Reducing Technology Transfer Costs

October 20, 2008

Universities and research institutions typically retain outside patent counsel to prosecute their patent applications.  While some firms perform the task efficiently and professionally, many firms exploit the university. The methods these firms use to fleece universities border on the absurd.  For example, one university will not send a courtesy "thank you" email as they are significantly billed by outside counsel for writing a "your welcome."  Technology transfer offices (TTOs) might consider the following in making safe and effective outside counsel selections:

Quality of Patent Counsel

Patent firms that can operate on the university level should typically have at least an average of 15 years experience on the partner level and be AV-rated.  Ask meaningful questions such as:

1. Attorney Training: What ongoing training to the attorneys receive (ABA, AIPLA, etc..)?
2. Assignments: If attorneys with less than 4 years experience will work on university matters, will all work be supervised?
3. Supervision: If "yes" to above, will the TTO be billed to "train" new attorneys on fundamental skills?
4. Billing Requirements: What is the annual billing requirement for an attorney.  1,800 hours is reasonable.  If attorneys must bill anything more there are probably not enough hours in the day to ethically meet the requirement.
5. Volume: How many filings/issuances has the firm received in the last few years?
6. Past Performance:  How many clients have been acquired based on a patent portfolio developed by the firm?
7. Staff Training: What training do you give your staff?

Aggressive versus Moderate Prosecution

Not all technologies have the same licensing potential.  A novel book binder is not Taxol.  A novel fishing reel is not Gatorade.  Do not fall for the premise that all disclosures must be pursued by egalitarian principles.  An experienced patent firm can step up or step down prosecution responsive to TTO instructions.  We suggest:

1. Turnaround: For high-value applications TTOs should press firms for expedited turnaround.  Patent term is already ticking-down so even if the firm will pick up the extension fee the TTO will have less term to license.
2. Pre-Emptive Interviews: For high-value applications TTOs should press firms to call the examiner upon filing an amendment and set a telephonic interview before the examiner writes a final rejection.  There will likely be less PHE and a better opportunity to get an earlier allowance.
3. Appeals: For moderate-value applications that do not have a definite licensee, filing an appeal might cost less than engaging in an expensive cycle of continuation applications.
4. Restrictions: For moderate-value applications, ask the firm to structure the claims so the application will not be split into an excessive number of divisional applications.

Avoid getting Fleeced

If the TTO does not police its patent costs then the burden is merely shifted to the licensee.  Some portfolios are so obese with unnecessary filings they are "unlicenseable."  There are a number of simple steps to mitigate excessive costs before they occur:

1. Flat Fees: Ask the firm whether they will set a flat fee for the particular filing.  Firms are in the best position to know what resources will be required to fully and competently perform the work.
2. Billing Ceiling: If hourly, set a billing "ceiling."  For example, if the billing for a non-provisional patent application will exceed $5,000, require the firm to unambiguously explain why the project requires more time than normally allotted.
3. Extensions: Set a predefined window with respect to office action extensions.  If the TTO provides all necessary information two months before a deadline and the firm sits on the information, should the TTO pay for the extension?  Flag firms that continually bill for extensions they should pay.  TTOs should not have to continuously fight for billing adjustments.
4. Delegation: Flag firms that bill attorney time for doing anything assignable to a paralegal or secretary.  Copying references, submitting an IDS, or scheduling a conference call should not be billed at an attorney rate.  Also look for anomalies such as 18 minutes of billable time to leave a voice message.

TTOs provide a streamlined environment for outside patent firms.  Disclosures have the core information required for a patent filing (i.e., statutory bar dates, inventors, etc..).  TTOs send a consistent stream of work to the outside firm.  The firm rarely must discuss the fundamentals of patent prosecution.  Accordingly, patent firms should genuinely appreciate and aggressively represent TTOs in a professional and efficient manner.  Anything less is unacceptable.