What is Intellectual Property (IP) Budgeting?
IP is a significant cost center for an innovative organization or corporation. In general, the costs escalate geometrically over the years as the portfolio grows in depth and geographical spread.
Most people even vaguely familiar with IP handling are well aware of common costs such as for application drafting and filing, patent research, application prosecution, Trademark filing, IP due diligence, IP Litigation etc. However there are many, many other expenses which are often less understood, not expected, and very painful.
A critical element of managing an IP portfolio is managing the budget for the IP portfolio. This is not an easy thing to do, but a critically important task, that aims to help manage costs, anticipate expenses, plan for “surprises”, and in general, have a budget for enabling qualitative handling of the important matters. IP Budget management requires a high level of organization, and is generally not for CFO’s, as it also requires much specialist information, a very good understanding of the position of the portfolio, and the strategy for developing the portfolio going forward.
What are the Consequences?
Most nightmare scenarios you can dream up can well be the consequences of bad IP budget management. I have seen many mess-ups and painful losses resulting from inadequate IP money management, and you don’t want these to happen to you!
A mismanaged IP budget may easily lead to throwing away of good IP, having inadequate cover for core IP, compromising on new IP discovery, using up precious R&D resources developing unprotect-able or patented IP etc. Considering that IP is a critical and indispensable asset, the above scenarios are no less serious than destroying critical revenue channels of your core business.
15 Initial Smart Budgeting Tips:
- Carefully select your external IP council, and demand a high level of transparency and control in all budget related matters.
- Be involved in managing your IP portfolio, to ensure that quality and relevance are maintained, and that costs do not get out of control.
- Have a dedicated (at least part time) IP manager to take responsibility for managing your internal IP related administration and development, and controlling your outside council’s performance and charges.
- Realize that IP related expenses are generally cyclical, so both ups and down in spending should be anticipated and used to your advantage.
- Ensure that if you are a micro or small entity, you reap the benefits of lower fees, depending on your size and the respective jurisdictions in which you have filed applications.
- Consider using a carefully executed Provisional patent application filing strategy, especially for developments-in-process. Also consider the various prosecution highways between countries, which may help speed up examination and reduce prosecution related expenses.
- Respond to deadlines in good time, to avoid unnecessary fines for late filings, last minute handling and rush jobs.
- Understand the alternatives when deciding where to patent, which associates to use, how to manage the internal and external IP players.
- Develop policies and a system of rules for delivering clear instructions internally and externally, to minimize confusion, mistakes and non-responsiveness.
- Get on top of the formalities, such as Assignments, form completion, document storage etc.
- Strive to file relevant applications only, with realistic claims, to aid faster and cleaner prosecution.
- Avoid excessive claiming, which often slows down prosecution and significantly increases costs, especially when filing internationally.
- When filing internationally, carefully consider the legal and economic importance of the foreign jurisdictions you are considering. Each unnecessary foreign filing may prove to be a significant drain on resources.
- Regularly audit your IP portfolio, and get rid of irrelevant or non-useful IP you have in your portfolio.
- Focus your patent portfolio on elements that can be commercially advantageous. Patent application are not justified for every cool idea you have, so spend your IP Dollars on cost effective and value generating families and files only!
Keep in mind that your intellectual property budget should not be considered overhead. It is part of an entity’s overall strategic plan and a generator of assets for the company. Make these assets work for you!
The writer is Yaron Damelin CEO of Patenting Solutions – Personal IP Management