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WHY EUROPEAN CLIENTS ARE BEST ADVISED TO FILE PATENT APPLICATIONS IN THE U.S. FIRST

by John Moetteli, Esq.1

Introduction:

With respect to patent strategy, patent attorneys best advise their clients by suggesting that they start their patent filing in the jurisdiction of the most commercial importance to them 2. The practice of merely filing locally without any justification other than tradition often fails to serve the client's best interests. Why? This article will show that the client's U.S. patent rights are likely the most flexible and powerful tools to monetize a client's invention, particularly where a potential licensee or infringer resides in the U.S.. To fail to communicate these advantages to the client is the strategic equivalent to a chess instructor failing to tell his student that the queen is allowed to move in all directions as far as the way is clear. Winning at the game of Intellectual Property is difficult enough without being handicapped by not knowing the rules of the game. The game is global now and the client's expect to be informed of the basic rules of the international patent strategy.

Yes, for companies whose markets are local, and whose inventions have no licensing value in the U.S., advising the client to file a patent application locally is certainly legitimate. But then, how many clients would admit that their inventions fall into this category? For globally-minded clients and for clients whose inventions may have a significant market in the U.S., the patent attorney should advise their clients to file in the United States first or at least concurrently with or immediately after a local filing. Why? If they do not file early in the U.S., a client can lose significant rights because more prior art can be cited against them. We'll explain this in more detail below. Besides this, the United States has a developed patent system (more than 200 years old) which, in many ways, has helped shape the laws of many other industrialized nations. This developed patent system helps reduce unknown factors which increase the risks of litigation. Still further, the United States remains a dominant force in international commerce and if a client is forced (because of budget constraints for example) to choose one single national patent to have in their portfolio, most clients choose a U.S. patent3. Here is a listing of some of the many reasons for starting first in the U.S.:

The 18 Reasons to file in the U.S. first

The following 18 reasons help justify filing a patent application in the U.S. The first five reasons directly justify filing a patent application in the U.S. first. In any case, where a client eventually decides to file a patent application in the U.S., in hindsight at least, that client should have filed in the U.S. first. The following reasons should help make this fact clear.

1. First and most important: To better ensure the client obtains the broadest possible U.S. patent. Filing in the U.S. first, allows the applicant to jump back in time one year to define the prior art against which the client's patent application will be judged. Filing early in the U.S. is necessary in order to take advantage of the grace period of one year from the filing of your client's first U.S. application to exclude the applicant's own as well as a third party's prior art. Here's why: Title 35 U.S.C section 102(b), states the following:

35 U.S.C. 102 Conditions for patentability; novelty and loss of right to patent.

A person shall be entitled to a patent unless -

... (b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States...

Consequently, although the priority filing date is the date that determines prior art for a European patent, and in fact most national or regional patents, for a U.S. patent, prior art is defined one year before the earliest filing in the U.S.4. Yes, although the practice of "swearing behind" using the client's non-U.S. priority filing helps to a limited extent because the client can claim inventorship at least back to his priority filing date (only available for WTO-member countries), this allows them to go back in time only to their priority filing date, not one year earlier to their priority filing date, as he would have been able to do if the client had filed first in the U.S. Consequently, if the client chooses to file anywhere but the U.S. first, he's choosing to put himself at a disadvantage vis--vis other patent filers who have a 102(b) filing date in the U.S. which is earlier than their priority filing date. That, in almost all cases, would be a strategic mistake that the rational client, if fully informed, would never expect to make but for his ignorance. The first priority of the client-oriented patent attorney is to ensure that his client does not make mistakes.

One may fairly ask, why does filing in the U.S. first offer this very significant advantage? Because the U.S. is a first to invent country (not a first to file country) and the filing of a U.S. application is the best proof of date of invention. Further, by the provision of a grace period of one year, the client receives the benefit of the assumption that it took a year to develop the invention prior to filing in the U.S. Consequently, if the client files first in the U.S., the U.S. patent examiner can assert less prior art against him, and therefore, the client's U.S. patent claims can be broader than elsewhere in the world. In addition, if a third party competitor wishes to defeat the client's U.S. patent, they must find prior art that is one year older than they would otherwise have to find if the first filing as a non-U.S. filing. Alternatively (the down side), the client must find prior art that is one year older in order to defeat a competitor's earliest U.S. filing date.

2. Fortunately, the European Patent Office and the patent offices of essentially all industrialized nations of the world consider a U.S. patent filing a valid priority filing for their own purposes, thereby serving to reserve rights in that country as of the U.S. priority filing date. Of course, the Paris Convention requirement that the regular filing be made within one year of the first filing still applies. In other words, a Swiss resident filing a U.S. patent application first and later (within one year) a European patent application, can claim priority to the U.S. patent application and thereby fully preserve their rights in Europe, just as if the client has filed in Europe or their home country first. It should be noted, however, that where the applicant is a French resident, France might not consider a first U.S. filing by such an applicant as a valid filing because of French national law requiring that residents of France file first in France for national security purposes (however, this is likely to soon change, so feel free to contact the author to learn of the latest status on this point).

3. U.S. patent applications can be filed in any language. Only six month or perhaps a year or more later (within six months of receiving an official notice to do so) must the application be translated into English. This means that the client applicant can gain the above advantage by filing a U.S. provisional patent application concurrently with an early local filing, for a cost of perhaps less than 500 Euros more than filing in the foreign country only (i.e., essentially, the U.S. provisional can be a straight filing or re-filing of the original non-English language filing).

4. The filing fee for a U.S. provisional application is $210, significantly lower than the filing fee in most other industrialized countries. For individuals or companies having less than 500 employees, the official filing costs and most future official fees are reduced by 50% (so, $105 for a U.S. provisional filing).

5. Monetizing a patent is much easier in the U.S. than in other countries because the legal system allows clients with valuable patent rights to negotiate a contingent fee agreement with even the largest law firms. Depending on the perceived value of the patent, these firms will not charge for their time or expenses, unless and until they win the case and damage award is granted. In Europe, most countries (with the possible exception of the United Kingdom) do not allow lawyers to accept contingent fees, and so the client must pay their lawyers by the hour in Europe. Large companies know this and so tend to ignore the European patent rights of others until a suit is actually filed. Large European research institutions and universities know this and very often file for patent protection only in the U.S. for certain technologies.

6. Because the United States represents the largest domestic market for a broad range of products and services, this sheer market size means that it is likely that, on a per capita basis, the United States will be the least expensive jurisdiction in which to obtain patent protection5. A U.S. patent typically costs one half that of a European patent, for example. Further, renewal fees are only due every 3.5 years, not yearly as in Europe.

7. English is the language of Computer Science, Information Technology, Business and Law, and the native language of many industrialized nations around the world, such as the United Kingdom, Ireland, Australia, Canada, New Zealand, and Singapore. Further, Japan permits filing in English, provided that a translation into Japanese is filed within two months. Therefore, a patent application drafted in English first is likely to not suffer from losses in meaning due to translation in these important countries.

8. Extraterritorial effects may be put into action: a significant advantage of filing in the U.S. first, is that, if no further filings are made, a U.S. patent can provide protection for the inventor or licensee in ways which extend beyond the borders of the United States.

9. The filing of a U.S. provisional patent application permits a claim of priority without reduction of the term of the U.S. patent that claims priority to it (i.e., the term of the U.S. patent begins on the filing of the subsequent regular U.S. application) and the preservation of patent rights at minimal cost (the lack of formal requirements of a U.S. provisional application means that the application can be prepared for less money than a regular U.S. application-an important advantage for start-ups who are strapped for cash).

10. An early U.S. filing date means that our client's application won't be rejected by the U.S. patent office under 102(e) of the U.S. Patent Law, when another party's U.S. patent application has published during the prosecution of the client's application, even though their non-U.S. priority filing date is earlier than our client's U.S. filing date. Conversely, if the client's priority filing is a U.S. filing, then the publication of the client's application creates 102(e) prior art against competitors.

11. It is clear that patent protection is available for computer software in the U.S., and for business methods as well (subject to certain conditions). The long history of accepting software patent applications in the U.S. has made the U.S. patent office the office of choice for software patent examination, in part because the thoroughness of prior art searching is considered to be superior there. Therefore, filing a regular U.S. application early, and ordering accelerated examination is often the quickest way to determine whether a patent will ultimately issue on any application filed.

12. Where the invention has already been publicly disclosed, the United States is among the very few countries in which one has a one year grace period in which to file.

13. Because the United States is a first-to-invent country, one may file a patent application which is essentially identical with an earlier application filed by a competitor, within one year of the publication of the competitor's U.S. application, and, provided that the client can prove he was the first to invent in an interference procedure and that there were no novelty-destroying publications one year prior to the filing of the application, he may be able to recover the rights to the patent from the competitor (this applies to countries, such as Switzerland, Germany, and Austria that are members of the World Trade Organization).

14. Provided the client does not file any foreign applications and requests non-publication of the application at the time of filing, his U.S. application is kept secret and never published by the U.S. patent office, until it is granted. Therefore, the client need not relinquish trade secret protection until he is convinced that the patent protection obtained will protect him more effectively than merely keeping the technology secret. This is simply not possible if a European, Japanese, Chinese or Korean patent is filed.

15. Patent pending status can be maintained almost indefinitely (subject to the 20 year patent term, payment of fees and ongoing good faith prosecution of the application) and thus offer the ongoing threat of amendment to "cover" a competing device, thus providing a deterrent effect against competition, particularly where large investments in tooling would be required of competitors/potential infringers.

16. Unity of invention requirements are less stringent in the U.S. than in Europe, enabling the possibility of one U.S. patent covering two or more inventions as defined under the European Standard of unity.

17. A filing date of yesterday is possible, through taking advantage of the significant time difference between Europe and the East Coast or Hawaii for example. In fact, clients that come to our firm in Europe and ask us for a priority filing benefit from an additional 6 hours to prepare and file such priority filing. This is because the date of filing at the U.S. Patent Office counts as the official filing date and so, we have until 6 AM in the morning (midnight Washington DC time) to file an application in order to get the filing date of the previous day in Europe.

18. Prior art that would otherwise qualify as prior art in Europe and most industrialized countries of the world, is not considered prior art in the U.S. when there is a common inventor or if such technology was developed under a joint-development agreement.

Conclusion:

Despite the obvious advantages of filing in the United States first, some countries do not permit their residents or citizens to file in foreign countries first. For Example, French residents must file in French, in France first, using a French patent attorney Where the invention is known to be a state secret, German residents must file in Germany first6. In most other countries (including Switzerland), clients are free to file first wherever they choose.

Further, when publication is imminent, and the inventor is not an English speaker, preparing an application in his mother tongue (say German) and filing in the most convenient location to obtain a filing date may mean that filing first in the United States is not possible (although this is seldom the case, the situation does arise from time to time; however, the fact that a filing by 6AM the next day usually means that the U.S. filing date will receive the same filing date as the local patent application).

If the client would like to save costs and time by filing a U.S. provisional patent application, the fact that the application is not reviewed substantively until a regular application is filed (thus delaying the ultimate issuance of the patent) may be a factor in the client's decision to file a U.S. provisional application.

Please feel free to contact us to discuss what we can do for you as a client or as a patent attorney to file early in the U.S. If you are a client, we are happy to consider helping you file U.S. patent applications directly. Our firm is also capable of preparing patent applications for filing in Europe which meet the stringent requirements of the U.S. Patent Office. So if the client thinks he might file in the U.S. at a later date, it is wise to prepare the first application to meet these most stringent requirements (to better insure validity of the patent in the U.S.).

Visit our website at www.moetteli.com for further information on intellectual property rights.

1 John Moetteli is an international patent attorney and managing attorney of Da Vinci Partners LLC (www.moetteli.com), an IP firm in Switzerland specializing in preparing and filing U.S. and European patent applications for clients around the world. He also teaches intellectual property strategy at IMD, Lausanne, Switzerland.
2 Where such a choice is permitted under national law, discussed infra.
3 Companies and institutions that, from the public record, do this include: IBM, Logitech, the University of Geneva, HUG, the EPFL, and many large Swiss chemical and pharma companies, for example.
4 When it comes to issues in U.S. patent law dealing with proof of inventorship, which is a unique characteristic of U.S. patent law vis--vis other countries, the equal treatment provisions of the Paris
5 The licensing value of a U.S. patent is therefore much greater than any other national patent.
6 German state secrets are defined as facts and knowledge accessible to a limited number of people whose revelation would damage the external security of the German nation" 93 Nr. 1 Strafgesetzbuch (StGB)(Ger.), translated in Joseph J. Darby, The Penal Code of the Federal Republic of Germany 118 (1987). Therefore, this covers almost all military-related inventions the details of which are known by only a few.

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