Predicting the costs of patenting innovations and maintaining a patent portfolio is a crucial part of the budgeting process. However, cost prediction is often a complex process, especially for young companies with smaller portfolios. So if you are spending less than $100,000 a year on your patent filings, it is challenging to estimate monthly costs. Spurious events are also harder to predict. The bigger the portfolio, the easier it is to estimate the costs–as there are a lot of data points to connect, the law of averages kicks in. Now you can either do the data crunching yourself, or you can bring in the experts to help. Here are three ways you can go about getting cost estimates:

  • Ask a patent attorney
  • Assess each and every file
  • Use an estimation tool

Before we get into the details of each of these ways, let’s understand what kind of associated costs need to be taken into consideration: anticipated as well as unanticipated. 

Costs to be Taken into Account While Budgeting  

The predictable costs associated with a patent application include: internal costs to the enterprise including possible inventor bonuses, government fees due throughout, miscellaneous expenses for obtaining inventor signatures, and submitting prior art and other ministerial filings.  Internal resources, such as inventor engagement to fill forms and review drafts, any patent committee to vet ideas, and administrative activity to approve patent counsel recommendations.  The government fees are fairly predictable, but are discounted for small enterprises and even more for tiny ones.  

Argument Phase

The patent examiner almost always rejects your patent application and it is rare to win an allowance in that first round of response.  Two to four rounds of argument are typical, but each technology area and examiner is different. Software tools have deep learning capabilities to estimate how many rounds your assigned examiner is likely to require.

Tough Examination

There are technologies such as business methods, GUIs, AI algorithms, genetic software, and others that have an especially difficult time at the patent office.  This often results in far more rounds of argument during the filing process. Sometimes the innovation you file is not unique enough, which can cause issues.  If you are unlucky enough to get a new examiner or one that is stingy in awarding patents, examination can be protracted and expensive.

Annuities

Annuities may also impact your patent costs. Patent annuities are renewal fees paid periodically to maintain a patent’s validity. These fees may vary in amount and timing from country to country and constitute additional patent costs. For those operating in the United States, here is what the annuities look like:

Inventor Awards

An incentive scheme rewarding inventors within your company who receive patents can add to the final costs of a patent application. Therefore, if your company has such a scheme, the incentives should be considered in the budget.  

Furthermore, cyclical events such as annual conferences, may impact your patent costs. This is done on top of the inventor bonus program that typically awards new filings and issuances.  Some host a user community, hackathon, or developer conference that is fertile ground for mining patent ideas.

Foreign Patents & Translation Fees

Patent rights are awarded by country or region. Starting domestically is commonly followed by overseas filings that can claim priority if within a year, which allows the foreign case to have the same effective filing date as the domestic patent application. Expect to spend  $40-60K per foreign patent with your patent counsel.

The length of a patent specification may increase the filing fees, especially in international applications requiring translations. A translation will be required where the official language of the patent office is different from the language in which the application is drafted. This will attract translation fees and filing fees for additional pages of the patent specification. For instance, the estimated costs of translating an application into Chinese, Japanese, Korean, and Russian are between $3,000 and $6,500.

Let’s now turn to the methods for getting cost predictions. 

Ask an Attorney

You can ask your patent counsel for predictions on the timeline for the patent application process. Your counsel will often be able to make an estimate or give an opinion on the cost of the application in the short term, depending on the stage of the application and the anticipated timeline. 

However, it may be difficult to obtain an accurate estimate, despite the attorney’s experience. This is because patent offices are bureaucratic agencies that do not have uniform statistics for each case.  The technology area and assigned examiner will greatly affect the cost as will the counselor you choose and the strategy they take.  For example, an amendment may result in a quicker but narrower patent.  Fighting for the broadest possible claim can be expensive.

Assess Individual Files or Historical Costs

An alternative to obtaining an estimate from your attorney is to independently examine each file and make predictions. The future effort is ascertainable in the short-term, and an educated guess can be made for the remaining costs. This bottom-up approach provides a fairly accurate estimation, but it is more suitable for companies with smaller portfolios. In addition, regardless of the portfolio size, it may not be an efficient use of your time.

With a top-down approach, you may study counsel’s invoices for the last quarter or last six months to assess the burn rate on patent applications. You may further identify a cyclical pattern of patent filing. For example, a version of a product released annually, which requires a patent filing before each release. These patterns will guide you in relying on the company’s burn rate to predict the budget for the next few months.  This technique works better with large patent portfolios where the law of averages kicks in, but smaller portfolios are more sporadic.

Software Tools

A software tool may provide an accurate estimate, which considers a combination of prediction methods and big data to allow you to model applications based on their complexity, the examiner or area of the patent office as well as the chosen patent counsel. 

Software, such as the TIP Tool, can simplify IP budget and cost estimates. These tools provide interactive interfaces where you can input the anticipated fees, such as attorney fees. The tool then uses this input to predict the costs of completing the patent application. In making its prediction, it considers other costs, such as the costs of prosecution, assignments, declarations, and other filings that you did not anticipate. 

Since these tools give a projected cost for each filing, short-term prediction is relatively easy. For several filings, you may use tools to obtain an estimated cost for each filing before adding them up. The relevance of these tools, however, extend beyond patent prosecution fees to include patent maintenance fees. It allows you to predict the costs of renewals, increasing the accuracy of your budget planning process. 

With the cost of patenting innovations quantified, you will increase the accuracy of your IP budget to allow for more strategic predictions.

Key Takeaways

Predicting patent costs is a difficult task because there are several factors that may influence the cost. Some of these factors are not easily anticipated. And when you have a small portfolio, spurious events make it nearly impossible to create an accurate estimate of costs. It is also time-consuming to review each patent with a large portfolio. Hence, it’s cost-efficient to go with the tools that can provide cost estimates as accurately as possible.