Start-Up’s Primer On International Patent Protection

An Article in Schott, P.C.’s IP Law For Start-ups Series
By Stephen B. Schott

The innovative start-up looking to protect its market and increase its value will often file for patent protection. But when making the decision to seek patent protection, it will quickly face a second question: Should the start-up file for international patent protection?

There are a few things that start-ups should know about international patent protection:

1. Patents are territorial. Patents give protection within the country that grants them. A US patent grants the right to exclude others from making, using, and selling infringing goods within the United States. It grants no rights in Canada or Japan.

1a. US Patents do have an extra-territorial property. A US patent includes the right to prevent others from importing goods into the United States. If an infringer produces a product that falls within a patent’s claim scope in Taiwan, for example, you can’t sue them for infringement in Taiwan. But if they try to import their product into the United States, you can sue them in federal court, or if your only goal is to block the product’s importation, in a special court at the US International Trade Commission.

2. There is no such thing as an international patent but there is such a thing as an international patent application. (But see #4 below regarding the European Unitary Patent.) 148 countries,  including all the countries where a start-up might want to file a patent application except Taiwan, are signatories to the Patent Cooperation Treaty (PCT), which accepts PCT patent applications. A PCT application in most ways is the same as a US application, and within 30 months of its filing,* an applicant can transition the PCT application into individual countries, including the US.

The transition to individual countries, or national phase as its called, enters the PCT application as its own application in the individual countries. If you do this, you have to then pay filing fees for every country that you enter, usually at a slightly discounted rate. Thus, the national phase costs can add up quickly if you are entering multiple countries.

The PCT application never in itself matures into a patent. It undergoes a formality and patentability review but even if the conclusion of that review is that the claims are novel and inventive, it is up to individual countries to decide the application’s patentability based on their independent review, which may differ from the PCT receiving office’s conclusion.

3. A PCT application is a good way to delay the high cost of filing in individual countries. Because it’s so expensive to enter individual countries, filing a PCT application is a convenient way to put off the decision to file in those countries for 30 months while you develop your business. At the end of the 30 months, you may have success in certain countries and only file in them. Or you may only want to pursue your domestic rights and take no action. Or you might want to file all over the world. The PCT preserves all of those options for 30 months.

4. In Europe, you can get a European patent. Europe has its own European Patent Office(EPO) and a patent granted therefrom can be validated (become enforceable) in countries that have signed on to the treaty that governs it. Each validation costs money and must be accompanied by an appropriate translation but there is a large savings in that only one organization, the EPO, reviews the application for patentability.

A European Unitary Patent, coming in 2015, will grant patent rights throughout almost all European countries and will require no validation fees.

5. If you get a patent in the US and nowhere else, it’s not the end of the world. Your start-up will be ineligible for a patent monopoly in those other countries and your company’s net worth will be less, but in terms of what happens in those other countries, you’re now just a player in the market. And yes, your competitors can copy your idea in those countries and sell it under their own brand names.

6. The costs for filing internationally can be prohibitive to a start-up. Filing a PCT application, based on an already-prepared US application, can cost $4-5,000, mostly in governmental fees. For each individual country you enter, the costs vary but will be between $2,000-$5,000 per country. As you start prosecuting the patents and paying eventual grant fees, those costs will multiply depending on the number of countries you entered. To secure 10 international patents can easily cost $100,000.

Filing for international patent protection is a business decision based on:

1. Where your future market will be;
2. How much money you have to spend; and
3. How much value you want to add to your company.

*The full rule is more complicated and the deadline for filing is actually measured from the earliest priority date claimed in the application.

If you have questions, contact me.
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