International Strategies: PCT Patent Application and Licensing Fee (Royalties) in overseas countries
Inventors aim to sell their products in as many markets as possible and consequently seek patent protection in countries where there is a market. However, the filing of patent applications in multiple countries can be expensive.
Furthermore, there are ongoing costs in maintaining and prosecuting these applications. Consequently, many inventors prefer to delay incurring these costs for as long as possible but still retain the option of filing patent applications in the desired countries.
There are several strategies in which to delay the incurring of expenses in filing multiple overseas patent applications.
- Preparing and filing a provisional patent application in respect of the invention. A provisional patent application is the cheapest of patent applications to prepare and file and provides the inventor with a period of 12 months to determine the countries in which they would like to pursue patent protection.
- Preparing and filing a PCT patent application which is an international patent application that serves to postpone the filing of national patent applications in overseas countries.
PCT Patent Application: The Ins and Outs
If you are considering filing your patent application into multiple countries, you would benefit by filing a PCT patent application. A PCT patent application will give the inventor a total of 30 and 31 months from the filing date of the priority patent application before it is necessary to file corresponding applications in the desired countries.
The benefits of this, is that inventors are able to start manufacturing and distributing overseas from day one having the comfort that their patent rights are covered. During this time, inventors can work out which markets they wish to pursue and in which countries they wish to obtain patent protection.
Licensing Fee (Royalties): The Benefits
Licensing is a cost-effective way to manufacture, distribute and sell your product. In a nut shell, the licensor (the inventor/applicant) is paid licence royalties by the licensee (manufacturer/distributer/seller) to commercialise the intellectual property. These royalties are typically expressed as a percentage of the product’s sale price, but other factors can influence the rate. In many cases, the patentee will receive minimal (if any) up front money and a predetermined amount per product sold. We always recommend that the license agreement include a performance clause where you can terminate the agreement, because of failure to achieve minimum turnover, and then be able to license to another.
If you are interested in looking at this further, please contact us.
Major Overseas IP Markets
The markets to consider are places where your product is sold and where your products can be manufactured.
The United States of America
The IP market in the United States of America (USA) is similar to Australia but significantly larger. The USA is Australia’s third-largest two-way trading partner in goods and services (after China and Japan).
China is Australia's largest trading partner and presents enormous opportunities for Australian businesses. Australia is both a leading source of resources for China and increasingly a supplier of premium goods and services.
Acquiring patent protection in China enables the inventor/applicant to sell their product into emerging Chinese markets. It also enables the inventor/applicant to manufacturer their product in China and prevent others from doing so.
The European Union (EU) includes 28 member states and is the world’s largest trading bloc. As a single market, the EU is the world’s largest economy and is one of Australia's largest trading partners.
The IP system in the EU is sophisticated and can be both complex and expensive given the number of different national and EU-wide rights available.
China is Australia's largest trading partner. This presents great opportunities for Australian businesses as Australia is both a leading source of resources and a supplier of premium goods and services to China.
China now appears to want to be the leader in innovation and to do so they are placing a lot of time and resources into their intellectual property system.
If you would like to know more about obtaining patent protection overseas
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WHAT OUR CLIENTS SAY
"I felt so comfortable with Philipp and with the team at Wynnes, that I didn’t need or want to go anywhere else for IP advice and protection."
"A friend of mine strongly recommended to see Ewen. As soon as I met with him and started discussing my idea, I knew that I was in capable hands."
"When we came to the office and showed Philipp a prototype, he really grasped the product and concept without having to double explain things which was great."
"It’s different for the little guys, being a small business and protecting your idea is quite expensive. Ewen understood that. Instead of trying to explain things in legal terms – he introduced the commercial way."