Does your company have foreign competitors? Business is global, but each patent—a weapon for market advantage—is an armament of one nation. Treaties notwithstanding, the power of a patent usually stops at the border.
In this article, I will discuss how to cover the globe with a minefield of patents, including where to start, how to obtain foreign filing licenses, and how to steer clear of export controls violations.
Before we jump into the fray, let it be acknowledged that patents are not for everyone. Not every invention warrants a patent application. Timing is important. So is purpose. See 4W’s of Patent: Who, What, Why, When.
Know when to hold ’em and when to fold ’em
It is one thing to file a patent application in one’s own country—a relatively minor investment for companies with substantial resources. The bet is that the technology will be profitable and that exclusive rights will be worth protecting.
As another year elapses from the first filing date, there will be another decision, hopefully more fully informed by market data, whether to file for international patent protection, typically under the PCT. This can help to “buy time” and keep the company’s options open, while deferring still larger investments and commitments.
As the calendar advances almost another 18 months—don’t wait until the last minute—the decision must be made whether and where to enter the “national phase.” Each selection of country or region can entail the outlay of significant fees and costs.
There is a saying, “Know when to hold ’em, know when to fold ’em.” See The Gambler, by Kenny Rogers. In other words, consider the cost/benefit at each stage before undertaking national, international, and foreign patent filings.
The quid pro quo of patents
Patents are available in most of the 196 countries of the world. 176 of those countries are parties to the Paris Convention. 148 are parties to the Patent Cooperation Treaty (PCT). These treaties make it easier to file international (PCT) and foreign patent applications.
Every nation that grants patents to inventors and employers expects something in return. In Latin—as popularized in law—this is the quid pro quo, literally, “this for that.”
Generally, each national patent system grants exclusive rights for a specified term, upon payment of fees and satisfaction of conditions, with the aim of encouraging full and prompt disclosure of the invention in order to advance the progress of technology and commerce.
Where industry and security intersect
Sometimes, when dealing with patentable technology, national security is implicated. Many of the world’s most powerful countries—including America—reserve the authority to clamp a secrecy order on technologies deemed to be vital to national security interests, i.e., valuable for military or defense purposes. That power wouldn’t be worth much unless the nation had the opportunity to review the technology before it is disclosed abroad. That’s where foreign filing licenses and export control laws come in.
Disclosure or national security?
There’s the tension: Encourage disclosure (usually) or prohibit it (in cases of national security). There are gates that must be passed, unknown and invisible to most people. Don’t be caught by surprise in a springing gate!
Prison sentences for illegally exporting technology
This is no joking matter. The little known but highly powerful Bureau of Industry and Security (“where industry and security intersect”), housed in the U.S. Department of Commerce, has imposed and published a long list of lengthy prison sentences for violation of export control laws. Some of the exports are goods: high grade carbon fiber to China, aerospace metals to Iran, chemical laboratory and web-monitoring equipment to Syria. Others are exports of technology itself.
It is a matter of public record that U.S. Army researchers sometimes invent such things as alloys of uranium, vanadium and yttrium. If you invent something like that, don’t send the alloy or the recipe abroad without U.S. government approval.
You don’t sell to arms dealers?
You say you don’t sell to arms dealers? You’re not out of the woods. Export controls violations don’t have to look like a Nicolas Cage movie.
For broad categories of technologies, it is prohibited to disclose inventions to foreign nationals or to file patent applications in foreign patent offices without an export control license or a foreign filing license, respectively.
If you deal in materials, or material processing, or computers, or electronics, or software, or GPS systems, or smartphones, you might be on thin ice. Apologies for mixing metaphors. If you sell or invent in these technical fields, you can run afoul of the law with such an innocuous step as sending the invention disclosure abroad for purposes of a prior art search or preparation of patent drawings.
Filing of a foreign patent application without a foreign filing license is illegal. Among other penalties, the U.S. government has the power under 35 USC 182 to abandon your patent application. Down the drain.
Foreign officials have expressed great interest in U.S. laws and procedures pertaining to secrecy orders. Shouldn’t you be concerned, too?
Business value of patents
Let’s return to the business proposition. In many countries, exclusive rights to proprietary technologies have real value, conveying market leadership, ability to command premium prices, and enjoyment of profitable margins.
At the same time, each national patent requires a substantial investment. There are fees and costs from preparation to filing to grant and beyond.
For a given invention, in how many countries—and which ones—do you want patent protection? That’s a hard question to answer, especially at the outset, when the technology is still untested in the marketplace. Fortunately, thanks to the Paris Convention, you don’t have to file in every country on Day 1. Instead, a first national filing can be made, and other national or international filings can follow within 12 months and still be entitled to the original filing or “priority” date. Under the Patent Cooperation Treaty (PCT), still further time, generally up to an additional 18 months, can be bought at a price.
In what country should you file for patent first?
You have to start somewhere. How do you select the country of first national filing?
I recently presented on this very topic, by popular demand, to the Illinois Paralegal Association (IPA). Several of the IPA attendees asked me to post my PowerPoint presentation, and I agreed, so here it is. Thanks to the IPA, attendees and readers for your interest.
U.S. companies often will file for patent first in the USPTO
For most American companies and most American inventions, the answer will be simple. If the invention is made in America by American inventors, the first filing will usually be in the U.S. Patent and Trademark Office, for two main reasons:
- The U.S. economy is the largest in the world, and a U.S. patent provides the biggest bang for the buck; and
- Filing in other countries requires a foreign filing license.
After filing a regular utility patent application in the USPTO, a popular strategy is file a PCT application within 12 months, and then (after the USPTO grants a foreign filing license) to enter the “national phase” in select countries within the next 18 months. Popular jurisdictions include the other four members of the IP5, namely, Europe (EPO), China (SIPO), Japan (JPO), and Korea (KIPO). The European Union (28 countries) may roll out a “unitary patent,” through the EPO, as early as next year. An EPO application also can provide the basis for a patent registration in other important non-EU countries such as Turkey. Canada is another popular jurisdiction, among others, for U.S. patent applicants.
Get 90% of the benefit at 10% of the cost
When the time comes to enter the national phase, the cost of filing for patent in all 148 PCT countries would be astronomical. You can get 90% of the benefit at 10% of the cost by narrowing your choices to the IP5.
Spoiler alert: Be careful with cross-border inventions, patent searches, and drafting
Complications can arise. Just as competition is global, so is cooperation. Inventions are often made through collaboration of international teams, sometimes working across borders. And other nations have their own requirements and restrictions.
Sometimes the laws of nations conflict: What do you do if the laws of two nations both require you to file in each country first? What if they both require you to seek a foreign filing license before you file or disclose to any other national patent office?
Be cautious about having prior art searches or drafting done in another country
Well-meaning people can run afoul of the law by sending sensitive invention disclosures abroad for prior art searches or preparation of patent drawings or applications. In many fields of technology, such acts could be interpreted as violations of U.S. export control laws. See Overview of U.S. Export Control System, published by U.S. Department of State.
Seek advice of counsel
Common sense and good intentions only go so far. Often it is necessary to research and apply the various applicable laws and to follow the proper procedures. This may and often does require advice of counsel.
Go forth and conquer
May you and your company prosper with a well-placed minefield of U.S. and foreign patents.