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.
I do not wish to be thought of as criticizing the ethics of patent lawyers. To the contrary, most patent professionals operate within the highest of ethical considerations. Nonetheless, when one does not obtain payment for saying “no” to a client, it must necessarily follow that even the most ethical persons will lean toward performing work for a client when their livelihood depends on the billable hour model.
Against this background, it is not surprising that many patent lawyers do not think to examine the business implications of filing a patent application prior to moving forward with assessing the legal merits of the invention. If the invention is patentable, the patent attorney will typically suggest ways that the patent application can be crafted to earn an issuance from a patent examiner. When the application is rejected, the patent attorney will then suggest ways to convince the patent examiner of the reasons that some aspect of the claimed invention should go to allowance. Generally lost in the journey through the Patent Office is whether getting a patent serves the business interests of the client.
As a salient example of this, recently a client engaged me to provide him with a second opinion. This client had previously engaged a respected patent law firm to conduct a patentability analysis for him of his invention. The patent lawyer provided him with a 15 page opinion which was mostly boilerplate legal language. Buried in the middle of the opinion was a statement along the lines of “your invention is patentable, but the claims may be somewhat narrow given the relevant prior art.” My client, a smart businessman, but not particularly patent savvy, took this to mean that he should move forward with a patent application. Indeed, the patent attorney seemed to encourage this because at the end of the lengthy opinion, the attorney stated something along the lines of “when you send me a $6500 retainer, we will begin drafting your patent application for you.” Nowhere in the opinion did the lawyer encourage his client to pick up the phone to discuss whether a patent would benefit his business plans.
On recommendation of his business lawyer (a law school friend of mine), the client called me after spending several $1000’s on the patentability opinion. I told him that, as an IP Strategist, my goal was to assist him in seeing whether filing a patent application would serve to support his business plan and that, as a result, I might recommend that he not move forward with filing a patent application.
He was at first surprised, but after further discussion, he understood the value of my perspective. I reviewed his invention and the prior art, but not without first discussing his business plan with him. Notwithstanding the expensive 15 page legal opinion stating that his invention would be patentable, I told him that he would likely have less than 20% chance of getting his patent application approved by the Patent Office. Moreover, given the closeness of the prior art, success would likely be very expensive and would take several years. Since my client’s business success would center on classic “first mover advantage,” I concluded that a patent application would not serve his business purposes. As a result, my recommendation to him was to spend his money on something other than patent protection. He took my advice.
Significantly, I made much less money by recommending that my client not seek patent protection–probably only about 10 or 15% of what I would have made by moving forward with drafting, filing and prosecuting his patent application. I was willing to accept this considerably lower fee because it was the right thing to do. That is, while I agreed with the first patent attorney that his invention was patentable, in view of his business plan and the narrow scope of the claims that would likely issue at considerable expense (if at all), I concluded that he would not have been able to prevent others from knocking off his product once it made it into the market. And, since it only mattered that he was first to the market, there really was no reason for him to spend $10K or more on obtaining patent protection that would effectively not provide him any measurable business advantage in the future.
Lawyers comfortable with the traditional model of providing patent legal services wonder why I effectively choose to short-change myself on legal fees by sometimes recommending that my clients not engage me to prepare and prosecute their patent applications for them. Nonetheless, I believe that the way patent legal services are provided must change, and I am willing to make less money in the short term as I serve as a pioneer–a sort of “IP Strategy Evangelist.” Given the not insignificant phone calls and emails I have received in recent months, other patent attorneys feel the same way I do. I am hopeful that our voices will begin to be heard and that change will come to the way the patent business is conducted.