A "retainer" is a deposit made to an attorney or agent for work to be performed. In the case of attorneys, including patent attorneys, any retainers paid are deposited in a non-interest bearing account until earned. You are entitled to any unearned amounts upon demand or upon terminating my representation of you.
Many intellectual property attorneys, including me, have discovered that it is best to secure payment of our costs and fees before commencing work for a client, in particular, before starting to draft a patent application. Absent a retainer, I have sometimes spent years collecting fees for work that I have performed. For that reason, I require retainers from most clients, at least until we have built up a long term relationship.
In most jurisdictions, an attorney is required to place all monies received as a retainer in a non-interest bearing account. At that time, the money is still yours. As the attorney earns a portion of the retainer, he can transfer that amount of money from the trust account to his personal account, giving the client credit on his bill for that amount. Should the client terminate his employment of the attorney before the attorney has earned the entire retainer, the remainder has to be returned to the client upon demand. Note that in all cases, the attorney is required to provide an accounting of what has happened to retainers. Also, many jurisdictions periodically audit attorneys to make sure that they are properly handling their retainer accounts. Finally note that improper handling of retainers is almost always an ethics violation, which may cause the attorney to lose his license to practice both before the courts in a state, and through reciprocity, his license to file and prosecute patents before the USPTO.
A "nonrefundable retainer" is a retainer that is considered earned when you render it to the attorney. Most jurisdictions question nonrefundable retainers very closely, and consider them in many cases to be unethical. I never require a nonrefundable retainer.
In the case of patent applications, I require half of my expected fees, or half the maximum amount of fees that I will charge, if they are capped, before I will start preparing a patent application. I require the remainder, along with all costs, before I file the patent application with the USPTO.
In the case of patent prosecution, I require all of my estimated fees and costs up front before I will start to work. I require the same for patentability and non-infringement opinions.
In the case of copyright and trademark applications, I require half of my estimated fees, plus all costs, as a retainer before starting work.
A "professional services agreement" is an agreement between an attorney or agent and his client setting forth what work is to be performed, how the client is going to pay for it, etc. It also lays out, to some extent, the rights and responsibilities of the two parties.
Always, for several reasons. First, more and more states’ attorney ethics rules require a signed professional services agreement before starting work. Secondly, if properly done, professional services agreements make it clear to both parties what their legal responsibilities and rights are. And third, it makes it easier for me to collect my fees.
This is semantic, and you will sometimes find some attorneys using different terminology. Herein, I use the term "fee" to denote payment for the work that is performed by an attorney (like me) or a patent agent. I use the term "costs" to denote the monies that are paid to others, most notably, the government. Note however that the U.S.P.T.O. designates what I term "costs" as their "fees". Also included in costs are the payments I make to patent draftsmen for patent drawings. However, when I hire an outside searcher for searching prior art, most notably patents, I include that in my own fees.
For most matters, my "hourly rate" is $200 an hour. This is the typical hourly rate that I charge for drafting, filing, and prosecuting patent applications.
Actually, in comparison with other attorneys, and in particular, in comparison with other patent attorneys, I charge at the low end of patent attorneys with my experience. Indeed, currently I am charging $200 an hour. If I were in a middle sized law firm, I would probably be billed at $300 an hour. Even more in a large firm. I can charge less, because I have less overhead.
The reason that patent attorneys charge more than most attorneys do is that we are required to have expertise in two fields: law and engineering. We also must pass at least two bar exams, one at the state level to be an attorney, and the patent bar to be allowed to practice before the U.S.P.T.O. in patent matters. Typically, fewer than half the applicants taking a given patent bar exam pass.
A "flat fee" is a set amount charged for a particular matter. I typically charge a flat fee for patent prosecution, opinions, and copyright and trademark registrations.
A "fee cap" is a maximum amount that an attorney or agent will charge for a matter. I typically utilize caps for drafting and filing patent applications. This removes some of the risk from the client, in that he knows the maximum amount that I will charge for the matter. In most cases, my legal fees will be fairly close to the cap, so you can think of a cap as a fixed or flat fee with the possibility that I might return a small portion, should it take me less time to prepare than expected.
A "patentability opinion" is an opinion that a patent attorney or agent provides that takes a look at the prior art and gives his best professional estimate at what type of claims he might be able to procure if filed and prosecuted. The patent attorney or agent will typically either commission a patent search, or do one himself, to give him a basis for making his estimate of how broad of claims he might be able to procure.
The way that patentability opinions work is that the patent attorney (or agent) first searches (or has searched) the prior art, most notably, issued patents. He may also look at other publications and published pending patents. From the information he receives there, he will then predict the breadth of claims that he believes he might be able to obtain. This is typically in the form of proposed claims.
The big reason to have a patentability search done is to have an idea of the type and breadth of claims that the patent attorney (or agent) believes that he might be able to get through submission and prosecution of a patent application with the U.S.P.T.O.
Another reason is that most often, an applicant gets one real chance during prosecution to amend his claims to conform to the prior art that his examiner has found and has cited against his filed claims. After that, he essentially has to pay the equivalent of another application fee in order to continue prosecution (called a "Request for Continued Prosecution" or RCP). Thus, in many cases, it is advantageous for the patent attorney (or agent) to closely tailor the claims filed in view of the known relevant prior art, so as to minimize the ultimate cost of patent prosecution.
Either a patent attorney or a patent agent, licensed to practice before the U.S.P.T.O. can provide you with a patentability opinion.
For most inventions, I will provide a patentability opinion, that includes a patent search, for $1,000 flat fee. There are situations where I might charge more.
An "infringement opinion" is an opinion by an attorney that a product or process, work, or mark, does (or does not), in all likelihood, infringe someone’s patent, copyright, or trademark, respectively. Most of the time, they are commissioned by a potential defendant. However, occasionally, they are commissioned by a potential plaintiff.
The major reason that infringement opinions are commissioned is that someone receives a demand letter from the owner of a patent, copyright, or trademark. These are typically called "demand letters" because they typically demand that the alleged infringer immediately stop infringing, and often, that he pay damages or royalties.
Another reason that an infringement opinion is obtained is preparatory to litigation. Litigation is usually very expensive, and in many cases, it would be foolish for an owner of a patent, copyright, or trademark to file suit against someone, only to find out later that he should have known from the first that infringement was unlikely.
The effect of a demand letter is to put an alleged infringer on notice that he is (allegedly) infringing some other party’s patent, copyright, or trademark. From that point forward, if the alleged infringing party is ultimately found have infringed, he is considered a willful infringer. This typically results in increased damages -–for example, in some cases, treble damages. Also, the chance that that other party is awarded his fees and costs is also increased for willful infringement.
A competent opinion of noninfringement by an attorney will often negate the willfulness resulting from the demand letter. As a corollary, an opinion of infringement, especially if in writing, can be devastating to a defendant. For that reason, most attorneys will first provide their clients with their infringement opinion verbally, and ask if they want it in writing. Needless to say, prudent clients typically request the written opinion if the opinion is that of probable non-infringement, but refuse the written opinion if the opinion is that of probable infringement.
Only experienced licensed patent attorneys should ever be retained to give a patent infringement opinion. Not a patent agent. And not an attorney not licensed to practice before the U.S.P.T.O. Experienced intellectual property attorneys, who may, or may not be licensed as patent attorneys are typically competent to give copyright and trademark infringement opinions.
The reason for to remember that infringement opinions are most often drafted in view of potential litigation. As such, it is expected that they will be utilized in court to negate a claim of willfulness of infringement. That means that they will often be attacked on one of two grounds: the skill shown in their drafting, such as in the evaluation of prior art in the case of patents; and in the competence of the person providing the opinion. While a patent agent may technically be competent to provide such an opinion, in the view of most patent attorneys, an agent providing such an opinion would exceed his U.S.P.T.O. license – and thus, he would be practicing law without a license. Judges, who are rarely licensed patent attorneys, tend to discount the abilities of non-attorneys in legal matters.
For most situations, I charge $1,000 flat fee for a patent infringement opinion, This includes, in the case of patent infringement opinions, the cost of a patent search, if necessary.
For most inventions, I charge $200 an hour, up to a cap of $4,000 to draft and file a patent application. In some instances, I will charge more. I will tell you, if I think that this is applicable.
Note that some patent attorneys and agents charge more for software patents than they do for simple mechanical inventions. This makes no sense to me, and I attribute that to their lack of experience in that area.
I require half of my cap, typically $2,000, as a retainer, before I will start drafting a patent application.
The U.S.P.T.O. classifies patent applicants as either small entity or large entity. General Motors and IBM are considered large entities, while individuals, are usually considered small entities. The U.S.P.T.O. charges large entities double for most things. The following costs will assume small entity status. If you are representing a large entity, double them. If you are in doubt, the best place to find out whether or not the entity owning a patent application is a small entity or not is at the Small Business Administration (SBA) site, and in particular, start at an article titled: What is a Small Business.
In a typical utility patent application filed today, the relevant costs are:
| $150 | - Basic filing fee for a patent application if not filed electronically |
| $75 | - Basic filing fee if filed electronically |
| $250 | - Utility patent application search fee |
| $100 | - Utility patent application examination fee |
| $40 | - Recording each patent assignment |
Some other filing fees that you may see are:
| $100 | - Each independent claim above three (3) |
| $25 | - Total claims above twenty (20) |
| $180 | - Each multiple dependant claim |
| $65 | - Surcharge for late filing of oath or declaration |
| $125 | - Utility application size fee – for each 50 pages above 100 filed |
| $300 | - Non-English specification (regardless of small/large entity) |
Note that these costs change periodically. The latest U.S.P.T.O. fees can be found at: http://www.uspto.gov/web/offices/ac/qs/ope/fees.htm. You should always check the latest fees before making any payments to the U.S.P.T.O.
In addition to U.S.P.T.O. mandated fees, costs may include approximately $100 per page for patent drawings when I need to have them done by a patent draftsman. This is primarily applicable for mechanical applications.
I will not file a patent application for a client until I have been paid in full for my time and efforts and have also received payment for the expected filing fees.
Typically, a year or two after a patent application is filed, your patent attorney or agent will receive an First Office Action from the U.S.P.T.O. Prior to issuing an Office Action, the examiner assigned to your application will have done a prior art search, most notably reviewing the closest patents to your invention. Based on this, he will reject, object to, or allow your claims. Most often claims will be rejected as lacking novelty (35 U.S.C. § 102) or being obvious (35 U.S.C. § 103). Objected to claims are currently dependant upon rejected claims, but would be allowable if rewritten in more independent form to not depend on rejected claims. The examiner will also object to any formality problems with the application at this time.
Your patent attorney or agent will then file a response to the Initial Office Action cleaning up any informalities the examiner may have found, and amending the claims, as required. In some cases, the patent attorney or agent will instead argue in his response that the examiner is mistaken in his rejection of some of the claims.
If the response to the Initial Office Action satisfies the examiner, he will then issue a Notice of Allowance. Otherwise, he will respond with another Office Action. Most often, this is marked "Final", indicating that prosecution is essentially closed. However, it may be possible at this time to file an Response (or Amendment) After Final dropping some claims, and amending others in accordance with the Final Office Action requirements. If this is not satisfactory to the applicant, his patent attorney or agent may file a Request for Continuing Prosecution, reopening prosecution, or may appeal the Final Office Action to either the Board of Patent Appeals and Interferences or to the United States District Court for the District of Columbia.
You can find more information on patent prosecution at my Patent Prosecution FAQ.
If I initially wrote the patent application, I typically charge $750 to respond to a First Office Action or to any other non-Final Office Action. I may charge somewhat less, typically $500 to respond to a Final Office Action, again, if I initially wrote the application.
However, if someone else initially wrote the patent application, my fees start at $1,000 and go up. There are a couple of reasons for this. First, if I wrote the application, I can come back up to speed fairly quickly on the application. I understand the invention, and what I tried to do with the claims. Also, I have filed and prosecuted enough patent applications that objections on the basis of formality are rare for the applications that I draft.
I typically do not understand applications well enough to respond to Office Actions when someone else wrote the application. Before I can respond, I must first read the application, start to finish, at least once, sometimes more than once. This takes time.
Secondly, there are some patent attorneys and agents who get business by low-balling their initial patent drafting fees. But they do this by minimizing the work they do in the patent drafting. The result, in many cases, are numerous formality problems that must be addressed before the Office Action is responded to on its merits. This can be a substantial effort on my part.
I will not start work responding to an Office Action until I have received my fees up front as a retainer.
You can, of course, take your work to another patent attorney or agent. Or, you can try to respond on your own.
Indeed, if I have not received a retainer within thirty days of providing you with a copy of an Office Action and how much I would charge for responding, I will start to withdraw from representation of you so that you will have time to obtain other patent counsel.
I do this because some have argued that if a patent attorney or agent waits until the last minute, he is ethically obligated to respond, regardless of whether or not he has been paid. The best solution here is to withdraw early enough that the client is not prejudiced by the withdrawal.
Upon receiving a Notice of Allowance, an Issue Fee is required before a patent can be issued. This is currently $700 for a small entity utility patent application. I charge $300 for filing the required paperwork here. In addition, in order to keep a patent in force, a patentee must pay Maintenance Fees on a periodic basis. Currently, for a small entity, they are as follows:
| $450 | - Due at 3 ½ years |
| $1,150 | - Due at 7 ½ years |
| $1,900 | - Due at 11 ½ years |
There is also a $65 additional cost for paying within the next six months, and after that, the patent is abandoned. It can be revived by paying the above maintenance fees plus $700 if the abandonment was unavoidable and $1,640 if unintentional.
Quote available upon request.
Quote available upon request.
Quote available upon request, but typically charge $200 an hour, with half the estimated fees up front.
A "contingent fee" is a fee that is contingent upon some occurrence. You see these most often in litigation, where the an attorney charges a percentage of whatever he wins for his client – for example, in many cases, he charges 1/3 of the amount won as his fee. If he doesn’t win anything of value for the client, he doesn’t get paid.
Note that in most jurisdictions, the client has to pay costs. Only the attorneys’ fees are contingent.
Rarely.
Most Intellectual Property (IP) legal work doesn’t lend itself to contingency fees. This is especially true for copyright and trademark registrations. Patent applications are discussed in the next section.
The places where I will consider a contingency fee are in litigation and licensing, including, most notably, infringement litigation. But note here that Intellectual Property (IP) litigation is extremely expensive, typically costing over $100,000 in legal fees. In order to take an infringement case, I need to be able to see a reasonable likelihood of receiving several times the legal fees that I would receive if I did the work on a non-contingent basis. Copyright litigation, with the copyright properly registered prior to any infringement has a lower bar both because copyright litigation is typically a little cheaper, and there is a decent chance at getting attorneys’ fees awarded if you win. There is little chance of this in patent litigation.
No. There are a couple of reasons for this. First, most patents don’t make money for their inventors. So, taking a percentage of nothing nets zero. Secondly, most often whether or not a patent makes money depends primarily on how well the patent owner or applicant does bringing his product to market. This is out of the hands of the patent attorney.
Finally, an attorney’s time is his stock in trade – what he sells. If a client is not paying directly for an attorney’s time, he has no incentive to minimize how often he talks to the attorney. The last time I filed a patent application on a contingency fee basis, the client would call me daily. This lasted for well over a month. This would not have happened if she had not seen my time as free.