What’s the value of IP attorneys in the innovation process?

IP is the bedrock of a company’s income stream, FICPI’s comprehensive report explores how IP practitioners can add value to companies and how investment in properly qualified IP attorneys could pay dividends. 

All patent attorneys know that drafting a new patent application, especially from “scratch” (i.e. without an earlier application for a similar invention to work from) can be very time-consuming and, as a direct consequence, costly.  

As early as 1892, the US Supreme Court noted that “the specification and claims of a patent, especially if the invention is at all complication, constitutes one of the most difficult legal instruments to draw with accuracy.”1 Patent attorneys (and patent offices) also know that a well-drafted patent specification is of fundamental importance to the efficient operation of the patent granting process and is the best way to ensure strong protection for their clients’ inventions.  

Why is it then that patent attorneys regularly struggle to recover from their clients fees representing anything like the true cost of the work involved and frequently acquiesce to “cut price drafting”? 

In part the reasons may be historical; but might there also be a systematic failure by patent attorneys to justify the full cost of drafting a high quality patent application to their clients?  Have we conditioned our clients to expect drafting at a price that is a fraction of the true cost?

Pinpointing the value of professional IP services

The work of an IP attorney involves a mixture of complex administrative work and high level professional and technical skills. FICPI’s publication “The IP Practitioner – Adding Value to Innovation?”2 includes a detailed review of the typical activities of an IP attorney in advising their clients and filing and prosecuting applications for registration of IP rights for domestic and foreign applicants.  

Traditionally, patent attorneys might have been able to generate sufficient income from the largely administrative aspects of their job. This made it unnecessary to charge fully for more time-intensive aspects – especially patent drafting –  which would substantially increase the cost of entry into the patent system and thus deter some would-be applicants from protecting potentially valuable inventions. 

Indeed, the author is aware anecdotally of at least one British patent attorney firm which, in the 1970s, charged literally nothing for drafting new applications, presumably because they considered it to be a loss-leader and were able to derive enough income from other parts of the resultant work.  

Fixed costs for the essentially administrative work involved in filing new applications at home and abroad (which typically generated a steady reciprocal flow of instructions to and from foreign associates) and for regular renewal fee payment services after grant, at least enabled IP attorneys to offer time-based charges at an hourly rate which was far lower than those of other legal practitioners of comparable training and experience in other areas of the law. 

Clients have become accustomed to those lower rates. 

Skilled attorneys navigate legal and procedural complexities

Nowadays IP attorneys face strong competition for the administrative work. There is an ever-increasing number of auxiliary IP service providers offering renewal fee payment, search, patent translation and even application filing services at very low costs. These are enabled by economies of scale and near- and off-shoring processes, leaving IP attorneys ever more reliant on the more complex, technical tasks, such as patent drafting, to maintain their profitability. 

However, the requirement for expert advice and well prepared applications remains, making it all the more important for patent and trade mark attorneys to be able to articulate with clarity the value of the professional services they provide, including patent drafting. 

The task of explaining the value of high quality IP attorney-work is made more difficult by the enormous legal and procedural complexity of the IP systems, the lack of international harmonisation in the acquisition and enforcement of registered IP rights and the long timescales over which IP rights are acquired and remain in force, many without ever being tested by a third party challenge to their validity or being actively relied on to deal with infringers. 

There is relatively little in the way of academic literature on this topic; a notable exception being a paper by Rassenfosse G. et al. in 20193, whose results suggest that having a higher quality patent agent firm can raise the probability of a grant significantly.  Further, the effect of agent quality was found to be larger than the effect of invention quality at the USPTO and its absolute impact is greatest at the EPO and JPO. Nevertheless, there seems to be a need for the IP profession to do a better job at explaining what it does and how it adds value to the innovation process. 

It was for this reason that FICPI started work on its report, which describes in detail the IP system, how IP rights are obtained, the nature of the IP practitioner, the status of the IP profession and what the IP practitioner does, before going on to propose possible empirical bases for assessing the value added by the IP profession to innovation on a cost-benefit analysis.  In particular, “The IP Practitioner – Adding Value to Innovation?” sets out how the cost of IP attorneys’ services may be calculated and two different ways for assessing the benefit of those services to innovative businesses. Future posts on this blog will contain extracts from FICPI’s report.

Further information

1 Topliff vs. Topliff, 145 U.S. 156 (1892)
2 Orange, John and Alge, Daniel and Chambers, Greg and Kollner, Malte and Obhan, Essenese and Sugranes, Elia, The IP Practitioner: Adding Value to Innovation? (December 2019). Available at ficpi.link/orange
3 de Rassenfosse, Gaétan and Jensen, Paul H. and Julius, T’Mir and Palangkaraya, Alfons and Webster, Elizabeth M., Getting Patents: Is Agent Quality More Important Than Invention Quality? (August 2019). Available at SSRN: https://ssrn.com/abstract=3254958 or http://dx.doi.org/10.2139/ssrn.3254958

Next steps/how to get involved 

How FICPI makes IP attorneys more effective 

FICPI’s report “The IP Practitioner: Adding Value to Innovation?” was the culmination of several years’ work; driven by feedback from our members as to how to explain the value of the work that experienced and qualified IP attorneys carry out, and how a qualified IP attorney can ensure a better result for the client. FICPI colleagues from Europe, Australia, Canada and India joined to work on the report, resulting in a document which it is hoped will serve as a useful tool for IP attorneys and offices, FICPI members and international organisations active in the field of IP, and could also be a useful reference guide for IP firms’ clients.