International Trade
Federal Action Needed to Help Small Businesses Address Foreign Patent Challenges Gao ID: GAO-02-789 July 17, 2002Small and start-up businesses are principal sources of innovation and are vital to U.S. economic growth. Statistics show that small business created more than 5.5 million new jobs in the United States during the 1990s. In the current global economy, protecting innovations in the United States and abroad is an important component of small businesses' ability to develop overseas markets. The cost of obtaining, maintaining, and enforcing foreign patents is the most significant foreign patent impediment that small businesses encounter. GAO found that obtaining patents abroad is costly for several reasons: (1) companies typically seek patents in several other countries simultaneously and incur costs in each location, (2) some foreign patent office fees are substantially higher than corresponding U.S. Patent and Trademark Office fees, and (3) foreign patent laws and requirements are complex and difficult to understand causing companies to incur substantial U.S. and foreign legal fees. The businesses GAO surveyed said that the impediments they encounter have discouraged or prevented them from obtaining as much foreign patent protection as they would like. Large businesses are better equipped to deal with foreign patent impediments because they have more financial resources and foreign patent expertise and are better able to enforce their patents abroad. The small businesses and patent attorneys thought that certain federal actions could help small businesses overcome the impediments they face in seeking foreign patent protection.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-02-789, International Trade: Federal Action Needed to Help Small Businesses Address Foreign Patent Challenges
This is the accessible text file for GAO report number GAO-02-789
entitled 'International Trade: Federal Action Needed to Help Small
Businesses Address Foreign Patent Challenges' which was released on
August 22, 2002.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products‘ accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
INTERNATIONAL TRADE:
Federal Action Needed to Help Small Businesses Address
Foreign Patent Challenges:
This is a test for developing highlights for a GAO report.
The full report, including GAO‘s objectives, scope,
methodology, and analysis is available at
www.gao.gov/cgi-bin/getrpt?GAO-02-789. For additional information
about the report, contact Loren Yager (202-512-4346). To
provide comments about this test highlights, contact Keith
Fultz (202-512-3200) or email HighlightsTest@gao.gov.
Highlights of GAO-02-789, a report to the Ranking Minority
Member of the Senate Committee on Small Business and
Entrepreneurship and the Chairman of the House Committee on
Small Business.
Why GAO Did This Study:
Small businesses are important to the U.S. economy for their
roles in technological development and job creation. To fully
protect and profit from their innovations, small businesses
may need to obtain patents in other countries. Congressional
requesters asked GAO to identify whether small businesses
encounter any impediments in seeking patents abroad and to
determine whether any federal actions could help small businesses
overcome those impediments. To answer these questions, GAO
convened an expert panel of U.S. patent attorneys and surveyed a
limited number of small businesses.
What GAO Found:
Foreign patent costs are the most significant impediment that
small businesses face in trying to protect their inventions
abroad, according to the small businesses and patent attorneys
GAO contacted. The minimum cost to a small business to obtain
and maintain a relatively simple patent in the United States
for 20 years could be about $10,000, based on a scenario that
GAO developed. However, extending this patent to nine other
countries, which could be a typical small business foreign
patent strategy, could cost between $160,000 and $330,000,
according to GAO‘s research. Other impediments that the
businesses and attorneys identified included companies‘ limited
resources and limited foreign patent knowledge; differences
among foreign patent systems, which increase costs and make
the process more complex; and the existence of challenging
business climates and weak patent enforcement in certain countries.
Large businesses also face some of these impediments, but
have more resources and expertise to address them than small
businesses do.
Over 70 percent of both the small businesses and the patent
attorneys that GAO surveyed believed that federal efforts to
promote harmonization (i.e., reduce differences) among U.S. and
foreign patent systems and to reduce the high cost of foreign
patents would be the best way to help small businesses. Member
states of the World Intellectual Property Organization, including the
United States, have taken some steps to harmonize their patent
systems and are currently negotiating to reduce the more substantive
differences that remain among them. A majority of small businesses
also thought that federal financial assistance to help defray the
high costs of foreign patents would be useful, but many on the
patent attorney panel did not support this step. Instead, a majority
of the patent attorneys believed that informing and educating small
businesses about foreign patents would be worthwhile.
What GAO Recommends:
GAO recommends that the U.S. Patent and Trademark Office obtain
input from small businesses and other interested parties to
assess the advantages and disadvantages of various patent
harmonization options. GAO also recommends that the Small
Business Administration make information about key aspects
of foreign patent laws, procedures, and costs readily available
to small businesses.
The U.S. Patent and Trademark Office and the Small Businesses
Administration agreed with our recommendations.
Figure: Impedements that Small Businesses Face in Obtaining Foreign
Patent:
[See PDF for image]
[End of figure]
This is a test for developing highlights for a GAO report. The
full report, including GAO‘s objectives, scope, methodology,
and analysis is available at www.gao.gov/cgi-bin/getrpt?GAO-02-789.
For additional information about the report, contact Loren Yager
(202-512-4346). To provide comments about this test highlights,
contact Keith Fultz (202-512-3200) or email HighlightsTest@gao.gov.
Report to Congressional Requesters:
July 2002:
International Trade:
Federal Action Needed to Help Small Businesses Address Foreign Patent
Challenges:
GAO-02-789:
Letter:
Results in Brief:
Background:
Small Businesses Encounter Cost and Other Impediments When Seeking
Foreign Patents:
Impediments Negatively Affect Small Businesses‘ Foreign Patent
Decisions:
Several Federal Actions Could Help Small Businesses Overcome
Impediments:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Response:
Appendixes:
Appendix I: Objectives, Scope and Methodology:
The Expert Panel:
The Small Business Survey:
Appendix II: Information about the Small Business Survey Population:
Size of Businesses Surveyed:
Industries of Businesses Surveyed:
Locations of Businesses Surveyed:
Patent Behavior of Businesses Surveyed:
Appendix III: Members of GAO‘s Patent Attorney Panel:
Appendix IV: Results of the Patent Attorney Panel Surveys:
Phase I:
Phase II:
Phase III:
Appendix V: Results of the Small Business Survey:
Appendix VI: Processes and Costs Involved in Obtaining Foreign Patent
Protection: A Hypothetical Scenario:
Estimated Cost of U.S. Patent:
Filing for a Foreign Patent:
Obtaining a Foreign Patent Using PCT:
Maintaining a Foreign Patent:
U.S. Attorney and Foreign Representative Fees:
Total Scenario Costs:
Scope and Methodology:
Appendix VII: Comments from the U.S. Patent and Trademark Office:
GAO Comment:
Appendix VIII: Comments from the Small Business Administration:
GAO Comment:
Appendix IX: GAO Contacts and Staff Acknowledgements:
GAO Contacts:
Staff Acknowledgments:
Glossary:
Tables:
Table 1: Minimum Estimated Costs For a Small Business to Obtain and
Maintain U.S. and Foreign Patent Protection for a Single Invention:
Table 2: Statistics on the Number of Small Businesses Screened and
Selected for GAO‘s Survey:
Table 3: Foreign Patent Experience of the Small Businesses That GAO
Surveyed:
Table 4: Descriptive Statistics on Impediments That Businesses Face in
Seeking Foreign Patent Protection:
Table 5: Descriptive Statistics on Suggestions for Small Businesses to
Consider When Seeking, Obtaining, and Maintaining Foreign Patent
Protection:
Table 6: Descriptive Statistics on Public Assistance Options to Help
Small Businesses Overcome Impediments to Seeking, Obtaining, and
Maintaining Foreign Patents:
Table 7: Estimated Costs to Obtain and Maintain U.S. Patent for 20
Years:
Table 8: Estimated International Stage Patent Costs:
Table 9: Estimated National Stage Patent Costs:
Table 10: Estimated Costs Involved in Maintaining a Foreign Patent in
Nine Countries for 20 Years:
Table 11: Estimated U.S. Attorney and Foreign Representative Fees:
Table 12: Estimated Total Foreign Patent Costs:
Figures:
Figure 1: Small Businesses‘ and Patent Attorneys‘ Views on Types of
Foreign Patent Impediments That Small Businesses Face:
Figure 2: Small Businesses‘ and Patent Attorneys‘ Views on the Stages
of
Foreign Patent Costs as Impediments to Foreign Patent Protection:
Figure 3: Small Businesses‘ and Patent Attorneys‘ Views on Company
Characteristics as Impediments to Foreign Patent Protection:
Figure 4: Small Businesses‘ and Patent Attorneys‘ Views on Differences
among Foreign Patent Systems as Impediments to Foreign Patent
Protection:
Figure 5: Small Businesses‘ and Patent Attorneys‘ Views on Individual
Country Characteristics as Impediments to Foreign Patent Protection:
Figure 6: Patent Attorneys‘ Views on Small Businesses‘ Level of Foreign
Patent Protection:
Figure 7: Patent Attorneys‘ Views on the Differences in Impediments
That
Large and Small Businesses Face:
Figure 8: Small Businesses‘ and Patent Attorneys‘ Views about Possible
Federal Actions to Overcome Foreign Patent Impediments:
Figure 9: Patent Attorneys‘ Views on the Usefulness and Feasibility of
Federal Financial Assistance for Reducing Foreign Patent Costs:
Figure 10: Patent Attorneys‘ Views on Usefulness of Information That
Federal Government Could Provide to Small Businesses:
Figure 11: Number of Employees in Small Businesses That GAO Surveyed:
Figure 12: Industries of Small Businesses That GAO Surveyed:
Figure 13: Locations of Small Businesses That GAO Surveyed:
Figure 14: Number of U.S. and Foreign Patents Held and Pending among
the
Small Businesses That GAO Surveyed:
Figure 15: Foreign Countries or Locations in Which Small Businesses
That
GAO Surveyed Held Patents:
Figure 16: Patent Attorney Reponses to Questions 11 and 12 of Phase II:
Figure 17: Patent Attorney Responses to Questions 13, 14, and 15 of
Phase II:
Figure 18: Patent Attorney Responses to Questions 17 and 18 of Phase
II:
Figure 19: Patent Attorney Responses to the Four Questions in Phase
III:
Figure 20: The International and National Stages of the PCT Process:
Abbreviations:
EPO: European Patent Office:
IP: intellectual property:
PCT: Patent Cooperation Treaty:
SBA: Small Business Administration:
USPTO: U.S. Patent and Trademark Office:
WIPO: World Intellectual Property Organization:
Letter July 17, 2002:
The Honorable Christopher S. Bond
Ranking Minority Member
Committee on Small Business
and Entrepreneurship
United States Senate:
The Honorable Donald A. Manzullo
Chairman, Committee on Small Business
House of Representatives:
Small and start-up businesses[Footnote 1] are principal sources of
innovation and therefore play an important role in technological
development. These firms are also vital to U.S. economic growth--
statistics show that small businesses created more than 5.5 million new
U.S. jobs during the 1990s.[Footnote 2] In order to prosper, small
businesses, particularly those in high-technology industries, must be
able to protect and profit from the innovations that flow from their
research and development expenditures. In the current global economy,
protecting innovations in the United States and abroad is an
increasingly important component of small businesses‘ ability to
develop markets in other countries. One way to globally protect
innovations is to obtain U.S. and foreign patents. While small
businesses held about 11 percent of the U.S. patents granted to U.S.
entities in 2000, available research indicates that small businesses
are less likely than large businesses to seek patents overseas, even
when their inventions are of similar value.[Footnote 3]
Concerned that some small businesses, particularly high-technology
firms, were not obtaining patent protection overseas and thus were
losing potential sales in foreign markets, you asked us to analyze (1)
whether small businesses face impediments in obtaining foreign patent
protection; (2) what impact any impediments have on their foreign
patent decisions; and (3) whether any federal actions could help small
businesses overcome the impediments they may face in obtaining foreign
patents.
To meet our objectives, we convened a Web-based panel of 39 U.S. patent
attorneys with expertise in obtaining foreign patents for both small
and large businesses. In the panel‘s three phases, the patent attorneys
identified and assessed a range of foreign patent impediments and
possible federal actions to address them. Based on the attorneys‘
input, we then developed a questionnaire that we administered to a
random sample of small businesses that had obtained or considered
obtaining foreign patents in the last 5 years. The 38 businesses that
participated in our survey operated in a cross-section of industries;
more than 80 percent of them held foreign patents. Although we
initially randomly selected the sample of small businesses, the number
we ultimately consulted was limited because information was not
available for a substantial number of businesses. Therefore, the
information in this report does not represent the overall set of small
businesses that seek foreign patent protection. (App. I provides
further details about our methodology and its limitations. App. II
contains information about the businesses we surveyed, and app. III
lists the members of the patent attorney panel.):
Results in Brief:
The cost of obtaining, maintaining, and enforcing foreign patents is
the most significant foreign patent impediment that small businesses
encounter, according to the small businesses and patent attorneys that
we consulted. Patenting abroad is a costly endeavor for several
reasons. For example, (1) companies typically seek patents in several
other countries simultaneously and incur costs in each location; (2)
some foreign patent office fees are substantially higher than
corresponding U.S. Patent and Trademark Office fees; and (3) foreign
patent laws and requirements are complex and difficult to understand,
causing companies to incur substantial U.S. and foreign legal fees. As
a result, foreign patent protection is more expensive to acquire than
U.S. patent protection. We developed a hypothetical scenario to
estimate patent costs and determined that a small business could pay
about $10,000 to obtain and maintain a U.S. patent on a single
invention for 20 years. However, it could pay at least $160,000 to
$360,000 to obtain and similarly maintain patents in nine other
countries for the same invention (this amount of foreign patent
coverage could be considered typical for a small business). Small
businesses would incur such costs for each patent they seek to file
outside of the United States. Other factors impede small businesses‘
efforts to patent abroad as well, according to the groups we surveyed.
For example, the businesses and patent attorneys said that small
businesses tend to have limited resources to pay foreign patent costs,
a limited overseas presence to enforce their patents, and limited
knowledge about foreign patents. In addition, differences among other
countries‘ patent laws, standards, and procedures heighten the level of
complexity associated with obtaining foreign patents. Finally,
unfavorable business climates and the lack of enforcement in some
countries also impede small businesses, according to our survey
results.
The businesses we surveyed said that the impediments they encounter
have discouraged or prevented them from obtaining as much foreign
patent protection as they would like to have. A majority of the patent
attorneys said that most small businesses hold fewer foreign patents
than they need, primarily because the impediments are too difficult for
them to overcome. Most of the attorneys believed that large and small
businesses generally encounter many of the same impediments to
acquiring foreign patents, but the impediments have a more negative
effect on small businesses. Large businesses are better equipped to
deal with foreign patent impediments, the attorneys said, because they
have more financial resources and foreign patent expertise and are
better able to enforce their patents abroad.
The small businesses and patent attorneys thought that certain federal
actions could help small businesses overcome the impediments they face
in seeking foreign patent protection. More than 70 percent of the
survey respondents in both groups supported federal efforts to promote
harmonization among the world‘s patent laws and systems and to seek
patent cost reduction. Patent law harmonization efforts have been
ongoing in the World Intellectual Property Organization for at least 20
years, and while some success has been achieved, many differences among
member countries‘ patent laws remain. Harmonization could provide many
advantages, such as agreement on the types of innovations that can be
patented, acceptance among national patent offices of one another‘s
work, and substantially reduced costs. However, achieving harmonization
could require significant changes to U.S. patent laws. In addition to
supporting harmonization efforts, nearly 70 percent of the businesses
thought that federal financial assistance to help defray the costs of
foreign patents would be helpful, but less than 50 percent of the
patent attorneys held this view. Most of the patent attorneys regarded
federal financial assistance as an indirect solution to the broader
problem of a lack of uniformity among global patent systems.
Conversely, nearly 70 percent of the attorneys, but only about 40
percent of the businesses, thought that making information about
foreign patents available to small businesses, particularly those that
are just beginning to consider foreign patents, would be useful. In
this report, we recommend that the government assess the advantages and
disadvantages to U.S. businesses of various options for further patent
harmonization. However, given the long-term nature of these efforts, we
also recommend that the government make information about key aspects
of obtaining foreign patent protection available to small businesses to
assist their efforts.
Commenting on a draft of this report, the U.S. Patent and Trademark
Office and the Small Business Administration indicated that they agreed
with our recommendations but lacked the expertise to independently
develop information about foreign patent protection. We agreed and
modified the recommendation to direct the agencies to collect and make
available existing information about foreign patents.
Background:
A patent is the grant of a property right that a national government or
an international intergovernmental authority issues for an invention.
Patents cover inventions of new products as well as new processes to
make or use new or existing products. While patent rights vary by
country, a patent typically gives an inventor the right to exclude
others from commercially making, using, offering to sell, or importing
the invention in the country that granted the patent during the patent
term, usually a 20-year period from the application date. Any violation
of that right is considered a patent infringement. Patent owners that
wish to address the infringement of, or to ’enforce,“ their patent
rights must initiate a legal action in the country or countries where
the infringement occurred. (Our glossary defines the patent-related
terms we use in this report.):
U.S. companies and inventors that seek patent protection in the United
States file patent applications with the U.S. Patent and Trademark
Office (USPTO). They are typically represented by a patent attorney,
who drafts their patent application and responds to USPTO questions
about the application. Before granting a patent, USPTO will search for
relevant ’prior art“ (all patent and nonpatent literature that helps
determine whether a new patent will be granted) and examine
applications to, among other things, determine whether the claimed
invention is ’new and nonobvious.“ USPTO provides information about the
U.S. patent system to independent inventors that are considering
whether to obtain a U.S. patent, but it provides little information
about foreign patent systems.
U.S. companies and inventors that seek foreign patent protection may
file either (1) separate patent applications with each national or
regional patent office where they desire patent protection, or (2) an
international patent application under the Patent Cooperation
Treaty[Footnote 4] (PCT) that the World Intellectual Property
Organization (WIPO) administers.[Footnote 5] While the PCT process does
not culminate in a ’world patent,“ because such a patent does not
exist, it does enable applicants to indicate the countries where they
might like to seek patent protection and to undergo a single prior art
search and single examination before deciding whether and in which
countries they wish to obtain patents. In order to preserve their
rights to the invention they seek to patent, U.S. companies and
inventors must file all foreign patent applications related to the
invention, including PCT applications, within 1 year from the date on
which their U.S. application was filed. If they do not file with this
1-year period, companies and inventors lose certain rights that an
international treaty provides, which may in turn affect their ability
to obtain patent protection abroad.[Footnote 6] Foreign patent
applications must conform to the patent laws and requirements in the
countries where protection is sought.
U.S. companies and inventors that seek to patent abroad incur costs to
apply for, obtain, maintain, and enforce their patents. For example,
national patent offices typically charge fees when patent applications
are filed, as well as when they search for prior art, examine
applications, and grant patents. In addition, companies and inventors
may incur costs to have patent applications translated into other
languages. National patent offices also charge fees to maintain or keep
a patent active after it has been granted. Whereas most USPTO fees are
reduced by half for small entities (defined as a small business,
independent inventor, or not-for-profit entity), most foreign patent
offices do not offer similar fee reductions. In addition to varying
national patent office charges, companies and inventors must pay for
the services of U.S. and foreign patent attorneys or agents throughout
the process, particularly if they take any enforcement action related
to their patents.
Small Businesses Encounter Cost and Other Impediments When Seeking
Foreign Patents:
Small businesses face many obstacles in obtaining foreign patents, but
cost is the greatest impediment, according to the small businesses and
the panel of patent attorneys we surveyed. Certain characteristics of
small businesses themselves are also great impediments, the survey
respondents said. These latter include the amount of resources that
small businesses can allocate for foreign patent costs and the tendency
for these businesses to have a limited overseas presence. In addition,
the patent attorneys believe that small businesses lack sufficient
knowledge about foreign patents. This causes them to make inappropriate
decisions about obtaining and managing their patents. Both groups
believe that differences among foreign patent systems, such as
variations in the extent and type of protection that other countries‘
patent systems provide, create challenges. Finally, certain aspects of
individual countries, predominantly a country‘s market or business
climate and the extent to which it enforces its patents, can present
significant impediments for small businesses. (App. IV contains the
results of the patent attorney panel. App. V contains the small
business survey results.):
Cost Is the Primary Impediment for Small Businesses Seeking Foreign
Patent Protection:
The impediments that the small businesses and patent attorneys rated
fell into six broad, overlapping categories: (1) costs associated with
foreign patents, (2) characteristics of companies, (3) differences
among foreign patent systems, (4) characteristics of individual
countries, (5) factors related to USPTO (such as the quality and
timeliness of its work), and (6) availability of advice about foreign
patents.[Footnote 7] About 80 percent of both the small businesses and
patent attorneys believe that the costs associated with foreign
patents--
including costs to acquire, maintain, and enforce them--greatly impede
small
businesses‘ efforts to patent abroad (see fig. 1).[Footnote 8] (We
asked the
businesses and the patent attorneys to indicate whether the foreign
patent
impediments that they identified in each category affected small
businesses
to a very great extent, a great extent, a moderate extent, some extent,
or
little to no extent.) The two groups also held fairly consistent views
about the relative importance of other types of impediments. For
example, less than 25 percent of both the small businesses and patent
attorneys thought that USPTO-related factors and the availability of
U.S. or foreign legal advice about foreign patents were great
impediments to small businesses. However, the patent attorneys were
more likely than the small businesses to view company characteristics,
differences between foreign patent systems, and individual country
characteristics as areas that greatly impeded small businesses‘ foreign
patent efforts.
Figure 1: Small Businesses‘ and Patent Attorneys‘ Views on Types of
Foreign Patent Impediments That Small Businesses Face:
[See PDF for image]
Note: Percentages reflect the number of respondents who rated items
within each category as posing a great or very great impediment.
Thirty-eight small businesses responded to our survey, and 39 patent
attorneys participated in our panel. The number of respondents who
rated individual items may be lower. See appendixes IV and V for the
actual number of respondents to each item.
Source: GAO analysis of small business surveys and patent attorney
panel questionnaires.
[End of figure]:
Foreign Patent Acquisition Costs Are Considered to Be More Problematic
Than Maintenance or Enforcement Costs:
We asked the small businesses and patent attorneys to rate several
costs associated with foreign patents, including patent acquisition,
maintenance, and enforcement costs, in order to understand whether
certain patent stages pose more of an impediment than others (for
example, whether small businesses can afford to obtain foreign patents
but cannot afford to keep or enforce them). As shown in figure 2,
nearly 90 percent of the businesses and attorneys regarded patent
acquisition costs as a great impediment and thus rated these costs
somewhat higher than maintenance or enforcement costs.
Figure 2: Small Businesses‘ and Patent Attorneys‘ Views on the Stages
of Foreign Patent Costs as Impediments to Foreign Patent Protection:
[See PDF for image]
Note: Percentages reflect the number of respondents rating each item as
posing a great or very great impediment. Thirty-eight small businesses
responded to our survey, and 39 patent attorneys participated in our
panel. The number of respondents who rated individual items may be
lower. See appendixes IV and V for the actual number of respondents to
each item.
Source: GAO analysis of small business surveys and patent attorney
panel questionnaires.
[End of figure]
According to the businesses and patent attorneys and our analysis,
several factors cause foreign patents to be expensive and typically
more costly than U.S. patents.
* Companies typically file in several countries at a time, but the
exact number depends on the company‘s business needs and strategies.
For example, the overall patent strategies of two-thirds of the
businesses we surveyed ranged from obtaining patents in multiple
countries in one region to patenting virtually worldwide. The remaining
one-third of the businesses said they typically patent in only one or a
few selected countries.
* Applicants incur multiple costs in each country, and many countries‘
patent office fees are higher than comparable U.S. fees. Moreover, many
of these foreign charges are redundant. For example, applicants may
incur multiple search and examination fees, because each national
patent office where they file may conduct its own prior art search and
its own examination. Even applicants that use the PCT process to
initially obtain a single search or examination may still be required
to pay additional examination fees to the national patent offices where
they choose to file applications.
* Most patent applications that are filed abroad must be translated
into a foreign language at some point. Nearly all of the patent
attorneys we surveyed regarded the cost of such translations as a great
impediment for small businesses. Several businesses and patent
attorneys estimated that translating an application into Japanese, for
example, can cost about $8,000-$10,000 or more.
* Applications must be customized to meet the patent laws and
requirements of each country, and businesses must be represented by
foreign patent attorneys or agents in each country where they file
applications. These requirements add to the cost of the U.S. and
foreign legal fees that businesses incur.
Based on this information, we developed a hypothetical scenario to
estimate the minimum cost for a small business of obtaining and
maintaining patent protection for a single invention of minimal
complexity in the United States and nine major countries.[Footnote 9]
Such a foreign patent strategy could be considered typical for a small
business, according to the attorneys we consulted. As shown in table 1,
while the minimum cost to obtain and maintain patent protection in the
United States on the invention in our scenario would be about $10,000,
the minimum foreign costs could range from about $160,000 to
$330,000.[Footnote 10] These costs include foreign patent office and
U.S. or foreign attorney charges for developing and filing a patent
application, obtaining an issued patent, and maintaining an issued
patent for 20 years.[Footnote 11] Actual patent costs for a patent
filing strategy similar to our scenario could be far higher because we
assumed that the patent application would not face a difficult
examination process in any of the countries. Thus, our scenario
eliminated many patent office and legal costs that companies incur in
trying to obtain a patent. Actual patent costs would also vary if
certain key assumptions were modified. For example, if foreign patent
protection was desired in more than nine countries, the costs would
increase. Also, if a patent application was longer or more complex than
the one in our scenario (25 pages in length), the cost to obtain patent
protection abroad would rise because translation expenses and some
foreign patent office charges would be higher. Conversely, if patent
protection was not maintained for the full 20-year term in each of the
countries, official fees and attorney fees to maintain the patent would
decrease.[Footnote 12] The latter condition would reduce the overall
cost of foreign patent protection relative to the U.S. cost. (App. VI
contains more information about our scenario.):
Table 1: Minimum Estimated Costs For a Small Business to Obtain and
Maintain U.S. and Foreign Patent Protection for a Single Invention:
Stage of patent costs: Estimated minimum costs to obtain patent; United
States: Official fees[B]: $1,010; United States: Attorney fees[C]:
$5,402; United States: Total U.S. costs: $6,412; [Empty]; Nine Other
Countries[A]: Official fees[D]: $15,517; Nine Other Countries[A]:
Attorney fees[E]: $
