Posted By
Cooley GO

If you run a tech company, should you invest in foreign patent protection? On one hand, worldwide patent protection can be incredibly valuable, especially for a product with a worldwide market. On the other hand, obtaining worldwide patent protection can be time consuming and expensive, and it may make sense to devote your resources to other investments.

Given the costs and benefits of filing for patent protection abroad, it makes sense to consider whether an investment in foreign patent protection would pay off in the long term. Generally, the return on foreign patent protection depends on how foreign patent protection would fit into your business plan. With this in mind, consider these questions when deciding where to file for patent protection:

  • Where is your product sold? If your biggest market is overseas, then it probably makes sense to file for foreign patent protection. Patent protection in the largest, most lucrative markets creates an additional barrier to entry for competitors.
  • Where is your product made? If your product is made overseas, then foreign patent protection can provide additional leverage in negotiating manufacturing contracts and preventing knock-offs from being made abroad.
  • Where is your product used? Do your customers plan to use your product mainly outside the United States? If so, you can also use a foreign patent to encourage your foreign customers to buy from you instead of from a local supplier.
  • Where are your competitors, suppliers, and customers? A patent in the country where your competitors make and sell their products can provide an additional deterrent. For instance, if your main competitor makes a competing product in China, then you may be able to use a Chinese patent to disrupt its manufacturing without necessarily involving customers in other markets.
  • Where are your prospective investors, partners, and acquirers? Consider filing for patent protection in markets that are important to anyone who might be interested in investing in your company. This should encourage investment, increase your company’s valuation, and make it easier to share technology with foreign partners. Generally speaking, if your goal is to be acquired, then it makes sense to follow a patent strategy that aligns with the business goals (and patent strategy) of your target acquirer.
  • How easy is it to obtain patent protection abroad? It can be difficult to get patents in some countries, and much easier in others. The costs also vary widely, depending in part on whether or not the foreign patent office conducts business in English. And certain patent offices give deference to the US patent office, which means that you can use allowance of a US patent application to speed up allowance of a corresponding foreign patent application.
  • Can you take advantage of foreign patent laws for other reasons? If applying for a foreign patent application yields a payoff elsewhere, then it may be worth the cost. For instance, the UK patent office offers relative quick, inexpensive examination that can be used to expedite allowance of a corresponding US patent application. It can also be easier to pursue indirect infringers in the UK than in the US. And Germany has criminal penalties for patent infringement that can be extremely useful in applying pressure to competitors.
  • Can filing abroad improve your chances of invalidating a competitor’s patent? Filing abroad creates prior art that may disrupt your competitors’ ability to get patent protection. For example, Chinese knock-off competitors not only copy products but often file patent applications in China based on the copied products. If you file a Chinese patent application, you may create prior art that is easier for a Chinese patent examiner to find and apply to your competitors’ patent applications.

There are other reasons to consider foreign patent protection, including the strength of the foreign patent system and the ease of detecting and pursuing infringers. In the end, however, the most important consideration is whether or not the return on foreign patent protection is worth the investment.