Of course cost is one of the most fundamental considerations in making foreign filing decisions. Failure to accurately evaluate this cost leads to two different errors: (1) underestimating the cost and committing to a strategy that is too expensive for the company to sustain, and (2) overestimating the cost and foregoing valuable protection. Either error can have devastating consequences. As with the patent cost portion of the evaluation, it is also important to consider the relevant market in assessing the value of a patent investment. A simple way to do it on a country by country basis is to use the Purchasing Power Parity adjusted by the Gross Domestic Product. This ratio is a rough estimate of the market to be accessed in a specific country. World-wide cradle-to-grave patent costs for pharmaceuticals of around $2.5 million, divided by the purchasing power provide a rough estimate of the relative value of each dollar invested in a particular country. This approach does not naturally, take specific country industries and markets into consideration, but the factor provides high-level guidance for foreign filing strategy.
Countries in the “Global Patent Strategy Matrix” figure are listed with their total cradle-to-grave patent costs in order from top to bottom (both on the matrix as a whole and within each cell) in order of increasing Market Access Score, and left to right in order of Decreasing Enforcement Probability. Thus, according to the cradle-to-grave cost divided by the purchasing power parity adjusted gross domestic product analysis, the United States represents the best value for patent cost investment, followed by the United Kingdom, Japan, France, and so on. For a protection focused strategy, filing would be in the countries listed in the left most column. For a market focused strategy, filing would be in the countries across the top row. For the best balanced strategy of protection versus market access, filing would focus on the cells in the upper left quadrant of the matrix and avoid those in the lower right portion of the matrix.
Since China in particular has become an important and growing business and IP market it must be noted that as of 2019 major changes were underway for China’s Patent Law. On January 4, 2019, the National People’s Congress in China published the latest draft of the Fourth Amendment to China’s Patent Law. As a whole, the proposed changes addressed a lot of the criticisms people had regarding the strength of IP protection in China. These changes, once implemented, will make China a much more patent-friendly jurisdiction, benefiting innovators worldwide.
Examples of notable changes include (1) a longer patent term for innovative drugs and design patents; (2) litigation reform such as significantly higher damage amounts and streamlined processes for suing infringers; (3) new ways of rewarding innovators for their contributions; and (4) creation of an open-licensing regime to encourage use of patents in China.