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.
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:
- PCT Basics: Obtaining Patent Rights Around the World
- Patent Advantage: Laying the Groundwork for International Rights
- PCT Basics: Understanding the International Filing Process
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.