When General Counsel Michael Finn joined global specialty chemicals leader and essential solutions provider Nouryon in 2018, the ACC Value Challenge and its goal to help in-house counsel get more value for their legal spend was on his action list. Having identified the need to modernize and streamline Nouryon’s intellectual property processes, Finn engaged outside counsel Tim Lorenz of Lorenz & Kopf, LLP | LKGLOBAL, with whom he had previously partnered on similar projects. Lorenz teamed with Nouryon’s Deputy General Counsel Jared Zane and Global Director of IP Matt Kellam, to reimagine the company’s intellectual property management and execute a comprehensive strategy. Two main fronts for the reimagined strategy created the perfect opportunity to apply value levers: administration of IP services and strategic reshaping of the IP portfolio.
Nouryon’s intellectual property department was a self-contained unit within the company, comprised not only of attorneys, but also of internal docketing clerks, translators, and dedicated search personnel; the department also outsourced a significant amount of work. “The team had become larger and more costly than optimal for Nouryon, and the IP portfolio was bloated and did not reflect current and future business objectives,” says Lorenz. “There must be objective criteria beyond the number of patents in a portfolio.”
Zane describes the pre-reimagined status: “There was a disconnect between the business and the IP legal department. The IP department is there to support the business, not the other way around,” he says. “Aligning the two can be a challenge, but fruitful for value and efficiency. Seeking that alignment provides a valuable opportunity to reconnect with the business.”
Together Zane, Kellam, and Lorenz implemented necessary steps to reorganize administration of IP. The partnership with outside counsel, alongside the application of new pricing features, including fixed rates and fee limits, provided economies of scale as well as budget predictability. Administering processes in-house meant specialized personnel dedicated to a small range of duties and the management of dozens of law firms around the world, whereas outsourcing to LKGLOBAL allowed Nouryon to benefit from the firm’s robust procedures already in place. Additionally, one consolidated monthly cost for daily delivery of IP services, on a lower per-unit basis, created the opening for Nouryon to decommission an entire accounting software program dedicated to processing IP invoices.
LKGLOBAL developed a budgeting matrix tool dedicated to highly granular monitoring of monthly spend and annualized projections. Spikes in a particular category are monitored to ensure there is a reasonable basis and to allow adjustment as necessary to meet quarterly and annual budgets. Annual budget forecasts are calculated using specific metrics by category; IP spend has been within budget since Q3 2019. Further, these changes have paved the way for Nouryon’s IP professionals to focus on higher-value tasks.
To inform those tasks, Kellam and Lorenz examined the IP portfolio with a critical eye on strategy. The goal was to maintain IP in jurisdictions that support the business objectives while maintaining cost controls and budgets. At Nouryon, annuities, taxes, and maintenance fees had become a large portion of the total budget.
“If you have $25,000 in annual sales and no manufacturing in Madagascar, why would you pay $40,000 -$50,000 a year to maintain that patent portfolio?” asked Lorenz. “There must be conscious, objective criteria to make sure you’re supporting the business.”
Nouryon’s strategic IP portfolio was reduced through a strategy of maintaining patent families but reducing the number of countries per family. To make those decisions, several criteria, including sales data and country patent enforceability, are taken into account and used to create a recommended country grid per business line.
A dashboard calculates data from 15 lines of business and organizes all actionable IP deadlines into a single tool. Data is stored in sections and updated quarterly in tandem with business line meetings where patent portfolio decisions are made. The dashboard facilitates high-level strategic review of pending patents and their relative priority.
Naturally, change on this scale required thoughtful management. Education and dialogue were crucial to identify low-hanging fruit and design a strategy that would help Nouryon use its IP investment wisely. Kellam and Lorenz held in-person meetings with key stakeholders (pre-COVID) to get buy-in.
“We reiterated that we completely support the idea of filing IP, but it’s critical to file the right kind of IP. We asked the business what they needed and to trust us to help them. We eliminated bloat, redundancies, and outdated IP. Although we did reduce the size of the in-house department, all important IP has been retained,” says Kellam.
This data-driven, automated and disciplined approach has helped Nouryon reduce its global IP budget, which includes both internal and external spend, by 41 percent from 2019 to 2021. By removing low-value patents from the Nouryon portfolio, the total number of patents has decreased by 48 percent and the number of patent families by 23 percent.