Budget pressures are driving companies to bring more patent
processes into their IP departments, according to in-house
sources at technology, life sciences and manufacturing
Out of the seven corporate lawyers Managing IP interviewed,
six said they had brought or were considering bringing certain
functions in house either completely or partly because it would
make them more cost effective or efficient, and without
sacrificing patent protection quality.
"All companies have limited budgets and resources," says the
senior IP counsel at an automotive parts company. "We should be
cost efficient, and internal legal professionals are often less
expensive than outsourced ones."
But, he adds, most businesses have peaks in their patent
work, and increasing internal capacity just to manage those
would be too expensive. "You must find the balance between the
size of your internal workforce and how much you outsource," he
The head of IP at a factory tech manufacturer says that his
company underwent a process of tightening processes to reduce
costs and drive efficiencies, which meant identifying which
functions should be done totally or partly inside the firm.
The IP head of a global steel manufacturing company adds
that he inherited a mess of around 80 outside counsel charging
different rates for different services when he started his
role, and put numerous functions in house that could be done
better by internal lawyers.
The challenge for these companies has been working out which
processes are better to bring in house based on cost and speed
and putting mechanisms in place to review whether those
findings work in practice and continue to work over time.
The first and perhaps most obvious consideration for
in-house counsel when working out which functions to do
themselves is how much a law firm will charge for a service
compared with the price of training employees to do the job and
paying their salaries.
The main factors in this analysis, according to in-house
sources, are how often the department does a particular
function and whether it could afford to produce and sustain the
same resources or knowledge sets as a law firm to avoid
"If we used outside counsel to sit in meetings and try
to understand your company’s invention,
for example, we would end up with expensive
The vice-president of legal at a German biotech firms points
out that litigation, for example, is commonly outsourced by
companies because these cases are large, one-off activities
that are not done enough to warrant hiring and training
in-house people. Equally, if a company occasionally licenses is
patents but is not a prolific licensor, it will likely cost
less to leave that function with private practice.
In particular, he says, large licensing transactions require
enormous resources and a global reach that could not be
produced or sustained in most patent departments.
"That kind of work is hard and fast and very few companies,
apart from perhaps large pharmaceutical firms, could not
possibly afford to do all of that in house." He adds that
businesses may also want the protection of a law
firm’s liability insurance for riskier processes
so that they do not have to brunt the cost of that financial
"It is best to develop a few specialisms within patent
departments and more or less outsource the rest," he says.
The IP head for a Spanish pharmaceutical company agrees with
this approach, and adds that her department does drafting,
prosecution and freedom-to-operate reporting internally in
Europe because its employees have the skills and qualifications
they need to produce work to a high standard there.
But she relies on outside counsel when it comes to filing or
prosecution in non-European jurisdictions because it would not
be cost effective to upskill her patent attorneys to work
effectively in different patent systems across the world.
The senior IP counsel at an automotive parts company says
that his firm similarly does most prosecution and all of its
drafting in house partly for that reason and outsources larger
projects to law firms that have the required resources.
But even when a process is seemingly cheaper to give to
in-house lawyers than external counsel, it could still work out
cheaper with a law firm after some negotiation. Sources say
that patent businesses should seek to strike a deals with law
firms that could make the service cheaper and introduce price
The head of IP at the commercial arm of a UK university says
his company recently introduced a tendering process for its
patent drafting where firms could bid for guaranteed work.
"We now pay a fixed price and would only pay more under
exceptional circumstances, which means it works out well to
outsource that particular function," he says. "But the chances
are most firms cannot afford to do this sort of work so cheaply
and will need to find ways of doing more for less to keep
companies giving it to them."
The IP head of a global steel manufacturing company says his
firm underwent a similar process of striking fixed fee deals
with private practice firms. He adds that firms might be able
to produce even more services for cheaper than in-house
departments could afford to in the future by investing in
efficiency-driving technologies such as workflow software and
In-house sources say that another reason to bring a patent
processes in house is to drive efficiencies. In-house lawyers
often have a better knowledge of a company’s
inventions that enables them to do some processes more easily,
and ultimately makes it easier for external counsel to complete
the work that’s outsourced to them.
"If we used outside counsel to sit in meetings and try to
understand your company’s invention, for example,
we would end up with expensive patents," explains the head of
IP at a European factory tech manufacturer.
"We have a lot of communication with external firms,
and having a reliable centralised system is the best
way to manage that"
"If in-house people who are knowledgeable of the product and
of IP harvesting do that homework instead, and they describe
the invention to an outside drafter, we can get high-quality
protection for less money." He adds that it is ultimately a
matter of streamlining the process based on the strengths of
both in-house and external lawyers.
The IPR manager at an abrasives and tools manufacturer says
that his firm does patent searches to determine novelty in
house for the same reason, and puts its findings into a package
which it gives to its private practice partner.
"They can work on that much more efficiently than if they
were doing searches themselves, I think."
Doing these processes quicker has the obvious benefit of
cutting down the time and money law firms spend on various
functions – but it also enables the business to get
high-quality protection quicker or enforce its rights more
easily. This translates into competitive advantage and
increased revenues for the business as a whole.
In-house departments could also make processes more
efficient if they invest in processes and technology. The head
of IP at a UK university commercial arm says that his company
implemented a property database and time management system to
help streamline processes and manage deadline internally and
with outside counsel.
"We have a lot of communication with external firms, and
having a reliable centralised system is the best way to manage
that," he says.
Budget pressures are driving more patent processes in
in-house because they’re often cheaper and faster
that way. But IP heads must be careful to find the right
balance and ensure not too much is brought inside or given to