Interview: Fixed price patent prosecution

Better budget predictability for everyone

“Fixed fees allow for much better budget predictability and are much easier to manage than hourly rates”, Yannick Biron explains about ipan/Delegate’s newest service offering dubbed ‘Fixed price patent prosecution’. Yannick is a European and French patent attorney, currently in charge of service design for filing & prosecution within the ipan/Delegate – CPA Global group.

“Everything we develop today has been thought out with a practicing patent attorney mindset”

Before joining the group, Yannick led the Safran Group patent operations for five years and before that, he was the patent portfolio manager at Airbus. “In both roles, I dealt with many of the challenges in-house IP organizations face, such as defining the make or buy policy, choosing, maintaining and developing IP management systems, organizing administrative functions, defining and supervising both local and foreign attorney networks, or managing budget and resources.

Yannick.Biron

Yannick Biron

European & French Patent Attorney

Vice President of Service Design

 

Everything we develop today has been thought out with a practicing patent attorney mindset”, Yannick shares. “Based on experience, together with my other patent attorney colleagues, with more private practice backgrounds, we design services that serve both communities of IP professionals: IP firms and corporate IP departments.”

 

The fixed price patent prosecution service of ipan/Delegate is a new and unique approach to foreign filing and prosecution, built out of a concept mostly available only to large corporations… until now. Adapting the model to make it available to every IP professional worldwide was not an easy task, and innovative solutions will always raise some eyebrows. As the lead person for the new foreign filing and prosecution service, Yannick is best placed to answer the most pressing questions about the offer.

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What is the fixed price patent prosecution service exactly?

 

From an in-house patent attorney standpoint, alternative fee arrangements help manage budgets. In both large IP organizations I worked for, managing the IP budget was always a top priority. Fixed fees allow anticipating costs much better than hourly rates. This is not a new idea, but still worth remembering. Our main objective, as a service provider, is to democratize fixed fees, for both administrative and patent attorney work products, by giving everyone on the market access to sound alternative fee arrangements. With the deployment of the service, every IP owner can benefit from better budget predictability. The solution is no longer exclusively reserved for large IP owners. We allow any IP right holder, either directly, for organizations with in-house IP professionals, or via their IP firms, for smaller players, to take advantage of the model. 

"Our main objective is to democratize fixed fees by giving every IP professional on the market access to sound alternative fee arrangements"

We talk a lot to IP firms to convey the message, allowing them, through the service, to better support their own end-clients. As the foreign prosecution budget may represent up to 70 percent of a large organization’s IP budget, working on optimizing foreign prosecution budget must be one of the top priorities of any IP manager or IP firm.

When you think about it, any IP right holder should select its preferred local partners with foreign prosecution in mind. From an IP firm perspective, the offer allows us to better serve clients of the firm, with a proven, on-the-shelf solution for foreign patent work, already exploited by larger players for many years.

 

If I take the example of a startup requesting cost estimates from its IP firm, for obtaining IP rights abroad, IP firms can now provide accurate estimates in a matter of minutes. Responding to increasingly frequent – and recurrent – IP owners’ Request for Proposals or “RFPs” has never been so simple.

Besides budget predictability, how else could the fixed fee model help IP owners and IP firms?

 

Fixed fees allow our clients or our clients’ end-clients to make much more informed decisions. They can immediately evaluate the consequences of filing abroad, and decide whether or not to maintain or drop pending cases. IP firms, similarly to IP owners, now have the capability to easily provide much better budget estimates to their clients, whatever the stage of prosecution.

 

Our model also drastically eases the accounting burden that comes with foreign prosecution. When I was at Safran, our foreign agent prosecution work would generate around 10,000 invoices per year. One common solution to that problem is an e-billing system, typically becoming increasingly popular in the United States. I personally believe these are great tools. However, they really only help to digest and manage the mess and it requires a lot of effort before anyone is able to take full advantage of them. With our fixed-fee model, based on a prosecution grid that is similar across all jurisdictions worldwide, we remove the mess altogether. We do this by harmonizing the way foreign agents invoice their work. Each action is categorized in a similar way, finally giving IP managers the power to keep their IP budget under control without extensive analytical effort, and in much more relevant details than any existing standard – such as LEDES or UTBMS -, especially when it comes to analyzing foreign prosecution costs.

Another common approach to keep the foreign prosecution budget under control is to put pressure on foreign agents to lower their administration-related fees. In a certain way, this makes sense. Nobody wants to pay $300 for the transmission of a patent publication document in a foreign language.

"Our model drastically eases the accounting burden that comes with foreign prosecution"

There are, without a doubt, plenty of tasks, and associated fees, that can be challenged in a similar way. From my experience, however, I know that this is an extremely delicate exercise. Putting pressure on the administration side of things may lead to an increase in the hours charged for patent attorney work products. If, on the other hand, you take a more global approach, not only focusing on administrative tasks but also on attorney work products, both the IP owner or his representative and their foreign agents can negotiate a price level that makes sense for both parties. Only then can you create the foundation for a fruitful, long-term collaboration. And negotiating the level of hourly rates still does not solve your problem of controlling the total cost. 

 

Last but not least, for IP firms, putting aside the time and effort required, negotiating fees with foreign agents may prove to be tricky, as the foreign agent may also send work back to the instructing firm. Our offer removes such a barrier altogether, in the best interest of the end-client.

By harmonizing prosecution tasks and limiting the amount that attorneys are allowed to charge per task, do you not think the quality of attorney work products will be compromised?

 

Good point. Quality is our top priority. With our IP attorney background, we are perfectly aware of what’s important to our clients. For the offer we are bringing to the market, we realize that even more important than their own IP budget or their client’s budget, IP attorneys’ main concern is that the patent they obtain in any given jurisdiction is the best they could get. Obtaining the best claim scope requires qualitative exchanges with foreign agents, which can be of a technical, legal, or tactical nature. Foreign attorneys should be good at what they do, capable of communicating efficiently and feel comfortable in spending the time required to deliver the best service to their clients, even when working under fixed fees. This is the core principle of any alternative fee arrangement.

"Our offer is able to generate 20 to 30 percent cost savings on any IP owner's foreign prosecution budget"

As a side comment, all the agents we work with, and consequently suggest to our clients after checking potential conflicts of interest, have been carefully selected according to rigorous criteria. All our agents are great agents. I encourage anyone to try them out.

Moreover, although we calculated that our offer is able to generate 20 to 30 percent cost savings on any IP owner’s foreign prosecution budget, in our mindset, agreeing on fixed fees is not at all about pushing costs down. When we address the way forward with our agents, the discussion is about converting the same amount of effort they would put in any given matter into a fixed fee. That’s all. Sometimes they lose, sometimes they win, from a financial perspective, but the intellectual effort they spend on any given case or office action is geared towards delivering the best possible solution to the client. Exactly the way they would if they were to charge by the hour.

 

Now about the harmonized tasks. That does not mean we restrict the actions of our agents in any way. Let’s take the most obvious example: dealing with a substantive office action. Well, indeed, the task definition is the same across all jurisdictions worldwide. But what handling an office action means in practice in a given jurisdiction, can mean something different in another. These boxes leave plenty of room for creativity and the model does not prevent any of our agents from providing the best level of service.

Why would clients change their agents, who they might have a great relationship with, for yours?

 

Well, pragmatically speaking, if you are responsible for a significant IP budget and you have the opportunity to save 20 to 30 percent on what represents up to 70 percent of your total budget, I would personally think the option is at least worth investigating. The same applies to IP firms who now have the possibility to package their own legal services with fully transparent and attractive foreign offers, possibly leading to significant cost savings for their end-clients. The overall foreign budget of a client could even be reduced while the IP firm could charge more for foreign work, in a different relationship where the IP firm would bring more value than local agents. Our service offers a great opportunity to redefine the work-sharing between local and foreign firms.

Such offers focus on foreign patent prosecution work. This means IP owners, either through their in-house IP counsels, or their outside counsels, still benefit from the positive control of a local attorney, familiar with the invention and its evolutions, centralizing the work performed by all foreign agents.

"If alternative agents can deliver the same level of quality for more attractive fixed fees, it's worth a try"

Our IP firm clients still fully control and drive foreign prosecution. Our agents, as is the usual practice in the industry, generally apply the instructions, argumentation and fallback positions suggested by the instructing local attorney. Our agents bring value, in collaboration with the instructing attorney. Switching foreign agents does require adaptation efforts – really a change management issue – but if those alternative agents can deliver the same level of quality for more attractive fixed fees, I believe it is worth a try.

 

Some of our clients decide to handover to us only a portion of their portfolio to start with, e.g. our agents may be appointed to handle secondary jurisdictions only, or depending on the strategic importance of cases, i.e. more strategic cases may be handled with historical partners while less strategic ones would be handled via our agents.

Finally, our clients may also face difficulties with their existing agent network. Typically, as I have experienced in my previous roles, the added value of foreign agents may sometimes be challenged. Increasing volumes can negatively affect the relationship, e.g. if a partner was historically managing all cases while an increase in volume suddenly requires a more junior attorney to get involved. Some agents may also charge fees, which at one point, our clients may consider excessive. 

 

"Some agents may also charge fees, which at one point, our clients may consider excessive"

Last but not least, conversely, should clients prefer to keep their preferred agents in some jurisdictions, we perfectly understand. We experimented with these relationships in our previous roles. In that case, we either offer to coordinate the filing process and centralize invoices or leave the client to deal with those in a more traditional way.

Back to your point on the huge number of invoices foreign patent prosecution generates, how does the model work in practice?

 

As a starting point, one should realize that all these invoices come in at completely random intervals. The situation is sometimes frightening. Invoices come in every day, for different jurisdictions, different agents, different cases, different tasks. All invoices are different. The granularity of tasks across agents is never the same. Accounting labels are often unclear. Additional charges may be mentioned without any clear explanation of what they mean. I am still not 100 percent sure what a ‘disbursement’ is or if it even means the same for all agents. Hourly rates may be charged requiring the need for instructing attorneys to confirm the hours spent, sometimes as from a certain threshold, requiring an additional check whether the threshold is met or not.

Our model removes all this pain. We negotiate fixed fees with our agents for any prosecution task, according to a grid, which is the same across all jurisdictions. Agents send their invoices to us and we control, on behalf of our clients, whether agents have charged the prices we negotiated.

"All these invoices come in at completely random intervals. The situation is sometimes frightening"

If they haven’t, we challenge them. If they have, we dispatch all the agents’ invoices to the client, in the same format, incl. e-billing formats, at the rhythm of their choice. For example, every month, a client would receive all invoices from all its agents and cases across all jurisdictions, ready to be digested by their IP management system or e-billing system, respecting our prosecution grid tasks, converted into accounting items by then.

Importantly, should a client decide to keep one of its preferred agents in the loop, e.g. in one or more major jurisdictions, we can still centralize invoices from these specified agents. If the specified agent works under hourly rates, we would simply collect and pass through those invoices to our client at the same preferred intervals.

 

While agents send their invoices to us, clients still keep the mandatory direct relationship with foreign agents. Communication between our clients and foreign agents remains unaffected. This is to ensure the best patent can be obtained and to allow for the most fruitful, long-term relationship. We only operate behind the scenes, handling the financial and invoicing aspects.

How does the market respond?

 

These are exciting times. Combined with state-of-the-art technology and optionally, additional paralegal support, which we can now offer through our consecutive mergers with IPAN and CPA Global, we believe our solution can change the way foreign patent filing and prosecution is currently managed.

 

The market is intrigued by our offer and is eager to find out more. Not everyone might adhere to the approach, but I welcome anyone who is tempted to try.

Fixed price prosecution
product sheets

Find out how we can help with this comprehensive guide. Download now in PDF format.

Download the Fixed Price Prosecution Product Sheet