6.Filing National Stage Applications: Exercising PCT “National Options”

We have been talking so far about how to preserve the option of filing national patent applications on a date after the “free” one year Paris Convention deadline. Now we turn to the second step of the PCT analysis: exactly which countries should you file in when the deadline for the National Stage arrives?

Choosing where to file patent applications depends of course on the expected benefit of patent protection in each country or region. The following table shows some sample National Phase filing fees for two countries (China, US) and one region (Europe).

Which country or region should be a priority? There are two ways to approach this problem. One is to make your best estimate of the potential future profits in each region, then decide on the chances that this profit will be achieved. So if you think U.S. profits will be roughly $250,000 per year, and are 40% confident of this, you could estimate future profits at $100,000. This is obviously far more than the US National Stage filing fee of $ 1,600, so of course you would file a PCT National Stage application in the US.

A second way to approach the problem is to rank the regions according to your best estimate of the ratio of profits to filing fee. With this approach, there is no need to put a precise numerical estimate on the expected profit. You simply decide which country is ranked first in the estimated profit/filing ratio. You can also fix a total National Stage filing fee budget - say, $10,000 for a certain invention that is subject to a PCT International Stage application. Then you file in countries according to your ranking, until your budget is spent.

Using this approach, you might rank the countries/regions this way, depending on your best estimates:

This is just a rough example; you can adjust this method in a number of ways. For a detailed example in the pharmaceutical industry, ranking all PCT countries by National Stage filing fees, and comparing these to worldwide market share data for each country.[3]

There is one more item of strategy regarding PCT filings that you should be aware of. There are two different paths or “Chapters” in the PCT process. The first, Chapter Ⅰ, generates an International Search Report (ISR, or preliminary prior art search), and then moves directly to normal patent prosecution in a national or regional patent office. The second, Chapter Ⅱ, adds something extra to the international stage: a “preliminary examination” of the patent claims. This is a separate, PCT patent examination step. It results in a document called an International Preliminary Examination Report (IPER).

Many times, patent lawyers will recommend using the Chapter Ⅱ procedure when the international search report turns up some prior art close to the claims - i.e., when the ISR produces negative findings. Responding to these findings in a Chapter Ⅱ preliminary examination can save you time and money. That’s because if you do not use Chapter Ⅱ, you will have to respond to these findings in each national or regional patent office where you file a National Stage application. In other words, you can save the supplication of effort in responding to negative prior art findings by using Chapter Ⅱ. The results of the Chapter Ⅱ preliminary examination are then given to all national/regional offices. This can reduce prosecution time in a national office. Also, because the patent office in smaller countries often relies heavily on the PCT preliminary examination, the international preliminary examination report may serve as more or less the final patentability review in some countries.

The following diagram summarizes the PCT process:

The PCT system

Source: USPTO/World Intellectual Property Organization (WIPO)

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[1] Source: EPO database, worldwide.espacenet.com.

[2] Source: Lenovo Annual Report, 2017/2018 Fiscal Year, ended March 31, 2018, avail. at https://investor.lenovo.com/en/publications/reports/ar_1718.pdf.

[3] See Robert Silverman, Patent Filing Strategies for Pharmaceutical Products: Simple Cost-Benefit Analysis Based on Filing Costs and Pharmaceutical Sales, 33 American Intellectual Property Law Association Quarterly Journal 153 (2005).