With the cost of capital increasing and a recession looming, a review of patent prosecution expenditures is inevitable and wise for many organizations. While organizations may be tempted to simply cut costs, it is important to keep the future protection of your intellectual property in mind and to recognize opportunities for maximizing returns on past patent prosecution investment. Here are a few strategies to consider.
- Prioritize existing technologies. When economic times are tough, organizations can prioritize their patent prosecution investment by focusing on protecting their most valuable and important innovations, rather than trying to protect every development. This may include shifting the budget toward continuation applications to broaden the scope of protection for important technology or to focus the scope on coverage that is important to the organization and/or its future. It is worth noting that even if a patent was issued from an application in a family of patent applications, so long as at least one application is pending in that family, a continuation application can be filed. Prioritization can also mean shifting funds away from filings outside of the core technology toward new applications for new improvements to the core technology.
- Consider licensing and partnering. Licensing and partnering opportunities can generate additional revenue from existing patents, as opposed to relying solely on sales of the patented products or services. With capital relatively tighter for everyone, companies may be more open to taking licenses instead of fighting expensive court battles.
- Take strategic cost-cutting measures. Cost-cutting can be done in an infinite number of ways. As a patent attorney, I acknowledge my own interest here and wouldn’t recommend firing all of us. So, as a happy comprise, I offer some strategies to consider that will enhance financial efficiency in the short to medium timeframe. One option is to switch away from paying hourly for every new application that describes the invention in full detail from scratch. This drafting strategy can provide lots of options down the road as far as claim scope, but it is often more expensive. An alternative is to have a base description drafted for a specific technology or product, and then pay a flat fee for each application disclosing an invention arising out of that technology using the base description. This strategy provides predictable costs in unpredictable times. There are tradeoffs of course, such as potentially increased prosecution costs down the road in the event of a thorough rejection of an application having a limited disclosure. However, applications are usually examined 1.5 to 2.5 years after filing, so such costs are delayed until financial conditions (hopefully) improve.
- Postpone filing through provisional applications. Non-provisional patent applications may be postponed until the economy improves and there are more resources to devote to the process by filing provisional applications. One strategy is to file provisional applications and then wait to file non-provisional applications down the road (but before the 12-month expiration date). Provisional applications are not examined by the USPTO and therefore do not need to comply with all the formal requirements, so they require less attorney time and are therefore cheaper. However, provisional applications should always describe the inventions as completely as possible. Cash-strapped start-ups often use this strategy: they file provisional applications to receive a filing date, and then pitch the technology to secure financing and/or partnerships prior to filing the non-provisional application within the 12-month timeline.
- Focus on domestic market. This strategy is similar to strategies 1. and 3. above. Organizations may focus on protecting their innovations in their domestic market, where they have more established returns on investment. Foreign filing costs (such as prosecution costs, filing fees, maintenance fees, foreign and domestic attorneys’ fees, etc.) are sometimes higher than domestic filing costs and therefore may result in a lower return on investment compared to domestic activities.
Although the state of the economy might motivate significantly lower patent expenditures, there are many strategies for organizations to utilize to optimize their investment and to ensure their intellectual property is still protected. Further, research has shown that organizations that innovate in downturns tend to grow, whereas those that don’t risk stagnation or decline.