Are Patent Attorneys Worth Their Billables?

It’s no secret that obtaining a patent is expensive, but there's proof that an attorney may be worth the cost.

bonus money low bonuses poor empty pockets sad upset lawyer businessmanEd. note: This is a sponsored post from our friends at Juristat, whose statistical modeling capabilities allow users to visually plot their chance of success in every aspect of the patent application process.

It’s no secret that obtaining a patent is expensive. Even the simplest patent costs a minimum of $8,000. Attorney’s fees typically make up 70-80% of the costs[1] of obtaining the patent, leading many independent inventors and small businesses to question whether they really need an attorney to pursue a patent.  However, without the assistance of specially trained patent professionals, pro se inventors face extensive prior art research, peculiarities of patent writing, procedural requirements, and hours of work.  “The application process is likely to go more smoothly with fewer mistakes if you seek representation,” according to an animated woodchuck speaking on behalf of the USPTO.

At Juristat, we spend a lot of time evaluating how law firms and in-house teams fare before the USPTO, but what about the pro se inventor who decides to save some money and go at it alone? Is it really worth the money saved?

Methodology

We wanted to analyze the success rates of pro se applicants versus the USPTO averages and the averages of the top firms.[2]  In order to do that, we distinguished pro se applications as those that 1) did not include an attorney registration number, and 2) either the application did not include a firm name or company name or the application’s first named inventor matched the listed correspondent name. Using the above criteria, we identified 31,786 pro se applications.

Analysis

Allowance Rate

Predictably, pro se applicants generally perform below average in terms of their allowance rate when compared to the average of the USPTO as a whole and the average of the top firms’ applications.  We broke the data down into the different technology centers (groups of art units at the USPTO that review applications pertaining to particular technologies).  Figure 1 demonstrates that the firms’ allowance rates closely track the USPTO average, whereas the pro se applicants have a noticeably lower allowance rate in every technology center except one.

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The one aberration occurred in Technology Center (“Tech Center”) 1600, responsible for patent applications covering biotechnology and organic fields.  So, why do pro se applicants perform above average in this particular tech center?

One potential explanation for this anomaly is the quality of patents obtained by pro se filers in the 1600s.  While pro se filers are getting fewer office actions and have a shorter average time to allowance, they also seek and get fewer independent and dependent claims allowed.  On average, pro se filers in Tech Center 1600 obtain 1.98 independent claims and 8.15 dependent claims.  The overall average for that Tech Center is 3.31 independent claims and 18.55 dependent claims.  Thus, while pro se filers have a higher allowance rate, they may also be obtaining simpler or lower-quality patents.[3]

That’s one theory.  But we at Juristat, quite frankly, don’t know what the deal is in Tech Center 1600.

Timing

We also compared pro se applicants’ time from filing to allowance to the USPTO average and that of top firms.  Overall, pro se applicants take an average of 27.15 months while the USPTO average is 33.65 months.  At first glance, it might appear that pro se applicants perhaps respond more quickly to office actions than attorneys who have multiple applications demanding their time and attention.

Again, it’s also likely that a pro se applicant is going it alone because the invention is a relatively simple one, contributing to a shortened prosecution timeline.  The fact that pro se applicants also have fewer independent and dependent claims at publishing, indicating a simpler patent, may support this hypothesis and contribute to a shorter prosecution timeline.

So, Is It Worth an Attorney?

Because a patent application on its own is worthless, we might value a patent application based on its expected value.  For example, let’s say an inventor has a patentable device that, if patented, is worth $100,000.  The inventor must then decide whether to pursue the patent on his own or to hire a patent attorney to assist him.

Focusing purely on allowance rate for this example, we’ll assume that the inventor knows that his application is likely to get assigned to Tech Center 2400, where pro se applicants have an allowance rate of 57.0% and the top firms’ average allowance rate is 76.1%.  Multiplying those rates by the value of the patent (if issued) provides expected values of $57,000 (without an attorney) and $76,100 (with an attorney from a top firm) for the application.  Thus, an attorney could provide an additional $19,100 in expected value for that application.

As we are all aware, an attorney comes at a price.  According to AIPLA’s 2015 Report of the Economic Survey, the median charge for a firm to file an original application on an invention of “minimal complexity” is $7,000.  Additionally, AIPLA reports that the median cost for an application amendment or argument is $2,000.  On average, though, top firms receive just over two office actions per prosecution, doubling that $2,000 fee.  Assuming there is no appeal, a filer can expect to pay an attorney roughly $11,000 for the prosecution (excluding copy, drawing, and government fees).

If we factor that into our expected value calculation, the expected value of the application without an attorney remains $57,000, but the expected value of the application with an attorney is $65,100.  Thus, in this case, legal assistance is likely still worth the investment, as the expected value is still $8,100 higher.

Before any patent attorneys reading this take that as indisputable justification for their hourly rate, there are a few things to keep in mind.  First, that example is in the tech center with the largest disparity in allowance rate between pro se filers and the top firms.  Second, our simplified analysis doesn’t account for the fact that pro se filers are likely to lose more claims during prosecution than they would if they used an attorney, affecting the value of the patent ultimately issued. Finally, the actual cost of prosecuting a patent can vary widely from the median costs reported by AIPLA used in our example depending on the attorney’s rate, the complexity of the invention, and the examiner assigned to assess the application.

Conclusion

While the America Invents Act created a pathway for pro se filers to obtain pro bono legal help, that help is limited in both availability and scope.  Thus, pro se filers are generally left to make the choice between paying up or navigating their application through the prosecution process solo. It’s clear that there is a benefit to be had by availing oneself of a patent attorney, but whether the benefit is worth the cost is dependent on a number of factors including how valuable the eventual patent would be and the complexity of the patent.

[1] See Gene Quinn. Cost of Obtaining a Patent in the U.S. (Apr. 4, 2015), available at http://www.ipwatchdog.com/2015/04/04/the-cost-of-obtaining-a-patent-in-the-us/id=56485/.

[2] http://bit.ly/1SCPgzA

[3] This discrepancy is present across all Tech Centers, but is particularly large in the 1600s. For example, the difference between the number of claims in patents in the 2400s between pro se filers and the top firms is negligible. However, there is a very large disparity between the two allowance rates in that Tech Center, indicating that pro se filers may be attempting to obtain patents just as complex as the ones prosecuted by law firms.


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