Licence of Right: A possibility to reduce maintenance fees
Maintenance fees, sometimes referred to as renewal fees or annuity fees, for patent rights have to be paid annually in most countries. The differences from one country to the other are the starting point of the first payment and the amount of the maintenance fees. A few countries provide reductions on fees if you are an individual or your company has a small entity status. But what can you do if you are a large entity? Basically not much – besides reducing the number of your patents.
There is, however, one legal institute that is available to any entity irrespective of its size and nature that requires at first and foremost the willingness to grant a licence on your patent right.
The owner of a patent can apply to the Intellectual Property Office to have the patent endorsed for licence of right (L.O.R.). This application by the patentee is a declaration of willingness to grant a licence to anyone. The endorsement acts as an invitation to third parties to apply for a licence. The advantage of the licence of right is that it lets other people know that licences are available and that maintenance fees are reduced by 50%.
Unfortunately, not many countries provide for licence of right. The European Patent Convention does not provide for L.O.R. – grant of a licence is governed by Art. 73 EPC but this is not our subject here.
There are approximately 20 countries which have this option. Among them are some important patent filing jurisdictions:
- Germany (Licence of right is called Lizenzbereitschaft and is governed by §23 Patentgesetz);
- Italy (Licenza di diritto, Art. 80 Decreto Legislativo of 10th February 2005 no. 30);
- Spain (Licencia de pleno derecho, Art. 81 Ley 11/86 de 20th March 1986);
- United Kingdom (Licence of right, Art. 46 Patents Act 1977).
- France is no longer among the countries. Art L 613-10 governing L.O.R. was abolished by Law no. 2005-842 of 26 July 2005.
Since provisions of L.O.R. have minor differences from country to country, the following paragraph deals exemplarily with the German Law. The declaration that licences under the patent are to be available as of right is effective upon receipt by the German Patent & Trademark Office (DPMA). It can be filed at any time after grant of the patent or while the patent application is pending. That means that the patentee must grant a licence to anyone who wants one. The endorsement is registered and published. As long as an exclusive licence is registered under the patent the declaration is not possible.
As mentioned there are differences, the United Kingdom for example requires that the patent is granted.
Renewal fees falling due after the L.O.R. is filed are reduced by 50%. The United Kingdom IPO recommends on their website to file a L.O.R. at least ten days before the annuity falls due.
Other countries – besides the above four - who grant a fee reduction for L.O.R. are Belarus, Brazil, Czech Republic, Ireland, Lithuania, Latvia, Russian Federation, Slovakia.
The German Patent & Trademark Office as well as the United Kingdom IPO provide on their website access to a database containing information on patents that are available for a licence.
As the patentee can apply for its entry, he/she can also apply for cancellation of a Licence of Right. A L.O.R. will be cancelled if there are no existing licences and the renewal fees have been balanced. The United Kingdom requires additionally that any opposition to the cancellation has been dealt with.
In a new episode of the Advancements series, Dr. Richard Brunner, Chief Legal Officer at the Dennemeyer Group, explains why protecting IP is of the utmost importance for innovators and how blockchain technology works to their benefit.