Time: a competitiveness factor on patented innovation

Vicente Zafrilla Diaz-Marta
Intellectual Property expert at the Latin America IPR SME Helpdesk

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.

Registering your trademark in Latin America through Madrid System

When an SME wants to register an IPR in different countries there are two alternatives, to apply for the IPR before each national office or to use one of the WIPO international registration systems, namely Madrid System (trademarks), Patent Cooperation Treaty (patents) and Hague System (Designs).

In this post we are going to explain how Madrid System can be a useful tool for EU SMEs that aim to protect their trademarks abroad, benefiting from simpler and cost-effective proceedings.

The Madrid System is not implemented in most Latin American countries. Nevertheless, this situation is expected to change in the near future, therefore EU companies that want to internationalise to Latin America may be interested in registering its trademark through Madrid System on the current members (Colombia, Cuba and Mexico) and hopefully, extend the protection to further members once them enter into the system. madrid-system

What is Madrid System?

Madrid System is the WIPO International Trademark Registration system governed by the Madrid Protocol and Agreement. It allows trademark applicants to apply for registration in various countries simultaneously with a single application.

Who can benefit from the system?

Any national or company from a Member State of the Protocol or the Agreement. All EU Member States have ratified the Protocol.

In which Latin American countries could I apply from protection through Madrid System?

Only a few Latin American countries (Colombia, Cuba and Mexico) are members of the Madrid System.

How does it work?

EU applicants can request an International Trademark Registration before their own national IP office or the EUIPO (Office of Origin). The International application must be based on a prior trademark application or registration (both EU and national trademarks are accepted).

Thereafter the Office of Origin submits the application to WIPO, that performs the formal examination, publishes it on the WIPO Gazette of International Marks, and send it to each national IP office where the applicant want to protect the trademark (Designated Party).

IMPORTANT! Each national office is entitled to perform the substantive examination according to its internal regulation and to reject or register the trademark within 12 months (Cuba) or 18 months (Colombia and Mexico). In case of third parties oppositions, the term in Colombia to reject the trademark might be extended.

Once the trademark is registered in all or some of the countries the renewal and modifications are centralised by WIPO and you can manage it as a single registration.

How much does it cost?la-logo

It strongly depends on the number of countries, the type of trademark and the number of classes for which protection is sough.

We strongly recommend you to check the useful International Application Simulator and Fee calculator offered by WIPO on its website.

What are the main advantages?

Madrid applicants may benefit from certain advantages over those that prefer to register on a country-by-country basis:

  • The trademark is applied for in a single language: English, Spanish or French, without the need of further translations.
  • Applicants benefit from a simplified application proceeding instead filing a bundle of applications before each national office.
  • Each due fee is paid in a single currency (Swiss francs) and a single payment.
  • Any modification, renewal or transfer can be done directly before WIPO with effects in all Designated Parties.
  • As a general rule, it is not mandatory to appoint and pay a representative on each Designated Party except in certain cases (e.g. the trademark is opposed)
  • Once registered, it is possible to extend the International Trademark protection to other countries by means of subsequent designations. This is very useful if the company wants to enter into new markets or if a new Latin American country in which the SME operates enters Madrid System.

Want to know more?

Contact our Helpline!