Here are the three questions you need answered in order to know how you are being charged:
1. What service fee are you paying?
2. What are the local costs charged for each country?
3. How are foreign exchange costs being charged?
If you don’t know the answers to these questions, you will have no idea how invoice charges are arrived at and you will never be able to verify the accuracy of any invoice.
Why do these three questions, and the answers given, matter? Let me explain.
1. Service fee
I have come across too many IP owners who have been referred to a payment provider by their patent attorney and have no idea what they are to be charged per renewal.
If you do know what the service fee is, you should consider what other suppliers would charge. For example, I have seen an IP owner charged £168 per renewal by one supplier when another major supplier would have charged £60, and yet another as little as £15. A higher service fee is no guarantee of better service and a low fee does not necessarily mean you will be less well served.
A service fee should be just that – a fee for the service provided. Costs incurred in providing the service should not be an additional opportunity for profit. That opportunity has been well and truly embraced by at least one supplier, which brings us to the next question.
2. Local costs
It is now possible to pay renewal fees direct in more than 20 countries (‘direct pay countries’). In all others, renewals can only be handled through local agents who will charge a fee for their services. Most suppliers do not charge local costs for direct pay countries; there is, however, at least one major supplier that does.
Some suppliers pass on local agent charges at cost. Others do not. If you don’t know what your suppliers’ local charges are for each country, and don’t compare costs between suppliers, you could find that you are paying considerably more than you need to.
Most suppliers charge the same local costs for patent annuities regardless of the annuity year. One notable exception charges local costs that increase with each annuity year. This is another way in which you can find yourself paying well over the odds for what should be a disbursement.
3. Foreign exchange (‘FX’)
This is the one that confounds most of us. FX is ‘smoke and mirrors’ territory and we too easily imagine it to be awash in volatility and risk. Not so, as you can read in my post here.
Among some of the major suppliers, the average FX mark-up (on inter-bank rates) is an average of 3%. This is the mark-up applied to particular currencies when converting to your chosen invoice currency.
There is one major supplier that applies mark-ups commonly ranging from 20% to over 50%. This mark-up is applied to Official Fees and to local charges and the result can be that those costs alone can be almost twice what other reputable suppliers would charge.
When you have answers to the three questions, you will be in a position to verify the invoices you receive.
My firm offers a Renewals Invoice Verification Tool with pricing based on IP portfolio size, starting from at as little as £500 for those with portfolios of up to 250 IP rights. To read more, and watch a very short explanatory video, please visit http://www.pacipr.com/services.