Restoring lost IP rights: prevention is better than cure

The unintentional loss of valuable registered IP rights, whether patents, trademarks or other rights, can be extremely distressing. The financial and time-related costs of trying to restore lost rights can be significant. However, even when rights have been lost, it is sometimes possible to rescue them.

Restoration is most often required when patents have lapsed due to the accidental failure to pay renewal fees (annuities). This report outlines the two most common situations in which annuity-related lapses occur and how to avoid them.

When a European patent application has been granted recently
Up until the grant of a European patent application as a bundle of national patents, the proprietor’s records in some cases include only the European patent application and not the individual national validations. These are often added to existing records after post-grant validation has been completed. However, this approach can cause problems where the payment of the renewal fee is due after the patent has been granted – in this situation, a bundle of renewal fees are payable at national patent offices, but no reminder is logged on the proprietor’s system as individual records have not been created for these national validations.

This situation can be avoided by:

• creating records for all national validations (including the renewal fee due date) as soon as the territories for validation have been decided; and
• creating these records before the European patent application is granted (if possible). 

If the validation territories cannot be determined until after grant, when creating records for the validations it is important to ensure that the due date for this first post-grant round of renewal fees is appropriately docketed to allow for situations where the renewal payment is due before the decision on where to validate is made.

The danger in creating records after grant arises where the renewal fee due date has already passed before the national records have been created. Since many records systems assume that reminders are always forward looking, when the records are created, the system might automatically docket the due date for payment of the renewal fee as the following year (since this year’s due date has already passed). In such a situation, anyone checking the system might wrongly assume that the present year’s renewal fee has already been paid (when it actually has not) because the system says that the next renewal fee due is the following year’s. This small docketing error can have severe consequences.

When a patent or whole portfolio of patents is being sold by one business to another
A particularly dangerous situation is where negotiations between the parties become protracted and last for six months or more – if renewal payments are due during negotiations and any misunderstanding between the seller and the buyer arises regarding who is responsible for maintaining the patents, the payment of renewals can be overlooked.

Although this can easily happen, especially when each side is preoccupied with the details of the deal, it can be avoided by clarifying from the outset of the negotiations which party is responsible for the monitoring and payment of renewal fees and at which point responsibility is transferred. The issue of renewal fees should not be left at the bottom of a to-do list – if it is not identified early on as an important issue, the buyer may end up having successfully negotiated a deal only to find that crucial patents or other registered rights have lapsed in the meantime.

An established reliable records system is vital
As restoring lost rights can be expensive, a top-notch record-keeping system is worthwhile. While this in itself may not provide immunity from unexpected events and any resulting errors or lost IP rights, it is worth ensuring that all important dates are recorded and maintained in a robust system.

Such a system should include simple but crucial steps, such as:

• paying attention to all incoming communications (eg, lapse notices, non-payment notices and loss of rights notices). While there are unscrupulous scammers out there, it is worth checking with your IP adviser before disregarding any communications;
• ensuring that:
  • all due dates are appropriately docketed (preferably electronically); and
  • the system is capable of generating prompts reminding the proprietor of important deadlines; and
• having a system of in-built double checks, where the process of docketing crucial due dates is monitored by more than one employee to allow for the necessary cross-checks.

Having well-established, reliable systems in place for the docketing and managing of important deadlines is crucial for reasons other than safeguarding rights from the outset. They can also serve as evidence that can be given to IP offices if the need to apply for restoration arises. For example, at the European Patent Office and many national patent offices in Europe, applicants must prove that the lapse occurred in spite of due care having been exercised by the applicant (and their representative, if relevant) by submitting detailed supporting evidence. It is much easier to satisfy the due care criterion if a deadline monitoring system is in place.

If you discover (or suspect) that a registered right has lapsed unintentionally, the situation might be remediated if you act quickly. Contact your IP adviser immediately to determine whether a restoration application can be filed at the relevant IP office. If you are not too late, docket this deadline once it has been identified.