Patenting Offshoring Jobs or a patent to manage offshoring processes?
A while ago, I had blogged about innovation and an Infosys colleague being granted a patent. Over the weekend, I came across an interesting blog post on Slashdot that talks about how “IBM Seeks US Patents For Offshoring US Jobs” The blogger says "IBM and other corporations are seeking patents for inventions covering the offshoring of US jobs. The USPTO is considering IBM's patent application for Outsourcing of Services, a 'method for identifying human-resource work content to outsource offshore of an organization' to 'countries where cheaper labor prices and/or cheaper materials are available.'
Here’s an abstract of the patent application from USPTO’s website: “A method for identifying human-resource work content to outsource offshore of an organization. The method is provided on a computer readable medium and includes the steps of identifying at least one task being performed by an organization; associating each identified task with a functional group within a plurality of functional groups related to the organization; determining information about individual human resources spent on each task; determining task information about human resources spent on the plurality of tasks, the task information based on the determined information about individual human resources spent on each task; using the determined task information to determine a value of each task; and outsourcing tasks having a value lower than a predefined limit to at least one of offshore and to a low cost supplier.”
bloggers seem to be having a field day with the catchy title of the application. [Just a small sampling of viewpoints: Slashdot, nakedcapitalism.com, boonika.net]
The thread of discussion on the blogsphere reminds me of the (in)famous patent for “One-Click Shopping” by Amazon during the dot.com heyday or the Microsoft lawsuit over the patent for scroll mouse or the patent for “sending software applications over the Internet”
I am neither a legal expert nor an expert on patents but the even a cursory look at the IBM’s application abstract doesn’t sound like they are patenting ‘Offshoring US Jobs” as many bloggers seem to be claiming. It looks like they are applying to patent a software application to leverage a ‘process’ to manage people. Well, this is something many service companies, especially those with globally distributed teams do as a matter of day-to-day business of managing human resources. Many, including Infosys leverage complex, albeit proprietary, systems for this and other activities and the patent application in question seem to pertain to IBM’s proprietary process.
Note to self: send a note to Infosys’ patent cell gurus to ask for their viewpoint.
Update: "Offshoring Patent: Big blue withdraws application" Thanks to inputs from bloggers (self included), Bob Sutor, IBM's vice president of open source and standards, is quoted saying "We’re glad the community pointed this application out so IBM could take swift action." [in withdrawing the patent application in question]
Comments
Hi Mohan,
I have read somewhere that IBM earns more than 1.5 billion dollars by leveraging patents filed by it.
Is there any cause of concern for generic companies like Infosys?
Posted by: Anshuman | October 3, 2007 12:17 AM
Interesting article on patent application.
These are my views :
The patent application is about patenting
A method of identifying of Jobs (typically the ones which require a lot of human efforts , are repeatable and are less to medium complex) which can be outsourced
A method of developing a migration project plan and tasks to an outsourcing location, etc
Even though I see that this application ( if granted ) will not patent off shoring jobs or the process ..Indian/Outsourcing companies could end up paying royalty to IBM if their clients demand that they use IBM’s patented methodology for identification of what work is most suitable for outsourcing and the process by which it is best outsourced …so this could be a example of Innovation ( Indian software companies pioneered the Global delivery model ) without Patent protection has no value.
Posted by: Chetan Bhor | October 3, 2007 04:02 AM
Anshuman and Chetan,
You both make great points. In my mind the flip side of patents like this (even if granted): how does one monetize them? There are several ways one could do this:
a) ROI/Cost benefit angle*. Large companies file for thousands of patents per year [just an unofficial sampling: http://www.awapatent.com/?id=858]. Per this estimate alone, companies like big-blue were granted thousands of patents. Do the ROI calculation* for yourself ;-)
b) Organizations do benefit from the PR/Marketing value of ‘leveraging one’s Intellectual Property and using such IP during sales presentations or to get a foot-in-the-door
c) Marketing the patented idea. Though there is generally a very slim chance of this happening (in many cases), returns on an extremely innovative and marketable idea can be tremendous.
*Assuming one could use the following equation
Cost of Patents = Cost of ideation, innovation + Cost of filing for (all) patents
Factor in the failure rate of patent applications (Only a small percentage of all patent applications convert to successful patents granted). Also add the cost of applicaton: an average of several thousand $s for every application.
ROI on Patent = Cost of Harvestable Patents + Marketing costs + cost of turning-innovation-to-solution + Ongoing cost of following up on ‘use’ of one’s patented idea by others
Posted by: Mohan Babu | October 3, 2007 02:29 PM
Hi Mohan,
I came to this link thru the question posted by you on Linkedin.
I would like to add something to what you have said above regarding monetization of patents. Patents are filed for two purposes - one to create a monopoly for ones own products, but excluding others from using your patenting technology ( for example a company having a patent on a drug can exclude others from manufacturing and selling that drug.) The other is to earn revenues by out-licensing the patented technology to others.
Now big corporations like IBM can be compared to an innovation factory, where a huge manpower is involved in R&D activities. These people innovate a lot of things, some of which are incorporated in IBM products. These can be called as the products of the innovation factory. However, there are a lot of things which cannot be used by IBM itself. These innovations can be termed as “by-products” of the innovation factory. Instead of letting the “by-product” go waste, IBM secures the ownership right of these by patenting them. These can now be out-licensed to earn revenues.
The interesting part here is that the marginal cost of patenting the “by-products” is not very high as:
- these innovations were developed while producing the “products”, therefore cost of ideation innovation for these “by-product” innovation per se is low
- IBM already have a huge patent department, so the marginal cost of preparing and prosecuting the patent application is lower for them.
And if we consider this with some occasional “by-product” innovation which are out licensed to generate huge revenues, the cost seems a good bargain.
Regards,
Ashutosh
Posted by: Ashutosh Srivastava | October 5, 2007 07:02 PM