Foreign Patents - Part II

I said in Part I that the foreign patent decision is often a tough one for small business. The issue is cost, as well as the basic question of whether you really need foreign patent protection.

Remember - a patent is used to exclude competition, not to grant you permission to make and sell. If you have a U.S. patent then you (in theory) are protected from anyone, including foreign competitors, from selling your invention in the U.S. market. So you, (again in theory) have protection in the biggest market in the world economy.. And you have that protection at a fairly reasonable cost. thus the smart decision for many businesses is to get a U.S. patent and forget foreign filings.

But there are businesses, and some of my clients are included, in which some foreign markets represent a significant part of the total opportunity. And if the invention is easy to reverse engineer and produce, they recognize that they may lose that opportunity if they do not get foreign protection.

These are the small businesses that have the more difficult decision, because of the cost. The cost question is complex so I will oversimplify it. Roughly it will cost you $5000 per country to file. Not that expensive per country but you need to be very selective about picking your countries. My guideline is that if you can capture 80% of the market opportunity with X countries (plus your U.S. patent) then you should keep your filing to those X countries. Beyond that you are rapidly getting into diminishing returns.

For some opportunities you might achieve the 80% with the U.S., Germany and Japan. For others it may not be that clear. The other cost factor to consider is that in addition to these filing fees you will be faced with annual maintenance fees in each country to keep the patent in force.

In summary I urge all of my clients to work with me and think through whether they really need foreign protection. It is an invention by invention decision. Roughly half of my clients get U.S. protection only. They frankly do not envision trying to sell their idea overseas.

That's all for now. But I think we will need at least a Part III.