Global Patent Strategy: Patent Protection Costs in Five Upper Middle-Income Economies

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Published on 5 October 2018

In one of our previous articles, Patent Protection Costs in Business-Friendly Jurisdictions: Where to File Patents, we illuminated which regions possess favorable business regulations and climates and are most likely to offer competitive returns on investments. In this article, we shall move beyond the business-friendly jurisdictions and discuss the costs of patent protection in upper middle-income economies. These developing economies may be attractive destinations for inclusion in a global patent filing strategy on the basis of: growth or market potential; Foreign Direct Investment inflows; consumer spending potential; favorable Intellectual Property and/or business regulations.

Upper Middle-Income Economies

The Ease of Doing Business Index is the World Bank's flagship ranking from 1-190, in which "economies are ranked on their ease of doing business." The ranking is based on ten parameters: starting a business; construction permits; getting electricity; registering property; getting credit; protecting minority investors; paying taxes; trading across borders; enforcing contracts; and resolving insolvency.

The Index is a powerful tool that can influence investment decisions; multi-national corporations widely rely on the Index to guide their strategic investment decisions (Ricardo Pinheiro-Alvesa and João Zambujal-Oliveira; 2012).

As per the latest rankings, twelve upper middle-income economies feature in the top 50. These are: Macedonia (Former Yugoslav Republic), Malaysia, Mauritius, Thailand, Russia, Kazakhstan, Belarus, Montenegro, Serbia, Romania, Mexico, and Bulgaria.

Of the twelve economies, Macedonia, Serbia, Romania, and Bulgaria are member states of the European Patent Office, with Montenegro being an extension state. Likewise, the economies of Belarus, Russia, and Kazakhstan are member states of the Eurasian Patent Office. Malaysia and Thailand, on the other hand, are member states of the Association of Southeast Asian Nations.

Patent Filings in the Upper Middle-Income Economies

In the year 2016, the National Intellectual Property/Patent Offices of Belarus ("BY"), Bulgaria ("BG"), Kazakhstan ("KZ"), Malaysia ("MY"), Mauritius ("MU"), Mexico ("MX"), Montenegro ("ME"), Romania ("RO"), Russia ("RU"), Serbia ("RS"), and Thailand ("TH") collectively received more than 77,000 patent applications, with no data being available for patent application filings in Macedonia. Of these, about half of the total applications were filed with the Russian Federal Service for Intellectual Property, with Kazakhstan, Malaysia, Mexico, Romania, Russia, and Thailand receiving more than 1,000 patent applications.

The figures quoted above are based on the numbers published in the World Intellectual Property Indicators 2017 and the Annual Report 2016 published by the Department of Intellectual Property in Thailand.

Beyond Beaches, Food, and Tourism

Malaysia, Mexico, and Thailand may be renowned for their coastlines, beaches, and food, but there is more to these countries than meets the eye. They are becoming increasingly favored destinations for strategic Foreign Direct Investment and hotspots for Research and Development, which have led to them becoming preferred destinations for patent application filings.

In fact, as per the WIPO publication referenced above, the Patent Office of Mexico, the second largest economy in Latin America, was the second fastest among the world to issue a first office action on a patent application in 2016 (about three months).

Patent Protection Costs in the Upper Middle-Income Economies

Let us now study the costs of patent protection in the upper middle-income economies that received more than 1,000 patent filings in 2016 (excluding Romania).

Since a patent is typically maintained for at least six to ten years, we shall consider the costs from June 2018 through June 2027. There are three categories of costs involved: official fees, attorney charges, and translation costs.

For the purposes of this article, we shall consider a patent specification drafted in English comprising 40 pages (including five pages of drawings and 15 pages of claims), 15 claims, and three independent claims, which is to be filed electronically by a company (i.e. large entity) to whom the rights have been assigned, in the aforementioned economies.

For the above scenario, the total costs to file a patent application, get the patent issued, and maintain the patent are approximately $42,000. As shown in Table 1, the estimated patent protection costs are spread across the five different stages of the patenting process: Patent Filing, Patent Examination, Patent Prosecution, Patent Grant, and Patent Maintenance Fees/Patent Renewal Fees/Patent Annuities. The costs are inclusive of Value Added Tax in the range of 6% to 18%, which has been added to the attorney charges and translation costs in the respective jurisdictions.

Patent Filing Costs and Patent Specification Translation Costs

The estimated patent filing costs are inclusive of the attorney charges for handling each independent claim in excess of the first independent claim in Kazakhstan; the official fees for each claim in excess of 10 claims in Malaysia and Russia; the attorney charges for handling the excess claims in Malaysia; and the official fees and the attorney charges for filing a Statement of Right in Malaysia.

In Mexico, the estimated patent filing costs are inclusive of the official fees for each page in the specification in excess of 30 pages; the attorney charges for handling claims in excess of 10 claims; the official early publication fee; and the attorney charges for recording an assignment and filing a Power of Attorney.

In Thailand, the estimated patent filing costs are inclusive of the official publication fee and the attorney charges for filing the publication request, in addition to the official fees and the attorney charges for recording an assignment.

Translation of the patent specification into the official language is mandatory in Kazakhstan, Mexico, Russia, and Thailand. The estimated costs of translating the patent specification into Kazakh, Spanish, Russian, and Thai vary between $1,827 in Mexico to $3,058 in Kazakhstan. When expressed as a percentage of the total patent filing costs, the translation costs vary between 50% of the total estimated costs in Mexico to 80% of the total estimated costs in Kazakhstan.

Patent Application Examination Costs

The estimated costs of patent application examination are inclusive of the official fee for requesting an examination of each independent claim in excess of the first independent claim in Kazakhstan and Russia. Unlike Kazakhstan, Malaysia, Russia, and Thailand, which follow a deferred patent examination system, Mexico follows an automatic patent examination system and, therefore, the examination stage is not applicable in Mexico.

In Russia, where the official patent examination fee depends on the timing of the request for examination filing, it is assumed that the request is not filed at the time of filing the patent application.

Patent Prosecution Costs, Translation Costs, and Patent Grant Costs

The estimated patent prosecution costs are based on the average number of office actions with substantive objections being issued in each jurisdiction (based on our research). These costs are inclusive of the attorney charges for reporting each office action, preparing a response, and processing the response.

As is the case with patent filing, translation is also required during patent prosecution in Kazakhstan, Mexico, Russia, and Thailand. Assuming 10 pages of translation per prosecution action, the estimated translation costs vary between $1,031 in Russia to $2,184 in Kazakhstan. When expressed as a percentage of the total estimated patent prosecution costs, the translation costs vary between 21% of the total estimated costs in Mexico to 50% of the total estimated costs in Kazakhstan.

With the exception of Malaysia, an official patent grant fee is charged in the other four jurisdictions. In Mexico, the estimated patent grant costs are inclusive of the patent maintenance fees for the first five years.

Patent Maintenance Fees and Patent Annuity Fees by Country

When expressed as a percentage of the total estimated patent protection costs, the estimated patent annuity fees by country vary between 12% of the total estimated costs in Mexico to 34% of the total estimated costs in Malaysia.

In Malaysia, the patent maintenance fees are calculated from the grant date and are due in respect of the second year and each following year from grant. The estimated patent maintenance fees for Malaysia are based on the assumption that the patent is issued in 2021.

Patent Management Software and Patent Portfolio Software

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Venkatesh Viswanath (Senior Content Strategist, Quantify IP) contributed to this article.
Exchange Rates Used: 1 U.S. Dollar = 331.11 Kazakhstan Tenge; 19.90 Mexican Pesos; 3.99 Malaysian Ringgit; 62.19 Russian Rubles; and 32.02 Thailand Baht