Where should you enter the national stage?
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Where should you enter the national stage?

You know the story. About 18 months ago you filed a PCT application designating over 140 countries and regions. Now the national stage deadlines are fast approaching and you need to make a decision about which countries and regions should be kept alive by entering the national stage. Going into all 140-odd countries would be nice, but even Bill Gates couldn’t afford to do that, so which ones should you choose?

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We are constantly surprised that, even by this stage, many applicants haven’t given much thought about what they are hoping to achieve with their patent application. We’re even more surprised that applicants ask advice from someone (ie, us!) who doesn’t know their business, their technology or their market, about which countries they should choose. Unfortunately, we can’t give them specific advice, but we can point out a few factors they should be thinking about when making a decision.

“To Market, to Market…”

It seems obvious, but the first question an applicant should ask is “Where are my main markets?” For consumer goods, applicants might want to consider covering their local country (if they don’t already have an application on foot there), and then any other jurisdictions where they already make sales. For general consumer goods, the US is usually a good addition – for many products a US patent gives good bang for the bucks spent.

Applicants that manufacture and sell, say, mining equipment should be looking at where that equipment will be used; if there’s no iron-ore mining going on in the US at the moment, there’s little use in getting patent protection for an iron-ore testing rig there, even if it is the world’s largest (general) consumer market. In short, applicants should look at where their products will sell, not where products in general sell.

Also, more emphasis should be placed on those markets with the potential for growth – such as China or Brazil – and bearing in mind that patents last 20 years from filing in most countries, potential for growth should be considered from a long term perspective, not just what might happen in the next financial year or two.

Similarly, we often find applicants wondering about the worth of protection in countries like China or India, due to concerns about the strength of IP law in those countries. Our suggestion is look at how far China has come in IP law terms in the last 10 years, and try to imagine where it might be in another 10 (at which time a patent entering the national phase now will still have 8-10 years to run). Then look at the growth of the consumer market there over the same period and try guessing where that might be in 10 years. Looking at the drastic positive change in both market size and the effectiveness of IP law, the long-term picture for some applicants can make countries like China, India and Korea essential.

Competition

Where are the applicant’s competitors operating? Particularly in high-tech and fast-moving fields, markets are far from established, and you may not yet be competing directly with your competitors in some markets. Don’t wait until you’re both there slugging it out to consider extending patent protection into that jurisdiction.

Also, it may pay you to consider covering at least some of your competitor’s more important markets to give yourself some leverage. For example, one of our clients’ major competitors is based in Austria, and has a particularly strong market presence in that country. They consider Austria a special case because of this. For less important inventions that might not be worth the cost of a European application, they file in Austria anyway to give them extra leverage in this market where their competitor is particularly strong. It’s a nice ace to have up your sleeve if you one day find yourself negotiating a cross-licence with that competitor!

Think about the countries where your competitors are (and are operating) and determine whether there is long-term advantage in giving yourself some leverage there, even if you aren’t considering taking them on there yet.

“If you build it…”

We’re sometimes surprised by how often applicants say they’re filing in a particular country simply because that’s where they intend to manufacture the product. If money is no object, there’s nothing wrong with this approach. However, unless there is something special about that country’s manufacturing sector that makes it likely a competitor would need to get a particular product manufactured there, applicants should consider whether this money might be better spent protecting markets where the product will actually be sold. A competitor choosing to manufacture in Korea rather than China is a trivially easy way to avoid a Chinese patent, for example.

The Snowflake Principle

No two inventions are the same, and different patent applications may have different importance to your business. It may not make sense to your business to always proceed in the same combination of countries with all applications. Perhaps your budget would better be spent by getting wide coverage for important inventions, and lesser coverage for inventions that are less central to your business.

Conclusion

These are just some of the many factors that should be considered when choosing where to enter the national stage. Applicants should remember that getting a patent should always be a business decision. No-one knows your business like you do, so try to spend some time thinking about where your business is now and where it might be in the future, and what this particular product means and might come to mean to your business. You can then make a decision about where to enter the national stage based on sound commercial principles.

If you’re curious where other inovia clients are filing, you can take a look at our list of top national stage countries for 2012.

Know the cost of filing

When deciding where to file, it is very important to consider the costs involved. Europe, for example, has very high government fees compared to other jurisdictions. Fortunately you can use inovia’s 1-click quote tool to estimate the cost of PCT national stage entry upfront. Simply enter your PCT number and select the specific countries you are considering and the tool will present accurate agent, government and translation costs for each country, tailored to your specification.


Justin Simpson
is an Australian Patent Attorney and inovia’s founder.

 

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