Foreign IP strategy for manufacturing executives

By Michael Bielski

Globalization has created significant opportunities for manufacturing companies in the outsource contract manufacturing sector — across various end-market segments and industries. However, along with these opportunities has surfaced an unwanted risk against one of a company’s most valuable assets – its intellectual property (IP), including patents and trade secrets.

The increase in a company’s IP risk profile warrants placing ever more importance on foreign patent filing IP strategies developed and implemented by companies and, the growing role that business, product marketing, and technical executives must play in developing company IP strategy in conjunction with sound legal counsel.

Foreign patent filing IP strategies have significant implications regarding the scope of patent rights afforded to a company.

Business, marketing, and technical executives don’t necessarily have to understand the minutia of patent prosecution, however, these executives should be intimately involved in strategic decisions regarding which jurisdictions companies should pursue product patent protection.

This decision process should not be ad-hoc. IP strategy and foreign patent filing decisions must be aligned with a company’s business priorities, objectives, and goals.

Foreign patent filing diversity
As an example of how diverse and comprehensive foreign patent filing IP strategies can be, let’s look at jurisdictional patent family members for patents filed — whose primary US Class is 600/300 – for medical surgery, diagnostic testing products.

 

Table 1 displays foreign and domestic applications from 1997 to 2007. Note: PCT refers to Patent Cooperation Treaty.

Table 1
United States Class 600/300 Filing Jurisdictions
Medical Surgery & Diagnostic Testing Products
Country Original Patents
Slovakia 1
Singapore 2
Turkey 2
Argentina 3
Greece 4
Latvia 4
Indonesia 5
Netherlands 5
Italy 6
Czech Republic 8
Finland 9
Switzerland 15
Hong Kong 16
Poland 18
South Africa 19
Portugal 20
Hungary 21
Urasian 24
France 25
Ukraine 26
Denmark 36
Sweden 42
Taiwan 45
Russia 59
Norway 75
United Kingdom 84
Spain 104
South Korea 114
Mexico 148
New Zealand 149
Israel 188
Brazil 192
Austria 273
China 343
Germany 684
Japan 1,029
Canada 1,109
Australia 1,971
European 2,505
PCT 3,025
United States 10,457
Total 22,865

 

As illustrated above, companies in this particular medical technology space filed foreign patent filings in more than 35 jurisdictions — at tremendous cost. Although the United States is the dominant jurisdiction, many other jurisdictions have also been integral to the foreign patent filing IP strategies for the organizations filing.

 

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Foreign patent filing IP strategy considerations
How do executives choose which jurisdictions to file patents in? How can executives align their foreign patent filing IP strategy with their company’s strategic business objectives in a cost-effective manner?

At a minimum, aligning company foreign patent filing IP strategy with strategic business objectives requires an evaluation of a few basic factors for consideration. These include:

  • Locations / regions products are manufactured, sold, or used
    Jurisdictions where a company conducts its core business activities are the most important locations for jurisdictional patent protection. These destinations are fundamental jurisdictions that must be covered by the company’s patent portfolio, and most of the time, should take precedence in the decision-making process.
  • Carefully isolating areas where opportunities for IP licensing exist
    Patents, along with ‘know-how’, are often key components in an IP licensing transaction. Solid patent protection can increase the value of the license and provide the licensee with significant competitive advantages.
  • Know where your competitors are filing IP
    Companies may consider filing patents in foreign jurisdictions where competitors are active, in an effort to gain market space and / or leverage IP assets during future negotiations.

 

Other considerations companies should also take into account when developing a foreign patent filing IP strategy include:

  • Time
    Foreign patent filing IP strategies must account for both current and future business activities. It is critical for business, marketing and technical executives to communicate the company’s vision and business objectives to the legal team in order to ensure that this is supported by the foreign patent filing strategy.
  • Enforceability
    In some instances, benefits obtained from filing patents in jurisdictions where patent enforcement is difficult to enforce are of limited value. When making foreign patent filing decisions, it is important to discuss the likelihood of such enforcement with experienced patent counsels.Companies can positively influence costs of developing their foreign patent IP strategy by not including regions where patent filings are not warranted.
  • Budget
    Due to costs associated with filing foreign patents, in most instances, companies just cannot afford to obtain patents in every jurisdiction they might do business in.To combat this constraint, a cost-benefit analysis can be used to assess IP risks associated with each jurisdictional filing as it relates to the company – with decisions must be made accordingly. This cost-benefit analysis may essentially be a comprehensive evaluation of the factors discussed in this article.

 

Foreign patent filings can keep your company competitive
As outsourced contract manufacturing continues to attract more interest among executives tasked with developing more competitive supply chains, and manufacturers in emerging jurisdictions such as Brazil, India, China, and Vietnam each become more active in presenting opportunities for joint manufacturing ventures and other types of partnerships with global manufacturing companies, executives must decide the best course of action as they engage such opportunities.

Below are some ways companies can maintain a competitive advantage while developing and implementing a foreign patent IP filing strategy:

  • Benchmark your competition
    Keeping track of where your competitors are filing patents is an important analysis that can help guide your foreign patent filing strategy.
  • Track IP litigation cases
    Recent IP litigation cases may change a foreign patent filing strategy by increasing, or decreasing, the value of patents in a particular jurisdiction. For instance, if a jurisdiction known for weak enforceability suddenly decides a significant patent infringement case in favor of a non-native plaintiff, this jurisdiction which may have previously been inconsequential — may now warrant patent filings.
  • Track patent rule changes in foreign jurisdictions
    Patent rules and procedures are in constant flux across the world. It is important for these changes to be monitored as changes could materially affect foreign patent filing IP strategies.
  • Partner with other organizations in key jurisdictions
    When feasible, partnering with organizations native to a particular jurisdiction could possibly increase your company’s IP leverage against competitors should litigation later arise.

 

Managing patents vs. wasting resources
Foreign filings must be managed. It can be common where a change in business objectives could adversely impact some foreign patent filings, rendering them useless to the company.

For example, a company may decide that it will only outsource manufacturing to one entity in a single jurisdiction (or location) as opposed to multiple entities in multiple jurisdictions. Recent litigation, or patent rule, changes could make one jurisdiction less favorable for patent filings.

These extraneous jurisdictional patent filings may present opportunities to prune a company’s patent portfolio, thereby saving executives thousands of dollars in prosecution and maintenance fees.

Above all
A well-planned foreign patent IP filing strategy that supports company business objectives can help lower IP risk associated with globalization and outsource contract manufacturing.


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  1. Steve DeCollibus

    Steve DeCollibus    
    North Kingstown RI | North America
    Posted at 8:18 am on August 9, 2013

    It would seem that your typical development engineers and marketing people are not prepared in any way to approach this strategically, is there a source outside of pure law that one can use when making these kinds of decisions.

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