Why should some Latin American IPOs improve their patent granting procedure?
According to OECD´s Oslo Manual innovation is defined as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations”.
Therefore a country´s ability to innovate does not exclusively rely on how much research is developed in a country but on how much of this research reaches the market, directly or indirectly.
Despite a certain degree of debate concerning patents as boosters of innovation, it is true that there is a relevant percentage of innovation that reaches the market by means of patents.
Delays in registration are traditionally perceived as barriers for the entrance of foreign innovators and companies. However, this is only a partial view, since such deficiencies also entail a negative impact on their national innovation and entrepreneurship environment.
Effect on the Industrial Application analysis: the priority period
Since Paris Convention patent applicants in any of the member countries of the convention, enjoy a 12-month priority period to file their patent in any other member countries, while keeping its first application date as the priority date.
In terms of market entrance, 12 months is a very short period of time to assess whether the market accepts a product or not, especially if it is an innovative one. Therefore, only those companies that are very sure of the success of the product and/or have the means to predict such a success will invest their resources in seeking patent protection.
In such a scenario, only few SMEs and inventors would decide to invest their time and money to protect their inventions abroad and/or, once decided, would limit the number of international filings.
Fortunately, the Patent Cooperation Treaty extends the priority period. Once the PCT filing fee has been paid (around €1200) applicants can decide in which countries they want to protect their patent within approximately 30 months (depending on the country). Under this timeframe, even SMEs can assess if they want to enter certain countries.
Therefore, Latin American countries that are not members of the PCT (Argentina, Bolivia, Paraguay, Uruguay and Venezuela) are not only discouraging foreign IP applicants to protect their inventions, but also limiting the access of their own nationals’ patents to international protection.
This barrier has a stronger deterrent effect for foreign SMEs and inventors rather than big companies, which file their applications regardless of there being a PCT or not.
Effect on Application: Search and Examination Report
All those IP offices that are able to provide the Search and Examination Report within a short period of time are giving their applicants a competitive advantage.
If the IP office is able to issue the Preliminary Search Report and/or the Examination Report in a short timeframe, the IP applicants will be able to save money by:
- Withdrawing the application and/or not filing the PCT if the patent is not new or inventive or;
- Limiting or erasing claims that lack novelty or inventiveness to prevent facing delays related to other IPOs’ objections.
Thus, Latin American IPR Offices that cannot issue the PSR and/or the ER in twelve months from the priority/filing date are forcing their nationals to face the International Phase of the PCT or the filing in third countries without information concerning the strength of their patents or at least an overview of the expectations of succeeding in the granting of the patent; this is a scenario that may lead to losing all the amounts invested in the application, translations and any other administrative costs.
In recent years some Latin American IP Offices seemed to notice this negative impact and have started to take measures to improve their performance at internal level; by improving their internal practices, and thanks to international cooperation both at interregional level (e.g. the PPH agreements signed with EPO, Spanish IP Office and USPTO) and at intraregional level, with tools like the Prosur PPH or CADOPAT.
Effect on Exploitation and Enforcement: Granting
Delays in granting the patent also have direct consequences in the use and defence of the patent. Despite the “standard” 20-year term of a patent, a patent’s lifecycle in certain sectors, such as smartphones, tends to be shorter. In some cases, a patent granted five or six years from the filing date have no or very reduced economic interest.
In addition, and generally speaking, pending patent right holders benefit from very little or any rights concerning enforcement until the patent is granted. Such a circumstance prevents them from bringing actions against infringers, which does not only harm their interests, but also their licensees’, including local companies.
Furthermore, long granting periods also harm competitors. A pending patent operates as a “warning” advice for competitors, who are very likely to avoid incurring in acts that may be prohibited by the patent owner once the patent is granted. Hence, a patent office that incurs in delays in rejecting a null patent creates uncertainty to its nationals about whether or not they are able to use the invention.
For instance, in the case were the same patent is rejected by National IP Offices, if country A rejected it in year 2 from filing date and country B rejected it in year 5, country A competitors would enjoy three additional years when they can freely use and exploit the invention in the country, whereas country B competitors will be subject to uncertainty until the patent is rejected.
To conclude, time is a key factor for the patent system. Although inefficiencies in patent registration procedures may harm foreign companies and innovators’ interests, the harm caused to its own national innovation system is even worse. Moreover, very long and formal procedures lead to a negative perception over the patent system in general, and discourage national innovators from protecting their inventions both nationally and abroad, which directly affects the country´s ability to compete in a knowledge-based economy.