In my last article I discussed the initial provisions of a U.S. utility patent application retainer agreement. We are now at the point where we address the fees in the retainer agreement. The fees should be confirmed at the beginning of the document, and soon after the parties to the agreement are designated.
The retainer agreement should first recite the total amount of the attorney fee, as well as the amount to be paid upfront. The retainer agreement should also address surcharge attorney fees, and the conditions under which they must be submitted. This information becomes particularly important if the attorney fees for drafting the application are flat. For example an attorney fee surcharge may include the client’s changes to the basic nature of the invention after the application is almost completely drafted. The retainer agreement should also explain under what circumstances attorney fee deposits will be returned to the client.
Thereafter the non–attorney government fees should be specifically designated and clarified. Whether the client must submit these fees prior to payment to the patent office or whether the office requires payment thereafter must also be confirmed. The client must also determine whether requirements for small entity/independent inventor status are met, to qualify for discounted government fees. To qualify the number of employees of the client cannot exceed 500 persons. This standard is not the same criterion for other entities under the federal tax code so the client must exercise care here. The next somewhat insidious issue becomes whether another person or entity has rights to the invention and whether that person employs no more than five hundred persons. If they employ five hundred persons, then even if the client qualifies as a small entity or independent inventor, the client must pay the non-discounted fees. These non–discounted government fees are twice the amount of the small entity/independent inventor fees! Furthermore, if insufficient government fees are submitted during the patenting process, a third party may invalidate a resulting patent because of fraudulent small entity/independent fee payments.
In addition to mandatory government fees, the retainer agreement should inform the client of other possible government fees. Many of these fees are late filing surcharges, such as an initial filing without a declaration, and sending the declaration afterwards. There are also late government fee surcharges if communications are sent to the patent office after the relevant deadline expires. Also, are government (or attorney) fees designated for either refiling of an application, an international submission or an appeal in the United States? These possibilities should all be clear from the retainer agreement.
There may also be a separate petty cash deposit requirement, and if so this fee should be explained in the retainer agreement. Is it required upfront? Will it require replacement after depletion in the future? Is the deposit part of a lump sum upfront deposit? Is there a separate petty cash statement for the balance in the escrow account? How exactly is the petty cash applied? Postage? Photocopies? Long-distance phone lines charges to the Patent Office for discussions with the examiner? How much of it is returned if the client separates from the office? Is a balance of the petty cash deposit applied to delinquent attorney fees? If so, how and when? These are all contingencies that should be stated in the written agreement. If these written fees are understood by both the attorney and client at the beginning of the project, I guarantee that the working relationship will proceed much more smoothly and productively thereafter.
© 2012 Adrienne B. Naumann
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