Annuity Payments-Digging Through The Archives

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Patent maintenance fees (Annuity payments) are a large part of every IP group’s budget. They’re also much of the reason for this site, so we thought it would be interesting to open up the vault and review the history of this now ubiquitous service. Come join us as we examine the heritage of one of the first outsourced legal services. 

The Early Days

Annuity Payments

Before annuity vendors arrived on the scene, patent owners had basically two options when renewing their IP. Option one required them to manage the process internally, making payments themselves (where possible) and coordinating with agents in countries where required. Their only other option was to turn everything over to a law firm and let them handle the process and coordinate the foreign agents. 

Some companies could afford to employ teams of people to manage the complexities of making international payments, but 60 years ago, there was no Internet or email,  making communication with agents and patent offices cumbersome and slow. Equally important, PTOs didn’t have websites and IP Management systems hadn’t been developed yet, so it was nearly impossible for most companies to keep track of patent law changes and fee updates.  This forced most companies to rely on (and pay) for a combination of law firms and foreign agents to handle their payments. 

A New Paradigm Emerges

In the late 1960’s, computers became increasingly mainstream and companies around the globe began finding creative ways to leverage their capabilities. While still very expensive for individual companies to purchase, centralized service bureaus began to spring up to serve annuity customers, enabling costs for computing to be shared across clients, while also aggregating payments and leveraging economies of scale to drive down agent costs. 

These technology roots can be seen in the names of many of the early annuity vendors, like Master Data Center, Computer Packages Inc (CPI) and Computer Patent Annuities (CPA). John Dennemeyer and Bernard “Berny” Olcott were also early pioneers, heavily influencing the industry and becoming dominant forces in the market. 

An Industry Modernizes

The world has changed a lot since those early days, and the annuity industry has (slowly) changed along with it. Mainframe computers were replaced by mini computers and then by personal computers. 

Paper reports and punch cards have been replaced by electronic decision lists, and many IP Management systems automatically synchronize with annuity vendors’ systems, eliminating the need to email or FTP data files. Proof of payment is now available at the click of a button and country law updates transparently flow into IP Management systems. Today, patent payment processes are highly automated and efficient for all vendors, making it difficult for them to differentiate an increasingly commoditized service.

Vendors Today

The vendor landscape today is quite a bit different than the early days described above. Dennemeyer and CPI have remained largely intact (although the founders are sadly no longer with us), but that’s about all that would be recognizable today to a time traveller from the 70’s. 

Master Data Center and CPA Global are now combined into a single publicly-traded entity, Clarivate. Olcott, one of the largest annuity vendors throughout the 70’s and 80’s is also part of Clarivate. Ipan, a company that arrived on the scene fast and departed just as quickly joined Clarivate as part of the CPA Global acquisition. 

While consolidation has removed a number of the original vendors from the mix, clients aren’t starved for choices. Questel and Anaqua have both acquired annuity payment organizations and are now major players in the industry. A number of completely new annuity payment vendors have also entered the market, most notably MaxVal, and patentrenewal.com, demonstrating that there is room in the industry for more options. 

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