Patent Search and Drafting Becomes Next Frontier for Outsourcing IP Services

By Stuart Recher
November 22, 2016

patent-map-globe-335bIt is no secret that the growth of the legal process outsourcing market has been growing at break-neck pace for the past several years. The result of a confluence of factors, including the global financial crisis, increased regulatory and compliance demands, and an overall increase in litigation, the outsourcing space has been one of the few bright spots in an otherwise contracting legal market.

According to the Peer Monitor Report on the State of the Legal Market, total legal spending increased by just 2 percent globally over the past year.  Meanwhile, the legal process outsourcing market is projected to grow at a rate of 27.8 percent per year through 2022, according to research firm Global Market Insights.

The trend makes a lot of sense. Legal workloads are getting tougher and budgets get tighter, so why not outsource lower-cost, routine tasks, such as document review and translation services to specialized firms who can produce higher output at a lower cost? What many may find surprising, though, is the volume and variety of legal work that’s being outsourced today. It’s no longer just low level administrative activities that are the domain of outsourced legal services. Increasingly, sophisticated, highly-specialized work is being farmed out to outsourced service providers and it’s both in-house corporate counsel and law firms who are driving the trend.

The drive toward increasing degree of sophistication of outsourced legal work is on clear display in the world of outsourced IP services. According to our new survey of 539 IP attorneys representing a cross-section of corporate counsel and law firms around the globe, we have found a widespread and global embrace for the outsourced approach to IP business management.

Moreover, the survey found that while cost and efficiency are indeed major drivers of the growth of the outsourced IP services market, respondents are also looking for specialized expertise and scalable staffing capabilities that will help them manage their IP portfolios more effectively, while avoiding costly mistakes.

All told, 34 percent of survey respondents were located in North America, 32 percent were in Europe, 22 percent were in the Asia Pacific region, and 7 percent were in Latin America. These IP professionals were asked questions on topics ranging from their current use of outsourced legal services to their plans for the future to challenges and pain points they are encountering along the way.

 

Outsourcing is Here to Stay

The base finding from the survey is that a total of 71 percent of respondents said they are currently outsourcing IP work and 91 percent of respondents said they intend to continue doing so at the same level or increase the amount of work they are outsourcing in the future.  Those numbers were slightly higher among law firm respondents, among whom 99 percent said they would continue outsourcing at the same level or increase their level of outsourcing in the future.  Among corporate IP departments, the total was to 88 percent (see chart 1 below).

Chart 1

The primary factors driving the trend toward increased use of IP outsourcing are cost pressures, efficiency, and staffing.  Among law firm respondents, 32 percent said that cost pressures were the primary challenge their IP departments are facing today, followed by 22 percent who cited the need to do more with less, and 15 percent who said they have had a hard time recruiting and onboarding qualified IP staff.  Among corporate legal departments, the breakdown was similar, though the demand for increased efficiency in their operation was on par with cost pressure as the primary motivator (see chart 2 below).

chart-2-copy

Chart 2

Patent Search Poised to See Largest Outsourcing Growth

When it comes to the type of IP work currently being outsourced, fairly basic tasks such as translations (76 percent), annuity payments (59 percent) and patent review and drafting (47 percent) are the focus among the majority of respondents. When asked about their plans for the future, however, both law firm and corporate respondents pointed to patent search (21 percent) as the largest growth category (see chart 3 below).

chart-3-copy

Chart 3

The leading recipients of outsourced IP work are still law firms. A total of 49 percent of respondents said they currently outsource IP work to law firms.  But they aren’t alone.  The second largest target for outsourced work are specialist consulting firms that focus on legal process outsourcing.  A combined 27 percent of law firms and 16 percent of corporate IP departments are outsourcing work to these types of specialists (see chart 4 below).

chart-4-copy

Chart 4

Defining Success

When it comes to selecting an outsourcing partner, expertise is the key differentiator, trumping cost as the primary factor used to evaluate vendors. Among the top factors used to evaluate service providers, both in-house counsel and law firms put technology domain expertise, proven track record, and abilities to scale at the top of the list (see chart 5 below).

chart-5

Chart 5

When comparing the perceived benefits of lP process outsourcing across functional areas, there are some distinctions in how law firms and corporate IP counsel, IP administrative staff, and law firms define a successful partnership.  While law firms seem to prize efficiency, saving money, speed, and staffing as the top benefits of outsourcing, corporate IP departments put efficiency, staffing, expertise, and speed at the top of their list (see chart 6 below).

chart-6

Chart 6

As the IP outsourcing market continues to mature, the level of service provided and the widespread acceptance for its role in the overall legal services ecosystem is creating huge opportunities for law firms and corporate counsel to do more with less.

While there is still a long way to go before full scale industry-wide adoption of IP process outsourcing, a critical mass of early adopters have blazed a trail toward establishing benchmarks for what to expect from this type of relationship.

Over the next several years, we project that there will be a dramatic increase in the volume of IP work that is handled by outsourced service providers along with a corresponding increase in complexity of that work. Also, unlike the early days of outsourcing in which much of the industry’s growth came at the expense of traditional law firms, the trend toward increased adoption of outsourced IP services among law firms suggests that they are adapting successfully to this disruptive innovation.

The Author

Stuart Recher

Stuart Recher is the Vice President of IP Services at Clarivate Analytics, formerly the IP & Science business of Thomson Reuters. He is responsible for professional services supporting clients across the Lifecycle of Innovation from discovery to protection and commercialization. Recher has held a number of senior management roles working with corporate IP departments and law firms around the world. Prior to working at Clarivate, he was vice president of IP outsourcing at CPA Global. Stuart has an MBA from Duke University.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 34 Comments comments.

  1. Anon November 22, 2016 6:47 am

    Exporting patent drafting still runs into the legal wall of needing permission to export (which only comes after filing an application).

    We ran into this issue some ten years ago or so, and nothing has changed since then.

  2. American Cowboy November 22, 2016 9:09 am

    Patent drafting is not a commodity, despite what BigLaw, the Big Banks and the multinationals claim.

  3. Gene Quinn November 22, 2016 10:02 am

    AC-

    I agree 100%. The outsourcing of patent drafting is a mistake, particularly when dealing with computer implemented inventions (i.e., software), which now accounts for 50% (or more) of all innovation. With all the requirements one must follow having outsourcing the drafting of patent applications is enormously risky.

    -Gene

  4. angry dude November 22, 2016 11:39 am

    outsourcing patent drafting is the most ridiculous thing in nature

    patent should very clearly describe the very essence of invention which can only be done by an original inventor himself, with some active participation from a qualified US patent attorney/agent to follow current “requirements” (which btw change after each stupid Scotus ruling 🙂

    what a mess

  5. Raina Haque November 22, 2016 12:46 pm

    Does this mean, then, that registered patent attorney/agents should prepare to prosecute patents they did not draft? Sounds like it’s going to raise the cost of prosecution.

  6. Paul Cole November 22, 2016 5:46 pm

    Patent drafting should be a collaborative effort between the inventor(s) and the patent attorney(s) who need to work together as a team.

    A patent specification may be considered the answer to a notional examination paper with Q1 “write all you know about your invention” and Q2: “define it”.

    Like an examination answer, credit is given only for what is in the script. What the inventor knew, but did not put in his script, is of no help.

    To get things right involves detailed discussion, preferably fact-to-face and detailed painstaking investigation by he attorney. It should not be hurried. The resulting specification must be fit to put before a court, in the US and possibly in China, Japan or Europe. If you don’t know how demanding the standard is when you get to litigation, then talk to people who have been through the experience.

    In any significant campaign, the cost of the initial application accounts for only a small portion of the total. But get things wrong, or leave critical detail out, and all is wasted.

    Commoditising patent drafting is only for inventions foreseeably of no real significance. And if that is the case, why bother with the patent system?

  7. Ternary November 22, 2016 6:02 pm

    Good article, but not a popular subject. Conceptually, there is no reason why an outside party cannot draft a patent application. It is done all the time. Most of the drafting is very formulistic. A well trained engineer with writing skills should be able to set up a basic specification that correctly recognizes and describes aspects of the invention. That would give you a decent basis document for at most $4k. (that is 40 hours for a $100/hr engineer). An expert “attorney” may have to spend up to 10 hours to draft claims and review the spec back on the claim aspects. That will get you a $6500 application, with USA resources.

    I am not saying that you do not need a highly qualified patent attorney. But you don’t need a high price attorney for all aspects of an application. Even an experienced attorney cannot protect you from nonsense like Alice. Just review the original Alice patent (5,970,479): well written, plenty of drawings, clearly disclosing an electronic process that cannot be performed by humans. And yet… !

    The cost of getting a patent is too high, certainly in view of lack of guarantee of success. We should try to dramatically lower the cost for getting a patent, which would also reflect the true value of most patents. Outsourcing, not necessarily off-shoring, would be helpful.

  8. Tourbillon November 22, 2016 10:46 pm

    You can have it fast. You can have it cheap. You can have it good.

    Pick any two of the three.

  9. Benny November 23, 2016 5:40 am

    Ternary @ 7,
    I suggest you recheck that figure of 100$/h for a competent engineer with writing skills. In the engineering world I inhabit, that number is fantasy.

  10. Ternary November 23, 2016 10:05 am

    Benny@9. Patent engineers generally do not make more than $120k, if even that. Good patent engineers are often better than average attorneys in drafting specs (but that is an entirely different discussion.) Billing for patent engineers at some firms is over $200/hour. So, in the “law firm” model as a client you will probably not get much cost benefit from patent engineers. However, many large companies use in-house engineer/attorney teams to draft patent applications. You can easily check on line who is using this model. I was told that this is in effect an old Motorola model (each patent attorney worked with 2 or 3 patent engineers).

    The issue in using engineers in outsourcing is not the cost of engineers but the preference for high billing rates in our industry.

  11. Anon2 November 23, 2016 11:14 am

    Benny @9

    There are always an ample number clients who are cheap and/or reckless enough and there’s always an ample supply of engineers incompetent and/or insecure/meek enough to generate a niche of sub-market quality and/or sub-market pricing.

    Thankfully in a free market, there will always be an ample number of clients who are aware of the value of patents, how much talent is required, and that there always comes a cost to hire the best talent or to the purchase the best product – and that is true for ANY industry.

    Ternary@9

    I am not aware that billable rates of engineers from engineering firms are anywhere as low as say the internal cost of a run of the mill engineer at a tech company. Those are two different markets and are not to be confused.

    As for the “preference for high billing rates”, that is not an “issue”. Unless you are ready to say the issue is that we in the U.S. enjoy living in a free society with a free market rather than having price controls as would occur under a dictatorship.

    Everyone, talented (to whatever degree) can and “should” charge as much as the demand for their particular level of talent and quality of product, the market will bear (to the extent their negotiating skills are capable of). Luckily there is room for a wide range of talent, individuals and teams. What cannot be escaped from is that you charge what you can get paid for and your clients pay for what they can get, and this can include “nothing” if both decide to walk away.

    Suppose you were the first engineer to become a lawyer and you wanted to create a firm full of lawyer engineers. If you first looked at law firm rates and then also looked at engineering firm rates, what do you think the rates for your new firm would be like? Not below both.

  12. angry dude November 23, 2016 11:22 am

    Ternary @10

    “Patent engineers generally do not make more than $120k”

    Where ? The number is totally dependent upon location

    In Silicon Valley I would put that number at 150-200K unless you want a crappy patent

    And somewhere in upstate NY or in PA they can make you run in circles 24/7 for 100K

  13. Anon November 23, 2016 11:58 am

    Anon2 – well stated. Thank you.

  14. Paul F. Morgan November 23, 2016 3:02 pm

    Outsourcing of corporate application preparation at lower costs has been increasingly common for more than a dozen years now, with many large companies no longer doing any prep or prosecution in-house. [The various corporate employee benefits costs, above and beyond salaries, are a major factor.]
    The Export Control legal obstacle to farming out application preparation to even Indian law firms has somehow been overcome. It is definitely being done.
    Yes, even PTO examiners have complained about lower quality patent applications from outsourcing as compared to former applications from attorneys who really know a particular companies technologies and prior art. I cannot help noting that is even being admitted by some of the same folks often complaining here about harder it is to get and enforce patents these days, but not drawing the correlation to, in part, low cost outsourcing.

  15. Paul F. Morgan November 23, 2016 4:12 pm

    One reason for a recent increase in prior art searching re patents is the Sup. Ct. Halo v. Pulse decision considerably increasing the risk of greatly enhanced infringement damages for ignoring infringement assertions by patent holders until they are sued.

  16. Ternary November 23, 2016 4:40 pm

    As Gene pointed out in the past, obtaining a patent in the US is becoming a sport of kings, pretty much like in Europe. Concern about price is not the same as promoting price control. The price is artificially high because of the patent system, not because of some inherent property of an invention or technology. The IP drafting/prosecution market is driven by byzantine rules that require very specific knowledge of the law and regulations, fees and certification, not of technology. And it is getting worse, not better.

    I would say that you should get a quality patent for a quality invention. A patent is (should be) a bureaucratic piece of paper that records the personal property of an invention. A patent application should not be more than a standard form that you fill out. (I know that is not going to happen). I believe that when given the chance, an Indian or Chinese or any other well trained patent engineer is able to submit a quality patent application. It is just a matter of time. Now that is a free market, which is of course not very popular nowadays.

    I know serious top notch inventors who concluded that the patent system is a complete self serving money generating scam and they blame the attorneys as well as the PTO and they have stopped pursuing patents. I won’t go that far, and I continue to file, because I trust that some sanity will return. But there are reasons for concern and price is one of them, as patents are rapidly getting out of reach for independent inventors.

  17. Independent Inventor November 23, 2016 5:32 pm

    The patent outsources should make a deal with the patent office:

    “We won’t file any more English-as-a-2nd-language apps in exchange for . . . no more English-as-a-2nd-language examinations.”

  18. Independent Inventor November 23, 2016 5:34 pm

    Sorry; should read “outsourcers.”

    And Happy Thanksgiving everyone.

  19. Anon November 23, 2016 6:16 pm

    Mr. Morgan,

    Do you have anything beyond anecdotes to back up:

    The Export Control legal obstacle to farming out application preparation to even Indian law firms has somehow been overcome. It is definitely being done.“…?

    I would be interested in any solid data on that, as I believe that the penalty – at any time – is the loss of ability to enforce the patent.

  20. Anon November 23, 2016 6:19 pm

    (Any time prior to receiving the “ok to export” signal from the USPTO which only can come after the application is filed)

    You are talking about a very real and very costly comeuppance if indeed “this is happening.”

  21. Paul F. Morgan November 23, 2016 7:38 pm

    Independent Inventor, that was really funny, but will not be fully appreciated.

  22. Looking for evidence November 24, 2016 6:50 am

    Has anyone got any metrics to suggest drafting from a top tier firm is better than drafting from a cheaper firm or even outsourced drafting? This industry needs to get a lot more evidence based – every attorney firm will tell you they are the best.
    Every time we were on the wrong end of any litigation the attorneys would always tell us that the asserted patents were of dubious quality / badly drafted but half the time that had no impact on our response

  23. American Cowboy November 24, 2016 9:53 am

    Ternary @16,
    Nice bit of fantasizing, my friend.
    But, you do not mention claim drafting, which is probably 80% of the important part of an application, since the claims define the invention.

  24. Paul F. Morgan November 24, 2016 10:09 am

    Yes indeed A.C. A patent with a worthlessly narrow picture claim, easily designed around by competitors, may even be able to obtained pro se or with the help of an examiner. A patent with only an invalidly over-broad claim and no fall-back intermediate scope claims, or adequate specification support for them, may also be more cheaply obtained.
    The large number of patent applications written with only “means function” claims still being written many years AFTER the Fed. Cir. made it very clear that those are narrow claims, and require specific specification support for each “means” to avoid ambiguity rejections, is another example, and an indication that not even all patent attorneys were paying enough attention to patent law changes.

  25. Paul F. Morgan November 24, 2016 11:07 am

    “Looking for evidence” those are very good questions.
    Especially for application prep and prosecution, which individual actually does the work is far more important than the general reputation of the firm. [A top rated law firm might even use inexperienced new associates for some prep and prosecution with very little partner supervision, or even farm it out, if you don’t supervise.]
    Rarely do clients make specific inquires as to the experience level and current patent case law knowledge of that individual. However, a good corporate patent department will at least have their work checked by an another, experienced, patent attorney.
    Getting an independent second opinion or review on patent matters can be just as valuable as for selecting surgery and a specific surgeon, but for some reason is rarely done.

  26. Ternary November 24, 2016 1:55 pm

    American Cowboy@23. Nice shooting from the hip, but somewhat inaccurately. I do say that you need an experienced attorney, just not for all aspects of the application. Claims are definitely one aspect. Another aspect is to check that the claim language is sufficiently supported in the spec. Yet another aspect relates to means-plus-function to check if sufficient embodiments are disclosed and more of those formulistic elements that any experienced patent professional will (or should) recognize immediately. Most experienced patent engineers are familiar with these aspects. It is really not that complicated to say “In accordance with an aspect of the invention…”

    Not that it always helps, as prosecuters may introduce novel language in an office action response that undermines the validity of a patent as some recently reviewed cases demonstrate.

    My experience in overcoming rejections is that it is easier if there are sufficient technical aspects (the engineering side of a spec) disclosed. The recent Cuozzo case includes a very valuable invention of which alternative embodiments were not sufficiently described. Those are patent engineering aspects that would possibly have saved the patent.

    In fact an inventor/engineer/attorney team works very well for many reasons, including price, quality as well as extra eyes and push-back opinions as mentioned by Paul above.

    Happy Thanksgiving

  27. LisaLisaDC November 24, 2016 2:12 pm

    Article is just a plug for IP & Science Thomson Reuters. Yuk! Hope that they paid IPWatchdog some ad revenue.

  28. Gene Quinn November 24, 2016 3:11 pm

    LisaLisaDC-

    No payment received for this article. It raised an interesting issue about outsourcing, which we have been discussing in the comments. The fact that it was written by someone from Thomson Reuters who is familiar with Outsourcing just means the article was written by someone who can comment with first hand knowledge about what is happening in the industry. The article also provides interesting factual information based on survey results, which at the very least tells us about perceptions in the industry. As one who did survey based research when I was obtaining my LL.M. in Intellectual Property so many years ago I always find this type of information interesting. Knowing what others in our industry think and do seems useful to me.

    Cheers.

    -Gene

  29. Anon November 24, 2016 4:46 pm

    Good points, Mr. Morgan.

  30. Paul F. Morgan November 25, 2016 10:24 am

    Thanks Anon,
    Another concern on this topic is avoiding inequitable conduct rendering a patent unenforcable. Not everyone writing and prosecuting patent applications has the same training and sensitivity as to prior art disclosure duties and candor, and the danger of erroneous representations to the PTO, as a good patent attorney should. That can include specification representations of the state of the art as of the filing date. This point was brought home to me a number of years ago by a surprising statement by a CPC of a major auto company that they had settled the majority of their patent suits brought by individual inventors at low cost after uncovering and asserting an IC defense.

  31. Anon November 25, 2016 12:24 pm

    That can include specification representations of the state of the art as of the filing date

    An interesting comment – since applicants are not required to be experts on the state of the art itself. This is an area rife with patent profanity (and comes with its concomitant “thinning out” of applications.

  32. Paul F. Morgan November 25, 2016 2:02 pm

    Yes, it is an example of unnecessary affirmative representations that are NOT a good idea to make in a patent application specification, especially “the invention comprises…” or a “Summary of the Invention.” [But, you may well need some kind of exemplary “problem-solution” statement for effective EPO or other foreign-equivalents filing.]
    [I do not know if most “patent engineers” writing specifications know this, or not?]

  33. Ternary November 25, 2016 9:44 pm

    Paul, so good of you to bring up the EPO, where most of the examiners and the attorneys before them basically are patent engineers, trained in patent prosecution procedures.

    This is evidenced by the “software” patents in the EPO (which formally of course do not exist), which are really very technical descriptions of improvement of using processors. While many US patent attorneys are still stuck in functional claiming of software, the processor (or technical) approach in the EPO is an example how an engineering approach does work.

    Unfortunately, the EPO has brought patent prosecution to an entire new level of complexity and cost and the term ‘independent inventor’ is hardly ever used in Europe and is a uniquely US phenomenon that we should protect.

    I absolutely do not promote developing a patent application without input of an experienced patent attorney. Experienced means preferably also being involved in IP litigation and not only prosecution. But I do recommend finding an attorney who works closely with a (lower billing rate) experienced patent engineer and lets clients share in the overall lower cost. Inventors: search for it and ask for it.

  34. Anon November 26, 2016 10:13 am

    There appears to be a hidden assumption that should be brought into the light: That assumption is that applications for patent should be the same no matter what sovereign (and the laws of that sovereign) are approached.

    This assumption should be denounced.

    Yes, it is easier to be able to use just a single application. But that path of ease is the slippery slope that large TRANS-nationals often use to subvert (or seek to subvert) the differences in laws that exist between the sovereigns – with a direct (and perhaps even calculated) result in degrading the gold standard of what the US sovereign had built for strong patent protection.

    We very much should strive to protect our strong patent system – no matter how or where the call to “commonize” may come from. If there is to be commonization, let the rest of the world change to our (sadly, previous) standards.

    Indeed, this would be one way to “make America great again” (if I may borrow and de-politicize that term).