NEW DELHI: The US slowdown has kicked off a heated debate in the US legal circles. At the heart of debate is a recent notice by the United States
Patent and Trademark Office (USPTO) barring companies who send information overseas regarding inventions and patents without government clearance. While some believe offshoring is good as it cut costs for legal firms, lawyer groups in the US are against it.
Treading on extreme grounds, some also believe the notice might sound a death knell for the LPO industry, while a section of Indian lawyers believe it is the result of hectic lobbying by a section of US law fraternity.
"It is the vested interest of a group, which is blowing it out of proportion. The notice does not mean much to us since we do not outsource any sensitive information. Some percentage of the LPO industry might be affected due to the market sentiment, but it will have no bigger impact," said CPA Global's India head Bhaskar Bagchi. CPA is one of the largest LPOs in the world.
Meanwhile, the Wall Street meltdown has resulted in a slew of bankruptcy filings, due diligence and lawsuit drafting work, a lot of which is being outsourced. Many believe that the US notice is just a ploy by anti-outsourcing lobby to prevent more of such work going to India. The cost of preparing a patent application in India averages about $2,000, whereas the cost to prepare the same application in the US ranges between $8,000 and $15,000. The median annual salary of a lawyer in the US is about $95,000, while in India it's around $20,000 per year.
(I can believe that the $95,000 guy isn't outsourcing to the $20,000 guy and pocketing the difference). The primary function of this notice is to prevent publication of an application as a patent where such disclosure would be detrimental to the US national security. Additionally, the Act provides for the licensing of applications for export for the purposes of filing for patents abroad.
Says Mumbai-based LPO, Pangea3's co-founder and CEO Sanjay Kamlani: "This notice is just a reiteration of a rule that already existed before. In my view, by this notice, the US government accepts outsourcing as an inevitable part of economic transactions." However, some US attorney's look at it very differently. "Finally, someone has noticed that our export laws prohibit the sending of information relating to technology overseas without a proper license. This should signal an end to the $2.2 billion per year patent outsourcing to India. For admittedly selfish reasons I am happy that export regulations will now be enforced as written," writes a pro-regulation US patent attorney, Gene Quinn in his blog.
There's other section of the US legal fraternity, which has a different view. Last month, American Bar Association (ABA) came out in full support of outsourcing saying there was nothing "unethical" about it. The ABA's observations come in the midst of a long-running debate in the US and other Western countries over fear of job losses from outsourcing to places like India.
In the legal arena, the opponents of outsourcing practice have said there were additional concerns such as professional ethics and confidentiality. "The notice does not explicitly ban patent offshoring. USPTO has just reinstated a policy that has always been there. All the companies in this space adhere to the given guidelines," added Mr Bagchi. However, Pangea3, one of the leading LPO players, has drafted a formal response to its clients explaining how the notice impacts the current patent prosecution work outsourced to India. At present, the Indian LPO industry is worth $240 million and industry sources predict that this will grow to over $640 million by 2010. Also, the industry currently employs around 7,500 people, which is expected to reach 32,000 by end of 2010.
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