2011 IPO Corporate IP Management Benchmarking Survey. November Intellectual Property Owners Association

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1 2011 IPO Corporate IP Management Benchmarking Survey November Intellectual Property Owners Association

2 Table of Contents Page PART I: Organizational Data (Industry sector, total employee numbers, size of IP budget as compared to research and development).1 PART II: IP Staffing (Employee numbers by industry in IP departments, worldwide)..11 PART III: IP Department Structure/Function (Reporting structure, percent time of spent by in-house professionals on various issues). 15 PART IV: Financial (Dollars spent by industry on patent procurement, treatment of IP generated income)...20 PART V: Outside Counsel (Billing arrangements, cost of opinions, number of outside firms and size of firm used, insurance issues) PART VI: Operational Data (Invention disclosures received, applications filed, use of outsourcing various functions, foreign filing activity, awards/financial incentives for inventors)...33 Notes: 1. This is the third time IPO has conducted this survey. It incorporates many of the questions from IPO s 2006 and 2009 benchmarking surveys. 2. In some industries, the response rate was extremely low. While the data for those industries is not as meaningful as others, the data is presented in a format similar to the 2009 survey report to enable comparison. 3. The survey was developed by IPO's Corporate IP Management Committee with the help of the IPO staff. We extend special thanks to Russell Binns and John Williamson. 4. The survey respondents were primarily Chief Patent Counsel and Chief IP Counsel with responsibility for patents and trademarks at their companies. 5. Numbers in parentheses represent the number of respondents Intellectual Property Owners Association

3 PART I: ORGANIZATIONAL DATA 1. Identify the single industry sector that most closely describes your company: 58 Companies 2. Number of total worldwide employees: Chemical/Pharmaceutical/Biotechnology/Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies 1. Page 1

4 Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies Other: 13 Companies 2.1. Percentage of employees in the U.S.: 58 Companies Mean Median Chemical/Pharmaceutical/Biotechnology/Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies Electrical/Electronics/Components: 10 Companies Information Services/Other Communications/Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies Other: 13 Companies Page 2

5 3. Number of total worldwide R&D employees: Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies Other: 13 Companies 1. Page 3

6 3.1. Percentage of R&D employees in the U.S.: 58 Companies Mean Median Chemical/Pharmaceutical/Biotechnology/Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies Electrical/Electronics/Components: 10 Companies Information Services/Other Communications/Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies Other: 13 Companies Last completed fiscal year revenue range: Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies 1. Page 4

7 Other: 13 Companies 5. Last completed fiscal year budget for Research & Development: Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies 1. Page 5

8 Other: 13 Companies 6. Are all intellectual property functions centralized in one Intellectual Property Department? Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies 1. Page 6

9 Other: 13 Companies 6.1. What functions are included in or controlled by the Intellectual Property Department? (check all that apply) 11 Companies Patent Prosecution 100 IP Litigation 45 IP Licensing 82 Trademarks 73 Transaction/Commercial/Contracting 64 Copyrights 73 M&A IP due diligence 82 Other How many other departments have intellectual property attorneys or intellectual property functions? Intellectual Property Department? 11 Companies Mean Median Last completed fiscal year budget for Intellectual Property Department: Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies 1. Page 7

10 Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies Other: 13 Companies 8. The percentage of the IP budget to the R&D budget for the last completed fiscal year: Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies 1. Page 8

11 Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies Other: 13 Companies 9. The percentage of the IP budget to the revenue for the last completed fiscal year: Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Consumer Products/Food & Beverage: 6 Companies 1. Page 9

12 Electrical/Electronics/Components: 10 Companies Information Services/Other Communications /Media: 3 Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 3 Companies Other: 13 Companies 1. Page 10

13 PART II: IP STAFFING 10. List the number of full time equivalent worldwide IP professionals and full time equivalent support staff employed at the end of the last completed fiscal year and indicate whether or not they were employed in the company's IP department with Y/N/Mixed. [Ex. 30/Y] Chemical/Pharmaceutical/Biotechnology/Medical Devices: 20 Companies Professionals Worldwide (Including U.S.) Resident in IP Dept.? (Y/N/Mixed) Mean Median Professionals Patent Attorneys Y Trademark Attorneys Mixed Patent Agents Y Patent Paralegals Y Trademark Paralegals 3 1 Y Litigation Attorneys 2.75 N Litigation Paralegals 1 0 Mixed Other Attorneys in IP Group 1 0 Y Non Attorney Professionals 7 1 Y Support Staff Docket Clerical 6 1 Y Secretaries/Administrative 14 4 Dedicated Computer Support 0 0 Other 0 0 Total Professionals and Support Staff Consumer Products/Food & Beverage: 4 Companies Professionals Worldwide (Including U.S.) Resident in IP Dept.? (Y/N/Mixed) Mean Median Professionals Patent Attorneys Y Trademark Attorneys Y Patent Agents 12 4 Patent Paralegals.4.5 Trademark Paralegals 4.75 Y Litigation Attorneys.6 0 Litigation Paralegals.3 0 Other Attorneys in IP Group 0 0 Non Attorney Professionals 24 5 Support Staff Docket Clerical 7 1 Secretaries/Administrative 21 4 Dedicated Computer Support 1 1 Other.3 0 Total Professionals and Support Staff Page 11

14 Electrical/Electronics/Components: 10 Companies Professionals Worldwide (Including U.S.) Resident in IP Dept.? (Y/N/Mixed) Mean Median Professionals Patent Attorneys 14 4 Y Trademark Attorneys Patent Agents 3 2 Y Patent Paralegals Trademark Paralegals 1 1 Litigation Attorneys 2 1 Litigation Paralegals 1 1 Other Attorneys in IP Group Non Attorney Professionals Support Staff Docket Clerical 6 1 Y Secretaries/Administrative 3 2 Dedicated Computer Support 1 1 Other 0 0 Total Professionals and Support Staff Information Services/Other Communications/Media: 3 Companies Professionals Worldwide (Including U.S.) Resident in IP Dept.? (Y/N/Mixed) Mean Median Professionals Patent Attorneys 6 6 Y Trademark Attorneys 1 1 Patent Agents.5.5 Y Patent Paralegals 3 3 Y Trademark Paralegals 1 1 Y Litigation Attorneys.5.5 Litigation Paralegals.5.5 Other Attorneys in IP Group 0 0 Non Attorney Professionals 18 3 Y Support Staff Docket Clerical 2 1 Y Secretaries/Administrative 2 1 Y Dedicated Computer Support 0 0 Other 0 0 Y Total Professionals and Support Staff Page 12

15 Mechanical and Machinery: 3 Companies Professionals Worldwide (Including U.S.) Resident in IP Dept.? (Y/N/Mixed) Mean Median Professionals Patent Attorneys Y Trademark Attorneys Y Patent Agents Patent Paralegals Y Trademark Paralegals 2 2 Y Litigation Attorneys 1 1 Litigation Paralegals Other Attorneys in IP Group Non Attorney Professionals 2 2 Support Staff Docket Clerical 1 1 Secretaries/Administrative Y Dedicated Computer Support Other 7 7 Total Professionals and Support Staff Y Software/Computers/Peripherals: 3 Companies Professionals Worldwide (Including U.S.) Resident in IP Dept.? (Y/N/Mixed) Mean Median Professionals Patent Attorneys 22 4 Y Trademark Attorneys Y Patent Agents.6 0 Patent Paralegals Y Trademark Paralegals Y Litigation Attorneys N Litigation Paralegals N Other Attorneys in IP Group N Non Attorney Professionals 14 2 Y Support Staff Docket Clerical.5.5 Y Secretaries/Administrative Y Dedicated Computer Support 0 0 Other 0 0 Total Professionals and Support Staff Page 13

16 Other: 13 Companies Professionals Worldwide (Including U.S.) Resident in IP Dept.? (Y/N/Mixed) Mean Median Professionals Patent Attorneys Y Trademark Attorneys 2 1 Y Patent Agents 4 3 Y Patent Paralegals 6 2 Y Trademark Paralegals Y Litigation Attorneys Y Litigation Paralegals 1 1 Other Attorneys in IP Group Y Non Attorney Professionals 5 2 Support Staff Docket Clerical Y Secretaries/Administrative 15 5 Y Dedicated Computer Support 2 2 N Other Y Total Professionals and Support Staff Y 11. With respect to the total number of IP professionals currently working in your organization, during the next year do you expect the number of IP professionals to: 57 Companies: Increase Decrease 7.02 Stay the same Page 14

17 12. Do you expect the number of patent applications prepared in house to: 57 Companies: Increase Decrease 5.26 Stay the same PART III: IP DEPARTMENT STRUCTURE/FUNCTION 13. Are intellectual property operations centralized in a single location? 57 Companies: Yes No If response to 13 is no, provide the number of locations of U.S. IP operations: 34 Companies: 2 or Less 50 3 to to Over Page 15

18 13.2. If response to 13 is no, provide the number of locations of non U.S. IP operations: 34 Companies: 2 or Less 50 3 to to Over The Chief IP Counsel (or heads of IP functions) primarily reports to: (check one) 57 Companies: Chief Legal Officer (General Counsel) Other Non IP Attorney Chief Executive Officer / President 5.26 Engineering or R&D Executive 3.51 Intellectual Property Business Unit Executive, Licensing Executive or Chief Strategy Officer 0 (non attorney) Other 1.75 Page 16

19 15. Estimate the percentage of time spent (including management of outside counsel) on the following by in house professionals (e.g. attorneys, licensing executives, portfolio managers, patent agents) in support of the overall IP function (Total should equal 100): Chemical/Pharmaceutical/Biotechnology/Medical Devices: 20 Companies Mean Median US and foreign patent preparations, filing and prosecution (including disclosure review and novelty searching) Validity and infringement studies Commercial support/agreement work M&A support 5 4 Trademark preparation, filing and prosecution Trademark counseling 3 2 Copyright preparation and filing.5 0 Copyright counseling.5 0 Other counseling (trade secret, mask works, etc.) 4 1 Patent Litigation 8 5 Trademark Litigation 1 0 Copyright Litigation 0 0 Licensing/Monetization IP Department administration Other 1 0 Total 100 Consumer Products/Food & Beverage: 5 Companies Mean Median US and foreign patent preparations, filing and prosecution (including disclosure review and novelty searching) Validity and infringement studies Commercial support/agreement work 7 5 M&A support 4 3 Trademark preparation, filing and prosecution Trademark counseling 7 5 Copyright preparation and filing.25 0 Copyright counseling.25 0 Other counseling (trade secret, mask works, etc.) Patent Litigation Trademark Litigation Copyright Litigation 0 0 Licensing/Monetization IP Department administration Other 0 0 Total 100 Page 17

20 Electrical/Electronics/Components: 9 Companies Mean Median US and foreign patent preparations, filing and prosecution (including disclosure review and novelty searching) Validity and infringement studies 8 7 Commercial support/agreement work M&A support 6 5 Trademark preparation, filing and prosecution Trademark counseling Copyright preparation and filing.25 0 Copyright counseling.25 0 Other counseling (trade secret, mask works, etc.) Patent Litigation Trademark Litigation Copyright Litigation 0 0 Licensing/Monetization 7 5 IP Department administration Other.5 0 Total 100 Information Services/Other Communications/Media: 2 Companies Mean Median US and foreign patent preparations, filing and prosecution (including disclosure review and novelty searching) Validity and infringement studies Commercial support/agreement work M&A support Trademark preparation, filing and prosecution Trademark counseling 3 3 Copyright preparation and filing 3 3 Copyright counseling 1 1 Other counseling (trade secret, mask works, etc.) 0 0 Patent Litigation Trademark Litigation 0 0 Copyright Litigation 0 0 Licensing/Monetization IP Department administration Other Total 100 Page 18

21 Mechanical and Machinery: 3 Companies Mean Median US and foreign patent preparations, filing and prosecution (including disclosure review and novelty searching) Validity and infringement studies Commercial support/agreement work M&A support 7 5 Trademark preparation, filing and prosecution 3 2 Trademark counseling 7 8 Copyright preparation and filing 0 0 Copyright counseling.25 0 Other counseling (trade secret, mask works, etc.) 2 1 Patent Litigation Trademark Litigation Copyright Litigation 0 0 Licensing/Monetization 2 2 IP Department administration 4 5 Other 0 0 Total 100 Software/Computers/Peripherals: 2 Companies Mean Median US and foreign patent preparations, filing and prosecution (including disclosure review and novelty searching) Validity and infringement studies 5 5 Commercial support/agreement work 5 5 M&A support Trademark preparation, filing and prosecution 5 5 Trademark counseling 5 5 Copyright preparation and filing 0 0 Copyright counseling Other counseling (trade secret, mask works, etc.) Patent Litigation 5 5 Trademark Litigation 0 0 Copyright Litigation 0 0 Licensing/Monetization IP Department administration Other 0 0 Total 100 Page 19

22 Other: 12 Companies Mean Median US and foreign patent preparations, filing and prosecution (including disclosure review and novelty searching) Validity and infringement studies 10 5 Commercial support/agreement work M&A support 4 3 Trademark preparation, filing and prosecution 3 2 Trademark counseling Copyright preparation and filing.5 0 Copyright counseling 1.5 Other counseling (trade secret, mask works, etc.) 2 2 Patent Litigation 13 5 Trademark Litigation 1 1 Copyright Litigation 1 0 Licensing/Monetization 5 1 IP Department administration 5 5 Other Total 100 PART IV: FINANCIAL (Information provided in USD for previous fiscal year.) 16. & 17. Total litigation (inter partes before a court but not before a patent office) for last completed fiscal year: 48 Companies Number or Active Matters Pending Total Expenses: USD Mean Median Mean Median Patent ,180,400 3,000,000 Trademark ,750 62,500 Copyright 0 0 5,000 0 Not Applicable Licensing: Does your company license out any IP assets or otherwise monetize its IP assets? 55 Companies: Yes 71 No If response to 18 is yes, in last fiscal year, how much licensing revenue was collected (in USD)? 38 Companies: Less than $1 Million $1 Million to $10 Million $10 Million to $50 Million Over 50 Million 50 Page 20

23 19. IP Generated Income: 56 Companies: Yes No a. Is the IP Department considered/treated as a corporate profit center? 9 91 b. Do licensing fees or similar income come through (and directly impact) the IP department budget? c. Is the IP department s performance measured directly on the amount of licensing and similar income received by the corporation? d. Is IP licensing and related income a metric of your company? e. Have you experienced pressure in recent years to increase corporate revenue directly from IP assets? f. If the IP department is not directly generating and collecting licensing revenue from IP assets, is there another department that is? If response to 19.f. is yes, where does that other department report? (Check one) 18 Companies: Other Dept. Reports To Legal Department (General Counsel/Chief Legal Officer) 5.5 Engineering or R&D Executive 11 CEO/President 0 CFO/Finance Organization 22.5 CTO 5.5 Marketing Executive 0 Business Unit Division with P/L Responsibility 44.5 Other Do you expect efforts to monetize IP assets to: 57 Companies: Increase 68 Decrease 0 Stay the same Have you securitized your IP as a method of financing? 57 Companies: Yes 26 No 74 Page 21

24 PART V: OUTSIDE COUNSEL 23. Identify the billing arrangement most frequently used with outside counsel in preparing complete patent applications ready for filing: (check one arrangement only) Chemical/Pharmaceutical/Biotechnology/Medical Devices: 20 Companies Fixed Fee (project based/per application) 25 Fixed Fee (monthly or annual/subscription type model) 0 Hourly Rate 65 Results Oriented 0 Volume Arrangement/Discounted Fees 5 Other 5 Consumer Products/Food & Beverage: 5 Companies Fixed Fee (project based/per application) 80 Fixed Fee (monthly or annual/subscription type model) 0 Hourly Rate 0 Results Oriented 0 Volume Arrangement/Discounted Fees 0 Other 20 Electrical/Electronics/Components: 10 Companies Fixed Fee (project based/per application) 70 Fixed Fee (monthly or annual/subscription type model) 0 Hourly Rate 30 Results Oriented 0 Volume Arrangement/Discounted Fees 0 Other 0 Information Services/Other Communications/ Media: 3 Companies Fixed Fee (project based/per application) 100 Fixed Fee (monthly or annual/subscription type model) 0 Hourly Rate 0 Results Oriented 0 Volume Arrangement/Discounted Fees 0 Other 0 Mechanical and Machinery: 3 Companies Fixed Fee (project based/per application) Fixed Fee (monthly or annual/subscription type model) 0 Hourly Rate Results Oriented 0 Volume Arrangement/Discounted Fees 0 Other Software/Computers/Peripherals: 3 Companies Fixed Fee (project based/per application) 67 Fixed Fee (monthly or annual/subscription type model) 0 Hourly Rate 33 Results Oriented 0 Volume Arrangement/Discounted Fees 0 Other 0 Other: 12 Companies Fixed Fee (project based/per application) 83 Fixed Fee (monthly or annual/subscription type model) 0 Hourly Rate 17 Results Oriented 0 Volume Arrangement/Discounted Fees 0 Other 0 Page 22

25 23.1. If using Fixed Fee arrangements for preparing patent applications, how much is the typical fixed fee amount? (check dollar amount) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 5 Companies Less than $5, $5,000 to $7,500 0 $7,500 to $10, Over $10,000 0 Electrical/Electronics/Components: 7 Companies Less than $5,000 0 $5,000 to $7, $7,500 to $10, Over $10,000 0 Mechanical and Machinery: 1 Company Less than $5,000 0 $5,000 to $7, $7,500 to $10,000 0 Over $10,000 0 Other: 10 Companies Less than $5, $5,000 to $7, $7,500 to $10, Over $10,000 0 Consumer Products/Food & Beverage: 4 Companies Less than $5,000 0 $5,000 to $7, $7,500 to $10, Over $10,000 0 Information Services/Other Communications/Media: 3 Companies Less than $5,000 0 $5,000 to $7, $7,500 to $10, Over $10,000 0 Software/Computers/Peripherals: 2 Companies Less than $5,000 0 $5,000 to $7, $7,500 to $10, Over $10, If paying an Hourly Rate for patent applications, how much is the average hourly rate? (check dollar amount) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 13 Companies Less than $ $250 to $ Over $ Mechanical and Machinery: 1 Company Less than $250 0 $250 to $ Over $400 0 Other: 2 Companies Less than $250 0 $250 to $ Over $ Electrical/Electronics/Components: 2 Companies Less than $250 0 $250 to $ Over $ Software/Computers/Peripherals: 1 Company Less than $250 0 $250 to $400 0 Over $ Page 23

26 24. Identify the billing arrangement most frequently used with outside counsel when preparing responses to office actions during the prosecution of patent applications: (check one arrangement only) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 20 Companies Fixed Fee 25 Hourly Rate 65 Results Oriented 0 Other 10 Electrical/Electronics/Components: 10 Companies Fixed Fee 30 Hourly Rate 70 Results Oriented 0 Other 0 Mechanical and Machinery: 3 Companies Fixed Fee 67 Hourly Rate 33 Results Oriented 0 Other 0 Other: 11 Companies Fixed Fee 36 Hourly Rate 64 Results Oriented 0 Other 0 Consumer Products/Food & Beverage: 5 Companies Fixed Fee 60 Hourly Rate 20 Results Oriented 0 Other 20 Information Services/Other Communications/Media: 3 Companies Fixed Fee 67 Hourly Rate 33 Results Oriented 0 Other 0 Software/Computers/Peripherals: 3 Companies Fixed Fee 67 Hourly Rate 0 Results Oriented 0 Other If using Fixed Fee, how much? (check dollar amount) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 5 Companies Less than $1,500 0 $1,500 to $2, $2,000 to $3, Over $3,500 0 Electrical/Electronics/Components: 3 Companies Less than $1,500 0 $1,500 to $2, $2,000 to $3,500 0 Over $3,500 0 Mechanical and Machinery: 2 Companies Less than $1, $1,500 to $2, $2,000 to $3,500 0 Over $3,500 0 Consumer Products/Food & Beverage: 3 Companies Less than $1, $1,500 to $2,000 0 $2,000 to $3, Over $3,500 0 Information Services/Other Communications/Media: 2 Companies Less than $1,500 0 $1,500 to $2, $2,000 to $3, Over $3,500 0 Software/Computers/Peripherals: 2 Companies Less than $1,500 0 $1,500 to $2, $2,000 to $3, Over $3,500 0 Page 24

27 Other: 4 Companies Less than $1, $1,500 to $2, $2,000 to $3, Over $3, If using Hourly Rate, how much? (check dollar amount) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 13 Companies Less than $ $250 to $ Over $400 8 Electrical/Electronics/Components: 7 Companies Less than $250 0 $250 to $ Over $ Mechanical and Machinery: 1 Company Less than $250 0 $250 to $ Over $400 0 Consumer Products/Food & Beverage: 1 Company Less than $250 0 $250 to $ Over $400 0 Information Services/Other Communications/Media: 1 Company Less than $ $250 to $400 0 Over $400 0 Other: 7 Companies Less than $ $250 to $ Over $ Has your company adopted alternative fee arrangements? 56 Companies: Yes 64 No Has your adoption of alternative fee arrangements reduced the per application/per project cost for your company? 35 Companies: Yes 89 No Did your adoption of alternative fee arrangements reduce the total patent prosecution spend for your company in 2010? 35 Companies: Yes 57 No 43 Page 25

28 25.3. Since adopting alternative fee arrangements, the quality of the work product is: 36 Companies: Better 5.5 Worse 5.5 Stayed the same Has your use of alternative fee arrangements extended to both U.S. and international counsel on patent matters? 35 Companies: Yes 57 No What concessions have you agreed to in return for alternative fee arrangements? (Ex. set volumes of work, limits to project scope, simplified billing, etc.) Access to electronic records Defined work scope Limits to project scope Set and minimum volumes of work Simplified and direct billing Limited number of firms/providers used For what types of projects, other than patent preparation and prosecution, has your company used alternative fee arrangements? Agreements EPO opositions Claim charting Contract preparation Litigation M&A Opinions Reexaminations Right to use studies Trademark searches Validity/freedom to operate searches Page 26

29 26. Identify the billing arrangements most frequently used with outside counsel in preparing trademark applications ready for filing? (check one arrangement only) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 17 Companies Fixed Fee 23 Hourly Rate 59 Results Oriented 0 Other 18 Electrical/Electronics/Components: 8 Companies Fixed Fee 12.5 Hourly Rate 87.5 Results Oriented 0 Other 0 Mechanical and Machinery: 3 Companies Fixed Fee 67 Hourly Rate 33 Results Oriented 0 Other 0 Other: 10 Companies Fixed Fee 50 Hourly Rate 40 Results Oriented 0 Other 10 Consumer Products/Food & Beverage: 5 Companies Fixed Fee 40 Hourly Rate 40 Results Oriented 0 Other 20 Information Services/Other Communications/Media: 3 Companies Fixed Fee 67 Hourly Rate 33 Results Oriented 0 Other 0 Software/Computers/Peripherals: 3 Companies Fixed Fee Hourly Rate Results Oriented 0 Other If using Fixed Fee arrangements for preparing trademark applications, how much is the typical fixed fee amount? (check dollar amount) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 4 Companies Less than $1, $1,000 to $2, $2,000 to $3,000 0 Over $3,000 0 Electrical/Electronics/Components: 1 Company Less than $1,000 0 $1,000 to $2, $2,000 to $3,000 0 Over $3,000 0 Mechanical and Machinery: 2 Companies Less than $1, $1,000 to $2,000 0 $2,000 to $3,000 0 Over $3,000 0 Consumer Products/Food & Beverage: 2 Companies Less than $1, $1,000 to $2,000 0 $2,000 to $3, Over $3,000 0 Information Services/Other Communications/Media: 1 Company Less than $1, $1,000 to $2,000 0 $2,000 to $3,000 0 Over $3,000 0 Other: 5 Companies Less than $1, $1,000 to $2, $2,000 to $3,000 0 Over $3,000 0 Page 27

30 26.2. If paying an Hourly Rate for trademark applications, how much is the average hourly rate? (check dollar amount) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 10 Companies Less than $ $250 to $ Over $400 0 Electrical/Electronics/Components: 7 Companies Less than $ $250 to $ Over $ Mechanical and Machinery: 1 Company Less than $250 0 $250 to $ Over $400 0 Other: 4 Companies Less than $ $250 to $ Over $400 0 Consumer Products/Food & Beverage: 2 Companies Less than $250 0 $250 to $ Over $400 0 Information Services/Other Communications/Media: 1 Company Less than $ $250 to $400 0 Over $400 0 Software/Computers/Peripherals: 1 Company Less than $250 0 $250 to $ Over $ Identify the billing arrangement most frequently used with outside counsel when preparing responses to office actions during the prosecution of trademark applications: (check one arrangement only) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 17 Companies Fixed Fee 0 Hourly Rate 82 Results Oriented 0 Other 18 Electrical/Electronics/Components: 7 Companies Fixed Fee 29 Hourly Rate 71 Results Oriented 0 Other 0 Mechanical and Machinery: 3 Companies Fixed Fee 67 Hourly Rate 33 Results Oriented 0 Other 0 Consumer Products/Food & Beverage: 5 Companies Fixed Fee 40 Hourly Rate 60 Results Oriented 0 Other 0 Information Services/Other Communications/Media: 2 Companies Fixed Fee 0 Hourly Rate 100 Results Oriented 0 Other 0 Software/Computers/Peripherals: 2 Companies Fixed Fee 0 Hourly Rate 50 Results Oriented 0 Other 50 Page 28

31 Other: 10 Companies Fixed Fee 10 Hourly Rate 80 Results Oriented 0 Other If Fixed Fee, how much? (check dollar amount) Consumer Products/Food & Beverage: 2 Companies Less than $1, $1,500 to $2, $2,000 to $3,500 0 Over $3,500 0 Mechanical and Machinery: 2 Companies Less than $1, $1,500 to $2,000 0 $2,000 to $3,500 0 Over $3,500 0 Electrical/Electronics/Components: 2 Companies Less than $1, $1,500 to $2,000 0 $2,000 to $3,500 0 Over $3,500 0 Other: 1 Company Less than $1, $1,500 to $2,000 0 $2,000 to $3,500 0 Over $3, If Hourly Rate, how much? (check dollar amount) Chemical/Pharmaceutical/Biotechnology /Medical Devices: 13 Companies Less than $ $250 to $ Over $400 0 Electrical/Electronics/Components: 3 Companies Less than $250 0 $250 to $ Over $400 0 Mechanical and Machinery: 1 Company Less than $250 0 $250 to $ Over $400 0 Other: 7 Companies Less than $ $250 to $ Over $400 0 Consumer Products/Food & Beverage: 3 Companies Less than $250 0 $250 to $ Over $400 0 Information Services/Other Communications/Media: 2 Companies Less than $ $250 to $ Over $400 0 Software/Computers/Peripherals: 1 Company Less than $250 0 $250 to $ Over $400 0 Page 29

32 28. Opinions of Outside Counsel: What is the average cost of an infringement/non infringement opinion and a validity/invalidity opinion for a study on a single patent during the last completed fiscal year? 41 Companies: Mean (in USD) Median (in USD) Infringement/Non infringement 16,431 15,000 Validity/Invalidity 22,551 20,000 Not Applicable 11 Companies 29. Opinions of Outside Counsel: What is the average cost of an infringement/non infringement opinion and a validity/invalidity opinion for a study on a single trademark during the last completed fiscal year? 33 Companies: Mean (in USD) Median (in USD) Infringement/Non infringement 2,727 2,000 Validity/Invalidity 3,378 2,000 Not Applicable 24 Companies 30. Do you expect the number of written opinions of outside counsel as to non infringement/invalidity requested to: 52 Companies: Increase 38 Decrease 8 Stay the same U.S. patent applications prepared by outside counsel are prosecuted by outside counsel: 56 Companies: Always 43 Most of the time 27 Sometimes 18 Seldom 7 Never 5 Page 30

33 32. U.S. trademark applications prepared by outside counsel are prosecuted by outside counsel: 52 Companies: Always 46 Most of the time 19 Sometimes 12 Seldom 8 Never Indicate the number of application originating law firms used during the last completed fiscal year: Firms used for: None Over 20 Total a. Patent Preparation and Prosecution b. Trademark Preparation and Prosecution c. Intellectual Property Litigation and Disputes Your expectations for the number of law firms used by your company: Firms used for: Increase Decrease Stay the Same Total a. Patent Preparation and Prosecution b. Trademark Preparation and Prosecution c. Intellectual Property Litigation and Disputes How many outside law firms within each of these size ranges are used in preparing and prosecuting your company s patent applications? 52 Companies: Mean Median Solo Practitioner Attorneys/Agents Attorneys/Agents Attorneys/Agents Over 100 Attorneys/Agents Page 31

34 36. How many outside law firms within each of these size ranges are used in preparing and prosecuting your company s trademark applications? 44 Companies: Mean Median Solo Practitioner Attorneys/Agents Attorneys/Agents Attorneys/Agents 2 1 Over 100 Attorneys/Agents What is the number of IP litigation cases handled by outside counsel by firm size? [Ex. 3 cases] 48 Companies Mean Median 1 25 attorneys/agents 1 case 1 case attorneys/agents 4 cases 2 cases Over 100 attorneys/agents 12 cases 3 cases 38. In assigning patent work to outside counsel, do you prefer to use: (check one) 54 Companies Separate firms to handle each of 1)litigation; 2) preparation/prosecution; and 3) opinion work 44 Separate firm to handle litigation, but the same firm for both preparation/prosecution and opinion work 50 Separate firm to handle preparation/prosecution, but the same firm to handle both litigation and opinion work 4 Same firm to handle litigation, preparation/prosecution and opinion work Average cycle time of outside law firms for patent preparation/prosecution from receipt of invention submission to filing of application? (check one) 53 Companies 60 Days or less Days Days 15 More than 120 days 6 Page 32

35 40. How do you select outside patent prosecution counsel (mark the following in order of priority using numbers 1 10 only once each with one being the highest priority)? 51 Companies Rank Quality of work/results 1 Experience in a specific field of technology 2 Responsiveness 3 Cost 4 Prior relationship or personal recommendation 5 Personalized Service 6 Reputation 7 Technology capabilities (i.e., billing tools & processes, etc.) 8 Firm size / number of attorneys 9 Alternative fee arrangements How do you select outside trademark counsel (mark the following in order of priority using numbers 1 10 only once each with one being the highest priority)? 40 Companies Rank Quality of work/results 1 Responsiveness 2 Experience in a specific field of technology 3 Cost 4 Prior relationship or personal recommendation 5 Personalized service 6 Reputation 7 Technology capabilities (i.e., billing tools & processes, etc.) 8 Alternative fee arrangements 9 Firm size / number of attorneys 10 PART VI: OPERATIONAL DATA 42. During the last completed fiscal year, was there a goal/target for the total number of patent applications to be filed by the company? 54 Companies: Yes (Go to 42.1 and 42.2) 35 No What specifically was the company goal/target? 17 Companies Mean Median Page 33

36 42.2. Was the specific goal/target: 19 Companies Missed 16 Met 31.5 Exceeded Did those patent attorneys who handle patent preparation and preparation/prosecution in house have a set goal/target for the number of patent applications to be drafted personally during the last completed fiscal year? 53 Companies: Yes (Go to 43.1) 24.5 No How many patent applications were to be drafted personally during the last completed fiscal year? 13 Companies: 44. What is the percentage of the total number of patent applications drafted by in house attorneys or agents in the last completed fiscal year? 53 Companies Mean Median Does your company track in house IP attorney and paralegal time? 55 Companies: Yes 11 No Does your company charge internal clients (business units, divisions) for in house legal work? 56 Companies: Yes (Go to 46.1 and 46.2) 27 No 73 Page 34

37 46.1. Is charge based on (check one): 15 Companies: Business Unit Driver (e.g. Headcount, R&D Expense, Sales) 7 Average Hourly Rate 13 Actual Legal Spend 67 Other During the last completed fiscal year, identify: Chemical/Pharmaceutical/Biotechnology/Medical Devices: 17 Companies Mean Median Number of invention disclosures received Number of original non provisional utility patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of provisional patent applications first filed in the U.S How many of the applications were prepared by in house counsel? 37 8 How many of the applications were prepared by outside counsel? 13 4 Number of original non provisional utility patent applications first filed other than in the U.S How many of the applications were prepared by in house counsel? 26.5 How many of the applications were prepared by outside counsel? Number of perfected utility patent applications filed from provisionals How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? 46 1 Consumer Products/Food & Beverage: 3 Companies Mean Median Number of invention disclosures received 934 1,000 Number of original non provisional utility patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of provisional patent applications first filed in the U.S How many of the applications were prepared by in house counsel? 1 0 How many of the applications were prepared by outside counsel? Number of original non provisional utility patent applications first filed other than in the U.S How many of the applications were prepared by in house counsel? 1 0 How many of the applications were prepared by outside counsel? Number of perfected utility patent applications filed from provisionals How many of the applications were prepared by in house counsel? 1 0 How many of the applications were prepared by outside counsel? Page 35

38 Electrical/Electronics/Components: 8 Companies Mean Median Number of invention disclosures received 1, Number of original non provisional utility patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of provisional patent applications first filed in the U.S How many of the applications were prepared by in house counsel? 6 4 How many of the applications were prepared by outside counsel? 17 5 Number of original non provisional utility patent applications first filed other than in the U.S How many of the applications were prepared by in house counsel? 13 0 How many of the applications were prepared by outside counsel? Number of perfected utility patent applications filed from provisionals How many of the applications were prepared by in house counsel? 4 0 How many of the applications were prepared by outside counsel? Information Services/Other Communications/Media: 2 Companies Mean Median Number of invention disclosures received Number of original non provisional utility patent applications first filed in the U.S How many of the applications were prepared by in house counsel? 5 5 How many of the applications were prepared by outside counsel? Number of provisional patent applications first filed in the U.S How many of the applications were prepared by in house counsel? 0 0 How many of the applications were prepared by outside counsel? Number of original non provisional utility patent applications first filed other than in the U.S How many of the applications were prepared by in house counsel? 0 0 How many of the applications were prepared by outside counsel? Number of perfected utility patent applications filed from provisionals How many of the applications were prepared by in house counsel? 0 0 How many of the applications were prepared by outside counsel? Mechanical and Machinery: 3 Companies Mean Median Number of invention disclosures received Number of original non provisional utility patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of provisional patent applications first filed in the U.S How many of the applications were prepared by in house counsel? 69 9 How many of the applications were prepared by outside counsel? Number of original non provisional utility patent applications first filed other than in the U.S How many of the applications were prepared by in house counsel? 35 0 How many of the applications were prepared by outside counsel? 48 7 Number of perfected utility patent applications filed from provisionals 88 6 How many of the applications were prepared by in house counsel? 13 5 How many of the applications were prepared by outside counsel? 75 6 Page 36

39 Software/Computers/Peripherals: 2 Companies Mean Median Number of invention disclosures received 1,510 1,510 Number of original non provisional utility patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of provisional patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of original non provisional utility patent applications first filed other than in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of perfected utility patent applications filed from provisionals How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Other: 12 Companies Mean Median Number of invention disclosures received 1,333 1,000 Number of original non provisional utility patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of provisional patent applications first filed in the U.S How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? Number of original non provisional utility patent applications first filed other than in the U.S How many of the applications were prepared by in house counsel? 17 0 How many of the applications were prepared by outside counsel? Number of perfected utility patent applications filed from provisionals How many of the applications were prepared by in house counsel? How many of the applications were prepared by outside counsel? For inventions originating with inventors based outside the U.S., where does your company first file? 54 Companies: Almost always in the U.S Almost always in the country of origin 33.5 Sometimes in the U.S. and sometimes in the country of origin 20 Elsewhere, including using PCT 13 Page 37

40 49. & 50. During the last completed fiscal year, what was the total number of utility patents issued to your company by the USPTO? What was the total number of utility patents issued to your company other than those issued by the USPTO? 49 Companies: Utility Patents Issued by USPTO Other Utility Patents (not issued by USPTO) Mean Median Mean Median From Worldwide (Including U.S.) Operations & 52. At the end of the last completed fiscal year, what was the total number of utility patents owned by your company in force in the U.S.? What was the total number of utility patents owned by your company in force outside the U.S.? 44 Companies: Utility Patents in Force in U.S. Utility Patents in Force Outside U.S. Mean Median Mean Median From Worldwide (Including U.S.) Operations 4,515 1, ,994 4, During the last completed fiscal year, at each U.S. maintenance interval, what percentage of U.S. granted cases owned by your company were abandoned of the total number up for renewal in that period? 42 Companies: 10 or less At 3.5 Years: At 7.5 Years: or more At 11.5 Years: What percentage of patents worldwide owned by your company were abandoned during the last completed fiscal year? 38 Companies Mean Median 9 10 Page 38

41 55. Foreign Filing: For all originally filed non provisional U.S. utility applications filed in the previous completed fiscal year by or on behalf of your company, what was the percentage of those cases for which foreign counterparts were filed? Chemical/Pharmaceutical/Biotechnology/ Medical Devices: 17 Companies Consumer Products/Food & Beverage: 3 Companies 18 Companies Companies Electrical/Electronics/Components: 3 Companies Information Services/Other Communications/Media: 2 Companies 8 Companies Companies Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 2 Companies 3 Companies Companies Other: 3 Companies 13 Companies Page 39

42 56. Foreign Filing: The average number of countries in which national filings or countries designated in regional filings (e.g. EPO) were actually made corresponding to applications first filed in the U.S. and also filed abroad: Chemical/Pharmaceutical/Biotechnology/ Medical Devices: 17 Companies Consumer Products/Food & Beverage: 3 Companies 17 Companies 5 or less or more Companies 5 or less or more 25 Electrical/Electronics/Components: 3 Companies Information Services/Other Communications/Media: 2 Companies 8 Companies 5 or less or more Companies 5 or less or more 0 Mechanical and Machinery: 3 Companies Software/Computers/Peripherals: 2 Companies 3 Companies 5 or less or more 0 2 Companies 5 or less or more 0 Other: 3 Companies 13 Companies 5 or less or more 0 Page 40

43 57. Foreign Filing: Indicate the countries in which national filings or filings designated through regional filings (e.g. EPO) were typically made corresponding to applications in the first filed country: 58. Does your company use patent committees to review invention disclosures and select disclosures for which to pursue patent protection? 54 Companies: Yes (Go to 58.1 and 58.2) 85 No How are your patent committees structured? 40 Companies: Page 41

44 58.2. What groups are represented on the patent committee(s)? (check all that apply) 59. How often does your company do product clearance patent searches on its new products? 54 Companies: Always 31 Most of the time 26 Sometimes 30 Seldom 9 Never 4 Page 42

45 60. How often does your company monitor patents issued to your competitors by the USPTO and major foreign patent offices as they are issued? 53 Companies: Always 17 Most of the time 34 Sometimes 26 Seldom 21 Never How often does your company use patent landscaping and analysis software to develop technology and business strategies? 55 Companies: Frequently 11 Occasionally 69 Never Does your company have a financial reward (cash or stock payment) program for U.S. inventors? 55 Companies: Yes (Go to 62.1) 69 No 31 Page 43

46 62.1. Indicate whether a standard payment is made and the standard amount paid for each of the following events: (If the standard payment is made in shares of stock or options, please indicate the fair market value [FMV] in lieu of dollar amount.) 30 Companies Mean Median Submission of an invention disclosure $112.5 $50 Filing of the priority application $1,075 $1,000 Issuance of first patent $563 $500 Issuance of further patents $218 $0 Cumulative awards for multiple patents $1,818 $0 Other Financial Awards: Inventor Remuneration Program for products that go to market, award is in stock between $20 100K. Reward based on use of granted patent by the company. Commercial use Letters and patent coins Each inventor of highly rated invention submissions receives $200. Inventor receives $1,000 upon approval to file. Inventor receives $3,000 for usage and up to $50,000 from license income. 63. Does your company have a program of non financial recognition (plaque, memento, coin, ceremonies, etc.) awards? 53 Companies: Yes (Go to 63.1) 85 No Which of the following types of recognition do you employ? (check all that apply) 40 Companies: Inventor plaques, certificates or mementos, inclusion on inventor honor roll 90 Inventor recognition ceremonies 62.5 Public displays in company facilities 42.5 Other non financial (please specify) 0 Page 44

47 64. My company uses: (check all that apply) 54 Companies: 65. Have you benchmarked your operation with those of other companies in the past two years? 54 Companies: Yes (Go to 65.1 and 65.2) 43 No What benchmarking measures were used? (check all that apply) 18 Companies: Patents or applications per R&D engineer 5.5 Patents or applications per patent attorney 39 Patent budget $/patent or application 44 R&D expense $/patent or application 55.5 Ratio of patent budget to R&D budget 33 Ratio of patent budget to revenue 28 Headcount: attorneys, engineers, etc. 72 Other Was a previous IPO survey your benchmark? 20 Companies: Yes 25 No Is your IP operation managed against other particular external benchmarks? 52 Companies: Yes (Go to 66.1) 17 No 83 Page 45

48 66.1. Which external benchmarks have you managed your operation against? (please specify) Number of patents issued to competitors and innovative companies Patents per R&D expenditures Wall Street Journal/Patent Board Ratings Other surveys 67. Outsourcing: During the last completed fiscal year, were any of your U.S. patent applications being prepared or prosecuted by someone outside the U.S. for purposes of achieving cost savings? 53 Companies: Yes (Go to 67.1 through 67.6) 15 No In which country was the work performed? (check all that apply) 53 Companies: Australia 14 Canada 0 China 28.5 Europe 28.5 India 86 New Zealand 0 Other (please specify): Germany What type of work did you outsource? (check all that apply) 7 Companies: Patent application drafting with claims 57 Patent application drafting without claims 28.5 Patent preparation/prosecution work 43 Drawings 43 Translations 57 Patent mapping/analytics/ip landscaping 43 Prior art searching 71 Other (please specify): Proofreading 14 Page 46

49 67.3. What was the average cost of a patent application prepared by the service provider in the lower cost country (excluding government fees)? What was the average cost of responding to a U.S. office action by the service provider outside the U.S. (excluding government fees)? Overall, what is your experience with outsourcing to someone outside the U.S.? Has your experience with outsourcing improved from previous experiences? 8 Companies: Yes 62.5 No 0 Not Applicable 37.5 Page 47

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