Comment: Why it’s time for more law firms to turn an IT adversary into an ally
Outsourcing processes like patent annuities is nothing new and has been commonplace for several decades, but in more recent years the emergence of foreign filing platforms lead by providers such as inovia has enabled another key area of intellectual property to be streamlined. Justin Simpson*, founder of inovia, explains how such IT platforms can help firms make more money from IP…
The Intellectual Property (IP) industry has been historically slow in changing its ways but in the past twelve years there has been a sharp increase in specialist IP service companies that focus on particular areas of the patent process. inovia is a provider that specialises in handling the foreign filing process and offers cloud-based technology and streamlined backend systems that lower clients’ costs, while increasing transparency and efficiency.
The international patenting steps involved in the Patent Cooperation Treaty (PCT) and European patenting process are highly administrative, yet can be very costly if patent protection is sought in numerous countries. Prior to the utilisation of an IP platform like inovia, applicants engaged their local counsel to handle the foreign patent filing, now considered to be an “old school” approach in today’s changing IP landscape.
After filing a PCT application, entering the national stage in a variety of countries requires filling out the proper forms, submitting necessary documents and coordinating with foreign associates. Since there is no substantive work involved, there is limited value in having a patent attorney handle this part of the process. In fact, it is generally handled by a paralegal or administrative assistant within law firms.
Over the past twelve years, inovia has established a network of top-quality attorneys in more than 130 countries and has negotiated fixed rates with those agents by virtue of the significant volume of work sent each year. Even if an applicant files a few applications per year, they benefit from the bulk buying power inovia provides. inovia does not eliminate the need for a patent attorney (since the substantive drafting and prosecution after filing overseas still need expert input), but simply help in this one area of the patent process to save individuals and companies time and money.
Wind of change
There are several factors driving the implementation of service providers like inovia in companies’ foreign filing strategies. These include:
• Reduced IP Budgets. Companies and individual inventors have been working on reduced budgets since the economic downturn. For many, this means limiting where they file or abandoning patents altogether.
• Changing Attitudes. According to the annual report The U.S. Global Patent and IP Trends Indicator applicants are taking more control of their foreign filing. This annual benchmark report gauges the impact of the economy on companies’ IP strategies and as is this case each year, a growing number of respondents report that they plan to save on foreign filing costs by shifting their work from attorneys to non-law firm providers.
• Lack of Transparency. One of the key benefits of using an IP platform like inovia is cost transparency and upfront quoting using fixed pricing. Traditionally, the law firm hourly billing model doesn’t allow an applicant to budget accurately. They only know how much their foreign filing will cost when they receive the bill.
So why would a law firm view a service provider as an ally, not a competitor?
Because of the changing landscape in Intellectual Property, law firms sometimes view service providers as competitors, when in fact, it is possible for local counsel and IP platforms to work together to their mutual benefit. The reality is that some tasks traditionally handled by law firms have become less profitable and firms may be able to leverage IP platforms in order to maintain or even increase profits.
According to the 2014 U.S. Global Patent and IP Trends Indicator, 33% of respondents reported working on a reduced IP budget last year and of these, 6% of respondents saw budgets cut by more than 30%. While this is an improvement from previous years, the mindset of companies has changed since the great economic downturn and cost cutting pressures remain. If law firms work directly with IP platforms, they maintain control of the foreign filing revenue flow and avoid having their clients turn to other service providers directly.
For example, in the case of PCT national stage entry, if an attorney presents a $25,000 bill to their client, over 80% of that bill will be from the government fees, translation fees, and service fees of the foreign associates. The fee that the local counsel adds for coordinating the work is a relatively small percentage. If the attorney’s client asks for a discount, the government fees are merely pass through costs, and it is difficult to go to all of the foreign associates and negotiate a price cut. Instead, the attorney may be forced to cut their own fee, significantly reducing their own profit margin.
In order to maintain a profit margin on the foreign filing work, the patent attorney can work with a specialist foreign filing service provider. Such providers have already negotiated low rates with foreign associates, so they can pass those savings on to the patent attorney. The attorney can then add his usual coordination fee for the work, while providing an overall lower service fee to the client. The client saves money, the attorney maintains his/her margin and the loyalty of the client who then may have more room in their budget to spend on the next drafting project or litigation advice. It’s a win-win situation.
IP platforms like inovia offer many benefits that patent firms might find attractive. A last minute request from a client to file into an obscure destination can catch them off-guard. inovia has a fully vetted agent network and handles these last minute instructions on a daily basis. inovia provides upfront and accurate cost estimates for applicants which allow attorneys to gather funds from their clients before the work is completed, reducing the need for a patent attorney to act as a bank.
It’s undeniable that the IP landscape has changed in the past decade and law firms must continuously look for ways to stay competitive. Whether clients are demanding lower fees or firms are looking for internal efficiencies, now is the time for firms to consider aligning with an IP platform and be part of the global shift to a more efficient and cost effective approach to the international patenting process.
* Justin Simpson invented the inovia technology platform in 2000 and founded the company in 2002. Since then, Justin has been involved in all aspects of the company’s growth. Prior to starting inovia, Justin worked as a software specialist patent attorney for a number of Australian attorney firms including Allens Arthur Robinson and Shelston IP.
inovia is the global leader in foreign patent filing, having served more than 1,500 clients. Its global instruction platform, inovia.com, simplifies the PCT national stage entry, direct (Paris Convention) filing and European validation processes. inovia, a member of the RWS Group, has headquarters in New York, offices in London, Munich and Sydney, and agents covering over 130 countries, providing support in all major time zones and IP jurisdictions. www.inovia.com