Five Ways to Control Intellectual Property Costs
Protecting IP is expensive, but understanding the process of obtaining patents at home and abroad can help companies distribute resources efficiently.
By: D'vorah Graeser
Published: October 26, 2011
Whether to obtain patent coverage outside the home market is an important question for medical device developers to consider. A company might choose to patent an invention outside its home nation for marketing reasons (so a product can be sold in foreign markets, for example) or strategic purposes (to block competitors, perhaps).
A granted patent is a territorial legal right that excludes others from practicing, manufacturing, and selling the technology claimed in the patent within the relevant territory. To achieve such patent coverage, a company must submit a separate patent application for each country (or region, in the case of the European patent application) of interest. The time and effort required to obtain international patents is an important consideration, because in the vast majority of countries, the process to obtain a patent requires a significant investment after filing for examination. During the process of examination, the examiner checks the patent application to determine whether the claims are novel, nonobvious (or inventive), and useful. The examiner might require amendments to the claims, text, or drawings before the patent is granted. The company must assist the patent attorney with such issues. This costs money and requires time and effort on the part of company personnel. The examination process can take 3–8 years or longer.
Medical devices typically enter the market relatively quickly after patent applications are filed, so obtaining patents as quickly and inexpensively as possible is particularly important when it comes to protecting innovative new medical devices. Speed is crucial to ensure that copycats and other infringers are challenged with a patent. Expense is also an issue, due to the relatively rapid iteration process for medical devices.
The uncertainty associated with the examination and exchange rate costs can make it difficult to accurately budget for international patent costs. This article discusses five ways medical device entrepreneurs and experts can control these costs.
Understand the Patent Stages and Their Costs
A patent application goes through multiple stages before a patent is granted. Filing the application is only the beginning. How quickly the application proceeds through these stages determines how quickly a patent is granted.
Most countries, including the United States, require some type of examination process, during which an examiner typically considers whether the claims will be accepted or rejected due to prior art claims or for other reasons. Multiple rounds of examination are often necessary. Some countries also require a specific request for examination to be filed. This typically provides an opportunity to amend the claims, but at additional cost.
Delaying the filing of the request for examination slows the prosecution of the application and, hence, delays patent issuance. Having realistic expectations of claim coverage—accepting claims that are narrower than those originally filed, for example—can significantly decrease the time spent in prosecution. All countries also require an additional fee once the patent application has been granted.
An open, accessible patent agent or attorney can help applicants understand the patent process. Companies should convey their expectations in terms of time, cost, and patent coverage Claims that are perfectly acceptable in one country might be unattainable in another, due to different rules or standards for examination. Companies should talk to their agents about claim strategies in each country. Understanding the entire process and its costs will help limit any last-minute surprises.
Know the Patent Lifetime and the Medical Device Life Cycle
Once granted, patents have a lifetime of 20 years from the date the original patent application is filed (with some exceptions in a few countries). However, due to constant technological improvements and developments, the life cycle of medical devices as covered by the claims in any given patent may be shorter than 20 years. Therefore, when filing a patent application, it is important to consider how long a granted patent will protect the medical device as marketed.
Understanding the entire process and its costs will help limit any last-minute surprises.
For example, if a patent application protects the initial, basic concept for a new medical device, it is reasonable to expect that the granted patent would protect the initial product and any subsequent improvements. However, that is not always the case. During examination, the claims may be narrowed to such an extent that while the current iteration of a medical device is protected, future iterations may not be. Furthermore, the claims in a patent application may be directed to a specific feature of a medical device, which may not be present in future generations. If a patent application includes claims that may potentially protect the current and future generations of a particular medical device, it might be worthwhile to spend the time and money necessary to obtain claims of the desired breadth in all countries of interest.
On the other hand, if a patent application only protects a particular iteration of the medical device with an expected post-approval market lifetime of 5–10 years, it might be a good idea to file in fewer countries, to avoid lengthy prosecution times and reduce costs.
If Priorities Change, Consider Dropping Applications
Companies should let their business models direct which patents they pursue, not the other way around.
Often, business priorities change so that one or more countries—or one or more patent applications—become less relevant than originally anticipated. If such a change occurs, it is important for companies to review their patent portfolios and consider dropping one or more applications in unnecessary countries.
So-called zombie patent applications (nonrelevant applications for which significant sums are still being paid) are a drain on resources and can prevent companies from having sufficient funds to draft new patent applications. Companies should avoid continuing prosecution of a patent application simply because the application was filed, especially if it was done without considering the ultimate relevance of the application to their current business.
Draft the Initial Application with All Countries of Interest in Mind
Different countries have varying requirements and best-practice guidelines for drafting patent applications. While it is impossible to consider the different requirements and guidelines for all countries when drafting a patent application, companies should know which countries are of particular interest to their business and draft their applications with those countries in mind.
A patent cooperation treaty (PCT) application, for example, is an international application that gives inventors the right to file in hundreds of countries within a certain time period. After filing, however, the description of the invention and the figures generally cannot be changed—only the claims can be changed. Therefore, the PCT application should be drafted according to the rules of the specific countries in which the company eventually wishes to file. Otherwise, it may not be permitted to make desired changes to the claims at a later date.
For medical device patents, it is particularly important to note that not all places permit claims to be based only on drawings if the corresponding text does not provide written support. Europe is one example. The European Patent Office does not permit claims that are not supported word for word in the text, regardless of what is shown in the accompanying drawings. Therefore, it is important that companies communicate with their patent attorneys or agents all of the patentable aspects of their medical inventions to ensure the text supports all the claims.
While official (governmental) patent fees are fixed, patent attorney fees are not.
The fees charged by the patent attorney in a company’s home country, as well as the fees of international patent agents or attorneys outside of its home country, are negotiable. The extent to which they are negotiable depends on factors including the extent of a company’s prior business with the patent agent or attorney and the type of work to be performed.
Attorney fees are particularly negotiable at the time the patent application is filed, because patent attorneys are interested in receiving new business. In some circumstances, various services are available to assist in cost-effective filing through reputable patent attorneys. As an example, Inovia (inovia.com) assists in filing in many different countries during part of the patent application known as the PCT national stage by charging low, fixed rates for filing patent applications.
No matter how much a company spends, it is important to understand the fees charged and what those fees cover. This will help in budgeting and in negotiating a better deal.
Overall, patents are a powerful tool for protecting a business from competitors and carving out a global market. Having a proper understanding of the process can help companies save money and obtain the coverage that suits their individual business needs and capabilities. However, international patent strategy must stem from international business strategy. Companies should view patents as a tool to assist their business plans, not as a separate goal.
D’vorah Graeser is the founder and CEO of intellectual property firm Graeser Associates International (Chicago).