Patent Costs

As patent attorneys, we are continually surprised by the incorrect perceptions that exist around patent costs, including patent costs in Australia. Here we seek to address:

1. Patent costs vs. war stories
2. How to choose your patent attorney
3. How Baxter IP makes patent costs transparent
4. Why the cost-conscious inventor should consider Baxter IP

Patent costs vs. war stories

One of the best examples of a war story on patent costs that we’ve heard was on Shark Tank 2015, during which an inventor claimed to have spent some $700,000 on IP costs prior to any sales of his device. This story goes to the crux of most war stories on patent cost in Australia and overseas, that is – don’t spend money on patents if you are not creating a business (whether a manufacturing or R&D and licensing business) or preparing to sell your patent in parallel to pursuing patent protection. If something significant is not happening on the commercial or capital front within 18 months of filing a provisional patent application this is normally an indicator that there is a misconception around patenting.

The aim of intellectual property is to create far more value than its cost of acquisition, either directly via:

1. patent sale; or
2. patent licensing

or indirectly by:

1. protecting profit margins; or
2. growing market share

than the cost of obtaining that intellectual property.

Where you are founding a startup or preparing to sell your patent, the patent system offers numerous opportunities to delay patent costs, for example:

1. you can start the patent application process with an inexpensive provisional patent application that will lay an international claim to your idea for the first 12 months without any further costs; and
2. after the 12 month provisional patent application period, you can then file a PCT international patent application to extend your international claim to your idea for another 18 months.

All up, using the process we have outlined above and in relation to a simple consumer product invention, the total cost for maintaining your claim to the new idea for the first 2 ½ years can be as low as $17k. Baxter IP employs numerous other strategies to maintain costs to a tight budget for our clients who are cost conscious.

Patent costs: how to choose your patent attorney?

Based on the commercial outcomes you are seeking from your IP

You should patent for successful commercial outcomes, whether it is:

1. A valid patent that you can enforce against an infringer;
2. A valid patent that you can use to de-motivate or dissuade a competitor;
3. A patent application that enhances the value of your business during capital raising;
4. A patent application that is purchased by a third party;
5. A patent application that you license to third parties; or
6. A valid patent that protects the profit margin of your products.

So, how might your choice of patent attorney affect the potential for you to achieve a successful commercial outcome?

In relation to 1 & 2, to achieve a valid patent, your best chances are by working with an experienced patent attorney who is a specialist in your technology area as they will understand the prior art more intimately and be able to get right to the heart of any objection an Examiner may raise. No patent attorney is an expert in all technology fields; thus, your best chances of finding a patent attorney with that specialist technical knowledge is within a medium sized patent attorney firm with multiple patent attorneys, rather than a one-person practice.

Tip: There are numerous so-called “patent attorney firms” that are really just one-person- practices. How can you tell? Look at their staff page carefully; simply because they have multiple staff listed does not mean they have more than one patent attorney. Some staff may not be registered patent attorneys. It goes without saying, if the website does not list a registered Australian patent attorney by name – be very careful.

In relation to 3 to 5, it will be easier if you can work with a patent attorney who can add value by introducing you to commercial contacts who can assist you in capital raising / sale of IP and licensing. Further to this, investors and licensees will want to see a reputable patent attorney firm brand behind your intellectual property protection, and it’s even better if they have had positive dealings with the firm previously.

To achieve the optimal balance between patent cost and risk

The patent application process is highly deadline oriented, and for some deadlines there are no extensions available – if they are missed, your patent application will lapse. Therefore, the question that every inventor must ask is – what happens if my patent attorney is suddenly unable to look after my matter? For example, if they fall ill. This can be a real problem for a one-person practice, whereas the risk is mitigated by working with a firm with multiple patent attorneys.

Finally, the quality of your patent work is of the utmost importance, and there can be a huge difference between a provisional patent application prepared by one firm and one prepared by another firm in terms of the final scope of legal protection achieved – we explain these differences and why they are important here.

How does Baxter IP makes patent costs transparent?

Baxter IP was one of the first patent attorney firms in Australia to adopt a simple fixed-fee and capped-fee approach to carrying out intellectual property work for its clients. Here’s how we make costs transparent:

1. At the first meeting, we will give you a copy of our Patent Applicant’s Guide which sets out for you our fixed costs and cost ranges for the entire patent process. This effectively allows you to create a patent budget for years into the future.
2. Before conducting any action we will give you a fixed cost estimate for the action and will only commence work on the matter after there is agreement on price.