(Editor’s note: Cecily O’Regan is a registered patent attorney and member of the Intellectual Property & Technology Group at Greenberg Traurig LLP. She submitted this story to VentureBeat.)
Building an IP portfolio can be expensive. And pursuing international rights can be a daunting expense for a young organization – – especially if it’s self-funded.
But there are ways to keep overall costs down during a company’s early stages – and this frugality (and a well thought out IP strategy) is something that will impress VCs when you decide to seek funding.
Below, you’ll find some of the best methods for stretching your dollars as you put together your IP portfolio.
Work with an Attorney/Agent familiar with your business space - Not all attorneys are created equal. Just like you wouldn’t hire a podiatrist to perform brain surgery, you should try to pick an attorney or agent who is familiar with your technical and business landscape.
He or she will be able to leverage off of their existing knowledge and experience – making them more efficient and probably less costly, regardless of hourly rate. They’ll also have some understanding of the competitive product landscape, making them more creative at claim drafting and better able to identify projects that may not be worth the expense of a patent.
Focus your patent portfolio on aspects that provide a commercial advantage - Not all inventions are created equal – and a patent application is not necessarily warranted for everything you create. For example, a way to charge a capacitor faster may be one of the outcomes of product development. It may even be an elegant and interesting approach worthy of admiration from other engineers – satisfying the “ghee whiz” factor. However, if it doesn’t contribute to a commercially relevant feature, it may not be worth the expense of filing a patent application.
Use provisional patent applications wisely - At the earliest stages of a project, you can secure preliminary coverage for inventive concepts with a provisional patent application filed in the U.S. Filing this can extend the time for preparing and filing a full utility application for one year – at which point both U.S. and foreign coverage will need to be pursued.
Having one or more provisionals on file will also facilitate being able to talk to VCs and angel investors about funding – without the risk of running afoul of the absolute novelty requirement imposed in many foreign countries.
Ideally you should prepare the provisional application fully with a complete set of claims. However, the requirements of a provisional application are much less formal and sometimes it isn’t feasible to do this.
Keep costs down when the one-year provisional conversion deadline hits - If your application needs to be filed internationally (and if the improvement is an incremental one, it may not), you can delay those expenses for up to 18 months by filing a Patent Cooperation Treaty (PCT) application, an international agreement for filing patent applications in up to 117 countries.
This can also buy you some time (and potentially delay $500-$1000 in fees, depending on the number of claims) for a full filing with the U.S. patent office. The U.S. application can be filed from the PCT application anytime (i.e., when money becomes available) up until the thirty-month deadline.
Although many countries are members of the PCT, there are some notable exceptions, such as Taiwan. Know where you plan to pursue coverage.
Using Australia or Korea as the search authority for your PCT can also save you money. Using Korea currently costs $729 and Australia is only $1,278. The U.S. charges $2,080 – and getting it done in Europe runs $2,378. All searches, regardless of origin, scan U.S., European and PCT patents and the results are always provided in English.
(An additional benefit of using Korea or Australia is that it is more likely that the search results will be received by the 18-month deadline, giving an early indication of potential hurdles.)
Develop your international strategy thoughtfully - Any foreign filing should primarily focus on countries where there is a significant market and/or manufacturing capability. It’s also worth your time to identify countries where a potential acquirer pursues patent protection. So, if there are two or three large companies that could be a potential acquirer, find out where they file their patent applications and consider those countries first as you line up foreign coverage.
Some countries, like Brazil and China, offer utility model protection in addition to traditional utility protection. Utility model applications cost 30-50 percent less than a traditional utility application and are primarily used for mechanical inventions. They have a shorter term of protection and go through a less stringent examination process. They’re not only an inexpensive entre into IP coverage in an emerging market, they also can provide access to lower courts in a country for enforcement which can keep litigation costs down.
Consider filing for design patent protection - Design patents provide coverage for visual features, including the shape, configuration and pattern of an article of manufacture. Coverage for the design is less robust than a utility patent, but is an important component to an IP strategy for products.
Keep attorney’s fees and costs under control - Request reporting communications by email: In an increasingly electronic world, email is both expedient and convenient. It also reduces the amount of photocopying charges and eliminates the cost of postage or courier charges. Over time, the reduction adds up. As an added benefit, it’s easier for small companies that lack administrative staff to manage the mountain of papers associated with patent filings – not to mention deadlines. Just be sure to take extra care when addressing the emails, so an attorney-client communication is not inadvertently sent to the wrong email address.
Also, consider paying annuities (taxes) and maintenance fees directly: Instead of having your attorney handle the yearly taxes that are due for foreign patents/applications and maintenance fees (on issued U.S. patents), open an account with one of the commercial annuity services.
It’s a little less convenient, but it eliminate a handling fee that typically ranges from $200-$500 per case). The annuity service will send a quarterly report to you – and you forward instructions along with any payment. If you’ve got just 10 cases, the annuity service could save you up to $5,000 per year. And as your portfolio grows, so does the potential savings.
Finally, communicate, communicate, communicate!: Talk openly and regularly with your counsel about budgeting needs and funding status. Request estimates for projects and insist that you be advised in advance if a project will exceed the estimate. Ask what you can do to reduce the cost. Consider taking on additional tasks, like preparing detailed figures, yourself.