04 April 2016

How to Patent Your Invention in Australia and the US

Australia-USAFor many of the Australian clients I work with, the most important markets are Australia (i.e. the ‘home’ market) and the US (because of its size and relative accessibility).  This means that when it comes to protecting their innovative technologies, obtaining patents in these two countries is at the top of these clients’ lists of priorities.  I am therefore often asked how best to achieve this objective, how much it will cost, and how long it will take.

The typical ‘lawyer’ answer is, of course, ‘it depends’!  Do you want patents only in Australia and the US, or are there other countries of interest?  When and why do you require these patents?  Do you want to obtain patents as quickly as possible, or are there strategic advantages in drawing out the pendency (and finalisation of the scope of rights) for as long as possible?  What is your budget for the patenting program, both in the short term and over the coming years?

Assuming that you are able to answer these questions, it should be possible to develop a strategy that meets all of your requirements.  In this article I will go into further detail of one fairly typical and effective approach, along with some of the relevant considerations and potential variations.

Obtain US Patent Rights First

Whatever overall strategy is adopted, in most cases I will recommend endeavouring to obtain US patent rights prior to Australian rights.  Just to be clear, for readers who may be less familiar with the way the patent system works, this does not mean filing an Australian application later than a US application.  It is, in fact, essential that both applications be filed in ‘parallel’ (although there are different ways of achieving this).  However, it is generally possible to ensure that the applications proceed at different rates through the US and Australian patent office procedures.

So, why obtain US patent rights first?  There are a number of reasons.

Firstly, the work carried out by examiners in the US Patent and Trademark Office (USPTO) is highly-regarded internationally.  (For the most part, in my experience, this regard is justified, though of course there are exceptions in individual cases.)  Frank Sinatra’s assessment of New York is thus also largely applicable to the USPTO – if you can make it there, you’ll make it anywhere!  (Although it has to be said that Ol’ Blue Eyes had his problems with Australia.)

The second reason, which is strongly related to the first, is that examiners in the Australian Patent Office will generally use the outcome of US examination in order to expedite their own work.  Indeed, you can ensure that this is the case by taking advantage of a Patent Prosecution Highway (PPH) program to accelerate examination of an Australian application which includes one or more claims corresponding with your granted US claims.

Thirdly, you have a much greater degree of control over the pace of the Australian application.  In both Australia and the US you have options for accelerating examination (which is a topic beyond the scope of this article), however only in Australia can you effectively slow it down.  In the US, you pay filing and examination fees at the outset, and a first examination report (called an Office Action) will issue in due course, typically around 2-3 years after filing.  If there are any rejections or objections raised by the examiner, you then have just three months to respond (with a further three months being available upon payment of extension fees).

In Australia, however, you are not obliged to request examination, or pay the associated fee, at filing, and this step can be delayed until the Patent Office directs you to request exam.  This might not occur until four years or more after filing, although you always have the option of making a voluntary request at any time.  Depending on the technology of your invention, up to a further 12-18 months may pass before you receive a first examination report.  You then have a total of 12 months to overcome any objections and get the application in order for acceptance.  As indicated above, if you already have a granted US patent then this is likely to be relatively straightforward to achieve.

Cost Benefits of a Well-Defined ‘Sequential’ Strategy

As you might have gathered, deliberately setting about obtaining your patents in a well-defined order may save you time and money in the overall process.  If you ask a patent attorney (such as myself) how much it will cost to obtain a patent in Australia or, alternatively, in the US, the answer you get will most likely assume independent ‘prosecution’ (as negotiating the patent examination process is commonly known).  It will be based upon assumptions about the likelihood, and nature, of objections/rejections being raised by the relevant examiner, and the typical costs of dealing with such issues.

However, in the strategy outlined above, obtaining your second patent in Australia will typically be much more straightforward, and predictable, than obtaining your first in the US.  That translates into cost savings.

Starting Out – Provisional or Not?

The big questions you will face early in the patenting process are where and how to file your first application.  Initially, i.e. for the first 12 months, you only need a single application on-foot.  There are international treaties and conventions (most notably the Paris Convention for the Protection of Industrial Property) that permit you to file further applications for the invention described in your first application, and obtain the legal benefit of your initial filing date, at any time within that first year.

If you are resident in Australia, your first application can be filed pretty much anywhere, including the US.  If you are resident in the US, then you may be legally required either to file first in the US, or obtain a formal approval (known as a ‘foreign filing licence’) to file initially in another country.  As it happens, the easiest way to obtain a foreign filing licence is by filing a US patent application covering the invention!

Both Australia and the US also offer the option of filing either a provisional application, or a ‘full’ application (usually called a ‘complete’ application in Australia, or a ‘utility’ or ‘nonprovisional’ application in the US).  A provisional application ‘lives’ for only 12 months, is never examined, and cannot result in a granted patent.  For that, whatever full applications are required must be filed while the provisional is still alive, claiming the benefit of the provisional’s filing date.

Contrary to what some people believe, it is not necessary to begin with a provisional application, and indeed most countries do not even provide this as an option.  You can, if you wish, dive straight in to the ‘main game’.  However, a provisional application does provide an important advantage.

Be wary of anyone who tells you that the benefit of a provisional application is lower cost.  This is not a real advantage of provisional applications.  As the patent laws now stand in Australia, the US, and pretty much everywhere else, a provisional patent specification is required to provide full support for whatever protection is ultimately granted.  Provisional applications are therefore best prepared by a professional who is sufficiently familiar with the legal requirements in at least the jurisdictions in which you intend to proceed with full applications.  In most cases, the actual cost savings available (e.g. through lower filing fees, and avoiding requirements such as formal drawings) amount to no more than A$1000-2000, and will be incurred anyway within a year of filing.

I have noticed that some patent attorneys (in Australia and the US) continue to offer ‘cheap’ provisional drafting services.  I can only assume that these involve either cutting corners that should not be cut, or reflect a ‘loss leading’ business model.  The thing about a loss-lead is that you are going to end up paying for it somewhere down the line.  And since not all applications proceed to the later stages of ‘full’ filing and/or examination, you might find that you are effectively paying a ‘surcharge’ to cover a proportion of losses on other people’s provisional applications!  I could be wrong about all this, of course.  But if you are given estimated costs on a provisional application that seem like a bargain, I strongly recommend that you also inquire about anticipated costs over the following 3-5 years as well, and compare with corresponding estimates from a service provider with more realistic provisional drafting costs.

In any event, the real benefit of a provisional application is that it buys you an extra year.  A patent has a nominal term of up to 20 years, which is separately determined in each country, and which commences from the date on which the full national application is filed.  By filing a provisional application, you can therefore spend a full year doing whatever you like – such as developing your commercialisation strategy, raising funds, or just carrying on business-as-usual – without using up any of the eventual life of your patents.

If you expect to gain most of the commercial benefit of your patent in the early years, then the extra year provided by a provisional application may be of little consequence.  Indeed, your main objective in this case may be to obtain your patents as quickly as possible.  However, if your invention relates to a product with a potentially long commercial life, or which may take a number of years to reach maximum profitability, then delaying the start of your 20-year patent term may be hugely beneficial.  This – along with the  fact that skipping the provisional stage will bring forward all of the further costs associated with filing and examination – should therefore be a major consideration in whether or not your first step is to file a provisional or a full application.

A Quick Comment on International (PCT) Filing

The Patent Cooperation Treaty (PCT) is an international agreement among 149 countries which creates a central mechanism for filing an ‘international application’ that can introduce a further delay of 18 months (or more, in some countries) between the initial filing, and facing the costs and complexity of individual national or regional patent application filing and examination.

While the PCT system does provide some benefits, it essentially introduces additional costs (typically on the order of A$5000-10000) into the overall process.  If you are considering an extensive filing program, across a large number of jurisdictions, then this might not be significant to you.  But if your intention from the outset is to proceed only in a couple of countries (e.g. Australia and the US) this is, relatively speaking, a significant additional cost.  Therefore, while a PCT application could form part of a considered filing strategy (particularly if delaying other costs is important), I do not intend to say any more about it here.

So, What Will It All Cost?

Any attempt to estimate generic costs is doomed to failure.  Every case is unique.  Some turn out to be relatively straightforward, and relatively low-cost, while others may become unexpectedly complicated and expensive.  You should therefore take my effort here with a grain of salt!

Assuming that you are an Australian-originating applicant, that you are using the services of an Australian patent attorney, paying in Australian dollars, and that USD/AUD exchange rates are around a historically ‘typical’ value (as they are at the time of writing), your costs a likely to be within plus-or-minus 50% of the following very rough numbers:
  1. professional preparation of a suitable initial patent specification – anywhere from around A$5000 to A$10,000, depending on technology and complexity;
  2. filing a provisional application, in either Australia or the US – around A$500-1500;
  3. filing a corresponding US nonprovisional application – around A$3000-5000;
  4. filing a corresponding Australian complete application – around A$1500-2000;
  5. examination and grant of a US patent – around A$10,000-20,000; and
  6. examination and grant of an Australian patent (following US grant) – around A$2000-3000.

Conclusion – Summing Up the Strategy

In summary, the strategy I have outlined here is:
  1. unless speedy grant of patent rights is your priority, start with a provisional filing – in Australia, if possible, since it is likely to be slightly cheaper;
  2. file your ‘full’ Australian and US applications within the initial 12-month period, and delay requesting examination of the Australian application;
  3. hopefully obtain a US patent first – typically within about 3-4 years of filing; and
  4. finally, use your experience at the USPTO to secure your Australian patent.
If all goes reasonably well, this limited patenting program might cost you around A$30,000, over a period of 4-6 years.

Finally, as always – and particularly if you have more specialised needs, such as for accelerated examination and grant – you should seek professional advice specific to your circumstances before embarking on any patenting program.  There are so many options and strategies available, even with only two countries involved, it is impossible to do them justice in an article of this type.


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