South Africa: The Costs of Patenting …… or not

Last Updated: 11 October 2010
Article by DAVID COCHRANE

The patent system is in place for the protection of new inventions - to stop others from copying the new ideas and time-consuming and often costly research of an inventor so that the inventor can reap the benefit of his/her work.
There are many examples of inventors who did not protect their new ideas and have not derived the full benefit of their inventions. Possibly the most famous South African example is the "dolos" which, according to reports, was invented in 1966 by a draughtsman working at the East London harbor engineer's office – Mr Aubrey Kruger1. The dolos is a concrete breakwater structure in the form of an "H", with the one leg turned through 90 degrees. The dolosse (named after the fortune-telling bones thrown by Tswana and Sotho diviners) were lighter and easier to manufacture than prior breakwater blocks, and interlock and form a breakwater which effectively dissipates the energy of breaking waves. Dolosse have been used to protect harbours locally in the Eastern Cape, and internationally. Some 7000 have been used to reinforce the sea-facing Hong Kong Reservoir and, today, millions are in use throughout the world. The cost of not protecting this invention has, indeed, been high.

On the other hand, the cost of patenting itself is high and there are, no doubt, many inventors who have spent a lot of money filing patent applications for new inventions, and have seen these costs wasted.

Before proceeding with a patent application it is important to:

1) determine whether patent protection is suitable for the type of invention;
2) understand the market, competition, and the need for the invention locally and internationally;
3) conduct searches to ascertain whether the invention is new and inventive and thus patentable; and
4) understand the costs of patenting and have a patent filing strategy in place as early as possible.

1) Determine whether patent protection is suitable
The patenting procedure is time-consuming, and costly. In most countries of the world it can take from 1-7 years for a patent application to proceed to grant. On the positive side, the term of patent protection is long – 20 years from the filing date. Patents do not suit products that have a short lifespan of less than 5 years, but are geared towards products with a lifespan of up to 20 years.

In some cases it may be better to protect a product by keeping its make-up or the way in which it is manufactured secret. A good example of this is the formula for Coca-Cola. By keeping the formulation secret, Coke has been able to protect its product for longer than the twenty year term afforded by a patent. This strategy must however be considered very carefully before being followed. If the secret gets out, for example via a disgruntled ex-employee, then the information will be in the public domain and no longer protected. There is also a risk that a third party could develop the same or a similar invention in a different country where the invention was not used or known, and may be able to obtain protection for its invention in that country, and prevent the "original" inventor from entering the country thereafter.

2) Understand the market and competition
It is necessary to understand the market and the competition. It is very difficult to penetrate a market already saturated with a new product, even if the new product is patented. A patent does not guarantee commercial success. It must be determined whether the product can be commercialized successfully locally and/or internationally. If the product has the potential of international commercialization, countries and strategies for entering these countries should be in place to make sure that there will be a return on the costs of filing patent applications in these countries. An inventor must also decide how the patents will be commercialized. Does the inventor have the resources to develop and supply the invention himself, or does the inventor want to licence or sell the invention? Despite inventors' hopes and dreams of making millions, the latter options can prove to be the more difficult.

3) The novelty search
In order to be patentable, an invention must be new and inventive. In order to be "new", the invention must be different from the "prior art". "Prior art" is all information available to the public prior to the filing date of a patent application. To be "inventive" an invention must not be an obvious step in view of the prior art.

Ascertaining the novelty of an invention is most conveniently done by conducting a patent prior art search. A patent prior art search can be conducted by a patent attorney. Depending on the complexity of the search and the number of earlier patents, a prior art search can cost from R 5 - 15 000 or more. There are also dedicated searching companies locally and internationally that can conduct this type of search. Alternatively, inventors can conduct searches themselves through patent databases that are available on the internet, for example:

United States Patent and Trademark Office: http://patft.uspto.gov/
Espacenet: http://ep.espacenet.com/

Patent searches are not the only type of prior art searches that can be undertaken. Searches on the internet, as well as literature searches can also unearth relevant prior art.

Whichever way an inventor decides to go, a good prior art search (patent, internet and/or literature) can provide valuable information as to whether it is worthwhile proceeding with a patent application, as well as information on what others have tried before (and possibly does not work too well).

4) The cost of filing patent applications – a patent strategy
As mentioned above, the term of a patent is 20 years from the filing date of a complete patent application and, depending on the route taken and the country, the time taken from filing a complete patent application to grant can be from 1-7 years (or longer). During the time that a patent application is pending maintenance and patent prosecution costs usually fall due. After grant, yearly renewal fees fall due until the expiry of the patent. Patents offer long term protection, but may take a long time to proceed to grant, and are usually costly with costs falling due at different times.

Patenting in South Africa only
For a South African, the patenting procedure usually starts off with the filing of a provisional patent application in South Africa. The cost for a patent attorney to prepare and file a provisional patent application can be from R 10 000 to R 20 000, or more if the invention is complex and much time is required to prepare the patent specification.
After the provisional patent has been filed, the applicant has one year to take the next step – the filing of a complete patent application. The complete application can cost from R 15 000 – R 25 000, or more depending on the complexity of the invention.

The SA Patent Office checks that the correct forms have been filed, but does not conduct a substantive examination of the application to check that the claims are new and inventive. The complete application is usually accepted and can proceed to grant 6-9 months after filing, with no extra expenses. After grant an annual renewal fee in the region of R 1 000 falls due to keep the patent in force until it expires.

The Table 1 below shows the costs that can be expected for the average SA patent, over the first period of 7 years:

Table 1 – Estimated costs of obtaining patent protection in South Africa

Cost/R
Year 1

Cost/R
Year 2

Cost/R
Year 3

Cost/R
Year 4

Cost/R
Year 5

Cost/R
Year 6

Cost/R
Year 7

Prior art search

10000

South Africa provisional
patent application

15000

South Africa complete
patent application

20000

Annual renewal fee

1000

1000

1000

1000

1000

TOTAL/R for first 7 years

25000

20000

1000

1000

1000

1000

1000

50000


Patenting Internationally and in South Africa
There are many variables relating to the costs of filing patent applications internationally as well as the time that it takes to get patents granted internationally. These include the complexity of the invention, which patenting route is followed, how many countries are elected, how difficult the patent prosecutions are and monetary exchange rates. The explanation below is for an average international patent filing via the Patent Cooperation Treaty (PCT) route.

For a South African, this procedure also starts off with the filing of a provisional patent application in SA at a cost of R 10 000 to R 20 000, depending on the complexity of the invention.

The provisional application is usually followed by the International (PCT) patent application which must be filed within 12 months of filing the provisional patent application. The PCT application can cost from R 50 000 to R 70 000, or more depending on the complexity of the invention. The PCT application is examined by an International Patent Examiner who conducts a prior art search and provides a Written Opinion on the novelty and inventiveness of the invention claimed. If the Written Opinion is negative, it is possible to amend the claims and/or provide an argument as to why the claims are novel and inventive by Demanding Examination of the application. This step can cost from R 20 000 to R 30 000. Thereafter the Examiner will issue a Preliminary Examination Report. A positive report is useful as it can make the prosecution of patent applications down the line easier.

Within 30/31 months (depending on the country or regional system) of the filing date of the provisional patent application, it is necessary to file patent applications in the countries and regions where patent protection is required. For each country and regional system there is a cost for filing the patent application. The costs vary from country to country and regional system to regional system. The following main regional systems (there are others) are available:

Europe, covers: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, France, Finland, Germany, Great Britain, Greece, Hungary, Italy, Ireland, Luxembourg, Monaco, Netherlands, Romania, Poland, Portugal, Slovak Republic, Republic of Slovenia, Sweden, Switzerland including Liechtenstein, Spain, Turkey.

ARIPO, covers: Botswana, Gambia, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Sierra Leone, Sudan, Swaziland, Tanzania (Tanganyika), Uganda, Zambia and Zimbabwe.

OAPI, covers: Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, Gabon, Guinea, Guinea Bissau, Ivory Coast, Mali, Mauritania, Niger, Senegal and Togo.

After filing, most countries and regional systems conduct a substantive examination of the patent application and it is often necessary to amend the claims and/or submit arguments as to why the claims are novel and inventive. This step is referred to as "patent prosecution". Furthermore, in some countries and regions an annual maintenance fee falls due while the application is pending. Once the application has been accepted, grant fees fall due. For the regional system of Europe, a validation fee must be paid for each country in that system that the applicant elects to proceed in. After grant, annual renewal fees then fall due for each country.

Table 2 below shows the costs that could be expected, and when they could fall due, for the first 7 year period for an average patent application in a selection of popular countries and regional systems (and popular countries selected within the regional systems):

Table 2 – Estimated costs of obtaining patent protection in selected countries Internationally

Cost/R
Year 1

Cost/R
Year 2

Cost/R
Year 3

Cost/R
Year 4

Cost/R
Year 5

Cost/R
Year 6

Cost/R
Year 7

Prior art search

10000

South Africa provisional
patent application

15000

PCT application

80000

40000

Australia patent application


40000

40000

5000

5500

ARIPO patent application

45000

15000

30000

20000

OAPI patent application

80000

30000

10000

12000

Canada patent application

35000

15000

China patent application

45000

45000

3000

3000

European patent application

70000

50000

35000

Germany - validation

15000

8000

France - validation

15000

7000

Italy - validation

30000

7000

United Kingdom - validation

10000

5000

Japan patent application

65000

25000

25000

South Africa patent application

6000

1000

1000

1000

USA patent application

55000

50000

TOTAL/R for first 7 years

25000

80000

40000

441000

256000

154000

108500

1104500


From the above, it is clear that not filing a patent application for a new invention and losing out on protection can be very costly. The filing of patent applications is also a costly procedure and an inventor should devise a patent filing strategy early on in the patenting procedure to ensure that there is sufficient funding and that the patent filing route, countries selected, and costs for these countries are justified.

Please feel free to contact the writer for further information on filing patents internationally and patent filing strategies.

Footnote
1. Graeme Addison, The Hidden Edge, The Engineering Association, 2002, pg. 143

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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