Commentators like me frequently rail against what we view as the often unnecessarily high cost of obtaining patent protection. In truth, many patents are overpriced and provide questionable business value to their clients. Over-priced patents do not form the basis of this article, however. Instead, this is about the opposite phenomenon, i.e., under-priced patents. Specifically, in this article, I describe a company's desire to obtain low cost patents and what such a patent strategy may reveal about its long term viability. I was recently contacted by a large printer manufacturer ("PrinterCo" for the purposes of this discussion) to see whether I was interested in preparing patent applications for the price of $1300 each. This price seemed somewhat ridiculous to me because even the most "bargain basement" patent preparation prices that pop up on my Google sidebar advertising do not seem to dip beneath a threshold level of $2800. And, as a
For many years, vendors of office automation systems expended considerable effort trying to convince corporate and law firm patent attorneys to adopt paperless file management systems by touting the time and money savings associated with electronic files over the traditional patent file system. However, relatively few patent attorneys have done so, instead, remaining loyal to the traditional three-sided manila patent file folder. Until recently I was one of those patent attorneys. Now that I have discovered the vast efficiencies and improvements possible with these electronic systems, the question is why I remained true to this clearly outdated system of maintaining client patent prosecution records. Given the remarkable efficiency and knowledge management improvements possible with electronic patent file management systems, there can be no viable excuse for either corporate or law firm patent attorneys not to adopt such systems.In retrospect, I think I found that the heft and history represented by the
This week, I am using the IP Maximizer Blog to let readers know about an exciting upcoming IP Strategy event. My fellow IP Strategist, Jordan Hatcher, and his team at ipVA and colleagues at ExponentIP are working with Managing IP to provide a free webinar on IP Strategy in Europe on February 26, 2009 at 9 am EST. (I understand it is also going to be recorded.) I am very excited about this program because, as someone who advises on worldwide IP strategy, I am sure the insights provided in this webinar will elevate my knowledge and allow me to provide enhanced advice to my clients regarding IP protection in Europe.
Some might wonder why I am so looking forward to learning more about strategic IP outside of the US, so I will give some background.
By counting a number of many multi-national
A SVP at a large consumer products company recently expressed frustration that he cannot bring a patent infringement lawsuit even when his company holds 18 US patents (and many other foreign patents) on a product that closely resembles a competitor's product. His annoyance is compounded because his company spent several years developing the product and technology covered by the patents. His company also spent several $MM introducing the product, which turned out to be a failure. The company removed the product from the market after several months, but the many patents remain in the portfolio today, and are still being maintained at considerable expense. I estimate that the patent protection for this failed product cost as much as $500K for patent coverage worldwide. Significantly, the product did not fail due to quality or performance issues. Rather, it failed because it was over-engineered and used many expensive ingredients, a fact which made
As legal service fees continue to rise five percent or more year after year, corporate IP managers, such as Chief IP Counsel and the like, continually face pressures from their management teams to reduce outside counsel legal expenses. The current economic downturn has also resulted in corporate legal budgets being slashed, thus increasing the pressure on corporate IP managers to reduce outside counsel costs, even while IP asset value is becoming more important to C-level management. As a result, the need for corporate IP managers to achieve outside counsel fee relief while at the same time maintaining IP legal service quality is more acute than ever today. Today, there are a number of commonly accepted methods to achieve outside IP counsel fee relief including fixed (or "capped") fee arrangements and a percentage reduction per total hours billed, as well as electronic billing systems set up to automatically audit law firm bills.
In recent years, financial analysts came to believe that intangible asset value forms an increasing aspect of overall corporate value. These experts generally agreed that intangible asset value made up at least 70 % of the total market cap of the average corporation, an increase of an estimated 20 % in 1975. Not surprisingly, however, the recent global economic downturn has resulted in a steep decline in the amount of market cap attributed to intangible assets. Experts now say that the current (market adjusted) corporate value attributable to intangible assets is "less than 50 %." To someone who has toiled in the trenches of intangible asset protection at both the law firm and corporate levels, the at least 70 % generalization always possessed a sense of being pulled out of the air, as does the new
As a self-described "Recovering Patent Lawyer," I am now effectively an outside observer of the way the patent business is conducted in the law firm practice environment, and how corporate and other clients purchase patent legal services. In this last year in which I have re-invented myself as an IP Strategist, I have come to firmly believe that the basic patent law firm business model contains a fundamental flaw: outside patent counsel can make money only when they actually do work for their corporate clients. As such, there is no value when a patent attorney (or her law firm partners) tells a client that he should not pay you for the attorney's expertise. This necessarily sets up a tension between what the best interests of the law firm attorney and those of the corporate client.
While a majority of companies consider the cost of obtaining patent protection an essential element of the product and technology development process, few of these same organizations favor the prospect of asserting their patent rights against potential infringers. Moreover, no company relishes the prospect of being a defendant in a patent lawsuit. That most do not readily welcome patent litigation is not surprising given that the average cost of large case (i.e., over $25 MM at stake) patent litigation through trial in 2007 was about $5MM per party in 2007. For disposition of smaller cases, the total amount per party was about $1MM in 2004 dollars. Why does it cost so much for a patent owner to assert her patent rights against an alleged infringer? Put simply, patent litigation at its core is an adversarial undertaking in which lawyers typically define the meaning of a successful outcome. In this context,
I often facetiously refer to myself as a "recovering patent attorney." This somewhat tongue-in-cheek phrase seems appropriate to my present professional state of mind because, after many years of drafting and prosecuting patents for clients of all sizes and degrees of sophistication, in the end, I became disillusioned with the way the patent business traditionally operates. Too often, I found that the patents I worked so hard (and was paid handsomely) to obtain failed to serve my client's business needs. In searching for the source of the disconnect between my efforts, the client's expenditures and the ultimate value of the patent to my client's business, I realized that those responsible for the client's business often did not participate adequately in the patenting process. Instead, at many organizations, inventors and patent attorneys served as the gatekeepers for most patent decisions. While the relevant client business unit typically held some say in patenting