SpicyIP wishes its readers a very happy independence day.
In a previous post, we highlighted a US guideline that appeared to possess all the trappings of a trade protectionist measure. Gauri Kamath has an interesting article on this theme in the Businessworld, which I reproduce below. She quotes David Perla, co-CEO of New York’s Pangea3, a leading LPO that employs lawyers in India, as stating that the guideline will not really have any significant impact on Indian service providers. (Perhaps) In response to Gene Quinn's highly provocative and outlandishly absurd statement that the USPTO notice "will certainly kill all patent outsourcing (and) likely will also kill a lot of technical development outsourcing as well", Perla notes that “certain patent law firms are using the notice to misinform and mislead clients and potential clients”.
Outsourcing Snags
A US notice on patent outsourcing has caused a lot of confusion
GAURI KAMATH
08 Aug 2008
Is the US trying to discourage its companies from availing of cheap legal services from low-cost economies such as India? At the heart of the debate is a recent notice by the United States Patent & Trademark Office (USPTO) to persons and companies who send information regarding their inventions overseas in the course of patenting them. The notice clarifies that unless this ‘export’ of information is intended to facilitate the filing of a foreign (non-US) patent, it will need to be cleared by the Bureau of Industry and Security, or BIS, in the US Department of Commerce. The BIS is concerned with advancing US economic interests without compromising its security.
It is common practice for US companies and law firms to avail of cut-price services from India for things like patent search and drafting to aid the filing of a US patent. According to Pune’s ValueNotes, patent services made up 20 per cent of the value of legal services outsourced to India’s so-called legal process outsourcing, or LPO, companies in 2007. It estimates the overall Indian LPO business at between $225 million and $240 million, at least a 50 per cent jump over 2006.
Information that clients disclose to these LPOs in order to help them do their job appears to fall under the purview of the latest USPTO notice, stoking fears that this might put the brakes on patent services outsourcing. The US stance “will certainly kill all patent outsourcing (and) likely will also kill a lot of technical development outsourcing as well”, writes Gene Quinn, a patent attorney at the Maryland-based patent law firm White & Quinn on his blog IPWatchdog.com. Quinn, who is opposed to legal services outsourcing, thinks this recent notice will “bring jobs back to the US”.
But that is an extreme reaction, says David Perla, co-CEO of New York’s Pangea3, a leading LPO that employs lawyers in India. Perla explains that in the first place, only those companies that have inventions around certain specified software and dual-use technologies need BIS clearance to send information overseas. And Pangea3 does not have any business in that area, he says. “A lot of companies don’t outsource that,” he adds.
Besides, the USPTO has merely restated an old rule. The only impact, says Perla, is “confusion in the short term” as companies inquire whether this changes anything. “Large corporations have quickly recognised that the notice is merely a re-statement of current law and policy,” he says. “They realise that there is no need to change their current pro-outsourcing posture.” Perla alleges that “certain patent law firms are using the notice to misinform and mislead clients and potential clients”.
The notice does not explicitly ban patent offshoring, says Neeraja Kandala, principal analyst for legal services at ValueNotes, though any need for government clearance has the potential to slow things down. “But to understand the implications, we need to investigate this further,” she says.
The USPTO’s decision to issue a clarification suggests that at least some companies might not have been aware of this rule. “A great majority of the Indian law firms may not have been aware… till the notice,” writes Shamnad Basheer, a patent expert, on his blog spicyip. But he suggests that less than 10 per cent of outsourced patent applications might be affected.
In the meantime, Pangea3 has drafted a formal response to its clients explaining how the notice impacts the current patent prosecution work outsourced to India. For the moment, “there is still confusion”, says Perla. But he expects it to die down as things become clearer.
In a previous post, we highlighted a US guideline that appeared to possess all the trappings of a trade protectionist measure. Gauri Kamath has an interesting article on this theme in the Businessworld, which I reproduce below. She quotes David Perla, co-CEO of New York’s Pangea3, a leading LPO that employs lawyers in India, as stating that the guideline will not really have any significant impact on Indian service providers. (Perhaps) In response to Gene Quinn's highly provocative and outlandishly absurd statement that the USPTO notice "will certainly kill all patent outsourcing (and) likely will also kill a lot of technical development outsourcing as well", Perla notes that “certain patent law firms are using the notice to misinform and mislead clients and potential clients”.
Outsourcing Snags
A US notice on patent outsourcing has caused a lot of confusion
GAURI KAMATH
08 Aug 2008
Is the US trying to discourage its companies from availing of cheap legal services from low-cost economies such as India? At the heart of the debate is a recent notice by the United States Patent & Trademark Office (USPTO) to persons and companies who send information regarding their inventions overseas in the course of patenting them. The notice clarifies that unless this ‘export’ of information is intended to facilitate the filing of a foreign (non-US) patent, it will need to be cleared by the Bureau of Industry and Security, or BIS, in the US Department of Commerce. The BIS is concerned with advancing US economic interests without compromising its security.
It is common practice for US companies and law firms to avail of cut-price services from India for things like patent search and drafting to aid the filing of a US patent. According to Pune’s ValueNotes, patent services made up 20 per cent of the value of legal services outsourced to India’s so-called legal process outsourcing, or LPO, companies in 2007. It estimates the overall Indian LPO business at between $225 million and $240 million, at least a 50 per cent jump over 2006.
Information that clients disclose to these LPOs in order to help them do their job appears to fall under the purview of the latest USPTO notice, stoking fears that this might put the brakes on patent services outsourcing. The US stance “will certainly kill all patent outsourcing (and) likely will also kill a lot of technical development outsourcing as well”, writes Gene Quinn, a patent attorney at the Maryland-based patent law firm White & Quinn on his blog IPWatchdog.com. Quinn, who is opposed to legal services outsourcing, thinks this recent notice will “bring jobs back to the US”.
But that is an extreme reaction, says David Perla, co-CEO of New York’s Pangea3, a leading LPO that employs lawyers in India. Perla explains that in the first place, only those companies that have inventions around certain specified software and dual-use technologies need BIS clearance to send information overseas. And Pangea3 does not have any business in that area, he says. “A lot of companies don’t outsource that,” he adds.
Besides, the USPTO has merely restated an old rule. The only impact, says Perla, is “confusion in the short term” as companies inquire whether this changes anything. “Large corporations have quickly recognised that the notice is merely a re-statement of current law and policy,” he says. “They realise that there is no need to change their current pro-outsourcing posture.” Perla alleges that “certain patent law firms are using the notice to misinform and mislead clients and potential clients”.
The notice does not explicitly ban patent offshoring, says Neeraja Kandala, principal analyst for legal services at ValueNotes, though any need for government clearance has the potential to slow things down. “But to understand the implications, we need to investigate this further,” she says.
The USPTO’s decision to issue a clarification suggests that at least some companies might not have been aware of this rule. “A great majority of the Indian law firms may not have been aware… till the notice,” writes Shamnad Basheer, a patent expert, on his blog spicyip. But he suggests that less than 10 per cent of outsourced patent applications might be affected.
In the meantime, Pangea3 has drafted a formal response to its clients explaining how the notice impacts the current patent prosecution work outsourced to India. For the moment, “there is still confusion”, says Perla. But he expects it to die down as things become clearer.
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