Why offshoring some tech transfer functions could help create U.S. jobs

U.S. research universities churn out over 60% of our nation’s basic, game-changing research.  In this era of tight budgets, some universities are offshoring the work involved in bringing on-campus inventions to market, paying companies in India to do market research and low level legal work such as patent prior art searches.  It’s counter-intuitive, but could offshoring  the commercialization process of university inventions help bust out some of the un-used backlog of innovative university technologies, and actually *help* our universities create domestic, high-value jobs?    

Offshoring remains a taboo subject in our faltering economy, but it may not be as simple as we have been led to believe.  I share the same reservations about offshoring work that any American does — after all, I live in upstate New York, the land of decaying manufacturing cities.  However, strange as it may seem, universities that offshore knowledge work such as patent analysis and market research reports report a significant increase in new invention disclosures and happier faculty inventors.  And, giving overworked tech transfer staff some freed up time to work on more strategic, higher-visibility projects could raise the perceived value of the university’s tech transfer services. It goes against what most of us believe, but there’s increasing evidence that offshored jobs do not decrease the number of domestic jobs.  In fact, recent research concludes that “an increase in offshoring pushes the average task performed by [U.S] natives toward higher cognitive and non-routine content.” (1)      

Of course nothing in life is free, or free of risk.  Like anything that offers tempting upfront cost savings, offshoring has significant downsides.(2)  Some people fear that offshoring could put the university at risk of violating export control laws, expose university innovation to intellectual property (IP) theft, and undermine the perceived value of existing on-campus tech transfer services.  Not to mention the horrors of modern-day sweatshops in unregulated work environments.    There are serious and proven downsides to offshoring knowledge work.  What could be the potential upsides?    

Too much discussion of offshored reports is based on vague allegations of poor quality.  Below are a few reports created by a company called Ashmar.  Their CEO and founder, technology entrepreneur Anurag Bist, is based in the U.S. and his 15-person staff in India.  I am not endorsing them; take a look at the reports and form your own opinion.  Feel free to pass these reports along to university inventors and entrepreneurs.      

• Sample1: Patentability and Marketability Report: Smart Cell Culture Platform– $1000 and one week turn-around time     
• Sample2:  Patentability and Marketability Report:  Passively Closed Microvalve using pH Sensitive Hydrogel Actuation  — $1000 and a week turn-around time   
• Sample3:  Detailed patent and biosensor competitive landscape report.  –  $3000-5000 and 3-6 week turn-around time  

It’s entirely possible that offshoring patent and market research is not the right strategy for managing a university IP porfolio.  But if something could offer your university some of the benefits listed below, wouldn’t you at least be curious enough to investigate further?  

1.  Cost savings on legal fees:   Patenting early stage university technologies is an expensive and uncertain business.  In 2008, the top 20 U.S. research universities spent an average of $6.7 million a year on patent-related activities.  However, on average, these same universities got only half of that investment paid back.  (AUTM, 2008 data)  

Each year, the top 20 U.S. research universities continue to file on average, 150 provisonal “placeholder” patent applications (AUTM 2008).   Investing in prior art patent searches may save money; if a report uncovers prior art for a new invention, a university will know not to file a provisional patent application.   Universities that comission offshore prior art reports find that on average, prior art exists for about 15% of new inventions.  Some faculty, based on what they learn in a prior art report, have steered their research into a fresh and novel direction.  

Further down the road, if a university has already paid for a prior art search and then later decides to file a utility patent on an invention, the U.S.-based attorneys that draft the final patent claims can do that a lot faster, hence more cheaply.        

2.  Being business capable:  Raw, early stage university research has no commercial value without a market context.  When I worked in a university tech transfer office, the most common complaint about our technology marketing efforts was from business people.  They complained that we only provided technical information, but nothing about the potential business value of an invention.  We agreed completely agreed with their feedback, but staff simply did not have time; providing inventors and businesses high quality market research reports and patent assessments of university inventions (perhaps fairly enough) were not a priority of the administrators of our tech transfer office.  

3.  Freeing up staff time for higher-value functions:  Lee Taylor of the University of Hawaii commissions patentability and market reports for about 40% of new inventions; his tech transfer office has four staff members, a tight budget, and needs to continually prove value to university inventors and administrators.  Small tech transfer offices such as Hawaii are actually the norm in U.S. research universities.  Over ninety percent of U.S. university tech transfer offices have fewer than ten professional staff members.  Sixty percent of universities rely on undergraduate and graduate students to conduct patent prior art searches and do marketing research on new inventions. (3)     

4.  More, and happier university inventors:  It used to worry me when I worked in a university, that when we told an inventor her technology was not worth patenting, we did not offer her substantial evidence to support our decision.  As a result, some inventors lost trust in us.  Like humans of all ages, when we’re told “no” and handed a convincing reason why, we walk away feeling much better.      

Inventors like quick, objective and precise feedback on their invention.  Happy inventors are more likely to come back again with new inventions in the future. For example, the University of Hawaii found that when they started giving their inventors reports similar to those listed above, the number of invention disclosures went up significantly.     

5.  Speed:  The top 20 U.S. research universities receive an average of about 340 new invention disclosures each year. (4)    University staff are burdened with hundreds of inventions to manage, so digging into the details of a single invention can take months (80-90% of university inventions never find a home in industry).  It takes an offshoring company about a week to conduct a simple prior art and market search and three weeks to conduct a complex analysis.   

In conclusion, all of us want to help the U.S. economy find more solid footing.  You wouldn’t be reading this if you weren’t a passionate advocate of the potential social and economic value of federally funded university research.  Offshoring some of the work associated with managing university inventions is not a step that should be taken lightly, or without significant investigation.  Rural and land-grant universities face additional PR challenges if they were to offshore what today are core university functions, since they tend to be the largest and most visible employer in the region.       

Yet, rather than dismiss a potential catalyst for university innovation without a fair hearing, let’s at least explore the pros and cons of offshoring some university tech transfer functions.  What if a university could save money, place more inventions into the marketplace, create more startups, attract more invention disclosures and free up staff time for more strategic work activities?  For universities that are experimenting with offshoring core functions, what has your experience been?  I’d love to hear about it.        

(2) Outsourcing to India Draws Western Lawyers. “  By HEATHER TIMMONS.  Published: August 4, 2010, New York Times.  

(3) “ORGANIZATIONAL STRUCTURE AS A DETERMINANT OF ACADEMIC PATENT AND LICENSING BEHAVIOR: A SURVEY OF AMERICAN RESEARCH UNIVERSITIES.”   Prepared for:  The Committee on Management of University Intellectual Property, the National Academies.  September 28, 2010.  By Maryann P. Feldman.       

(4) “ORGANIZATIONAL STRUCTURE AS A DETERMINANT OF ACADEMIC PATENT AND LICENSING BEHAVIOR: A SURVEY OF AMERICAN RESEARCH UNIVERSITIES.”