Controlling Patent Costs and How to Say No: Lessons from AUTM 2013

At inovia we often speak to universities about the challenges that they face when it comes to international patenting filing.  Many of our university clients face budget and cost pressures and will often abandon technologies when there’s no licensee in place, even though they may have already spent thousands of dollars drafting the application and filing the PCT.

At the recent Association of University Technology Managers (AUTM) annual meeting, inovia’s founder Justin Simpson moderated a panel on the topic of Controlling Patent Costs while Protecting More Technologies, and was joined by three university experts to address some of these challenges. 

Speaking on the panel were:

Wesley Blakeslee
Executive Director of the office of Technology Transfer
The Johns Hopkins University

Veronica Kayne
Director of Innovation and Intellectual Property
George Mason University

Brett Maland
Licensing & Business Development Associate
University of Missouri-Columbia

Veronica Kayne kicked off the session by discussing how she’s changed the paradigm at George Mason from one of prolific patent filing to a selectivity model.  When her predecessor left, the office was in the red and almost all disclosures resulted in a patent filing.  Kayne realized that the office needed to change; Mason needed to play a bigger role in the region’s economic development and that required more attention to licensing and thorough market analysis for evaluating what to patent.

“I’m here to show you that you can say no and live,” Kayne told the audience.  She admitted, however, that telling faculty that you will not patent their technology is much easier said than done.

Along with employing a selectivity model, Kayne offered these tips from her experiences:

• It seems obvious, but patent only where patenting is going to accomplish something.  Gather feedback and perform marketing research early on.
• Teach outside counsel to be more skeptical so that they share the vision of patenting only where valuable.
• Re-evaluate technology and the market potential at every stage in the patenting process.  George Mason requires that their outside counsel fill out a commercialization questionnaire when each office action comes in, to evaluate whether it is worth continuing at each stage.

Kayne’s parting words to the audience: “Be brave; stick to your guns.  And have a boss who can back you up.”

Next, Wes Blakeslee shared Johns Hopkins’ approach to reducing patent costs.  Blakeslee began his career as an engineer and systems analyst (a.k.a. rocket scientist) with the U.S. National Aeronautics and Space Administration.

“Doing university tech transfer is not rocket science.  It’s much harder,” Blakeslee began, referring to the task of rejecting faculty members’ technologies.

Over the last 6-7 years, Johns Hopkins has almost doubled its invention disclosures; however, the office has managed to reduce net patent expenses through targeted cost-cutting measures, including:

• Consolidating their outside counsel from about 35 firms to 7;
• Negotiating significantly discounted hourly rates and putting caps in place with their outside firms; and
• Creating an in-house patent counsel group, not with the intent of replacing outside counsel, but to help reduce costs for non-licensed cases.

To echo Veronica Kayne’s suggestions, Blakeslee also mentioned that they’ve implemented an aggressive screening process for disclosures to better analyze the market value upfront.

Blakeslee described the shock of receiving bills totaling $3 MM in legal fees one year.  Now, with fixed rates and caps, his team knows exactly what to expect.  Their overall legal expenses may have increased due to the rise in disclosures, but after credits for in-house work and licensee reimbursements, net patent expenses for the office have actually decreased from 6 years ago when disclosure volume was much lower.

“Not everyone can do all these things, but you can negotiate with outside counsel,” he said.  “But be careful that it doesn’t impact quality.”

Finally, Brett Maland of the University of Missouri shared tips on “Best Practices for Foreign Filings.”  Maland shared that while the University of Missouri keeps patenting costs relatively low, they will front the patent prosecution costs for promising licensees, giving them one or two years before they must reimburse the costs.  So, his office must thoroughly evaluate the licensee and make sure that they are meeting due diligence terms and other obligations per the licensee agreement.

The University of Missouri also works closely with their licensees to evaluate their plans for where to file, considering the:

• Must haves: US and European Patent Office
• Very large economies: China and Japan
• English speaking: Canada, Australia, South Africa
• Large economies: Russia (consider regional Eurasian Patent Office), Brazil, Canada, Australia, South Korea and Mexico
• Far-eastern economies: Indonesia and Thailand
• Countries having a main port of entry

Maland reiterated that it’s also important to consider where the licensee’s competitors are filing, and whether or not it is a high-volume consumer product, which may require a broader filing strategy.

The panel wrapped up with a group discussion and audience questions.  On the topic of saying no, both Blakeslee and Maland agreed that you need to bring a well-supported case to the table when rejecting a faculty member’s technology.

“When you do create that detailed and persuasive argument, you don’t get as much pushback,” said Maland.  “The problem is, it takes a lot of time to develop those arguments.”

These professionals’ experiences demonstrate that universities face a tough balancing act between selectivity/cost-cutting and generating licensee revenue.  To help our clients, we started the One More Year program, which buys universities more time to find a licensee when they have an impending PCT national stage entry deadline.

This year’s AUTM Annual Meeting in San Antonio was a great opportunity to catch up with clients and meet new people.  As always, we appreciated the invitation to lead a panel and are very thankful for the panelists’ time and thoughtful participation.

Next year’s AUTM Annual Meeting will be held in San Francisco from February 19-22.