2
The Economic Objectives of Protection

Claas Junghans

The purpose of this chapter is to enable the reader to clearly position patents within the context of business strategy. Whilst patents are technical in substance and legal in structure, their pursuit requires the consumption of both human and financial resources, and the decision to allocate these resources is a rational economic one.

Before delving more deeply into the technical and legal elements of patenting, the reader is therefore advised to invest considerable thought in the overall business purpose of patenting. It is likely, and highly advised, that the reader will employ a patent attorney to both draft applications and provide counsel on patent strategy. The attorney's ability to translate business needs into a patent portfolio is dependent on the applicants communication of clearly defined economic objectives. In the absence of these goals, even the most qualified and diligent of patent attorneys will make assumptions about the applicants needs. The results are at best unnecessary costs, and at worst, bad patents that do not match the economic drivers of the application.

The generation of intellectual property is a complex endeavour, requiring investment of both time and money. Much can be done to optimize the yield of this investment if clear objectives are stated early in the process, and a plan is made to attain these objectives. Many resources are poorly spent because such commonplace advice is not followed. Applicants will be in a variety of situations with regards to their industry, technology, financial circumstance and competitive environment. Hence, the detailed objectives in patenting discussed here, will be different for each inventor or applicant. Nevertheless, standard elements of situations can be identified and a combination of these elements will, to some degree, resemble the scenario in which readers find themselves.

This chapter studies two key fundamental elements of patent strategy; the route of filing, and the breadth of claims. It discusses each element and considers the factors that drive value generation for each.

2.1 Filing Strategy

The applicant must determine the timing of application and the number, and sequence of countries in which an invention will be registered as a patent.

2.1.1 When to File?

The simple answer as to when to file the first application is: as early as possible after having obtained substantial proof of an invention. The greatest risk for any applicant is that of being pre-empted by a competitor filing a similar or closely related invention. A competing invention submitted earlier may render the applicant's claims unpatentable and may ultimately mean that the applicant is subject to exclusion by the competing patent.

Chapter 3 discusses the criteria for the sufficient disclosure of material. It is important that the application discloses not only an idea but a workable technical solution to a real problem. If this criterion is not satisfied, the patent may not be issued, or, if approved, may be liable to attack by competitors. US law has especially stringent requirements as to sufficient disclosure. This is important when filing in the US through the USPTO, or indeed if any application filed outside the US is to be used for claiming priority before the USPTO.

2.1.2 Where to File: National Offices and International Treaties

To the unitiated there appears an intimidating myriad of routes to achieving patent protection. Fundamentally, the process is a national one; application in a territory is followed by local examination and, if all goes well, the grant of a patent, which is locally enforceable. To reduce the inefficiencies of multiple patent applications however, there exist a number of international treaties that define how countries can work in concert to consider, grant and enforce patent applications. These treaties are identified in Box 2. As discussed below, however, these create a range of options for the applicant.

Box 2 International Patent Treaties

(for lists of member states, see Annex 1-3)

The Paris Convention, to which a great many countries are signatories, grants the right to use the priority date of an application in any member country in all the other countries of the treaty.

The Patent Cooperation Treaty (PCT) regulates a unified application pathway to allow applicants simultaneously, and with a single application, to apply for a patent in several countries. Patents are not issued by the PCT pathway, but by the individual member states or regional offices named as designated states in the PCT application form. A preliminary examination can be requested in the PCT pathway.

The European Patent Convention (EPC) is an agreement between its member states to unify the patent application and granting process within Europe. The applicant submits a patent application to the European Patent Office, which processes and, if the result of the examination is positive, issues a European Patent. The European Patent then must be registered with the national offices to become valid in each specific country. All countries of the European union are members of the EPC, but also many non-EU members, such as Switzerland and Turkey. The EPO performs a similar function to a national office. The cost, however of filing through the EPO, is lower than simultaneously filing in several EPC member states.

Other regional treaties, the Eurasian Patent Organisation EAPO, the OAPI and the ARIPO, regulate applications in Eurasia, and the French- and English-speaking African countries respectively.

National Pathways

Patents are granted and enforced at a national level, and different offices have a different approach to allowing certain claims. The result of an examination may differ particularly between US and European offices.

The quickest patent application pathway therefore is to file directly and immediately in the desired territories. Each office will then examine each patent according to national regulations. Much of the cost of patenting is incurred early, including office and translation fees. If the invention is found to be patentable however, this is the fastest route to the grant of enforceable exclusionary power.

European Pathway

A European Patent is essentially a single application process covering a bundle of national filings. The application is submitted to the European Patent Office, which performs a review of the prior art and examines the application, on behalf of its constituent territories. If the examiner agrees to the patentability of the submitted claims, a European Patent is issued. More details of this process are given in the next chapter.

Fees have to be paid at different stages of the process and the total office fees from application to grant are in the range of 4000 Euro1).

Once the European Patent is issued it is automatically valid in all designated states and the application is not re-examined by the offices of each country. The applicant must pay for translation into the national languages of the countries in which it is to be effective, and national fees must be paid. Translation is expensive relative to the EPO fees and annual maintenance fees must be paid to the national offices.

A European Patent Application can be submitted as a first application without priority, as a secondary application claiming the priority of another national, European or PCT application, or the European Office can be elected in a PCT application. In this latter case, the EPO procedure is delayed until the national phase of the PCT pathway.

PCT Pathway

In the PCT pathway one application is submitted to a single Patent Office acting on behalf of the World International Property Organisation (WIPO), or the WIPO central office itself. This office processes the application according to the PCT treaty provisions. For every application, a search report is published 18 months after the priority date of the invention. A preliminary examination can be sought by applying to have the International Application examined by the competent office. The examination can be ordered at any time during this first phase of the PCT process.

However at no stage does the PCT application become a valid patent, conferring exclusionary rights. This quality is only achieved after the national phase, which may be entered into up to 30 months after the initial priority filing. Then, the applicant has to send copies of the PCT application, along with a translation to the corresponding national language, to the national offices. This national phase can be very expensive, depending on the number of countries and the size of the application.

The strategic function of the PCT pathway is that of a "waiting room". It gives the applicant an additional 18 months of time on top of the 12 months accorded by the right to priority under the Paris Convention, to decide where and how to pursue the protection of the invention. Any resultant patent is not enforceable until completion of the national phase after this time.

If possible, an early decision should be made as to the extent of territorial protection which will be ultimately required, and whether the corresponding applications will be filed immediately and directly, or through the PCT mechanism, with or without the use of the priority period.

Filing one national application first and using the priority of this application to file a PCT application before the expiry of the12-month priority period expires is a standard way. This method combines...