Fourth-quarter patent annuity invoices will be arriving at the beginning of September. For most organizations, auditing an annuity invoice can seem like an impossible task, so we’ve put together a quick guide to help you get started.
Tip # 1: Keep It Simple
Your goal should be to spend the minimum possible time searching for a few red flags. Don’t worry about what happens if you find red flags, and don’t get overwhelmed by the size of your invoice; just keep it simple and get started. You should be able to spot one or two red flags in less than 10 minutes. Once you get experienced at checking invoices, you can expand the scope, but initially, it can be overwhelming. Tips two through five will reinforce this theme of simplicity.
Tip #2: There's No Need To Check Every Patent Annuity
In a perfect world, you would analyze every patent annuity line item – but that can take days or weeks with a large portfolio. The reality is that you are just looking for red flags (back to keeping it simple); you only need to check a handful of cases. If you find one red flag, we can guarantee you that there are more. If you find two or three red flags across different currencies (see tip #3), we can guarantee that there is much more.
Tip #3: Think in Terms of Currencies, Not Patents
In most invoices we review, currency charges are the number one source of above-market costs. If you have a large international portfolio, you’ll have several different international jurisdictions, some of which share a common currency for PTO payments. European countries are a prime example of this – and you can take advantage of this to simplify your validation process.
When developing your strategy for auditing your portfolio, you will want to focus on your largest source of currency conversion. Have a lot of US payments, and you are invoiced in US Dollars? No need to check them. If you have a large number of European patents and are invoiced in US dollars, then that is probably where you want to focus.
There are efficient ways to approach auditing your European payments as well. The exchange rate for your French patents will be the same as for your German and your Netherlands patents – so you only need to pick a patent or two in one country and you can effectively audit currency costs for all of Europe.
Tip #4: Start small with 1 or 2 Direct Payment Samples
The easiest way to quickly validate whether you are being charged too much is to check a couple of cases from jurisdictions with direct payment processes. If you are invoiced in the US Dollar, German, and United Kingdom patents are great for auditing. If you are invoiced in Euros, United Kingdom patents and United States patents are good for auditing.
You can use our free tools (see tip #5) or do it manually. Find a patent in your invoice, go to the website for the jurisdiction of the patent, and look up the maintenance fee, then look up the exchange rate on the date of your invoice and calculate the cost at the bank rate. Add your service fee to it; the difference between that number and your invoice is the amount you were charged for currency. We’ll let you decide whether that is reasonable or not. We’ve got a full example below:
We have a 20th Year German case, and we were invoiced 2,500 US Dollars from our annuity vendor on August 1st. Lastly, our annuity vendor charges us 20 US Dollars per payment.
We look up the German maintenance fees and see that a 20th-year German annuity costs 2,030 EUR. The exchange rate on the 1st was 1.09802100, meaning that the annuity cost at the bank rate was 2229 USD. Add our 20 USD service fee, which totals 2,249 USD.
German Patent Fees: https://www.dpma.de/english/services/fees/patents/index.html
Since we were charged 2,500 dollars, and there are no agent fees or other costs in Germany, the difference between 2,500 and 2,248 is our currency cost – 252 USD. That’s more than a 10% currency cost, which should be a big red flag!
Tip #5: Take advantage of free Patent Annuity resources
We have all kinds of resources to help you control costs. Our website has a free patent annuity self-audit tool (www.prokurio.com/solo) that will help you estimate your currency costs, and we have dozens of blog posts on cost-saving strategies. Our free tools are a great way to identify excess costs and avoid paying too much for your patents.