An imaginative program to control patent prosecution costs by going to fixed fee arrangements with all of its U.S. law firms has enabled the BYU Technology Transfer Office to increase its number of patent applications by several hundred percent while holding the line on total yearly patent prosecution expenses. Buoyed by that success, the TTO has recently moved to do the same thing for foreign affiliate charges, a process that Dee Anderson, associate director, says required a significant amount of creativity.

Because the university does not have as many foreign filings as U.S. filings, the TTO lacked the leverage by itself “to encourage our foreign affiliates to strike fixed cost deals for patent costs from end to end in foreign countries,” Anderson explains. To gain that leverage, BYU formed a consortium of law firms and universities to join forces and gain bargaining clout. Now the TTO is able to insist that its U.S. law firms use only selected foreign affiliates who have agreed to the same kind of fixed-fee arrangements used for U.S. patents — and the savings are significant BYU was able to negotiate fixed fees ranging anywhere from $2,000 to $8,000 for filing patent applications in the U.S. “The lower fees are for very small or one-person firms, while the larger ones are on the higher end of the scale,” says Anderson. For the most part the firms in question were open to discussion, he notes. “We have had a couple of firms that refused; we cancelled our business with them and moved on to other firms. Anderson adds that the fixed fee arrangement is mutually beneficial. “We’re able to file more patents than we would have otherwise. And because we have visibility on costs it makes our decisions easier, so we end up patenting much more, and taking a little more risk,” he explains. Because of the increased volume, he notes, the law firms are actually making more in total fees than they were in previous years.

Anderson says that BYU has also negotiated fixed-fee arrangements for handling office actions, which can include responding to written objections; telephone interviews, where several hours are spent discussing claims and objections with a patent examiner; or trips to Washington, DC, where in-person interviews are conducted. All in all, he says, “it used to cost from $20,000 to $70,000 to prosecute a patent in the U.S., whereas now it’s really hard to go above the  $20,000 total.” That has allowed BYU to expand its patent applications from about 20 a year to 80 a year for the past few years. “Despite that fact, our total overall budget has only gone up about 25%,” Anderson notes.

Early this year, the TTO turned its attention to costs associated with foreign affiliates and discovered that those expenses were through the roof. “In fact, they were higher than for the U.S. law firm that was really doing all the heavy lifting.” Following an approach similar to what he had adopted with the U.S. firms, Anderson identified some of the best firms in each country and negotiated fixed fees with them. “We were able to cut costs between 50% and 70% over what we had previously paid,” he reports. The fixed price arrangements have been struck with foreign law firms in 40 countries. And BYU’s U.S. law firms must now use only those foreign affiliates.

However, Anderson concedes, BYU would not have had enough clout by itself to convince the foreign affiliates to agree to these fixed fee arrangements. “I realized that in order to get enough numbers in a given country, I needed to consolidate my business with a number of other universities and law firms,” he says. The vehicle he created to do that, the Utah Law Consortium of universities and Utah law firms, now consolidates most of the group’s business at one law firm in each country. “The group is able to file between 20 and 30 new applications in each country per year, and the group then gets the best pricing and fixed rates for start to finish for an application — no matter how difficult or easy the prosecution may be,” Anderson explains. A detailed article on the BYU strategy appears in the January issue of Technology Transfer Tactics. To subscribe and access the full article, along with more than four years of archived best practices and case studies, CLICK HERE.

Posted January 18th, 2012 under Tech Transfer

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