inovia's Foreign Filing Blog

Eastern Migration: Patent Filing and Protection in China

As one of the largest filers of PCT national stage applications in the world, inovia often observes firsthand global trends occurring in the foreign filing industry. One noteworthy development in the past decade is the emergence of China as both a major source and destination for patent applications. For instance, China was the top national stage entry country in 2009 among our clients, surpassing Europe for the first time in our history.

 

Why File in China?

This is a common question we field from our clients. After all, applicants have historically associated China (and by extention perhaps other BRIC countries) with lax IP law enforcement, and many wonder whether patent protection there is worth the expense of its pursuit.

To aid in changing this global perception, China passed the Third Amendment to Chinese Patent law, effective October 1, 2009. The Third Amendment significantly strengthens protection of patent rights, including increasing infringement penalties, granting officials the authority to conduct investigations and patent infringement raids, and establishing an evidence preservation system. These new laws, along with the recognition of China as a commercial and industrial behemoth, help explain the surge of applicants seeking patent protection in China, even during these troubling economic times.

 

Increased Patent Applications Originating from China

Increased awareness of the need for IP protection and an environment fostering innovation will also designate China as a leading source of patent applications. In 2008, the top PCT patent filer worldwide was Huawei Technologies, a Chinese telecommunications company, with 1,737 applications. The next year, they were surpassed by another Chinese telecommunications manufacturer, ZTE Corporation, which filed 1,164 applications. Coincidentally, the one millionth PCT application was one filed by a Chinese corporation.  Needless to say, we expect China's PCT momentum will only continue for the coming years.

“What countries does Europe cover?”

We get this question fairly often.

Sometimes clients (even experienced patent attorneys) make the mistake of assuming the EPO is simply the patent office that caters to the countries of "Europe". It's actually a bit more complicated than that.

Without any additional context, the word "Europe" is generally used as shorthand for the European Union (the "EU"). The EU is a group of 27 member states that form a political and economic union with limited powers delegated to a central European parliament.

However, "Europe" for the purposes of patents is different. The member states of the European Patent Convention (the "EPC") include a number of countries that aren't members of the EU, such as Switzerland and Turkey.

Further complicating things is the fact that new countries are periodically added, either as full members of the EPC, or indirectly by becoming an extension state (extension states will be explained in another posting).

Simply looking up the list of EPO Member States on the EPO's website can potentially be misleading. This is because (for a PCT application) whether a particular country is covered by a European regional phase filing is based on the International Filing Date rather than when the regional phase is entered.

Interestingly, the Norwegian patent office experienced an unexpected fall-off in national phase filings immediately after 1 January 2008 when it became a member state of the EPC. Maybe it was the financial crisis that was in full swing by that time, but it's also possible some applicants made an incorrect assumption about Norway being included in all European regional phase filings after 1 January 2008.

So, what's the easiest way to determine whether a particular country will be included in a European regional phase application from a particular PCT application?

Look at the PCT bibliographic cover sheet, and find the field headed "(84) Designated States". After the word European, there is a bracketed list of country codes. This is the list of countries that will be covered by a European filing coming from this PCT application. If you don't already know it, look up the country code for the country of interest, and see whether it's in that list.

 

5 Reasons to file in New Zealand

(This is the first of a series of posts about particular countries.)

Five good reasons for filing a New Zealand Patent application:

1. New Zealand is a relatively inexpensive country in which to get patent protection.

2. The New Zealand Patent Office provides fast, good quality examination. You can often use what you learn during New Zealand examination in other countries.

3. The New Zealand market is an ideal testing ground for new products and services. New Zealand consumers are sophisticated, well-educated, and relatively affluent - and readily accepting of new products and services.

4. New Zealand IP rights are robust. They are predictable and can be enforced at considerably lower cost than in many other markets.

5. Once a patent application is allowed by an examiner (and providing no opposition is filed), the grant process is quick, simple and cheap.

Thanks to Ian Cockburn at PIPERS, our agent in New Zealand, for this information; you can reach him online at icockburn@piperpat.com.

Using the PCT - That's more expensive, isn't it?

In theory, PCT application fees should make the PCT route to foreign patent filing more expensive (overall) than direct Paris Convention filings. However, reality isn't always that simple.

First, the additional 18 months the PCT buys allow better assessment of an invention's likely commercial value.

Second, the International Search Report (ISR) issued during this period often provides a reasonable indication of prior art that will be faced during national phase examination.

Via these advantages, the PCT enables applicants to dynamically adjust the average cost per filing in a way that direct Paris Convention filings simply don't allow. For example, PCT applications for inventions of low commercial value can be allowed to lapse, or national phase can be entered in fewer countries. Higher value applications can be filed more broadly.

Finally, if you can keep national phase entry costs low enough (get a free cost estimate via our PCT calculator), the PCT route can be cheaper overall even without taking these factors into account.

Maybe applicants should consider whether they can afford not to use the PCT!

Top national stage countries for 2009, by industry

In this earlier blog post, we ranked our top countries for 2009.  We've also broken down the top countries by the Industry type of our client base.  The rankings come out as follows:

Mechanical / Engineering:

1. Brazil

2. Europe

3. China

4. Australia, USA

 

Electrical / Electronics:

1. China, Japan

2. Korea

3. India

4. Australia

 

Pharma / Biotech:

1. Europe, Japan

2. Australia

3. Canada

4. India

 

Chemicals / Materials:

1. China, Europe

2. Canada

3. Australia

4. Brazil

 

IT / Software / Media:

1. China

2. Europe

3. India

4. USA

5. Japan, Korea

 

Business / Finance:

1. China

2. USA

3. Europe

4. Australia, India

 

 

PCT Applications - Top national stage countries for 2009

It's that time of year again; where did the year go?

inovia handles the 3rd largest volume of PCT applications at the national stage, according to an MIP Ranking in October '09.  The countries our clients filed into for 2009 broke down by the following ranking:

1. China - 11%

2. Europe - 10%

3. Canada and Japan - 9%

5. Australia and India - 8%

7. Brazil - 6%

8. Korea - 5%

9. Mexico, South Africa, Russia and USA - 4%

The <4% countries included Singapore, New Zealand, Israel and Malaysia.

Look for a future post with a break-down by Industry type against country selection(s).

BRIC Countries - IP Concerns?

Our clients often ask us about the value of IP protection in countries like China or India (or Russia and Brazil, the other "BRIC" countries), due to a perception that IP laws are relatively weak there.

While we don't give advice about country selection, consider this approach: look how far China has come in IP law and enforcement terms in the last 10 years.  Now 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 retail market in China over the last 10 years within the technical field covered by the invention and try assessing where that might be in another 10 years.

Looking at the drastic positive changes in both market size and the effectiveness of IP law, the long-term picture for some technologies can make countries like Brazil, China, India and Russia (and more recent arrivals to the BRIC-type club, such as Korea) essential foreign-filing destinations.

We'll continue to blog about this topic in the coming months, as (based on the amount of feedback we get) it's an issue of interest to applicants of all sizes and levels of experience.

Photo credit: Esparta

If you want a quick and free cost estimate of filing into a BRIC country (or any of the 60+ other countries where we operate), use our cost calculator for your PCT national stage entry or European validation.

Part III of III: Where to enter national phase?

Part III: Where to enter national phase?

 

"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.

Photo credit: CaptPiper

Part II of III: Where to enter national phase?

Part II: Where to enter national phase?

 

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.

Part I of III: Where to enter national phase?

You know the story: about 18 months ago you filed a PCT application designating over 130 countries and regions. Now national phase deadlines are fast approaching and you or your client needs to make a decision about which countries and regions should be kept alive by entering the national/regional phase.

Going into all countries would be nice, but even Bill Gates couldn't afford to do that, so which ones should you choose?

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 about this from someone (ie, us!) who doesn't know their business, their technology or their market.

While we can't give them specific advice, we can point out a few factors they might like to think 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 - 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.

More thoughts in a subsequent post...