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Regardless of what you are doing and where you are doing it, developing an international intellectual property strategy can be pivotal to the long-term success of any business. This case study highlights the benefits and considerations of pursuing international patent protection with a prior U.S. filing. International treaties allow inventors in the U.S. to claim the priority of their filing with the USPTO on international patents. The purpose of such extensive patent filing is to protect investments in research and development.
While reliance on U.S. legal systems can stop the importation of infringing products, reliance on U.S. courts alone is not the most effective use of resources. U.S. patents only stop infringing activity on U.S. soil. There is little to nothing a U.S. judge can do to stop an international manufacturer from reproducing your product and selling it to another outside the U.S. However, international patents can provide patentees with effective routes to international injunctions to stop such manufacturing at its source.
Who's Zoeller?
Zoeller Pump Company (“Zoeller”) is a Kentucky Corporation headquartered in Louisville, KY. Zoeller has made a name for itself as a dependable pump manufacturer, including its mainline M53 pump, one of the few sump pumps still made in the USA. However, when customers praise your products, competitors and copycats always listen. While manufacturing quality goods is always a solid business plan, endless other entities will see the market potential in attempting to undercut your prices while piggybacking on research and development without contributing or licensing such rights.
The U.S. market is pivotal to Zoeller’s past and continued successes. U.S. courts offer various methods for enforcing patent rights within U.S. territories. Crucial to Zoeller’s long-term success is developing its international patent strategy, in which Zoeller applies for patent rights in strategic international jurisdictions. When you have a U.S. patent, you can prevent infringement on U.S. soil, but you cannot prevent a foreign manufacturer from manufacturing your product with only a U.S. patent.
Zoeller’s General Counsel, Dr. Jeffery P. Langer, discussed the company’s steps to protect a patent for an innovative float tree assembly internationally. The takeaways from Dr. Langer are for educational purposes, and KYIPA recommends that you consult with a licensed patent professional if you have questions or concerns about your options for securing patent protections on something innovative. It is also worth noting that the timeline and cost estimates can vary drastically depending on the technology group.
While this text attempts to provide insight into the benefits of having an international patenting strategy, many details and nuances of any patent regime make such generalizations challenging. We must reiterate that you direct any questions from this text to a licensed patent professional, as this text is for informative purposes. KYIPA is an excellent resource for getting connected with patent professionals in Kentucky.
Zoeller Takes Advantage of Intellectual Property Protection
Zoeller Company was founded in 1939 as a family-owned operation making a dependable column sump pump. From its humble beginnings, Zoeller, one of the oldest U.S. pump manufacturers, has maintained the highest quality standards, setting the benchmark for all other manufacturers of pumps.
The subject matter of the patent discussed was for a spring-loaded float tree assembly; the innovation offered a solution to problems faced by Zoeller that cost both the manufacturer and their customer time and resources. However, placing innovative products into the commerce streams comes with its own problems. Such problems become amplified when the overall product can be reverse-engineered and mass-produced by dexterous manufacturers. In the case of the innovation embodied in Zoeller’s new float tree assembly, there are also low barriers of entry to manufacture, and the costs of producing the float tree are not prohibitive to prevent copycats.
Zoeller secured patent protection in China and the U.S. to prevent the unauthorized manufacture of the product on an international scale efficiently. The benefits and added value of being able to enforce an invention internationally are genuinely exponential. Whatever your business is, if you are dealing with patentability, you should also consider your international options.
Challenges of Protecting Your Inventions
Regardless of what you manufacture or what services you offer, other market participants can do what you are doing, and some will see an opportunity to do just that. Without investing in the research and development required to create the innovation, such opportunists can instantly reduce costs to potential customers. Acquiring a U.S. patent is only part of the battle to enforce patent rights. U.S. patents are limited to infringing activity in the U.S., not any other nation in the Americas, Africa, Asia, Australia, Europe, or Antarctica. While international treaties can make acquiring international protections on your U.S. patent easier, enforcement around the globe can become extremely costly, and depending on your product and the market, you may only need to pursue patent protection in select nations.
The central challenge with having quality products that customers choose to purchase is that others notice and try to copy them. When customers tell imitators they refuse to switch because of a feature the knock-off does not have, it may not take long for manufacturers to begin attempting to replicate your innovation at wholesale. Protecting the innovations that resonate with customers is quite a challenge, and having an international patent strategy can enable your business to maximize the efficiency of its limited resources to increase profitability.
The device claimed in Zoeller’s ‘733 patent brings value to their customers, yet nimble manufacturers can replicate such products quickly through injection molding or similar processes, which Zoeller wanted to prevent. Using only the U.S. Federal court system and International Trade Commission, proceedings can cost $2-4M/year and take 12-18 months for a preliminary decision. Calculatedly filing for international patent protection allows for more cost-effective options for manufacturers to protect their product lines including bringing suit in China.
Strategizing International Protection
When filing for a U.S. patent, Dr. Langer stated the bulk of the costs are in the initial drafting, which can cost $5-15k for filing in the U.S. when utilizing outside counsel. The average time for the USPTO to grant a patent from the filing date takes 2-3 years, with expected costs of around $25-50k total for U.S. filing and prosecution. USPTO fees can be found on their website and other costs vary based on attorney and type of invention.
While there is no concrete answer to how long it will take for a patent to grant, expect anywhere from one to three years to obtain a patent from the filing date of the non-provisional patent application. The USPTO needs a minimum of a year to process a patent application, however various circumstances — anything from poorly drafted claims or other formal and substantive inaccuracies to an overburdened office — can make it last as long as six. The USPTO provides excellent educational resources on the Patent Process.
The answer to the question, "how much does a patent cost?," can drastically range from $800 to over $100,000. The cheapest way to get a patent is to file it yourself as an inventor, though this method is very risky because of the intricacies and particularities of the USPTO. Expect at least $5,000 for the cost of hiring a patent professional. The bulk of the costs come from the patent application drafting process, and the costs for international filing can vary depending on the invention claimed and the locales protection is sought but fees for translating the document can be expected in addition to filing fees.
International patent filing in China costs approximately an additional $10K for an invention patent and $5K for a utility model. As Dr. Langer illustrated an additional five-figure upfront cost is exponentially less than any seven-figure expenditure solution to problems that may arise. Neither the Chinese utility model nor an equivalent exists in U.S. patent law, but the legal concept is not exclusive to China regarding international adoption.
In addition to being relatively cheap, registering a Chinese utility model is a process that usually takes 6-18 months for an enforceable right, and once issued, utility models are hard to kill. Utility models are known as “patent-lite” because they have a shorter lifetime and are examined less extensively. There are high-level formality checks to ensure the information provided is accurate, which takes 3-7 months. Also required for registration is a validity check with some prior art analysis but not quite an examination that occurs with U.S. utility patents or Chinese invention patents. The CNIPA (China National Intellectual Property Administration) is who you must go through for a validity opinion in China, which usually takes 3-6 months, but once issued, there is an enforceable right for injunctions and criminal charges. Chinese utility model patents are known for their short pendency and complete lack of substantive examination for rights to be granted, though they only have a ten-year life.
To recover damages for infringement in China, you need either a traditional patent or a utility model. A U.S. patent alone doesn't offer international protection. The process is similar to the USPTO’s methods for issuing patents claiming priority from a foreign patent filing. International countries are willing to accept priority from a U.S. patent due to the Paris Convention Treaty. There are 177 total members, according to the World Intellectual Property Organization. Still, expect it to take up to 3-4 years to get a Chinese invention patent. In China and nations adopting similar patent regimes, patent rights can be acquired as an invention patent and a utility model.
Implementation of IP Strategies
With a primary goal of preventing foreign manufacturing of products, international patents become sought after by companies like Zoeller. After obtaining a Chinese utility model, an administrative proceeding for $50-150K can be brought in China and an injunction can be granted within 60-120 days. International patent filing achieved the goal of preventing the foreign manufacture of Zoeller's product more efficiently than relying on U.S. legal systems alone. The money saved on legal expenses to curb such competition can be reinvested into researching and developing further innovation without cutting operation costs.
China has specialized IP courts, and local market authority enforcement like regulators more than a traditional court system. Local market authorities can grant injunctions to prevent sales, destroy existing stocks of goods, and even handle criminal charges in conjunction with the local police. These routes are the quickest route for securing an injunction on an infringing manufacturer, offering the potential for injunctive relief in as few as 60 days. Alternatively or in combination, the specialized IP courts can provide damages in addition to an injunction. If damages are sought for infringement in China, expect costs of $300-450K for bringing the action in Chinese civil court, a process that generally takes 18-24 months.
The U.S. District Court for the Eastern District of Virginia (EDVA)--or the “Rocket Docket” as it is often known--is one of the fastest federal courts in the country. Indeed, according to the Administrative Office of the U.S. Courts, in 2021, the average EDVA civil case lasted only six months from filing to disposition (including settlements). Prior to the implementation of COVID-19 guidance, the average length of time between filing a civil case and trial was 11 months. Even with slowdowns related to COVID-19 precautions, the EDVA remains one of the fastest courts in which a litigant may file a civil case and obtain a final resolution.
Attison L. Barnes III, Stephen J. Obermeier, Krystal B. Swendsboe, The Rocket Docket Ensuring Clarity and Predictability in Civil Litigation, Litigation, Winter 2023, at 34.
With the complexity of patent litigation, you can still expect 18-24 months to be considered a speedy resolution. The choice of venue may cause additional delays as the general average for resolution in U.S. district courts can range from one to three years. In addition, bringing an action through the U.S. International Trade Commission can take up to 18-24 months and quickly millions of dollars to complete.
Impact of International Protection Strategies
Acquiring Chinese patent protections on the ‘733 patent allowed Zoeller to enforce injunctions at a fraction of the cost of the total reliance on U.S. legal systems. Choosing to seek international patent protection like Zoeller did for the ‘733 patent was a very strategic choice by the business to effectively prevent disruption of their sales in the U.S. and abroad. A U.S. patent prevents the importation of infringing products, but when business becomes international, there can be issues with enforcing infringing activity outside of America. The impact on the business of having Chinese patent rights added a clear value to the product. The key value comes from the ability to legally prevent international copycats from being able to manufacture the product. An international patent strategy like this allows no chance for these manufacturers to attempt and get the copycat product to potential customers without infringing on a patent within the infringers’ jurisdiction.
Why Seek International Protection?
The initial officers of the Zoeller family who founded the company built a business that developed goodwill amongst their customers for providing quality pump products. The founders passed on the dedication to manufacturing quality pump products to their employees and families. In developing their product lines, Zoeller is no stranger to companies attempting to copy their products through reverse engineering. Preventing such actions becomes more challenging when business occurs beyond the U.S. territorial boundaries. As illustrated with international patent prosecution for the ‘733 patent, Zoeller was able to elevate and secure their recognition among their customers.
The biggest pitfall any inventor wants to avoid is a granted patent being declared invalid. Some of you may already have nightmares of the Patent Trial and Appeal Board (PTAB) killing your patent. PTAB challenges kill many patents that they touch; PTAB used to pick up all cases, but now they are more selective on what they will hear. Still, as a defendant, you can expect costs of $350-750K to defend the validity of your patent. Based on data from WIPO Magazine, the estimated average duration of court litigation in a home jurisdiction was three years, costing around $475,000, whereas litigation in another jurisdiction takes around 3.5 years with legal fees of just over $850,000.
In addition, having only a U.S. patent enables international challengers to practice the patent in their nation and bolster their arguments that your U.S. patent is invalid. On the other hand, having an international patent can bolster the U.S. patent’s strength since it has been examined by multiple patent agencies, making independent decisions on the patent worthiness of what is claimed in patent applications.
Leveraging its intellectual property into internationally patented products has given Zoeller a competitive advantage against competitors in U.S. and elsewhere. Not only does having added international patent rights prevent others from manufacturing your inventions, but coupled with branding efforts, the patents can give a competitive advantage in developing goodwill amongst consumers for the products made. Additionally, when it is a concern, such an international patent strategy will bolster investors’ confidence to ensure further research.
Take-Aways
Regardless of the industry you are in or plan to join, if you plan on seeking patent protection in America, there may be tremendous economic value in seeking patent protection internationally. Even if you are working with subject matter that is not patent-eligible, considering an international intellectual property protection strategy can still bring value to your business in America.
Connecting yourself with good patent or intellectual property professionals can be highly beneficial. These individuals can secure intellectual property protection for you in the U.S. or point you in the right direction. KYIPA offers many networking opportunities throughout Kentucky that facilitate the development of an innovative ecosystem by putting successful industry leaders such as Zoeller, IP attorneys, researchers, entrepreneurs, and other members of the community in the same room and allowing for a hospitable solution to the various problems we all are facing and allowing for the stimulation of solutions that may not otherwise occur. Learn more about KYIPA and free membership on KYIPA.org.
Patent protection in the U.S. is required to claim priority from a U.S. invention for international filing. That being said, talking with a patent professional will ensure that property rights on your work are retained and that your work is not infringing on another patent. Before being granted a U.S. patent, you must become familiar with the market and understand where international manufacturers may attempt to copy your product. Understanding the market behind your technologies can help optimize international patent protection by targeting patent protection in specific countries rather than going fully global or only in America.
Just because you are a business headquartered and manufacturing only in the U.S. does not mean you are restricted to U.S. courts. You can consent to “step” into international courts, and as illustrated by Zoeller’s international strategy on the ‘733 patent, utilizing international patent systems gives the company multiple routes for enforcing their patent without a multi-million-dollar expenditure.