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December 12, 2004
I Welcome Offshoring in the Patent Business
There has been some talk about outsourcing certain legal tasks to India, particularly aspects of patent preparation and prosecution. Expectedly, there has been some outcry in the US. As for me, I am all for offshoring or attempts at offshoring.
A good bit of hand wringing has happened over the alleged demise of the US manufacturing industries. While it is true that our labor costs are horrendous due to the labor union’s overreaction to many abuses by companies in the beginning of the Industrial Revolution, outsourcing has driven some incredible improvements in manufacturing technologies in the US.
As a designer for consumer goods, I would visit our US plant and see one operator take care of 30 injection molding machines. Our manufacturer in China, making the same parts, would need about 40-60 full time people (all young girls) to operate that many machines. The difference was in the tooling. In the US, the tools were designed to eject the parts cleanly, trimming the runners, and automatically regrinding excess material. In China, a girl would reach her hand into the injection press, remove the part, hand it to another girl who would cut the part from the runner, who would hand the part to yet another girl who would file off the gate.
In the US, labor costs forced large investments in tooling and capital. In China, very little capital investments were offset by a bigger investment in labor. In the final analysis, many parts could be economically manufactured in either the US or China.
The same thing may happen with patent practice. Changes will happen to the US patent law market, driving the US providers to capitalize on their assets, while the Indian or other market capitalizing on theirs. In the US, our assets are the practitioner’s education and breadth of knowledge of the technology. I do not mean legal education, but education and training in the sciences and technologies.
One of the biggest assets the US has over almost any other nation is the experience in technology. This cannot be underestimated. My first job out of college was with McDonnell Aircraft (now Boeing). When I had a question about forgings, I went to the guy in our department who had done forgings for 30 years and knew every little trick there was on designing a forging so that it could be manufactured, carry the maximum load, and have the minimum weight. A simple half hour conversation with the expert, and countless dollars and months of schedule could be saved.
My next job put me in Singapore attempting to install a manufacturing line for disk drives. The only technically trained people were young, maybe 30 years old, and did not grow up working on cars or even driving for that matter. They had all attended school, but did not have the background that comes from being around very experienced people. They did not have the intuition that comes from experience, either personal experience or experience from others. Consequently, everything we did had to be painfully simple, to the point that we would sacrifice product performance just to make things simple enough to be manufactured and maintained over there.
As patent prosecution services are moved overseas, I see a lot of the deadwood in the US patent market being shipped overseas. Anyone can be a patent scrivener. That is not what the US patent prosecution market has to offer. Our value is in the fact that (some of us) come from practical, engineering backgrounds and have worked in industry. We have an inventiveness, creativity, and breadth of knowledge that is so far unmatched globally. There is no doubt that the marketplace will change with the advent of offshore patent services. In my experience, that kind of change has always been for the better.
Posted by krajec at December 12, 2004 08:13 PM
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Comments
Russ,
You're absolutely right on a macro-economic scale.
However, protectionism becomes much more attractive when MY job is at stake. When the consumer can hire experienced Indian professionals for less than even inexperienced locals, the locals simply can't compete.
Your comments on technology experience as our resource is very important. Adam Smith's theory on the invisible hand of the market says that resources will automatically be allocated efficiently. In China, the resource is cheap labor, in the midle east it's oil, in the U.S. it's tecnological know-how and innovation. We outsource/import those things that we can get cheaper and we export those things we can do more cheaply. In the end, everyone is better off (unless, there are larger social concerns like child labor).
Of course, that doesn't make me feel much better about the prospect of unemployment.
Posted by: Melody at December 13, 2004 09:09 AM
You are a very bold and honest man indeed, condoning outsourcing in your own profession.
It's been a while since I've seen the word "scrivener" used so frequently and so contemptuously. What happened to the good old Biblical days of the scribe, when a person could make a good living off just reading and writing! Think about it, a second grade education would lead to respectable employement!
My only hope is that once the human race learns to efficiently allocate ourselves, we'll all be able to sit back and CHILL. Let the robots do the work and the humans play!
Posted by: Daniel at December 18, 2004 01:57 AM