Today’s unforgiving budgetary climate confronts corporate IP departments with a multitude of challenges: from pressures on headcount and outside counsel spend, to the costs of portfolio maintenance fees and software systems. Costs have risen relentlessly, but there are solutions.
What is Driving the High Cost of Intellectual Property Operations?
1. Ralph Schroeder, CEO Helios IP
Greg Daines, CSO Helios IP
What is Driving the High
Cost of Intellectual Property
Operations?
Operational Excellence™ Series
2. About Us…
For 20 years Greg’s been
innovating on the front lines
of IP management. He has
worked for companies such as
Lecorpio and Knowligent
designing and implementing
solutions for many of the
world’s most innovative
organizations including Apple,
Google, Amazon, and Adobe.
Greg Daines
Ralph started out as an
attorney, but quickly found
his calling in IP management.
Along the way he worked at
leading IP companies such as
Anaqua, Dennemeyer, PwC,
and Hyperion, and has
become a thought leader
advancing the state-of-the-
art in IP management.
Ralph Schroeder
3. About Helios…
We created Helios IP to solve the serious problems corporate IP
departments face in efficiently managing their operations. Having
worked implementing systems and supporting patent and trademark
operations for a wide range of organizations both big and small, we’ve
seen firsthand how hard it is to realize the promise of technology.We
believe that legal IP groups need smooth and efficient operations so they
can get back to doing what they do best.
Helios offers a real solution.You can learn more here…
4. What’s the problem with the rising
cost of IP Operations?
• IP Department Budgets under pressure
+
• Expectations are increasing
+
• Costs have risen steadily
• Headcount
• Annuities fees
• Software systems
• Outside counsel spend
• Portfolio maintenance fees
Cost
Controls
Process
Inefficiency
Resource
Constraints
Increased
Workload
5. The problem is NOT outside counsel rates…
• Hourly rates are on the rise, BUT…
• The majority of work is no longer billed hourly
• Fixed-fee is the new normal
Fixed Fee, 23%
Hourly billing, 18%Fixed & Hourly, 57%
Other, 2%
6. So, what is driving the rising costs?
Our analysis has revealed four key factors driving
rising costs:
1. The ability to efficiently Scale
2. Duplication of effort
3. Systems & Data
4. Third party Services
7. 1. Scale
The demands of building and operating a world-class IP portfolio have become
orders of magnitude greater. In a recent benchmarking survey, we found that
over 87% of IP departments see increased complexity as their biggest cost
driver.
Scale = Volume x Complexity
Volume: demand for growing portfolios & global coverage
Complexity: freedom to operate, clearance, enforcement,
licensing, designs, domains, trade secrets, open source
The operational capabilities and processes available to many IP groups are simply
not up to the challenge of volume and scale they are facing.
CHALLENGE
8. 2. Duplication of effort
Managing outside counsel can be almost as time-consuming as doing the work in-
house, largely because IP groups often lack the operational tools and capacity to
collaborate efficiently.
CHALLENGE
Using outside counsel often does not alleviate the pressure as much as expected.
Our research shows the majority of legal groups practice some version of
‘shadow docketing’.
In-house attorneys and support staff often
spend up to 60% of the equivalent time
overseeing prosecution strategy, work product
review, error-checking, ‘shadow’ docketing,
and other case management activities.
Full Shadow,
47%
Partial
Shadow, 33%
No
Shadow,
15%
Not Applicable, 5%
Majority of legal groups use shadow docketing
9. 3. Systems & Data
IP systems are integral to success. However, buying, installing, maintaining, supporting,
customizing, and operating today’s complex IP management systems is a major source of rising
costs. Our research shows systems challenges as impacting a majority of IP legal groups.
Technology promises increased efficiency and operational effectiveness, but the cost
and difficulty of realizing the full benefits can put it out of reach for many IP groups.
CHALLENGE
• Prices going up:The cost to license systems has grown by 2x-
3x over the past few years
• Starting is costly:The cost to implement a solution can be as
much as 2x-4x the initial licensing cost
• Maintaining is costly:
• Customization:To stay useful, systems must be
continually customized
• Complexity: Now a necessity to keep dedicated “sys-
admins” on-staff
36%
45%
53%
68%
Don't Have Metrics
Inadequate Data
Sources
Lack of Systems or
Tools
Lack of Analyst
Expertise
What is the greatest impediment to
pursuing IP performance management?
10. 4. IP Services: Annuities, Renewals, etc.
Patent maintenance/annuity fees, trademark renewals and other
IP service fees represent the largest non-litigation administrative
line item for IP budgets.
IP services promise efficiency and reliability to IP teams in need of both, but the costs
are often high and managing the services can drain operational resources.
CHALLENGE
• Costs are often not transparent and can be much higher than
expected.
• Using outside attorneys often compounds the cost.
• Simply managing these services is manual, time-consuming, and
therefore costly.
11. What to do about it?
It’s more important than ever for IP groups to have
the support of highly effective IP operations. How
can this be achieved with limited resources?
1. Process 2. Skills 3. Systems 4. Providers
12. 1. Process improvement
A sub-optimal operating model is the most important root
cause of reduced cost effectiveness; and the best source of
improvement.
• Look for ways to reduce activities that are redundant and
do not add value. Avoid duplicating activities that are best
handled outside.
• Use effective tracking and reporting instead of manual
oversight where possible.
• Rationalize functions in order to free up resources for those
activities that add value to the IP department and its
clients.
13. 2. Skills and governance
Take an objective, open-minded approach to understanding
your true core competencies and the IP department’s
requirements.
• Reassess whether certain IP activities are truly essential.
• Review process and governance structures looking for
opportunities to minimize steps and approvals.
• Look at how operational responsibilities are assigned and
managed paying close attention to administrative
bottlenecks.
14. 3. Systems and data
Taking a pragmatic look at your systems and technology will help your operations
team understand and decide what solutions will improve efficiency and
productivity. Take a step back to reassess and streamline technology to
achieve a more simple approach that is ultimately more valuable to users.
• Inventory your full systems landscape and map your current technology against
your needs to ensure your core requirements are being met.
• Objectively assess if your group are realizing the expected benefits from
current systems.
• In cases where benefits have been underwhelming, review potential
alternatives including looking for simple, practical, low tech options.
• Connect your systems assessment with your Process and Governance reviews
to identify unnecessary, non-essential, and redundant technology burdens.
15. 4. Providers
Managing a world-class IP portfolio involves a myriad of complex and
interdependant activities and specialized competencies.An increasing variety of
specialized IP providers and services are available. Look for opportunities to use
outside services and providers to leveraging the productivity of your limited
resources.
• Look for ways to shift specialized work to more cost effective and higher
quality providers.
• Ensure you evaluate the full cost of managing the provider, and look for ways
to minimize and/or automate.
• Review current providers to determine if work currently being done externally
could be done more cost effectively by a different type of provider.
• Remain open to new provider models and approaches, as they may address
deficiencies found in the more established providers.
17. It’s time to be a lawyer again…
Your team's administrative and system headaches?We've got this.
Helios provides effortless operational excellence so you can get back to
doing what you do.
Find out how we do it and get the free IP Operations white paper
by clicking here…