UTBMS I/P Billing Codes Finalized
In recent years, however, clients have become more focused on requesting additional billing information from their outside law firms, or asking that billing data be presented in specific formats. In some instances companies have wanted to analyze their costs along various dimensions to provide benchmarks for the more systematic evaluation of legal costs. In others, there has been a desire to develop a database of costs on discrete legal activities. Along with these trends, the rise of electronic legal billing and data exchange has created a flood of new information.
In order to address these and other challenges, many consumers of legal services have began to move toward "task-based billing" systems where standardized codes are used to identify common tasks and activities performed by different service providers. These types of management information systems are well-known in project accounting circles where costs and revenues are allocated according work breakdown structures of deliverables and tasks that need to be performed in order to complete a project. Perhaps the most well-known of these task-based billing systems outside the legal serves profession is the Health Care Procedure Coding System established by the U.S. Health Care Financing Administration (HCFA) in 1978 for the billing of health care services under Medicare and Medicaid. By similarly requiring legal bills to be categorized according to a standard set of tasks and activities, rather than by matter and day of month, it was hoped that service providers and consumers could get a better handle on where those dollars were going.
A similar Canadian UTBMS project was instigated at the suggestion of the Insurance Corporation of British Columbia (ICBC). Their legal department saw the value of the UTBMS system being developed in the United States. However, U.S. billing codes were not directly applicable to the Canadian legal system due to minor differences in process and terminology. Recognizing the value of a uniform code set for the Canadian legal community, ICBC requested the assistance of The Conference Board of Canada in bringing together a broad coalition of law firms and corporate legal departments from across Canada to address this issue. Although an intellectual property code set was developed by the Canadian consortium, that code set used a variety of terminology that is unique to the Canadian legal system, and therefore difficult to implement for large, multinational intellectual property service consumers and suppliers.
PA100 - Assessment, Development, and Administration
PA200 - Patent Investigation and Analysis
PA300 - Domestic Patent Preparation
PA400 - Domestic Patent Preparation
PA500 - International Patent Preparation
PA600 - International Patent Prosecution
PA700 - Other Patent-Related Tasks
A typical task code under the "PA 400 - Domestic Patent Prosecution" phase heading is
PA430 - Official Communication - Domestic
All action associated with processing an Official Communication from a Patent Office (known as an "Office Action" in the U.S. when directed toward the merits of the application) in the home country of an application for an application filed under PA300, including initial review and any calendaring ("docketing" in the U.S.) of any response deadline, report to client with any proposed response, review of applicant's
instructions and inventor's comments, preparation of amendments and/or responsive arguments, examiner interviews, and report of actions to the client. Includes activities associated with Official Communications not affecting the merits of the application, such as filing receipts, restriction/election requirements, and annuity/maintenance fee payments. Also includes "Petitions" and other requests for supervisory action that are not decided by a quasijudicial appellate tribunal within the Patent Office, such as petitions to reinstate an abandoned application in the U.S.
PA710 - Opinion Preparation
All action associated with the completing formal legal opinions on the validity, enforceability, infringement, and/or non-infringement of a patent claim. Includes opinions on infringement of a client's patent by a non-client infringer.
PA720 - Portfolio Analysis and Management
All action associated with reviewing, analyzing, documenting, and managing a portfolio of patents. Includes patent "due diligence" during transactional analysis.
PA730 - Assignments and Security Interests
All actions associated with negotiating and preparing assignment (i.e. previously
registered or filed application) or security interest, including review of file history, checking status and meeting with client. Work of outside vendors in conducting searches or otherwise assisting investigation should be an expense under E100.
PA740 - Licensing
All actions associated with negotiating and preparing license.
It will be apparent from these examples that “reporting” letters to clients (such as for receipt of an Office Action or other official communication from a patent Office) have not been broken out separately from the tasks that are likely to be authorized by the client as a result receiving the reporting letter. Although service providers put varying degrees of effort into such initial tasks, the need for simplicity in the code sets was believed to overweigh the value of such minute breakdowns of billing information for clients. In fact, the task codes are numbered in groups of ten so as to allow clients to add additional codes for any such further breakdowns, and also allow additional codes to be added by the LEDES in the future to reflect significant changes in intellectual property procedures. In addition, each phase is also provided with an “X99” task code (where ”X” is the phase series) that service providers can use for tasks not captured in the in the existing codes for the particular phase, and/or that clients can designate for any special task information that they would like to collect.
E125 Translation - Translation fees including preparation and keyboarding
(typing) of documentation
E126 Drawings - Drawings prepared by external draftsman
E127 Patent and Trademark Records - Including patent copies, priority documents, file histories and other intellectual property records obtained through third-party vendors;
E128 Searching and Monitoring
E129 Official Fees, excluding post-issuance patent maintenance, trademark renewal
fees and late fees - Official fees not otherwise identified above which
are paid to governmental and quasigovernmental entities in connection with a
pending application, including those paid to Patent and Trademark Offices, the
World Intellectual Property, Notaries, consulates, and embassies.
E130 Post-Issuance Patent Maintenance and Trademark Renewal Fees - Official fees paid to a government agency in order to maintain an issued patent or trademark in force
E131 Late Fees - Official surcharge fees paid to a government agency in order to have a documents entered into the record pas an initial deadline, including Petition for Extension of Time and Information Disclosure Statement fees in the U.S.
There are significant benefits to both law firms and law departments in terms of administrative simplicity and cost reduction from standardization under these code sets. In addition, these code sets should help consumers of intellectual property legal services to analyze their costs along various dimensions and provide benchmarks for the more systematic evaluation of legal costs. For organizations that find their costs outside industry benchmarks, this information may also lead to more frank discussions about excessive service level demands and/or service level differentiators. Such objective information will hopefully allow both consumers and suppliers of intellectual property services to have clearer expectations that lead to more even more effective and efficient commercial relationships that those that exists today.