The article below appeared in the May 2009 issue of Technology Transfer Tactics. Click here to subscribe.

Outsourcing the foreign filings may offer advantages both in terms of cost and speed.

One firm focused squarely on this task is New York-based Inovia. Founded by patent attorneys, the company helps university TTOs with two parts of the patent process: national stage entry at the end of the Patent Cooperation Treaty process and European validation at the end of the European patenting process. With both services, Inovia helps clients convert a single application or patent into multiple applications or patents in foreign countries.

The firm is a smart option for recession-pressed TTOs, maintains founder and executive director Justin Simpson, because those two steps are often the most expensive parts of the patent process, during which TTOs or their licensees can incur huge attorney fees and translation costs. Particularly challenging, he notes, is the fact that all the costs are due at once, with deadlines that generally cannot be extended. “If you don’t [meet those deadlines], you’ll never again be able to obtain patent protection in those countries,” Simpson says. “With hard deadlines and high fees to pay, it’s often a hard decision for universities to make.”

Inovia says it can help make the decision easier by lowering the cost of foreign patent filing for its clients by an estimated 20% to 40%. The company has spent a number of years and millions of dollars, Simpson reports, to build patented automation systems for just the two parts of the process it specializes in. “Our systems do a lot of the work that is normally done by both the local patent paralegal and the foreign patent paralegal,” he says. “For example, when instructing Inovia to file in 10 countries, a patent paralegal may take 15 minutes to complete the process, compared with the two to three hours it may take to instruct associates directly.” The automated Inovia systems pre-prepare all the forms that must be signed for all of the countries, so the TTO receives them in one e-mailed bundle.

The firm can also simplify the invoicing side of the process, Simpson adds. It’s fairly typical for foreign associates to invoice local attorneys, who then pass on the bills to the university in summary form — and those bills can be a nightmare to sort through, reconcile, and allocate. His company, by comparison, is “very transparent about costs,” he says, “providing instant up-front cost estimates so universities know in advance exactly how much they will pay.” The firm also provides detailed invoices overnight for every country, he says, breaking down the translation, government, and service fees, so clients know exactly what they’re paying.

Some of the savings Inovia clients see come from its buying power, Simpson continues. “Compared to any law firm in the world,” he says, “Inovia handles the most PCT national stage entries. We use that buying power to negotiate lower filing fees and guarantee that our agents will not bump up the prosecution costs down the track. The savings are real and permanent.” Those savings can then either be retained by the TTO, or used to increase the number of countries filed in, or the number of technologies applied internationally.

“Licensees are often keen to see many countries covered, but aren’t too keen on the high filing costs,” Simpson observes. “Our university clients find that they do their licensees a favor by stretching their IP budget further, but also benefit themselves by receiving licensing revenues from countries they otherwise could not afford.”

How it works

Here’s how the process works:

• After obtaining a cost estimate from the Inovia website, a university TTO instructs the company online via its order wizard.
• Once the company obtains all the specification details online, it calculates all the attorney, translation and government fees and provides detailed invoices by e-mail. Attached to that e-mail are any required power of attorney forms for all the countries involved.
• The university TTO gets those forms signed and pays Inovia’s invoices.
• Inovia then instructs all of the foreign agents, providing them with all the documents needed for the various countries.
• Once the cases have been filed, Inovia’s foreign attorneys e-mail the university directly, reporting that the filing has taken place.
• After the filing, the university corresponds directly with the foreign agents for the foreign prosecution. Alternatively, universities can have the foreign agents correspond with their outside counsel.

Simpson emphasizes that Inovia’s invoices include “everything to do with foreign filing,” so the TTO can set its budget and be confident it won’t go over. Be aware, though, that Inovia’s services don’t include subsequent prosecution charges. Those costs “are very difficult to predict in advance,” Simpson points out, “and are billed directly by our foreign agents.”

He stresses that Inovia is an IP administration company and not a patent firm, so it does not offer substantive legal advice. Its associates won’t tell you which countries you should file in, as that’s largely a business decision. And although it can estimate how much your claims will cost in government fees and can file amended claims on your behalf, it can’t draft revised claims for you.

Client comments

David J. Glass, PhD, senior associate director of technology transfer at McLean Hospital in Belmont, MA, used Inovia’s services a year or so ago. “For the most part, we got what was advertised, which was a substantial cost savings,” he says. “And the Inovia people were honest and helpful, and the transactions all went well.” The cost savings, he notes, were on the order of 50%. “It would have cost about $50,000 to go through our U.S. attorney, but it only cost us $25,000 to $30,000 using Inovia.”

One issue he hadn’t anticipated was how much of his own time was required to coordinate the filing process. Inovia’s web-based procedure for getting information to its foreign associates was very efficient, he says. But he, as the in-house tech transfer representative, became their primary contact — not the university’s lawyers as would usually be the case in a foreign filing. “We filed in six to eight countries, and within days my in-box was full of e-mails reporting routine matters I wouldn’t ordinarily be involved in,” Glass reports. Fixing the problem wasn’t too challenging, “but it took a little bit of doing to get the messages rerouted to our U.S. attorney. There was a little legwork on our side to get the powers of attorney signed and all of that,” he says.

Even if outsourcing is not the route you choose, Simpson advises TTOs to take a careful look at their foreign filing process, which may be an excellent target for gaining efficiencies and cutting costs. “In the life of a patent, you will never spend more money in one hit than you do at the PCT national stage or at European validation,” Simpson says. “It pays to take a closer look at whether your current approach is the best approach for your university and your licensees.” Indeed, experts — including Simpson — tell TTT there are several ways university TTOs can cut foreign filing costs.

Simpson urges consolidating providers, for one thing, and selecting only one or two local attorneys — rather than six or more — to handle your patent work. That can give you greater buying power to negotiate more favorable rates. Asking those attorneys to use the same foreign attorneys, with whom favorable rates have been negotiated, also helps. Keep in mind, though, that asking more than one attorney to work with the same foreign lawyer may be a challenge in its own right. And trying to convince them to work with an outsourced single source of foreign patent filings might be, too.

More than a commodity

Michael T. Marrah, associate general counsel and co-director of the Office of Technology Management at Washington University in St. Louis, reminds TTOs to make sure outsourcing is strategic and cost-effective if, like his institution, they work routinely with as many as two dozen law firms on patent prosecution. “Can you get all of them to use one outsourcing company for that one slice of patent prosecution workflow?” he asks. “It’s no small feat.” In general, he suggests banishing any thought of foreign filing as “a commodity you can outsource and have off your desk.”

For some TTOs, a better solution may be bringing more of the foreign filing function in-house. “When you look at companies and universities with larger portfolios, a pattern emerges,” Simpson points out. “As portfolios increase in size, more and more of the IP functions are moved in-house. Given sufficient volume, it makes more financial sense to pay an in-house paralegal’s or patent attorney’s salary than to pay the hourly rate charged by a patent firm for those services,” particularly for more routine activities. For example, while TTOs “may never have sufficient in-house drafting skills,” he comments, “they may have the ability to instruct foreign filing or prosecution, or even pay annuities themselves.”

And don’t let your outside counsel scare you into inaction, he adds. “TTOs are often reluctant to take processes in-house because they are concerned about how their outside attorneys will react. But because it’s the university or licensee who is paying the bill, surely the university is the boss and should be able to make the call as to the best way to spend its IP funds.”

Glass also recommends being judicious, especially with today’s lean budgets, in deciding on the number of claims in your application. In the biotechnology and life sciences space, he notes, “the tendency is to write patent applications to protect everything under the sun. For national phase filings, focusing on those claims that are the most important can substantially keep costs down.”

In addition, he says, be very clear with your attorneys exactly what services you expect to pay for. “In things like this, the law firms hit us for a lot of associated charges, such as processing certain kinds of documents” he says. “If you’re in a situation where you need to get a handle on costs, you can sit down with the partner in charge of your portfolio and renegotiate your billing structure to make it clear what extras you’ll be charged for.”

Another cost saving measure, recommended by Arlington, VA-based patent attorney Richard C. Litman, is to defer examination until it is absolutely necessary. “That’s a good strategy if the university is paying the costs while trying to find a licensee,” he suggests, “or to ensure that licensing revenues in the early years of a license agreement are not reduced by significant legal costs.”

Contact Glass at 617-855-3825 or dglass@mclean.harvard.edu; Litman at 703-486-1000 or litman@4patent.com; Marrah at 314-362-3783 or sandra_compton@wustl.edu; and Simpson at 212-217-9345 or mail@inoviaip.com.