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Panel: What we would do if 20% of our patent budget were cut

Speakers discuss best patent budget practices

An all in-house panel explained how they stick to a budget and demonstrate the value of their patent portfolios

Panellists from InterDigital and Corteva Agriscience discussed best practices for patent budgets at Managing IP’s US Patent Forum yesterday.

Sonja London, director of patent licensing at Nokia in Finland, moderated the talk on “Portfolio optimisation: creative solutions for managing your IP strategy” and asked panellists what they would do if 20% of their budget were cut.

Marian Flattery, associate general counsel of IP at agricultural chemical company Corteva Agriscience in Iowa, said foreign filings would be the first area she would look to cut. She noted that her company often files in 40 to 60 countries, but said this could be curtailed if budget restrictions required it.

She added that Corteva has used a reverse auction platform to get law firms to bid against each other to work for the company. She said the process drove down costs by 25%, which was much more than she had expected.

Timothy Bedard, vice president and chief patent counsel at Visa in Washington DC but speaking in a personal capacity, said companies should consider subscription models where businesses pay law firms a certain amount of money per a month. 

He added that finance teams typically don’t like the “lumpiness” of legal expenses, so they may prefer more predictability.

Pruning and culture

Brian Dorini, senior portfolio manager at InterDigital in New Jersey, said businesses should look into pruning older patents. They can sell part of their portfolio to reduce costs and generate some income, he said.

Flattery at Corteva added that companies should consider how their culture contributes to budget issues. Some companies have a culture of counting patents and trying to get as many as possible.

But Flattery says this mindset can drive the wrong behaviour from patent attorneys and the research and development team. If companies are merely counting patents, they might try to register five patents where one would suffice and be more cost-effective.

How to outsource

Counsel discussed what kind of preparation and prosecution work can be outsourced to private practice lawyers and what should be done in-house.

Bedard said this issue comes down to whether the business believes that this kind of work is a good use of in-house lawyers’ time.

He said he believes that outside counsel are the experts and have knowledge of case law and the USPTO that makes them best suited to handle day-to-day patent preparation and prosecution.

But some companies take a different approach. Flattery said Corteva used to outsource 80% of its work to outside counsel and now sends out closer to 20%. She said the business hired additional attorneys and patent agents to reduce reliance on private practice lawyers.

Licensing mythology

Flattery also discussed licensing, saying her company doesn’t do a lot of it. That being said, Corteva has a patent for a popular pet medication and licenses this patent and gets a substantial revenue stream in return.   

But sometimes people at the business cite this patent as a reason to be wary of abandoning other patents.

“We need to manage the mythology within the company. If we haven’t licensed it out within five or ten years, we take a hard look at whether we’re trying to license it or just sitting on it in the hope that someday somebody will come knock on our door.”

Bedard went on to talk about how companies can demonstrate the value of their portfolios. He said it can be difficult for lawyers to do this if their companies are acquiring patents for defensive purposes rather than for licensing. 

But he said the absence of inbound lawsuits from operating companies can help prove that a patent portfolio is valuable.

Cross-licensing opportunities can also help lawyers demonstrate value, he added, because companies typically don’t want to enter cross-licence agreements with businesses that don’t have strong portfolios.

October 7 was the final day of Managing IP’s two-day virtual patent forum. 

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