a

GAO

United States General Accounting Office

Report to Congressional Requesters

June 2003 INTERNATIONAL 

TRADE

Experts’ Advice for 

Small Businesses 

Seeking Foreign 

Patents

GAO-03-910
According to the expert panel of patent law attorneys that GAO surveyed, 

small businesses that are considering whether to seek patent protection 

abroad should identify and assess the full “cradle-to-grave” costs of 

acquiring, maintaining, and enforcing foreign patents. Other considerations 

should include the locations where small businesses intend to sell or 

manufacture their invention and whether the range of benefits obtained from 

foreign patents, such as increased sales or higher company value, is 

sufficient to justify their cost. Furthermore, small businesses should try to 

understand foreign patent laws and systems and the quality of foreign patent 

enforcement, the expert panelists said. The small businesses that GAO 

surveyed agreed that foreign patent costs, benefits, and potential locations 

were important factors in their decisions to patent abroad. However, some 

small businesses did not properly evaluate long-term costs and could not 

determine whether foreign patent benefits outweighed the costs. 

 

The most important step that small businesses could take to improve their 

foreign patent efforts, according to GAO’s survey of patent law experts, is to 

avoid disclosing information publicly about an invention before filing a U.S. 

patent application. The United States permits such disclosure, but doing so 

can invalidate an applicant’s right to patent protection abroad. The second 

most important step is to be aware of filing deadlines, which are specified in 

foreign laws and international patent treaties. Other important steps 

included integrating foreign patents into long-range business planning and 

seeking patents in countries where meaningful protection is available and a 

return on investment is likely. 

Experts’ Views on Key Steps for Small Businesses Seeking Foreign Patents 

PATENT PENDING

Apply for U.S. patent before disclosing

information about an invention

Ensure long-range business

plans support foreign patents

Weigh the nature and

patentability of inventions

Only patent in countries where

patent will be enforced and a

return on investment is likely

Source: GAO analysis of patent attorney panel questionnaires.

Treat patents as assets to be

discarded when usefulness is gone

Follow deadlines specified in U.S.,

foreign, and international patent law

Small businesses, which are 

important to the U.S. economy for 

their roles in job creation and 

technological development, must 

be able to protect and profit from 

their innovations. One way to 

protect their innovations on a 

global basis is to obtain U.S. and 

foreign patents. These businesses, 

however, face numerous 

impediments when trying to patent 

their goods or processes abroad. 

These impediments, which GAO 

identified in a July 2002 report, 

include high costs, limited 

resources, and limited knowledge 

among small businesses about 

foreign patent laws and systems. 

Because of concern that small 

businesses, particularly hightechnology firms, were not 

obtaining patent protection abroad 

and thus were losing potential sales 

in foreign markets, GAO was asked 

to (1) identify the factors that 

patent law experts believe small 

businesses should consider as they 

decide whether to seek patent 

protection abroad and provide 

information on how small 

businesses viewed these factors 

and (2) identify the steps that small 

businesses should take to improve 

their foreign patent efforts, 

according to our survey of patent 

law experts. 

www.gao.gov/cgi-bin/getrpt?GAO-03-910.

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4347, or YagerL@gao.gov. 

Highlights of GAO-03-910, a report to the 

Chairman, Senate Committee on Small 

Business and Entrepreneurship; the 

Honorable Christopher S. Bond, U.S. 

Senate; and the Chairman, House 

Committee on Small Business 

June 2003

INTERNATIONAL TRADE 

Experts’ Advice for Small Businesses 

Seeking Foreign Patents 
Page i GAO-03-910 International Trade

Contents

Letter 1

Results in Brief 2

Background 3

Small Businesses Should Consider a Complex Array of Factors 

Before Investing in Foreign Patents 4

Experts Identify Key Steps for Small Businesses to Improve Their 

Foreign Patent Efforts 13

Observations 15

Appendixes

Appendix I: Objectives, Scope, and Methodology 17

The Expert Panel 17

The Small Business Survey 18

Appendix II: Members of GAO’s Patent Attorney Panel 20

Appendix III: Factors Related to the Decision to Seek Foreign Patents 23

Location and Size of Foreign Markets 23

Foreign Patent Benefits 25

Foreign Patent Costs 26

Nature of the Technology, Invention, or Product 29

Attributes of a Patent and Its “Claims” 30

Foreign Patent Infringement and Enforcement 31

Composition of Company’s Patent Portfolio 32

Location of Manufacturing, Assembly, Research, and Development 

Sites 33

Foreign Patent Laws and Systems 33

Regulatory Environments in Other Countries 35

Timing of Patent Applications and Relevant Deadlines 36

Competitive Concerns 36

Demographics and Cultural Differences 37

Appendix IV: Small Business Views on the Relevance of Certain Factors to 

Their Foreign Patent Decisions 38

Appendix V: Processes and Costs Involved in Obtaining Foreign Patent 

Protection: A Hypothetical Scenario for 2002 40

Estimated Cost of U.S. Patent 41

Filing for a Foreign Patent 42

Obtaining a Foreign Patent Using PCT 44

Maintaining a Foreign Patent 51

U.S. Attorney and Foreign Representative Fees 53
Contents

Page ii GAO-03-910 International Trade

Total Scenario Costs 54

Scope and Methodology 54

Appendix VI: Patent Law Experts’ Views on Steps That Small Businesses 

Should Take to Improve Foreign Patent Efforts 58

Tables Table 1: Sources, Types, and Purposes of Foreign Patent Costs 6

Table 2: Assessment of Patent “Practical Value” in Other 

Countries 12

Table 3: Patent Law Experts’ Views on Most Important Steps That 

Small Businesses Should Take to Improve Foreign Patent 

Efforts 14

Table 4: Estimated Costs to Obtain and Maintain U.S. Patent for 20 

Years 42

Table 5: Estimated International Stage Patent Costs 49

Table 6: Estimated National Stage Patent Costs 51

Table 7: Estimated Costs Involved in Maintaining a Foreign Patent 

in Nine Countries for 20 Years 52

Table 8: Estimated U.S. Attorney and Foreign Representative 

Fees 54

Table 9: Estimated Total Foreign Patent Costs 54

Table 10: Patent Law Experts’ Views on Small Business Steps to 

Improve Foreign Patent Efforts 58

Figures Figure 1: The International and National Stages of the PCT 

Process 46
Contents

Page iii GAO-03-910 International Trade

Abbreviations

EPO European Patent Office

IP intellectual property

PCT Patent Cooperation Treaty

SBA Small Business Administration

USPTO U.S. Patent and Trademark Office

WIPO World Intellectual Property Organization

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-03-910 International Trade

United States General Accounting Office

Washington, D.C. 20548

A

June 26, 2003 Lret

The Honorable Olympia Snowe, Chairman

Committee on Small Business 

and Entrepreneurship

United States Senate

The Honorable Christopher S. Bond

United States Senate

The Honorable Donald A. Manzullo

Chairman, Committee on Small Business

House of Representatives

Small and start-up businesses1

 are important to the U.S. economy for their 

roles in job creation and technological development. Small businesses, 

particularly those in high-technology industries, must be able to protect 

and profit from the innovations that flow from their research and 

development expenditures. One way to protect innovations on a global 

basis is to obtain U.S. and foreign patents. However, in July 2002, we 

reported that small businesses face numerous impediments when trying to 

patent their goods or processes abroad. These impediments include high 

costs, limited resources, and limited knowledge among small businesses 

about foreign patent laws and systems.2

 We concluded that such 

impediments affect small businesses more negatively than large businesses 

and may discourage or prevent small businesses from seeking global 

protection for their innovations. In that report, we recommended that the 

federal government (1) assess the advantages and disadvantages to small 

businesses of making further progress toward patent law harmonization 

and (2) make information about foreign patent laws, requirements, 

procedures, and costs available to small businesses. 

1

Under 13 C.F.R. part 121, the Small Business Administration (SBA) established various size 

standards, based on economic activity or industry, for determining what is a small business 

for purposes of eligibility for its programs. Based on the SBA standards, we defined a small 

business for purposes of conducting our work as having 500 or fewer employees.

2

See U.S. General Accounting Office, International Trade: Federal Action Needed to Help 

Small Businesses Address Foreign Patent Challenges, GAO-02-789 (Washington, D.C.: July 

17, 2002).
Page 2 GAO-03-910 International Trade

Because our July 2002 report indicated that small businesses that lack a 

sufficient understanding of foreign patent laws, processes, and costs may 

have difficulty making appropriate foreign patent decisions for their 

companies, you asked us to (1) identify the factors that patent law experts 

believe small businesses should consider as they decide whether to seek 

patent protection abroad and provide information on how small businesses 

viewed these factors and (2) identify the steps that small businesses should 

take to improve their foreign patent efforts, according to our survey of 

patent law experts. 

The information in this report is based on the results of a Web-based expert 

panel and a small business survey that we conducted for our July 2002 

report. The panel was comprised of 39 U.S. patent attorneys whom we 

selected based on their experience in obtaining foreign patents for both 

small and large businesses. We asked these experts to identify factors that 

are relevant to foreign patent decisions and actions that small businesses 

can take to improve their foreign patent efforts. We also administered a 

questionnaire to a random sample of small businesses that had obtained or 

considered obtaining foreign patents in the last 5 years. The 38 businesses 

that participated in our survey ranked the importance of various factors to 

their foreign patent decisions. Much of the information in this report was 

not included in our July 2002 report. (App. I provides further details about 

our scope and methodology and the methodology’s limitations. App. II lists 

the members of the expert panel.)

Results in Brief Small businesses that are considering whether to seek patent protection 

abroad need to consider a complex array of factors before making this 

investment, our panel of patent law experts said. For example, these 

businesses need to identify the full “cradle-to-grave” costs of acquiring, 

maintaining, and enforcing foreign patents during their average 20-year life 

span. Without full knowledge of these typically high costs, small businesses 

risk wasting resources by beginning a patent acquisition process that may 

be too costly to complete. Further, small businesses need to consider 

whether the range of benefits that foreign patents may provide to them, 

such as increasing sales or the company’s value, are sufficient to justify 

their cost. In making this assessment, businesses should consider the 

nature of their inventions, the locations where they expect to sell or 

produce them, and the places where their competition is located before 

choosing the countries in which they will seek patent protection. In 

addition, small businesses should try to understand how key aspects of 

foreign and international patent law could affect their decision. For 
Page 3 GAO-03-910 International Trade

example, the attractiveness of certain countries would likely diminish if 

their patent laws and systems do not provide adequate patent protection 

and meaningful patent enforcement. The small businesses we surveyed 

said that some of these factors, such as costs and locations, were more 

important to their foreign patent decisions than other factors. Contrary to 

the experts’ advice, some businesses had not properly evaluated long-term 

costs and could not determine whether the benefits of holding such patents 

outweighed the costs.

The experts we surveyed identified and ranked 20 steps that small 

businesses could take to improve their foreign patent efforts. The most 

important step they identified is to avoid publicly disclosing information 

about an invention prior to filing a U.S. patent application. While such 

disclosure is permitted in the United States, it can invalidate an applicant’s 

right to patent protection in many foreign jurisdictions. The second most 

important step is to take foreign filing actions in accordance with the 

deadlines specified in foreign laws and international patent treaties. For 

example, a company must file a foreign patent application typically within 

1 year from the time it filed a corresponding U.S. patent application. Other 

important steps the experts identified included making foreign patent 

decisions in accordance with a company’s long-term business plan and 

filing applications only in countries where protection will be meaningful 

and the patent will produce a return on investment. 

Background A patent is the grant of a property right that a national government or an 

international intergovernmental authority issues for an invention. Patents 

cover inventions of new products as well as new processes to make or use 

new or existing products. While patent rights vary by country, a patent 

typically gives an inventor the right to exclude others from commercially 

making, using, offering to sell, or importing the invention in the country 

that granted the patent during the patent term, usually a 20-year period 

from the application date. Any violation of that right is considered a patent 

infringement. Patent owners that wish to address the infringement of, or to 

“enforce,” their patent rights must initiate a legal action in the country or 

countries where the infringement occurred. 

U.S. companies and inventors that seek patent protection in the United 

States file patent applications with the U.S. Patent and Trademark Office 

(USPTO). They are typically represented by a patent attorney, who drafts 

their patent application and responds to USPTO questions about the 

application. Before granting a patent, USPTO will search for relevant “prior 
Page 4 GAO-03-910 International Trade

art” (all patent and nonpatent literature that helps determine whether a 

new patent will be granted). USPTO will also examine patent applications 

to, among other things, determine whether the claimed invention is “new 

and nonobvious.” USPTO provides information about the U.S. patent 

system to independent inventors that are considering whether to obtain a 

U.S. patent, but it does not provide any information about foreign patent 

systems.

U.S. companies and inventors that seek foreign patent protection must file 

applications with foreign patent offices. These applications must conform 

to the patent laws and requirements in the countries where protection is 

desired. Foreign patent offices also conduct prior art searches and examine 

applications in accordance with their own laws. They generally require 

patent applications to be filed in the host country language or translated 

into this language at some point after the initial filing. U.S. companies and 

inventors typically must be represented before the foreign patent office by 

a foreign patent attorney or agent. 

Small Businesses 

Should Consider a 

Complex Array of 

Factors Before 

Investing in Foreign 

Patents

Small businesses must weigh a complex array of factors and long-term 

issues before deciding whether an investment in foreign patents is 

appropriate for their company, according to the patent attorney experts on 

our panel. Factors they identified include costs, benefits, location of 

foreign markets and manufacturing sites, and foreign patent laws and 

enforcement, among others. Our analysis shows that businesses cannot 

assess individual factors in isolation but must instead weigh the multiple 

factors’ combined effect on their foreign patent decision. Making the 

decision more complex, many attorneys said, is the need for small 

businesses to assess many long-term issues at the time of their decision, 

such as future outlays they will incur and possible changes in current 

market or legal conditions over the patent’s life span. Many small 

businesses we surveyed recognized the importance of these factors and 

incorporated them into their decision-making process. However, some 

businesses lacked a basic understanding of the foreign patent process and 

failed to adequately assess long-term issues. (App. III contains more 

detailed information about the range of factors the experts identified. App. 

IV provides information on how the small businesses ranked the 

importance of various factors.)
Page 5 GAO-03-910 International Trade

Small Businesses Should 

Identify and Assess LongTerm Costs

Most of the experts said that it is important for small business owners to 

understand the full “cradle-to-grave” costs of holding and enforcing foreign 

patents and weigh whether such an investment is appropriate for their 

company. Several of the experts said that small businesses should try to 

estimate the full costs before making any investment in foreign patents, 

noting that they have observed that some small businesses make initial 

investments in foreign patents, perhaps filing multiple applications abroad, 

only to realize that they cannot afford to continue the process. Small 

businesses face challenges in learning about foreign patent costs, however. 

Many types of costs are involved, foreign fees structures change frequently, 

and small businesses typically have limited resources to devote to staying 

abreast of these developments, according to several experts. A number of 

experts suggested that if a small business cannot afford the long-term costs 

of foreign patents, it should probably look for other ways to protect its 

innovations or focus solely on the U.S. market. 

Foreign patent fees are numerous, and because comprehensive patent law 

harmonization is lacking, many fees may be incurred for redundant 

purposes, according to our patent law experts. Table 1 shows some of the 

source, nature, and purpose for some costs that are typically incurred. The 

experts noted that foreign patent office fees often exceed comparable U.S. 

fees and are sometimes charged for work that USPTO has already done, 

such as searching for relevant existing patents and other literature.3

Moreover, although small businesses are allowed to pay reduced USPTO 

fees compared with their large business counterparts, they receive no 

similar reductions from most foreign patent offices.4

 Patent applications 

have to be translated into other languages, and the cost of these 

translations can be significant.5

 Business also incur both U.S. and foreign 

patent attorney costs, the latter being necessary because U.S. patent 

attorneys are typically not allowed to represent clients before foreign 

3

Changes to the USPTO fee structure were proposed in H.R. 1561, “United States Patent and 

Trademark Fee Modernization Act of 2003,” introduced in April 2, 2003. Congress has 

reviewed, but has not acted on, this proposed legislation.

4

The Canadian Intellectual Property Office offers reduced fees for small entities.

5

Translation costs vary according to the length and nature of the patent application but 

could cost $2,000-$10,000 per translation or more, according to several experts on our panel 

and our own research. Several experts on our panel said that translation costs are 

particularly irksome because the quality of an application can diminish in the translation 

process, and most people who want to read the technical specifications of an invention are 

likely to read the original version of the application.
Page 6 GAO-03-910 International Trade

patent offices. Finally, because foreign patent applicants can also file their 

applications through certain regional patent offices that cover multiple 

countries, such as the European Patent Office,6

 or in accordance with an 

international patent treaty (the Patent Cooperation Treaty,7

 which enables 

applicants to file an international patent application and delay certain 

national patent office charges), additional cost types exist beyond those 

shown in table 1. 

Table 1: Sources, Types, and Purposes of Foreign Patent Costs

Source: GAO analysis based on information provided by expert panelists, national patent office fee schedules, and other private sources.

6

The 1973 European Patent Convention, which created the European Patent Office, 

established a single procedure for granting patents in the 27 member countries on the basis 

of a uniform body of substantive patent law. An application to the European Patent Office is, 

in effect, a group of national patent applications that are processed together, but become 

separate patents that are separately maintained and enforced.

7

The Patent Cooperation Treaty is administered by the World Intellectual Property 

Organization and is adhered to by 120 countries. It facilitates the simultaneous filing of 

multiple patent applications in member countries on the basis of a single application. 

Applicants are able to undergo a single search and examination before deciding whether 

and in which countries they wish to obtain patents, and can delay filing applications with 

national patent offices by up to 30 months.

Source of cost Type and purpose

National patent office Application or filing fee - incurred upon filing patent application

Search fee - incurred to have patent office search for previous 

or existing patents or other material relevant to the application

Examination fee - incurred to have patent application 

examined

Grant fee - incurred to have patent issued

Maintenance fee - incurred (usually yearly) to keep patent in 

force

Private sources U.S. patent attorney fees – incurred to draft patent application, 

search previous patent literature, and generally represent 

applicant

Foreign patent attorney or agent fees – incurred to have 

approved representation before foreign patent offices

Translation fees – incurred to translate patent applications in 

languages accepted by foreign patent offices
Page 7 GAO-03-910 International Trade

The total cost of obtaining a set of foreign patents to extend a company’s 

U.S. patent protection abroad, and of maintaining those patents over their 

possible 20-year life span, is quite expensive, according to our expert 

panelists. Depending on the scope of protection desired, each U.S. patent 

taken abroad can cost several hundred thousand dollars. (In our July 2002 

report,8

 we developed a hypothetical, relatively straightforward patent 

scenario to estimate the U.S. and foreign patent costs that a small business 

might incur. The results of this analysis are reproduced in this report in 

app. V.) The experts advised that small businesses should understand and 

examine the various methods that exist to file for foreign patents, as well as 

the cost differences between the various methods. Moreover, they should 

examine the full life-time costs to hold and enforce their patents, not just 

the up-front costs to obtain them.

Among the small businesses we surveyed, foreign patent costs were a 

significant factor in, and often the biggest impediment to, their decisions to 

patent abroad. The companies collectively identified all cost components, 

including foreign patent office fees, translation costs, and U.S. and foreign 

attorney charges, as being particularly expensive. Several of the companies 

had explored different methods for obtaining foreign patents and many 

used the Patent Cooperation Treaty. Despite the importance of cost, 

however, we noted that several of the businesses began the foreign patent 

process without fully understanding and budgeting for the types and 

amounts of costs they would incur in the future. For example, one 

company that was attempting to patent abroad for the first time spent 

about $80,000 applying for several European patents but said it could not 

allocate any more funds to the process and might have to abandon its 

applications. Another business described applying for a Japanese patent 

without knowing what each step of the process would cost and was 

surprised each time its patent attorney said additional payments were due. 

This company ultimately asked its patent attorney to fully disclose all steps 

and associated costs so that it could better plan for the expenses. Another 

company said that ignorance about foreign patent costs is prevalent among 

small businesses.

8

GAO-02-789.
Page 8 GAO-03-910 International Trade

Small Businesses Should 

Weigh Potential Benefits 

and Carefully Select Patent 

Locations 

In addition to cost, the experts said small business should assess the 

benefits that foreign patents may provide and should review various 

marketing, manufacturing, and competition issues before selecting the 

locations where they will seek patent protection. Given the significant 

expense of foreign patents, the experts said that small businesses should 

only patent abroad if doing so fits with the company’s overall business plan 

and if the potential benefits will likely outweigh the costs. Small business 

should also develop long-term plans for how they will maximize the benefit 

and limit the costs of their global intellectual property portfolio. 

Unfortunately, in the experts’ view, many small businesses do not 

sufficiently analyze the costs and benefits, do not understand strategies to 

minimize cost, and may overestimate or underestimate the value of their 

innovations. 

One key to maximizing benefits and minimizing costs is the appropriate 

selection of foreign patent locations, according to our experts. Many of 

them recognized that small businesses may lack the resources to patent in 

as many locations as they desire (this was a predominant view among the 

small businesses we surveyed). In this situation, the experts advised small 

businesses to target their patent resources to carefully chosen locations 

that will provide the most appropriate and useful protection they can 

afford. Ideally, businesses should seek protection in locations where they 

expect to sell or manufacture, as well as possibly import, distribute, use, or 

transport their products or services, according to the experts. Businesses 

should be mindful of where future markets may develop during the patent 

term, an assessment that is admittedly difficult to make, several experts 

said. Competitive concerns, such as where current competitors market or 

manufacture their products or services, would also be relevant. Other 

factors, such as the nature of foreign regulatory environments or the extent 

of nonpatent barriers to market entry, would further influence the choice of 

foreign patent locations. 

Despite this potentially long list of locations to consider, several experts 

advised that businesses may be able to select a few key countries from 

among their ideal list and achieve sufficiently effective patent protection 

for less cost. One expert panelist advised that adopting an overall foreign 

patent strategy should aid in the selection of locations, noting that possible 

strategies will fall within a spectrum ranging from competitor-driven to 

market-driven. According to this expert’s advice, “if non-patent barriers to 

market entry are high and the number of competitors is discrete, this is 

particularly favorable toward the adoption of a competitor-driven strategy 

in which patent applications are filed in countries where the home and 
Page 9 GAO-03-910 International Trade

manufacturing bases of the competitors are located . . . protection solely in 

countries of competitors is effectively worldwide patent coverage because 

manufacturing or sale of all products has been covered. If nonpatent 

barriers to market entry are low and competitors are liable to spring up 

anywhere on short notice, this militates toward a market-driven strategy in 

which patent applications are filed in the most relevant or major markets.”9

Among the small businesses we surveyed, the most important decisionfactor in patenting abroad was the location and size of foreign markets. 

Some distinct patterns emerged among the businesses regarding location. 

Pharmaceutical and biotechnology companies, whose products have long 

development cycles, generally sought to obtain broad global coverage for 

their products, based on future market expectations. Others, including 

those in the automotive parts, machine tools and equipment, oil, and 

environmental cleanup areas, tended to focus on current markets in a few 

countries were their industries were prevalent or their technology was 

valued. 

While benefits were highly relevant to many small businesses’ decisions, 

assessing them was more difficult. Several businesses said that patents 

generally offer exclusive rights to market a product or service, thus 

supporting high prices to recover research and development expenses. 

However, some businesses that had commercialized products could not 

identify any measurable benefits that their foreign patents had provided. 

One business official said he thought his company might have done just as 

well abroad without holding any foreign patents. Finally, other businesses 

noted that, due to long commercialization cycles for their products, they 

were forced to proceed with the foreign patent process and incur the costs 

without knowing whether their products would succeed and produce any 

return on investment. 

9

John H. Pilarski, Group Technology Counsel, Illinois Tool Works, Inc., “Practical 

Considerations on the Formulation of Foreign Patent Strategy,” (presented at the 2001 

American Intellectual Property Law Association Spring Meeting, May 2001, San Francisco, 

CA).
Page 10 GAO-03-910 International Trade

Small Businesses Need to 

Understand Foreign Patent 

Laws and International 

Treaties

In addition to commercial concerns, the nature of foreign patent laws and 

systems is also important in selecting foreign patent locations, many 

experts said. Because foreign patent laws differ, small businesses should 

consider targeting their resources toward the countries that offer 

appropriate patent protection and meaningful enforcement, the experts 

said. To do so, small businesses need to understand how differences 

between U.S. and foreign patent laws may affect the kind of patent 

protection they can obtain abroad. For example, certain types of 

technology can be patented in the United States, but not elsewhere, and 

other countries’ patent laws may not offer the same breadth of protection 

that a corresponding U.S. patent affords. In addition, small businesses need 

to understand how foreign patent systems function to avoid developing 

unrealistic expectations about the timing, difficulty, or cost of their efforts. 

In our July 2002 report, the experts identified the lack of sufficient 

knowledge among small businesses about foreign patent laws and systems 

as a significant impediment to these businesses’ efforts to patent abroad. 

The panel of experts identified several key aspects of foreign patent laws 

and systems and of international patent treaties10 that small businesses 

should understand. For example, they specified these four factors:

• The priority principle – In the case of competing applications for the 

same invention, the United States awards the patent to the individual or 

entity that can demonstrate it was the first to invent. All other countries 

award the patent to the individual or entity that was the first to file a 

patent application.

• The grace period – The United States allows patent applicants a 1-year 

grace period between the first public disclosure of an invention and the 

patent application date. Many other countries, however, will not grant 

patents in cases where public disclosure precedes the patent application 

date. Because of this difference, companies that take advantage of the 

U.S. grace period may find themselves ineligible to receive foreign 

patent protection.

10Under the 1883 Convention for the Protection of Industrial Property (known as the Paris 

Convention), 163 countries give limited recognition to each other’s patent application filing 

dates. Under the convention, for 1 year after the date a U.S. patent application is filed, 

basically the same application may be filed as a foreign counterpart application in any 

country that is a convention member. Another important international treaty is the Patent 

Cooperation Treaty, administered by the World Intellectual Property Organization.
Page 11 GAO-03-910 International Trade

• The availability or nature of patent protection – Some 

technologies or processes that can be patented in the United States, 

such as business methods and certain software processes or 

biotechnology inventions, cannot be patented elsewhere. In addition, 

some countries only allow claims (the part of a patent application that 

defines the invention) that are more narrow or restricted than what the 

United States typically allows.

• The strength of enforcement – Various issues, including the strength 

of patent enforcement law and the nature of foreign court systems, 

affect the degree to which a company can enforce a patent abroad. The 

experts noted that some countries have weak or nonexistent 

enforcement laws, while others have acceptable laws but slow or 

ineffective enforcement processes. Further, the remedies available in 

some countries to address patent infringement, such as injunctions to 

stop infringement or damages to compensate a company for its losses, 

differ from what is available in the United States and may not be 

sufficient to counteract the effects of infringement. Finally, differences 

in civil litigation, such as whether special courts exist to hear patent 

infringement cases or the extent of pretrial discovery, may affect the 

ease or quality of enforcement abroad. Table 2 shows a 2003 assessment 

by one of our expert panelists of the practical value of patents 

(determined according to multiple factors including level of patent 

enforceability and sophistication of court systems) in various countries.
Page 12 GAO-03-910 International Trade

Table 2: Assessment of Patent “Practical Value” in Other Countries

Source: James A. Forstner, Intellectual Property Consultant, “International Patent Enforcement,” (presented at a seminar on European 

Patent Practice and Procedure 2003, George Mason University Law School, June 2003, Arlington, Virginia).

Notes: According to the source cited, the categories were developed from the perspective of a U.S. 

company. A number of factors were considered in determining the relative practical value, based on 

the author’s considerable experience in obtaining and enforcing foreign patents, such as the 

competency of the national patent office, the ability to obtain patent claims of reasonable scope at a 

reasonable cost in a reasonable time, the enforceability of the patent in a particular country (including 

the sophistication and independence of the court systems, the ability to obtain injunctions and 

significant damages, the resolution of court proceedings within a reasonable time, the question of 

whether the courts are biased against foreign plaintiffs, the competency of the local bar), the 

deterrence value of patents against potential infringers, the ability to generate significant license 

royalty income, the level of industrialization in a country, and the consumer population of a country.

Patents in countries that do not appear on this list are considered to have no practical value as of June 

2003.

a

Denotes countries taking significant steps to improve patent value

Among the small businesses we surveyed, the nature of foreign patent 

enforcement was a more important factor to their patent decisions than the 

nature of foreign patent laws and systems. Many businesses acknowledged 

that foreign patent laws and systems were difficult to understand, causing 

them to rely on their patent attorney to tell them what they need to know. 

Category of country Countries

“A” Countries

Patents have high practical value

Australia

Canada

The Netherlands

United Kingdom

United States

“B” Countries

Patents have medium practical value

Belgium

Finland

France

Germany

Ireland

Israel

Italy (also San Marino)

Korea

New Zealand

Singapore

Sweden 

“C” Countries

Patents have low practical value

Argentina

Austria

Brazila

Chile

Chinaa

Czech Republic

Denmark

Greece

Hong Konga

Hungary

India

Japana

Luxembourg

Malaysiaa

 (also Sabah

and Sarawak)

Mexico

Norway

Pakistan

Paraguay

Philippines

Poland

Portugal

Russiaa

Slovakia

South Africa

Spain

Switzerland (also

Lichtenstein)

Taiwana

Thailand

Turkey

Ukraine
Page 13 GAO-03-910 International Trade

Several businesses indicated important ways in which they had initially 

misunderstood foreign patent laws and international patent treaties—such 

as believing that their U.S. patent provided them global protection.11

Regarding patent enforcement, many businesses said that they avoid 

seeking patents in countries with weak patent enforcement, despite the 

belief in a few instances that those countries held potentially lucrative 

markets for the companies’ products. A few companies’ foreign patents had 

been infringed, leading some to take enforcement actions and others to 

back out of the market. One company said that, because enforcement 

proceedings are so prohibitively expensive, it seriously examines 

enforcement regimes and costs as it makes foreign patent decisions. 

Experts Identify Key 

Steps for Small 

Businesses to Improve 

Their Foreign Patent 

Efforts 

Given the challenges that small businesses face in acquiring foreign patents 

and the limited resources (including time) that some small businesses 

have, we asked the patent law experts to identify and rank various steps 

that these businesses could take to improve their foreign patent efforts. In 

their role as advisors to small businesses, the experts had many years of 

experience observing the foreign patent behavior of small businesses. Of 

the 20 items that they ranked, more than 80 percent of the experts 

identified six steps that they viewed as the most important actions small 

businesses need to follow. As shown in table 3, these included actions 

related to the disclosure of an invention, the timing of foreign filing actions, 

the way the business incorporates intellectual property into its operations 

and manages it, and the selection of countries in which it seeks protection. 

(App. VI contains details on all of the steps the experts identified and 

ranked.)

11A U.S. patent does offer some protection for activities outside the United States. For 

example, it could be used against the manufacturer of a pirated product made outside the 

United States and sold within the United States, or of a pirated product made in the United 

States and sold outside of the United States. 
Page 14 GAO-03-910 International Trade

Table 3: Patent Law Experts’ Views on Most Important Steps That Small Businesses 

Should Take to Improve Foreign Patent Efforts

Source: GAO analysis of patent attorney panel questionnaires. 

Note: Appendix VI contains complete information on how the experts ranked all steps identified in 

response to this question.

The experts gave their highest rankings to two steps related to businesses’ 

knowledge of foreign patent laws and international patent treaties, 

underscoring their view that insufficient knowledge of these issues may 

cause small businesses to inadvertently impair their ability to protect their 

inventions abroad. First, the experts were unanimous in stressing the 

importance of not divulging information about an invention before filing for 

U.S. patent protection. Several attorneys noted that small businesses 

sometimes disclose information about their invention to assess its market 

value or otherwise attract interest in the company or product, only to learn 

later that they can no longer obtain foreign patent protection in countries 

that do not offer a grace period between such disclosure and the act of 

filing a patent application.

Second, the experts also held strong views about the need for small 

businesses to understand the steps required under international treaties or 

foreign laws and the associated deadlines and to act accordingly. 

Applicants or patent holders that fail to observe these requirements risk 

losing their patent rights, the experts said. For example, an international 

treaty requires patent applicants to file for foreign patent applications 

within 1 year of the date of their domestic patent application. Missing this 

deadline causes businesses to lose the “priority” rights that an international 

treaty conveys and complicates their efforts to get foreign coverage. In 

Rank Small business step

Percent of

experts rating as

most important

1 Avoid divulging information about an invention prior to filing a 

U.S. application

100%

2 Be familiar with key dates and deadlines that are specified 

under U.S., foreign, and international laws, and take filing 

actions accordingly

95

3 Consider the company’s long-range business plan 86

4 Manage patent portfolio as an asset, and regularly review 

foreign portfolio

83

5 Consider the nature and patentabilty of the product 81

6 Only file in countries where protection will be meaningful and 

patent will produce a return on investment

81
Page 15 GAO-03-910 International Trade

addition, maintaining patent rights abroad requires that patent holders pay 

maintenance fees by specified deadlines (these are usually due annually in 

other countries, whereas U.S. maintenance fees are due only three times 

over the life of the patent). Finally, some countries require patent 

applicants to take certain steps that are not required in the United States. 

For instance, patent applications in the United States are automatically 

examined, whereas in Japan an applicant must request the examination.

Finally, the panelists suggested that small businesses should thoroughly 

analyze their long-term business plan and their interest in expanding 

abroad, as well as the company’s commitment to holding and enforcing 

foreign patents. They recommended that small businesses treat their 

patents as assets that should be shed as their value decreases. Specifically, 

businesses should regularly review their foreign patent portfolio to 

determine whether it makes business sense to maintain each of their 

patents given the costs involved. 

Observations For a number of small businesses, the decision to expand their businesses 

by selling abroad is a significant step in the progress of their firm. As part of 

that decision, many of these firms must consider the methods available to 

protect their innovations, and one of those methods is by obtaining foreign 

patents for their products. The processes and costs involved in obtaining 

and enforcing foreign patents are complex, however, and often not well 

understood, which can negatively affect foreign patent decisions. For 

example, the complexity and expense may deter some small businesses 

from expanding their business abroad altogether. Others begin the foreign 

patent process with limited or insufficient knowledge and make costly 

mistakes that they can ill afford. Not surprisingly, we noted that a learning 

curve exists—some companies that were patenting abroad for the first time 

lacked full knowledge of the foreign patent process, whereas companies 

with more foreign patent experience described having learned from 

previous mistakes that they had made while seeking foreign patents. 

We believe the information in this report is potentially helpful to small 

businesses that are considering foreign patents. Even with complete 

information about the foreign patent process, the patent decisions are 

complex due to the need for information such as product-specific 

projections on potential sales in foreign markets. However, the experiences 

of other firms and the guidelines from our expert panel should enable small 

businesses to better understand the importance of key factors and make 

their decisions about foreign patents more systematically.
Page 16 GAO-03-910 International Trade

As agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after its 

issue date. At that time, we will send copies of this report to the Ranking 

Members of the Senate Committee on Small Business and 

Entrepreneurship and the House Committee on Small Business, and other 

interested congressional parties; the Administrator of the Small Business 

Administration; and the Director of the U.S. Patent and Trademark Office. 

Copies will be made available to other interested parties upon request. In 

addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov.

If you or your staff have any questions concerning this report, please call 

me at (202) 512-4347. Key contributors to this report were Shirley 

Brothwell, Jason Bair, Jeffrey Larson, Rona Mendelsohn, and Elizabeth 

Sirois.

Loren Yager, Director

International Affairs

and Trade Issues
Page 17 GAO-03-910 International Trade

Appendix I

Objectives, Scope, and Methodology AAppenendxIdeisi

After we issued a July 2002 report on foreign patent impediments that small 

businesses face, the Chairman of the Senate Committee on Small Business 

and Entrepreneurship and the Chairman of the House Committee on Small 

Business asked us to (1) identify the factors that patent law experts believe 

small businesses should consider as they decide whether to seek patent 

protection abroad and provide information on how small businesses 

viewed these factors and (2) identify the steps that small businesses should 

take to improve their foreign patent efforts, according to our survey of 

patent law experts.1

 We collected information on these objectives in two 

ways. First, we solicited information from a panel of 39 U.S. patent 

attorneys that we selected because of their expertise in obtaining foreign 

patents for large and small businesses. Second, we surveyed a sample of 60 

small businesses that had obtained or had considered obtaining foreign 

patent protection and received 38 responses. We formulated the questions 

in our small business survey based on the information we obtained from 

the panel of patent law experts. 

The Expert Panel We selected our expert panelists using criteria that included years of 

experience in obtaining foreign patents and a record of publishing articles 

in professional journals. Based on these criteria, we invited 39 patent 

attorneys to be on our expert panel. All accepted. About half of the 

panelists were in-house counsel for large or small companies, while the 

other half were outside counsel. The combined expertise of the attorneys 

on our panel covered a broad spectrum of technologies, including 

electrical, mechanical, chemical, pharmaceutical, biotechnology, 

semiconductors and computers, consumer products, medical products, 

manufacturing, and oil.

We obtained the experts’ views through an iterative Web-based panel that 

consisted of three phases. In the first phase, we asked the patent attorney 

experts to respond to open-ended questions about broad issues concerning 

foreign patents and small businesses, including factors that small 

businesses should consider in deciding whether or not to patent abroad 

and possible things that small businesses could do better when they decide 

to patent abroad. We then performed a content analysis that identified 

major themes within the question posed and grouped the themes into 

1

See U.S. General Accounting Office, International Trade: Federal Action Needed to Help 

Small Businesses Address Foreign Patent Challenges, GAO-02-789 (Washington, D.C.: July 

17, 2002).
Appendix I

Objectives, Scope, and Methodology

Page 18 GAO-03-910 International Trade

several categories. To maintain standards of methodological integrity, two 

coders independently performed the content analysis and then met to 

reconcile differences. Any issues that the two original coders could not 

reconcile were referred to other independent coders for a final 

determination. 

In the second phase, we asked the panelists to respond to about 40 closeended questions that we crafted based on our content analysis. In the third 

phase, we asked panelists to expand upon their close-ended responses to 

some questions. All 39 attorneys participated in the first phase, which ran 

from July 19 to August 28, 2001; 36 attorneys participated in the second 

phase, which ran from November 5 to 26, 2001; and 32 attorneys 

participated in the third phase, which ran from January 14 to February 8, 

2002. 

The Small Business 

Survey

To answer our two report objectives, we also conducted a survey of small 

U.S. businesses. Because we wanted to understand how small businesses 

make decisions about whether or not to obtain foreign patents, we 

surveyed businesses that had patented inventions in the United States and 

had also obtained or considered obtaining foreign patents.

As there is no database of U.S. small businesses that have obtained patents 

overseas, we had to identify these businesses using USPTO data on U.S. 

patents granted to applicants that had claimed small entity status. To do 

this, we screened the patent owners to find out if they were (1) small 

businesses, (2) U.S. companies, and (3) interested in patenting overseas. 

Given that there were more than 10,000 patents issued to small entities in 

1997, the year for which we considered USPTO data, we realized that it 

would be impractical to conduct a large, generalizable survey. Instead, we 

decided to conduct a small, randomly selected sample of small businesses 

that had obtained or considered obtaining overseas patents during the last 

few years. 

We developed the small business survey based on the patent attorneys’ 

responses to the second phase of the patent attorney panel survey. We 

faxed the survey to 60 businesses in December 2001. In all, 38 of the 60 

companies we surveyed responded. We conducted follow-up telephone 

interviews with 18 of these small businesses to obtain more detailed 

comments about their answers and to understand more about their foreign 

patent decisions. 
Appendix I

Objectives, Scope, and Methodology

Page 19 GAO-03-910 International Trade

Although we initially randomly selected the sample of small businesses, the 

number we ultimately consulted was limited because information was not 

available for a substantial number of our sample. Therefore, the 

information in this report does not represent the overall set of small 

businesses that seek foreign patent protection.

In this report, we present (1) the results of the content analysis of the 

attorneys’ open–ended responses about the factors that small businesses 

should consider, (2) the results of the attorneys’ close-ended responses 

about what steps small businesses should take to improve their foreign 

patent efforts and, (3) information and illustrative examples from the 

survey of small businesses.

The information presented in this report is based on expert opinion and 

secondary sources. We did not independently analyze foreign patent laws 

to verify the information provided. The information in this report is not 

intended to represent legal advice.

We did our work from May 2001 to June 2002 in accordance with generally 

accepted government auditing standards. The information provided during 

the expert panel was not time-sensitive, but we did update certain 

information where appropriate. For a fuller description of our 

methodology, see International Trade: Federal Action Needed to Help 

Small Businesses Address Foreign Patent Challenges (GAO-02-789), 

appendix I.
Page 20 GAO-03-910 International Trade

Appendix II

Members of GAO’s Patent Attorney Panel ApenIdxi

Andrew C. Aitken, Partner, Venable, Baetjer, Howard & Civiletti, 

Washington, District of Columbia. 

Robert A. Armitage, Vice President and General Patent Counsel, Eli Lilly 

and Company, Indianapolis, Indiana.

Charles Berman, Partner, Oppenheimer, Wolff & Donnelly, Los Angeles, 

California.

Robert P. Blackburn, Vice President and Chief Patent Counsel, Chiron 

Corporation, Emeryville, California.

Margaret A. Boulware, Shareholder, Jenkens & Gilchrist, Houston, Texas.

Michael J. Buchenhorner, Esq., PA, Palo Alto, California.

Jay L. Chaskin, Of Counsel, Cantor Colburn LLP, Norwalk, CT; Retired 

Associate International Patent Counsel, General Electric Company, 

Fairfield, Connecticut.

Q. Todd Dickinson, Partner, Howrey Simon Arnold & White, Washington, 

District of Columbia. 

Mary Ann Dillahunty, Partner, Burns, Doane, Swecker & Mathis, LLP, 

Redwood Shores, California.

James A. Forstner, Esq., Private Consultant, Arlington, Virginia.

Kathleen Fowler, Senior Patent Counsel, Immunex Corporation, Seattle, 

Washington.

J. William Frank, III, Partner, McCracken and Frank, Chicago, Illinois.

Gary L. Griswold, Chief Intellectual Property Counsel, 3M; President, 3M 

Innovative Properties Company, St. Paul, Minnesota.

Samson Helfgott, Director of Patents, Katten Muchin Zavis Rosenman, New 

York, New York.

Max D. Hensley, Vice President of Intellectual Property, Gilead Sciences, 

Inc., Foster City, California.
Appendix II

Members of GAO’s Patent Attorney Panel

Page 21 GAO-03-910 International Trade

David W. Hill, Partner, Finnegan, Henderson, Farabow, Garrett & Dunner, 

L.L.P., Washington, District of Columbia. 

John H. Hornickel, Chief Intellectual Property Counsel, 

Bridgestone/Firestone Americas Holding, Inc., Akron, Ohio.

Alan J. Kasper, Partner, Sughrue Mion, P.L.L.C., Washington, District of 

Columbia. 

Irwin M. Krittman, Vice President for Patent Administration, Thomson 

Multimedia Licensing Inc., Princeton, New Jersey.

Maria C.H. Lin, Partner, Morgan & Finnegan, L.L.P., New York, New York.

Nancy J. Linck, Senior Vice President, General Counsel, and Secretary, 

Guilford Pharmaceuticals Inc., Baltimore, Maryland.

Doug Luftman, Corporate Counsel, CIENA Corporation, Cupertino, 

California.

Gregory J. Maier, Senior Partner, Oblon, Spivak, McClelland, Maier & 

Neustadt, P.C., Arlington, Virginia.

Michael Meller, Partner, Anderson Kill & Olick, P.C., New York, New York.

Ann M. Mueting, Mueting, Raasch & Gebhardt, Minneapolis, Minnesota.

Stephen L. Noe, Assistant General Patent Counsel – Europe, Caterpillar 

Inc., Peterborough, England.

Michael J. Pantuliano, Counsel, Clifford Chance Rogers & Wells, L.L.P., 

New York, New York. 

John B. Pegram, Principal, Fish & Richardson, P.C., New York, New York.

John H. Pilarski, Group Technology Counsel, Illinois Tool Works, Glenview, 

Illinois. 

Peter W. Roberts, Founding Member, Roberts, Mlotkowski & Hobbes, P.C., 

Fairfax, Virginia.

Bernard F. Rose, Ph.D., Partner, Lyon & Lyon, L.L.P., San Jose, California.
Appendix II

Members of GAO’s Patent Attorney Panel

Page 22 GAO-03-910 International Trade

John M. Sanders, Sughrue Mion, P.L.L.C., San Diego, California. 

Victor Siber, Partner, Clifford Chance Rogers & Wells, L.L.P., New York, 

New York.

Liza K. Toth, Vice President for Intellectual Property, Matrix 

Semiconductor, Inc., Santa Clara, California.

Ann S. Viksnins, Esq., Shareholder, Schwegman, Lundberg, Woessner & 

Kluth, P.A., Minneapolis, Minnesota.

Michael Walker, Associate General Counsel, Intellectual Property, E.I. du 

Pont de Nemours and Company, Wilmington, Delaware.

Harold C. Wegner, Partner, Foley and Lardner, Washington, District of 

Columbia.

Elizabeth C. Weimar, Esq., Of Counsel, Morgan, Lewis & Bockius, L.L.P., 

Washington, District of Columbia. 

Daniel N. Yannuzzi, Vice President, Chief Intellectual Property Counsel, 

Conexant Systems, Inc., Newport Beach, California.
Page 23 GAO-03-910 International Trade

Appendix III

Factors Related to the Decision to Seek 

Foreign Patents ApenIdxi

The patent attorney experts on our panel identified numerous factors that 

small businesses should consider in deciding whether or not to seek, 

obtain, and maintain foreign patents. We analyzed their input and 

developed 13 broad categories that we believe captured the experts’ 

advice. These categories include the location and size of foreign markets; 

the benefits of foreign patents; the costs of foreign patents; the nature of 

the technology, invention, or product; the attributes of a patent and its 

“claims”; the issue of foreign patent infringement and enforcement; the 

composition of a company’s patent portfolio; the location of 

manufacturing, assembly, and research and development sites; the nature 

of foreign patent laws and systems; the regulatory environments of other 

countries; the timing of patent applications and relevant deadlines; the 

nature of competitive concerns; and the issues of demographics and 

cultural differences. In our small business survey, we asked respondents to 

rank the extent to which the categories we developed were important to 

their foreign patent decisions. 

This appendix discusses the various factors that the patent attorney 

experts identified, organized into the categories and presented in 

descending order of importance as ranked by the small businesses. 

Linkages exist among many of the factors and categories, meaning that 

small businesses that are making foreign patent decisions probably cannot 

and should not assess the factors in any given category without, at the 

same time, considering the influence of factors in other categories. 

Location and Size of 

Foreign Markets

The experts said that small businesses should consider obtaining foreign 

patents in the countries where the current or potential markets for their 

product or technology are located. Some experts expanded the list of 

considerations beyond markets, saying businesses should consider holding 

patents in any country where they plan to import, sell, license, distribute, 

use, or transport their invention. They stressed that small businesses 

should conduct market analyses in support of their decision and identified 

the types of questions that such analyses should address, which included 

the following:

• How large is a country’s population? Countries with large populations 

may be worthwhile targets for many kinds of products or technologies 

because of the increased potential for a return on investment. 

• Is there a match between a country’s consumer base and the item or 

technology being patented? For example, one expert observed that 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 24 GAO-03-910 International Trade

seeking patents on marine engines or boats might not make sense in a 

landlocked country without lakes, regardless of population size, 

because there would be no real consumer base. 

• Is the consumer base’s level of technological development sufficiently 

advanced to use the item or technology being patented? Small 

businesses may wish to avoid countries where the consumer base 

cannot use or manufacture or does not value certain types of 

technology. (See section on “Nature of the Technology, Invention, or 

Product” for further discussion of this issue.)

• Are there competing manufacturers already serving this market? (See 

section on “Location of Manufacturing, Assembly, and Research and 

Development Sites” for further discussion of this issue.)

• What is the nature of host country regulation over the item or 

technology being patented? For example, do host governments require 

regulatory approval for certain items or are they able to impose price 

controls? (See section on “Regulatory Environments of Other 

Countries” for further discussion of this issue.)

• What is the tendency for patent piracy and how strongly are patents 

enforced? (See section on “Foreign Patent Infringement and 

Enforcement” for further discussion of this topic.)

The experts held varying views about the correct number of markets in 

which small businesses should seek foreign patents. According to them, 

some small businesses typically patent in too few foreign locations, while 

others tend to patent in too many overseas locales. Recognizing the high 

cost of foreign patents and the need for small businesses to focus their 

resources, several experts said that small businesses should only patent in 

the countries where their major markets are located or in a select number 

of countries that will give effective patent rights within a region. However, 

some patent attorneys held a different view, saying that small businesses 

should also consider obtaining patents in countries where markets don’t 

currently exist but might develop in the future. One attorney acknowledged 

that at the time that foreign patent applications must be filed, it can be 

difficult to predict the future direction of foreign markets and the 

likelihood of any significant market developments occurring during the 

time that a foreign patent is still in force (typically a 20-year period from the 

time of application). For example, one panelist said that recent revisions in 

China’s patent laws, a country where patent enforcement has generally 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 25 GAO-03-910 International Trade

been regarded as low, now make China a location where patent protection 

should be considered for certain inventions. 

Foreign Patent 

Benefits

The experts pointed to a broad range of financial or competitive benefits 

that foreign patents can provide for small businesses. One expert said that 

small businesses need to identify which benefits they hope to achieve by 

obtaining foreign patents in order to better focus their decisions. Potential 

benefits include protecting the company’s technology, increasing the 

company’s value and visibility, making the company more attractive to 

investors, and rewarding the inventor or raising the inventor’s profile. 

Holding foreign patents can also help small companies secure financing or 

possibly be acquired by another company. In addition, foreign patents 

enable businesses to demand higher prices, at home and abroad, for their 

products or services, expand their market share, and earn revenue from 

foreign sale or manufacture activities. Similarly, businesses that hold such 

patents can further earn revenue by licensing to others, the right to sell or 

manufacture the company’s products or services. Several experts also 

highlighted the possibility of enhancing a company’s competitive position 

through holding foreign patents. Holding patents abroad may help disrupt a 

competitor’s activities, discourage infringement, or provide the company 

leverage in future negotiations with private sector or government officials 

in other countries. 

Many experts emphasized that small businesses should carefully evaluate 

potential benefits in order to assess whether these will outweigh the costs 

of obtaining foreign patents. Several experts expressed their belief that for 

many small businesses, with their often limited budgets, foreign patent 

benefits would frequently not exceed costs. In evaluating benefits, one 

expert said that the amount of money spent to protect intellectual property 

internationally should be commensurate with the amount of expected 

international sales. If there are very limited foreign sales, and limited 

foreign business, there need not be much investment in foreign patents. 

Another expert argued that unless foreign patents can generate a revenue 

stream or provide a competitive advantage, their cost is hard to justify. A 

third expert stated that, if a company’s main purpose in seeking foreign 

patent protection is defensive (that is, to prevent competitors from 

obtaining corresponding patents that block the company’s ability to 

operate freely), then foreign patents are probably not necessary. If, 

however, a company intends to license and receive royalties or hopes to 

prevent competitors from entering the market, then a well-planned foreign 

patent strategy is essential. 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 26 GAO-03-910 International Trade

Foreign Patent Costs The experts discussed foreign patent costs at length and urged small 

businesses to develop an overall strategy for their foreign patent filing and 

maintenance activities so that costs can be minimized. Overall foreign 

patent costs are comprised of a variety of national patent office, 

international, and private sector fees, which when combined represent a 

significant expense for large or small businesses. Although understanding 

these various fees can be challenging, the more informed a small business 

is about the costs, the better able it is to perform a cost/benefit assessment 

and to discern whether foreign patents are an appropriate investment. 

Some experts explained that many foreign patent costs are incurred at the 

front end of the patent life cycle, during the application process, but that 

significant costs also continue to be incurred throughout a patent’s lifetime. 

The experts identified ways that small businesses can defer costs by taking 

advantage of regional or international patent filing options and provided 

some cost-saving suggestions for small businesses to consider.

Types and Significance of 

Costs

U.S. companies and inventors that seek to patent abroad incur costs to 

apply for, obtain, maintain, and enforce their patents. For example, 

national patent offices typically charge fees when patent applications are 

filed as well as when they search for prior art (the body of information, 

including patent and nonpatent literature, that is consulted to determine 

the patentability of an invention), examine applications, and grant patents. 

In addition, patent applicants may incur costs to have patent applications 

translated into other languages. National patent offices also charge fees, 

called “maintenance fees” or “annuities,” to keep a patent active after it has 

been granted, typically for a period of up to 20 years. Whereas in the United 

States, most Patent and Trademark Office fees are reduced by half for small 

entities (defined as a small business, independent inventor, or not-for-profit 

entity), most foreign patent offices do not offer similar fee reductions. In 

addition to varying national patent office charges, patent applicants must 

pay for the services of U.S. and foreign patent attorneys or agents 

throughout the process, particularly if they take any enforcement action 

related to their patents.

Acquiring foreign patent protection is expensive, regardless of company 

size. Companies that patent abroad typically seek patents in several other 

countries simultaneously and incur the full range of costs in each location. 

According to the experts, many of these costs are redundant or 

disproportionate to the benefit they provide—for example, companies may 

have to pay each patent office to conduct a patent search, even though 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 27 GAO-03-910 International Trade

much of the literature searched may be the same. Also, companies may 

have to pay for multiple patent examinations, because each country 

examines patent applications in accordance with its own laws. Some 

foreign patent offices charge fees that do not exist in the United States, and 

some fee amounts are substantially higher than corresponding U.S. Patent 

and Trademark Office (USPTO) charges. For example, most patent offices 

levy annual maintenance fees that increase steadily over the 20-year 

lifespan of a patent, whereas USPTO assesses only three maintenance 

charges during that time. Finally, several experts said that requirements to 

translate patent applications into foreign languages result in significant 

expenses that may have little practical value. One expert cited a study that 

translations are seldom used and a few experts believed that most parties 

who are qualified to read and understand the technical descriptions in a 

patent application are able to do so in English or another prominent 

language. Another expert noted that a significant benefit of the European 

Patent Convention is that all paper work can be processed in English (or 

another recognized language), and translations can be delayed until the 

very end of the application process. 

Given the significant expense, many experts thought it important for small 

businesses to be well informed about the full cost of foreign patent 

protection, stating that many small businesses focus on the initial costs but 

fail to think about long-term costs. Unless small businesses consider the 

full “cradle-to-grave” costs of foreign patents, then any cost/benefit 

assessments they perform will be misleading. However, one expert said it is 

difficult for most U.S. companies to obtain good information about foreign 

patent costs and may be particularly hard for small businesses. Moreover, 

foreign patent costs change frequently. Another expert recommended using 

a software package, known as “Global IP Estimator,” that is designed to 

help businesses perform foreign patent cost calculations.1

 Despite such a 

tool, however, several experts acknowledged that fully anticipating the true 

lifetime costs of holding foreign patents is difficult. 

Strategies to Reduce Costs The experts also thought that small businesses should strive to understand 

and explore the various strategies that exist to reduce foreign patent costs. 

First, these businesses need to understand the different methods for filing 

patent applications and determine whether one method is more cost1

Global IP Estimator is available from Global I.P. Net in Kihei, HI.
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 28 GAO-03-910 International Trade

effective than another. Business can file patent applications directly with 

each individual patent office in the countries where protection is desired, 

or they can file patent applications with regional patent offices that cover 

multiple countries (such as the European Patent Office).2

 Businesses can 

also file patent applications under an international treaty—the Patent 

Cooperation Treaty—that covers 120 countries and is designed to help 

streamline the initial patent search and examination functions and 

expenses. In the first method, all fees are due directly to the national patent 

offices, in accordance with their procedures, within 1 year from the time a 

U.S. patent application was filed. In the latter two methods, additional 

upfront fees are incurred, but national patent office requirements are 

streamlined and costs are delayed. The most cost-effective means will vary 

according to patent strategy, including the number and identity of countries 

where protection is sought and the nature of the patent application itself. 

(See app. V for a more in-depth discussion of filing procedures under the 

Patent Cooperation Treaty.) 

In addition to exploring patent filing methods, small businesses can 

minimize costs in other ways. For example, businesses can try to avoid 

incurring translation expenses by focusing their efforts toward countries 

where English applications are accepted (that is, Canada, England, Hong 

Kong, India). They can limit the inventions they patent or the number of 

countries in which they seek protection—one expert suggested carefully 

choosing a few countries in which to spend all available patenting money 

on getting well-prosecuted, broad patents in those countries rather than 

getting narrow patents in many countries. This expert also suggested that 

small businesses concentrate their foreign patent efforts on the key 

features of a technology that competitors will need in order to be 

competitive. Finally, many experts advised small businesses to routinely 

examine the foreign patents they hold to determine whether any are no 

longer commercially valuable. Such patents could be allowed to expire, 

potentially saving the business thousands of dollars in annual maintenance 

fees. Several attorney experts advised that small businesses should 

evaluate, at every step of the foreign patent process, whether expenditures 

could be better spent on other things.

2

The 1973 European Patent Convention, which created the European Patent Office, 

established a single procedure for granting patents in the 27 member countries on the basis 

of a uniform body of substantive patent law. An application to the European Patent Office is, 

in effect, a group of national patent applications that are processed together but become 

separate patents that are separately maintained and enforced. 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 29 GAO-03-910 International Trade

Nature of the 

Technology, Invention, 

or Product

Several experts said that the nature of a company’s technology, invention, 

or product needs to be assessed when making the foreign patent decision. 

Businesses should consider the importance of a technology, invention, or 

product to the company, its competition, or the marketplace, as well as an 

invention’s technical complexity and life span. In many foreign 

jurisdictions, some types of technology are not considered patentable 

material, including business method inventions and some types of software 

or biotechnology (see discussion below in section on “Foreign Patent Laws 

and Systems”). Furthermore, according to several experts, some 

technologies, inventions, or products might be better protected as a trade 

secret than covered by a patent.

If the technology, invention, or product that a company seeks to patent is a 

core item or is very important to the company’s business, this would argue 

in favor of seeking foreign patents, according to several experts. In 

addition, if the technology, invention, or product is substantially novel or 

more advanced than what is available in the marketplace or is particularly 

relevant to a competitor’s business, seeking patents abroad would be 

warranted. Some experts said it may be desirable to patent inventions that 

are readily detectable (that is, reverse-engineered based on simple 

inspection of a product). Similarly, products that can be easily or cheaply 

brought to market (that is, where barriers to market entry are low) may 

benefit from a broader patent strategy. Some experts said that companies 

should also evaluate whether the item they seek to patent is a substantive 

versus a marginal addition to their own patent portfolio, suggesting that 

foreign patent costs may be warranted in the former case but not the latter. 

The experts identified issues related to the technology, invention, or 

product that might dissuade companies from filing for foreign patents for 

certain items or in certain cases. First, several experts advised that patents 

may not be necessary for inventions for which use or manufacture is not 

easily detected, and a few well-targeted patents may be sufficient for 

products that require substantial capital or expertise to produce. Second, 

experts said that small businesses should be aware that in most foreign 

locales, the patent application is published at some point after application 

but prior to granting a patent (typically 18 months after application). This 

creates a window of opportunity, before the company actually has a patent, 

for potential infringers to learn about and begin copying the company’s 

item. This may be a greater risk in some countries than others. One panelist 

suggested that if trade secrets are contained in a patent application, the 

invention may be of more value when held as a trade secret (and not 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 30 GAO-03-910 International Trade

disclosed) for a potentially unlimited time period. Third, one expert 

advised against obtaining foreign patents on technologies, inventions, or 

products for which there are competing items in the market that already 

serve the same function. 

When weighed against the amount of time required to obtain foreign 

patents, the life span of a technology, invention, or product may either 

encourage or discourage companies from seeking such protection. Some 

items have a valuable life span of only a few years, such as those in the 

telecommunications and software industries, and will produce licensing 

revenue only in the early years of a patent. Others, such as those in the 

pharmaceutical or biotechnology industries, are in development for many 

years and are monetarily valuable only in the latter years of a patent. The 

technology, invention, or product’s life span needs to be compared with the 

amount of time required to obtain a foreign patent. On average, U.S. patents 

are granted about 2 years from the date of application, but patents in 

Europe are granted about 6 years from the application date; one panelist 

said obtaining a Japanese patent can take up to 10 years. A product with a 

shorter life span would be obsolete at the time of patent grant, whereas a 

longer-lived product would still be valuable. Investing substantial funds in 

foreign patents is naturally more warranted in the latter case.

Attributes of a Patent 

and Its “Claims”

Several experts said that small businesses should consider the nature of the 

patent itself, including its claims (descriptions or definitions of the subject 

matter that the applicant regards as his or her invention or discovery), as 

well as its scope and application. Several of the panelists explained that the 

broader a patent’s reach (meaning claims with broad coverage), the more 

value it will add to the business that holds that patent. This is particularly 

true if the claims will likely block a competitor’s ability to develop a 

competing product. In contrast, as one panelist said, if claims are narrow 

and only provide a limited scope of protection, a patent might be less 

significant, and the need for foreign patent protection would be reduced. 

Also, the nature of what claims cover is relevant, according to one expert. 

For example, if claims cover a product that will be marketed to end-users, 

the patent should be pursued. However, if claims cover a research tool or a 

key process used to make a final product, it might be better to hold these 

items as trade secrets than describe them in a patent application. 

Several experts cautioned small businesses to be aware that patent regimes 

vary from country to country. As a result, not all foreign patents on a single 

invention will contain claims of the same breadth and value, and the 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 31 GAO-03-910 International Trade

specific nature of what is protected abroad may vary by country. Some 

countries do not permit applicants to obtain a meaningful scope of 

protection for their inventions by granting only very narrow claims. 

According to one panelist, in such cases, the claims are easily “designed 

around” by competitors and make patent protection essentially 

meaningless. 

Foreign Patent 

Infringement and 

Enforcement

Many experts argued that foreign patents are only valuable to the extent 

that they can be enforced. Therefore, small business owners should find 

out how effective patent enforcement is in the target countries and if laws 

and competent infrastructure exist to deal with infringement. This includes 

an assessment of the injunction and remedy provisions contained in foreign 

law, as well as the capabilities of a foreign government and judicial system 

to enforce overall respect for patent rights, particularly for nonnationals. 

Additionally, several experts stressed that small companies should assess 

their own ability and willingness to enforce patents overseas, because 

doing so is complicated and expensive. One important aspect of enforcing 

patents is the ability to detect infringement. However, it can be challenging 

for small businesses to detect infringement on foreign patents if they do not 

have operations overseas. Foreign operations, branch offices, or licensees 

can all provide effective means for detecting infringement. 

Several experts noted that variations exist in the degree to which patents 

are respected and enforced abroad. One expert listed three questions 

regarding the quality of patent enforcement in another country:

1. Do infringers know that if they infringe a patent they could be forced by 

a court to stop the infringement and pay damages?

2. Are the courts sophisticated enough in patent matters to reliably 

enforce patents?

3. Is it possible to obtain an injunction against infringers, and are 

significant damages available?

Because enforcement is an expensive option to pursue, several experts 

noted that the outcome needs to be sufficient to make the patent owner 

whole. One expert explained that litigation costs are generally high in 

Japan, the United Kingdom, and the United States; but only the latter two 

countries also award damages that are intended to compensate the 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 32 GAO-03-910 International Trade

patentee for loss suffered due to infringement, such as lost profits. The 

extent of damages awarded in other countries, including many European 

countries, is not sufficient to make the patentee whole and bears little or no 

relation to the loss incurred. However, another expert countered that the 

U.K. and U.S. judicial systems are cumbersome and excessively procedural, 

whereas in the German court system, for example, technically trained 

judges dispatch cases fairly and promptly. Several experts noted that many 

countries are beginning to improve their enforcement of patent rights and 

these developments may make certain countries worth considering, 

particularly if they present major foreign market potential.

Even if the proper systems are in place, foreign court systems may exhibit 

overt or covert discrimination against nonnationals. In one instance, an 

expert explained, a client tried to enforce a patent in India against a local 

company, but the judge, believing foreign-owned patents to be of limited 

social value, developed a hearing schedule that was so tedious, the client 

gave up the case. 

Composition of 

Company’s Patent 

Portfolio

Small businesses should think about the number of foreign patents they 

already hold in a given country, or abroad in general. Some experts 

cautioned businesses against having too many foreign patents in their 

patent portfolio as this may become unmanageable or may not produce a 

return that is worth the substantial investment made. As several panelists 

explained, patents can sometimes be outdated if the technology is no 

longer in use or has become insignificant. Therefore, several experts 

highlighted the importance of periodically reviewing a company’s foreign 

patent portfolio. If circumstances have changed, appropriate action (for 

example, termination of an application or abandonment of a patent) might 

be necessary. Further, one panelist suggested that small businesses should 

seriously consider the fact that obtaining and maintaining foreign patents 

will significantly increase the workload of the staff involved in looking after 

the patent portfolio. For comparison, the panelist noted that many large 

companies have substantial numbers of staff solely charged with looking 

after their foreign patent portfolio. 

However, according to another expert, some businesses are hoping to 

become more attractive to larger, international entities by holding as many 

foreign patents as possible. The strategy is that larger, presumably 

multinational, entities are more likely to buy out the smaller business if it is 

holding a large portfolio of foreign patents. 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 33 GAO-03-910 International Trade

Location of 

Manufacturing, 

Assembly, Research, 

and Development Sites

Many experts on our panel stated that small business owners should 

consider obtaining patents in any country in which they conduct research 

and development, or assemble or manufacture all or part of an invention or 

product. In this same vein, business owners should also consider the 

location of their competitors’ research, assembly, or manufacturing sites. 

Further, businesses should consider where the main manufacturing centers 

for similar products or technologies are located and seek protection there 

to stop unauthorized third parties from manufacturing their invention or 

product. Patent protection in such locations is important, because 

manufacturing capabilities already exist and unauthorized production 

could be quickly and cheaply initiated. At the same time, business owners 

need to think about whether new manufacturing sites could emerge 

because the nature of their technology, product, or invention is easily 

detected, and the cost of setting up a manufacturing process is low. The 

level of technical competence among a country’s population is a relevant 

factor in making this assessment.

Foreign Patent Laws 

and Systems

Small business owners need to understand the nature of foreign patent 

laws and systems as they make their foreign patent decisions. Many 

differences exist among foreign patent laws, and other countries’ laws are 

different from U.S. patent law. Also, the systems set up throughout the 

world to process applications and award patents are not the same. Many 

experts stated that some small businesses are not well informed about 

these differences and how they can affect a business’s ability to obtain 

foreign patent protection that is comparable to its U.S. patent protection. 

Because patent law is an area under constant development, one expert said 

it is important to occasionally review recent procedural, legislative, and 

judicial developments in foreign countries to ensure that all current 

relevant factors are known and understood. Moreover, small businesses 

that understand how foreign patent systems function are less likely to 

become frustrated by the foreign patent process.

Foreign patent laws can differ from U.S. patent law in many important 

respects. For example, other countries differ from the United States in how 

they award patents in the case of competing applications for the same 

invention. This is referred to as the “priority principle.” All countries except 

the United States award patents to the first inventor to file a patent 

application, a method called “first-to-file.” The United States awards 

patents to the inventor that can demonstrate it was the first to invent the 

item in question. These two systems engender very different patent filing 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 34 GAO-03-910 International Trade

approaches. One encourages rapid use of the patent system, while the 

other does not. 

Another key difference between U.S. and foreign patent regimes further 

exacerbates the different approaches in the timing of filing patent 

applications. Small businesses are accustomed to the provisions in U.S. 

patent law that allow patent applications to be made within 1 year of public 

disclosure of an invention. But such disclosure may render an applicant 

ineligible under many foreign patent laws, which require “absolute novelty” 

as a condition of patent grant—in other words, disclosing an invention 

publicly before applying for a U.S. patent and securing a “priority date,” 

which is sometimes done to attract interest or financing, can violate the 

absolute novelty standard applied in other countries. Thus, U.S. patent 

applicants that are accustomed to the protections in U.S. patent law that 

enable them to move more slowly in filing patent applications should 

consider modifying this approach if they desire foreign patent protection.

In addition to these key principles, the types of inventions or technologies 

that patents can cover differ among countries. For example, business 

method inventions and certain software processes and biotechnological 

inventions cannot be patented outside of the United States. Experts also 

noted that some developing countries have been slow to grant patents for 

pharmaceutical products, and some countries will not allow patent 

coverage for methods of medical treatment. One expert said the limits on 

patent coverage for cutting-edge technology can be particularly 

problematic for small businesses, which often excel in this area. Foreign 

patent laws may also differ from U.S. patent law in terms of the degree of 

protection that issued patents provide (whether measured by the exclusive 

rights granted to the holder or by the breadth of claims that are allowed); 

therefore, the nature of protection obtained in each country where patents 

are held on a single invention may not be identical. 

Further, some small businesses may not understand key international 

treaty provisions that affect the timing of their foreign patent filings. In 

order to preserve their rights under the Convention for the Protection of 

Industrial Property (known as the Paris Convention), small businesses 

must file all foreign applications related to the inventions they seek to 

patent abroad within 1 year from the date on which their U.S. application 

was filed. If they do not file within this 1-year period, they lose certain 

international treaty rights. This may, in turn, affect their ability to obtain 

foreign patent protection. 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 35 GAO-03-910 International Trade

Finally, according to one panelist, many countries require compulsory 

licensing if a patentee does not commercialize the patented product within 

a certain period of time (frequently 3 years). A small business may be 

forced to give a license to a competitor to use a technology in which the 

small business has made a considerable investment but may only be able to 

demand a “reasonable royalty” under the host country laws. In addition, 

another expert noted that some developing nations grant patents for much 

less than the standard 20 years, which can be a major problem with 

products that may take many years to bring to market. 

Regardless of the nature of a host country’s patent laws, small businesses 

should also understand the strength and competency of the national patent 

office and the degree of difficulty that dealing with a national patent office 

presents. The strength of the national patent office may be gauged, in part, 

by the technical expertise of its examiners, the consistency and quality of 

its patent examinations, and the amount of time it takes to grant a patent. 

Several experts stated that some foreign patent offices lack sufficient 

numbers of qualified examiners. In Taiwan, for example, patent law is not 

always properly applied, because examination of patent applications is 

contracted out to part-time examiners who are not trained in law, said one 

expert. Also, major patent offices, such as the European Patent Office and 

the Japan Patent Office, have tremendous workloads and significant 

backlogs in processing patent applications (this is also true of USPTO). 

Several panelists stated that patent pendency times outside of the United 

States range from 3 to 7 years; the average patent pendency period in 

Europe is about 6 years. Finally, several experts noted that meeting the 

formal requirements of multiple patent offices and dealing with their 

bureaucracies is quite challenging. Some experts expressed the belief that 

some foreign patent offices practice subtle discrimination against 

nonnational applicants. For example, one expert said that foreign 

applicants in Japan are not familiar with the use of particular “code” words 

and phrases that are used to favor domestic applicants. 

Regulatory 

Environments in Other 

Countries

Small businesses should also consider the broader regulatory institutions 

within a country and how government policies could influence their 

decision to patent in certain countries. One panelist noted that a vast array 

of products, including pharmaceuticals, agricultural chemicals, and 

telephonic equipment may not be marketed without government approval. 

Therefore, the interaction between the regulatory system and patent laws 

in a country will affect the extent to which patents are commercially 

meaningful and should be considered when evaluating the prospect of 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 36 GAO-03-910 International Trade

obtaining foreign patent protection. Several panelists said that policies of 

protectionism for local industries within a country could also be an 

important element to consider, because products might face additional 

barriers to market entry despite having been awarded a patent in that 

country. 

Timing of Patent 

Applications and 

Relevant Deadlines

Small businesses need to understand the timing of foreign patent 

application filing and other deadlines and act in accordance with these 

deadlines. These include filing foreign patent applications within 1 year of 

the time a U.S. application was filed in order to protect an applicant’s Paris 

Convention rights and following the time frames and actions established in 

the Patent Cooperation Treaty (if applicants file under this treaty). It also 

includes taking actions in accordance with the expectations of national 

patent offices, such as paying maintenance fees in a timely fashion. 

Competitive Concerns The expert panelists identified a range of competitive concerns that small 

businesses should evaluate when thinking about foreign patents. In 

addition to examining the company’s own patent portfolio, some experts 

said businesses should try to assess the composition of any competitor’s 

patent portfolio. One panelist said that a business owner can judge the 

extent to which he or she should patent overseas based on a competitor’s 

foreign filings, since companies frequently use patents to trade with other 

companies. Another panelist said that the location of a competitor’s patents 

may reflect its future business plans. 

In addition, as mentioned previously, several on our panel agreed that 

business owners should also consider the location of their competitors’ 

research and development, manufacturing, and assembly sites when 

deciding on a foreign patent strategy. One panelist suggested it may be 

worthwhile to patent an invention in countries where companies do not 

intend to develop or produce their product just to prevent their 

competitors from doing so. For example, a small chemical company may 

not have a plastics manufacturing plant in Spain, but if the large company 

competitor’s plastics manufacturing plant is in Spain, the small company 

should protect its innovation in Spain. 
Appendix III

Factors Related to the Decision to Seek 

Foreign Patents

Page 37 GAO-03-910 International Trade

Demographics and 

Cultural Differences

Small businesses should also consider the population, wealth, size, and 

other demographic aspects of target countries when deciding whether or 

not to apply for a foreign patent. For example, countries with large or 

wealthy populations are worth considering if the potential market size 

would be larger or sales more lucrative. However, this would only be true if 

the population was likely to use the product. Likewise, some panelists 

explained that other demographic elements—such as the level of 

industrialization, the degree of technological development, and the 

prevalence of political or economic stability and development—could be 

useful tools for assessing a country’s potential patent value. Finally, social 

or environmental attitudes may be useful indicators of potential patent 

value.
Page 38 GAO-03-910 International Trade

Appendix IV

Small Business Views on the Relevance of 

Certain Factors to Their Foreign Patent 

Decisions ApenVIdxi

For our July 2002 report, we asked the 38 businesses that responded to our 

survey to indicate the extent to which their company typically considered 

certain types of factors when making decisions about foreign patent 

protection. Businesses were asked to rank 13 types of factors on a scale 

ranging from “little to none” to “very great.” This appendix contains the 

survey results and shows the percentage of businesses ranking the 

importance of a given factor at each of the five levels on the scale.
Appendix IV

Small Business Views on the Relevance of 

Certain Factors to Their Foreign Patent 

Decisions

Page 39 GAO-03-910 International Trade
Page 40 GAO-03-910 International Trade

Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002 ApenVdxi

Note: The material in this appendix appeared originally in our report titled 

International Trade: Federal Action Needed to Help Small Businesses 

Address Foreign Patent Challenges, GAO-02-789, June 2002. The fees 

disclosed in the appendix are based on information that was available as of 

June 2002 and have not been updated.

Companies may obtain foreign patent protection in several ways. The costs 

associated with obtaining such protection vary depending on the process 

followed, the nature of the patent sought, and the extent of global patent 

coverage desired. This appendix presents a hypothetical scenario that we 

developed for a small business seeking to patent a single invention abroad. 

Our goal was to illustrate a common foreign patent process and to estimate 

the costs that a small U.S. business1

 might incur when filing for, obtaining, 

and maintaining foreign patent protection in the United States and nine 

other countries. We based this hypothetical scenario, in part, on what 

several patent attorneys advised us could be considered a “typical” small 

business patent application and process. 

Our scenario depicts a small company filing for foreign patent protection 

for one of its products in six European countries (France, Germany, Italy, 

Ireland, Sweden, and the United Kingdom), Canada, Japan, and South 

Korea. Patent laws in each of the nine countries cover the technology for 

this product, which can be protected with a single patent. The hypothetical 

company has already filed its U.S. application for this product. The U.S. 

patent application on which the company will base its foreign applications 

was relatively short and straightforward, consisting of 25 pages, 5 

drawings, and 15 claims (claims define the invention and are what make 

the patent legally enforceable). Patents will ultimately be issued in each 

country where the company is pursuing protection. In order to keep its 

patents in force, the company must pay recurring fees (referred to as 

“maintenance fees”) to each national patent office. In our scenario, the 

company opts to keep each patent in force for its full term, which is 20 

years from the date of patent application filing. (Additional information 

about our scenario and methodology can be found at the end of this 

appendix.)

1

Under 13 C.F.R. part 121, the Small Business Administration (SBA) has established various 

size standards, based on economic activity or industry, for determining what a small 

businesses is for purposes of eligibility for SBA programs. Based on SBA standards, we 

defined a small business for purposes of conducting our work as having 500 or fewer 

employees. 
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 41 GAO-03-910 International Trade

Given this scenario, the estimated cost of the U.S. patent, maintained for a 

period of 20 years, is about $10,000 (in 2002 current year dollars).2

 The 

estimated cost of the foreign patents, maintained for a similar length of 

time, would range from about $160,000 to about $330,000 (in 2002 current 

year dollars). These are minimum estimates that include patent application 

filing and issuance fees, translation fees for applicable foreign patent 

offices, maintenance fees, and estimates of attorney and foreign patent 

agent fees associated with work related to the filing and paying of these 

fees. Actual patent costs for a patent filing strategy similar to our scenario 

could be far higher because we assumed that the patent application would 

not face a difficult examination process in any of the countries. Thus, our 

scenario eliminated many patent office and legal costs that companies 

incur in trying to obtain a patent. Actual patent costs would also vary if 

certain key assumptions were modified. For example, filing applications in 

more than nine countries would increase the cost of obtaining foreign 

protection. Also, if a patent application was longer or more complex than 

the one in our scenario, the cost to obtain patent protection abroad would 

rise because translation expenses and some foreign patent office charges 

would be higher. Conversely, if patent protection was not maintained for 

the full 20-year term in each of the countries, official fees and attorney fees 

to maintain the patent would decrease.3

 The latter condition would reduce 

the overall cost of foreign patent protection relative to the U.S. cost. 

Finally, these estimates do not include costs that could be incurred from 

legal fees payable for litigation associated with possible infringement and 

defense of a patent. 

Estimated Cost of U.S. 

Patent

The scenario assumes that the small business has already filed its U.S. 

patent. As shown in table 4, the minimum cost to obtain that patent would 

be about $6,412. This includes U.S. Patent and Trademark Office (USPTO) 

small entity filing and issuance fees, as well as attorney charges to prepare 

2

These estimates are expressed in 2002 current year dollars because of a lack of information 

about the timing and amount of future expenditures for patent maintenance and attorney 

fees. Additional information on our scope and methodology in developing these estimates 

can be found at the end of this appendix.

3

U.S. patent maintenance costs are fully paid by the end of the twelfth year from the date the 

application was filed, whereas foreign patent maintenance costs continue to be incurred 

through the twentieth year from the date of application. Thus, holding foreign patents for 

shorter periods of time reduces the cost of foreign patent protection relative to the cost of 

U.S. protection. 
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 42 GAO-03-910 International Trade

and file the patent application and obtain the issued patent. The minimum 

cost to maintain the patent for a 20-year term would be about $3,528. This 

includes USPTO maintenance fees that are charged 3 times during the 20-

year term after the patent is granted, as well as attorney charges to pay 

those fees. In this scenario, 65 percent of the costs are incurred to obtain 

the patent and 35 percent to maintain it.

Table 4: Estimated Costs to Obtain and Maintain U.S. Patent for 20 Years

Source: GAO analysis of USPTO fees and American Intellectual Property Law Association data.

Notes: All USPTO fees are small entity fees effective October 1, 2001.

Attorney charges are based on the American Intellectual Property Law Association’s Report of 

Economic Survey 2001 and reflect the median charges for the subject item.

Filing for a Foreign 

Patent

A company can acquire foreign patent protection in two ways: (1) by filing 

separately in each country or region where protection is desired or (2) by 

filing for patent protection in 120 countries at the same time through an 

international application established by the 1970 Patent Cooperation Treaty 

(PCT), as amended.4

Type and stage of fee Cost in U.S. dollars

Application

USPTO basic filing fee 

Attorney charges to prepare and file patent application

$370

5,002

Issuance

USPTO issue fee 

Attorney charges

$640

400

Total application and issuance costs $6,412

Maintenance

USPTO fee at year 3.5

USPTO fee at year 7.5

USPTO fee at year 11.5

Attorney charges to pay 3 maintenance fees

$440

1,010

1,550

528

Total maintenance costs $3,528

Total cost to obtain and maintain the patent $9,940

4

Much of the technical information presented in this appendix is drawn from Stephen Elias, 

ed., Patent, Copyright, & Trademark: A Desk Reference to Intellectual Property Law 

(Berkeley: Nolo Press, 1996). 
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 43 GAO-03-910 International Trade

Companies may file separately in each country where protection is desired 

under the rules established by the 1883 Paris Convention, as amended. Also 

known as the Convention for the Protection of Industrial Property, this 

treaty is adhered to by 163 countries and gives limited recognition to one 

another’s country patent application filing dates. Applicants choosing this 

route must file foreign patent applications within 1 year of the date on 

which they filed their domestic patent application (known as the “priority 

date”). Applicants will face the requirements and costs that each country 

imposes upon filing their patent applications. As a result, filing separately 

may be cost-effective for those interested in holding patents in only a few 

countries. 

The second process for foreign filing is through an international patent 

application under the Patent Cooperation Treaty (PCT), which the World 

Intellectual Property Organization (WIPO) in Geneva, Switzerland, 

administers. This treaty is adhered to by 120 countries and facilitates the 

international filing of patent applications by centralizing filing procedures 

and standardizing the application format. The PCT enables applicants to 

obtain an international search report or “prior art search”5

 and preliminary 

examination.6

 This is commonly called the “international stage” of a PCT 

application.7

 Following this stage, PCT applicants then decide in which 

countries they want to hold patents and enter processes in these countries 

to obtain such patents. This is commonly called the “national stage” of a 

PCT application. Applicants incur PCT fees during the international stage 

and national patent office fees during the national stage.8

 However, by filing 

through the PCT, applicants can delay paying the national stage fees for up 

to 30 months from their patent priority date.9

 This delay allows applicants 

5

Prior art is the body of information, including patent and nonpatent literature, that patent 

offices consult to determine the patentability of an invention.

6

An examination is a process in which a patent examiner will correspond with applicants 

and decide whether inventions deserve patents based on claims. 

7

The expression “international phase” or “stage” is not officially used in the PCT, but 

according to WIPO, it has become customary and is used in its Patent Cooperation Treaty 

guide (http://www.wipo.int/pct/guide/en/).

8

The expression “national phase” or “stage” is not officially used in the PCT, but according to 

WIPO, it has become customary and is used in WIPO’s PCT guide 

(http://www.wipo.int/pct/guide/en).

9

Most patent offices, including those in our scenario, provide for a delay of 30 months. 

However, some will allow a 31-month delay from the priority date. 
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 44 GAO-03-910 International Trade

more time to assess the value of their invention and the likelihood of 

obtaining a patent in a particular country before incurring the costs 

associated with obtaining patent protection in that country. 

If an applicant desires patent protection in a region such as Europe, 

Eurasia, or Africa, the applicant may file with a regional patent office or, if 

filing through the PCT, designate a regional office. The European Patent 

Convention and the Eurasian Patent Convention are examples of regional 

patent treaties that allow applicants to file one single application for the 

contracting states within those regions. For instance, the European Patent 

Convention and its associated office, the European Patent Office, consist of 

27 member states.10

Obtaining a Foreign 

Patent Using PCT

In our scenario, the company uses the Patent Cooperation Treaty process 

for filing its foreign patents. We chose to illustrate the PCT process because 

it is a widely used and “typical” method for obtaining foreign patent 

protection, according to patent attorneys we interviewed. The PCT process 

consists of two main phases, the international stage and the national stage. 

International Stage: PCT 

Processes and Costs

The international stage of the PCT process is comprised of several steps, as 

shown in figure 1. First, applicants file a PCT application and pay 

associated filing fees to a PCT receiving office, as shown in box 1 of figure 

1. The receiving office, which is a contracting state, is the authority to 

which nationals or residents of that state submit their international 

applications.11 Second, applicants select an International Searching 

Authority12 to prepare an international search report that will provide 

10The European Patent Convention member states include Austria, Belgium, Bulgaria, 

Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Hungary, Germany, Greece, 

Ireland, Italy, Liechtenstein, Luxembourg, Monaco, the Netherlands, Portugal, Romania, the 

Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom. 

11Applicants may also file with the International Bureau of WIPO regardless of the state of 

which the applicant is a resident or national. Residents or nationals who are party to 

regional patent conventions may file international applications with the regional offices that 

the conventions established.

12An International Searching Authority is a national office or intergovernmental organization 

that is highly experienced in examining patent applications and is specified by the receiving 

office. The International Searching Authority establishes documentary search reports on 

prior art with respect to inventions that are the subject of applications.
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 45 GAO-03-910 International Trade

information on relevant prior art based on the claims of the application.13

The International Searching Authority conducts a prior art search and 

issues a search report for the applicant’s review, as shown in box 2 of figure 

1. Based on the results of the report, the applicant may decide to continue 

or discontinue the patent process in certain countries. Discontinuing the 

patent process because of an unfavorable search report allows the 

applicant to save on the costs of processing the application in various 

countries. However, the applicant may amend the claims of his or her 

application and maintain only those that are favorable and likely to result in 

the grant of a patent. 

13See The World Intellectual Property Organization, Patent Cooperation Treaty: chapter 2, 

article 33, (Geneva: WIPO, http://www.wipo.int/pct/en/index.html, downloaded in May, 

2002).
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 46 GAO-03-910 International Trade

Figure 1: The International and National Stages of the PCT Process

Prior

U.S. patent 

application filed.

Patent Cooperation 

Treaty application 

and fees due to 

receiving office.b

Patent Cooperation 

Treaty search 

conducted, and 

search report 

issued. Claims 

amendments filed 

within 2 months of 

receipt of search 

report.

WIPO publication of 

international 

application and 

search report. 

Applicant makes 

decision whether to 

file Patent 

Cooperation Treaty 

chapter II demand.

Optional step

The international stage

Month 0 Month 12-13 Month 13-16 Month 16-19

1 2 3

a

The national stage

Source: GAO analysis of the Patent Cooperation Treaty and national patent office fee schedules.
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 47 GAO-03-910 International Trade

a

This figure illustrates the process and timetable in cases where an applicant has first filed a U.S. 

patent application. However, applicants may file their initial application under the PCT. In these cases, 

the steps would be the same, but the timetable would differ. 

b

The PCT application is due at month 12, and the fees are due at month 13.

Once WIPO publishes the international application, as shown in box 3 of 

figure 1, the applicant has the option of obtaining an international 

preliminary examination report.14 The preliminary report provides an initial 

If demand is filed, 

Patent Cooperation 

Treaty chapter II 

International 

Preliminary 

Examination 

conducted by 

International 

Preliminary 

Examination 

Authority, and 

report issuance.

Patent issued or 

denied by 

designated national 

office.

Patent holder pays 

required 

maintenance fees 

to national office 

where patent is 

enforced for 

desired number of 

years.

Month 19-28

Month 31+

5 6 7

Entry into the 

national stage from 

either Patent 

Cooperation Treaty 

chapter I or chapter 

II. Pay designated 

national offices the 

required national or 

regional fees. Pay 

translation fees if 

applicable, and 

appoint a patent 

agent where 

required.

Month 30-31

4

Year 3-20

14The international preliminary examination report is produced by an International 

Preliminary Examination Authority, which is appointed in the same fashion as the 

International Searching Authority.
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 48 GAO-03-910 International Trade

and nonbinding opinion about whether the claimed invention appears to be 

novel, nonobvious, and industrially applicable.15 If the applicant decides 

not to obtain this preliminary report, the applicant will enter the national 

stage of the patent process. If the applicant decides to obtain an 

international preliminary examination report, he or she must file a “PCT 

chapter II demand.” The issuance of the international preliminary 

examination report, as shown in box 4 of figure 1, allows the applicant to 

assess the chances of obtaining a patent in a particular country before 

incurring the costs associated with pursuing patent protection in that 

country. 

The costs associated with the international stage include fees payable to 

the receiving office for work related to filing the international application, 

obtaining the international search report, and designating the national 

patent offices where applicants may decide to file during the national stage. 

Applicants will also incur U.S. patent attorney fees for filing and any 

applicable work corresponding to the PCT process. We will address these 

costs in the final section of this appendix. The receiving office sets the 

transmittal fee. This fee is payable for the tasks associated with the receipt 

and checking of the international application. The fee also covers the 

transmittal of application copies to WIPO and the International Searching 

Authority. The International Searching Authority sets and receives the 

search fees for establishing the international search report. The 

international fee accrues to WIPO and is the sum of the basic fee and the 

designation fees. The basic fee is for tasks that include the publication of 

the international application and the communication of notifications to the 

applicant, the receiving office, the International Searching Authority, the 

International Preliminary Examination Authority, and national and/or 

regional offices. The designation fee is payable for the first five national or 

regional offices designated in the application. There is no charge for 

designations beyond five. 

Our scenario assumes that the United States operates as the receiving 

office, as well as the International Searching Authority and the 

International Preliminary Examination Authority, for the hypothetical 

company’s patent application. Table 5 shows the fees associated with the 

international stage of the foreign filing process through the PCT. The 

15See The World Intellectual Property Organization, Patent Cooperation Treaty: chapter 1, 

article 15, (Geneva: WIPO, http://www.wipo.int/pct/en/index.html, downloaded in May, 

2002).
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 49 GAO-03-910 International Trade

company would pay four designation fees: one each for Canada, Japan, 

South Korea, and the European Patent Office. In our scenario, the company 

chooses to pursue national stage entry after chapter II processing. This 

means that the business will incur the additional costs of having 

preliminary examination conducted by an International Preliminary 

Examination Authority to further assess the chances of obtaining a patent 

for its invention in the desired countries or regions. The additional costs 

include two fees payable to the International Preliminary Examination 

Authority. The first of these is a preliminary examination fee that accrues to 

the International Preliminary Examination Authority for carrying out and 

establishing the international preliminary examination report. The second 

is a handling fee that accrues to WIPO for carrying out various tasks related 

to the international preliminary examination report. The estimated total 

cost of the international stage, given this scenario, is $2,100. 

Table 5: Estimated International Stage Patent Costs

Source: USPTO fee schedule.

Notes: U.S. and foreign patent attorney fees not included.

a

USPTO is the receiving office.

b

USPTO is the International Searching Authority.

c

USPTO is the International Preliminary Examination Authority.

Type of fee Cost in U.S. dollars

PCT chapter I fees

Transmittal feea $240

Search feeb 450

International fees (basic fee and designation fees)

Basic fee 407

Designation fee ($88x4) 352

Certified copy fee 15

Total PCT chapter I fees $1,464

PCT chapter II fees

Preliminary examination feec $490

Handling fee 146

Total PCT chapter II fees $636

Total international stage fees (PCT chapter I and chapter II 

fees) $2,100
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 50 GAO-03-910 International Trade

National Stage: National 

Patent Office Processes and 

Costs

The national stage is the second of the two main phases of the PCT patent 

procedure. For official entry into the national stage, the applicant will be 

responsible for paying the required fees to each national or regional patent 

office elected,16 along with the fees associated with furnishing a translation 

of the international application where applicable, as shown in box 5 of 

figure 1. The applicant may also be required to appoint a patent attorney or 

agent in each of the designated offices. (A patent agent is a nonattorney 

with technical training who is legally permitted to draft, file, and prosecute 

patent applications on behalf of inventors.) Such appointment may be 

required if the applicant is a nonresident of the designated office’s 

respective country. The deadlines for these requirements are generally by 

month 30 after the priority date, but some PCT contracting states may 

extend this deadline to month 31. Once these steps are completed, the 

company will officially enter the national stage via chapter I or chapter II.17

Next, the designated offices will carry out an examination of the 

application and either issue or deny the national or regional patent based 

on their respective national laws, as shown in box 6 of figure 1.

The costs associated with the national stage include official fees payable to 

each designated office for filing the patent application, examining the 

application, and granting the patent. The applicant may also incur fees for 

the translation of the patent application. In addition, the applicant will 

incur costs for any work involving a U.S. patent attorney or a foreign patent 

attorney or agent (hereafter referred to as “foreign representatives”). We 

will address these costs in the final section of this appendix.

Our scenario assumes that the company will be pursuing patents through 

three national offices—Canada, Japan, and South Korea. The company is 

also pursuing patents in six European Patent Office member states—

France, Germany, Ireland, Italy, Sweden, and the United Kingdom. Table 6 

shows the fees associated with the national stage of the foreign filing 

process through PCT. Official fees include the filing fee, state designation 

fees in the case of the European Patent Office, examination fees, and 

16The PCT defines a national or regional office as “designated” in chapter I and “elected” in 

chapter II.

17Effective April 1, 2002, the entry date for chapter I was changed from 20 months to 30 

months from the priority date pursuant to PCT Article 22. Officials from USPTO noted that 

many contracting countries of PCT have indicated that the change is incompatible with their 

current national laws. Therefore, they will not recognize the change until their respective 

national laws have been changed. 
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 51 GAO-03-910 International Trade

patent granting fees. The company will incur translation fees for Japan, 

South Korea, and the non-English speaking countries designated in the 

European Patent Office; namely, France, Germany, Italy, and Sweden. The 

total estimated cost of the fees associated with the national stage, given our 

scenario, is $13,417. This does not include costs associated with either U.S. 

attorney or foreign representative work. 

Table 6: Estimated National Stage Patent Costs

Source: Global IP Estimator (software package that provides cost estimates of international patent applications). (Kihei, HI:Global I.P. 

Net, 2002).

Notes: Exchange rates used by Global IP Estimator software: British pounds = 0.6876 to the U.S. $; 

Euro = 1.1193 to the U.S. $; German marks = 2.1893 to the U.S. $; Japanese yen = 131.71 to the U.S. 

$; Canadian dollar = 1.5913 to the U.S. $; Korean won = 1,317.8 to the U.S. $.

a

Translation fees vary according to the length of the application. Our estimate assumes 25 pages of 

translation.

Maintaining a Foreign 

Patent

Maintenance fees, also referred to as “annuities” or “renewal fees,” are paid 

to each patent office where a patent has been obtained. Maintenance fees 

would be applicable if the business decided to keep a patent granted to it in 

force, regardless of how the company filed. Maintenance fees keep the 

patent in effect and must be paid on a recurring basis, usually annually for 

up to 20 years after the priority date, as shown in box 7 of figure 1. Patent 

holders can expect an annual increase in fees charged by each national 

patent office for maintaining the patent. If a business decides not to 

maintain any of its patents and therefore not enforce them for a full term, 

the maintenance fees for each patent would cease from the last year during 

which the patent was kept in force. 

Our scenario assumes that the company seeks to keep the patent it 

obtained through the PCT process in force in each of the nine countries for 

National or regional 

patent office

Official

fees

Translation

feesa

Total

(cost in U.S. dollars)

Canada $314 $0 $314

European Patent Office 3,237 1,739 4,976

Japan 1,699 2,999 4,698

South Korea 1,229 2,200 3,429

Total $6,479 $6,938 $13,417
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 52 GAO-03-910 International Trade

a term of 20 years from the priority date.18 Table 7 provides the total 

maintenance fees over 20 years that would be payable to the patent offices 

in our scenario, not including attorney fees. The fees would be payable to 

Japan, Canada, South Korea, and each country that the company 

designated through the European Patent Office. The total estimated cost to 

the business for full-term foreign maintenance is $83,543. This does not 

include costs associated with either U.S. attorney or foreign representative 

work.

Table 7: Estimated Costs Involved in Maintaining a Foreign Patent in Nine Countries 

for 20 Years

Sources: Canadian Intellectual Property Office, European Patent Office, German Patent and Trademark Office, Irish Patents Office, 

Italian Patent and Trademark Office, Japanese Patent Office, Korean Intellectual Property Office, United Kingdom Patent Office, and 

WIPO.

Notes: Exchange rates are based on data from DRI-WEFA, World Outlook Comparison Tables, 

Forecast Data, 2001, fourth quarter, and DRI-WEFA, Monthly World Outlook (Philadelphia:DRI-WEFA, 

Feb. 15, 2002). Exchange rates are based on an average exchange rate forecast for years 2001-2005 

and years 2006-2020. 

Maintenance fees are expressed in current year dollars because of a lack of information about the 

timing and amount of future expenditures for patent maintenance. 

Renewal fees are payable to the European Patent Office for the years before the European Patent 

Office grants the patent. In our scenario, we assume the European Patent Office grants the patent in 

year 5. As a result, the company must pay a renewal fee of $351 in year 3 and $374 in year 4 to the 

European Patent Office. The figure for European Patent Office renewal fees in the table reflects fees 

for years 3 and 4 and the maintenance fees for designated member states for years 5-20. 

18We assumed that the patents would be held for the full 20-year term in each country to 

show what the maximum maintenance costs might be. However, most patents are not held 

for the full term.

Country Cost in U.S. dollars

Canada $1,510

France 5,001

Germany 13,520

Ireland 4,637

Italy 6,002

Japan 22,783

South Korea 18,910

Sweden 5,552

United Kingdom 4,903

European Patent Office renewal fees 725

Total $83,543
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 53 GAO-03-910 International Trade

U.S. Attorney and 

Foreign Representative 

Fees 

Throughout the foreign patent process, the company will incur fees for U.S. 

attorneys and foreign patent representatives. Unlike national patent office 

fees, which governments typically publish in fee schedules, U.S. attorney 

and foreign representative costs may vary widely, depending on a number 

of factors. Therefore, they are difficult to estimate reliably. For example, 

items such as the nature of the patent sought, the extent of global patent 

coverage desired, the foreign patent process followed, and the amount of 

time patent attorneys spend modifying patent applications to meet the 

expectations of individual patent offices will affect the cost of U.S. patent 

attorney and foreign representative services. U.S. patent attorney fees will 

also vary throughout the United States. For these reasons, our estimates of 

U.S. patent attorney and foreign representative costs are, at best, 

approximate. 

We presented our foreign patent scenario to, and obtained cost estimates 

from, four of the patent attorneys on our panel.19 We asked them to 

estimate the U.S. attorney and foreign representative fees that the 

hypothetical company might incur at the international and national stages 

and throughout the maintenance phase. Their estimates for the U.S. 

attorney and foreign representative charges during the international and 

national stages were similar, but their estimates of these costs during the 

maintenance phase covered a broader range. As shown in table 8, the total 

cost of U.S. attorney and foreign representative fees for the company could 

range from under $60,000 to $230,000. 

19These attorneys were based in San Jose, Calif.; Washington, D.C.; Minneapolis, Minn.; and 

New York City.
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 54 GAO-03-910 International Trade

Table 8: Estimated U.S. Attorney and Foreign Representative Fees

Source: GAO analysis of patent attorney cost estimates.

Total Scenario Costs The total estimated foreign patent costs to the company in our scenario 

ranged from about $160,000 to about $330,000, as shown in table 9. In this 

scenario, the company would incur about 35 percent of the lifetime costs to 

file and obtain the foreign patents and about 65 percent of the costs to 

maintain the foreign patents for their full 20-year term. 

Table 9: Estimated Total Foreign Patent Costs 

Source: GAO analysis of sources cited in table 4-8.

Scope and 

Methodology

To estimate the U.S. patent costs that a small business might incur, we 

obtained relevant fees from the USPTO schedule of patent fees, effective 

October 1, 2001. We used the small entity fees because the company in our 

International

stage

National

stage

Maintenance

phase

Total

(cost in U.S.

dollars)

U.S. attorney fees <$10,000-

$20,000

<$10,000-

$30,000

<$10,000-

$60,000

$<30,000-

$110,000

Foreign 

representative 

fees 0

$20,000-

$50,000

$10,000-

$70,000

$30,000-

$120,000

Total fees <$10,000-

$20,000

<$30,000-

$80,000

<$20,000-

$130,000

<$60,000-

$230,000

Stage Costs in U.S. dollars

International stage costs $2,100

U.S. attorney and foreign representative 

fees at the international stage <10,000-20,000

National stage costs 13,417

U.S. attorney and foreign representative 

fees at the national stage <30,000-80,000

Maintenance fees 83,543

U.S. attorney and foreign representative 

fees during the maintenance stage <20,000-130,000

Total $<159,060-$329,060
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 55 GAO-03-910 International Trade

scenario would be eligible to pay these lower fees. We obtained estimates 

for attorney costs from the American Intellectual Property Law 

Association’s Report of Economic Survey 2001. This survey is done every 2 

years and, among other things, provides statistics on billing rates and 

typical charge for representative intellectual property services. The data in 

the 2001 report is based on 1,829 responses. We used the median costs 

contained in the survey for actions that corresponded to our scenario.

To estimate the foreign patent costs that a small business might incur, we 

developed our hypothetical foreign patent scenario based on information 

that we obtained from our small business survey and patent attorney panel, 

as well as on input from several patent attorneys. We took this route 

because few of the studies that we analyzed about foreign patent costs 

were tailored to small businesses. Moreover, because many caveats exist in 

the foreign patent process, a scenario enabled us to better estimate costs. 

Based on this information and input, we developed what the patent 

attorneys advised was a reasonably typical foreign patent scenario for a 

small business. This scenario included filing a patent application of average 

length and complexity in a limited number of important countries, 

reflecting the choices that small businesses have to make because of cost 

considerations. We also chose to illustrate the PCT process because it is a 

commonly used process that small businesses might follow. 

The scenario included a range of assumptions to help narrow the scope of 

cost estimates as much as possible, particularly for the patent attorneys 

who estimated U.S. and foreign patent attorney charges. These 

hypothetical foreign patent scenario assumptions are as follows:

1. The U.S. application consists of 25 pages, 5 drawings, and 15 claims, 

including 2 independent claims.

2. Prior art is relevant to the first independent claim and its dependent 

claims, but not the other independent claim.

3. The first independent claim and its dependent claims are ultimately 

allowed after amendment.

4. One office action occurs.

5. No appeals, opposition, invalidation, scope trials, or the like occur.

6. The issued patent contains 15 claims.
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 56 GAO-03-910 International Trade

7. The company keeps each of its patents in force for 20 years.

8. The PCT application is filed in the United States. USPTO acts as the 

receiving agent and conducts the search and examination.

We included the nine countries in our scenario for various reasons. We 

selected Japan because it is an important market, and because we wanted 

to illustrate the higher costs that companies face when they seek patent 

protection in Japan. We selected Canada because U.S. small businesses are 

eligible for lower fees there and can file their applications in English, 

thereby avoiding translation charges. We selected South Korea to represent 

developing markets where companies may wish to obtain patent 

protection. We opted to include six European countries to represent 

reasonable but still limited protection in this major foreign market. 

We obtained information about the cost of filing a PCT application in the 

United States from the USPTO schedule of PCT fees. We used the Global IP 

Estimator software published by Global I.P. Net to obtain information on 

patent fees in each country included in our scenario. This software 

provides estimates of national patent office fees for countries throughout 

the world, including translation costs where applicable. We obtained 

information about these fees and costs from Global IP Estimator in January 

2002. We validated the information in the Global IP Estimator by examining 

the WIPO’s PCT applicant guides and published fees and the various 

national patent office Web sites. We obtained information about 

maintenance fees from WIPO, the European Patent Office, and the national 

patent office Web sites. Since many of these sources presented the fees in 

the national currency of the respective patent office, we used average 

exchange rates for years 2001-2005, and 2006-2020, provided by DRI-WEFA, 

an economic consulting firm. 

To obtain information about the cost of U.S. and foreign patent attorney 

services throughout the process, we surveyed four patent attorneys who 

were members of our patent attorney panel. The attorneys estimated, 

within ranges of $10,000, the U.S. patent attorney and foreign 

representative costs for the international and national stages and the 

maintenance phase of our scenario. Although the American Intellectual 

Property Law Association’s Report of Economic Survey 2001 contained 

data on U.S. patent attorney charges for these services, we did not use this 

data because it did not include foreign representative costs.
Appendix V

Processes and Costs Involved in Obtaining 

Foreign Patent Protection: A Hypothetical 

Scenario for 2002

Page 57 GAO-03-910 International Trade

We have expressed all costs in 2002 current dollars due to a lack of 

information about the timing and amount of future expenditures for patent 

maintenance and attorney fees. We collected information on the patent 

maintenance fees for the United States and foreign countries for the patent 

scenario described in this appendix. However, we do not have a breakdown 

of the costs on an annual basis, which would enable us to convert this 

stream of payments into present value terms. Since a larger share of foreign 

patent costs in this scenario accrue in the later years as compared to the 

U.S. costs, a present value calculation will result in a greater percentage 

reduction in foreign costs than in U.S. costs. Nevertheless, foreign patent 

costs still remain substantially higher than U.S. costs. 

We also shared our analysis with USPTO officials, who provided assistance 

and technical comments.
Page 58 GAO-03-910 International Trade

Appendix VI

Patent Law Experts’ Views on Steps That 

Small Businesses Should Take to Improve 

Foreign Patent Efforts ApenVdxiI

We asked the patent law experts: “What could small businesses do better as 

they consider whether or not to seek, obtain, and maintain foreign patent 

protection?” We analyzed their responses and developed a list of 20 steps. 

We then asked the experts: “How important are each of the following 

suggestions for small businesses to consider?” Response options ranged 

from “least important” to “most important.” The steps are presented in rank 

order in table 1 based on the combined percent of experts rating a step as 

“important” or “most important.”

Table 10: Patent Law Experts’ Views on Small Business Steps to Improve Foreign 

Patent Efforts

Small business step

Percent of patent law

experts rating step as

important or most

important

1. Avoid divulging information about the invention prior to 

filing a U.S. application.

100

2. Be familiar with key dates and deadlines that are 

specified under U.S., foreign, and international law, 

and take foreign filing actions accordingly.

95

3. Consider the company’s long-range business plan. 86

4. Manage patent portfolio as an asset and regularly 

review foreign portfolio.

83

5. Consider the nature and patentabilty of the product. 81

6. Only file in countries where protection will be 

meaningful and patent will produce a return on 

investment.

81

7. Begin to consider foreign patent options early, such as 

in the research and development phase, and seek 

legal advice at that time.

75

8. Obtain experienced U.S. patent counsel that is familiar 

with obtaining foreign patents.

74

9. Consider filing under international and regional treaties 

(Patent Cooperation Treaty, European Patent Office, 

etc.).

73

10. Do a thorough market analysis (i.e., company’s interest 

in overseas markets, current and potential size of 

foreign markets, nature of competition, etc.).

72

11. Become more knowledgeable about the total cost of 

seeking, obtaining, maintaining, and enforcing foreign 

patents.

71

12. Obtain experienced foreign patent representation 

(attorney or agent).

70
Appendix VI

Patent Law Experts’ Views on Steps That 

Small Businesses Should Take to Improve 

Foreign Patent Efforts

Page 59 GAO-03-910 International Trade

Source: GAO analysis of patent attorney panel questionnaires.

13. Realistically consider company’s willingness and ability 

to enforce patents abroad.

70

14. Involve top company officials in foreign patent 

decisions.

66

15. Consider alternative ways of commercializing foreign 

patent (i.e., licensing, joint ventures, partner with other 

U.S. or foreign firms, etc.).

64

16. Consider strategic options in the development of 

foreign patent applications (i.e., file shorter 

applications, design applications to meet foreign 

requirements, modify claims, consider utility patents 

where available, etc.).

61

17. Become more knowledgeable about foreign patent 

laws and practices and how they differ from U.S. patent 

laws and practices.

61

18. Estimate cradle-to-grave foreign patent costs and do a 

thorough cost/benefit analysis.

59

19. Seek training opportunities on foreign patent protection 

for any in-house counsel and other staff.

47

20. Seek advice and partner with other businesses. 35

(Continued From Previous Page)

Small business step

Percent of patent law

experts rating step as

important or most

important

(320151)
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