Many companies that develop technology find themselves considering patent protection in the US. But how about patent protection overseas? Where do you file a patent if a product is conceived in the US, manufactured in China, and sold in Japan? Turns out, the decision of whether to file a foreign patent application depends on the particular country requirements, the filing vehicle, and other factors.
Is it Patentable Overseas at all?
One of the first questions to ask must be is my invention patentable? In most countries, the requirements for a foreign patent application are similar to those of a US application, with the exception of public disclosure. Typically, to be patentable, an invention must be of a tangible subject matter, be novel, and contain an inventive step. Many foreign countries also require that the invention not be publicly disclosed before the filing date of the foreign patent application. This is a key difference from US law, which provides a one year grace period after a public disclosure of an invention. The foreign application “priority date” can be linked to an identical and earlier filed US application filing date in some circumstances, if the foreign application is filed within 12 months of the US application. So, applicants may be in luck if a public disclosure occurred before a foreign patent application filing but after a corresponding US application was filed.
Foreign Patent Application Filing Vehicles – Costs vs. Time
There are options for filing a patent application, with major differences being when costs are due and the timeline of examination. A foreign patent application may be filed directly in a particular country or through the Patent Cooperation Treaty (i.e., PCT application). A directly filed patent application has the potential to be examined and allowed more quickly, but invokes higher costs earlier on in the process. A PCT application, on the other hand, provides for examination to be conducted later on, may be nationalized into multiple countries, and allows for payment of the nationalization fees at least a year or two after the PCT application filing.
Key Questions – Important Factors to Consider
Though the idea of foreign patent protection may be attractive, it may not be suitable for every invention. You should consider several factors when determining whether or not to file foreign patent protection. For example, is the revenue tied to the product to be patented large enough to cover the cost of an infringement lawsuit? A patent infringement lawsuit in the US can cost between two hundred thousand dollars and two million dollars. Patent litigation is not called “The Game of Kings” for nothing. Foreign patent infringement cases will cost a US company even more. Before filing for patent protection, you should consider whether there is enough revenue tied to the patented product to defend an infringement lawsuit if needed.
Another factor to consider is whether the potentially patented product has manufacturing or other business ties to a particular country. Are parts of the product manufactured or developed in a particular foreign country? Have you granted another company an exclusive right to sell or develop the product in a foreign country? To keep manufacturers and business partners honest, patent protection should be considered in the countries in which they operate.
For start-ups, part of the exit plan is often to be acquired. You can greatly increase your company value if you obtain patent protection in a country that a potential acquirer exists in or operates in. For example, if you hope to be acquired by a company that exists in Japan, or does considerable business in Japan, owning a patent for your innovations in Japan will make your company more attractive to that acquiring company.
The Bottom line
Filing for patent protection in foreign countries is an important and strategic decision for companies with overseas business. There is no blackline rule to follow. A successful IP plan will include a foreign patent strategy that is determined from foreign patent application requirements, a carefully selected filing strategy, and consideration of the revenue, ties of the innovation to a particular country, and, for start-ups, your exit strategy.