A Business Tutorial: Four Ways to Stretch Your Patent Budget

Whether your annual patent budget is in the tens of thousands of dollars or the tens of millions of dollars, the pressure to do more with less is becoming increasingly essential, even for critical budget items like the development and protection of patents. In addition to the competitive edge that a strong patent portfolio provides, there are many financial benefits to creating efficiencies in a patent budget. Additionally, being able to apply for patents in multiple jurisdictions will help build your patent portfolio, which is attractive to investors. Finally, well-written and well-translated patent applications can help prevent costs associated with office actions, longer time to grant and litigation.

For those more focused on your company’s business outlook, with intellectual property (IP) being one of many departments under your umbrella, learning some basics on the critical – and not so critical – components of an IP budget can be extremely helpful as you work with your IP managers to make the most of what they have.

Components of a Patent Budget

When allocating budget funds within an IP budget, IP managers consider the following components:

  • Domestic Patent Applications. These are patents that your company has developed and that are currently in the process of application in the enterprise’s home turf. It is important for you to develop a strong patent application that will leave little to the imagination. The strength, or weakness, of this initial application will be carried through to any additional countries in which you apply for patent protection.
  • Foreign Patent Applications. If your enterprise is international-oriented, you will need a foreign patent portfolio to survive in the global market. The cost of foreign patents is typically higher than local patents because of translation costs, as well as higher fees for foreign filers. Where you need to file for foreign protection is an important aspect to consider when determining the overall IP budget.
  • Patent Protection and Litigation. Prosecuting patents is just the first step. Most global enterprises require a legal team that works proactively to prevent entanglements in patent litigation. However, litigation is virtually unavoidable, especially with patent trolling on the rise, so investing in well-drafted patents up front, can help reduce litigation risk down the road. Planning for litigation costs is essential to maintaining an accurate budget.

Because of the importance of a strong patent portfolio, a good approach to managing the patent budget is to identify specific steps you and the IP manager can take that will help maximize the budget without sacrificing the enterprise’s patent portfolio or its ability to protect it. Here are some suggestions.

1. Track potential patents and patent applications currently in prosecution.

It sounds simple enough to say you need to track patent application currently in prosecution, but this can have a profound impact on your budget. It is true that the firms you employ are tracking the patent applications, but they track due dates to make sure rights are not lost and everything is addressed on time. What you want to do is track your patent application from a strategic business perspective. The application may have made perfect business sense when it was filed, but perhaps over time you went in a different direction or there wasn’t the market interest you expected. So why continue to use up your patent budget only to acquire a patent asset that won’t be useful in your current plans? Periodically reviewing your in-progress patent portfolio with a substantive eye toward whether the assets continue to be worth pursuing is very important.

2. Work with the IP Managers to Prioritize Future Patents Applications.

In addition to reviewing your in-progress patent portfolio, review the plans for upcoming inventions that potentially need protection with the IP manager to help prioritize which ones need to be protected first or which existing patents need to be protected before others. Enumerating exactly what the patent’s projected revenue is to the company prevents superfluous patents from being filed.  Also, if planning to protect your patents on a global scale, prioritize which countries are most important for your business and whether the applications need to be filed in each country at the same time or one each quarter, etc. Work with the IP manager to develop a timeline that matches the priorities determined for each project. As a result, you will be able to project future gains with more accuracy and the IP department can work with more efficiency.

Additionally, once patents (and target countries) are prioritized, the filing process can be assigned to the attorneys with expertise parallel to the importance of the patent.

3. Ensure quality applications from the start with outsourcing partners that follow best practices. Starting with quality patent applications saves time and money down the road by reducing office actions, time to grant and the risk of litigation. Quality applications in large part result from outsourcing a variety of tasks related to the patent portfolio to quality partners. Whether the enterprise’s legal team needs outside counsel or expertise, patent translation or some other service, it’s important to choose a company that will make the investment worthwhile. Translation partners are particularly important because translation determines how well protected the patents will be in foreign countries and markets.

As budgets tighten, the temptation for many IP managers is to seek out the best price when it comes to patent translation costs. For IP-based enterprises, patent translation fees can sometimes account for up to 40 percent of their patent costs. A translation provider with a traditional country-by-country model, or even internal management through a variety of foreign agents, ultimately leaves enterprises open to litigation risk. Providers that rely on a streamlined translation services model can break down translation silos and not only produce high quality translations, but also reduce total cost of patent ownership. Search out these best practices for value and quality in your patent translation service provider:

  • People. Ensure that the people working on your patent translations, not only have native language skills, but also subject matter expertise in the scientific fields you are working in. Engineering problems are solved by engineers, not linguists, and perpetuating errors, though translations may be technically correct, will only cost you more money down the road.
  • Process. Centralized processes streamline translation and other foreign patent filing tasks to interactive teams that report to enterprise project owners. With this model, language silos are broken down and project managers can have a holistic approach to securing each patent in multiple jurisdictions. Additionally, you as a client will have more transparency to timelines and costs.
  • Technology. Technology-enabled translation services not only expedite the process with translation memory, but also promote accuracy with the consistent use of predefined terminology specific to each client’s target industries and geographies.

By selecting the right outsourcing partner you can experience increased patent filings, decreased office actions, reduced invalidation risk and faster time to grant.

4. Communicate, Communicate, Communicate.

Make sure your IP manager and the legal teams are communicating with your product and marketing teams, as well as the outsourcing teams helping them through the patent process. They all need to know when inventions are being discussed domestically or internationally, if the patent applications have been filed and where they have been filed, where the application is in the prosecution process and how important the patent is to the financial health of the company. A lack of communication can be extremely costly, especially if the marketing team announces a new technology before a patent application is filed in the United States or in countries in which protection is critical. In many countries, the inventor will have lost the right for protection completely.

Also keep IP managers informed of increased – or decreased – budgets. Budget allotments can change from year to year or quarter to quarter. This is one reason why prioritization can be useful; you easily can narrow or widen your focus depending on whether your budget is reduced or increased.

Even if your IP budget is under very little duress, these steps are a great way to avoid extra expense and make the most efficient use of the budget you do have in your IP department. Getting the most out of your IP budget is essential, no matter the size or demands of your enterprise. Prioritizing patents and looking for translation companies with streamlined processes will help your enterprise optimize any IP budget.

About the Author

Todd Rapier is the executive vice president of worldwide sales for MultiLing, an innovative leader in IP translations and other foreign patent filings services for Global 500 legal teams. A native English speaker fluent in Korean, Rapier has more than 17 years of experience in sales in the legal/patent industries for such multinational companies as LexisNexis, Simplure Power and Velosum, Inc.


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Join the Discussion

2 comments so far.

  • [Avatar for Todd Rapier]
    Todd Rapier
    March 24, 2014 12:42 pm

    Nice joke, Paul! I’ll have to ewes it… 🙂 And thanks for commenting.

    Foreign patent filing and maintenance is expensive, no doubt. But many of our multinational clients use as much as 40% of their budget on patent translations, so I would argue that it is a sizable line item in their budgets. However, if the translation can ensure quality patents from the start, then the investment is recouped with reduced office actions, faster time to grant and lower risk of litigation and invalidation. Additionally, your point underscores the importance of prioritizing and reviewing patents — so budget isn’t unnecessarily spent on patents that aren’t producing revenue.

  • [Avatar for Paul F. Morgan]
    Paul F. Morgan
    March 22, 2014 09:34 am

    Poor translations can certainly effect patent quality, but they are far from the most significant patent budget item as compared to other foreign application filing and maintenance fee costs. In particular, avoiding even doing extensive foreign filings without obtaining and reviewing a PCT or other prior art search, Then later (as hinted above) doing regular maintenance reviews for selective application abandonments based on initial examination results, product plan changes, and technological obsolescence.

    P.S. Here’s an old foreign application miss-translation joke: A U.S. patent application on a “hydraulic ram” gets translated in the local language as a “water buffalo.”