Offshoring Patent Drafting and Prosecution Services

Background

During 1997-2001, the USPTO granted almost half a million patents and over 700 organizations were granted more than 100 patents each during these five years. Overall, more than 353,000 utility, plant and reissue applications were filed in 2004 alone and out of these, foreign applicants filed more than 159,000! These numbers clearly indicate that there is a great deal of patenting activity in various organizations across the world and with more and more research & development occurring in emerging countries such as India and China. Evalueserve estimates that as many as 500,000 patent applications will be filed with the USPTO in 2010!

Within the United States, the task of preparing, filing and prosecuting patent applications as well as that of performing other intellectual property work (e.g., preparing, filing and prosecuting trademark applications and copyrights, IP litigation and IP asset management) is being performed by approximately 30,000 attorneys and agents who are registered with the USPTO. In order to meet the rising demand for the additional Intellectual Property (IP) work, Evalueserve predicts that this number will exceed 38,000 by 2010; otherwise, the corresponding prices will rise very sharply!

Currently, many large organizations have in-house IP divisions that usually consist of agents, associates, lawyers and business development professions who handle pretty much all kind of IP work. However, most small and medium-sized enterprises do not have such divisions and because of various reasons (that include cost, quality and efficiency), even many large firms often outsource some – or all – of their IP work to external, US-based law-firms. To contain
costs, many in-house IP divisions as well as stand-alone IP law-firms have already started outsourcing some of their work (e.g.,drafting of figures, literature searches, prior art searches, and invalidation studies) to third parties within the United States and some even to other countries.

Since both the price of, and the demand for IP services is likely to escalate during the next few years, but since the corresponding budgets (for IP creation and maintenance) are likely to grow only at the rate of inflation, more and more companies and many law-firms are beginning to look for cost savings without jeopardizing quality in any significant way. Furthermore, since a lot of research and development will be done in emerging countries such as
India and China, many companies are beginning to explore the potential of off- shoring IP services to third parties, particularly those that are located in low-wage countries such as India. In fact, Evalueserve estimates that there were
approximately 280 IP professionals in India in December 2004 who were providing the following kinds of patent-related services to US end-clients.

• Literature searches and prior art searches
• Technology and patentability assessment
• Patent Application Drafting
• Patent Application Prosecution
• Patent Proof-reading
• Patent Claim Mapping, Landscaping etc.
• Patent Portfolio Management

We predict that this number is likely to grow six-fold during the six year period, 2005 – 2010.

Different offshoring models for patent-related services

With respect to offshoring of patent related work, the following four models seem to be emerging:

1. Captive Centers formed by US Law Firms and Their Subsidiaries: Currently, Indian law does not allow “foreign” (i.e., non-Indian) law-firms to practice in India. Hence, some law- firms in the US and India are setting up subsidiaries so that they do not practice law in India but provide such IP services only for export purposes. For example, Schwegman, Lundberg Woessner and Kluth – a law firm that is headquartered in Minneapolis – has two captive centers of one of its subsidiary, Intellevate, and these two centers are located in Delhi-Gurgaon and
Bangalore. Intellevate currently has over 80 professionals in India that are involved in prior art searching and
patent proof reading and very soon they will be providing most – if not all – of the services mentioned above. Another example of this model is Nishith Desai and Associates, an Indian Law-firm with offices in Mumbai, Bangalore and Palo Alto, whose subsidiary IPPRO has over 10 professionals located in Mumbai.

2. Joint Ventures by US Law Firms: Rather than opening their own captive centers, a few US-based law firms have started joint ventures with similar law-firms in India. A good example is Cantor Colbourn Esq. that has joined hands with Lall and Sethi, Esq. in India. However, since most joint ventures generally fail – especially in India – one needs be cautious while treading this path.

3. Third Party Vendors Providing Services to Law-Firms: An example of such a company is Evalueserve that currently has over 90 professionals, generally hires engineers and trains them to become proficient in USPTO, PCT and WIPO rules and regulations, so that they can provide all of the services mentioned above.

4. Third Party Vendors Providing Services to In-house IP Attorneys: Usually, the vendors providing such services are third party vendors (as given in the fourth model) or Joint Ventures formed by US law-firms.

5. Captive Centers: A good example is General Electric that has more than 60 IP professionals (within its GE Research and Development center in Bangalore) and these professionals seem to be involved in most, if not all, of the services listed above. Although some other large companies are also trying this model, we believe that this model is unlikely to succeed unless the corresponding center has at least 50 professionals – because such a center will be unable to provide good career opportunities to its professionals if it does not have critical mass and these professionals will leave (especially since the job market in India is fairly “hot” right now and expected to remain so for the next 2- 3 years).

Offshoring patent drafting services

A patent application typically consists of the following activities: (a) prior art searching, (b) drafting background, (c) drafting specifications, (d) drafting claims, (e) drafting summary, (f) preparing drawings, and (g) a final review, modifications and filing. Although the last activity has to be always performed by a USPTO registered attorney or agent, who usually also becomes the attorney of record, other activities can be either done by the IP professionals in a remote location or by the IP professional located in the US. And, since there are at least four different offshoring-models (Cf. Section 2) there are several ways of “slicing and dicing” the patent drafting process. Given below is a sample of potential service models that are already being practiced:

• Drafting a complete patent application in an offshore location: In this service model, the invention disclosure is directly sent to an IP services’ company, say in India. This company assigns one or more IP professionals who work in close coordination with the inventor to appropriately draft the complete specifications and claims and prepare all drawings. The “final” draft of the patent application is then reviewed, modified and filed by the client’s patent attorney or by a US patent attorney contracted by the Indian IP services’ company. In this model, the US attorney typically spends 8 to 10 hours.
• Drafting one or more sections of the patent applications in an offshore location: Although there are many working models here, the one that is most common requires that the US patent attorney draft the claims whereas the Indian IP services’ company draft the background, provide the supporting specifications, draft the summary and abstract, and prepare figures. Again, the “final” draft of the patent application is reviewed, modified and filed by an appropriate US patent attorney, who usually ends up spending 10 to 12 hours or more (per application).
• Continuous involvement of US patent attorney during the entire proces: In this service model, the US patent attorney usually interviews the inventors, ensures that the invention disclosure is complete, drafts one or more claims, and then sends it to the Indian IP services’company for drafting the rest of the application. In some cases, the US attorney even reviews interim drafts of the patent application. Of course, like other service models, the US attorney also reviews, modifies and files the “final” draft of the patent application and the total time taken by him/her depends upon his/her involvement throughout the process.

Helping us attorneys with patent prosecution

Besides helping the US patent attorneys in drafting a patent application – in part or entirely – many Indian IP services’ companies are also providing a technical assessment of the prior art cited by the patent examiner during the prosecution process. Furthermore, depending upon the requirements of the US patent attorneys, these companies are providing anywhere from the basic material for drafting the response to themselves drafting the entire response to the examiner’s objections (which is then reviewed, modified and filed by the US patent attorney). However, since the “unit” of this work is small, the savings in cost are not as significant as during the patent drafting process. However, since such IP services’ companies can do the “heavy lifting” by studying the prior art cited by the patent examiner, they can usually save substantial time for the US patent attorney who can now use this time for doing “higher” end work, e.g., IP litigation.