How To Be a Smart Buyer of Patent Services – A Guide for SMEs

As you work as a patent attorney you meet many small to medium enterprises (SMEs – businesses with under 250 employees – also known as “small entities” in the US). Everyone has a different level of knowledge, and some companies are unaware of how they can get a better deal. To remedy this, here is my guide to commissioning patent work.

Light on an important subject
The advice is roughly split into the following areas:

  • Use competition to your advantage;
  • Prepare to better use your time;
  • Meet the people doing the work;
  • Look for a commercial and technical fit;
  • Agree on costs and timings in advance; and
  • Agree on workflow in advance.

Use competition to your advantage 

Patent firms (at least in the UK) will offer a free 30-minute consultation to potential new clients. Patent firms do this to get new business. It is often recommended to meet at least three firms to compare costs, people and approach. This means you can get up to 1.5 hours of free legal advice.

You can create a shortlist by looking for local patent firms. For SMEs, local firms (i.e. outside of London) are often a better fit on price and people, and organising company visits is easier. Many university cities have patent law firms, so a good play to start is to pick your nearest and search the Internet for “patent firm [nearest city]”. Have a look at the firms’ websites. You can normally get a feel for the size of a firm and their area(s) of expertise from their website.

If you are in a main patent hub (e.g. London or Munich), look for firms involved in activities that over lap with yours, e.g. firms that have talked at a nearby incubator or known industry group.

Firms are often split into four or so subject areas: pharma & biotech; chemistry; mechanical / heavy engineering; and IT & electronics. Many firms are better in one of these areas and weaker in others. Look for numbers of attorneys, their backgrounds and mentions of key clients to work out strengths and weaknesses. Try to shortlist firms with a strong practice group in your area of business.

Arrange meetings with your shortlist of firms by email or phone.

Prepare to better use your time

Ahead of your initial meetings, there is some preliminary work you can do to maximise your free legal advice and test your prospective firms. This often needs to be an hour or so of preparation: one page of A4 is about right.

First, attempt to write down why you need patent services. Do this in plain English. For example:

  • I need to stop my competitors doing X.
  • I have a new product that in launching in two months. We have spent Y on R&D.
  • We need investment. We have seed/series A/series B funding. We are looking at acquisition in as an exit in two to three years.
  • We have a few patents. We wish to monetise our portfolio.

Information that is useful to a patent attorney includes:

  • Your key markets (current and future);
  • Where you manufacture;
  • Your competitors (and their key markets / places of manufacture);
  • Your launch schedule; and
  • Your general business direction over the next 5-10 years (at a brief, high level).

If you have this information in pre-existing material (e.g. an investor or shareholder pack), you can provide this ahead of your meeting. It is worth keeping this high level and keeping as much as possible to publicly known details.

If you have a new product or idea, it may also be worth doing an hour or so of Internet searching and selecting the three most relevant finds. These may be supplied ahead of your meeting (e.g. send three URLs with brief notes – “This blog post describes something similar to the first step”).

If you can send this information, in confidence, ahead of your meeting then it is likely your prospective patent firms will do at least an additional 30 minutes of preparation before your meeting, and you will get better advice to compare. It also frees up time in the meeting to discuss strategy rather than go over these points. If you prefer not to send confidential details ahead of time, take your page of A4 as a meeting prompt.

Meet the people doing the work

A traditional way of law firms acquiring new clients is as follows:

  1. Prospective client meets charismatic partner at an event / on the golf course;
  2. A meeting is arranged with law firm via charismatic partner, who attends;
  3. The work starts and charismatic partner vaporises – a series of unknown associates impersonally deal with the work.

There is nothing necessarily malicious in this, some partners are better at sales, associates often do a bulk of the work due to the “leverage” model of law firms. It can, however, leave a bad taste if unexpected.

One way to avoid this is to ask to meet all those who will be potentially working with the company. Most patent firms should be happy to oblige. Be a little wary of those that refuse.

Look for a commercial and technical fit

A perfect technical match may be difficult to find. If there is a perfect match, there is often a conflict, e.g. the firm may work for one of your competitors. If you need to discuss sensitive commercial details in your initial meeting, you may wish to ask the patent firms you are meeting to perform a conflict check and confirm there is no conflict *before* you meet (or before you send them non-public information).

Sometimes you may get lucky and a technical fit may exist due to a recent client change (e.g. a past client was acquired and the work was moved to the patent firm of the parent company). This is probably the exception rather than the rule.

For a general technical fit look for:

  • Patent attorneys with a technical degree in your area of technology;
  • Current or recent experience in a neighbouring non-competing field;
  • Familiarity with at least general core concepts of your technology (if not your particular niche); and
  • Rapid understanding.

For a commercial fit look for:

  • Experience of similar size companies (e.g. revenue-wise) ;
  • Experience with your business model (e.g. software licensing vs. chemical manufacturing); and
  • General knowledge of your industry and market (e.g. at a Bloomberg, Economist or FT level).

Look for those that listen.

Agree on costs and timings in advance 

When you are obtaining cost estimates ask for prospective costs over the next year. Also ask to identify one or two key billing points over the year for costs to be charged.

An often heard criticism from companies is the stream of small bills from patent firms after a particular piece of work has been done. This is often due to the nature of the hourly billing module – small bits of work are often needed after an event of when miscellaneous communications arrive. Firms also wish to avoid having unpaid work sitting on their systems. One way to avoid this is to either include small future predictable costs in initial charges (firms often avoid doing this as it raises their estimates in comparison with other firms) or to have agreed billing points. For example, filing an application and filing a response are two normal billing points – you can ask that all others charges are also billed at these points with the substantive work.

Companies should also ask for caps or fixed prices for the work. Most patent firms should oblige if these are reasonable. This makes costs more predictable for the company, avoids surprise charges and often gets them a better deal.

Agree on workflow in advance

Patent attorneys charge for their time. Companies thus have a trade-off when commissioning patent work: they can save their time (e.g. engineer or C-level time) at the expense of higher patent attorney charges; or they can agree to do more on their end to save patent attorney costs.

For example, one substantial part of responding to examination reports is reviewing the cited prior art (typically 2-4 20-50 page patent publications). If a company wish to save on patenting costs, they can perform this work in-house (e.g. make it part of an engineer role). If a company provides guidance on differences and advantages (even if these are not put in legal terms), they can negotiate lower charges for responding to an examination report. If, on the other hand, engineer time is at a premium, they may ask that the patent attorney provides options or a proposal for their review (this should be provided at an executive summary level).

Similarly, to avoid drift, loss of momentum or extra charges, a timescale for work on both ends should be agreed at a high level. For example, it may be agreed that a draft will take 4 weeks to prepare and that engineers will review within 1 or 2 weeks of receipt. Similarly, it may be agreed that all official communications and filings are to be reported with 5 working days, or that engineers need 4 weeks to review cited prior art.

It is also a good idea to agree who is going to be the main point of communication on both sides, and whether any additional stakeholders need to be cc-ed by default (e.g. engineering managers, directors, secretaries, etc.).

This should not take too long to work out (e.g. a 30 min phonecall or a quick email exchange) but it pays dividends later on in the relationship (and avoids “surprise” charges cropping up).

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