Patent Department of the Future: How to Leverage Technology to Work Smarter, Lower Costs

Ms. Martin:

Hi everyone.  Thank you for joining today’s co-sponsored webinar presentation, Patent Department of the Future: How to Leverage Technology to Work Smarter and Lower Costs. 

I am Gail Martin, Associate Marketing Manager at LexisNexis IP, and I want to cover a couple of things before we get started.

Please feel free to submit questions during the conference by using the chat or Q&A feature and we will be sending you a copy of the slides and a link to the recording from today’s presentation.

Now I’d like to introduce today’s moderator, Rod Wittenberg.  Rod is the Director of Patent Workload Solutions for NexisLexis IP.  He is a technology evangelist and has worked in the Reed Elsevier organization for more than 20 years.  Rod holds a Juris Doctorate and an undergraduate degree in Political Science and Sociology and has practiced law in the state of Massachusetts.  He is a Trustee Emeritus of the Philadelphia Bar Foundation.

Thank you, again, everyone, for attending today’s presentation.  And with that, I’ll turn it over to you, Rod, to introduce our presenter.

Mr. Wittenberg:

Great.  Thanks, Gail.  Can you hear me okay?

Ms. Martin:

Yes, Rod.

Mr. Wittenberg:

All right.  Terrific!  Thanks also to Carey Jordan, a partner at Vorys, Sater, Seymour and Pease, out of the Houston office.  This is a great topic and an agenda that we have for you today. It’s timely and it’s valuable to corporate legal departments.

Carey, before we get started I thought you could share a little about yourself and why you’re so passionate about this topic.

Ms. Jordan:

Sure, I’d be happy to.  I am a 20-year patent veteran ‑‑ I hate to date myself, but it gives me some gray hair in this area ‑‑ and a Clemson grad, so I have to say “Go Tigers.”

And why am I passionate about this topic?  It’s because I have seen clients struggle with a myriad of pressures in today’s patent management days and schemes, trying to make good decisions, but yet they’re overwhelmed by demands, budget constrictions, as well as data.  I believe we have come up with a way to really help carve through this tangle of pressures to provide real advice that not only saves our clients a great deal of money and time but also allows them to prepare quality patents that can be leveraged for corporate benefit.  And I’ve seen it happen time and time again.  And so, with that success, I’m very passionate about sharing this approach with others.

Mr. Wittenberg:

That is terrific.

Ms. Jordan:

Thanks to LexisNexis in letting us present together.  I really appreciate it.

Mr. Wittenberg:

Terrific.  Well, thank you.

Let’s go to the next slide.  So, to keep everybody on the same track as we are, here’s our focus for today.  I won’t read the slides.  You’ll certainly get a copy as well.  But this is key to how we will manage the discussion and it’s all focused on helping the corporate legal department manage and evolve over time so that it does not get left behind.

So, here we are.  Right?  This is the perfect storm.  Every day, Carey, you and I have been talking about this, I read another article about corporate legal spend and the theme is extremely consistent.  More work seems to be coming in-house and there is more budget tightening.  In fact, the Corporate Legal Operations Consortium recently put out a survey and it said there was about a six percent move to work in-house, 37 percent to 43 percent.  And as this work is moving in-house, it’s moving over without a corresponding increase in spend.  So, one thing’s for certain.  People are being asked to do more with the same or less.

Can you tell us your perspective and what you’re seeing with your clients?

Ms. Jordan:

I mean, I think that’s exactly the case.  And you also have to put that in the context that we, as a society, are in the midst of some of the world’s most remarkable technological advances.  We’re experiencing one of the most tumultuous level economies in several decades.  The housing and financial markets crashed recently.  Oil prices have crashed, which is especially relevant to my neck of the woods.  But, nonetheless, companies have to be competitive and they’re pressured to innovate, lest they’ll be left behind by others who are innovating.  And being in-house counsel, you are being pressured to do more and more with less and less.

Several recent studies, very much like you’ve seen, one by RWS and OBS and another by Delegate indicate that 50 percent or more respondents seeing a decrease in their IP budgets in recent years, yet their workload has gone up significantly.  So, gone are the days of whatever cost necessary, let’s just file patents and you have to think about this much more strategically.  And, hopefully, that’s what we’re going to offer today.  So that you can achieve that broad, extensive patent portfolio that you need to, to be successful, but at the same time control your costs.

Mr. Wittenberg:

So, let’s advance to the next slide because I think there’s a glimmer of hope.  I think we talked about this from a 2016 data perspective.  And what I saw was a little glimmer of hope that CLOC, again, reported a modest increase.  Twenty-two percent of the legal departments have an increased technology budget in the latest report.  Really light, but subtle improvement.  And I think what we’re going to talk about today is how technology help process ‑‑ when you align those with the business objectives ‑‑ are clear paths to success for the legal department.

Ms. Jordan:

Yes, exactly, that’s what we’re going to talk about.  In this slide, what it shows you is the data from the RWS inovia, which really shows how much budget pressure and in-house counsel is under.  You can see that a very large percentage have had cuts, even if it was for the first time.  But, many, in successive cuts.  So, you see that maddening pressure increase in these responses.  And as to the Clock, yeah, my question on that ‑‑ and you and I weren’t ever really able to get to an answer ‑‑ is, is the technology budget increasing so that a legal department can get data sources or is that technology for R&D?  I didn’t think that was very clear.  And a technology budget if it’s R&D isn’t necessarily commensurate with a patenting budget, although theoretically it should be.  So, the patenting budgets, I think, are still being pressured, even though maybe law departments are having more funds allocated for technological database solutions, but not really the budget for managing and maintaining patent work.

Mr. Wittenberg:

Certainly a question for us to ask the group here today.  And, certainly, if anybody would like to comment in the chat section, let us know whether your budgets are increasing, decreasing or staying the same, I think would be great to hear.

So that we are not destined to repeat the past, I thought I’d share with you what the corporate law department of the future should not look like.  Right?  The books have to go and we have to be thinking about aspects of technology and various processes that allow us to evolve and use those elements to drive more profitable outcomes for the business.  I liken this to taking technology and leveraging it for early indicators and I think we’re going to talk a lot about early indicators today.  Because those early indicators, if they become transparent and easy to incorporate into your existing processes, they can get adopted.  Right?  Building that habit is going to be critical.

Ms. Jordan:

Absolutely.

Mr. Wittenberg:

So, let’s go to the next slide.

Ms. Jordan:

Just to add to your point there on the corporate side. It really has to evolve.  Because continuing to operate in this mindset, that this picture represents, is just making the crunch that in-house counsel is feeling that much more pressing.  And so, what is going to happen is you’re going to have much more database solutions.  But the problem is, with some of these database solutions, you can become overwhelmed.  So, you need solutions that really work.  And the early indicator piece, like you mentioned, is one, but the most important is really alignment with your business goals and we’re going to talk about that.

So, moving to the next slide?

Mr. Wittenberg:

Yep.

Ms. Jordan:

You know, what is that solution?

As you hinted at, Rod, really the solution is simple in concept.  It really is that to control costs and build and maintain a better, more valuable patent portfolio, your patenting decisions should be objectively aligned with your business strategies to provide tangible benefits to the company by leveraging those assets.  I know this seems simple, but the key is how you do this and whether you can do it in such a way to incorporate practices that then can have proven, measurable benefits.  And we’ll show you that today and some of the techniques we’ve designed to do it.

Mr. Wittenberg:

So, I think it’s a great opportunity to sort of look at that next slide and really describe how you do it easily.  And, you know, you’ve built a process around this, Carey, and the team at Vorys is on the cutting edge of this approach with clients.  You’re going to walk us through this a little bit?

Ms. Jordan:

Absolutely.

And these are the four points on which our approach is based.  And, I think, when you think about them, this makes complete sense. 

One is that you have to understand and then control all aspects of your budget, not just a singular aspect.  And we’ll talk about what that means. 

Then you have to file strategically to make the most of the dollars you do have and increase the odds that the resulting patents will produce corporate benefit in the end. 

And then you have to prune and abandon assets that don’t align with that business strategy. 

And along the way, you have to prosecute intelligently in light of not only jurisdictional reality, but the educated decision-making that early indicators can give you so that, if you optimize prosecution, you can ultimately optimize a claim that you get in each jurisdiction to make sure they align with your business purposes.  And we’ll talk about each of these as we move forward.  Want to add to that?

Mr. Wittenberg:

Yeah, no, and I’m particularly interested in that topic of pruning and abandoning assets.  Maintenance costs, ongoing filing fees, just seem to be that area where people get stuck and some of the things that you’ve shown me are really exciting.  So, yeah, let’s talk about how we more effectively leverage that portfolio.

Ms. Jordan:

Absolutely.  And I think to do that you have to really understand and kind of set a vocabulary, not only for this presentation, but also within your organizations, about how leveraging assets and patents is different than monetization and leverage is much broader.  Leverage can mean gaining opportunities through the patents.  For example, gaining a market opportunity because you have a patent or a patent present in a certain jurisdiction.  You can also use your patents to acquire talent or resources or attract collaborators.  You can also use your patent to get tax benefits in certain jurisdictions or receive preferential treatments in important jurisdictions.  Examples of those include Mexico, Brazil, South Korea and there are others.

So, all of those are leverage for the benefit of a company.  Monetization is really a much narrower piece of that and that is licensing revenue, infringement revenue, settlement revenue, that kind of thing, or revenue that you might get from selling patents.  A piece, absolutely, but not the entire piece, and changing the corporate understanding of patents as assets that can be leveraged, as corporate assets should be, can really help frame a discussion that patents can be viewed as much less of a sunk cost and a real asset of a company.

Mr. Wittenberg:

Yeah, well, it’s fascinating, too, because, when you think about this, what you’re saying here is, in a world where we’ve talked about the corporate budget is fixed, every dollar spent is potentially a missed opportunity somewhere else.  So, if you re-prioritize the spend, you eventually start spending where it makes sense.  And, again, I think what we’re going to continue to get into is how to do that effectively. 

Ms. Jordan:

That’s exactly right.  And that way you’ve not only optimized your budget, but you have created a potential for which you can have assets that actually work for you.  And, at the end of the day, that works to create a very great cycle that continues to support itself.

So, the first piece we talked about that you have to understand really is, do all the pieces that go into your budget, and although they’re represented in equal portions in this drawing, everyone knows that your budget might not represent in equal portions.  And we’ll talk about each piece. 

So, the application preparation costs, which is in the top right-hand, that oftentimes becomes an area of extreme focus by in-house counsel and general IP counsel.  And they’re always looking for, or seem to be from my perspective, the lowest cost provider or they’re cutting the number of applications they’re filing and in that instance, or either of those instances, actually, that hampers the ability to produce an arsenal that can be leveraged.  So, just looking at that one piece.

The next piece is staffing, external and internal, and that’s another piece of your budget.

Prosecution cost is the next piece, and that is oftentimes your foreign counsel or your non-local counsel, depending on where you sit, and your vendors.  That can be translation vendors, for instance.  They can add a large piece to your puzzle. 

And then the next piece, which is oftentimes the biggest piece.  I have several clients that said this piece is up to 75 percent of their budget spend, and this is official fees, maintenance fees, annuities, and filing fees.  But taking a laser and just looking at one of these as opposed to implementing a solution that addresses all of them to optimize it, is really missing the opportunity to get control of your budget, and we’ll talk about how that is.

Anything to add on that, Rod?

Mr. Wittenberg:

Well, I just said, again, as lawyers, we’ve become accustomed to doing things the same way for several reasons, not the least of which is we had drilled into our minds in first year law that precedent sets us apart in terms of the way we do things.  Once we’ve got that wheel, we’re not going to recreate it.  But time has changed the way we think about doing things today.  The computers that are on our desks today are so much more powerful than they ever were.  So, how do you start to promote this change and align your mission here, Carey, with your clients and get them to align with the broader corporate objectives?

Ms. Jordan:

I think that you get your clients to understand the leverage versus monetization distinction and then aligning the budget and then what you spend the budget on with the business strategy to ultimately produce a more high quality arsenal that can be leveraged, that becomes a virtual cycle.  Part of that virtual cycle is shown on the next slide, which is addressing sources of waste that exist in your budget.  These are some of the most common that I see and that’s supported in the literature. 

The first is filing strategy and portfolio misalignment.  I mean, this is simply that you have assets that no longer relate to commercial products, no longer relate to where your business is conducting their activities, no longer relate to or are relevant to any competitors, or maybe it’s assets that you’ve acquired that no longer align because you’ve evolved the products or processes that you have acquired.  So, there’s many reasons for misalignment but that is a primary source of waste because those maintenance dollars, as we talked about, get more and more expensive through the years and if you haven’t done that pruning to look at that, misalignment can be one of your biggest sources of waste.  So, this is a missed opportunity if you’re not looking at it to improve your budget management. 

The second is the product and market evolution, and this kind of goes hand in hand with the business alignment.  But as products evolve, the claims may be less and less relevant, oftentimes and in my view, too many times, patent prosecution and patent procurement is divorced from the commercial evolution of the product or service and so sometimes what you ultimately get is irrelevant.  And in some jurisdictions, the holding may be enough and in some jurisdictions and may be very important and so the claims that are not aligned with that evolution may no longer be relevant and you continue to hold them, so that’s another source of waste.

Another big source of waste, which I’m sure everybody on the call sees all the time, is risk aversion.  I mean, managers and inventors oftentimes don’t want to be the guy or the gal that made the kill call in a patent family.  Or who made a filing decision rather than saying, “Oh,” you know, “let’s do PCT and put it off for three years.”  Risk aversion with respect to abandonment filing and pruning decisions makes a big chunk of your budget, is wasted where an opportunity, you know, the risk, if you had taken the opportunity to address it, you can really make a difference.

Another big piece is unnecessary prosecution churn, and that’s kind of a term of art that I’ve developed.  But what I mean by that is that you take an approach or people take an approach where their claims are filed broadly everywhere that the family is filed and then each file is allowed to churn in prosecution.  On average, every single office action and every single family member is $3,000 to $5,000.  And in a lot of those jurisdictions, you might not need a broad claim.  So, having it churn and accumulate those office actions over time can be a waste of money depending on the jurisdiction. 

Another source of waste is uninformed prosecution like Rod was leading into, which is this idea that I’ve developed that looks at early indicators to create educated decision-making opportunities before you invest.  So, for example, you can file in such a way that you get a search report that allows you to have some sense of what claims are viable, the better claims that you have filed, for example, if you filed a picture claim right off the bat, and you can see that that is allowable, that early indicator can advise you what breadth of claims you should file in each of the jurisdictions that align.  And we’ll talk more about that.  That all five of these areas are ways in which your budget is not being efficiently spent in ways in which you can address it, because these are sources of waste.

Anything to add, Rod?

Mr. Wittenberg:

I just would like to add that what we’re seeing and have seen over the course of the past several years is greater transparency into places like the USPTO being able to extract more data from the disparate databases so that we can bring really good information together to help make decisions.  And I think that each one of the points that you’ve got here has some tie-in to how you would use insights today differently than you may have five or ten years ago.  So, again, looking forward to digging in with you a little bit further.

Ms. Jordan:

Great.  Me, too.  All right.  So, let’s do that dig in and on this side, how do you strategically align with your business?  How do you strategically align your patenting decisions?  And really it’s looking at the business strategy at whatever granularity makes sense for your business.  Is that a business unit?  Is that a product line?  Is that an invention disclosure?  You know, it really depends on your culture and how things need to be decided.  But let’s just for this purpose, for this discussion, call it a business unit.  And so, for that business unit, you need to understand what the business strategy is in order to align the patenting decisions. 

And the business strategy really comes down to kind of three points.  One of which is competitor intelligence.  Many of the tools that we’ll talk about, the data base tools like Total Patent is one I use all the time, can really help you dig into what competitor patent holdings there are, which tells you what jurisdictions they may think are important.  You also want to look at their activities for where they’re manufacturing, where they’re using, where they’re selling.  So, the competitive intelligence piece for your primary competitors has got to be included in your business strategy. 

The second piece is what the business unit’s actual activities are and what their goals are now and in the future because a good patenting strategy should both take into account where is it today and where I’m going to sit in five years, or, you know, 10 years, depending on the technology.  So, you want to look at, you know, where is this business unit making the product or service?  Where are they offering it for sale?  Where are they using it?  Where are their primary revenue sources?  What revenue sources do we want to make sure to protect?  What blocks do we want to put up to protect those?  And all of that comes into the business actualities of what’s going on and you can do that by jurisdiction. 

And none of this makes sense if you haven’t taken into account what I call jurisdictional realities.  And what jurisdictional realities are is a combination of what the different factors look like?  What is the corruption in that jurisdiction?  What’s the stability of the political and judicial systems?  What is the patenting system like?  Has it adopted the TRIPS protocols?  Can a non-resident company really enforce in that jurisdiction if that’s a purpose for which you’re obtaining a patent?  How long is it going to take to get a patent?  How are intellectual properties’ rights viewed? 

I mean, those are just some of the questions that go into jurisdictional realities that have to form this background under which you’re understanding this business strategy.  And I know this sounds like a lot and you can do this research within your organization and track it, but, you know, our clients, because it was a lot of information, we designed a solution that we’re calling PatentlyIntegrated that integrates all of this together into a simple number.  I think I’ll just move to the next slide to show you.

Mr. Wittenberg:

Sounds good to me.

Ms. Jordan:

Thanks.  Well, it does make it easier for sure.  So, this is just a hypothetical example that comes in from the tools.  It takes in building this business alignment and this is based on an actual analysis we did for a Fortune 100 company in one of their very important product lines.  And they had filed in 34 countries regularly and as you can see, as I’ll explain this out, what this takes into account is the business actualities as I described to them for that business unit and product line and it looks at what jurisdictions ‑‑ on the left are the jurisdictions ‑‑ and in the background is a jurisdictional database that provides all of the jurisdictional realities that I mentioned and more that perform, you know, that become the background for the analysis.  And for each of those jurisdictions, we’re looking at what is the business doing there?  What is the product line doing?  Just to take the U.S. across.  In the U.S., we’re definitely using and selling there, that company is.  They’re not making there, the manufacturing center is elsewhere, it’s in Germany. 

Enforcing?  Yeah, the U.S. has a robust IP system, if I’m going to enforce a patent that’s probably where I want to be in business, agreed. 

Justified.  This is a shorthand term that we use to say, is there a tax advantage for filing there?  Is there a strategic business advantages, for example, do you get some kind of preferential contracting right by being in that jurisdiction?  Brazil is a great example of that.  Or is there some other business justification for which you want to be in that jurisdiction that may or may not relate to your activities or competitors’ activities? 

Then, the next two are the competitive intelligence.  What are the competitors you’ve identified doing there and are they making?  Are they using?  Are they selling?  And you have to look at that. 

And then another piece is you have to look at what kind of blocks would you want to create and why?  And we’ve taken all of that and put it into an algorithm that simplifies it into this last column that we call the PatentlyIntegrated Strategic Index.  One of my non-patent partners likes to call this Carey’s FICA score, which is kind of like that.  But, I hope my FICA score is higher than these numbers I have today.  But it does give you a simple number by which all of these considerations have been taken into account to give you some indication as to whether one of the jurisdictions on the left is in alignment with your business.  This particular client wanted to have demarcations at a number of 200 and another one at 150 and another at 100.  Those demarcations may be different, you know, based on the circumstances, but this particular client wanted it to be that. 

And what the green represents is that 200 and above of an index ‑‑ that indicates a high degree of alignment of those jurisdictions for filing, maintaining and how you handle your prosecution strategy in those jurisdictions.  There’s a high degree of alignment meaning that those jurisdictions are important. 

The yellow means these are less important.  They don’t align as much as the green so you want to ask some questions around why we’re patenting there, why we’re maintaining holdings, and it may make complete sense, but it may take a closer look at what’s the desired claim scope, what’s the existing claim scope, but some more due diligence may be necessary because the degree of alignment is less. 

The orange is even less alignment.  This client wanted to have a demarcation in the yellow and some insisted we would have given those all in yellow, but they really wanted to have a demarcation and the reason they wanted to have a demarcation is because they wanted to tie it to what the competitors were doing.  And, if you’ll notice in the green, these were mostly definitelys and likelys whereas here in the oranges we weren’t sure, or they weren’t sure, we couldn’t find any evidence and may be likely, so they wanted a demarcation based on the competitive.  This is a very competitive industry and that’s why there’s an orange section.  So, these are even less aligned and would require even more due diligence in order to determine whether a patenting or maintaining a patent in that area ‑‑ in those jurisdiction makes sense. 

The red may be self-explanatory, but these are ones that are the least aligned.  These jurisdictions don’t make sense.  And these are holdings that probably don’t make sense in your portfolio given your current business strategy.  So, you can see how this in a very single number, in a single way that a CFO can understand can tell you and to help guide your patenting decisions and we’ll talk about how you can use this relative ranking of strategic alignment with your business to help drive those decisions.  Is there anything, Rod, you want to add to this?

Mr. Wittenberg:

I could add a ton more, but for simplicity sake when you’re talking about bringing numbers to a CFO, I know there are a lot of attorneys out there that don’t always feel comfortable doing it and having your counseling, along with their input, allows this discussion to happen and it is much more meaningful when you are having that conversation with the CFO about driving shareholder value and using numbers to tell the story.  So, again, what I think you’ve done here is tremendous from that perspective of breaking it down into needs and wants and tying a number back to it.  I know I’m simplifying it but, you know, you’ve really made it easy to consume.

Ms. Jordan:

Well, I think that that’s been the essence and I appreciate that, and so, what this client did was go back to ‑‑ they were filing in 34 jurisdictions.  We were able to prove that there were four jurisdictions that were very strategically aligned, there were four more that were likely strategically aligned, but maybe less so, and then four more that may be strategically aligned and, you know, that’s 12 of 34, and that’s 22 jurisdictions that they could not, you know ‑‑ that they could then maybe forego for each family member. 

So, let’s say just your official filing fees were $3,000, let’s just say, on average for 22 jurisdictions, for every single application you’re filing.  What is your cost savings?  Hundreds of thousands of dollars that you can then, going back to the cycle of your budget, possibly maybe put into new applications that can help drive a culture of innovation in the company and build even more assets.  So, you can see how you can use this to really make some strategic decisions and go to the table to the business folks and say, “All right, let’s talk about the orange and red.  Why do you want to be there?  Is that because Fred said so 10 years ago?”  That’s usually the case.  Or is there some other reason?  Let’s talk about it.  So, it at least gives you a framework at which to have that discussion.  Let’s move to the next slide and we’ll show you actually kind of how this works. 

So, to optimize your patent spend, one of the ways like we told you, the waste is really due to assets that no longer align, and if you’re a giant company who has giant portfolios, being able to triage the assets that you hold is essential to doing an effective pruning.  So, what this alignment does, is gives you a sense of how to triage pruning. 

So, the red, any holdings in the red jurisdictions, you know, we show that those don’t align with the business strategies anymore.  Those may be able to be abandoned, or donated, or sold, or, you know, put in a patent pool, or you name it.  There’s lots of different ways to divest them.  So, that may be some severe cost savings that you can achieve by taking out holdings in the red jurisdiction. 

The orange, those may be easy decisions as well.  Because they are a little bit more aligned, you might want to look at some of the claims in some of the jurisdictions that go back to the activities here that align.  So, if you’re in the orange, and you really are most concerned with your activities, maybe in Algeria, here, you want to look at holdings there more closely because you’re definitely there, but the point is it gives you a way to triage and look at that. 

Go back to the slide.  The yellows are more aligned.  So, your effort, if it’s spent on orange and red jurisdictional holdings, that can make a big impact on that maintenance fee number that is weighting down your budget and really hamstringing what you can do with new innovations.  This ‑‑ depending on what your holdings are ‑‑ this may ‑‑ just going from the red and orange ‑‑ may make a huge difference. 

Going to the yellow is another way to increase your savings and then the green may be something you don’t look at, and you may be saving some time there because those seem to be aligned.  And then you can read ‑‑ you can do this alignment as often as you’d like.  We usually recommend like biannually or annually, but this gives you a way to really triage those holdings so that you can make sure the maintenance fees that stay on your plate, that hamper your budget, make sense. 

You want to add anything on that, Rod?

Mr. Wittenberg:

I don’t.  I think you’re doing great and I know this slide coming up here is an important one.

Ms. Jordan:

Right.  And why are we spending so much time talking about pruning?  One, it’s a giant piece of your budget.  Like I said, oftentimes it’s 50 percent or more, and secondly, if you look at this, making these assets work more efficiently, it really should be a priority because the costs involved are just tremendous. 

So, an annual cost of maintaining a simple patent family in the U.S., Japan and Europe over a full 20-year protection period is $75,000.  So, if you’re a company that has 100 patents a year that you file, the annual carrying costs could be $750,000.  So, the costs are tremendous here in terms of what that load is on your official fees and you’ve got to think about that.  So, if you can control that by pruning it in a strategic way, your way that gives you an insight into how to triage it, you can make a real difference in how your spent ‑‑ how your spend is spent.  

This alignment can also help you prosecute, and let me tell you what I mean, and this kind of alludes to what Rod was saying about early indicators.  So, what this alignment can do is it can help you have a much more educated approach to prosecution. 

So, the pink square with the arrow is an illustration of kind of what we all grew up learning about prosecution.  You filed the broad claims, the claims stayed the same as the originally filed, and you take those everywhere around the world, and then you let them spin, each family member in each jurisdiction, you let it spin and let it prosecute until you get to your ultimate claim scope, and that spin is represented in this wide arrow staying wide for a long time because each office action in each jurisdiction is $3,000 to $5,000 that you’re picking up.  And so, if you have a single patent that you have filed in ten jurisdictions, and you get three office actions in each of those ten jurisdictions, it just exponentially multiplies in terms of cost. 

So, our recommendation is to kind of flip that concept on its head and use the alignment to educate your prosecution, and what we mean by that is, you know, your orange jurisdictions, as you saw, were much less aligned with your business strategy.  Therefore, the scope of the claims that you get there is probably less important than it is in a green jurisdiction, for instance, that was clearly, highly aligned with your business strategy. 

So, what it may make sense to do in these jurisdictions is once you have an early indicator, that search report, and hopefully you’ve included a picture claim or something like a picture claim, in that claim set that was examined in the early indicator; then, if that’s allowable, and that’s the commercial product, you go take that into the orange jurisdictions and don’t get the spin of the office action and that may be sufficient, because those jurisdictions are not aligned with your business, but you need something. 

The same thing goes for the yellow.  It may not be that the broad claim scope is what you need there.  You may not need it then.  However, you know, depending on how the activities align for the yellow, in some jurisdictions that may make sense.  So, you can look at what the activities are there relative to what you know is allowable in the early indicator and then decide if you need to seek broader protection in a single jurisdiction. 

The green jurisdictions are jurisdictions you presumably will always want the broadest claim.  So, from this, you can develop what is kind of a hub and spoke method of managing international prosecution based on your business alignment, and you can see how that would work. 

So, the sum of this is really churn where it makes sense, you get a broad claim.  In other words, spin where it makes sense, take those office action hits on the costs so that you have a chance of getting the broadest claims.  And in jurisdictions where it isn’t necessary because of the business alignment, don’t do that.  Do prosecute in a way ‑‑ file claims in a way that’s educated based on early indicators so that you don’t have to do that.  You take what you need.  And this is a way to very much control prosecution costs. 

So, going back to the circle of costs, this really hits that non-resident agent cost, translation cost and official fee cost.  So, this can be a huge way to control your budget.  Rod, do you want to add anything on that?

Mr. Wittenberg:

No.  I think I’m going to follow-on on this subject of prosecuting intelligently with the next slide, and what I, again, tie back into, is sort of your color scheme here.  Green means go, and when we look at the concept of early indicators, here at LexisNexis, we’ve really been at the cutting edge of patent examiner analytics. 

So, in addition to the early indicators that you alluded to, there are other early indicators to take advantage of, and these have come about as a result of all the transparency that we have into the patent office, especially at the USPTO. 

You know, I think we consider ourselves the inventors of examiner analytics in the early 2000s and we did it to create transparency into the process and that patent acquisition process for corporations and we’ve continued to refine the approach and the latest in early indicators for us is what we call ETA.  That’s examiner time allocation and the key to this is that it takes into account the entire body of work. 

So, unlike allowance rate, which only looks at those cases that have been disposed of, granted or abandoned, we’re now able to look into a much broader data set, including all of the pending apps.  And so, when you see a 13 up in the upper right-hand corner, what that signals in red, is that you should take a look at this examiner’s behavior.  Understand the application.  Tie it back into the overall tiering and the strategic value of that patent.  If it’s going to take a long time, and it’s in an area where technology, it leapfrogs one year after the next, you may want to consider a different approach for that particular case or how you deal with that examiner generally. 

What I’d say is, overall, this early indicator is absolutely able to predict how long it will take to get to allowance and I think it’s just another element in money-ball lawyering, you know, whether it’s used by corporate counsel or used strategically by outside counsel to help the client make key decisions.

Ms. Jordan:

Right, and we use it as a way to cut cases that are spinning where they don’t necessarily need to spin, right?  Because if it’s sitting there for too long, and my assumption is always that it’s carrying costs it doesn’t need to carry.  And why is that?  And so I want to know, and so that’s one thing we’ve used this for and it’s really helpful.

Mr. Wittenberg:

Yep.  I think it’ll also differentiate you, and we’ll get to that slide in a moment, but certainly it is a way to use data to help you make the best decision for your client, and similarly, you know, here, what we’re looking at are two images from the patent advisor service, where what you’re seeing is a case on one side and literally the entire portfolio on the right, and what I really talk about when I look at these two slides is using technology in your law department to make better decisions that align with the business metrics, and so, that you can also demonstrate performance to the leadership team.  I say it’s easy to ask the tough questions when you can see the portfolio or any case from this perspective.  And why is that?  If you’re looking at the case on the left, what you’re seeing is would you put a low value case through seven office actions and the appeals process if you knew there was a better path forward?

And, Carey, you talked about not letting a case, you know, spin.  I think that the answer’s pretty simple.  No, I would not let a low value case continue to churn and spend office action after office action expense.  It’s the opportunity cost there at $1,500 or $3,000 an office action, depending on what you’re spending as corporate counsel, your budget’s fixed.  Put that money to better use, either on a better path forward or on a better case.

Ms. Jordan:

Right.

Mr. Wittenberg:

And similarly, on the left-hand side, what I would say is, look at your entire portfolio at one quick glance.  If you see, you know, again, down at the bottom where you have the ETA of 10 plus, you can extract those cases and look at them individually as opposed to looking at the entire portfolio all at once.  Right?  This is that flowerbed.  Let me figure out by looking at my entire flowerbed where I have flowers that are a problem, flowers that aren’t necessarily going to grow the same way.

And so, when you consider your portfolio through this glance, you can then study the examiners.  Figure out who’s going to be the most challenging and consider a different approach.  Some approaches are as simple as saying, “I’m going to put all my cases with this examiner in the hands of my best outside counsel because they’re going to be effective at managing ‑‑ this examiner perhaps better than anybody else.  And I can use data to validate my choice.”

Carey, you were about to say something.  Sorry, I interrupted you.

Ms. Jordan:

No, I was just going to say, and if you overlay that with the jurisdictional alignment, with your business strategy, you can really understand how important the jurisdiction is and, therefore, how important that spin is.  Right?  If the U.S. is not an important jurisdiction, you know, this spin is just costing you money for kind of really no good reason.  And if you overlay the two, it’s a great way to get some insight into how your funds are being spent.

Mr. Wittenberg:

Yeah, we love it.  So, let’s take the last look at data aiding intelligent prosecution.  Now, here’s one that, again, even the recent surveys talk about this.  Corporations consider it a priority for their law firms to provide value, and they ask for more value.  In fact, I just read a survey this morning coming out of a law firm that says the corporations want more value.  And some are saying that I’m getting more value.  But the corporations aren’t always measuring it.  And so, what we’ve done here is we’ve aligned five or six outside counsel against an art unit and taken a look at how the outside counsel’s doing.  When you have the ability to effectively dashboard your outside counsel, you can see who’s providing value.  I’m not prescribing any value point to any single metric.  But when you are corporate counsel and you’re looking at your particular business strategy around how you like to acquire patents, you have to look at whether or not outside counsel is meeting the standards that you’ve set.

So, what you’re talking about here is a built-in warning system for corporate counsel to have conversations with outside counsel before the problem erupts to a real challenging place for that particular patent, for that particular outside counsel, for the portfolio overall.  I call this ‑‑ it’s an evolving part of the patent department embracing technology to make life better and to make the job better.  I’m not going to use the word easier because that’s not what we’re trying to do here.  What we’re trying to do is make your life better by simplifying some of the tasks that you’ve been doing by putting the data around it.

Ms. Jordan:

Exactly.  And I think that can be very helpful.  Moving to the next slide.

Mr. Wittenberg:

All right.

Ms. Jordan:

You and I have both mentioned this idea of using early indicators and, for me, an early indicator in prosecution is a substantive response from an office ‑‑ an office that maybe my search authority in a PCT case, in an EPO, if my EPO is my first case or, if I’m filing U.S. first, I’m going to expedite that prosecution so that hopefully I can get an office action within the first 12 months at a minimum, so that before I ever have to make the next filing decision, I kind of have a sense of what claims I’m going to get, potentially.  And so, when I say an early indicator, that’s what I’m looking at.

And what I mean, excuse me, the best way to do that is to use what we’re calling a strategic filing route, and we’ve invented an algorithm that does that.  And we’ve done that because we’ve seen so many clients really take ‑‑ and even outside counsel, I think ‑‑ take a one size fits all approach to how they file.  PCT always or provisional U.S. always or, you know, you always get PCT U.S. at the same time.  I mean, there’s just an always to it.  And always is really not the way to go because depending on the timing of the early indicator in that strategic route, the costs involved in the strategic route, the jurisdictions where you may ultimately file the family and how strategic they are and what treaties those particular jurisdictions belong to, are they members of the PCT, are they not, for instance, are they EPO members or not, all of those can come into the strategic filing route.

And then in each instance ‑‑ in various instances there is going to be a different driver.  So, for example, for some product lines it may be my goal in all of my patenting is lowest total cost.  Well, if that’s the case, generally speaking, the PCT is not the way that’s going to get you there unless you have only PCT jurisdictions that are in the green.  Sometimes delaying decisions is always problematic because you end up at $4500 add on that filing fee and if you ultimately get a bad early indicator, was that a good use of money?

But it really kind of all depends on what the technology is and what the business strategy is and what the life of that is and really thinking about how you’re filing, not as a, I’m always going to do it this way, but more in a which route gets me to my goal in the most strategic way and the most cost effective way.  And sometimes that’s the PCT, sometimes it’s using a Paris convention and sometimes it’s using a provisional.  And there’s also some early search jurisdictions that will give you an EPO search in six to nine months for a very minimal fee that I think often substitute in some circumstances for provisionals and you can still get an early indicator.

At any rate, there is a lot wrapped up into how you file and, if you take anything away from today, I think take away that using a one size fits all is not the way to think about how to file things, if you really got to think about the cost involved.

Ms. Martin:

Rod, you want to ‑‑

Mr. Wittenberg:

Good job.  You know, as I look at this and I know we’ve got only about 10 to 15 minutes left and we want to take a few questions, I think the three examples that are coming up are really emblematic of the approach that you’ve taken that helps a client see the tangible benefit of leveraging PatentlyIntegrated.

Ms. Jordan:

Exactly.  Thank you.  And let’s do the example.  The supporting information is in the chart at the bottom where it says “Estimated and Projected Costs.”  And what I’ll tell you about that is that these are just estimated flat fees.  That this is a real case, this is a case I took to a pitch and said, “Here, you know, let me show you why we need to think about things differently.  And, you know, these are the costs we estimate that you may have spent on this actual family.  And let’s walk through the family and then we’ll just concentrate on the costs, that you can look at when you get your slides, how we got to these costs.”  Understand that translations are not included because, you know, just for simplicity.

So, this family had a U.S. case and a PCT case filed on the same day.  Then at 31 months they went to Australia, Canada and the EP and those have issued and one’s been allowed.  We think, you know, just based on the existence of the family, that about $68,000 was what the family cost and I learned during the pitch that that was underestimation.  But, nonetheless, it was still 68. 

Going to the next slide, my point about strategic filing route was really driven home here.  Had they not filed the U.S. and the PCT on the same day but, rather, filed the PCT, gotten ISRWO from the search authority in 18 months, that’s an early indicator in my vocabulary.  So, that early indicator and that search was favorable.  It was very favorable.  It was fully favorable.  They should’ve taken that ‑‑ or could’ve taken that search to the U.S. through the PPH, gotten issued claims in the U.S. because the PPH expedites your prosecution in the U.S., and then gone foreign at the 31 months with issued U.S. claims.  What that would have done is removed office actions and you would’ve saved money.  Again, each office action is 3,000 to 5,000, and I know what you’re thinking of, and you’ll see our assumptions here.

So, by just filing it differently and, you know, going back, what they did was U.S. PCT on the same day.  Right?  Had they used this approach in this instance, it would have saved 18 percent.  So, if you extrapolate that over hundreds of filings, that 18 percent starts to make real money.  They could have saved an additional two percent had they used the Korean search authority as opposed to the EPO but, you know, that’s kind of a side issue.  But 18 percent is significant savings just by filing it differently.  You have the same results. 

The next example shows a different way they could have done it.  They could have avoided the PCT costs and gone straight to the EP and then gotten that EPO search ‑‑ most EPO searches are coming out, you know, in a reasonable period of time.  Again, we assume it would have been fully favorable because the ISRWO and the actual PCT case was and then that could have gone PTH in the U.S. and by doing that you, again, would not only save the office actions because you would have used this early indicator, but you also could have saved the PCT costs and those would have been zero netting you a minimum of 20 percent savings in that family to get to the exact same result. 

So, my point about really considering how you’re going to strategically, you know ‑‑ the file you’re going to file and what message you’re going to use and what timeline you’re going to get an early indicator and how you can use that to move forward into your next family members makes a huge difference on your budget.  And if you can do this, let’s say, in half of your cases, you know ‑‑ and this is not an outlier.  We do this analysis for all of our clients and I’ve seen anywhere from 10 percent savings to 60 percent savings on a family.  So, this is very much a middle of the road which I chose intentionally to show you but, you see the point.  The filing makes a difference and how you do it in this early indicator use, using it to make educated decisions up to the next step, makes a big difference.

Mr. Wittenberg:

It puts you back in a place, like you said, where you are aligning the patent department with the broader business objectives with the overall key objective, which is driving shareholder value.  And I think when you start to talk about business with these numbers, you’re not talking about big budget cuts.  You’re talking about being more effective users, spenders of the dollars that you’ve got.  And, if you start to reposition the dollars on additional innovation, you’re talking about growing that organic patent portfolio.  Or going out and acquiring patents that fit your needs because you’ve learned how to make the best decisions.  And certainly, Carey, this is probably how we start to sum up everything.

Ms. Jordan:

I agree.  And this is, I think, a great summary leading to that.  Because what a lot of companies do, they take a hatchet to the application prep.  I’m not going to file as many.  We’re going to go to the cheapest cost provider.  We’re going outsource prep to a non-U.S. company if they’re a U.S. company.  And they just take a hatchet to this without considering that they’re dropping the quality of the asset that drives the rest of this.  And if you can make better decisions that align with your business, like I showed you, and be in jurisdictions that really are aligned; control your prosecution in jurisdictions in alignment with your business goals; and prune the portfolio in alignment with your business goals, you can affect each of these areas which will derive more money to your application prep which will produce you more high quality assets that have a greater likelihood of being leverageable for corporate benefit.  You have a much higher quality patent portfolio. 

So, it’s just that ‑‑ really a smarter way of thinking about things, I think.  And so, let’s look at the last slide. 

There are some other cost-saving vehicles.  These are kind of your lower hanging fruit, I think, than what I’ve been thinking about today which are using flat fees or capped fees because you get predictability using translations in a way that you can leverage.  Like, for example, if you’re filing in a bunch of Latin American countries, maybe you only file in Spanish and get one translation that works in all of those or you get a flat fee from a translations provider.  Or, sometimes foreign counsel in those jurisdictions that require a translation from the language will give you a better deal if you’re actually using the counsel rather than a translation service. 

But, I think, most importantly, converting in-house IP counsel to be strategic business development advisors is the key.  So, that they’re part of the conversation about aligning business goals and all of these different aspects of the portfolio.  Because that’s what’s really going to make the change.  You know, using in-house people to be paper pushers is generally not as effective in terms of driving a valuable portfolio and getting control of your costs.  I think it’s an outdated model. 

So, Rod, do you want to go with our key takeaways?

Mr. Wittenberg:

Absolutely.  And then we will certainly open it up for some questions. 

But, you know, as Carey and I have alluded to throughout the process, the old way has to stop.  Evolve or get left behind is the mantra here. 

And there are different ways to evolve your thinking, evolve your approach and your process.  There’s data out there now that provides early indication ‑‑ the warning signs ‑‑ so that you have the ability to pivot when those key decision points arise.  I’d say, again, don’t keep doing what you’ve always done because you’ve gotten comfortable doing it.  Breaking those habits is extremely difficult.  And to get into that new habit ‑‑ the better habit ‑‑ it takes time and it takes practice.

Not all patents are created equal.  And I think it’s probably fair to say that almost everybody on the call has a tiering or a value system for their patent portfolio against the broader business objectives.  Look at it and look at it in the context of some of these data points that can easily be layered in.  When you talk about your portfolio and the metadata that’s out there from the tools like PatentlyIntegrated or Patent Advisor, you can layer them in simply and easily to be able to look at your portfolio through that different lens and you can then make the better value decisions on how to move forward with the patents that are of higher value.

And, lastly, and certainly not least, is embrace technology.  Embrace your outside counsel because they do have that vested interest in driving value.  They have been looking at technology, leveraging it to help make a difference in the outcomes.  And technology is one component.  But the people side of it, I think, has become equally important in how I’ve seen our law firms work closely with their corporations.

So, you know, I certainly want to thank everybody for spending some time with us today.  There’s a white paper for you and there’s some contact information.  All of this will be shared with you.  But I think I’ll turn it back to Gail for the last few minutes of Q&A.

Ms. Martin:

Hi, Rod.  And thank you to you and Carey for a good hour-filled session.  And the one thing that one attendee noted was just a comment that, you know, every dollar spent is a missed opportunity somewhere else.  And so, that resonated and hope that resonates with others as well. 

Ms. Jordan:

It does.  And the question is, is that dollar spent away going to ultimately result in an asset as a benefit to the company or is it a dollar spent that is an unneeded dollar spent because it goes to the waste?  So, yeah, theoretically every dollar is.  But you have to triage those that go into an ultimate asset versus those that go into a waste bucket.

Ms. Martin:

So good takeaway and don’t see any other questions.  There was one request to clarify the MUSP acronym for ‑‑ and that was Make, Use, Sell and Patent and that was on an earlier slide. 

Ms. Jordan:

Yeah.  Those are activities that in our PatentlyIntegrated analysis that we look at to be able to apply the jurisdictional realities and what the competitors and the actual business that we’re looking at are doing.  And so we look at what they’re making and where they’re making it and where they’re selling it, where they’re using it, where their customers are using it, where the revenue sources are.  That’s all part of the Make, Use, Sell analysis.  And then on the competitive intelligence, we also look at where competitors are patenting because that does give you some insight into what jurisdictions are important to them.  And sometimes where they’re patenting and where you’re patenting overlap completely and a lot of times they don’t, which may bring to the table a jurisdiction you haven’t considered in your habits that you may need to. 

Ms. Martin:

Well, I think we’re at the top of the hour nearly.  So, I want to say, thank you, both to Rod and to Carey and to the team at Vorys for some good content and hope that it was a beneficial session for everyone.

Ms. Jordan:

Thank you all for letting me participate.  I really enjoyed it. 

Mr. Wittenberg:

Likewise.  This has been a lot of fun and I hope was extremely educational for everybody.  Thanks, so much, Carey and Gail and Allie and the team here for helping us put this wonderful presentation together. 

Ms. Martin:

Thank you.  Have a good day.