Global Patent Power On a Budget: Where in the World to File
by Robert H. Johnston III and Megan Oursler
The reality of a global marketplace is expanding and international patent protection is becoming an increasingly important part of a company’s overall business strategy. Unfortunately, no single global patent presently exists. Patents remain territorial and must be secured in each country. Yet only the wealthiest companies can afford an each-and-every-country filing strategy. Consider that filing a simple, 15-page application in 140 countries is estimated to cost more than $1.3 million. As a result, most companies need a tailored international patent strategy to obtain sufficient global patent power on a budget. Developing such a strategy involves both business and legal considerations.
In developing an international patent strategy, companies should consider three central business considerations: (1) the company’s business model, (2) business goals, and (3) budgetary constraints. The business model outlines the products, manufacturing sites, and locus of sales activities. At a minimum, most companies consider filing in countries where sales and manufacturing occur. The company’s goals for its patent portfolio—whether for defense, offense, or to support alliances—impacts the strategy as well. The location of any competitors should also be considered. Finally, the company’s budget in the near term and over the coming years is an obvious limiting factor to be considered.
As these factors are considered, most companies use tactics to delay expenses and decisions as long as possible. Additional time allows a company to assess more accurately the technology from a business and legal perspective. A number of tools are used to delay expenses and decisions. The two most notable are the Paris Convention and the Patent Cooperation Treaty (PCT). The Paris Convention allows patent applicants to delay up to a year after filing an original application before filing counterpart applications in member countries. On the other hand, the PCT allows companies to delay country-by-country filings further by filing a single placeholder application that may be used in any of the 144 member jurisdictions in due course. The PCT receiving office also conducts a patent search. The search results help companies assess the merits of the invention before taking the application to specific patent offices around the world.
After delaying as long as possible, companies make their final decisions and enter patent prosecution in selected jurisdictions—countries or regions such as the European Patent Office (EPO). The expense and effort required in each location are factors in arriving at the final list of jurisdictions. Attempts over the last 40 years to harmonize patent laws have made patent prosecution more uniform worldwide. Harmonization was one force behind the Leahy-Smith America Invents Act that passed earlier this year.
In addition, efforts around the world continue to make the processes more efficient. For example, the recent London Agreement under European practice has eliminated the need to translate English applications into other languages before validating a European Patent in many non-English-speaking countries. European patent attorney Tim Ashton, of Forresters in the UK, believes this is one of the most important developments: “I think the London Agreement is the most important change on a cost point of view that we have had in the European Patent system since its conception.”
In addition to upfront considerations, companies must also consider enforcement. While patent protection in a particular country may sound desirable for business reasons, the challenges related to enforcing the patent may render the patent meaningless. The added expense of needing U.S. and foreign counsel, translation fees, and travel can make foreign patent litigation extremely expensive. Moreover, some countries simply do not have a legal system capable of enforcing patent rights. A number of related non-legal factors should also be considered. For example, the stability of the government and whether the country has a history of bias, corruption, or unfairness are relevant considerations.
All these factors make a one-size-fits-all strategy all but impossible. Accordingly, different companies develop different strategies even when in similar situations. In practice, some companies opt for a simple approach of filing in the U.S. and the “BRIC” countries (Brazil, Russia, India and China). Others carefully consider each invention in view of the previously-presented factors and custom tailor a strategy for the invention. Some companies develop several standard strategies, e.g., Tier 1, Tier 2, and Tier 3, and embrace one of the strategies based on the perceived importance of the invention. Some companies—typically start-up companies—simply mimic the filing patterns of established competitors. Still others focus on only controlling a few key jurisdictions, such as home country, main competitor’s country, and the two largest market countries. In this regard, a recent survey of U.S. companies resulted in the following ranking of jurisdictions as most important to an international IP strategy: Europe, China, Japan, India, Korea, Brazil and Russia.
Meaningful global patent protection can be obtained on a limited budget. The business and legal considerations must be considered in view of the various tools available. While there is no one-size-fits-all approach, an effective strategy can be carefully tailored to meet the company’s objectives.
Bob Johnston is a registered patent attorney with over 18 years’ experience handling intellectual property matters. He can be reached at Robert.Johnston@snrdenton.com. Megan Oursler is a registered patent attorney who has studied patent law abroad. She can be reached at email@example.com. Both practice with SNR Denton US LLP.