     August 27, 1982:
      By a small entity (@ 1.9(f))                           $ 60.00
      By other than a small entity                          $ 120.00
 
     (m) Surcharge for accepting a maintenance fee
     after expiration of a patent for non-timely pay-
     ment of a maintenance fee where the delay in
     payment is shown to the satisfaction of the
     Commissioner to have been unavoidable                  $ 550.00
 
One will note several things about this.  The fee that is due is
based on when an application was filed, not when the patent issued.
The fee goes up steeply, with an eight-year renewal costing more than
the four-year, and the twelve-year costing more than the eight-year.
Finally, the system even in the area of maintenance fees gives some
accommodation to individuals and small businesses by making their
maintenance fees less costly than for big businesses.  If you are a
"small entity" then your maintenance fee is cheaper (as is the
application fee and the issue fee).
 
>I haven't looked closely, but I suspect many of these
>were due to small businesses and individuals not having the money to
>maintain their patents, for one commercial reason or another.
 
No, that's not quite right.  By definition if the patent happens to have
worked out well (i.e. is making lots of money for the owner) then the owner
_does_ have the money to maintain it, and indeed has no difficulty
deciding to spend a small portion of the money on the maintenance fee.
This is so regardless of the owner happening to be an individual or
small business.  On the other hand, if the owner has not paid the
maintenance fee due to lack of money, then by definition the patent
must not have worked out well (i.e. has not made money for the owner).
 
On behalf of clients I regularly monitor patents owned by particular
large companies, and every week I see some patents owned by large
companies (who have lots and lots of money) expiring due to failure to
pay maintenance fees.  Obviously for them the decision not to pay the
fee was not lots of money, but rather a simple business decision.
 
>This list of 2000 was an unusual amount for the Gazette, which
>usually lists some patents expiring, but I haven't seen to many with so
>many.
 
I haven't checked the years exactly, but I think the number you observe
is going up because the eight-year anniversary is just now coming around
for the oldest US patents for which maintenance fees exist.  Consider
category (i) above, filed in 1982, issued (on average) in about 1984, and
having the eight-year fee coming due just about now.
 
That is, previously most patents that expired due to failure to pay
a maintenance fee were by definition patents for which the four-year
anniversary had come and gone.  By now the patents you note might include
both four-year and eight-year failures to pay fees.
 


Newsgroups: comp.patents