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Patents World-Wide: Deciding Where to Pursue Patent Rights


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: May 10, 2012 @ 7:25 am
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For many companies the best course of action is to file an International Application under the Patent Cooperation Treaty (sometimes referred to as a PCT application) and pursue patent protection around the world with the filing of a single, uniform patent application.  The PCT process is favored by many companies because of the long processing time.  The international stage of the PCT application can last for up to 30 months, which puts off when you have to make a decision about where to pursue rights.  This is particularly helpful if the innovation is early stage or encompasses basic scientific research that will need to be translated into a commercially useful innovation, or scaled in order to be feasible. In these scenarios so much can go wrong from scientific breakthrough to commercially useful invention that it does not make sense to spend vast sums of money early in the process when the invention may still fail to prove itself.

Typically there are a logical set of countries where maximum market opportunity exists for any innovation and you are likely to want to pursue protection in those countries where the economy is well adapted to provide the most economic potential for exploitation. With some innovations there are many countries that are capable of supporting a market for high-tech innovations, which sometimes causes people to want to apply for patents in a variety of jurisdictions.

Popular places to get protection for many inventions are the United States, United Kingdom, Germany, Japan and perhaps Asia as well, including China. While China does not have a stellar record of IP protection yet they are improving, and given the length of the patent and the huge market it might be worth the gamble. India may also be of interest given the size of the market as well, although the standard of living in India is so low for so much of the country it is not really an active market for many inventions.

International]

According to the recently released 2012 Global Patent & IP Trends Indicator, a study commissioned by inovia, 21% of the respondents sought patents in new countries versus the 2011 study.  Of those who sought patents in new countries the top reasons for adding countries were: (1) new market competitors; (2) improved enforcement practices (particularly in China and India); (3) potential business growth; and (4) possible manufacturing sites.

The inovia 2012 study also explained:

Nearly half of the respondents expect to save on foreign patenting costs by filing in fewer countries.  But this doesn’t mean they’re simply dropping countries; it seems many are just becoming more strategic with their global filing strategy.

Thus, gone (or at least going) are the days when companies would pile up on patents in countries where there was little or no business justification for seeking patents.

Becoming smarter about where to file makes a lot of sense, but not just because of the cost of obtaining a patent in various countries, but because there will be costs associated with maintaining those patent rights after they are initially obtained.  Jude Tonner of Sentry IP, a provider of specialist IP annuities services throughout the world, says:

When maintaining worldwide patent rights worldwide, it is essential that you do not focus on lessening the current year’s financial burden, at the expense of future years’ prospects. When international patent rights are held, the temptation exists to make immediate savings on maintenance fees by allowing the rights to lapse in certain territories. However, this wastes the significant investment already made by the Patentee in securing the rights.

Indeed.  Obtaining inter national rights does not present a trivial cost.  After initially filing an PCT application, for example, you will need to pass through the international stage and enter what is called the “national stage” in every country where you want to obtain a patent.  That means you will need local patent attorneys, translations services to translate your application into the language accepted by the country where you are seeking a patent and you will have to pay fees to each patent office.  This is an expensive proposition, so simply cutting by not paying maintenance fees means you just wasted the significant sums of money to obtain the right in the first place.  Hardly a winning business strategy.

What this means is you definitely do need to have a better strategy for both picking the countries where there are meaningful business prospects, but it also means having at least some idea about the likely costs associated with maintaining the rights once the patent has been obtained.  According to Tonner, “Europe, Canada and Australia, amongst others, all provide meaningful protection and reasonable maintenance fees.”

After you have obtained a patent in the countries where you have the best business justification you also need to have a plan for maintaining those rights.  Tonner explained: “There is usually a 6 month grace period in most territories following the renewal date. If payment within the grace period is missed then it can cost several hundreds if not thousands of dollars to revive a patent.”

It can be extremely expensive to revive patent applications that have gone abandoned, which is why companies that are not large enough to have a department dedicated to maintaining their own patent and trademark portfolios often hire specialty providers to administer the payment of maintenance fees.  In the United States, for example, the cost of a petition to revive when abandonment was unavoidable is $620, but the cost to revive for unintentional abandonment is $1,860.  For “unavoidable” think acts of God.  The overwhelming number of abandonments that get revived are due to unintentional abandonment, which is 3 times as expensive.

You certainly can’t stretch your patent budget if you start accidentally allowing patents to go abandoned, and countries have different rules making it difficult to keep track unless you have a very good docketing system.

The moral of the story is this: First, pick the countries where you want to seek patents wisely, obtaining a patent in a country only when there is an articulable business strategy. Second, remember to consider not only the cost of obtaining a patent in the first instance but also the cost of maintaining that patent once it has been obtained, if you can’t afford to keep the patent maintained then what in the world are you doing obtaining the patent in the first place? Finally, for goodness sakes don’t waste precious resources by negligently or accidentally allowing patents to go abandoned, only to have to revive them once you realize the mistake.

For more information about the International Patent Process please see:

If you are interested in filing an international patent application in the United States, or entering the national stage in the United States based on a previously filed international patent application, please feel free to contact me.

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Posted in: Gene Quinn, International, IP News, IPWatchdog.com Articles, Patent Cooperation Treaty, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

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  1. [...] IP Watchdog: Patents World-Wide: Deciding Where to Pursue Patent Rights – This post discusses the means through which a company pursue patent protection around the [...]

  2. During a recent discussion on an inventor’s forum, one inventor asked about priority dates as regards PPA’s and formal apps as regards international filings. Since he only planned to file in one foreign country outside of the US, one of the patent agents attending suggested just skipping the whole PCT thing and filing directly in the targeted market as well as filing in US, which made a lot of sense to me.

    It gave me an idea about how to perhaps avoiding having to tip my hand here in the US too early due to the required 18 month publication if plan to file outside of the US. (PCT filing). My next planned filing is for an invention that is sort of like an airplane, to use a pretty farfetched analogy. Once someone else has seen it, ala a published US patent application, they could easily start building cheap and possibly dangerous knock-offs about a year and a half before I had a granted patent in hand to be able stop them from importing.

    What if I filed in Australia directly first, and then later filed in the US about a year later? Oz will publish in 18 months? but I will probably have an Australian patent granted by then, so it won’t matter. Come to think of it, why couldn’t I file a US PPA, and an Australian Formal application at the same time? That way if I am able to find a willing licensee in Oz, I could just agree to abandon my US app to give the licensee an *exclusive* right to manufacture them and export them to wherever they like.

    I will have created my own prior art here in the US, but then again I can start building and selling them here in the US and the rest of the world free and clear if it seems attractive enough.

    Any ideas out there?
    SD~

  3. Of course with a non-compete licensing clause, or perhaps a performance sunset clause should they get a bit lazy. Generally I have found that Aussies and Kiwis are very intelligent and honest for the most part.

    SD~

  4. Stan,

    My current understanding of the law prompts this advice:

    NEVER consider filing in a foreign country. ALWAYS request non-publication.

    OK, that seems a bit extreme, but let me explain.

    If you can truthfully follow this advice AT THE TIME OF FILING, then your US filing is not published and you can always change your mind later about pursuing foreign filings. See 35 USC 122(b)(2)(b)(ii).

    This is the surest and best way to follow the original Quid Pro Quo agreement that the US Government had with inventors.

    Rememder, you can alwasy change your mind later on foreign filing, and if your US application is not published, you maintain the secrecy necessary (generally) to effectively file foriegn is you happen to change your mind at a later time.

  5. This strikes me as sound advice from BD. Where’s the flaw? I don’t see any.

  6. BD and M-

    Part of the US efforts to harmonize is the 18 month publication thing. If you elect non-publication you have to promise not to file outside the US, hence my efforts to sneak around it by filing abroad first. I suppose I will blow my US rights in doing so though, so probably not a good idea.

    On the other hand, if my application won’t fly, and it has already been published, I have given away all of my development efforts for all to see. That doesn’t seem fair to me.

    SD~

  7. hence my efforts to sneak around it by filing abroad first.

    No Stan, that is not advisable – AT ALL.

    In fact, as a US citizen, inventing here, and filing abroad first, you may end up breaking the law!

    Remember, your “promise” not to file outside the US only has to be true at the time of filing. The law is quite clear that you can change your mind anytime after filing, with absolutely no penalty. That’s also the beauty of filing the nonpublication request – you avoid the publication until you have better indications of your patent chances and your business situation.

  8. I have heard you can file a PTC application first, and I had forgotten about needing to get a foreign filing permit here in the US before filing abroad. The US would probably frown on my filing outside the US for something that might have an adverse effect on or threaten our national security.

    One gambit I have heard of is to file a PCT app first, and then much later file US and Australian formal apps. Seems as if that might effectively give me a lot more time before anything is ever published. I’m not sure if or when PCT app is published. The recent implementation of the Patent Prosecution Highway program would seem to possibly reduce foreign filing costs, which makes foreign filing a bit more attractive.

    The reason for filing in OZ and maybe NZ is that the concept is for a completely different type of water jet boat propulsion system. Hamilton made a huge splash with their water jet drive units quite a while back, which was basically a huge glorified Jacuzzi water pump that you could also steer and reverse quickly with a thrust reverser.

    Thanks for the help BD-

    SD~

  9. Stan,

    Be careful even with the PCT route as 35 US 184 and 35 US 185 may still apply (note the “Notwithstanding any other provisions of law” language which overrides other areas of law (such as the PCT).

    See http://www.uspto.gov/web/offices/pac/mpep/mpep_e8r6_appxl.pdf

  10. Thanks for the link BD-

    The *New and Improved* patent laws here in the US will probably cause a fair amount of confusion for another 2 or 3 years or so. I still believe that if you request non-publication here in the US, you are required to forfeit your foreign patent rights.

    I remember it clearly.

    I had to personally sign an oath Not to file outside of the US to be able to elect non-publication. Once again, it does not seem fair to me at all. My native patent office is willing to publish my failed patent application about 2 years before I can acquire a perhaps valid patent? What if it isn’t allowed a patent? All my hard work and efforts given away because of some terribly mis-guided legislation in the past, passed by politicians that have no idea of what they are doing.

    Maybe a glass of Calming Chamomile Kewl Aide will smooth some of the rough edges off for me.

    SD~

  11. I still believe that if you request non-publication here in the US, you are required to forfeit your foreign patent rights.

    Why do you think so my friend?

    Follow my advice at comment 4. Make it a policy that at the time of filing that you simply do not plan AT THAT TIME to make any foriegn filings.

    It’s that simple.

    You can even have a policy that the decision must be reevaluated at the Paris one year priority deadline (of course, you may still be in a long queue as to any substantive examination, but at least you have the benefit of time and reflection on your business plans. REMEMBER, the law allows you to change your mind and you need NO reason whatesoever. Your oath – and as man of honor I recognize is important to you – remains intact, and you are merely being prudent by delaying an actual decision to the point in time that the law allows.

    There is nothing wrong with taking every advantage the law provides.

    Remember, once upon a time, the actual Quid Pro Quo was NO PUBLICATION until issue. We should all reflect on how much tghe government sold us out with “mandatory” publication (and make no mistake whose HARMonization efforts influenced that decision).

  12. BD-

    Is your link to the current MPEP? It sounds as if we might have a new MPEP in about 6 months or so (not sure) Comments welcomed by Kappos and et al.

    SD~

  13. “Remember, once upon a time, the actual Quid Pro Quo was NO PUBLICATION until issue.”

    Exactly the point I was trying to make a while back. Max and others seem to have no problem with early publication, probably just because they dis-like the whole patent rights thing, or the idea of confidentiality somehow escapes their comprehension.

    If the USPTO receives a patent application from me, why are they allowed to reveal Any of it unless they decide to grant me a patent right 4 years later? If the application fails, at least I will still be free to try again for something better, without losing my foreign patent rights forever.

    Harmonization in action I suppose.

    SD~

  14. Stan, this 18 month publication thing. It is not so that BigCorp can see what YOU have in the pipeline, or to steal YOUR invention. Rather, it is so that Corp, both big and little, young and old, can know what patentable stuff their corporate competitors have got in the pipeline.

    If they can see what is in the pipeline,they can get worthwhile clearance opinions and avoid that subject matter on which their competitor has filed, and from which is going to emerge a valid claim covering what they want to do.

    If they have those opinions, they have the confidence to invest the billions to run up a new business.

    Running up such a new business creates jobs, nurtures innovation. By the way, how’s that going, these days in America?

    Now I appreciate that you see your invention as the thing that is going to save mankind on this planet. You will appreciate though that others don’t see it quite like that though. Ah, the travails of the lonely inventor.

    And after 40 years of doing patents for a living, I do still like them, I assure you. Indeed I consider them vital for the future of mankind. Thart is precisely why I hate to see anything that brings the patent system into disrepute.

    And i do get confidentiality. Every client wants 18 month publication of everybody else’s applications while enjoying indefinite confidentiality on his own. That’s only human, right?

  15. Stan, this 18 month publication thing. It is not so that BigCorp can see what YOU have in the pipeline, or to steal YOUR invention. Rather, it is so that Corp, both big and little, young and old, can know what patentable stuff their corporate competitors have got in the pipeline.

    MaxDrei, your naiveté is amusing. Sad, but amusing.

    What good is a pipeline view that is at least 18 months old and that will necessarily be incomplete due to at least in part non-publication requests?

    You do not seem to understand the dynamics involved in HARMonization. Consider exactly which types of entities most benefit from a one world process even (especially !! ) if this process means weakened patent protection. In other words, what types of entities benefit most in seeing disruptive new technology having lower levels of protection?

  16. I just realized something, MaxDrei.

    You say you have been at this for forty years, and yet the baggage you carry (I am aware of your frankly asinine views at Patently-O), mark you not as naive, but…

    …blind.

    I think that you are one old dog that cannot learn any new tricks.

  17. Max-

    Of course most large corporations won’t be looking to steal my inventions, since I obviously have an app filed. They just want to make it much more difficult for small entities to get a valid patent for *disruptive* innovations that might challenge their dominant position at the top of the IP hill and their market dominance.

    Is it any wonder that the leader in weakening US patent rights with the passage of the AIA was Senator Patrick Leahy, hailing from Vermont, the IBM State? It took him over 7 years, with generous support from large corporations, all in the cause of streamlining and harmonizing US patent law with the rest of the world.

    What is so superior about IP law in the rest of the world?

  18. Gene-

    Towards the end of your article you wrote: “The moral of the story is this: First, pick the countries where you want to seek patents wisely, filing obtaining a patent in a country only when there is an articulable business strategy.”

    That really struck a chord for me. For instance China would seem to be a good choice for my wind turbine concepts because the market is so large and their power grid is a bit challenged, shall we say.

    After doing a decent market search though, I found that there are probably dozens of small wind turbine manufacturers in China turning out really cheesy and cheap products. I don’t think I will try to go there at all, unless it is with products to sell them after I have a valid US patent in hand. (Or a licensee might after they are all tooled up.)

    SD~

  19. BD-

    I heard back from my very experienced patent agent in record time, after I sent him just a little of what you have posted. Here is an edited version of what he told me:

    “Over the past few years, the PTO has speeded up their initial processing procedures and licenses for foreign filing are routinely granted in a month or so (v. the 6 month ‘hold’ imposed by 35USC184).”

    And then a little later he says:

    “Very few patent applications have a problem with a foreign filing license. If you’re developing a wind turbine, you’re clean. If you’re developing an airfoil for supersonic flight with zero radar signature, you very well might, And, if there’s a problem, the PTO part of the problem (patent allowed/denied/invalidated) is much less of an issue than other parts of the Code.”

    I haven’t been developing any new types of dangerous weapons lately, so it looks as if I might be able to hasten things a bit if I desire to do so.

    SD~

  20. Just be careful Stan.

    Hate to see someone like you, an earnest and honest hardworking inventor get caught up in someone else applying the letter of the law (re-read the two sections and pay particular attention to the “mays” and the “shalls.”

  21. Perhaps the best part of listening to uncle Dave, is that he is not unwilling to discuss the business aspects of inventing. Most of the patent attorneys I have corresponded with tend to seem to get a bit nervous if you ask their opinion about the Business possibilities.

    And rightly so, as a patent agent will never have to represent me in a court of law, where a patent attorney might have a conflict of interest, if there was possible collusion involved.

    To present a true civil tort analogy, my friend Tim engaged a local attorney A to represent him in a civil suit against Fred, let us say… As it turned out, *Fred* had been a client of attorney A’s for several years previously, but attorney A just conveniently “forgot” to tell Tim about that.

    *Fred* was now engaging attorney B to defend his case against attorney A. Tim was stuck with an attorney whose ethical standards had been seriously compromised in my opinion. As it turned out, Tim didn’t even find out about the conflict of interest until several months after attorney A had lost his case.

    A patent agent doesn’t really ever have that sort of problem that I am aware of.

  22. Stan,

    Nothing wrong with patent agents, and like any profession, there are good ones, not-so-good ones and great ones.

    Generally speaking though – and only generally – agents will lack a nuanced view of litigation aspects of patent rights. While that does not directly sound in 35 USC 184 and 185, the “shall” and “may” clauses take the decision power out of your hands if you choose one path rather than the other. Even a great argument and matter completely benign may not overcome a bureaucrats decision to maintain a forfeiture of your patent right if you go down the wrong path.

    Your ethics hypothtecial paints a bad picture, but I would like to think such was a personal failing off the individuals involved.

  23. Stan you say:
    After doing a decent market search though, I found that there are probably dozens of small wind turbine manufacturers in China turning out really cheesy and cheap products. I don’t think I will try to go there at all, unless it is with products to sell them after I have a valid US patent in hand. (Or a licensee might after they are all tooled up.)
    just as a small hint: A valid US patent helps you zero in China or anywhere else in the world outside the US. If you do not have a valid patent there you won’t find anybody to license to. They will simply build it.
    And even if they are turning out bad products now that might and probably will change in time.

    Also you should keep in mind that the business strategy should be for the next 15 years. A lot changes in that time. You should also always consider where the producers and consumers (buyers) will be in 10 years.

  24. I was talking just selling or licensing here in thr US primarily, A Chinese patent would likely be difficult and/or expensive to enforce, so it doesn’t seem worth the effort when the US market is so large, and it is growing very quickly as oil and power get more expensive. Good point about looking 10 or 15 years down the road, though.

    PS to BD-
    I’m afraid I was just having a cynical moment with the attorney horror story. That’s why becoming a patent attorney back when I was in college was so appealing to me, as they generally don’t need to chase ambulances to make a living.

  25. By the way-

    This just came in from one of the American Wind Energy Association Smart Briefs, which I found to be a sort of no go for trying to acquire a Chinese patent for small wind turbines.
    http://usa.chinadaily.com.cn/business/2012-05/14/content_15284084.htm