New Zealand: Reining In The Cost Of Patent Protection For Small Businesses In Recessionary Times

Last Updated: 3 June 2009
Article by Jennifer Lucas

Protecting novel and inventive products, formulations, processes or methods can give you a 20 year monopoly to make, use or sell your invention. A granted patent is an asset that can be sold, licensed or enforced to ensure you are getting the financial rewards you deserve for your contribution to advancing a given technology. For this reason, patent protection is a fundamental part of business for many New Zealand companies.

However, protecting your intellectual property can be an expensive business. We know that, whatever the economic climate, inventions must be protected to stay ahead of the competition and to secure any income that the invention may generate. But for those looking to apply for a patent for the first time, the cost of doing so can be quite daunting.

In the current economic climate, it is useful to know there are options available for reducing the cost of existing patent protection, and deferring the cost of prospective protection.

Patent Searching

Before filing for patent protection it is worthwhile (although not essential) to complete a prior art search, and obtain an opinion on how the information disclosed in the search results may affect the patentability of your invention. A professional search is generally charged to you on both the time taken to collate the raw results, and the time taken to form an opinion based on these results.

Conducting your own initial searching can save you at least a portion of these costs. There are a number of comprehensive online patent databases available which will enable to you search the published patent literature at no cost1. The results you find may give you a clear indication that your idea is not novel, or provide you with an insight as to what is known in your field of interest so you can tailor your application around the known art. Performing a search early may also prevent you from conducting redundant R&D (for example where the technology is overly patented by others). Approaching your patent attorney with your own search results may negate the need for a full search to be completed (depending on the quality of your search), or you may choose to have an opinion provided based on the search results you have collated.

While a search will also be completed by the Intellectual Property Office of New Zealand when your patent application is examined, being aware of potential prior art before examination can save you the costs associated with amending your application or submitting arguments in support of your application, following the citing of a previously unknown document against your application.

Complete Applications in the First Instance

In New Zealand the patent application process generally begins with filing a provisional application, followed by filing a complete application within 12 months. Each time an application is filed, there are costs associated with drafting the application, as well as government filing fees. One option to reduce drafting costs is to file a complete specification in the first instance, eliminating the cost associated with drafting and filing the provisional application.

Filing a complete specification in the first instance does limit the scope of changes that can be made to the application, but has the additional advantage (along with saving provisional filing costs) of reducing the time between filing and grant of your patent. The sooner a patent is granted, the sooner it can be enforced or the technology licensed to third parties to generate income.

Receiving an examination report shortly after your first filing will also provide you with an Examiner's opinion on the patentability of your invention - this is often useful when deciding whether or not to invest further in patent protection internationally.

Divisional Patent Applications

Divisional patent applications can be used to save filing costs when your product or invention covers more than one inventive concept. In situations where it may be ideal to file two separate provisional or complete applications, both inventions can be incorporated into a single application, hence reducing both filing and drafting costs.

During examination a unity objection will likely be raised, and you then have the option to file a divisional application containing one of the two inventions. The divisional application will still retain the priority date of the first application, however the cost of turning it into a separate application can be delayed by over two years from the filing of the initial provisional application.

Filing For Patent Protection Internationally

Filing for patent protection in countries outside New Zealand is expensive, and there is little that can be done to make it significantly cheaper. There are however options available to defer costs as long as possible, and a sensible filing strategy should be determined before filing into countries that may turn out to be irrelevant.

There are two main types of international filing that are commonly used (with a few exceptions for individual countries). Convention applications can be filed directly into international countries within one year of filing your first New Zealand application for the same invention. This type of application is generally the most cost effective option if you are only interested in a few countries. However associated fees will generally be charged on filing.

The second international filing method is using the Patent Cooperation Treaty, or PCT. Using the PCT, a single international application is filed within one year of your first New Zealand filing for the same invention. A filing fee will be charged for this single application; however this fee is in most cases significantly less than the cost of filing convention applications in several countries.

This single PCT application then undergoes an international search and examination, and you typically have another 18 months before you need to decide which countries you specifically want protection in. Individual filing fees for your countries of choice are not usually payable until this period has passed, giving you an additional year and a half from first international filing to confirm your markets of interest, approach investors and potentially accumulate some more capital.

Look after the pennies...

In many countries, additional requests such as extensions of time or submitting voluntary amendments will incur further charges from both the government and the attorney looking after your application. While these charges may not be huge, ensuring deadlines are met and instructions provided when requested will help to cut back on avoidable costs. If final deadlines are missed, restoring an application can be expensive, and this situation should be avoided whenever possible.

To protect or not to protect?

Patent protection is designed so that inventors who spend time and money researching and developing new products are able to recoup their costs over a period of 20 years, in exchange for disclosing their knowledge to the public. If a new product, process or method is patentable, early investment to gain a strong patent can provide financial benefits in the long term.

Without patent protection, little action can be taken against competitors if they produce and sell their own version of an unpatented technology. If a new product is worthwhile, equivalent and possibly cheaper versions of the product may appear on the market within a matter of months, potentially reducing market share and overall profit.

While many may be tempted to proceed down the "do-it-yourself" path in order to save costs, the chances of gaining a robust granted patent that can be licensed or enforced are not high. A patent application, prepared by a patent attorney, and a patent filing strategy tailored to suit your budget, is the best way to ensure you are getting protection you can both afford now, and will be thankful for later.

Footnote

1 www.google.com/patents, http://ep.espacenet.com, www.iponz.govt.nz, www.uspto.gov, www.ipaustralia.gov.au

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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