The Budget Impact of Patent Translations

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—about eight pages.  The average English-language PCT application is now over 10,400 words, or over 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, and patent filing organizations purchase a tremendous amount of it 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, but some industries spend more than others.  Park IP Translations, a Welocalize company, prepared an analysis of approximately 97,000 English-language PCT applications with 30-month deadlines in 2018, and the data shows that patent application word counts differ significantly across technology. Biotechnology applications, in fact, contain about double the number of words on average.  Pharmaceutical applications aren’t far behind.

The graph below shows a rough approximation of the cost to prepare a translation by word count in several of the broad technology classifications used by WIPO.  The costs are estimated using a static baseline of $0.20/word.  This is on the low end in most countries for the large share of patent translations provided by higher-cost international patent law firms, but is reasonable benchmark of the blended average per word cost from Language Service Providers (LSPs) across higher- and lower-cost languages.

Cost of Translating a Patent Application by Technology Classification
Based on Middle 50% of Application Word Counts by Class, Assuming $0.20/word (for one language)

Looking deeper, 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 7,200 words, and “Biotechnology” applications which average over 21,000.

Also notable for Chemistry applications is the distribution of application sizes; the high average word count is driven in large part by a high proportion of extremely long applications.  In other words, the “long tail” for those filing Chemistry applications—especially in fields like Pharmaceuticals and Biotechnology—is much longer than those in other fields.  This means that in addition to incurring higher translation costs on average, for any particular application, there is a higher likelihood of applications that double the typical size or more.

To illustrate that point, below is a histogram showing the normal distribution of Chemistry application translation costs alongside all other technical fields.  Note that while Chemistry applications are clearly distributed more toward the higher word counts, the disparity is relatively small until the end, meaning that the “long tail” goes on much longer past the axis boundaries for Chemistry applications than other fields.  While the average Chemistry application costs a little over $2,600 to translate at $0.20/word, 9% of applications would cost more than double that.

Distribution of Cost to Translate Chemistry Applications vs. Other Fields
Based on Application Word Counts by Class, Assuming $0.20/word (for one language)

In addition to the size of the application, translation costs are driven by the number of countries in which the application is filed.  And here, 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 Hugely 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, though, compares only the relative quantities of translated words purchased; the dollar values are roughly approximated to convey the numbers in an intuitive way, but 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 (i.e. “native” to) 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.

But 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, not a lot of transparency, and 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.

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 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—“the way we’ve always done it”—which they haven’t taken action to improve.

What This All Means

For 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 translation needs, organizations consolidate their buying power; 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.  But 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 Welocalize Life Sciences and Park IP are here to help.  Contact us for a free, no obligation quote of your patent translation projects.

About the Author

Based in New York, Matthew Sekac is Senior Director, Global Strategy & Sales Operations, at Park IP Translations, a Welocalize company