Here are 5 examples of important ways costs can be reduced in obtaining and maintaining a patent, as well as when taking action against a competitor if necessary.
It’s no secret that obtaining a granted patent can be a long, complicated, and expensive process. However, it is not all doom and gloom as there are many ways to save money and help you to realise a return on money invested in a patent. It can be tempting to try and save costs on the initial drafting of your patent application, after all drafting and filing a patent application using a qualified UK or European patent attorney can cost upwards of £3000. However, this is counterproductive and may lead to a patent application that ultimately ends up costing far more in the long-term than the apparent initial saving, through seemingly endless rounds of examination around the world. A gold-standard and efficient first patent filing ensures that the application is suitable for filing everywhere around the world and includes the correct structure and data which will be acceptable not just in the UK and Europe, but also in the USA, China, Japan etc. where different rules apply. An efficiently-drafted patent application also avoids throwing the kitchen sink at the application, which can result in applications with up to double the required number of pages, ensuring that you won’t pay “excess page” fees charged by some patent offices (they don’t want slog through 50-100 pages of waffle) and has the added benefit of saving on translation costs when applying for a patent overseas, which can be one of the most expensive parts of the process. Finally, it is crucial that you find the time to provide all of the data, advantages and optional features of your invention to your patent attorney before the first application is drafted and filed. This will enable a well-rounded application from the outset and avoid any problems with trying to add further features to your application after it has been filed (which is not allowed in most countries, including the UK and Europe).
All patent office’s impose deadlines to keep the patent application process moving and to ensure patents are renewed on time. It is very important that these deadlines are met, which is why we maintain a professional deadline reminder system at Wilson Gunn. If a deadline is missed, obtaining an extension is sometimes possible, but usually only with payment of a fee – and this can significantly increase patent costs. At worst, a missed deadline can result in the patent being lost, which then wastes any previous expenditure in prosecuting the patent as well as potentially leading to wider negative implications for your business. As well as missing deadlines, another practice that increases costs is instructing your patent attorneys very close to a deadline. Whilst we can and will always ensure a deadline is not missed (even if instructed on the deadline day), late instructions can often lead to:
sub-optimal responses, e.g., if experimental work hasn’t been completed, the results of which would enable swift grant of the patent, but the omission of which leads to another rejection from the patent office and yet another cost-incurring deadline; and
for foreign applications – foreign attorneys charging “urgency” fees for preparing last minute documents.
Costs for obtaining a patent overseas vary depending on the country, and can be very expensive. In this regard, an international (PCT) patent application is usually worthwhile pursuing as it delays the cost of processing an application before national offices by 18 months. This gives time for the most important markets to be identified to ensure money is spent efficiently, as well as giving you time to ensure the products covered by the application are commercially viable and/or to identify licensees. The delay provided by the PCT application can also be sufficient for a UK patent to be granted for the invention before it is examined overseas. The granted patent can then help expedite examination overseas which minimises the heavy cost of overseas patent prosecution. To save money in Europe, a European patent application can be used to obtain a national patent simultaneously in up to 38 countries. If derived from a PCT application, it is possible to avoid certain official fees leading to further cost savings.
Patents and patent applications are an asset for your business, and like any other asset, you should review them to ensure they are providing a return on the costs required to obtain and maintain them. For example, you may be able to claim UK Patent Box tax relief to provide a tangible monetary benefit from the patent. If one of your patents no longer covers your business interests, it may be best to abandon that patent to save on ongoing maintenance costs. We know the invention covered by your patent is your pride and joy (and the result of blood, sweat and tears), but commercial considerations should prevail, and if your patent is dead wood, it should be pruned. However, before you do this you could consider licensing or selling your patent to generate some additional funds.
If you are concerned about the activity of your competitors, large savings can be made by acting at the right time. For example, if you are concerned about a rival UK patent application, there is no official fee for filing observations or comments on the validity of the patent application before it has granted. However, once granted, the patent may only be challenged with an invalidity action before the UK Intellectual Property Office or a Court, which can be very expensive.It is therefore best to proactively monitor competitor activity through watching services. This will ensure you can protect your interests in the most cost-effective way.
At Wilson Gunn we have managed global patent portfolios for over 150 years and are therefore able to help you secure cost-effective protection for your invention in the UK and overseas. If you have any questions about anything we have covered in this article, or intellectual property in general, please get in touch with one of our team. As budgets for IT seem to be on the rise and the importance of a solid technology team only increase, more and more organizations are realizing the necessity of being honest about costs, both to stakeholders and staff as well as to consumers. For a majority of companies, expenses are the most common factor that influences IT budget decisions and without a transparent plan in place these costs can quickly skyrocket, especially as technologies require updates or replacements down the line. For organizations that adopt IT cost transparency, not only can IT departments make educated and powerful decisions as a result of knowing where money is spent, but they are also on the same page as the business department related to the cost of running IT, ensuring the best strategies for future innovation.
In short, IT cost transparency is tracking the total cost it requires to deliver and maintain the IT services that are provided to the business. By making all costs and expenses highly transparent through management software and systems, organizations are better able to ensure business growth is not impaired by the pressure of IT budgets. In the broader scope, IT cost transparency is a component of IT cost optimization – which itself is part of a global IT optimization strategy. When IT departments achieve cost optimization, they are guaranteeing strategic initiatives can be met and supported while budgets remain appropriately constrained. Creating cost transparency, and further on cost optimization, in the IT department requires a complete understanding of not only what the business needs from IT but also of the current IT cost baseline.
There are multiple factors that must be considered when moving towards IT cost transparency and it is necessary for organizations to be properly informed of the main elements involved.
One of the first steps towards IT cost transparency is to find the IT asset baseline. This is accomplished by performing a complete analysis of the number of IT assets that are chargeable and determining how they are used. These assets might include things such as servers, networks, storage, software, mobile devices, and employee workstations. This baseline number must be accurate and completely reflect the amount of money towards these assets.
The next element of IT cost transparency is business system correlation. What this means is that the numbers from the analysis and asset baseline must be understandable in order for action to occur. By expressing facts in ways that decision makers can understand, IT costs and systems can be properly identified along with the value they provide the business.
Although making the asset baseline transparent and easy to understand is important, those steps alone are not enough to achieve IT cost transparency. The relationship between the deployment of software and its configuration must also be made transparent, including the connections of clustering, virtualization, and licensing. Another component of business intelligence is usage. While most organizations have multiple servers and hold expensive licenses, it is necessary to be able to identify who uses each of these components and what their value is to the systems. Being able to decommission unnecessary hardware and software is a huge piece of cost transparency.
While the idea of decreasing costs is a huge draw to undergoing IT cost transparency, there are many other benefits to adopting a solid system, as well.
One of the biggest benefits of IT cost transparency is that it provides a complete view of where money is actually being spent throughout the department. This information gives IT leaders and stakeholders the ability to make accurate decisions regarding current needs as well as future innovations.
For IT leaders, being able to have more leverage is a huge benefit of IT cost transparency as it allows them to more confidently communicate the reasons behind costs and their overall value to the company. By putting things into terms for even non-IT leaders to be able to understand and analyze, the business can start to put plans into place on what makes sense and what does not.
When assumptions about spending are replaced with numbers and data, it is much easier for companies to make decisions based on facts rather than emotions. IT cost transparency clarifies total expenses associated with IT, and factors in other elements like labor and assets. By providing this information, most open and honest conversations can occur between stakeholders.
As costs are regularly reviewed and analyzed, executives have the ability to see how their employees affect consumption and how teams are performing. When staff knows that data is going to be seen and shared, it can lead to increased engagement and reduced unnecessary costs. Once numbers are reviewed on a routine basis, cost transparency can influence employees to notice services and software that isn’t beneficial.
IT cost transparency shouldn’t be viewed as just another major project that IT departments must undergo in order to check it off the list. Rather, it should be seen as a solid investment that will end up saving tons of time and money as the years go on. By reporting assets, understanding business system correlation, and seeing how business intelligence interplays with other systems, organizations can become one step closer to IT cost transparency and ultimately complete cost optimization.
An asset is a resource that is controlled by an entity (such as a company or a business) as a result of past events (for example, purchase or self-creation) and from which future economic benefits (inflows of cash or other assets; or reduction in costs) are expected. Basically, the wealth of a business comprises of the following types of assets Wealth = Working Capital + Fixed Asset + Intangible Assets Working Capital : Working capital refers to the excess of current assets (cash, short-term investments, accounts receivable, inventories, prepaid expenses, etc.) over its current liabilities (trade accounts payable, current portion of long-term debt, income taxes, withholding taxes, accrued liabilities, etc.). It is also known as net current assets. Fixed Asset : Fixed assets which include plant, machinery and equipment, land and buildings, office furniture and equipment, computers, vehicles and other tangible property used by a business but not converted into cash in day-to-day business. Traditionally, fixed assets were considered to be the brick and mortar of a business and were seen as the main contributors to its wealth/value. Intangible Assets: Intangible assets are the non-physical property of a business. Traditionally, they were considered to be the 'Goodwill' of a business, that is, the amount paid for a business in excess of the fair value of its identifiable net assets. A wide range of intangible assets, such as customer's loyalty, well respected business name/strong reputation, calibre and morale of employees, IP assets, etc, were clubbed under 'Goodwill.' Intellectual property (IP) assets? IP assets are a sub-set of intangible assets and distinguished from other intangible assets by the fact that these are created by law. As such, IP assets are legally protected and can be legally enforced. These can be independently identified, are transferable and have an economic life (in contrast to their legal life, which is generally longer than their economic life). IP assets include patents, industrial designs, trademarks, copyright and trade secrets. Legal perspective: An IP asset can be defined in terms of particular qualitative characteristics or standards (such as that of novelty, originality). Economic perspective: An IP asset can be defined in terms of the economic benefit linked to the IP asset. For example, a patent that has not contributed to the production or protection of income has no economic value, even though it has legal existence. 2. Value of an asset the value of an asset is the value of the future economic benefits it brings. The value of an asset, whether tangible or intangible, can be estimated. Some assets are easier to value than others, and some valuations are more precise than others. Monetary or financial valuation is the process of determining or measuring reliably the value or worth of an asset in certain circumstances, the cost or price of an asset may be a good indicator of its value. (1) Value of an IP asset? The value of an IP asset derives, in essence, from its ability to exclude competitors from a particular market. Whilst the legal right grants exclusivity or the right to exclude, the economic right is based on exclusivity of use, that is, the ability to control the use of the IP asset. For an IP asset to have a quantifiable value, it should: - generate measurable amount of economic benefit to its owner/user. - enhance the value of other assets with which it is associated. (2) How to derive value from an IP asset a. Direct exploitation of the IP b. Through sale or licensing of the IP c. Even by not exploiting an IP asset (i.e., by merely owning it), it may be possible to add value, for example, by: - minimizing the negotiating power of customers, - offsetting supplier power, - mitigating rivalry, - raising barriers to entry by competitors and reducing the threat of substitutes.
Definition of IP valuation IP valuation is a process to determine the monetary value of subject IP. (1) Prerequisites for Undertaking IP Valuation to be able to do the valuation of an IP asset, it must be separately identifiable. a. The IP asset must be subject to specific identification and a recognizable description. b. There should be some tangible evidence or manifestation of the existence of the IP asset (e.g., a contract, a license, a registration document, a computer diskette, a set of procedural documentation, a listing of customers, recorded on a set of financial statements, etc.) c. It should have been created or have come into existence at an identifiable time (or time period) or as the result of an identifiable event. d. It should be capable of being legally enforced and legally transferred. e. It should be capable of having its income stream separately identifiable and isolated from the contribution of other assets employed in the business. f. It should be capable of being sold, without selling the other business assets of the enterprise to the same buyer. g. It should be subject to being destroyed or to a termination of existence at an identifiable time (or time period) or as the result of an identifiable event. (2) Factors influencing IP Valuation a. Premise of value: The value of an IP asset would depend on the context or circumstances in which it is being valued. For example, is it being valued in the context of a 'going concern' where it is 'alive and well' and performing its job, or is it being valued in a context of a going concern but where it is not being used? Similarly, in the case of liquidation, is it a forced liquidation or an orderly disposition of assets? The value will be different in each of these four situations. b. Standard of value: Learn More c. Reasons for, or purpose of, the valuation d. Time or date of valuation e. Access to and reliability of relevant data and information f. Valuation method(s) applied and assumptions made while applying a valuation method. Standard of value Understanding the concepts of fair market value and fair value, the most commonly used standards of value, is important when undertaking an IP valuation exercise. Fair market value (Market value) Fair market value can be defined as the price at which an asset or service passes from a willing seller to a willing buyer. Premise of value: Exchange It is assumed that both buyer and seller are rational and have a reasonable knowledge of relevant facts. Fair value (Fair price) Fair value is seen as appropriate for use in post transaction purchase price allocation. - Premise of value: Use Fair value is based on the assumptions that market participants would use when pricing the asset. Whereas fair market value is seems to be more appropriate when used in the premise of value in exchange, fair value is often based on premise of value in-use. In common situation, IP valuation is a process to evaluate the fair market value of an IP asset. Particular valuation method g. Legal, tax, financial or other business circumstances h. Nature, scope and strength/validity of the underlying IP asset I. infringement or freedom to operate issues. The term "intellectual property" (IP) refers to a class of property that encompasses intangible makings, such as distinctive identifiers for a company or its goods or services (e.g., logos, brand names). Patents, industrial designs, trademarks, copyright, IT infra, Apps, enterprise IT solutions, ITES, and trade secrets are examples of IP assets. IP assets are transferable, have an economic lifespan, and can be independently identified. The process of determining the fair market or arm's length value of IP assets is known as Intellectual Property valuation. Since intellectual property frequently represents a company's most valuable assets, appropriately valuing such properties is essential to determining the company's true worth.
The term "intellectual property" (IP) refers to a class of property that encompasses intangible makings, such as distinctive identifiers for a company or its goods or services (e.g., logos, brand names). Patents, industrial designs, trademarks, copyright, IT infra, Apps, enterprise IT solutions, ITES, and trade secrets are examples of IP assets. IP assets are transferable, have an economic lifespan, and can be independently identified. The process of determining the fair market or arm's length value of IP assets is known as Intellectual Property valuation. Since intellectual property frequently represents a company's most valuable assets, appropriately valuing such properties is essential to determining the company's true worth.
An IP asset must have the following criteria in order to be quantifiable:
It should provide its holder or user with quantifiable financial benefits.
It should increase the value of all other assets to which it is related.
It should have details of efforts/time/expenses for development
Prerequisites of Intellectual Property valuation:
When completing an Intellectual Property valuation, there are a number of crucial variables to identify and take into account. These consist of –
Clear identification of the IP
Unambiguous title to the asset.
Qualitative and quantitative characteristics of the IP.
Earnings capacity and profitability relating to the IP.
Market share supported by, or as a result of, the IP.
Legal rights and restrictions, competition, barriers to entry, and risks associated with the IP.
Product life cycles and positioning.
Historical growth and prospects for the future.
Investment or expenses which has been incurred to establish IP
How to calculate intellectual property valuation?
The value of the intellectual property may be determined using both qualitative and quantitative methods.
Method 1:
Market-based method –The market approach valuation technique looks at the value assigned to similar IP assets in transactions between independent parties to assess the worth of an IP asset. In this method, the comparison is made between the original prices levied for transferring the rights with a similarly available asset. It quantitatively analyses the market to obtain a fair value for the intellectual asset.
Method 2:
Cost-based method –The intellectual property's value is determined by calculating the cost incurred while creating it, including machinery, equipment, labour, legal protection, testing and trials, and overheads. Two different cost approaches can be considered in the determination of value: The recreation cost (cost associated with generating identical assets) and the cost of replacement (cost associated with the creation of assets having the same utility).It does not bring in the risks associated with the future cash flows of the IP. It is based on historical costs rather than future costs.
Method 3:
Income-based method –
The value of the IP is calculated by forecasting the revenue that the asset will generate in the future.
Works by discounting the expected future projections of cash flows or the income that is to be generated by the IP.
It is the most scientific approach for intellectual property valuation; the other methods under this approach are the excess profit method and the royalty method.
Qualitative methods are employed when the intellectual property does not provide any monetary benefit to the IP owner and is used internally for research and development purposes.
Method 1: Rating and Scoring – Scores are assigned considering multiple parameters which are regarded as non-quantifiable -- by analyzing the strategy, state of the technology, and value that the brand possesses and by measuring associated risks.
Method 2: Value indicators – In this method, the data and information about IPs are collected and categorized using statistical tools. They are sometimes also used as a tool for internal comparison.
