CHOOSING IN WHICH COUNTRIES TO FILE PATENT APPLICATIONS: A COST-BENEFIT ANALYSIS
Patents are national rights that give the owner the opportunity to prevent others from exploiting the patented invention in the relevant country for the limited period in which the patent is valid. There is no worldwide patent. This means at some point patent applicants will need to decide in which countries to file and prosecute patent applications or make patents effective. Typical examples of this are converting International (also known as PCT) applications into national or regional applications or validating European patents in the different designated (and potentially extension) states.
The process of deciding in which countries to proceed involves a classic cost-benefit analysis. However, it’s by no means straightforward with several considerations, especially in relation to the benefit, and there is rarely a one-size fits all approach. We set out below the key issues and provide some examples of considerations you may face. Greaves Brewster is fortunate to have several patent attorneys with previous industry experience who are adept at considering this question and would be happy to help and guide you through the process.
The two key cost elements to consider are complexity and monetary cost, and the two are interlinked.
As mentioned above, patents are national rights, and each country tends to have its own rules when it comes to patentability, patent prosecution and patent enforceability. This means it’s essential to retain the services of local patent attorneys in each country of interest who specialise in handling patent prosecution according to the local rules. It’s extremely difficult for a single patent attorney to be an expert in all countries, but an attorney with extensive experience of handling portfolios of cases across multiple jurisdictions can help you. Interacting with multiple local patent attorneys and dealing with all the different laws adds to the complexity of patent prosecution. Having multiple granted patents in different countries also requires you and your advisor to monitor them all and ensure the relevant fees (see below) are paid on time.
Patent applications and granted patents are expensive. First, there are patent office fees that need to be paid when filing and prosecuting patent applications and granting allowed patents. Second, there are local patent attorney fees for handling the applications and patents. These can be high, especially when the text of the application or prosecution arguments need to be translated into the local language. Third, all the major countries charge annual maintenance fees (also called annuities or renewal fees) for keeping granted patents in force.
The more patent applications you file, and the more patents are granted, the greater the complexity and the greater the cost.
The cost set out above needs to be weighed against the potential benefit of multiple patents in different countries, and this is where it gets a bit more complicated. There are several issues to consider when deciding where it’s worthwhile filing patent applications.
You, your collaborators, and your competitors
Patents are negative rights in the sense that they allow you to stop third parties from exploiting your patented invention. It’s therefore essential in the benefit analysis to consider in which countries your competitors are conducting their activities (especially manufacturing and selling products or providing services).
Nevertheless, it’s also important to consider in which countries you and your collaborators (existing or potential) have activities. A key concern of your Board of Directors and your shareholders is that your products or services are protected by intellectual property, including patents, in those countries where you operate. Similarly, potential investors, collaborators, licensees, or acquirers will want assurance that you have patent protection in their countries of interest, and you/they can stop competitors from using your patented invention in those countries. It’s therefore important to consider the value of the different countries of interest to you, your collaborators (current or future), and your competitors.
Population and economics
A simple way of considering the value of a particular country is by its population and its economy (especially Gross Domestic Product, GDP). This information is freely available on the internet (e.g., https://www.worldometers.info/world-population/population-by-country/ and https://www.investopedia.com/insights/worlds-top-economies/). Countries with a large population and a booming economy are not only attractive locations for you, your collaborators, and your competitors (known and unknown) to do business but are also hotbeds of innovation. It may therefore be important for you to have patent protection in these countries to prevent others from exploiting your patented invention.
On this basis, the US, China, Japan, and Europe are counties/regions where we often see patent applications being filed. India is also becoming more attractive because it currently ranks in the top five of both population and economy.
Manufacturing and supply chain
It’s important to note that patents not only allow you to prevent third parties from using and selling your patented invention but also allow you to prevent them from making and importing it. You should therefore consider where you, your collaborators, and your competitors have manufacturing plants and supply chain facilities and potentially file patent applications in those countries. Despite having smaller populations and economies, some countries, such as the Netherlands and Singapore, tend to punch above their weight in terms of importance because they have some of the world’s biggest ports and so will likely see the import of most goods.
Different countries specialise in different technologies, and so it may be worth looking at countries where your invention is most likely to be made or used. For instance, Southeast Asian Countries, such as China, Vietnam, Japan, and South Korea, historically manufacture a wide range of consumer electronics. If your invention relates to facilitating open heart surgery, you should identify the countries where the hospitals specialising in heart operations are located and in which countries most of those surgeries take place.
Although you may wish to file patent applications in a certain country based on the considerations above, it’s also worth considering the nature of your invention and whether it can be patented in the relevant country. As mentioned above, the patent laws differ between countries, and some countries choose to prevent people from getting patent protection for certain types of inventions. Information about patentability can be found on the websites of most patent offices, but it’s important to get the expert opinion of a local patent attorney if there’s a question over patentability (also known as patent eligibility).
Patent eligibility is a hot topic at the moment in the US. Several decisions from the US Supreme Court have cast doubt on the patent eligibility of software, business methods and naturally occurring products. Although India is attractive in terms of its population and economy, its law is problematic for biotech or life sciences inventions because it excludes from patentability plants, animals, and parts of them both. There are similar examples of exclusions in other countries.
Even if it’s possible to get a patent granted in a specific country, it’s also important to consider whether that patent can be enforced against third parties in the country’s courts. A patent may be considered worthless if you can’t use it to stop the activities of your competitors.
Historically, China and India have reputations as countries where it’s difficult to enforce patents. However, the situation is changing in many countries, and up-to-date information can be obtained from local patent attorneys and others sources (e.g., https://www.sciencedirect.com/science/article/pii/S1090951620300201).
If you’re a pharmaceutical company, there are some additional considerations when it comes to the benefit analysis. Information about a country’s health economy (including health systems governance and financing) can be found online (e.g., https://www.who.int/teams/health-systems-governance-and-financing/economic-analysis), and this may paint a different picture from the country’s overall economy (or GDP).
It’s also worth considering where clinical trials are being conducted in the field of the invention. Those countries which allow and conduct clinical trials in relation to specific therapies often have the willingness and infrastructure to quickly adopt the commercial use of those therapies. For instance, for companies inventing new CAR-T cells, it’s worth looking at which countries in which cell therapy clinical trials are being conducted because CAR-T cells will likely be commercialised in those countries first.
Although some countries and regions, such as China and Europe, have exclusions around patenting medical methods, there are normally ways around this exclusion so medical inventions can be protected. Again, local patent attorneys can provide advice on this.
Under the European Patent Convention (EPC), a single European patent application can be prosecuted at the European Patent Office (EPO). It’s necessary after grant of the European patent to validate the patent (i.e., make it effective) in the countries of interest, and the European patent effectively unbundles to form a collection of national patents. This of course involves choosing in which countries to validate.
Most of the issues discussed above also apply to the validation process. Although validation is much less complex than prosecution, it does require you to choose local agents, pay multiple fees, and prepare and file translations in some countries. All the granted national patents attract yearly maintenance fees. It’s therefore important to conduct a thorough benefit analysis of the European countries using the considerations set out above when choosing where to validate. As European patent attorneys, Greaves Brewster have particular expertise in this area.
If you have any questions about the comments above or would like additional advice, please feel free to get in contact.