[co-author: Daniel F. Gelwicks*]
According to a recent survey of over 100 companies and universities, nearly 93% who filed patent families in 2013 filed at least some of those patent families internationally.[1] While obtaining patent protection abroad is important in a global economy, obtaining international patent protection can be a substantial financial expense in addition to the legal and patent office fees that may have already been spent for preparing and prosecuting a U.S. patent application, which can average between $8,500 and $25,000.[2] Foreign patent filing decisions should take into account all of the potential additional costs associated with filing, prosecution, and annuity fees, as well as translation and legal service costs for hiring patent practitioners in each jurisdiction. Global filing, prosecution, and annuity estimates over the lifetime of a patent application can be generated on a country-by-country basis; however, the actual costs can change over time and with currency fluctuations. Furthermore, it may take several years after filing a foreign patent application before a patent actually issues. Unfortunately, foreign patent protection can be quite expensive, with the varying costs easily totaling in the thousands of dollars for each application. Since the costs associated with filing and obtaining foreign patent protection are significant, strategies that control, delay, consolidate, or minimize costs are advantageous. In this article, five tips are discussed for developing a cost-effective strategy for obtaining foreign patent protection.
Determine whether foreign patent protection of an invention is necessary
For many companies or applicants the decision to foreign file is something that the company cannot afford to ignore and the company needs to carefully consider whether foreign patent protection is necessary and appropriate. In deciding where to file for foreign patent protection, the company needs to know whether the associated product/service will potentially be sold and where it will be made in the future. In addition to budget, factors to consider include location of substantial markets, distribution centers, manufacturing centers, potential licensees and/or partners, competitors and where they are filing for patent protection, and whether the patent can be readily enforced in the country of interest.
Not all inventions warrant foreign patent protection. For instance, if the company’s invention is not a core technology, if there is no substantial market abroad, or if there are no interested licensees or partners for the invention, foreign patent protection may not be necessary. Likewise, foreign patent protection may not be appropriate if the invention may become obsolete within a short period of time, such as for some software inventions. If a company’s main market and all of its competitors are in the U.S., domestic patent protection alone may be sufficient to prevent competitors from making, using, selling or offering to sell competing products/services in the U.S.
An applicant also needs to determine whether the invention is even patentable subject matter in the relevant countries. Some countries may have patent laws that treat technology differently than in the U.S. For instance, many patent offices (such as in Europe, and unlike in Australia and the U.S.) prohibit patenting of methods of treatment or diagnosis on human or animal subjects. Other countries make it more difficult or impossible to patent business methods or software, such as in China, India, and the European Patent Office (“EPO”).[3] In some instances, it may be possible to draft the claims in certain ways in order to overcome these obstacles and to obtain meaningful patent protection.
While there is no per se “Rule of Thumb” approach in deciding which specific countries should be included in all foreign filing strategies, a U.S. based company may consider Europe as an important market. Other markets include very large economies such as China, Japan, and India; other relatively large economies such as Brazil, South Korea, and Mexico; and English speaking countries such as Canada and Australia. Popular individual countries within Europe include France, Germany, Italy, Spain, the U.K., and Spain.
For many companies, the ultimate selection of foreign countries in which to pursue patent protection can be industry specific. Often a company files in countries where the company or its competitors have a substantial market or future market opportunity for the innovation, or where the company or its competitors manufacture its products. Not surprisingly, the definition of “substantial market” can differ depending on the type of innovation involved. For instance, if the innovation relates to semiconductors, patent protection in China, Taiwan, South Korea, and Japan may be of interest as manufacturing sites. For medical devices, Europe, Japan, China, South Korea, Canada, Mexico, and Australia are popular choices. For technology patents, Europe, South Korea, Japan, Taiwan, India, China, and possibly Canada, Brazil, and/or Australia are usually considered. For pharma/biotech innovations, Europe, Canada, China, Japan, and Mexico are usually considered, and possibly India, Australia, Brazil, Indonesia, South Korea, Singapore, Israel, New Zealand, Philippines, Russia, Thailand, Vietnam, and/or South Africa. In a recent survey, which polled over 100 companies and universities, the respondents ranked Europe, China, and Japan as the top foreign jurisdictions for patent filings.[4] Not surprisingly, 45.6% of the respondents reduced their foreign filing costs by filing in fewer foreign countries.[5]
Consider a PCT application to defer costs and foreign filing decisions
There are three basic approaches for an applicant to file for patent protection abroad. One approach is to directly file a national application in the patent office of a foreign country, assuming that the company has already received a foreign filing license to export the technology outside of the U.S.[6] Another approach is to file an application at a regional patent office, such as the European Patent Office (“EPO”).[7] The third approach is to file a Patent Cooperation Treaty (“PCT”) application.[8]
If an applicant is interested in only one or two foreign countries, it may be advisable to file directly in each country even though the upfront foreign filing costs will be incurred right away. These filing costs can be substantial, especially if a translation of the application into a foreign language is required.
Alternatively, if a company is interested in countries only from a certain region of the world, it may be possible to file one patent application at a regional office.[9] A number of countries have treaties in place that would allow an applicant to file one application at a regional office.[10] Once granted, the patent can be effective in designated countries in the region. For instance, an applicant may be only interested in European countries and, therefore, the company may want to consider filing regionally under the European Patent Convention (“EPC”), as opposed to filing a separate application in each European country.[11] Once the European application is granted, the company can pick and choose which specific European countries to register the European patent within a specific time frame.[12] Similar to filing directly, the upfront filing costs can be substantial; however, this approach may allow an applicant to defer the translation costs.[13]
If a company is interested in more than two countries, if it is unsure of which countries to file in, and/or if it cannot afford the upfront foreign filing costs, the company should consider filing a PCT international application as a more cost-effective route. Applicants who file a PCT application can defer national phase filing (and associated costs) for at least 18 months and up to 30 months or longer (depending on the country).[14] Applicants also obtain a patentability search report and a written opinion regarding the claims which may be helpful in deciding whether or not to pursue national stage filings. According to a recent survey, a large majority of the respondents (96%) relied on PCT applications for foreign filing.[15]
A carefully drafted patent application can help to control prosecution costs and the final outcome
While the EPO and U.S. Patent and Trademark Office (“USPTO”) have similar requirements for patent applications, the same application can have dramatically different prosecution results in Europe and the U.S. For example, the applicant may not be able to make claim amendments to an EPO application in the manner that is available during U.S. prosecution because of European priority rules.[16] As a result, the claims issued by the EPO to a U.S. applicant may be unnecessarily narrow under European standards and may not sufficiently protect the invention. Therefore, an applicant needs to make sure that the patent application is drafted in such a way that it would comply with the different requirements of both the USPTO and EPO.
An applicant should also consider the size of the patent application including any drawings and limit the application to a certain number of pages and claims, depending on the filing rules for a specific patent office.[17] Many countries charge excess page and claim fees for applications that exceed the limit. While there is no excess claim fees charge in a PCT, added costs may be incurred to prepare preliminary amendments to reduce the total number of claims when it is time to file an application at the national stage. In some countries, such as China and India, excess claim fees can be charged for additional claims above the local limit, even if a preliminary amendment to reduce the number of claims is submitted with the application at the time of national filing. In other words, additional fees may be incurred just to reduce the number of claims from the original PCT application.[18] Perhaps more importantly, additional translation costs will be incurred for translating the excess claims and pages.
In many instances, foreign associates receive patent applications transmitted to them from domestic firms or companies, and the foreign associates will handle the translation and the filing of the patent application. In some instances, it may be more economical to have a patent application translated domestically into various foreign languages, and then send it to the foreign associates for final review and filing. Many domestic translation companies are willing to provide some discount, particularly where volume translations are involved.
Evaluate portfolio on a continuous basis
Companies may decide later on not to sell products or services in a particular country and thus may have no real interest in maintaining patents in such a country. Thus, regular reviews to determine a company’s interest in a particular country and to “prune” the IP portfolio by abandoning or selling portions of the foreign patent portfolio can be helpful in reducing the overall costs of prosecuting foreign patent applications and annuity costs in maintaining foreign patents. Ideally, these reviews should begin after filing for the patent(s) and continue on a regular basis until the patent(s) expire or are abandoned.
Patent Prosecution Highway can provide significant cost savings
While periodic pruning of the patent portfolio is one way to keep foreign patent costs in check, the Patent Prosecution Highway (“PPH”) program provides another option to help streamline the examination of patents in numerous individual countries based upon an original application filed in a single patent office.[19] Generally, the PPH program originates from a series of agreements between various countries whereby the patent prosecution work product from a home patent office or the PCT that indicates allowable subject matter in an application can be used to expedite prosecution in other countries. The PPH enables an applicant who receives a positive ruling on patent claims from one participating office to request accelerated prosecution of corresponding claims in another participating office, which may allow the applicant to obtain a patentability decision in the second office more quickly. Furthermore, the PPH promotes patent application processing efficiency by allowing the examiner in the office of later examination to reuse the search and examination results from the office of earlier examination, thereby reducing workloads and duplication of efforts.[20] As a consequence of this program, the PPH may help an applicant to save time and reduce costs. Currently, the U.S. has PPH agreements in place with several foreign patent offices including Australia, Canada, Finland, Japan, the United Kingdom, Korea, and China.[21] In many instances, the PPH program has resulted in higher grant rates, fewer office actions, and reduced pendency time and therefore can streamline and reduce overall foreign patent prosecution.[22]
Conclusion
For many companies, innovations are the lifeblood of the company and in many instances, it may be important to protect these innovations from competitors by securing IP rights abroad. However, the costs for obtaining and maintaining foreign patent protection can be expensive. The decision to pursue foreign patent protection should be based on factors such as customer location and whether the innovation is even patentable in the relevant countries. Where large upfront foreign filing costs are prohibitive to a company, a PCT application can serve as a useful vehicle to defer foreign filing costs and to provide companies additional time to make foreign filing decisions. Furthermore, by drafting applications carefully, evaluating the IP portfolio regularly, and taking advantage of the PPH program, companies can realize significant additional cost savings.
[1] The 2014 U.S. Global Patent & IP Trend Indicator, Inovia, p. 7, available at http://inovia.com/resources/global-ip-trends-indicator [hereinafter Inovia Report].
[2] See Stephen Yelderman, Improving Patent Quality with Applicant Incentives, 28 Harv. J.L. & Tech. 77, 136 n. 9 (2014) (discussing the range of average application and prosecution fees as somewhere between $8,500 to upwards of $15,000); see also David Fagundes & Jonathan S. Masur, Costly Intellectual Property, 65 Vand. L. Rev. 677, 690 (2012) (“an average patentee will spend approximately $22,000 to successfully prosecute a patent application.”); see also Am. Intellectual Prop. Law Ass’n, Report of the Economic Survey 27 (2013) (reporting that the median attorneys' fees for preparation of an original application for a relatively complex patent was between $8,500 and $10,000 in 2012).
[3] See Michael Geoffrey, Steven Birt and Ian Buckley, Patentability Of Business Methods — A Global Comparison, Law 360, available at http://www.law360.com/articles/319307/patentability-of-business-methods-a-global-comparison.
[4] Inovia Report, supra note 1, at p. 10.
[6] See M.P.E.P. § 140 regarding Foreign Filing Licenses.
[7] There are four regional groups for which a regional patent may be obtained via the PCT. Those are the ARIPO Patent, the Eurasian Patent, the European Patent, and the OAPI Patent. See http://www.wipo.int/pct/en/texts/reg_des.html for more details.
[8] The PCT is an international treaty with more than 145 Contracting States as of July 2014. The PCT makes it possible to seek patent protection for an invention simultaneously in a large number of countries by filing a single “international” patent application instead of filing several separate national or regional patent applications. For more information, see http://www.wipo.int/pct/en/training/index.html and http://www.wipo.int/pct/en/faqs/faqs.html.
[10] See n. 7, supra. See also http://www.wipo.int/pct/en/faqs/faqs.html (“If you are a national or resident of a country which is party to the ARIPO Harare Protocol, the OAPI Bangui Agreement, the Eurasian Patent Convention or the European Patent Convention, you may alternatively file your international patent application with the regional patent Office concerned, if permitted by the applicable national law.”).
[11] For more details see http://www.wipo.int/pct/guide/en/gdvol2/annexes/ep.pdf. See also n. 7, supra.
[12] For specific details with regard to the validation of a European Patent Grant, see How to get a European Patent, Guide for Applicants, Part 1, available at http://documents.epo.org/projects/babylon/eponet.nsf/
0/8266ED0366190630C12575E10051F40E/$File/guide_for_applicants_part1_10_13_en.pdf [hereinafter Applicant Guide Part 1].
[13] See How to get a European Patent, Guide for Applicants, Part 2, PCT Procedure before the EPO, p. 37, available at http://www.epo.org/applying/international/guide-for-applicants.html (“For the purpose of the international search by the EPO as ISA the application must be written in one of its three official languages, i.e. English, French or German. Where the international application is filed in a different language the applicant must file with the receiving Office a translation into one of the three official languages of the EPO. Such translation must be furnished within one month of the date of receipt of the international application by the receiving Office.”) [hereinafter Applicant Guide Part 2].
[14] Note that some countries are members of the Paris Convention but not the PCT and therefore to obtain a patent in those countries the application must be filed in that non-PCT country within one year from the filing date of the home application. See PCT Frequent Asked Questions 2 and 11, available at http://www.wipo.int/pct/en/faqs/faqs.html (“Direct or Paris route: you can directly file separate patent applications at the same time in all of the countries in which you would like to protect your invention (for some countries, regional patents may be available) or, having filed in a Paris Convention country (one of the Member States of the Paris Convention for the Protection of Industrial Property), then file separate patent applications in other Paris Convention countries within 12 months from the filing date of that first patent application, giving you the benefit in all those countries of claiming the filing date of the first application.”). See also n. 10, supra. Some of these non-PCT countries include Argentina, Jordan, Pakistan, and Venezuela. For a full listing, see http://www.wipo.int/export/sites/www/pct/en/texts/pdf/pct_paris_wto.pdf.
[15] Inovia Report, supra note 1, at p. 8.
[16] See European Patent Convention, Part VII, Chapter 1, Article 123, Amendments, available at http://www.epo.org/law-practice/legal-texts/html/epc/2013/e/ar123.html; see also Guidelines for Examination, Part H, Chapter III, 2.1 Indication of amendments and their basis under Rule 137(4), available at http://www.epo.org/law-practice/legal-texts/html/guidelines/e/h_iii_2_1.htm.
[17] For U.S. applications, there is a fee for each additional 50 sheets that exceed 100 sheets. There is also a fee for each independent claim in excess of three and for all claims in excess of 20. See USPTO Fee Schedule, available at http://www.uspto.gov/web/offices/ac/qs/ope/fee010114.htm. For PCT applications, additional fees are required if the application contains more than 30 pages. See Applicant Guide Part 2, supra note 13, page 32, point 170.
For European applications, if the European patent application comprises more than 15 claims, there is a claims fee in respect of each claim over and above that number. For the 51st and each subsequent claim the amount of the claims fee is higher. Also, an additional fee is payable for European patent applications comprising more than 35 pages. See Applicant Guide Part 1, supra note 12, page 33, point 92 and page 39, point 118.
[18] In China and India, the total number of claims is calculated based on the number of claims in the PCT application, so reducing the number of claims after international PCT publication will not end up reducing costs. See PCT Applicant’s Guide – National Phase – National Chapter – CN, State Intellectual Property Office of the People’s Republic of China, page 4, available at http://www.wipo.int/pct/guide/en/gdvol2/annexes/cn.pdf; see PCT Applicant’s Guide – National Phase – National Chapter – IN, Indian Patent Office, page 3, available at http://www.wipo.int/pct/guide/en/gdvol2/annexes/in.pdf.
[19] See generally USPTO Press Release, February 10, 2014, Implementation of the Global and IPS Patent Prosecution Highway (PPH) Pilot Programs with Participating Offices, available at http://www.uspto.gov/patents/law/notices/global-ip5.pdf [hereinafter PPH Implementation]; Global and IP5 Patent Prosecution Highway (PPH) Frequently Asked Questions (FAQs) available at http://www.uspto.gov/patents/init_events/pph/FAQGlobalPPH.pdf; USPTO’s PPH Flyer, available at http://www.uspto.gov/patents/init_events/pph/PPHFlyerNov2014.pdf; Trent Kirk, PTO Announces Expansion of Patent Prosecution Highway, 23 No. 10 Intell. Prop. & Tech. L.J. 8, CCH Incorporated (October, 2011).
[20] PPH Implementation, supra note 19, at p. 1.
[21] Beginning in January 2014, 13 Intellectual Property Offices have begun a Global Patent Prosecution Highway (PPH) arrangement. The 13 offices involved are IP Australia (IP Australia), Canadian Intellectual Property Office (CIPO), Danish Patent and Trademark Office (DKPTO), National Board of Patents and Registration of Finland (NBPR), Japan Patent Office (JPO), Korean Intellectual Property Office (KIPO), Nordic Patent Institute (NPI), Norwegian Industrial Property Office (NIPO), Portuguese Institute of Industrial Property (INPI), Russian Federal Service for Intellectual Property (ROSPATENT), Spanish Patent and Trademark Office (SPTO), United Kingdom Intellectual Property Office (IPO), and United States Patent and Trademark Office (USPTO). Samuel Helfgott, 6 No. 5 Landslide 54, IP Group News, American Bar Association, p. 1. In addition to the Global PPH and IP5 PPH pilot programs, the USPTO has PPH agreements with the following Intellectual Property Offices around the world: Colombia, Czech Republic, Germany, Mexico, Nicaragua, Philippines, Poland, and Taiwan. See http://www.uspto.gov/patents/init_events/pph/.
[22] USPTO Performance and Accountability Report, Fiscal Year 2013, pp. 20-21 (“The Patent Prosecution Highway (PPH) continues to be a successful work sharing vehicle, delivering prosecution advantages to both users and IP offices. PPH provides users reduced numbers of office actions, lower costs, higher grant rates, and faster prosecution, and they are all factors that drive the growth of the program.”).
* Daniel F. Gelwicks is an MBHB law clerk.
