The cost of securing IP can be heavily front loaded. Examples of such costs include patent drafting, pre-filing searches, filing fees, etc. These costs become “sunk” costs in that they cannot be recovered. Because IP protection can be a relatively long process, at any time during the process there are likely to be significant “prospective” costs: future costs that may be wholly or partially avoided depending on actions taken.
While not peculiar to the IP world, consideration of sunk costs when deciding actions affecting prospective costs are quite common. Put simply, the logic goes: “We should keep going and incur these costs because we have spent so much to get here. If we stop now, that expenditure will have been wasted.” This is an example of the sunk cost fallacy. While such behaviour has been characterised as throwing good money after bad, it is probably more accurate to say to is throwing bad money after good.
When faced with significant prospective costs in IP portfolios, the important question is whether incurring that cost is consistent with the current IP strategy and resources available. An IP strategy is not a static thing. It must adapt to changes in the business to which it relates in in the world market in which the business operates. A properly managed strategy needs to periodically review the prospective costs of a particular piece of work (e.g., a patent application) and decide if it still justifies future expenditure and to what level. What has happened in the past make no difference to this assessment.
Businesses can be understandably reluctant to abandon IP rights such as patent applications as there is usually now way to get them back if they change their minds. This problem can particularly manifest itself when there is no pressure on IP budgets so that hanging onto something does not inhibit other activity. Unfortunately, this just stacks up trouble for when times get tight and IP spend needs to be prioritised between maintaining what you have and beginning new work.
The sunk cost problem can be compounded by what is known as “plan continuation bias”: the tendency to continue with a planned course of action even though conditions have changed. This can be particularly evident where an upcoming cost is relatively low on a case-by-case basis, but the cumulative effect of these small costs is to significantly diminish the IP budget resources available for new work.
There are various ways in which IP can be managed to avoid these problems. One is to adopt a process that takes decisions on IP activities at times that are well-removed from the need to incur cost. Where time is short and a decision needed, sunk costs and plan continuation bias can encourage people to accept a cost that might not be justified. In short, do not leave it too late when making expensive decisions. Another is to conduct periodical reviews of the IP portfolio independently of any deadlines having cost implications. This allows decisions to be based on current strategy and the resources currently available.
By letting go IP rights, you free up resources that can allow other work to continue and, more significantly, new work to be undertaken. Judicious pruning of portfolios to abandon rights in countries of lesser interest, or to drop older rights that are not used can take a lot of pressure off an IP budget.
It is important to remember that you do not make progress by only cutting things out. You also have to add new things in. A properly managed IP strategy is key to such progress.
Martin Hyden, Trade Mark, Patent Attorney and Partner
Does owning IP rights improve economic performance?
A recent study performed by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) has shown that companies which own at least one patent, trade mark or registered design generate on average 20% higher revenues per employee and pay their staff on average 19% higher wages compared to companies that do not own any of these intellectual property (IP) rights.
Managing your business-critical IP during the COVID-19 crisis
UK businesses are fighting for survival during the continuing COVID-19 outbreak and trying to trade under difficult conditions, the likes of which haven’t been seen in the living memory of most business people. If you’re afraid that your business is going to the wall, it probably isn’t the top of your mind to pay for a patent application for your new technology or a registration of the trade mark for your brand new clothing range, right? Where is the money coming from to invest in such luxuries as IP, we hear you say, when staff are being furloughed and orders have been postponed?
Videoconferencing: the future of oral proceedings at the EPO?
The European Patent Office has announced that videoconferencing will become the norm for oral proceedings before examination and opposition divisions until at least 15 September 2021. But is this a taste of what the future holds for oral proceedings at the EPO?
EPO-CNIPA pilot for International Search
On 12 November 2019, the EPO and CNIPA agreed to enhance their bilateral co-operation to give patent applicants filing an international patent application in English at the CNIPA, the choice to opt for the EPO as their ISA. A two year pilot programme launched on 1 December 2020, offers applicants filing international applications with the CNIPA or the International Bureau (IB) of the World Intellectual Property Office (WIPO) the opportunity to select the EPO as their ISA and as their International Preliminary Examining Authority (IPEA), rather than CNIPA.
Changes to trade mark and patent law in Gibraltar
In October 2020, the UK Government declared that the territorial effect of five important IP treaties would be extended to cover Gibraltar from 1 January 2021. These treaties are the Paris Convention, the Patent Cooperation Treaty, the Madrid Protocol (on International trade marks), the Nice Agreement (on trade mark classification), and the Berne Convention (on copyright). Following on from this, a bill was passed in on 11 December 2020, making some amendments to trade mark and patent law in Gibraltar.
Much Ado About Nothing
For a long time, a source of tension among UK trade mark and design attorneys was the fact that the UK was one of the few EU member states to abide by a decision to allow attorneys from any European Economic Area country to represent clients in proceedings before any national office of an EU member state. With this in mind, one of the ironies of Brexit is that, from 1st January 2021, UK trade mark and design attorneys will (in general – please see below for a super-important exception!) lose the right to represent clients before the EU IPO