Striking the balance: how to reduce costs and maintain foreign patent protection for Scandinavian exports
Given the size of their domestic markets, Scandinavian companies are often export-orientated, either to other Nordic countries or to larger markets further afield. Companies will thus often apply for patents in multiple potential markets, which can be both expensive and time consuming, especially with regard to maintaining knowledge and expertise on country-specific regulatory requirements.
Interest rates are on the rise, the stock market is going through its usual volatility and many global indicators suggest that tough times lie ahead. This may leave many export-driven companies, including many across the Scandinavian region, at the mercy of foreign markets and exchange rates. It is thus increasingly important to maintain control of costs and reduce them where possible, and to find the right balance between costs and benefits. IP costs are often categorised differently to other expenses, given their necessity and time sensitivity. For example, new R&D and innovations are not automatically protected, and a patent or clearance must be filed before the product is launched or that protection option may be lost forever. Similarly, if a patent is abandoned, there may be no opportunity to revive it in future, should competitors begin developing products based on your previously protected technology.
There are many good reasons why companies should maintain patent protection, but there are also many options available to improve cost efficiency. For export-driven companies in Scandinavia, one of the most practical methods for balancing costs with protection in relevant markets is to examine the geographical coverage of their IP rights.
Review your patent families
When a patent application is filed, it is often for a new technology with potential for commercial viability and application but prior to launch, an element of uncertainty will always remain. If the Patent Cooperation Treaty route is chosen, there is usually time to develop a better understanding of potential applications, but the commercial breakthrough may still be yet to come. It is common to play it safe when choosing countries, because while it is possible to discontinue patent applications at a later stage, they cannot be added. Patent applicants often include some potentially relevant countries, as well. Therefore, unless patent families are reviewed regularly, the risk remains that protection is being sought in countries that add little value.
Country selection may have been made some years ago, with a view to where the product might be sold rather than where a patent might be used to hinder competition. For many Scandinavian firms, it may actually be more valuable to protect their patents in the United States, China, Germany, France or the United Kingdom than in their home country. The ability to hinder a major competitor in a major market may be more significant than obstructing them in Sweden, Denmark or Norway, for example. This is not a universal truth, but still something to bear in mind.
Outsource your renewals
Since patent family members can be removed, but not added, after the 30 or 31-month deadline (with a few exceptions), it makes sense to start by having a broad geographical coverage and reducing this as necessary. Timing this correctly is critical and thorough planning is key. Most patent offices use progressive annuity fees; the first few years are relatively cheap (around €300 to €400), but the final years can be many times the initial cost. While annuity fees differ from country to country, many are roughly in line with one another. Therefore, should you choose to validate your European patent in more than 20 European countries, it is likely that the majority of your annuity costs will be spent on upholding and maintaining protection in Europe. However, upholding your patent in the biggest European economies may be enough to hinder your competitors or make them consider different technologies. This is not a universal truth either, but again, something to consider.
It can be efficient and cost effective to outsource annuity and renewal payments, but it is worthwhile reviewing any associated service fees to ensure that they remain reasonable. Most service providers will have a surcharge related to exchange rates and costs for using local agents, so remember to factor this into your budget. That being said, should your provider offer a reasonable price and a high level of service, then it can often be worth the additional expense. You could also seek out a service provider that offers tools for portfolio management; this can improve efficiency and reduce your general costs over the long term, particularly if it means you do not have to pay for your own platform.
Companies seeking to lower patent costs should start by looking into their mature patent families to identify any patents that can be discarded, such as those in less relevant countries. For a patent family close to expiration, discarding patents in five countries could potentially reduce costs by up to €5,000 per year. Similarly, outsourcing renewals or portfolio management can be an effective way to indirectly reduce costs as it eases the administrative burden on the organisation, allowing your in-house team to focus on adding to your portfolio, rather than maintaining it. Export-driven countries, such as those in Scandinavia, should take note.
This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight
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