Intellectual property

Patent attorneys under fire over “crippling” fees

By Michelle Hammond
Tuesday, 17 January 2012

Australia’s patent attorneys have come under attack for charging too much for patent filing, with claims that some attorneys charge as much as $150,000 to file patents overseas.

Dr Kiki Tanousis is a director at Melbourne-based consulting firm Interface Innovation, which specialises in helping businesses commercialise their ideas.

Tanousis, who has worked with a number of start-ups in Australia and Britain, says some patent lawyers view patent filing as “money for jam”.

“Many Australian patent attorneys charge between $25,000 and $150,000 to file patents overseas, depending on the number of countries chosen,” Tanousis says.

“The Australian patent attorney business is a step or two behind the US, where vigorous competition has reduced costs dramatically.”

“Australian innovators are paying between 40% and 60% more for their patents than their American and European competitors. This places Australia in a very anti-competitive position.”

According to Tanousis, the drain of legal fees during the start-up phase could slow down the time required to take an innovative idea to market or completely discourage the inventor.

In the worst circumstances, it could push a small company into bankruptcy.

“With such crippling costs, many Australian inventors have been bankrupted. Other fantastic technology companies starve, flounder and fail,” Tanousis says.

Tanousis says the heart of the problem is that many local patent attorneys refer their clients to foreign patent firms, simply so that they can receive reciprocal referral business from overseas.

“Under this cosy two-way system, there is no incentive for either attorney to seek a better price for their client,” he says.

Alon Tamir, founder of StudioProper, which makes accessories for Apple devices, says he couldn’t afford a patent for his product Wallee Lock, which prevents iPads from being stolen.

“It would’ve cost us millions of dollars to get a patent, so we realised the best way to protect your market share is get out there first and do it better than everyone else,” Tamir says.

“These days, there is no real protection. Anything can be copied. The only way to safeguard your product is through service, innovation and quality.”

Tanousis encourages entrepreneurs to make use of inovia.com, a “patent powerhouse” founded by Sydney-based patent attorney Justin Simpson 10 years ago.

inovia.com is an online patent technology that allows Australian entrepreneurs to file patents overseas at around half the cost they are currently charged.

According to Tanousis, inovia.com is the largest filer of PCT patents in the US and the world’s third largest.

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Comments (7)

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Sounds like Alon should have spoken with us. It doesn't cost millions of dollars to get a patent, unless you want to cover every country on the planet - twice. As an extremely rubbery estimate, one could get a patent ready for national phase for less than $10k. Then enter national phase with inovia. For the US, that would be $2k (or $5k if you went to a local attorney). For Europe it would be around $5k ($13k local prices), China $2.5k ($6k locally). And then a few years down the line allow twice as much again (rubbery) to allow for your patent attorney to get it allowed. That's not millions of dollars and it's spread over 4-5 years.

Kiki Tanousis , January 17, 2012

I agree that the 'millions of dollars' comment is a serious exaggeration, unless you are looking at a seriously overblown patent strategy. Unfortunately, a lot of attorneys aren't very proactive at working with clients to set up a cost effective strategy that makes sense for their business.

Part of the problem is that the 'larger' Australian patent firms are set up to primarily to handle incoming patent applications from foreign applicants. This is the vast majority of their business, and it is fair to say they are driven by reciprocity to send their (relatively) few foreign filings to the O/S firms who send them the most work - and there is no incentive there to choose the most cost effective partner.

The Inovia platform appears to be a good way of choosing the cheapest O/S agent to enter national phase from the PCT. I haven't done so yet, but would consider involving them when next I have a client looking to file in multiple countries out of a PCT application.

However, it has to be remembered that Inovia is not 'your attorney' in an ongoing sense. You would then need to pro-actively manage all of the correspondence, examination and renewals actions arising out of each O/S attorney individually. My experience is that foreign attorneys are unused to 'hand-holding' non-lawyer foreign clients through what can be complex examination processes, and that their fees mount up VERY rapidly if their time in this phase is not tightly managed.

Ultimately, it pays to have a good Australian attorney help co-ordinate the 'post-filing' process. But I do agree that a lot of Australian attorneys charge far too much for the 'routine' filing procedures.

The best solution is often to look beyond the 'big name' patent firms and find the firms who are based on Australian clientele. You will find they don't charge anywhere near as much for the 'turn the handle' work, and are likely to do as good or better job than the big firms on the 'hard stuff', and do a LOT better on the strategy side as they will be far more interested in developing an IP strategy based on VALUE.

They also are likely to be sending more work overseas than they receive back, so they can locate the best value foreign associates (as Inovia does) without being driven by reciprocity.

Adam Hyland
www.frankehyland.com.au

Adam Hyland , January 17, 2012

On the "your left on you own" comment, this really isn't an issue. Any reputable patent firm should carry on with the prosecution on your behalf, even though you may have elected to file through the inovia platform, or instructed them to do so on your behalf. It should cost zero to do this. If anyone tries to charge you, make them put it in writing and send it to us. We're logging any instance of intimidatory behaviour. It is no more than a click of a mouse to keep a file open and carry on seemlessly with the prosecution. Alternatively, off the top of my head, firms like www.shelstonip.com/ or www.1place.com.au know the system well and would be happy to offer a level of service that our overseas competitors can take for granted.

I know for a fact that 50% of inovia users in the US are patent firms that use the platform on behalf of their customers. I'll keep posting Australian firms that offer the same service here, or drop me a line.

Kiki Tanousis
www.interface-innovation.com

Kiki Tanousis , January 17, 2012

Yes agreed - you still need a good local firm to oversee the rest of the process, if you don't have internal IP counsel or an IP department to manage this in-house.

Our firm (www.frankehyland.com.au) also would be happy to work in with a client wanting to file via Inovia if it was going to to be more cost effective for them, and if they can still choose the foreign attorney where desired.

Adam Hyland , January 17, 2012

Totally agree with the fact that Australian IP lawyers are charging way too much.
When I applied for a PTC, and progressed it with 2 international manufacturing companies ad 1 global UK based distributor(under strict NDAs) who are interested in licensing my IP, I then found out that to get beyond the PTC in USA, Aus, UK, China, India and 5 EU countries will cost me around $200,000. This is now stumping my opportunity to progress further as I have to find the $200K to

Quidam , January 18, 2012

Quidam - $200K sounds like a lot to cover that list of countries? Especially if the search done in the PCT was relatively clear?

A couple of points to bear in mind there are (a) that (to be fair to the Aust attorneys) the vast majority of the patent costs incurred after the PCT stage are the fees charged by the overseas patent offices and attorneys; and (b) if your patent strategy did amount to $200K that wouldn't get charged up front but would accumulate over at least the next 5 years as you work your way through examination in the various patent offices.

Having said that, I have no doubt you could get a better deal. But if your license fees don't dwarf the IP costs (which is how it should be) you might need a different strategy.

Adam Hyland
a.hyland@frankehyland.com.au

Adam Hyland , January 18, 2012

It’s been heartening to hear how quickly momentum is growing . Firms like Adam Hyland’s http://www.frankehyland.com.au/ (Comment 2 above) are a great example of patent attorneys stepping up and offering the same kind of service to Australian innovators that our overseas competitors can now take for granted.

Kiki Tanousis , January 25, 2012