Startups skirt law firms, make a beeline for boutique IP consultants

20 Sep, 2012

Startups spanning sectors are giving pricey, established law firms a miss and making a beeline to embrace boutique patent consultants to file for IP rights, a trend that consulting firms say is gradually gaining momentum despite low awareness levels.

More and more early-stage companies would opt for boutique consulting firms to file for product patents as awareness levels rise, according to various consulting firms.

A host of IP consulting firms including Inolyst, Brain League, IPPro and Sanshadow, which offer IP services to various startups operating in the IT, healthcare, energy, electrical and healthcare sectors, have set up shop in India. These firms claim that it is not just Indian companies which engage them, but foreign firms with units in India also are among their clientele. These consultants boast of having better technical knowhow and claim they charge far lower prices, some of them offering services at one third the price an established law firm charges.

"The trend is definitely changing," said Ishan Raina, marketing analyst, Brain League, a startup in the IP services consulting. "Startups have now started looking at boutique IP consultants to seek help for filing patents for their products in Indian as well as foreign markets. Given the rate at which we have been growing for the last several years, we see an increase in demand in future," added Raina.

Founded in 2006 by a bunch of graduates from IIT Madras, IIM Bangalore, National Law School of India University, Bangalore and Franklin Pierce Law Center, Brain League offers services covering IP generation, protection, commercialisation and management. The company boasts of notching up around 500 clients since its beginning.

Meanwhile, Bangalore-based IP consultant, Inolyst, which counts InMobi, Mobstac, Huawei, Ozonetel and Ericsson as its key clients, says that it too is witnessing a slew of opportunities from startups that are dumping law firms for IP-related matters. "Unlike law firms, we understand technology better. Also in terms of technology pricing, we are ahead of them. Our clients trust us as we can take off the complexity, while filing for patents in India and elsewhere in the world," said Dilip Kumar, CEO, Inolyst. Startups are finding it hard to make law firms understand their invention and the USP of the same, he said.

"Our clients do not need to sweat it out while explaining what their products are, as we understand it much better than law firms," said Kumar. Inolyst aims to be the 'Infosys' of IP five years down the line, according to him. Started in 2009, Inolyst has 70-80 clients, out of which 30-40 percent are from the IT space. The company is also working with various startups in the Startup Village in Kochi to create awareness about patents.

According to Vijay Kumar Ivaturi of Indian Angel network, it is nothing but the lower cost that powers this trend. "Many of the top law firms in India offer IP as a service, but they are expensive. However, there is a difference in approach based on whether one is seeking USPTO (United States Patent and Trademark Office) filing or Indian patent office. A startup will use a top tier firm if it wants to file in multiple countries and in those areas where the litigation is high. Hence, it is the ease of access and cost which drives this trend," Ivaturi said.

A law firm charges startups on an hourly basis, which makes them unable to anticipate a budget upfront, whereas a boutique consultant charges a fixed fee. Boutique firms normally charge anywhere between $3,000-$4,000 from their clients, which, they claim,  help the clients anticipate future expenses and plan accordingly.

It is true that many of the large firms may not have an in depth expertise in IT, but they have resources on call for helping them. In a very specific area, the boutique firm has an advantage as it is willing to work with the startup to evolve it. In law firms, they are charged by hour and it is beyond the reach of many companies to afford them, Ivaturi said.

Experts feel that it is an important initiative to explore patent ecosystem in the areas in which the startups are operating for filing patents based on their core offerings. While just the awareness aspect is coming to the fore in India, the trend has already gained traction in the West.

In general, Indian startups work on engineering differentiation and not on any fundamental differentiation in science. They use published methods in a novel fashion, but they might not be driven by their own research which is patentable.

"In sectors like energy or medical devices, it is important to file a global patent for apparatus or method and startups tend to use big firms for this. I rarely see anyone filing a patent in social commerce space, while someone may try to do so in a video optimisation solution." Ivaturi said.

There is also a trend towards filing an Indian patent that one can leverage the 'first to invent' factor over 'first to file' factor in USPTO. It costs much less to file in India and any small firm can do it.

According to Sridhar Ranganathan, VP, Strategic Initiatives, Bangalore-based mobile ad network, InMobi, working with Inolyst has helped it get a business perspective on how to go about the IP strategy as in whether to build a defensive or attacking or leadership position in the IP space. "This is greatly helpful for startups that they can leverage their IP as one of their key assets," he said.

Global challenges, local expertise

But challenges remain. "There is lack of awareness or appreciation of IP Strategies and patenting process. Also, startups do not know where to file for patents and how to navigate USPTO and other patenting bodies effectively. Leveraging outside help to capture the novelties appropriately during the patent drafting process is another challenge," Ranganathan said.

However, Sandeep Singhal of Nexus India Capital Advisors Pvt Ltd., said, "Most of our portfolio companies are working with US patent lawyers for their filings. In some cases they have used local legal firms that understand IP law for filing a provisional patent in India, but US attorneys have deeper understanding of patent laws related to technology IP and therefore help companies save a significant time even if they charge a bit more."

IPpro Inc, which has operations in the US and Singapore apart from Bangalore and Mumbai in India, is another venture in IP consulting. According to Anand Kamal, a patent analyst with IPpro, "Startups are more comfortable in sharing sensitive and confidential information related to their products with us. They prefer working with tech consulting companies like ours. They feel that law firms don't meet their technical expectations."

US-based IPpro, which is working with Nishith Desai Associates in India, has 10-15 active clients in India, most of them from IT sector. Kamal said high cost is a key deterrent for startups seeking to approach law firms. "Indian market is so huge and hence the number of startups approaching boutique firms is bound to increase," he said.

Firms like Inolyst also cater to global companies, which have operations in India. "We are able to provide the same quality of service that US companies offer, but at much better prices," said Anoop Kurup, director at Inolyst.

According to Santanu B, CEO of Bangalore-based Salorix, a startup in big data, boutique law firms have a new business model that is very startup friendly. "Being a small firm, you get personal attention from the management and the team dedicated to you. In addition to executing client's wishes, they drive the thought process and bring in the expertise from the field. The hand holding, educational approach to the patent process and attention to detail sets them apart from others," he said.

"The time between filing and granting (patents) may be long, but that's universal. In fact, if at all, the filing process has been as smooth or even smoother than we are experiencing in the US," he said.

New Delhi-based Sanshadow Consultants is another firm which offers services in IPR. Set up in 2004, it is headed by Dr. Shaleen Raizada, an expert in Intellectual Property rights. The company was funded by the Indian Angel Network in 2006. It has offices in Bangalore and Dehrahdun and counts as its clients IBM, IITs in Kanpur, Rourkee and Indore and Prima Telecom.

Legal fraternity sceptical

A senior lawyer with a leading law firm specialized in IPR, international trade and corporate laws, said on condition of anonymity, "I don't see any such trend emerging in India. As much as 70 per cent of companies in the country still prefer law firms to file for patents, as they can offer better expertise on IPR. Companies which don't have an in-house team only go to boutique firms."

The cost of service depends on the requirements of the company, which wants to file for patents, according to law firms. "If a company wants to use a law firm as a medium to just to file the patent application, then the charge is comparatively less. But, if it wants to use the firm to get an understanding on the advantages of the patent rights and if they need suggestions on whether the claim is appropriate or not, then the cost can vary.

The lawyer also said he does not find any differentiation in terms of technical knowhow between a law firm and boutique consultant. "We are equally strong when it comes to technical knowhow, as we have a 60-people strong engineering team to give advice on technology."

(Edited by Prem Udayabhanu)