Finding the perfect balance: golden rules for cost-effective outsourcing

In-house counsel are usually best placed to protect and capitalise on a business’s intellectual property. But how can quality be guaranteed in busy times? And what should be done in the event of a claim by a competitor or a complex application with substantial commercial interests? Companies with intellectual property have opportunities in terms of a structural collaboration between the in-house department and external IP support.

However rigidly tasks are organised within the department, some situations are tricky to cope with internally. When things take a turn for the worse, you need an expert to deliver quality and to do so quickly. Unfortunately, there is not always a clearly defined process allowing you to make adjustments at the right moment. It can be time consuming having to provide proper briefings and guidance, which may raise concerns about what this means for the bottom line. How do you gain more control over collaboration, quality, speed and cost efficiency? It is crucial to move away from resolving incidents on an ad hoc basis towards creating a carefully considered strategy that achieves a balance between what is done in-house and what is outsourced. The following ‘golden rules’ set out individual steps and areas for attention to make this a reality for your business.

Make a plan

A concise plan of action can be used to conduct an analysis of the in-house department’s strengths and the knowledge and skills that it possesses. Think about the possible scenarios to prepare for (eg, an experienced member of the workforce is ill or legal action is threatened). Then establish what types of activity can be best outsourced. The plan will produce a clearly defined policy for subcontracting. Will you opt always to outsource a certain part of the overflow or will this vary according to the type of work (eg, oppositions or opinions); or will you outsource work based on a specific subject area? The analysis may well result in a conscious decision in favour of an ad hoc approach. An added advantage is that the use of an external specialist’s services by employees and the company will be considered a legitimate alternative. This makes it easier to summon help at the right time and without losing face.

The plan should describe the conditions for subcontracting, such the point of contact, the procedural agreements and how costs will be settled.

Tips

• Set aside one or two working days to draft the framework of the plan. This will prevent the plan from being left at the bottom of the pile.
• Involve employees in the creation of the plan, so there is a common focus as to where the department’s strengths lie. This makes it easier to obtain external assistance in specific situations.
• Assess or test the plan regularly: does it fulfil the current function/role of the department within the company?

Choose a model that fits

Knowing where your department’s strengths lie will help you to focus on your own expertise. Moreover, this offers a natural basis on which to decide which tasks you would prefer to entrust to your external IP partner, perhaps for reasons of quality, speed and/or cost efficiency. So, which scenarios and issues need a contingency plan? The four models below set out the various forms of collaboration available.

Figure 1. Collaboration models

Liaison model

A liaison model allows you to select the specific activities that you want to do yourself and the other tasks for which you want to call in external assistance. The aim could be to reduce processing times or to obtain external skills and experience. In this model, the internal patent department acts primarily as a vital link between the business unit on the one hand and the external attorney on the other. In your department, you focus on identifying inventions and other IP opportunities. You also carry out the intake and search, and advise on whether you want to file a patent or register a trademark. An experienced external attorney drafts the patent application or registers IP rights. In short, you both do what you are good at, in the best possible way.

Prosecution model

This model involves outsourcing the entire prosecution for a defined portfolio of one or more patent families, allowing your department to concentrate on its primary work. This provides flexibility as well as control over quality. It comes as no surprise that an increasing number of businesses are opting to outsource a certain percentage of their prosecution work as standard practice. By integrating the collaboration with an IP partner into the work process, you have something to fall back on, with proven quality. You can easily manage peaks and troughs in the workload by using this model, and quickly arrange for cover for anyone in the department. If the workload increases and the budget permits, there is always someone available who is already familiar with the company and its resources. If there is a lull, it is possible to take work back, saving on outsourcing costs.

Area model

Outsourcing according to the area model is suitable if you want to outsource a specific field of work or technical skill as you lack the experience or manpower. The advantage of collaborating with an external IP partner is that you build up an IP portfolio quickly. You can bring in the specific technological expertise that is not (yet) available in-house by calling on the services of a specialist representative who takes care of the entire process, from the inventory to the application and opposition of the defined field. You can immediately identify inventions relevant to you and draft the associated application, without losing time on recruitment, induction and training. This may be necessary, for example, for a recent acquisition, when setting up a new business unit or in a restructure involving a change to the division of labour.

Intentionally ad hoc model

Your business might be so diverse that it depends on the task and subject matter as to which external specialist you want to employ. In this case, selecting an external IP partner on an intentionally ad hoc basis will be the model that suits you best. It is particularly important in that case to have a network of different specialists at your disposal. Depending on how busy it is and what issues occur, you can decide what is to be outsourced and to whom. Should a problem arise with an opinion, you will know whom to approach in that network. Whether you need an analysis of a competitor’s patent portfolio, a second opinion or a freedom to operate agreement, each of these is a task in relation to which an external partner can contribute valuable advice.

Tips

• When drawing up a plan of action, you should determine what tasks within the organisation require your attention. Apply a (working) model in this situation to ensure that the company’s IP interests are served as effectively as possible.
• Take the model that you want to use to define the collaboration and promote it in the department, so that individual attorneys will know when a problem or task is eligible for outsourcing and whom they can approach in this regard.
• Put together an organised database of external IP specialists or select a partner with much (varied) expertise and adequate capacity at peak load. At the end of a task, ask your employees to review how the external partner performed.

Choose the right partner

It goes without saying that your primary external partner must be able to provide what you need. Your choice will be heavily dependent on the model that suits your company’s operations. Thus, intentionally subcontracting on an ad hoc basis can be ideal for short-term processes in a small office. If you adopt the prosecution or area model, it will pay to develop a more long-term working relationship. If you outsource the intake, invention formulation and patent application drafting, the external IP partner will be able to do a good job only if there is also personal contact. If the focus is on undertaking administrative tasks or work that is procedurally well established (eg, prior art searches), proximity is less important and offshoring, for example, can be an attractive option. You may assume that more consultation is required as the issues become more focused on the details, in which case it is definitely to your advantage to find a partner nearby.

Tips

• Ask one or more third parties to carry out an ‘ordinary’ task for you in a time of need or when the time pressure is high. This will give you a good idea of the appropriate person or persons on whom to call if an incident occurs or there is a rush job.
• Whether on an ad hoc or fixed basis, it is advisable to maintain one or more relationships with an external agency that suits you.
• Always make sure there is a clear focus/demarcation and a clear division of labour for each task. This also helps you to conclude verifiable agreements for both process and costs.

Remember to act as a client and to communicate

The way in which the task is defined is decisive in achieving the desired outcome. The ‘just get on with it’ approach is not a recipe for success; rather, it is a frustrating process in which every answer raises new questions. Your external partner must first be informed about the procedures and timelines required in order to get the right people involved in the process. The role of good client practice in this context is often underestimated. A thorough briefing – on both the content and the work process – can save a lot of time in the long run. Should there be a draft first to provide feedback? Is the external partner permitted to contact the inventors directly? Who decides whether an application is filed?

Tips

• Whichever party you subcontract to, inform it of your expectations – not just about the costs, but also about the process in which you are collaborating.
• Ensure that the question set is clearly defined – for example, should the opinion that you want be a detailed analysis or a quick overview? The more specific the question, the more effectively the external attorney will be able to produce the work.

Invest in a solid relationship

Collaboration remains a human effort. Even if you have a clear focus on the strength of your patent department, you systematically apply the model for outsourcing and you are well organised in terms of knowing how to outsource and to whom, without energetic and involved commitment from both sides the collaboration will not get off the ground. So, give your external IP partner the means to acquire the experience in what your business is about and provide an insight into the issues and trends that you encounter. By offering trust, you will gain a supplier that acts as a partner and takes satisfaction in making a proactive contribution to help you to achieve your business objectives. In other words, if you invest in a relationship with your IP partner, it will pay off.

Tips

• Hold an annual meeting in which your employees and the stakeholders of the external IP partner can evaluate the collaboration together.
• Set aside time to share the strategy and development of your business with your partner.
• Keep in frequent contact, even beyond the immediate outsourcing of the task. Distribute your newsletter, for example, and invite your contacts to corporate events.

Five pitfalls best avoided

IP outsourcing can provide significant added value to the continuity, quality and cost efficiency of your intellectual property. However, this requires an outsourcing company to be aware of the main pitfalls or obstacles that in practice can lead to disappointment.

We’ll see how it goes

Waiting until a problem occurs will not allow you to keep quality under control when it comes to overflow. All you can do is turn to a third party at random. Therefore, ensure that you have an outsourcing strategy for IP issues that allows for flexibility, even when faced with problems as a result of illness or at peak times.

‘Jack of all trades’ syndrome

The tendency to address every issue from the organisation that ends up in the patent department with the same eagerness is definitely a pitfall. This leaves little time and space to consider what you are good at. There is also a lack of firm support in obtaining external assistance. After all, it is never expressly stated what your core competencies do and do not include.

There is no emergency exit

Is the predominant feeling that someone from the outside is unable to get to grips with the technical and organisational ins and outs of your business? In that case, there is little prospect of a solution, regardless of how busy it is. It is better to choose an external specialist before things take a turn for the worse. Choose a collaboration model that is appropriate for your company and circumstances.

Slapdash approach for a quick result

‘Good luck, off you go’ is an attitude that provides some momentary relief, but it is ineffective in practice. This is usually the result of there being too little time to sufficiently brief your external attorney. Further down the line, it will turn out that the work produced is not to your liking and a lot of time will have been lost. So, be clear in the task and your expectations.

Need-to-know basis

Providing the external IP partner with the minimum amount of information for a task will bring little return on your money. True synergy is achieved by investing in the relationship with your IP partner, including outside of direct subcontracting. This can take the form of regularly scheduled contact, both formally and informally. But be sure to share information about strategy, issues and successes as well.

Comment

For (large) companies and multinationals that already have in-house expertise, IP outsourcing can also bring added value in terms of quality, cost efficiency and speed. The aim is always to strike a perfect balance between the internal department and the subcontracted party. Which model will allow you to obtain the best balance depends on your company’s circumstances, the size and composition of your department and the patent issues at stake. The most crucial benefit of a structured outsourcing method is that you can always offload part of the overflow. So, you have a go-to partner who is fully involved and in direct contact to enable you to maximise the value of your IP interests.

V O

Johan de Wittlaan 7

2517 JR The Hague

Netherlands

Tel +31 70 416 67 11

Fax +31 70 416 67 99


Web www.vo.eu

Hajo Kraak

Partner

[email protected]

Hajo Kraak has been a patent attorney at V O since 2007. Previously he worked as in-house patent counsel in the chemical industry and research-based pharma. Mr Kraak continues to work for chemical and pharmaceutical companies. He graduated in organic and polymer chemistry from Leiden University (1987) and has been active in patents ever since.

As a patent attorney, Mr Kraak has dealt with a broad range of chemical, pharmaceutical and nutritional sciences and technologies. He gained considerable experience in obtaining patents and conducting opposition proceedings before the European Patent Office (EPO) and in international patent litigation. He has also been active in conducting patent due diligence investigations and developing patent strategies for various businesses, including pharma lifecycle management.

Jenny Cromsigt

European patent attorney

[email protected]

Jenny Cromsigt started her IP career in a biotech start-up as an IP manager. Subsequently, she worked as an in-house patent attorney in a large multinational company. Dr Cromsigt studied chemistry at the Radboud University in Nijmegen, after which she did her PhD in biophysical chemistry at the University of Umea in Sweden.

Dr Cromsigt has vast experience in drafting and prosecuting patent applications worldwide, as well as conducting opposition proceedings and oral proceedings at the EPO. In addition, she has experience in advising on patent validity and infringement in freedom to operate studies.

V O is one of the larger IP firms in Europe. More than 60 attorneys in the Netherlands, Belgium and Germany support clients worldwide to maximise the value of their intellectual property.