Price Sensitivity to Patent Preparation and Prosecution

I had occasion to discuss pricing schemes with another practitioner last week, and I think it is a very interesting topic.

The value delivered by a patent practitioner should, under normal circumstances, far outweighs the costs. If a single invention is generally worth patenting, it should potentially generate hundreds of thousands, if not millions and millions of dollars. This is more true for the small startup company where the largest asset is one or two patents covering the core idea, as opposed to the very large corporations who have portfolios of thousands of patents. The same holds true for independent inventors with ideas that are commercially viable.

Given that an inventor has a potential of reaping millions of dollars from their invention, does the price really matter for the patent?

My practitioner friend deals with lots of independent inventors, and he says that many of them are very price-sensitive. Often, these inventors have ideas that may or may not be commercially viable. Independent inventors are also very likely to be funding their project out of their own pocket, which is the source of the price sensitivity.

When I deal with independent inventors, I stress the value of what I provide. First, I invariably suggest that the inventor do a business plan for the idea before anything else. I like them to determine the potential cost of the product and compare it to the possible retail price. Doing a back-of-the-envelope market analysis will give at least an approximate volume of the product. These estimates do not have to be terribly complex, but should be done to convince the inventor that the idea is worth pursuing.

If the inventor does a crude business plan and determines that the idea is worth a substantial amount of money, I discuss the importance of making sure the patent is valid and enforceable. Cutting corners at this stage of the game is not in the client’s best interest. From this point on, the client understands that my goal is asking the tough questions, playing devil’s advocate sometimes, and obtaining as broad a patent as possible. The client also does not worry so much about the patent cost, because their data has convinced them that it is worth the investment.

Quite frankly, if a client really, honestly, truly believes in their invention, they will pay almost any amount of money to protect it properly. Price is not an issue. Quality is the only issue that really matters. This is how the Big Firms can still get $15K for a patent application.

Inventors who are willing to skimp on their patent protection up front are more likely to fail commercially, and are more likely to sue their patent practitioner after their skimpy patent is rendered invalid in the litigation that puts them in bankruptcy.