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A three-pronged approach to controlling costs of managing your patent portfolio

By Jesse Schwartz
Published: October 21st, 2020

A detailed article on strategies for controlling patent costs appears in the October issue of Technology Transfer Tactics. To subscribe and access the full article, click here.

For more information about the on-demand recording of the distance learning program “Maintaining a High-Quality Pa­tent Portfolio Under Severe Budget Constraints” or to order, click here. 

Peter Gordon, a founding and managing member of Patent GC, a team of IP, patent and trademark attorneys, began learning through “grace under fire” some of the keys to managing patent portfolio costs, and he shared those lessons, along with key tools and techniques, with the attendees of an October 5 webinar hosted by Tech Transfer Central entitled, “Maintaining a High-Quality Pa­tent Portfolio Under Severe Budget Constraints.”

Like many TTOs in today’s environment, “I was asked to reduce the patent budget to one-third of current spend,” he related. “Also, the [client company’s] CFO and CEO wanted me to explain how the budget grew to the current state. I was given a few weeks, and when I made my proposal, they then asked how much further I could cut it without hitting bone.”

Gordon said the framework of his overall strategy for doing “more with less” falls into three key areas:

  • Cost Model (generating a budget and analyzing costs);
  • Value Metrics (is the IP worth it?); and
  • Organizational issues.

The cost model, Gordon noted, can be used to generate the budget, analyze and track costs, and run through some “what if?” scenarios. “It’s primarily based on data about the portfolio and decisions and actions you will take on each matter,” he explained. The “key takeaways,” he shared, are how to use time to disposition (the average time it takes for you to make a decision of either abandonment or patent filing) as a key control in the budget, and how to manage the problem he calls “death by a thousand cuts.”

The structure of the model is divided into two key components — the portfolio, and variable costs. The portfolio, he explained, encompasses new invention disclosures and filings; existing and pending matters; and the maintenance and renewal component. Variable costs have two parts — “health” and “hygiene.”

The “health” component includes “large average costs that are key in any decision taken — like the cost for filing a new patent application.” Hygiene, on the other hand, refers to “how costs vary from matter to matter based on how well or consistently they are executed.” It’s these costs that he refers to as “death by a thousand cuts,” including excess claim fees, filing surcharges, incomplete applications, late/urgency fees, excess page fees, translation costs, corrections or drawings and specification, and reminders and requests for instructions.

“These little costs aggregate across the entire portfolio and have significant impact,” said Gordon. “There is a lot of variability in base costs due to wildly variable standards and how decisions are executed.”

The cost control strategy should revolve around “managing decision and action costs (and how to make decisions); the decision-making process affecting time to disposition; and things put in place to control death by a thousand cuts,” he summarized.

“First filings are clearly a percentage of invention disclosures, but others, like conversions, are dependent on decisions that may have been made by other people,” Gordon noted. “When you look at pending cases and maintenance and renewals, particularly pending, that is a function of all your previous filings and time to disposition. Maintenance and renewals depend on previous filings and a lapse in grant rates.”

If you decide to proceed further with any innovations, there will be an action cost, he noted. “The key drivers on those costs really depend on filing type, outside counsel selection and fee schedule,” he explained.

So, what are some of the keys to controlling time to disposition? “Anything that delays the patent application from getting to the examiner’s queue will delay getting it processed,” noted Gordon. “The other factor relates to knowing what you want to get out of the patent application at the time you’re filing it. If you do not have a good idea, a lot of time is spent flailing about. Have some strategy, some objective you want to get out of the application.

“Sometimes,” he continued, “you get prior art and it shoots down your goal. You need to be able to make a decision: are we going to be able to proceed or not? Going back and forth with the patent office can go on pretty much forever if you want it to; you have to decide when you’re done. A claim allowed is the easy one; the hard ones are when you have to decide to let go.”

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