Intellectual property, although intangible, is critical for tech companies. Often small companies with valuable in-house know-how are faced with strong international competition but limited economic resources. Taking an expert look at U.S. patent law, this series of articles, published by Da Vinci Partners LLC, presents a number of important strategies based on US law that can save you money while giving you a significant advantage vis-a-vis your competition.
A patent is an exclusive right granted for an invention, which can be a product or process that provides a new way of doing something or offers a new technical solution to a problem. According to data from the World Intellectual Property Organization (WIPO), the typical European country files many patent applications. Taking Italy as an example, more than 10000 patent applications were filed in 2022 and it ranks 11th globally.
The differences between Italy and the U.S. are significant and knowing them can be used to your advantage:
Table
| Metric | Italy | USA |
|---|---|---|
| Population | 60.3 M | 333 M (>5X) |
| GDP (2017) | $2.2 B | $27.3 B (>10X) |
| Number of companies (2020) | 4.6 M | 33.3 M (>7X) |
| Number of patent filings (2021) | 11K | 650K |
However, the patent strategies typically employed by Italian applicants do not always lead to the best results. This is partly because patent firms in Italy, specialized in European law, know little about U.S. patent law.
There are compelling reasons why any entrepreneur or inventor should pay attention to the impacts of U.S. patent law on their patent portfolio:
- Market: The U.S. is the largest domestic market for a wide range of products and services and by far the largest consumer market in the world.
- Dimensions: A single U.S. patent covers a market of over 330 million people.
- Competition: It is highly likely that if a patent in your portfolio is litigated, it will be in the U.S.
- Costs: A U.S. patent typically costs half as much as a European patent validated in most European member countries, especially considering market size and per capita value.
For example, did you know that filing your patent application in any country outside the US first precludes the possibility of seeking non-publication of the patent text in the U.S., thus eliminating the option of filing a "submarine" patent that avoids publication? Consequently, filing first in the US should be considered in many situations.
Ignorance of U.S. patent law could lead to missteps that limit future options or, worse, deprive the inventor of valuable strategic rights or U.S. patent rights entirely. This vulnerability to U.S. competition is particularly concerning for small- to medium-sized businesses, which make up one in five inventors in Europe. Therefore, developing a patent strategy that minimizes expenses and maximizes benefits is crucial.
Few people realize that the choice of country for registering the first patent application can significantly impact future options. Generally, when the applicant is free to choose outside their home country first, it is logical to consider filing first in the country of greatest commercial importance, based on market size, the presence of competitors, or potential licensees. For U.S.-based companies, the obvious and natural choice (and a legal obligation) is to file in the U.S. first. But what about entities based in Europe? Does it make sense to file first in Europe? Yes, Italian residents (as well as the French) need to request a foreign filing license before filing in the U.S. but this is an easy procedure and need not the delay the filing of the application if the filing is prepared properly.
Because it is always necessary to disclose detailed technical information about the invention in a patent application sufficient to allow a person of skill to be able to make and use the invention, filing a patent application authorizes the publication of valuable know-how at 18 months from the first filing date. Once previously secret information is published, trade secret protection for this know-how is no longer possible. But what if you could avoid publication of your valuable know-how and reserve valuable patent rights too?
In this series of articles, we will explore little-known filing strategies that reduce costs and offer important strategic advantages. For starters, we'll examine why filing a patent application first outside the US first may handicap your ability to maintain trade secret protection for your valuable know-how. On the other hand, filing a patent application in the US first just may be what you need to best ensure your company's success in the market!
References
https://knoema.com/atlas/Italy/Number-of-patent-applications accessed on 11.09.2024.
https://www.wipo.int/edocs/statistics-country-profile/en/it.pdf accessed on 11.09.2024.
Country comparison Italy vs United States 2024 | countryeconomy.com accessed on 11.09.2024.
https://www.statista.com/statistics/1465541/italy-active-enterprises-macro-region/ accessed on 11.09.2024.
https://www.forbes.com/advisor/business/small-business-statistics/ accessed on 11.09.2024.
https://ww accessed on 11.09.2024. accessed on 11.09.2024.w.sib.it/en/flash-news/intellectual-property-in-italy-statistical-highlights/ accessed on 11.09.2024.
https://www.statista.com/statistics/256554/number-of-patent-application-filings-in-the-us/ accessed on 11.09.2024.
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.
