A question that patent attorneys often receive from clients who are relatively new to international patent filing procedures is “where outside of the U.S. should I file my patent application?” While the attorney typically can’t provide the answer — each client must choose the countries that make sense for its business — the attorney can help lead the client to the answer that’s right for them by asking a few key questions. Here are key factors that I typically ask clients to consider when deciding where to apply for patent rights outside of the U.S:
What is the cost in each country?
The budget is always going to be a very important factor. After the U.S. patent application is filed, international filing costs typically vary from about $2,000 to $8,000 per country. Costs of prosecution and maintenance can raise the cost to $20,000 or more per country over the life of the patent.
Since 148 countries are currently parties to the Patent Cooperation Treaty, international filing costs can add up very quickly. Patent applicants should balance the cost of filing in each country against the benefits of filing or losses that can result from not filing (more on that below) and select countries where the costs are justified.
Where are your customers?
A key reason to apply for patent protection is to protect market share for a product or service. Any country where the market is likely to be significant — or at least a substantial multiple of the patent cost — is a candidate for patent protection.
However, patent applicants should balance market size against the practical realities of market opportunities. China and India are by far the world’s largest markets, but unless a company has the connections, expertise and resources to break into the Chinese or Indian market, a patent filing may be wasted in those countries.
In addition, in some cases one or two countries may be sufficient to protect the lion’s share of the market in a particular region. For example, if 80% of a company’s South American sales occur in two South American countries, then filing in those two countries may be sufficient to deter others from trying to capture your South American market.
Where are your competitors?
This question may yield the same answer as the “where are my customers” question. However, a patent provides exclusive rights to make, use and sell an invention. Often, a product may have a large market in one country, but manufacturing may occur in another country where costs are lower. Filing in countries where key competitors have their manufacturing operations can help you stop infringement at its source.
Where are your suppliers?
If you are contracting your manufacturing to an overseas supplier, you will be teaching that supplier exactly how to make your product. The supplier and its personnel will gain expertise, and perhaps even have tooling in place that is especially suitable for the product. If your relationship with the supplier sours, a patent can help you ensure that the supplier won’t continue to supply your product or service to others without you.
Where might I set up a regional operation in the future?
Enforcement efforts are often more successful for businesses with “boots on the ground” (and eyes and ears, too) in a country. If you are planning a regional office in a location, then it can be valuable to have patents in that location because your local representatives can help you yield results from those patents.
Are there any country-specific laws to consider?
Finally, a handful of countries have laws can affect a patent filing decision. For example, countries such as India have imposed compulsory licensing requirements on certain drug patents. While the licensing requirements can still result in royalties, these laws change the economics and need to be considered. As another example, Europe generally frowns on software patents, although devices and systems that perform certain processes often can be patented in Europe.