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  • How much does a patent cost?

    10/10/2019

    That is something I am often asked when telling people that I used to work as a patent examiner at the Swedish Patent office. In my current role today, I meet many different companies and when talking to the decision-makers I often hear that patents are expensive.

    Let us give you an example:

    Last week I met a technology company where they complained about their expensive patent portfolio, how it became a very expensive part of the whole budget and that they are currently looking at how to reduce the costs. When we started to look into their portfolio, I realized that they had filed patents in 18 different countries and when asked for the reason he replied that those are important markets. Then I asked him how his competitors are selecting countries and realized that he did not know. I soon understood that they had no IP strategy in place and that the challenge was to give him an understanding of the different components that drives patent costs.
    There is no short and simple answer on how much patent costs, however, in this blog I will try to answer this question on a high level and give advice making the process efficient and cost-effective by avoiding unnecessary costs.

    What costs need to be included in a patent?

    Before asking yourself how much a patent cost, you should check out my previous blog “How to patent the idea” and once you have decided to go for filing you should start to identify all costs related to the patent application. Three main drivers that will increase the cost on your patent application are official fees from the patent offices, translation costs when entering new countries and the use of a patent attorney to prepare the application and file it to the patent office.


    1. Patents are registered at national patent offices around the globe when you hand them in but as well when it is granted and validated. The official fees by patent authorities depend on which authorities (countries) you want exclusivity on and the stage the application is in.

      ● Filing fee
      ● Granting fee
      ● Designation fees
      ● Annual fees
    2. When you’re going abroad, translation costs need to be taken into consideration, too. Not all countries accept English written application and therefore if you are e.g. active in Asia you should also make sure to include translation costs.
    3. A patent application is a legal document that should make sure to protect your product or service and therefore you will need to use a patent attorney law firm to help you prepare all necessary documentation. The attorney may be responsible for:

      ● Novelty search
      ● Patentability opinion
      ● And Writing a patent application
      ● Administrative tasks to renew the patents every year

    Let me summarize the 3 main drivers that will drive the cost for a patent

    1. Official fees by the patent office – important countries
    2. Translation costs – Some countries only accept patent application filed in the original language
    3. Patent lawyer cost – A lawyer to draft and represent you in the different patent offices

    What can you do to control the patent cost?

    You should be prepared as good as possible before approaching a patent lawyer. I have produced a fictitious example that illustrates the patent costs of a company active in the wind power space. Start by collecting all necessary patent information possible and understand the landscape from a competitor and market opportunity perspective. See my blog “How to patent the idea” how to best collect the patent information. In figure 1, relevant patents to the wind power space are presented over time. The x-axis represents the priority documents of every invention and the y-axis shows the number of inventions. The different companies in the space are distinguished by different colors.

    Figure 1: Active companies in the patent space (click  here to open the image in a new tab)

    Converting the patent information into a world map helps you understand how the patents are distributed throughout the globe. By doing so you will understand which countries are of importance in the wind power space and the strategy your competitors are using to get exclusivity on the products. In figure 2, the patents from the wind power space have been assigned to the respective country where first filings are indicated by yellow color and patent families by red color. The size of the circles indicates the number of patents.

    Figure 2: How patens are distributed in the world

    Once you have a clear understanding of how your competitors are protecting their products with patents, it is now time to look into your own business strategy and see if you have different markets in mind and how they are overlapping the competitor’s markets.
    Please be aware that this example (looking into your competitor's patent portfolios) is only one out of many how to build your patent strategy. Usually, a best-practice IP strategy incorporates many more tasks to sufficiently build up a comprehensive but exhaustive monitoring and related patent strategy.

    Define your filing strategy and identify all costs

     The input from your analysis in combination with your business strategy will tell you:

    ● patent authorities need to be involved

    ● if translations may be required in the future

    In the given example with the analysis on competitors, the conclusion is that important markets are

    ● United States of America, Canada, Brazil, Europe (Sweden, Germany, Spain), India, China, Korea, Japan, and Australia

    In the fictive case I have created, my important markets are:

    ●  US, Europe (Sweden, Germany, UK) and China

    The choice of countries is something that only a company can decide on their IP strategy, you may need to include expected sales in certain countries, manufacturing sites, and your presence. In the given example I will only focus on US, Europe, and China and the strategy is to file a European patent application that is validated in Sweden, Germany, and the UK and a Chinese patent application and a US patent application claiming the priority from the EP application.

    Costs

    1. Official fees by the patent offices: 

      ● A filing fee, search fee, patentability examination and granting: 4000€
      ● Designation fee for all states: 600€
      ● Validation in 3 countries for Europe: 2000€
      ● Annual fees per year for US, EP, China: 35.000€ (Europe)

    2. Translation costs:

      ● Europe 0€ if you write it in English, German or French as the official patent languages
      ● US: 0€, the same language
      ● China: 10.000€

    3. Patent lawyer cost:

      ● Novelty search: 1.500€
       For writing an EPC, the US and Chinese application and other agent costs, such as replying to notices and administrative tasks: 20.000€

    Total around 73.000€

    Such investment is rather big regardless if you are a big or a small company and of course it can go higher if you select more countries.
    Please note that the patent applicants' costs in the given example have been estimated based on conditions set in some typical cases. I would like to point out that the total amounts are only approximate and could vary a lot. Time and costs can vary considerably in different cases, even when the conditions appear to be the same. The patent application's scope and complexity, agent contributions, and translation needs are factors that particularly affect the costs.

    Conclusion

    As you can see it is not an easy task to forecast all costs related to a patent but it’s worth doing the math and implementing a strategy prior to a potential application process. Regardless of the sector and country your company is in and which size it has. Once you’re building or selling a technical product you need to have an IP strategy!
    At the end of the day, there is a difference between a pending patent and a granted patent. My giveaway to you is that the costs depend on the number of countries you want to get exclusivity on and that you should always look for a high-quality patent attorney even though they stand for a big amount of your total investment. Their work is very important and once your patent will be tested by your competition in court you will appreciate a high quality of the patent application.

    At the end of the day, you get what you pay for……

    Going back to the technology company I mentioned in the beginning actually they reduced the number of countries per invention, down to 7 because they realized that some countries were not important anymore and they also canceled some patents because they were not important anymore to the business.

    If you are also facing similar challenges, please reach out to me or one of our IP experts that will support you with best practice when defining your strategy!

    All the analyses in this blog where execute with our unique patent platform “IamIP” and if you also would like to do a similar analysis book a meeting with our patent experts.

    One last thing, did you know that three of IamIP`s IP experts team are formers patent examiners?

    My name is Dimitris Giannoccaro, I am the CEO and co-founder of IAMIP and I am supporting technology companies to unleash the power in patents. 

About the blog

The blog will share business insights based on our experience about how to manage intellectual property assets and rights in a smart way. We will also share best practice from working with the world's most innovative companies. Get to know IamIP better by following our key events from our entrepreneurial journey aiming at revolutionising the intellectual property world.

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