(Adapted from a paper delivered at the Annual Meeting of the
Intellectual Property Section of the State Bar of California,
Coronado, California, October 9, 1987)
Foreign trade is becoming essential to the economic survival
of our nation. The use of foreign patents is an excellent tool to
protect foreign markets. An international treaty, the Patent
Cooperation Treaty (PCT), which will be discussed in this article,
permits for effective and relatively inexpensive foreign patent
protection.
Foreign patent protection is needed because patent rights are
territorial. Thus a United States patent only protects against
infringement throughout and within the United States. 35 U.S.C.
^154; 35 U.S.C. ^271(a); Deepsouth Packing Co. vs. Laitram Corp.,
La. 92 S.Ct. 1700, 406 U.S. 578, 32L. Ed. 2d 273, rehearing denied
93 S.Ct. 94, 409 U.S. 902, 34L. Ed. 2d 165 (1972). For example,
the use of a process in an Oriental or European country to make a
product sold in the United States, is not an infringement of a U.S.
patent for the process. Infringement of the U.S. patent cannot be
predicated upon acts consummated in a foreign country. Dr. Beck &
Co. G.M.B.H. vs. General Electric Co., D.C. N.Y. 210 F. Supp 86,
affirmed 317 F. 2d 538 (1962). The only remedy would be from the
enforcement
of a process patent which exists in the particular foreign country.
The PCT is a system that includes countries responsible for
about 90% of the total world patent filing: 40 countries including
most of the industrialized ones. Essentially all are accessible now
to U.S. patent applicants and practitioners. As of July 1, 1987
the U.S. adopted Chapter II of the PCT. With that we have taken a
major step towards an "international" patent.
A major step towards an
"international" patent
After filing a U.S. patent application, an inventor has a one
year priority period granted by the Paris Convention of 1883 to
decide where to file for foreign patents, and retain the benefit of
the U.S. patent application filing date. Without the benefit of
the priority period it may be too late to file a foreign patent
application because of intervening sales and usage by the inventor.
Different routes are available to an inventor for obtaining a
patent in foreign countries. There can be unique and different
situations that dictate creative and special foreign patent filing
techniques. However, for most inventions, once the various
possibilities have been evaluated, the most effective procedure for
foreign patent filing will be the PCT-EPO route.
By "PCT-EPO" is meant an international PCT application filed in
Washington with the European Patent Office searching and examining
the application. The PCT and European Patent Office system will be
further explained.
National, Regional or International Filing
One can file foreign patents nationally, regionally or
internationally. National filing requires the applicant to file
separate applications in each country. Essentially, regional
filing is a single European Patent Office filing covering some 13
western European countries. (United Kingdom, West Germany, France,
Sweden, Belgium, Netherlands, Luxembourg, Austria, Switzerland and
Liechtenstein, Italy, Spain, Greece. In the future Denmark,
Finland, Portugal and Yugoslavia could join). An international
filing is a single PCT application that designates as many
countries in that system as required. With the PCT system, the
application is searched internationally and, if desired, examined
internationally., Thereafter the applicant selects particular
countries where the patent is to be filed.
A valuable and new filing route is the combination of the PCT-
EPO filing procedures. After an analysis of the various factors
which go into deciding how to file a foreign patent, the PCT-EPO
procedure will dictate itself as the most appropriate generally.
A comparison of some features of the various routes for filing
foreign patent applications is presented in the Table.
Considerations For Foreign Filing
The considerations and objectives of deciding on a foreign
patent program generally come down to obtaining the most effective
foreign patents, most economically and commensurate with various
factors which include the subject matter; the nature of the
applicant; and the commercial purpose for the foreign patents.
o The Subject Matter
The high-tech area usually deals with biotechnology or
computers, and this generally dictates filing in the European
Patent Office, rather than national filings. In the mid-tech and
low-tech areas there is no need to file nationally since there is
harmony between the laws of the national countries and the EPO.
o The Nature of Applicant
A large corporation, generally with a defined budget seeks the
best patent protection possible relative to cost, and hence the EPO
and PCT is advantageous. An R & D venture corporation often also
needs to extend finances as far as possible. Alternatively a
venture company may seek as many patents as quickly as possible
and, in such a case, national filings could be of help. Mid-sized
corporations would generally benefit from international PCT filing
procedures followed by the EPO system, as would an individual or
smaller corporation, because of the deferred expenses.
o The Commercial Purpose For Foreign Patents
To be evaluated here is whether the patent is required for the
sole benefit of the applicant's business, for licensing to third
parties or cross-licensing internationally or nationally.
Alternatively, is it entirely speculative? In general, a PCT
application followed by an EPO filing will be appropriate.
National Filings are Expensive
Within the 12-month Paris Convention period, the applicant
must make his filing decision. Where this route is selected,
expenses are of no concern to the applicant, because some foreign
patents are needed, and it can be that some of these must be
obtained as quickly as possible. Except for special circumstances,
national filing is on the decline in Europe in favor of EPO
applications.
A European Patent Office Filing Defers Expenses
The European patent has largely replaced national filing,
because a U.S. applicant can prosecute in English, have a single
prosecution, and can keep options open much longer.
Once an application for a European patent is selected, the
incremental expense should be undertaken to cover essentially all
of the 13 EPO countries at that time. The applicant is thereby
extending the time for Europe up to the date of patent allowance
before having to incur heavy translation expenses.
The PCT Route Has Many Advantages
A U.S. national and resident can now file a PCT application in
Washington, designate 40 countries, and have the EPO search and
examine that application. The U.S. applicant has up to 30 months
to make his decision as to which countries finally to select for
foreign filings.
In the PCT after the 40th country designation, there is no
further charge, so that one can freely designate all relevant
countries beyond 10. This provides a free option for most countries
for at least 8 more months under PCT Chapter I, or for up to 18
months under PCT Chapter II, beyond the Paris Convention priority
period of 12 months. This gives us the 30 month period for
finalizing the foreign filing decision.
Moreover, by using the PCT-EPO route, it is not necessary to
designate exactly which European countries are required in the EPO
system until the end of the EPO prosecution, which can be another
12 months. What is achieved, therefore, is a valuable extension of
the time before substantial expenses must be incurred.
During this time the applicant can search and review the prior
art, determine to what extent the subject matter is commercially
viable and practical for patenting, and determine whether
licensing is likely. This way the applicant delays the bulk of the
investment in patent costs until an intelligent and knowledgeable
business decision can be made.
If the U.S. applicant does not wish to adopt Chapter II
applicant, the PCT Chapter I can still be used. The applicant can
thereby have either the U.S. or EPO conduct only a search. Within
20 months of the first filing date, the U.S. applicant will have to
decide where to foreign file based on results of the international
search, namely without an examination.
Centralized Search and Examination
is all done in English
Under Chapter II, with the PCT-EPO routing, a U.S. PCT
application filed in Washington, is searched to locate any prior
art by the EPO at The Hague in the Netherlands, and, is examined
based on the search results by the EPO in Munich. This centralized
search and examination is all done in English, and all actions can
be handled by a U.S. patent attorney. Thus, for patents in
countries as far flung as in Europe, and Brazil, Japan, and the
Soviet Union, it is now possible to have the examination in the
English language, and U.S. patent attorneys can conduct the
international preliminary examination firsthand from the U.S.
U.S. patent attorneys can conduct
the international preliminary examination
firsthand from the U.S.
This procedure does not mean that the various countries will
not "re-examine" the applications later, but certainly one should
be ahead with a good start, having had an EPO examination. Often
in difficult cases, particularly with some genetic engineering
inventions, other countries desire to find out the results of the
EPO examination before proceeding. This provides an important
advantage.
With increasing efforts towards patent law harmonization and
internationalization, the PCT-EPO route is a significant first step
for securing an "international" patent directly from the office of
the U.S. practitioner. U.S. practitioners have the right of
interviewing the EPO in Munich. As the responsible attorney
closest to the inventor and the real heart of the invention, the
U.S. practitioner probably can make the most informed international
decision about an invention . With this centralized approach, the
inventor will be best served.
U.S. practitioners have the right of
interviewing the EPO in Munich
This advantage of international practice could turn out to be
short-lived since the EPO is only prepared to examine 500 cases
from the U.S. per year over the next three years. The EPO is
however, increasingly likely to become the prime international
patent office and could open itself more rather than restrict U.S.
originated cases.
Deferral can save tens
of thousands of dollars in foreign
prosecution costs
With a PCT Chapter II filing, the costs incurred are low and
it provides an independent patent search and complete examination.
U.S. prosecution can be deferred for this 30-month period with a
replacement of the PCT application for the original U.S.
application. This deferral can save tens of thousands of dollars
of foreign prosecution costs and simplify internal patent
management. If one files nationally, then at the 12th month, the
cost of getting an application on file can be about $30,000 or
higher. This expense will increase periodically from that time
forward as prosecution commences. Under PCT Chapter II procedures,
the first requirement for a foreign attorney and for translations
or other national procedures commences only at the 30th month. The
overall cost could therefore be under $5,000 for the first 30
months. Additionally, total costs can be offset against later
national or EPO fees. Thus, the EPO provides 100% credit for the
search fee and 70% credit for the preliminary examination fee.
The PCT Chapter II thus includes important time shift
advantages. With the more rapid European procedure, where the
examination under PCT Chapter II is measured from the priority date
and must be completed within 28 months, U.S. inventors and
businessmen will benefit from a much earlier determination of the
likelihood of granting a European patent. The U.S. examination
will also be more informed after completion of searches at both the
U.S. and EPO patent offices.
