Founding Partner
So you’ve gotten your patent application on file, the rush and the fuss are over with for the time being, you’ve hit your deadline before the presentation or the trade show. Fortunately the patent decisions have been made now and you can forget about this part of your project at least for awhile. And maybe you take a deep breath, because the financial hemorrhage from the patent work is at least on hold.
But soon you get a letter from your patent attorney advising that the one year deadline is fast approaching and you need to decide whether you want international protection. What do you decide? How do you decide? What countries do you file in? Is worth the money it will cost?
Well the answer to the question “do we need international protection” is a qualified “maybe”.
Obviously, if you don’t plan to do business outside the US, then the answer is a clear “no”. If you get a US patent, you can always prevent people from importing into the US from another country. The US is all you need.
If you plan to sell outside the US, then you want to consider patents in the major markets where you plan to sell. If you plan to sell in Japan, for instance, consider a patent in Japan. That too is obvious.
But just because a patent is available doesn’t mean you want one. Here are some additional considerations.
First, think about the lifecycle of your product. The granting of international patents will lag behind the grant of the US patent by at least two years, in some countries more. It is not usual for foreign protect to take six years or more from the filing date of the US application. With some products it’s hard to predict – for others, the product lifecycle is much shorter. Before spending the money do your best to analyze whether the product will be on the market when the patent is granted.
Unless there is some special consideration, except for Brazil, forget about filing for patents in Latin America (with all due respect), Africa, or the Middle East (although some exception for Israel) and former Soviet bloc countries. These regions have weak patent systems for getting and enforcing patents. In many countries where private ownership principles are weak, the courts and laws do not favor patent holders. Think too about whether you’d be willing to bankroll a lawsuit in one of these countries. That’s not to say that filing in these countries is never a good idea, just that your particular facts should justify it and the filings should be on an exceptional basis.
Still, that leaves North America, Asia, and Europe, all with pretty good patent systems and courts. How do we maximize patent protection while keeping a reasonable budget?
If the product is a consumer product, then going after major markets makes sense. A strong, yet reasonably priced portfolio would include the US, Canada, Europe (Great Britain, France, Italy, Germany, maybe Spain), China, and Japan. This list will cover 90% of 90% of any companies needs. I’ve seen many companies with over 1 billion in sales function perfectly well just filing in the countries on this list. Filing costs, i.e. just to get the application on file in these countries is about $20-25,000 depending on exchange rates and application length. Prosecution costs and other fees can be estimated at 6-8,000 per country spread over 4-5 years. Expect your total bill in the other countries to be about 75-100k, excluding the US.
Many or most of your competitors may concentrate manufacturing in one country or region. For example, India has a large generic drug industry and is a natural place for branded pharmaceutical companies to consider. The electronics industry often files in Korea or Singapore. China is a favorite for general and consumer manufacturing. If you can anticipate where your competitors will make your product, filing a patent there is a great strategy.
Why? Suppose you are trying to stop an infringer. It is cheaper to file an infringement suit where the product is made, (which may only be one country) rather than filing suits in each country where it is sold (which may be many countries).
A very popular way to defer the costs associated with the international portfolio is via the PCT. With the PCT, you can wait an additional 18 months to decide which countries need protection, and defer the most of the costs until that time. Normally, you are required to make international filing decisions within one year of you first filing. The PCT allows you to defer the costs for an additional 18 months for a total of 30 months from your priority date. You can also defer deciding which countries you want to file in until the 18 month period has expired. The cost of the PCT is about $3,000 to $4,000. For this fee you also get a search. The search can help you decide the chances of getting patent the patent allowed.
If you are an individual entrepreneur and your strategy is to license, then a PCT application is a good idea – especially if you plan to license to larger companies that want global product lines. The PCT gives them the option to pursue international protection for your project in the counties important to them. This will make your patents more attractive to a perspective licensee.
As always, before making any international patenting decisions, it is best to discuss first with your patent attorney, as the facts and considerations in each case are different.