Costing the Earth?

One common, and sadly continuing, complaint from small companies are the cost of obtaining registered intellectual property, eg patents or trademarks, or the cost of going through IP litigation, either to enforce IP or defend an action. The expression on the CEO’s reddening face, the CFO rolling her eyes in horror, is all too familiar: does it have to cost the Earth?

For small companies these costs can be more than stretched budgets can bear. Prudence and good judgement can help but there is pressure to increase the burden of fees for registering IP and the cost of litigation. In the same way that as the UK National Insurance scheme pays today’s pensions from today’s payments from current workers, patent offices around the world have worked on a scheme where cash in from official fees covers the workings of the office. In a stable state this works fine: filing fees and maintenance fees cover the cost of issuing patents, ie filing numbers are stable and stock of pending (unprocessed) patent applications is constant, or at least reasonably so. A manageable problem if there is a boom in filings, as started in second half of the 1990s. The fees will (eventually) still cover costs, though (late) timing of income from maintenance fees may cause a cash flow issue. However, around the world in early 2000s stocks built up, causing back log in processing with consequent delays for customers. Then after boom came bust. Falling filing numbers leading to less cash in for an already stretched budget. Worse then that during the boom times, cash rich on up front filings fees, money was diverted into capital projects. A funding mechanism that one US official likened to a Ponzi scheme, and the financial controller of the European patent office described as a pyramid scheme. The result is a big problem for funding IP Offices, globally. The likely solution, at least in part, will be higher fees. An increased financial burden which will fall hardest, as ever, on small companies.

What can small companies do? First continue to make representations to government, whether directly or through trade bodies, about the effects on small and medium sized companies of the costs of IP. Second, or perhaps first, understand and engage with the management and creation of your IP so that ensure that you are getting what you need from what you invest, and certainly in a modern, global, knowledge economy, we all need our IP. Not to have it would cost us everything.

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