Startups Shouldn’t Ignore International Patent Protection

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Editor’s Note: The following is a guest post by Jeffrey Shieh, a senior patent attorney at patent filing provider inovia. I (Alexia) actually completely disagree with him here. Oh well — I should probably just write a post about it.  Yay TechCrunch!

The tech giants are clearly at patent war – Nokia vs. Google, Apple’s lawsuits in China, and Facebook vs. Yahoo!, etc. And international patent protection is clearly a vital part of both these companies’ defensive and offensive competitive strategies. However, not much is said about how international patent protection does or should factor into the business strategies of startups.  But we know that for many startups, their innovations are the lifeblood of their company.  As such, it is vital for these companies to protect their innovations from competitors by securing intellectual property rights.

Patenting 101

The first place to start is by applying for a domestic patent.  A patent gives the holder an exclusive right to an invention for a set period of time.  Patents are country-specific and are limited to the borders of the issuing country.  For example, a U.S. patent does nothing to prevent infringement in any other country.  This is why it is imperative for startups to also seek as much international patent protection as their budgets can allow.

Unfortunately, foreign patent protection can be quite expensive.  Depending on the size and complexity of the application, the need for translations, and the country or countries an applicant chooses to file into, the lifetime costs for a single application can reach the tens, if not hundreds, of thousands of dollars.

However, international patent protection is not something that startups can afford to ignore.  After filing for U.S. patent, there is a limited timeframe available for applying for international patent protection.  So while a startup may only be operating in the U.S. today, if there’s a chance that they may be manufacturing in Asia, selling in Europe, or competing with a company in Australia in the future, they must act now to capitalize on that protection.  After all, once the timeframe for applying for international patent protection lapses, the applicant could be precluded from receiving a patent for their own invention.  Therefore, startups can’t delay filing and risk losing their IP just to receive some short term cost savings.

Cost Saving Strategies

With these challenges in mind, there are several best practices that startups can employ in order to help guide their foreign patent strategy and obtain broader patent protection, while minimizing costs.

First, you can file a PCT application instead of filing direct via the Paris convention.  If you think you will be filing into more than just 1 or 2 countries, the PCT is a more cost-effective route.  The PCT also offers the advantage of delaying national stage filing costs by at least 18 months from filing your PCT application.  Many applicants use this time to refine the invention, research their markets, and look for licensees or buyers.  If you’d like more information on the PCT process, my company inovia offers a helpful guide on the PCT process, which you can download here.

Second, you should select your countries intelligently.  Not only do you need to know your invention, you need to know where it will potentially be sold and where it can be made in the future.  With this information, you can prioritize the countries you need to file into.  Additionally, you need to know if a country has patent laws affecting your technology.  For example, some countries prohibit the patenting of methods of treatment on human or animal subjects.  Other countries make it very difficult to patent business methods or software.  For these jurisdictions, you may need to draft your claims specifically to overcome these obstacles.

Third, you should ace the patent application process.  I certainly wouldn’t expect a startup to know every detail involved with foreign filing, but by having a basic background understanding of the process, you can reduce your filing costs.  Knowing when deadlines are approaching and making sure to provide instructions in advance will help you avoid taking unnecessary time extensions or incurring rush charges.  Also, some jurisdictions (with Europe as the primary example) charge excess claims fees for each claim included in your application over a certain number.  If you are able to reduce your claims, you can avoid or reduce these fees.

Finally, you should explore your options for either bringing IP tasks in house or outsourcing them.  Depending on the amount of work you have in your patent portfolio, it may be more cost effective to pay the salary for an in-house patent attorney, rather than retain outside counsel.  Outsourcing certain services, such as foreign filing or annuity payments, can also be an easy way to reduce your legal fees.

Make sure to research your options for foreign filing and run cost comparisons.  Many steps of the foreign filing process, such as PCT national stage filing and European validation, are largely administrative and can easily be outsourced for a lower cost.  Specialist foreign filing providers, as opposed to working with your U.S. counsel to file internationally, can often offer time and cost savings.

Case Study

As I mentioned above, outsourcing administrative steps of the patent process, such as PCT national stage filing, is an effective way of reducing patent costs without affecting your relationship with outside counsel who would still handle the substantive work later on.

I head up inovia’s “Small Business Solutions Team,” which works exclusively with inventors and startups to help educate them on the foreign filing process, and I had the opportunity to work with a tech start-up focusing on holography for use in medicine, entertainment and advertising.  They were seeking broad protection into seven countries.  The startup did their due diligence and compared inovia’s pricing to estimates from their outside counsel and found inovia’s pricing to be significantly lower.

I can’t comment on whether this startup would have been able to file into all seven countries had they chosen to work with their U.S. counsel, but if they were constrained by their budget, then there’s a chance that they may have forgone vital international protection in order to cut costs.

The message here is simple: startups, while strapped for cash, must think long term and protect the future of their business by securing both domestic and international patent protection. By employing a few simple best practices, they can maximize their patent protection, while minimizing costs.

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