Maximising the EPO’s Fee Reductions for Micro-Entities

On 1 April 2024, the European Patent Office (EPO) introduced a new fee reduction scheme for micro-entities (announced in the Notice from the European Patent Office dated 25 January 2024 concerning fee-related support measures for small entities; Rule 7a(3) and (4) EPC). This scheme provides a 30% reduction of a number of the official fees for a European patent application if the applicant is a micro-entity, regardless of the nationality of country of domicile of the applicant. A few important specifics have come to light, some of which emphasise that one size does not fit all and that some clients may benefit from a more individualised approach to paying official fees and claiming fee reductions.

Definition of “Micro-Entity”

The definition of a micro-entity is set out in Article 2(3) of Commission Recommendation 2003/361/EC of 6 May 2003:

“a microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.”

The Commission Recommendation provides further information on how to calculate the number of staff and the annual turnover/balance sheet total. However, of particular note is that Article 5 of the Commission Regulation states that the headcount “corresponds to the number of annual work units (AWU), i.e. the number of persons who worked full-time within the enterprise in question or on its behalf during the entire reference year under consideration. The work of persons who have not worked the full year, the work of those who have worked part-time, regardless of duration, and the work of seasonal workers are counted as fractions of AWU”. Thus, the criterion of “employs fewer than 10 persons” does not mean fewer than 10 full-time individuals, or fewer than 10 full-time and/or part-time individuals, are employed. Instead, it means that the annual work units of all relevant staff must not exceed the equivalent of 10 full-time persons. Care therefore needs to be taken when considering whether an applicant meets the employment criterion for being a micro-entity. 

Application Cap

Rule 7a(4) EPC provides a further criterion for being able to claim the micro-entity-related fee reduction. A micro-entity may claim the fee reduction only if they have filed fewer than five European applications in the 5 years preceding the filing date of the application in question, or the date of entering the European regional phase with the application in question (referred to as “the cap”). An assigned application counts towards this cap, and this became a matter of concern for one of our clients.

Our client, who met the eligibility criteria for being a micro-entity, had bought a portfolio of patent applications from another company, which included more than five European applications. Those assigned European applications were filed less than five years before the expected date of entry of a PCT application to the European regional phase, but the assignment of those applications had not yet been recorded at the EPO. The question was therefore raised whether it was the date of assignment or the date of recordal of the assignment which is relevant for the cap. 

Point 24 of the above-mentioned Notice states that, where an application is transferred, it may affect an applicant’s eligibility for the fee reduction from the date of legal effect of registration of the transfer in the European Patent Register. Rule 22(3) EPC states that:

“A transfer shall have effect vis-à-vis the European Patent Office only at the date when and to the extent that the documents referred to in paragraph 1 have been produced."

wherein the “documents referred to in paragraph 1” are the evidence of the transfer. The EPO confirmed to us that a transferred application will count towards the cap only as of the date on which the transfer is recorded at the EPO, and not as of the date of the transfer. Consequently, as the assignment of our client’s applications had not been recorded at the EPO, we were able to claim the fee reduction for micro-entities. It should be noted that the transfer of granted patents does not affect the cap.

When the assignments are eventually recorded at the EPO, they will not affect the payments already made, but may potentially affect future payments. In particular, once the assignments are recorded, the filing dates of those assigned applications must be considered. As there are at least five European applications filed in the five years preceding the entry of our clients PCT application to the European phase, the fee reduction will not apply to official fees due after the date of recordal of the assignments. However, to complicate matters further, some of the assigned applications may themselves be eligible to the micro-entity-related fee reductions, once the assignment is recorded, depending on how many European applications pre-date the application in question. The EPO provides guidance on how the cap works here.

Multiple Fee Reductions

It is also possible to claim more than one fee reduction provided by the EPO (section VII of the above-mentioned Notice). In particular, where an applicant has their residence or principal place of business in an EPC-contracting state whose official language is not one of the EPO’s official languages (English, French and German), it is possible to request examination in an official language of that state (which is not an EPO official language) and to thereby obtain a 30% reduction of the examination fee (Article 14(4) and Rules 7a(1) EPC; Article 14 Rules relating to Fees; referred to as the “language-related fee reduction”). When the language-related free reduction and the micro-entity-related fee reduction are combined, the 30% language-related fee reduction is applied first, and then the 30% micro-entity-related fee reduction is applied to the already-reduced examination fee. This meant that we were able to reduce our client’s examination fee by about 50%.

Tailored Strategies

While we usually recommend to our clients that we record assignments of patents and patent applications as soon as possible, the micro-entity-related fee reduction may in fact provide a reason to delay the recordal of the assignment(s). As the filing, search, examination and designation fees make up the bulk of the official fees due on European applications, our smallest clients may prefer to delay recording assignments of European applications until after any imminent new European application is filed. The assignments can then be recorded after paying the official fees on the new application. As mentioned above, while the recordal may affect future payments due on the application in question, it may also mean that some or all of the assigned applications can make use of the micro-entity-related fee reduction for future official fees due on those applications. 

It is also useful to be mindful of an applicant’s country of domicile, in case the micro-entity-related fee reduction can be combined with the language-related fee reduction, thereby maximising cost savings for our clients. 

Conclusion

The EPO’s micro-entity-related fee reduction scheme offers meaningful savings for small applicants, and this can be maximised by careful consideration of eligibility criteria, timing of recordals of assignments, and potential for combined reductions. Given that many companies, particularly in the life sciences field, are finding it difficult to secure funding, any cost-savings that their patent attorneys can provide are likely to be gratefully received.

The EPO’s micro-entity-related fee reduction scheme offers meaningful savings for small applicants, and this can be maximised by careful consideration of eligibility criteria, timing of recordals of assignments, and potential for combined reductions.