Monday, December 19, 2011

Foreign Patenting: Ways to Save Money

A US patent only protects the invention in the US and will not stop infringement abroad. Thus, a foreign patent is required in each country where patent protection is desired. However, it is expensive to file applications in all countries where the invention may be infringed. I want to discuss some ways of protecting the invention abroad without wasting money. 

Companies and startups in particular should not feel compelled to foreign file everywhere. It may be better for a company with a constrained patent budget to focus where it has current and expects future sales. Manufacturing a patented invention without permission may serve as a basis for infringement, but competitors may readily change a manufacturing site. It's much more difficult to change where the invention is sold or used. For example, a startup having US sales of 40%, European sales of 20%, China sales of 15%, Russian sales of 10%,  and 15% in the rest of the world may decide to seek patents in the US, Europe, China, and Russia, and ignore the rest. This "patent where you have sales" should be tempered by an assessment of the commercial value of the invention. The more important the invention is to a company, the more far reaching should be the patent effort, and vice-versa. Although far from a comprehensive study, my review of several Fortune 100 companies revealed even those with great financial resources were selective on foreign filing. Thus, a company might file only one application in the EPO for every five times it filed in the US.

I think that people are starting to analyze the cost of EP filings correctly over the long term. The EPO likes to stress the European countries can be processed as a single application in the European Patent Office, but you must look at the total cost of the entire process including after an EP patent issues. The cost reduction of that single application ends after the application is accepted as patentable. At that stage one must engage a foreign associate to pay the grant fee, file a translation, handle formalities, and pay fees sometimes annually in each country designated in the application. The entire cost can be substantial, e.g., $80,000, to cover major EP countries from the filing date to end of the patent term. 

The other point is the costs of foreign filing have a wide range. For example, each filing in Canada, China, Hong Kong, Singapore, or Taiwan may be $3,000-$4,000, while filing a single application in Europe, Japan, or South Korea may be $6,000 - $8,000. These are ball park figures to illustrate relative costs. For actual costs I suggest one contact a foreign associate in the country of interest close to the foreign filing date.  

One more thing, although one can file directly in each foreign country, it may be less expensive to first file a PCT application designating all foreign countries of interest for about $4,000, which permits you to extend the 12-month foreign filing deadline and attendant filing expenses another 18 months until a company can better assess the commercial value of the technology. It typically saves money by giving a larger window to determine if the foreign applications are worth it. Finally, any disclosure of the invention that occurs before the US filing date may bar foreign patent protection depending on the facts, which should be considered carefully with foreign counsel at the outset. 

Copyright © 2011 Robert Moll. All rights reserved.