According to a report published by Dolcera Analytics of Hyderabad, India, in 2006 the total number of patent applications filed around the world was 1,764,633, representing a 4.9% increase over the previous year. While the U.S. Patent and Trademark Office holds the top position in filings for any country, Japanese inventors and corporations file the most patents globally. China’s output has shown an enormous increase, with over a 300% increase in patents filed in 2006 as compared with 2000.

The state of the economy has forced many corporations to re-think their Intellectual Property strategies, including patent filings. As companies consider international patent filing, they soon find that international patent protection can be a very expensive and lengthy process. We would like to provide some ideas to assist you in making decisions regarding the allocation of resources in considering this important aspect of your business.

What are the routes to international patent protection?

A U.S. patent can protect an invention only within the U.S. and its territories. There are three routes to seeking foreign patent protection that are available to U.S. applicants. All three must be established within one year of a related U.S. application. In this article, we’ll be discussing some of the mechanics and strategies of foreign patent filing.

The most direct method of foreign filing is to file a patent application in the respective patent offices of one or more countries or regions of interest. (A region includes multiple countries that are served by a single patent office – for example, the European Patent Office serves 38 countries.) In direct filings, a qualified patent attorney or agent authorized to practice in the target country/region must be retained, translations must be made as needed, and full government filing fees paid. This direct path of country-by-country filing must be taken if a target country is not a member of the organizations to be discussed in the following.

Another option is to enter an application into the international Patent Cooperation Treaty (PCT) system. The PCT route permits an applicant to retain a priority date (typically your U.S. filing date) while delaying entry into any one of 141 countries and regions for one relatively low government filing fee. By the end of 30 months, however, the applicant must decide in which countries to continue patent prosecution, and proceed as above for direct filing. Thus the PCT option offers the benefits of deferring both the large costs associated with individual country filings and also the decision as to which countries to enter for 2½ years, while retaining an earlier priority date.

Finally, a new option has become available, the so-called “patent prosecution highway” (PPH), in which an application having claims that is considered allowable in the original country of filing undergoes accelerated examination in other participating countries. The success of this system can be seen in the statistics: While 44% of U.S. applications are allowed, 95% of those entering through the PPH are allowed. The U.S. currently has agreements in place with, among others, Japan, the UK, Europe, and Australia.

What are the costs to file patents internationally?

Generally the costs involved in seeking foreign patent protection are considerably more than those in the U.S. For example, while the lifetime cost associated with a U.S. patent averages $25,000, in Europe you are likely to spend $150,00; in Japan, $75,000.

Even when one has a patent in hand, applicants must remember that the costs of asserting a patent may be even higher than those in the U.S., which average one million dollars, and that they may be conducting such litigation at a distance, and possibly against a native.

Who is the “applicant”?

In the U.S., patents are prosecuted in the name of the inventor, although an entity to whom the inventor assigns his/her rights can direct prosecution.
Internationally, the applicant is the owner of the invention. While the inventors are named as individuals, it is the assignee whose name appears as the applicant. Owing to such different practices, it is very important that an assignment to the corporation be in place in the U.S. prior to undertaking foreign filing to protect the priority date of the invention.

What are the timing issues?

While the U.S. is still a “first to invent” country, most others are “first to file,” meaning that the first applicant to file a patent application wins the race.
When must you file a patent application? The U.S. and Canada provide for a grace period of one year from public disclosure; in all other countries, any public activity or offer for sale can cause loss of patent rights. Therefore, we would typically encourage applicants to at least file a provisional patent application in the U.S. prior to any public or commercial activity to retain their rights to file internationally.

Who is applicant?

Once filed, the average pendency in most foreign countries far exceeds that in the U.S. It is not unusual, for example, for a case to be pending for 5-10 years in Europe.

What are some business considerations in making a foreign filing decision? Who can benefit from foreign patents?

Large, multi-national corporations with the potential for substantial sales in a given country; smaller corporations that have the potential to be an acquisition or licensing target; and corporations attempting to stop a competitor from manufacturing and/or from selling their invention in the given country.

What are the risks associated with failing to seek or obtain patent protection internationally?

Obviously the greatest risk is being copied by a competitor. However, if the cost of issuing a patent far outweighs the potential for profit in a given country, it might be wise to simply compete locally or abandon that market.

Another possible risk is to a start-up corporation hoping to license their invention. If a potential licensee has a significant presence in a country in which you have not obtained a patent, the value of your invention, and thus your licensing revenue, may be diminished.

Given the expense and time involved, an applicant should carefully consider whether it is worthwhile to seek foreign patent protection, and should ask at least the following questions:

• How important is this invention to the core business?
• For how long will the invention be saleable?
• What is the rationale for seeking patent protection?
• Carefully weighing the answers to these questions should assist in making an informed decision as to seeking international patent protection, thereby avoiding unwarranted expenditures while maximizing return on investment.

This article is not intended to provide specific legal advice, and is presented for informational purposes only. Please seek competent legal counsel to address any specific questions or concerns.