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FAQ – amended Article 2(1) item 11 RFees – reduction of the appeal fee

With decision CA/D 17/17 of 13 December 2017 the Administrative Council of the European Patent Organisation amended Article 2 paragraph 1 item 11 of the Rules relating to Fees (RFees) so as to introduce a reduced fee for appeal. The reduction of the appeal fee applies to appeals filed by natural persons and entities referred to under Rule 6(4) and (5) EPC and entered into force on 1 April 2018. In a notice dated 18 December 2017 (OJ EPO 2018, A5) the EPO published the eligibility criteria and other information about the new procedure. The present list of frequently asked questions is intended to provide additional information for users.

Questions

Answers

Does the reduced fee apply only to appeals filed by natural persons or entities having their residence or principle place of business in one of the Contracting States?

No, Article 2(1) item 11 RFees only makes reference to the natural persons and entities listed in Rule 6(4) and (5) EPC instead of referring to Rule 6(4) EPC as a whole. This means that the link from Rule 6(4) EPC to Rule 6(3) EPC and further to the language requirements under Article 14(4) EPC does not apply when assessing the eligibility to the lower appeal fee. Also natural persons residing outside of Europe e.g. US residents or non-European entities e.g. Japanese SMEs are therefore eligible to the reduced appeal fee provided that they meet the requirements of Rule 6(5) EPC and those defined in OJ EPO 2018, A5.


Which criteria have to be met for a company to qualify as an SME? Are these criteria the same for companies having their principle place of business outside Europe?

For the purposes of determining whether a company qualifies as an SME, Commission recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises as published in the Official Journal of the European Union L 124, p. 36 of 20 May 2003 applies.

According to the definition of SMEs in European Commission Recommendation 2003/361/EC of 6 May 2003, the main criteria for qualifying as an SME are:

1) the number of employees (fewer than 250) and

2) either annual turnover not exceeding EUR 50 million, or an annual balance sheet total not exceeding EUR 43 million.

These criteria have to be met, irrespective of whether the respective company has its principle place of business in one of the EPC Contracting States or in any other country. This means that in order to qualify as an SME, also a company having its principle place of business in the US or Japan must have a staff headcount of fewer than 250 and either an annual turnover not exceeding EUR 50 million or, or an annual balance sheet total not exceeding EUR 43 million.


How are the staff headcount and financial criteria in the SME definition to be understood? Are there guidelines for whether an enterprise qualifies as an SME?

The staff headcount is a compulsory criterion, but only one of the two financial criteria needs to be fulfilled. When making the staff and financial calculations, the data in the latest approved annual accounts must be used.

To assess whether an entity fulfils the SME definition criteria, it is necessary to ascertain whether it is an autonomous, partner or linked enterprise. To do this, any relationship with other enterprises must be taken into account.

An enterprise is considered autonomous either if it is totally independent or if it has a holding of less than 25% of the capital or voting rights (whichever is the higher) in one or more other enterprises, and/or outsiders do not have a stake of 25% or more of the capital or voting rights (whichever is the higher) in it (cf. Article 3.1 of Recommendation 2003/361/EC).

In the light of the definition of “partner enterprise” and “linked enterprise” given in Recommendation 2003/361/EC (Article 3.2 and 3.3) and depending on the category applicable in the particular case, it will be necessary to add some or all of the data from the “partner” or “linked” enterprises.

If for instance enterprise A has three investors, B, C and D, each owning 20% of its capital or voting rights, and these investors are interconnected, forming a group of linked enterprises (B has a stake of 70% in C which itself has a stake of 60% in D), when calculating A's data to assess whether the SME definition criteria are met, it would at first sight appear that A is autonomous because each investor owns less than 25% of it. However, since B, C and D are linked to each other, as a group they own 60% of A. Therefore, 100% of the data of B, C and D must be added to the data of A.

Further information and guidelines:


What happens, if during the appeal procedure the appellant “grows” in terms of headcount or turnover and loses its SME or non-profit status?

For eligibility for the reduced appeal fee, the status of the appellant under Rule 6(4) EPC when filing the notice of appeal is relevant. Changes occurring subsequently to the procedural act of filing the notice of appeal, such as a substantial increase in turnover or staff headcount, have no retroactive effect on the validity of the declaration and the payment of the appeal fee.


In case an appeal is filed jointly by multiple persons, is it sufficient if only one of them is eligible within the meaning of Rule 6(4) EPC?

No, point 5 of the Notice from the EPO dated 18 December 2017 concerning the reduced fee for appeal (Article 108 EPC) for an appeal filed by a natural person or an entity referred to in Rule 6(4) EPC (OJ EPO 2018, A5) stipulates that if an appellant consists of a plurality of persons, each one must be a natural person or an entity within the meaning of Rule 6(4) EPC for the fee reduction to apply. A declaration to this end can be provided by the common representative, either in free text form or using EPO Form 1011bis (see also below under “When and how is the declaration to be filed?”).

If for example a European patent application is filed jointly by a German SME and a Chinese University and refused in the course of the patent grant procedure, when filing an appeal, both entities have to provide a declaration in order to be eligible to the reduced fee for appeal. Such a declaration may be given together for both entities in one document by the appellants’ common representative.

However, if multiple oppositions have been filed and the patent is maintained in amended form or the opposition is rejected by the opposition division, only those opponents appealing the decision and claiming to be entitled to the lower fee must file a declaration.


Are entitled natural persons or entities automatically considered for the reduced appeal fee, or is the filing of a declaration compulsory?

According to point 3 of the Notice from the EPO dated 18 December 2017 (OJ EPO 2018, A5), the filing of a declaration is an explicit requirement to benefit from the fee reduction, even for appellants who obviously fall under one of the categories of entities listed in Rule 6(4) EPC, such as natural persons or universities. Thus, this declaration must always be filed; there is no automatic recognition process.

Even if a declaration has already been filed for the purpose of a reduction of the filing or examination fee under Rule 6(3) EPC, in view of possible changes in company size and structure since the time of submitting the first declaration, a new declaration has to be filed in order to be eligible for the reduced fee for appeal.


When and how is the declaration to be filed?

The declaration may be given in the notice of appeal or on a separate sheet. Appellants wishing to file their declaration separately can also use a pre-printed declaration (Form 1011bis) which is made available by the EPO as of July 2018. The use of Form 1011bis is, however, not compulsory.

The declaration must be filed at the latest by the time of payment of the reduced fee for appeal, to allow the EPO to assess whether the correct amount of the appeal fee has been paid. If the declaration is not filed at the time of payment of the reduced fee for appeal, it may still be filed within the time limit under Article 108 EPC (cf. next question).


What does the EPO do if a declaration appears to be missing on the date of payment of the reduced fee for appeal?

If an appellant pays the reduced amount of the appeal fee without filing the necessary declaration, the EPO will proceed as follows:

If the period for paying the appeal fee has not yet expired, a warning letter will be issued to inform the appellant that no declaration has been received by the EPO. If the time limit under Article 108 EPC has not yet expired, the appellant can either pay the missing amount to the full fee or file the missing declaration.

Should the appellant omit to pay the missing amount or not file the declaration within the time limit under Article 108 EPC, the appeal may be deemed not to have been filed or the appeal may be considered inadmissible.


What happens if the EPO finds out that the appellant was actually not entitled to a reduction?

In case of interlocutory revision by the Receiving Section, the Legal Division or the Examining Divisions (Article 109 EPC), the new system under amended Article 2(1) item 11 RFees is based on trust, which means that the EPO will usually grant the reduction on the basis of the appellant’s declaration of entitlement. But it will also carry out random checks to verify whether the eligibility criteria were actually fulfilled. In case of doubt as to the veracity of the declaration given by an appellant, appropriate evidence may be requested by the Receiving Section, the Legal Division or the Examining Divisions. If it transpires that the appellant was in fact not entitled to the fee reduction, the notice of appeal may be deemed not to have been filed or the appeal may be considered inadmissible.


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