It is with great interest that we at Sentry IP read the report the United States Patent and Trademark Office made to Congress earlier this year on “International Patent Protections For Small Businesses”. The USPTO’s report highlighted the link between the ability of small US businesses to secure international patent protection and the availability to these businesses of a number of commercial advantages, such as attracting investor capital and accessing foreign markets by means of licensing, franchising and exporting. Research suggests that these advantages are directly related to the general economic health of the USA, with improved levels of manufacturing and production leading to job creation.
Once patents have been secured, there is a risk that skipping maintenance fees and allowing the rights to lapse could be seen as the only way to make post-grant cost savings. As a provider of specialist IP annuities services to owners of Intellectual Property rights throughout the world (including small businesses, individual inventors and universities, in addition to larger companies), we see first hand what the USPTO report is concerned with. Small businesses whose inventions are potentially relevant to both the domestic and overseas markets are likely to struggle to meet the financial requirements of gaining and maintaining international patent rights.
There are things that small businesses can do to lessen the burden of maintaining international rights. The most common methods of reducing this burden relates to international annuities. What follows is a discussion of the potential for international annuities to help small businesses avoid loss of the investment made in gaining international patents.
Options for International Patent Annuities
Obtaining international patent rights can be a lengthy and expensive proposition. Having expended a great deal of time and financial resources it is essential for patent owners and patent attorneys who represent these patent owners to streamline the process for maintaining the acquired rights in the most efficient manner possible. There are essentially three paths that can be pursued to maintain international patent rights.
The Patentee can attend to payment of annuities itself by dealing directly with the relevant IP offices. While this brings the obvious advantage of avoiding the fees of IP attorneys, this is not a commonly chosen option for holders of patent rights with international scope due to the risks involved.
The maintenance of patent portfolios is a specialist area, with IP attorneys and annuities service providers normally using systems which are specifically designed to handle the broad variances in patent maintenance rules and regulations from country to country. Practical issues like whether the IP Office in question will send reminders in advance of the due date, how user-friendly the official forms may be and which methods of payment are accepted by different IP Offices will also be encountered.
It is for such reasons that IP owners with portfolios covering a number of countries or territories outside the USA do not commonly elect to handle the annuities process directly.
2) Use of IP counsel to attend to annuities
A popular option is to use IP counsel to handle maintenance of international patent rights. This route has the advantage of removing pressure from the IP holder, as the entire process is entrusted to counsel.
Commonly, the IP holder will liaise with the same attorney or firm who assisted them with drafting, filing and prosecuting the initial application. This attorney will send reminders to the holder as the various due dates approach, and once instructed will refer the case to an attorney local to the relevant territory.
The main disadvantage perceived in using IP counsel to attend to payment of annuities is the level of costs involved. Notably, provisions for discounting the official fees for small entities do not exist in most countries, as they do in the USA. As a witness at the consultation process for the report noted:
Fixed costs and hourly rates for attorneys in, say, London or Tokyo are perceived to be significantly higher than those of their US counterparts.
A solution to this particular issue can be offered by specialist annuity services.
3) Outsourcing handling of the international annuities to a specialist
Specialist annuities companies can provide businesses with easy access to wide-ranging knowledge and infrastructure focussed solely on annuities, while also enabling substantial cost savings to be made.
There is a variance in the approach used by different annuities companies. Turning firstly to the more traditional model, the IP holder tends to provide details of their patents, which are then loaded on to the company’s system taking a set time. This more traditional account-based approach usually involves the holder committing to leave their portfolio in the care of the company for a set period. The company will send reminders to the IP holder including estimated fees (subject to currency fluctuations) for processing the relevant annuity. Should the IP holder only be able to confirm that the annuity should be processed close to the actual deadline, urgency surcharges are normally added to the previously estimated price.
Alternatively, a newer approach to annuities is available, having been pioneered by Envoy International and Sentry IP. This model provides small businesses (amongst others) with more flexible annuities services. Instant quotes (fixed price, not estimated) are supplied on demand to the IP holder, who need only upload the details of cases they wish to maintain. No significant lead time is required to take on any number of cases.
No obligation is forced on the holder to accept the quotes or to transfer the entire patent portfolio to the annuities company for a set period or otherwise. Consequently, the IP holder retains complete control over which patents are to be renewed, on a case by case basis.
This model provides businesses with access to cost efficient international annuities through a single supplier, decreasing the chances that the patent rights will be allowed to lapse in the name of cost saving.
The fixed pricing structure permits budgeting with full confidence that no unanticipated billing surprises will arise. The flexible nature of the system allows annuities to be paid when they become due, or alternatively grouped together and paid quarterly, half-yearly or even annually. Small business can better plan cash flow as a result.
This model of annuities services provides the most favourable option to small businesses, in terms of responsiveness, flexibility, transparency and cost efficiencies without sacrifice of quality of service.
Any cost savings available in the process of maintenance of internationally protected patents can only have a positive effect on the ability of smaller US businesses (and individual inventors) to secure and retain such patents, with the attendant growth and job creation improving the economic health of the nation as a whole.