By Amy Allen Hinson, partner, Parker Poe
For small to midsize manufacturers and other innovative companies in the Upstate, including patents in their overall business strategy is critically important to long-term success. The reality is that in today’s tech-driven marketplace if an organization is not protecting its technology, it is putting itself at risk.
But simply having a patent — or even a war chest of them — does not necessarily add value to your bottom line. Instead, the price of maintaining such a war chest can quickly detract from it. For that reason, the attempts by some businesses to commoditize patent work are short-sighted.
We understand the initial draw: Protecting your intellectual property can be expensive, and treating patents like a commodity appears to be a way to control costs. This commoditization generally happens through fixed fees, where the company pays a set price to a law firm for a set task, such as a completed utility application to the U.S. Patent and Trademark Office.
Be wary, however — you will get what you pay for. For example, let’s say you want to patent an inventive coating composition, so you enlist patent counsel to draft and file a utility patent application. With fixed fees, there is no motivation on the attorney’s end to fight hard and get the broadest, best, and most effective protection for a client. Instead, that attorney is incentivized to spend as little time on the application as possible, get it filed, and take his or her fee. Further, that attorney is incentivized to create as much down-flow work from that application filing as possible, which results in additional fixed fees paid by you and delays in obtaining important patent protection. No business would want to incentivize that kind of work by their own employees, so why would you do it for your outside patent counsel?
In addition, fixed fees for patent work cause companies to apply a one-size-fits-all approach to their intellectual property. Yet all inventions are not the same, and neither is the value of all patents. Businesses should decide which inventions or technology are most important to protect and strategize with their patent counsel to prioritize filings and allocate spending accordingly. After all, you hired patent counsel — not patent scribes — for a reason.
Prioritizing filings and spending is the type of strategic thinking that comes from a true partnership between innovative companies and their outside patent counsel. In tandem, they can effectively focus on the quality of a patent portfolio rather than its quantity. This means going beyond a narrow patent for a product today and instead thinking through how to future-proof it, ensuring that it will still be valuable — and enforceable — when competitors adapt and technology changes. This type of analysis may cost more on the front end, but it pays off down the road.
Maintenance costs are one reason why. The U.S. Patent and Trademark Office charges fees to patent owners approximately every four years, and those fees grow progressively larger. Most foreign patent offices have even higher fees, which are typically charged annually. Thus, the more patents you have, the more you pay. By partnering with outside patent counsel to assess how to write the broadest and most effective single patent, you can save significantly in the long run compared to using a fixed-fee arrangement that incentivizes as many patents as possible.
A strategic approach also pays off when it becomes necessary to enforce intellectual property rights. Quality patent counsel should always, on the front end, include a discussion concerning the defensive use of a patent. That will result in a better-written application because it factors in possible enforcement situations and potential design-around tactics by competitors, and it prepares you to take immediate action when a competitor infringes on your rights.
In sum, the commoditization of patent work incentivizes attorneys to do the bare minimum rather than to strategically partner with clients on protecting what really matters. Yes, using fixed fees may save manufacturers and other Upstate businesses money in the short-term. For some extremely large companies that care primarily about patent numbers, that approach may make sense. But in the long-term, paying for patent strategy and planning is an investment that will deliver more value to the corporate bottom line.
Amy Allen Hinson is a registered U.S. patent attorney in Parker Poe’s Greenville office. She serves as a strategic business partner to clients in a variety of industries. You can reach her at firstname.lastname@example.org.