Should You Invest in Foreign Patent Protection?

If you run a tech company, should you invest in patent protection outside of your home country? On one hand, worldwide patent protection can be incredibly valuable, especially for a product having a worldwide market. On the other hand, obtaining worldwide patent protection can be time consuming and expensive. Therefore, 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 depends on how patent protection in any particular country fits fit into your business plan. With this in mind, the following questions should be considered when deciding where to file for patent protection:

Where is your product sold?

If your biggest market is outside your home country, then it probably makes sense to pursue patent protection in those countries encompassing that market. 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 outside your home country, then patent protection in those countries where your product is manufactured 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 outside your home country? If so, you can also use foreign patent protection 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 example, if you are a US entity and your main competitor makes a competing product in China, then you may be able to use a patent in China to disrupt the competitor’s manufacturing without necessarily involving customers in other markets.

Where are your prospective investors, partners, and/or acquirers?

Consider filing for patent protection in countries that are important to anyone (persons or entities) who might be interested in investing in your company. This should encourage investment, increase your company’s valuation, and/or make it easier to share technology with foreign partners. Generally speaking, if your goal is to be acquired, 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, while it is much easier in others. In addition, the costs of obtaining patents in certain countries can also vary widely, depending, in part, on the language in which the foreign patent office conducts business. Moreover, certain patent offices give deference to other patent offices, thereby potentially allowing you to use the allowance of a patent application in one country to speed up the allowance of a corresponding patent application in another.

Can you take advantage of foreign patent laws for other reasons?

If applying for a foreign patent application leads to 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 patent application in another country (e.g., the US) and it can also be easier to pursue indirect infringers in the UK than it is in other countries. Likewise, Germany has criminal penalties for patent infringement that can be extremely useful in order to apply pressure to your competitors.

Can filing abroad improve your chances of invalidating a competitor’s patent?

Filing abroad also creates prior art that may disrupt your competitor’s ability to get patent protection. For example, knock-off competitors outside your home country may not only copy products but may also file patent applications in one or more other countries based on the copied products. Therefore, if you file a patent application in countries where these knock-off competitors are located, you may create prior art that would be easier for a patent examiner in those countries to find and apply to your competitor’s patent applications.

In addition, there are other reasons to consider foreign patent protection, including the strength of the foreign patent system and/or the ease of detecting and pursuing infringers in that jurisdiction. In the end, however, the most important consideration would be whether or not the anticipated return on foreign patent protection is worth your investment.