TRANSCRIPT: Why is transparency so important? What are the types of charges that may be hidden from most annuity customers? First let me say that most annuity providers are not transparent. They give you one number and they tell you that's the number you need to pay them to renew that package. And you don't know how much of it is the official fee. You don't know how much of it is the agent fee. And you don't know what other charges might be in there that you're not aware of.
There are three types of charges which are commonly hidden – I hate to use that word – but are put into the bill that most customers aren't aware of. One is what's called the substitute agent fee. Many of the annuity providers have a contract that says, "If we don't need to use a local agent to pay your annuity, we have the right to charge you a substitute agent fee." We don't charge substitute agent fees. If we don't need an agent, we don't charge you for one, but some annuity providers do.
Second is another area that's oftentimes not disclosed, are agent fee markups. If we use an agent to pay in a particular jurisdiction and they charge us $50.00, we charge you $50.00. But some annuity providers mark that up, and in many cases the markup may be more than what the agent is paying. So those agency markups are the second.
The third and largest category are foreign exchange markups. We charge you the same foreign exchange rate that we pay. Many of the annuity providers, perhaps most, mark that up. Their justification is that it's for the float costs and currency risks, etc. But they might mark that up 25-40%. So what that means is if we're talking about an annuity that in US dollars would have a cost of $1000 dollars, and they are marking it up 25%, they have a foreign exchange profit of $250. And you, the customer are paying $250 more than you should be paying.
U.S. renewals, which are called U.S. maintenance fees – that’s the term the United States uses for the tax – are due at 3 and a half years, 7 and a half years and 11 and a half years after the date of grant of the patent.
Transcript: A renewal--that can be a bit of a confusing term. It is a tax on a patent. In many Asian countries, and I believe New Zealand also uses the word “renewal,” which, again, is synonymous with the term “annuity” or “maintenance fee” or “renewal.” Now, where that one gets a little confusing is the term “renewal” is also used with trademarks, which is a – it’s a whole ‘nother avenue to go down with respect to laws about taxes, so – but, there are countries that use the term “renewal” synonymously with “annuity” and “maintenance fee.”
Transcript: A maintenance fee is essentially the same thing as an annuity. It is a tax on a patent. It’s just a term that is used by certain countries, so the United States uses the term “maintenance fee,” and that’s the tax on a granted patent. In the U.S. there’s three maintenance fees that are – during the life of the patent that the patent owner must pay to maintain the patent. Canada also uses the term “maintenance fee,” but it is the same thing. It is a tax on the patent.
Transcript: Yes, you can change it. There’s filings that you can do at the USPTO, and that’s something you’d want to work with a patent attorney on to get the correct entity status. Then there’s just a simple filing that takes place to correct the entity status.