4

Desirable Financial Policies and Fee Systems for
Industrial Property Rights

Desirable financial policies and fee systems for industrial property rights is changing, reflecting
current social conditions. For instance, there is so-called License of Right system, which is a fee system
giving a discount to a patentee who has registered his willingness to license his or her patent to a third
party. As License of Right system is considered to facilitate open innovation, the need to introduce thesystem into Japan is increasing.
On the other hand, there is a fee system giving a discount to applicants and right holders who meetcertain requirements, if they are universities, individuals, small entities. This system is also considered tofacilitate innovation.
In this study, the financial policies and fee systems of other countries intellectual property offices andare surveyed and the desire and situations of domestic universities, research institutions, companies, etc
are surveyed. Desirable financial policies and fee systems were reviewed on basis these survey andanalysis.

Ⅰ Introduction
The purpose of this study is to prepare basic
data to help the Japanese government implementa proper fee systems and an effective financial
management policy by conducting a survey andanalysis of the financial management policies, fee
systems, and financial policies of overseas
intellectual property offices and also a survey andanalysis of the domestic needs for improvementof the current financial
policy and theintroduction of a new fee system.
Furthermore, based on the results of thesurvey on the domestic needs and the survey on
the financial policies of other countries, this study
explores how to improve the fee systems andfinancial policies in Japan and takes into
consideration when devising a new financial
policy while exploring the contents of such a newpolicy with focus on the reduction system andso-called License of Right system.
In this study, the following surveys wereconducted and analyzed.
(1) Survey on the financial policies of othercountries and a survey on the users of
the overseas fee systems
We conducted a questionnaire survey on theoverseas intellectual property offices, institutions
and attorneys in other countries. We also carriedout an interview survey on the companies,
universities, and TLOs (Technology Licensing
Organizations) in other countries in order toexamine and analyze how the financial policies of
those countries had been implemented and how
the respondents regarded those policies.

IIP Bulletin 2009(2) Survey on domestic needs
We conducted a questionnaire survey and aninterview survey on universities, research
institutions, companies, etc. (including those whohave used the reduction system) in order toexamine the current state of the financial policy
and the respondents’ opinions and needs.
(3) Desirable financial policy and fee system
With the focus on the reduction andexemption system and the License of Rightsystem, We explored the current and future
Japanese financial policies based on the results ofthe survey on the overseas financial policies andfee system and the survey on the opinions andneeds of the users of the fee system systems inand outside Japan.

Ⅱ Overview
oftheFinancial
Policies of Other Countries andOrganizations and Their Revenue/
Expenditure Management andFee systems
Research was conducted on the accounting
systems, financial policies, and fee system of theUnited States, the United Kingdom, Germany,
France, China, South Korea, the EPO, and WIPO.
Accounting systems and financial policies
In the United Kingdom and France, therevenues and expenditures related to industrial
property rights are completely independent fromthe national general accounting. Similarly, in the
United States and South Korea, the revenues and● 26 ●

expenditures related to industrial property rights
are managed separately from the rest. The
revenues related to industrial property rights areused to cover the industrial property-related
expenditures in principle. In Germany and China,
such revenues are managed within the frameworkof general accounting. The financial policies forindustrial property rights vary from one country
to another as follows:
Fees for patent acquisition
Under the industrial property financial
policies of the countries and organizations, thetotal amount of fees for acquisition of a patent(application fee, search fee, examination request
fee, patent issuance fee, patent maintenance fee,etc.) depends on various factors such as anadditional fee for an additional claim. In the
United Kingdom, Germany, France, China, andSouth Korea, the fees for acquisition of industrial
property rights are as low as less than 50% of thefees in Japan. In the United States, the total of theapplication fee, search fee, and examination
request fee is about 50% of the corresponding
fees in Japan. The total amount of fees foracquisition of a patent including the issue fee,
which needs to be paid at the time of grant of apatent, in the United States is almost the same as
the total amount of fees in Japan. On the other
hand, the fees for acquisition of a patent from the
EPO are about twice the fees in Japan. However,since said EPO fees include the patent issue fee,
which needs to be paid for acquisition of a patent,in the case of a patent application that isabandoned in the middle of the patent acquisition
process, the fees for patent acquisition are about
1.5 times higher than those in Japan.
Additional fee for an additional claim
included in the application fee or the searchfee and the examination request fee
Japan, the United States, France, China,
South Korea, and the EPO have adopted thepolicy of adding a fee for each additional claim
when calculating the application fee or the searchfee and the examination request fee. Germany
plans to introduce such an additional fee system
in July 2009 at the earliest. The United Kingdom
is the only country that does not add a fee foreach additional claim.
Additional fee for each additional claim
included in the patent fee or the patentmaintenance fee
Only Japan and South Korea have adopted thefee system of adding a fee for each additional
claim in calculating the patent fee or the patentmaintenance/annual fee. In other countries, thenumber of claims does not affect the patent fee or
the patent maintenance/annual fee.
All of the countries and organizations subject
to this study except for the United States require
each patent applicant to start paying the patentfee or the patent maintenance/annual fee on anannual basis a few years after the filing of theapplication or from the registration of the patent.
Only in the United States, the patent maintenancefee is required to be paid in a lump sum by the 3.5
years, the 7.5 years, and the 11.5 years of thepatent registration date. All of the countries andorganizations have adopted the financial system
of increasing the amount of fee according to theage of the patent.
Fees related to trademark rights
Only Japan and South Korea demand thepayment of the registration fee at the time of the
grant of the trademark. The application fee isdetermined based on the number of classifications.
In Japan, a part of the application fee is called abasic fee, which is not affected by the number ofclassifications. While this basic fee is relatively
low in comparison with the United States andEuropean countries, the registration fee in Japanis as high as the application fee of those countries.
It should be noted that neither search nor
examination on prior trademarks is conducted in
the United Kingdom, Germany, France, and South
Korea. The renewal fee is relatively high in Japan.

Ⅲ Special Fee System (1)-Licenseof Right SystemAmong the countries subject to this study,
only the United Kingdom and Germany haveadopted the License of Right system. France
abolished this system in 2005.
The License of Right systems of the United
Kingdom, Germany, and France (up to 2005)
share the following characteristics:(1) Certain restrictions are imposed on the rightto request an injunction;(2) A declaration of License of Right may be
withdrawn;(3) If the patentee and a third party fail to agree
on the licensing conditions, they may use thesystem to decide those conditions;(4) The grant of an exclusive license isprohibited; and(5) A declaration of License of Right entitles the● 27 ●IIP Bulletin 2009

patentee to a 50% reduction of the patentmaintenance fee (patent fee) (a 40% reduction
in France).
On the other hand, their License of Rightsystems differ in the following respects:(1) The period during which a declaration ofLicense of Right may be made (after the filingof an application or after the registration of apatent);(2) The scope of a declaration of License of Right(a declaration may cover only the patent for
which the declaration is made or may cover
all of the patents granted based on a single
application);(3) The definition of the time when a license
granted to a third party upon request takes
effect (a license is considered to take effectwhen the third party’s notice reaches thepatentee or when both parties agree on theconditions of licensing);(4) The party that leads the negotiations on thelicensing conditions (the patentee or the third
party);(5) The presence or absence of the provision thatobliges the licensee to pay compensation to
the patentee (if the licensee fails to fulfill theobligation, the patentee may request an
injunction);(6) The presence or absence of the provision
concerning the rights of the licensee; and(7) The presence or absence of the mandatory
system to register License of Rightdeclarations.
The implementation and use of the Licenseof Right systems in the United Kingdom andGermany are the same in the following respects:(1) The intellectual property office provides the
public with the system to search and refer tothe patents for which a declaration of Licenseof Right has been made; and(2) The ratio of the number of registered patents
to the total number of patents or patentapplications is 5% or less.

Ⅳ Special Fee System (2)-Reduction and Exemption SystemAmong the countries and organizations
subject to this study, the United States, France,
China, and South Korea have a reduction andexemption system for individuals, small andmidsize companies, and research institutions.
Germany has a legal support system for

IIP Bulletin 2009individuals. However, this system does not
specify application criteria and has thecharacteristics of emergency measures. The
United Kingdom and the EPO do not have such a
reduction and exemption system.
The reduction and exemption systems of theUnited States, France, China, and South Korea
are described as follows.
Fees subject to reduction and the reduction
rates
The United States and France apply a flat
reduction rate of 50% regardless of thequalifications of an applicant. China and South
Korea offer a 50-85% reduction depending on thequalifications of the applicant.
Many countries have adopted the policy of
reducing or exempting the patent maintenancefee or the patent fee for a certain period of time.
In contrast, the United States reduces or exempts
those fees until the expiration of the right. France
reduces those fees for a period of seven years
from the application date, while the rate of
reduction decreases over those years. China
reduces the patent maintenance fee, which needs
to be paid once a patent is granted, for a period offive years. South Korea reduces the patent fee fora period of three years.
In the United States, small entities(individuals, small and midsize companies, andnon-profit organizations) are entitled to a
reduction or exemption as long as they haveneither assigned nor licensed their rights toinventions to other individuals, companies,
organizations, etc., that are not recognized as
small entities. The reduction rate is 50%.
A wide range of fees is subject to reduction.
For example, in the case of a patent right or adesign right, the minimum costs generated overthe period between the application filing date andthe patent expiration date will be subject toreduction (the basic application fee, the additional
fee for an additional claim, the additional fee foran additional page, the search fee, theexamination request fee, the patent issuance fee,
the re-examination request fee, the trial request
fee, the patent maintenance fees paid by thethree-and-a half year anniversary, the seven-and-ahalf year anniversary, and eleven-and-a half year
anniversary of the patent registration date).
In France, the rate of reduction is 50%(except for some patent maintenance fees) for
individuals, small and midsize companies, andresearch institutions. France offers a 50%
reduction for the examination request fee and the● 28 ●

patent maintenance fee for the period from thesecond anniversary to the fifth anniversary of thepatent application date and a 25% reduction forthe patent maintenance fee for the period fromthe sixth anniversary to the seventh anniversaryof the patent application date.
China offers an 85% (80% in some cases)
reduction to individuals and a 70% reduction tosmall and midsize companies. When a patentapplicant or patentee is an individual, China offers
an 85% reduction for the application fee and theexamination request fee and also for the patentmaintenance fee for the period from the firstanniversary to the third anniversary and an 80%
reduction for the application maintenance fee andthe fee to request a trial against an examiner's
decision of refusal. When a patent applicant or
patentee is a company, China offers a 70%
reduction for the application fee and theexamination request fee and also for the patentmaintenance fee for the period from the firstanniversary to the third anniversary and a 60%
reduction for the application maintenance fee andthe fee to request a trial against an examiner's
decision of refusal. In the case of an application
jointly filed by two or more companies, no
reduction is available.
In South Korea, a 70% reduction is offered toindividuals and small and midsize companies. A
100% reduction is offered to an individual who
satisfies certain criteria such as an individual withlittle financial means. A 50% reduction is offeredto public research institutions, national and local
governments,
governmental
investment
institutions, etc., and large companies that
conducted research and development activities
jointly with small and midsize companies andbecame joint patentees of the resulting inventions.
The fees subject to the reduction are the patentapplication fee, the utility model application fee,the examination request fee, the fee to request
technical appraisal, the fee to request a trial for
confirmation of the scope of right, and theregistration fee for the first to third year.
Procedure to receive a reduction
In China and South Korea, any person who
applies for a reduction is required to submit
certificates (In South Korea, any individual who
applies for a 70% reduction is not required tosubmit certificates). In South Korea, thesubmission of certificates is required for every
procedure.
On the other hand, in the United States, theprocedure to receive a reduction is much simpler.

An applicant or a patentee is only required toclaim one’s qualification for a reduction. However,the provision concerning fraud specifies that, if it
is later found that an applicant has obtained apatent at reduced fees despite the lack of small
entity qualification, the applicant shall be
prohibited from exercising the patent.
In France, until the revision of 2005, a
reduction had been available only to individuals.
Each applicant used to be required to submit
certificates every year. Since the revision, areduction is automatically offered to individual
applicants. Article L612-20 of the revisedIntellectual Property Code specifies that any
misrepresentation shall be subject to a fine that
does not exceed ten times the amount of the fees.
Use of a reduction system
The survey on overseas patent attorneys
conducted in this study reveals that applicants inany country with a reduction system are strongly
recommended to use a reduction system if they
are qualified for the reduction. In the Untied
States, however, the provision concerning fraud
discourages an applicant from using a reduction
system when the applicant is not certain about hisor her qualification status.
A reduction system is received favorably bypatent attorneys in all of the surveyed countries
because it is a system that offers a discount upon
and after patent acquisition without any
disadvantage.
In the United States and South Korea, since
the use rates of their reduction systems stand atseveral-dozen percent, each of these countries
has a fee system or a budgetary structure
designed to supplement the decrease in its
revenue caused by the reduction system.

Ⅴ Special Special (3) -Other SystemsThe countries subject to this survey, i.e., theUnited States, the United Kingdom, Germany,
France, China, and South Korea, have special fee
system as follows.
System to refund an applicant who has
overpaid or withdrawn his or her application(United States) (1) Any overpayment will be
refunded upon request. (2) The search fee and the
additional fee for an additional claim will be
refunded to an applicant who has withdrawn his or
her application before the commencement of
examination.

● 29 ●IIP Bulletin 2009

(United Kingdom)The fee already paid will be
refunded if a supplementary protection certificate(a patent whose protection period has been
extended) is canceled or invalidated.
(Germany) If an application is withdrawn or if anapplication is invalidated because the applicant
has failed to fully pay the fees, the fees alreadypaid will be refunded after the deduction of therefund fee as long as the procedure for thealready paid fees has not actually been started
yet.
(South Korea) (1) Any fee paid by mistake or inexcess will be refunded upon request. (2) If apatent is invalidated, the patentee may request arefund of the part of the patent fee that isallocated to the following fiscal year andsubsequent years. (3) If a patent is withdrawn
within one month from the application filing date,
the application fee and the examination request
fee will be refunded upon request.
Reduction system for a patent application
with a search report(United Kingdom) The search fee is reduced for apatent application transferred from the PCTinternational phase to the national phase.
Reduction system for a lump-sum payment(Germany) A reduction is given to a patentee
who pays the patent maintenance fee in a lumpsum for the third to fifth year.
A reduction for multiple applications(Germany) A reduction is offered to an applicant
who files two or more applications for a design.

Ⅳ Study on Desirable Financial
Policies and Fee Systems ofJapan for Industrial Property
Rights1

Questionnaire Surveys

We conducted a questionnaire survey onuniversities, research institutions, companies, etc.
(including those who have used the reduction andexemption system) in order to analyze theiropinions and needs concerning the fee system forindustrial property rights, a reduction andexemption system, and the introduction of theLicense of Right system.

IIP Bulletin 2009

Questions regarding the fee systems forintellectual property rights
In response to the question about theappropriateness of the amounts of fees forindustrial property rights (patent rights, utility
model rights, design rights, and trademark rights),
57.5% responded that all of the fees wereappropriate, 31.5% responded that the fees
related to certain rights were too high, and 1.7%
responded that the fees related to certain rights
were too low. (Q13) 79.3% responded that thepatent-related fees were too high.
77.0% responded that the application fee wasset at a reasonable level. On the other hand,
74.6% responded that the examination request
fee was too high, while 18.9% responded that said
fee was appropriate. (Q14)
When asked why they filed a patentapplication and sometimes abandoned the rightbefore registration, 74.8% responded that theneed for the right itself decreased. 60.7%
responded that the issuance of a notice of reasons
for refusal became unavoidable. 15.4% responded
that the examination request fee was too high.
13.9% responded that the total of the patentacquisition fees and the patent fee was too high.
(Q15)
Regarding the average length of the patentmaintenance period after registration, 42.1%
responded that the length was somewhere
between ten years and the expiration of thepatent. 30.6% responded that it was somewhere
between seven years and nine years. 10.6%
responded that it was somewhere between four
years and six years. 5.0% responded that it was
three years or shorter. (Q12)Regarding the reason for abandoning a rightafter the registration, 74.4% responded that theneed for the right itself decreased. 21.7%
responded that the patent fee was too high. 25.4%
responded that the patent maintenance fee wastoo high. (Q16)
Fee reduction policy
Among the respondents that have received
either a reduction or exemption of theexamination request fee for a patent or areduction or exemption of the patent fee for the
first to third year, 88.8% of them received a 50%
reduction of the examination request fee. Among
the respondents who received a 50% reduction of
the examination request fee, 43.9% of them also
received a 50% reduction of the patent fee for the
first to third year, for which those respondents
were likely to be qualified. (Q31)● 30 ●

When asked the reasons for not using the
reduction and exemption system in some cases,
the respondents who had used such a system
pointed out the failure to satisfy the criteria, thecomplicated procedure to receive a reduction or
exemption, and the excessively small amount of
reduction. (Q33)
In response to the question on the effect of
the reduction or exemption system, i.e., whether
the provision of a reduction or exemption for thepatent examination request fee or the provision ofa reduction, exemption, or moratorium for thepatent fee for the first to third year had
encouraged universities, research institutions,
small and midsize companies, and individuals to
obtain patents, 26.0% of the respondents
responded that the system had greatly promoted
patent acquisition. 57.3% responded that thesystem had promoted patent acquisition to acertain degree. (Q29)
With regard to the amounts of reduction
offered under the reduction and exemption
system, 61.2% responded that the amounts were
sufficient. 30.4% responded that the amounts
were insufficient and stated in the free comment
section that a 50% reduction would be insufficientbecause the examination request fee was very
high, that a reduction or exemption of the patent
fee had only a negligible effect because the patentfee for the first to third year was set at a
relatively low level, and that a reduction was notavailable for the patent fee for the fourth year andsubsequent years. (Q30)
Introduction of a new fee system (theLicense of Right system
Concerning the introduction of the License of
Right system, 11.7% responded that they strongly
supported the introduction. 35.1% responded thatthey rather preferred to see the system
introduced. 38.8% responded that they had nopreference on this matter. 3.5% responded they
did not prefer to see the system introduced. 0.7%
responded that they opposed the introduction.
(Q50)
In response to the question about the typesof patents they might register and the reason forregistering them if the License of Right system is
introduced, 37.7% responded that they would
register patents unused by the patentees. 37.3%
responded that they would use the system withthe hope of finding licensees. 36.0% responded
that they would use the system in order to lower
the patent maintenance costs. 15.6% responded
that they would register patents for which thepatent fees have become expensive. 8.7%
responded that they would register a patent if theregistration would not disadvantage them among
their competitors. (Q49)
With regard to the reasons for not using thesystem, 47.7% responded that the purpose ofobtaining patents was to protect their products.
28.2% responded that they were not allowed tochoose licensees. 21.9% responded that theirpatents were jointly owned or already subject tocontracts. 12.4% responded that a 50% reductionof the patent fee was not attractive. 8.7%
responded that the registration of a patent would
be disadvantageous in terms of enforceability andjudicial proceedings.
2

Interview survey

We conducted an interview survey onuniversities, research institutions, companies,
and organizations. The respondents presented thefollowing opinions and requests while their viewon the current financial policy and fee systems
was mostly favorable.
The examination request fee for patentapplications
Applicants find it difficult to decide when to
request examination because the future of thetechnology related to the patent is difficult topredict. Furthermore, they find it burdensome tobe required to pay the examination request fee
without a guarantee for the grant of a patent.
Patent fee
Patentees find it burdensome to pay thepatent fee for patents that have been registeredfor 10 years or longer since registration.
Furthermore, with regard to the patent fee for the
expiration year, patentees find it burdensome tobe required to pay the patent fee for a full year
even if the patent expires in the middle of theyear.
Reduction and exemption system
Many respondents voiced favorable opinions
about the cost-cutting effect of a 50% reduction or
exemption of the examination request fee.
However, respondents find it troublesome to pay
the personnel cost and attorney’s cost for
preparation of applications for reduction andexemption and to file an application for reductionand exemption every time they hope to receive a
reduction or exemption under the system.
Regarding the patent fee, a reduction and● 31 ●IIP Bulletin 2009

exemption system is not used in some cases
because of the facts that the system is notapplicable to a patent that has long beenregistered, that the patent fee is set at a low levelas far as the fee for the first to third year, which is
subject to this system, is concerned, and that thepersonnel costs and attorney’s costs for applying
for a reduction or exemption are expensive.
Introduction of the License of Right system
In order to promote licensing of patents, it isimportant not only to introduce a legal system but
also to create a desirable environment to andprovide support for active use of the system.
More specifically, the following measures should
be taken: improvement of the database,introduction of a mechanism to support proper
licensing negotiation and contract making, andestablishment of a system to promotecommercialization of patented technologies
licensed under the system.
With regard to the use of the system, bothpatentees and licensees are concerned that theymight be forced to conclude an unfair license
agreement in terms of license fees, etc.
From the viewpoint of patentees, theregistration of a declaration of License of Rightfor a patent would increase the risk ofencountering an infringer who intentionally takes
advantage of the restriction imposed on theenforceability of the patent right such as the rightto request an injunction.
On the other hand, from the viewpoint oflicensees, a patent licensed under the system
could become unenforceable because of theexistence of another patent for a dependent
invention.

required to decide when to request examination
despite the difficulty in predicting the future of
the technology related to the patent and that they
are required to pay the examination request fee
without a guarantee of the grant of a patent.
With regard to the current reduction andexemption policy, applicants find it burdensome tobear the personnel costs and attorney’s costs for
preparation of applications for a reduction or
exemption and to file an application every timethey hope to receive a reduction under thesystem. The system is not used in some cases
because the patent fee is set at a low level for the
first to third year. In order to reduce the burdens
on applicants who apply for a reduction, it would
be necessary to review the application procedureand study the possibility of allowing applicants toreceive various types of reduction and exemption
through one-stop application for such benefits.
With regard to the introduction of theLicense of Right system, in order to promote
licensing of patents through the system, it would
be important to create a desirable environment inorder to increase the usability of the system. For
instance, it would be recommended not only tooffer legal collateral but also to have a databaseindicate the patents registered under the Licenseof Right system, to establish a system to support
license negotiation and contract making, and to
introduce a mechanism to facilitate theexploitation and commercialization of thepatented technologies licensed under the system.

Ⅶ Desirable Financial Policies and
Fee Systems and needs to be
improved
Based on the results of the questionnaire
survey and interview survey described above,
which have revealed the existing needs for
improvement of the current financial policy andfee systems for industrial property rights and also
based on the findings of the survey on thefinancial policies of other countries, this study
revealed applicants’ opinions and needs that Japan
should take into consideration when devising a
new financial policy and explores a desired new
policy.
Many applicants find the examination request
fee burdensome in the respects that they are

IIP Bulletin 2009

● 32 ●(Senior Researcher: Kumiko IMAI)