Understanding the Real Costs of Patent Translations

Matthew SekacWritten by Matthew Sekac, Senior Director at Park IP Translations, the following article appeared in The Patent Lawyer Magazine, July/August 2016 issue, published by CTC Legal Media. The article, Unpacking Costs for Patent Translations, discusses the price of patent translations, and how to successfully get better results and reduce costs at the same time.

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Patent protection plays a role of increasing importance to businesses competing in international markets.  Globalization has put a worldwide population of customers within the reach of more and more businesses.  Arguably the best path to differentiation for these firms is to innovate, which makes the protection of those innovations critical.

The steady increase in global patent filings attests to their importance in the global economy, and as organizations file an increasing number of patents around the world, they face an increasing need for patent translation.

Park IP Translations’ analysis of worldwide patent filing statistics from the World Intellectual Property Organization (WIPO) suggests that the global market for patent filing translations is in the neighborhood of $1 billion annually.

In 2014, US applicants required more than 76,000 translations for PCT National Phase entry alone, plus nearly 60,000 (full and claims-only) translations for EP Grant and Validation.  For European applicants that number is estimated at around 100,000 for National Phase Entry and over 130,000 for EP.  In Asia, we estimate that in 2014 applicants from China, Japan and Korea required roughly 100,000 translations for National Phase Entry and more than 60,000 for EP.

Altogether, that makes well over 500,000 patent filing translations from just the US, Europe, China, Japan and Korea. That is without accounting for Convention/Direct National filings (where available data was less conducive to our analysis).

The Budget Impact of Translation

Patent translation is expensive. It requires a trained linguistic professional with a high level of specialized technical competency and working familiarity with the complex and nuanced language of patents.  The daily output of a typical translator is roughly 2,000 words, which is equivalent to approximately eight pages.  The average English-language PCT application is almost 9,400 words, or almost a week’s work before accounting for proofreading, reconciliation, desktop publishing and other quality assurance procedures.

For professionals with the requisite qualifications, all this time doesn’t come cheap. Patent filing organizations purchase a tremendous amount of specialists time in preparing billions of words of patent translation every year.  The impact of this expense on budgets is no secret. Speaking at the IP Service World conference in Munich in 2014, Theo Grünewald of the Steinbeis Transfer Institute shared survey data that offered a number of useful insights into the impact of translation on international patent portfolios.  When it came to cost, the survey results indicated that a majority of respondents elected to file in fewer countries as a result of translation costs.

Translation Costs Vary Across Industries

Translation costs are a fact of life for all patent filing organizations; however, some industries spend more than others.  Park IP prepared an analysis of over 100,000 recent English-language PCT applications, and the data suggests that patent application word counts differ significantly across technology.

The graph below shows a rough approximation of the cost to translate the middle 50% of applications, by word count, in each of the broad technology classifications used by WIPO.  The costs are estimated using a static baseline of $0.25 per word, which is high for language service providers (LSP); though it is meant to account for the large share of patent translations provided by higher-cost international patent law firms (more on this below).

Translation Cost by Technology Classification

Based on Middle 50% of Application Word Counts by Class, Assuming $0.25 per Word

patent translation costs

Looking deeper into the data, we see a much more pronounced effect across the 35 technology sub-classes.  Note the wide disparity between the 25th and 75th percentile cost for chemistry applications. This category contains both “materials, metallurgy” applications, which average about 6,350 words, and “biotechnology” applications, which average over 18,400.  Biotechnology applications, in fact, contain about double the number of words on average as all applications in the sample.  Pharmaceutical applications aren’t far behind.

In addition to the size of the application, translation costs are driven by the number of countries in which the application is filed.  Again, pharma and biotech applications are the most expensive.  Based on data from tens of thousands of applications translated by Park IP, these applications are translated into roughly twice as many languages as others.

Pricing is Variable

The data above shows the range of translation costs faced by organizations filing patents in different technical fields, approximated by applying a baseline rate to the word counts.  This is a useful way of visualizing the relative expense of translating an application faced by organizations doing business in different industries.  This analysis compares only the relative quantities of translated words purchased. The dollar values are roughly approximated to convey the numbers in an intuitive way. They assume that every word of translation has the same cost.

In practice, there is considerable variance in the unit prices paid by patent filers.  As a result, the actual translation expenditure of individual organizations is likely to differ considerably from the above for any given application in any given country.

In part, the unit cost of patent translation varies from language to language for straightforward economic reasons: the majority of properly qualified, native-speaking translators are residents of the country for which they translate.  English into Japanese translators are most prevalent in Japan, for example.  As a result, the cost of translation generally tends to correlate with the per-capita income of the target country.  Translation into languages like Japanese, Swedish, Dutch and Norwegian are generally expensive. Spanish, Chinese and Indonesian tend to be cheaper.

Translation rates also vary significantly within individual languages, even when accounting for the type of translation and the technical complexity of the content.  Because there are so many providers this is not a lot of transparency. Also, because a large proportion of patent filing organizations haven’t focused their attention on patent translation, there is a large disparity in the rates they pay.

This is true among translation companies; however, among dedicated LSPs the market is more competitive and the price discrepancies less pronounced.  For patent translations, the biggest driver of pricing disparities faced by different organizations is the still widespread practice of relying on foreign patent firms to translate their applications.  This practice is very likely to increase translation costs.  For example, it isn’t especially unusual for agents in to Japan to charge $0.50 or more per word for translation—more than double the higher-end baseline used in our estimates above.

In many cases, disparities in price reflect the work product one can expect to receive.  Every industry has aggressively low-cost players that are often ill-equipped to deliver the most demanding services.  In other cases, organizations find themselves paying rates that are far above market simply because of legacy processes. It is known as “the way we’ve always done it, “which they haven’t taken action to improve.

More Than a Cost Center

Many organizations approach patent translation as more or less a commodity service representing an inconvenient cost center.  Translation quality, though, can have a significant impact on the strength and consequent business value of an international patent portfolio.

The defining characteristic of commodities is that they are interchangeable. No one is ever meaningfully better than another.  For many practitioners, that’s an accurate enough description of patent translations. Translations into a language you don’t speak are indeed indistinguishable.

While it may be nearly impossible for any one person to distinguish between a good and a bad patent translation in every language, that doesn’t actually make them objectively indistinguishable or interchangeable.   Patents contain extremely complex technical content, and translating them requires a cross-section of high-level competencies including linguistic, scientific and patent-specific terminological expertise.  Without the right professionals operating within a sound, well-managed process, damaging errors are more likely to occur.

The fact that patent translations are not all interchangeable is evident from the consequences of bad ones.  Translation errors can increase costs and cause delays in prosecution. They can also have a damaging impact on the enforcement viability of issued patents.  Indeed, in the survey mentioned earlier, over 80% of respondents reported having encountered incorrect translations in the past, and more than one in four reported being aware of a situation where translation errors severely damaged the ability of an applicant to secure patent protection.  Over half described translation errors as a “latent risk” to the viability of their international patent portfolios.

Reducing Risks and Improving Results

iStock_000080498879_MediumFor innovative organizations competing in a global marketplace, patent translation impacts the bottom line.  Translation requires precious budget dollars and, if done poorly, can pose a meaningful risk to firms’ competitive positioning in international markets.

For those tasked with overseeing the IP interests of innovative organizations, patent translation is something to be actively managed.  By centralizing their translation needs, organizations consolidate their buying power, along with achieve reduced, stable costs, gain transparency, and improve budget forecast accuracy.  Consistent, transparent quality assurance practices improve quality and reduce the “latent risk” of translation errors, with clear lines of accountability.

Around a billion dollars is spent translating patents every year, and much of it is spent almost carelessly a “below the radar” line-item.  More organizations every year are taking control of their patent translation needs and strengthening the position of their business in the process.  If you haven’t done so already, companies like Park IP Translations are here to help.

Matthew Sekac

For further information on patent translation and legal language services, contact Matthew Sekac, Senior Director of Strategy at Park IP Translations, a Welocalize company, matthew.sekac@parkip.com

To download a full pdf version of the article, click here Unpacking the Costs for Patent Translations

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