How to reduce national phase costs?

Towards the end of the 30/31-month pendency of an international (PCT) patent application, the applicant needs to decide if/where to convert the PCT application into a national/regional application.  A key factor in this decision is inevitably cost.

It is extremely difficult to predict the cost of prosecuting a patent application in the national/regional phase because the costs depend on:

  1. Inherent patentability considerations;
  2. Formal matters and national fees;
  3. Overseas associates’ costs; and
  4. Translation requirements.

Whilst points 2-4 above are largely outside the applicant’s control, steps can be taken in respect of point 1 to reduce overall costs:

If the International Search Report (ISR) indicates that the invention is new and non-obvious, then the chances are that the national/regional patent offices will take a similar view because novelty and inventive step are (or should be) objective tests.  However, each patent office does apply its own patentability criteria (worldwide novelty vs local novelty; inventive step vs non-obviousness; and whether the priority or filing date determines of the relevance of prior art), so each national phase application is examined, independently, against the relevant national requirements.  As such, the fact that a patent has been deemed allowable, or even granted, in one country does not mean that it will necessarily be granted elsewhere. That said, one can use procedures such as the “Patent Prosecution Highway” to remove some of the examination burden later on (more on that in a separate post!)

If the ISR indicates potential problems, then you’ll likely need to overcome objections in the national/regional phase.  It is easy to see that there can be a lot of duplication of work if the same (or similar) objections need to be addressed over and over before each national/regional Examiner.  It therefore makes sense to try to address any objections, or potential objections, centrally, during the international phase.

Luckily, the PCT provides two main ways to reduce/avoid duplication of work in the national/regional phase, and hence reduce costs overall, albeit at the expense of additional cost in the international phase.  As such, there is somewhat of a balancing act to be done when deciding whether to spend extra money in the international phase to save costs later on, versus saving money in the international phase and deferring (and potentially increasing) those costs later on in the national/regional phase.  The two main procedures are:

Amending the claims after receiving the ISR (this is known as Art 19 PCT amendment); and/or amending the application and ask that it undergoes a central, non-binding examination procedure (this is known as Art 34 PCT amendment and a “Demand” for International Preliminary Examination).

The Art 19 PCT procedure is, in essence, a fire-and-forget procedure: the amendments are simply placed on-file and the applicant can opt to use them as the starting point for examination in the national/regional phase.  The Art 19 PCT amendments can be accompanied by a Reasoned Statement, which the national/regional Examiners may (or may not!) take into account when drawing-up their first Examination Report.  This can reduce costs later on, and is relatively inexpensive (usually adding about £600) in the international phase.

The Art 34 PCT procedure normally (but not always) reduces costs in the national/regional phase.  It is broadly the same as the Art 19 PCT procedure, except that rather than being a fire-and-forget procedure, an International Examiner reviews the amendments and submissions, and then draws-up an Examination Report, to which the applicant often has  right of reply.

If there are no objections, and the Examiner agrees that the application (as amended and/or in view of the submissions), in principle, relates to patentable subject matter, then a “favourable” Examination Report will be issued.

If, on the other hand, objections remain, then the Examiner will issue a “negative” or “partially-favourable” Examination Report, to which the applicant may respond with further arguments and/or further amendments.  If the dialogue between the applicant and the Examiner overcomes all of the objections – before the international phase runs out – then a “favourable” Examination Report can be issued.

The main advantage of obtaining a favourable International Preliminary Examination Report is its persuasive (but non-binding) status, which can greatly facilitate/expedite examination in the national/regional phase, and therefore reduce costs.  However, the IPE procedure is quite expensive, which puts many applicants off (however, see footnote).

In short, the main advantages of using the IPE procedure are:

  1. That it can be used to iron-out fundamental defects centrally, which often avoids at least one “round” of Examination later on.  If the same objections are likely to be raised by each patent office in the national phase, it makes sense to make a central amendment and nip the issue in the bud.
  2. If IPE procedure results in a favourable Examination Report, then in many cases, prosecution of the application in the national/regional phase later on is relatively straightforward.
  3. Consistency, because by amending the claims centrally before entering the national/regional phase, the divergence of the claims during prosecution is generally less.
  4. Reduced official fees (see footnote), because some national/regional patent offices reduce their official fees if they can rely, to some extent, on the work performed by the international search/substantive Examiner.

To give you some idea of costs, we have carried out an analysis of PCT applications on our own docket and have added-up the total costs of:

  1. “Fire-and-forget” PCT applications (where they are simply filed and then converted into national/regional applications at the 30/31 month stage);
  2. PCT applications in respect of which Art 19 PCT amendments were made; and
  3. PCT applications that underwent the Art 34 PCT International Preliminary Examination procedure.

On our docket, the average cost of a “fire-and-forget” PCT application is just £1,830 (standard deviation: £699), compared with an Art 19 PCT application, which adds about £600 to the cost.  On the other hand, PCT applications that underwent the Art 34 PCT International Preliminary Examination procedure cost, on average, £3,247 (range: £2,319 – £4,444; standard deviation: £742).

In conclusion, although requesting International Preliminary Examination could add about £2,600 to the overall cost of your PCT application, if you are going to enter the national/regional phase later on, this additional cost is almost certainly going to be offset by reducing the amount of prosecution cost later on.

If you require more information on national/regional phase costs, please contact us.

Footnote: If you are considering entering the European (EPO) regional phase of the PCT, then requesting IPE, if the IPE is carried out by the EPO, results in a huge reduction in the fees payable to the EPO upon entering the EPO regional phase.  As such, much of the IPE cost can be offset against cost savings achieved later.