Carolyn Favorito, an associate with Knobbe Martens, writes: Before making the expensive decision to file patent applications in various regions across the globe, consider a cost-benefit approach to filing.
Obviously, market share plays a significant role in capturing the potential benefit that can be derived from investing in a global patent filing strategy. Of the $24 billion global vaccine market in 2008, the United States and Europe enjoyed the lion’s market share of about 36% and 30% respectively. Japan’s and India’s market share each hovers around 4%, with Japan slightly leading India. China’s market share approaches 2%. Thus, the US and Europe alone account for about 66% of the global market, while the top five vaccine markets account for about 76% of the global market.
Accordingly, for vaccine companies seeking global patent protection, we generally recommend filing an international application (PCT) and entering at least the US and Europe at the national stage. When seeking additional patent protection, a company’s goals and budget must be assessed with respect to each additional jurisdiction’s market share and patent filing costs.
Companies that plan to manufacture and distribute vaccines can balance the costs and potential return for each additional jurisdiction and pinpoint patent protection in those jurisdictions having a favorable cost-benefit projection. For example, translations account for a considerable portion of filing costs. That is, while filing in Japan and China may seem logical from a market share perspective, the filing and later prosecution costs in these countries almost certainly exceed the costs in Canada and Australia, which have respectable market-share-to-cost ratios because translations are not required. After a certain proportion of the world market is covered, however, the return on a patent investment steeply declines.
Exit Plans and Raising Capital
An exit plan involving transferring patented technology requires carefully considering a relatively broader global patent portfolio to maximize the pool of interested parties. For example, interested parties may value patent protection in a variety of jurisdictions where they are domiciled or where the vaccine will be manufactured. Similarly, emerging companies courting venture capitalists may need to consider the attractiveness and breadth of their patent portfolio to gain investor interest, as a venture capitalist’s exit plan will likely rely on the sale of the technology, if not the company.
In these cases, patent prosecution costs may be postponed in various countries. Properly executing this strategy can maximize the portfolio’s value while minimizing the company’s costs. For example, examination may be grouped for some countries, and the examination results in one country may assist or control the examination in another country. Thus, prosecution strategies that accelerate examination in some countries, while postponing costs in other countries, can simplify and reduce the overall cost of a more extensive global filing strategy.
Other factors affecting global filing strategies include the disease’s prevalence, population, per capita GNP, health care system, government-imposed trade limitations, window of exclusivity, future market projections, strength of patent system, and ability and likelihood of enforcing patent rights in each jurisdiction.
Nonetheless, arming yourself with the proper cost-benefit analysis is the first step in maximizing the vaccine’s potential value based on selective global patent coverage.