2 December 2019

Effective Use of Outsourcing for Developing Patent Portfolios

Gary Whiting has been a patent attorney for more than 20 years, with almost half of that time spent in-house. Based on his experiences, Gary has the following thoughts on how in-house departments can make effective use of outsourcing when developing patent portfolios.

Why Insource? Why Outsource?

Let us assume that you are responsible for a dedicated in-house IP department that is developing a significant patent portfolio around the world. Your department has limited resources and makes extensive use of outsourcing. You are under pressure to develop a high quality patent portfolio that meets the needs of your business. You are also under pressure to keep costs under control.

How can you ensure that your use of outsourcing is effective?

If your in-house team has both the skills and the time to do so, then insourcing many of the tasks typically carried out by external patent attorneys is likely to be the cheapest option. Also, in-house teams are closer to the business and have detailed technical and business knowledge that can lead to the generation of a high quality patent portfolio that meets the needs of the business.

So why not insource everything?

In-house departments typically have insufficient resources (particularly time) to insource everything and it is easy to increase or reduce the level of outsourcing as workload demands fluctuate. In addition, outsourcing is typically the easiest (and most cost-effective) way of obtaining specific technical or legal expertise.

Core In-House Tasks

A number of elements of the patent portfolio development process can be considered to be core in-house tasks that should generally be partially or completely insourced, if the resources are available to do so.

Invention Harvesting

Your in-house team is likely to be closer to the business (and to the people within the business) than external patent attorneys. This, coupled with the knowledge of the business (including business strategy), typically makes invention harvesting a core function of the in-house team. here will be circumstances when external attorneys can be of assistance. For example, a visit from an external attorney (e.g. an invention harvesting workshop) can sometimes generate enthusiasm and encourage the submission of ideas for potential patent filings.

Initial Patentability Analysis

In some companies, patent applications are filed if there is a business case, with limited consideration of patentability. The consideration of the business case is a core in-house role. In other companies, patent applications may be filed only when a detailed patentability analysis concludes that the chance of obtaining a granted patent is high. Where to sit on this spectrum is a question for you and your business.

One aspect of patentability analysis is searching for earlier disclosures of similar concepts (prior art). In-house experts know the business, often making them good at searching in the relevant field, suggesting that prior art searching should be a core in-house function. However, prior art searching is a specialist and time-consuming task. You should consider whether the use of specialist external searchers is more efficient or whether your in-house team can do a more effective job. Also, with algorithms improving, is there a case for automatic or semantic searching as part of the process?

If a detailed prior art search is obtained, many departments consider that analysis of the search results is a core function of the in-house team. However, some companies prefer to outsource at least some of this work.

Filing Decisions

Whether to file a patent application is typically a decision with many variables, only one of which is patentability. Accordingly, this is usually considered to be a core in-house function. You should consider the extent to which the wider business should be involved at this stage. Do you want to get input from your technical team regarding the inventiveness of a new invention? Do you want to get input from your commercial team regarding the commercial value of a new invention?

Portfolio Management

A patent portfolio needs to be reviewed regularly to ensure that resources are being used effectively. For example, abandoning individual patents or patent families can help to keep costs under control.

This is generally an in-house role, and the wider business should perhaps be involved. One approach is to hold regular (e.g. annual) review meetings to get the business involved. This approach works well with relatively small patent portfolios, but can quickly become unmanageable as the size of the portfolio grows. Another option is to reconsider the value of cases within the portfolio at defined milestones (e.g. on grant) or at defined time periods after filing. ven though the decision making is often a core function of an in-house IP department, the implementation of such decisions is often outsourced. Although it is possible for an in-house team to liaise with patent attorneys around the world, this is a significant undertaking. This is typically only a core function of the largest in-house IP teams.

Consideration must also be given to how to handle renewal fee payments that are required to keep patents in force (such costs can be a large proportion of the lifetime cost of a patent family). Nearly all companies outsource this process, either to an external patent attorney or to a specialist renewal fee payment company, not least because of the severe implications of missing payments.

Non-Core Functions

A number of elements of the patent portfolio development process are not generally considered to be core in-house tasks. These are often outsourced (to a greater or lesser degree), although this may depend on the size and expertise of the in-house team.

Patent Drafting

Patent drafting is time consuming and most departments do not have the resources to draft all cases in-house. Many IP departments outsource all patent drafting work, but if you have internal patent drafting expertise, then a combination of drafting some cases in-house and outsourcing others may be optimal.

The preparation of the first patent filing for a new invention is one of the most important steps in the patent generation process. Well drafted patent applications not only lead to patents that are more likely to provide valuable patent protection, but such patent applications typically pass through the patent system more easily. It can be difficult (and expensive) to get poorly drafted patent applications granted and may be impossible to obtain a broad scope of protection. Accordingly, investing extra resources at the patent drafting stage may be cost-effective in the long term.

Patent Filing

The filing of patent applications is usually outsourced to patent attorney firms. Filing patents in-house involves significant responsibilities and is typically only cost-effective for companies with large patent portfolios. Before committing to this, you must ensure that you have sufficient internal resources. Consideration should be given to the implications of systematic mistakes that risk the loss of a significant portion of your patent portfolio.

Patent Prosecution

Prosecuting patents to grant typically involves a large number of self-contained tasks that are well suited to outsourcing to external patent attorneys.

Care is required here since patent applications can be granted with amendments that can significantly reduce the value of the patent within your patent portfolio. Thus, if this task is to be outsourced, then the in-house team should ideally maintain at least some control of the process. One common approach is to outsource the patent prosecution process to external patent attorneys, but for the in-house team to retain responsibility for the scope of the patent claims.

Oppositions and Contentious Matters

Patent oppositions can be extremely time-consuming. Accordingly, although expensive, unless your department has a significant amount of regular opposition work, such tasks are typically best outsourced. Similarly, contentious work is often better outsourced unless significant internal expertise is available. Outsourcing contentious work may also make the application of attorney-client privilege easier to secure.

Final Thoughts

IP departments have different sizes, skill sets, workloads and priorities. Almost all departments make at least some use of outsourcing and the comments above should assist with tailoring the use of outsourcing to meet your particular circumstances. It makes sense to discuss your approach to outsourcing widely. For example, these issues can be discussed within your IP team, within your wider business and with your peers (e.g. those managing IP departments at other companies). Moreover, external patent attorneys have experience of many different outsourcing arrangements, all of which have pros and cons. Although you should consult widely, ultimately decisions need to be taken and those should be communicated (internally and externally). External patent attorneys who understand the rationale behind your outsourcing arrangements (and your wider patenting strategies) will be better placed to meet your expectations.