5 Reasons Why Fortune 500s Are Outsourcing their Patent Processes

Outsourcing has been the buzzword in the corporate world since as early as the 1990s. And with the more recent phenomenon of ‘patent explosion’ due to which IP portfolios of companies have seen exponential growth, patent processes have come under the radar of outsourcing.

With more than 500,000 patent applications being filed annually in the US alone, Fortune 500 companies have been the early adopters in this scenario. These companies are outsourcing the usually grueling and long patent processes to IP service providers to streamline not just their IP operations but also their organizational functioning as a whole.

There are several factors that contribute to this choice that the Fortune 500 companies are making in outsourcing a key business process like the patent process. Here are the 5 most significant reasons behind this business decision.

1. Outsourcing is cost-effective

The patent process involves meticulous homework pertaining to prior-art and state-of-the-art research along with rigorous analysis of the competitive ecosystem before even filing a patent application.

To do this in-house and then get that team to collaborate with the patent attorneys is expensive, especially in this age of lean enterprises with downsized departments.

So, Fortune 500 companies are choosing to outsource this work to IP service provider firms, which employ professionals who are not just patent research experts but also industry experts.

These firms often provide IP services at much more economical rates due to the sheer effect of their scale. Also, these firms offer an extensive array of services concerning administrative IP work that does not need the expertise of patent lawyers and thus they further gain from low labour cost. So, in a cost-effective practice, the Fortune 500s outsource their patent processes to a combination of IP suppliers based on their functional specializations.

2. Outsourcing is time-efficient

Out of all the patents that get filed in a year, only 50-60% actually get granted. The typical time gap between a patent application and a patent grant varies from 2 to 4 years. So, for the owners of rejected patents (the number of which is quite high), it is an outright waste of time that would have been far better spent on core projects such as product development and R&D. Burgeoning IP complexity, patent research and patent renewal for granted patents also run into considerably high man-hours. So, Fortune 500s are apportioning the plethora of work to different IP service providers to ensure more time for their strategic projects.

3. Scalable staff capacity

When it comes to IP, workloads can fluctuate depending on the stage of the patent process. The same roster is not required for doing patent research and for paying patent renewal fees. So, to fill the gap, Fortune 500s outsource the patent process to a third-party IP supplier. It can also work the other way round. Large companies like Fortune 500s do not own only a single patent. They have massive IP portfolios that require different numbers of staff at different times. So, having a team with a third-party service provider that is scalable at any given point makes management of patent portfolios only more efficacious.

4. Lack of skilled workforce

This is a crucial factor that drives Fortune 500s to outsource patent processes. Companies find it onerous to hire IP staff with the required specific skillset. The time, work, money that is spent in trying to recruit qualified IP professionals is not commensurate with the results. It is far more convenient to outsource to an IP service provider that has a readily available team of skilled experts.

5. Ease of communication and coordination

Be it patent attorneys, technologists, researchers or industry experts, the patent process requires people with different skill sets. With the ever-growing patent portfolios of Fortune 500s, the number of people involved keeps on increasing. And then there are patent offices with their own processes. In view of all these, there can be a tremendous communication gap among all the stakeholders in the absence of a central team, which is the third-party IP service provider. So, Fortune 500 companies outsource their patent processes to IP suppliers who mediate between patent owners, patent attorneys (or patent law firms) and patent offices. Due to their prior experience in the IP service domain and the wide array of services they offer, these third-party IP suppliers enable effective communication and coordination among the different collaborators.

Each Fortune 500 company owns hundreds of patents. It is onerous to maintain such a mammoth patent portfolio with each patent being at a different stage of the patent process. Several people with varying areas of expertise need to join forces to keep the arduous process going. Fortune 500s are outsourcing it as a whole to IP service provider companies, where teams of specialist IP professionals are ready to maximise efficiency and profits by streamlining the patent process. Outsourcing is far from new in the Fortune 500 ecosystem. And with its all-round success, no wonder these companies are now turning to this tried and tested method for one of their key business processes – the patent process. 

-The Editorial Team

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