October 2016 Issue

EPO Practice
New Financial Incentives to Abandon European Patent Applications
by Philip L. Cupitt, Ph.D.

The European Patent Office (EPO) has made significant progress in recent years to reduce the time taken to examine European patent applications.¹ Despite this welcome progress, the total number of pending applications has steadily increased.² In an attempt to tackle the backlog, the EPO has launched a new initiative to encourage applicants to abandon their applications in exchange for a refund of the official examination fee.³

The proportion of the examination fee that is refunded depends upon whether substantive examination of the application has begun:

1.       Before Substantive Examination Has Begun

The examination fee will be refunded in full if an application is terminated before substantive examination has begun. To qualify for the refund, the application may be actively withdrawn by the applicant, refused by the EPO, or deemed to be withdrawn (e.g. due to nonpayment of a renewal fee).

Under the previous regime, 75% of the examination fee was refunded if an application was terminated before substantive examination had begun. The new regime thus gives applicants an extra financial incentive to abandon applications that, for example, have ceased to be commercially important or receive an unfavourable Supplementary European Search Report.

2.       After Substantive Examination Has Begun

Half of the examination fee will be refunded if an application is withdrawn before the deadline for responding to the first examination report (“Communication pursuant to Article 94(3) EPC”). However, if the application was already in an allowable form before the start of substantive examination, the refund is only available if the application is withdrawn before issuance of the notification of the intention to grant (“Communication under Rule 71(3) EPC”). 

It is important to note that, after examination has begun, the application must be actively withdrawn to qualify for the refund. The examination fee will not be refunded if, for example, the application is deemed to be withdrawn due to nonpayment of a renewal fee or through failure to respond to the first examination report. It should also be noted that the refund is only available for applications for which substantive examination begins on or after November 1, 2016.

Under the previous regime, no refunds were available after substantive examination had begun. The new regime thus gives applicants an opportunity to cut their losses when the first examination report suggests that the examiner’s objections are likely to be insurmountable.

When Does Substantive Examination Begin?

For the purposes of determining the amount of the refund that is available, substantive examination is deemed to begin when the examiner actually starts preparing the first examination report or the notification of the intention to grant.⁴ This may be several months, or even years, after the examination fee was paid.

It is possible to find out whether substantive examination of a published application has begun by inspecting the European Patent Register.⁵ A document entitled “Examination started” is automatically added to the application’s public file when the examiner starts preparing the first examination report, typically several days before the examination report itself is issued.

Notification of the Expected Start of Substantive Examination

To give applicants more opportunity to obtain a full refund of the examination fee, the EPO now sends a written notification of the date on which it expects substantive examination to begin.⁶ The notification, which is entitled “Expected start of examination” (EPO Form 2919), will be issued at least two months before substantive examination begins.  

There is no need to respond to the notification if the applicant wishes to proceed with substantive examination. On the other hand, if the applicant wishes to be sure of obtaining a full refund of the examination fee, the application should be actively withdrawn before the date given in the notification.  

The notification will not be issued for all applications,⁷ so applicants should not rely upon being given advance warning of the date by which they can withdraw an application to obtain a full refund of the examination fee. 

Refunds of Other Official Fees

The new financial incentives to abandon applications during examination supplement the existing incentives to abandon applications at other procedural stages. 

It has long been possible to obtain a full refund of the search fee when an application is terminated before the EPO has begun to draw up the search report,⁸ and to obtain a full refund of the appeal fee when an appeal is withdrawn before filing the grounds of appeal.⁹ More recently, the EPO has tried to reduce the backlog of pending appeals by offering a 50% refund of the appeal fee when an appeal is withdrawn before oral proceedings, before the deadline for responding to an invitation to file observations, or before a decision on the appeal is issued.