By JJB
The UK – tired of patents ?
Is the United Kingdom running out of innovative ideas? Over the last years, the number of patent applications within the UK has continuously declined. In fact, since 2007, the United Kingdom has lost 3% or more per year of its patent applications! This is even more astonishing when taking into account that the general trend of the worldwide economy points to a steady rise in the number of applications – in Japan, their number is 20 times higher than it was 30 years ago; in Europe, the numbers have even grown 25 times higher. When it comes to green technology, for example, South Korea holds three times more patents than the UK!
While the UK tends to lag behind other big global players of intellectual property, it seems as if this problem has even deteriorated because of the downturn that the British economy is facing. Several British companies claim that obtaining protection for their intellectual property is an investment that they no longer can afford. Yet, this supposed opportunity of cutting costs is likely to backfire at a hefty price. After all, the investment of several thousand Pounds for filing patent protection can be worth several million Pounds in return. This theoretically very high long-term profitability, though, is exposed to the several time-limits affecting patent protection.
The time-limit of patent protection
In theory, this very high long-term profitability can be achieved by controlling every commercial use that is being made of the patented invention, in every country covered by the patent’s protection. In return for this legal protection for commercialisation, companies have to grant open public access to technical information on how the invention works. This principle is supposed to enhance innovation and the accessibility of information, while granting legal protection for pioneers. Without this protection, companies would be much less inclined to invest in research and innovation. But as patent protection implies sharing of information, it also bears the possibility of being outrun by a more innovative competitor.
A patent’s commercial monopole on an invention can last up to a maximum of 20 years. After this period, everybody can make unlimited use of the from then on unprotected invention. But continuously renewing patent protection throughout this entire period grows more and more expensive the longer the patent exists. Therefore, there is a time-limit to patents, pushing companies to obtain an important financial turnover from their patent in only some years. In result, many patents are only exploited for a couple of years, and only the most profitable ones will be maintained throughout the maximum length of twenty years.
The long and winding road to patent protection
The process of obtaining a patent is known to be expensive and full of administrative obstacles. It is also quite time-consuming, taking up to several years, which includes several phases during which the inventor is particularly unprotected against competitors who might pick up the invention for their own purposes. In order to address this problem, the UK and several other states have introduced fast-track schemes in order to enhance the patent-granting process. Yet, a cheaper and faster administration of patent protection is to be handled with care. A sound protection of existing patents needs a thorough examination in the first place. This is also crucial as it increases the legitimacy of increased financial penalties for infringing patents – which are necessary if victims are to be fully reimbursed for their legal costs (which is especially important for inventors with low financial resources). All these vital functions could be jeopardized by the attempt to resolve the UK’s patent problems by solely forcing the patent administration to consume less and less time and money. In order for the administration to work at a certain standard, they need time and money. Yet, if applicants are the only ones to finance the administration’s quality, via increased application fees, SMEs will be even more discouraged from seeking patent protection.
Ineffective protection
Intellectual property rights’ infringements induce severe economic damage. The mere impact of counterfeits on the UK’s industry is considered to amount to £11bn a year. Thus, administrative burdens and time-limits cannot be the only explanation for the UK’s companies’ lack of dynamic commitment concerning patent protection. As a matter of fact, patent offices and courts worldwide are struggling to cope with international intellectual property lawsuits. But different national standards, definitions and languages make for lawsuits consuming large amounts of time and both financial and human resources. In consequence, a large majority of companies, namely SMEs, gave up pursuing international lawsuits that they know to be unaffordable.
A solution to this problem might consist in turning the status of copy right violations from civil offense into criminal offense. Some argue that this might reduce the financial hurdle that keeps SMEs from defending their intellectual property in court. It could also help to make society and companies realise the extent to which the theft of intellectual property is damaging the economy’s most vital fuel: innovation. Compared to the automatic authorship protection applied to artistic products, such as texts, music and films, the protection of technical inventions seems disproportionally low.
Nevertheless, if stealing intellectual property became a criminal offence, victims could no longer claim compensation payments; and the culprit’s guilt would have to be established beyond any reasonable doubt, whereas civil offences allow sanctions based on mere probability. Thus, it would become even harder for the judge to decide whether, in one particular case, a specific, valid patent has been infringed or not. In sharp contrast to most artistic creation, this question remains quite difficult to answer in most cases of technical intellectual property.
The EU as a wide-scale solution?
Given the complexity of practical problems hindering the patent system from producing satisfactory results, how can this system be improved? On a small scale, a company might find some pragmatic and affordable solutions, as for example making every person involved in a project sign a non-disclosure agreement, in order to protect the invention from competitors at the pre-patent stage.
Yet, this does not solve all the problems on the large scale. An important structural improvement would be a common EU patent system. The current, rather inefficient EU-system does not prevent companies from having to apply separately for their patent’s validation in every country they want to operate in. This procedure of validation accounts for 40% of European patenting costs. A common European system, providing protection in all Europe by just one patent, would enhance efficiency within the single European market, while promoting unified legal standards and jurisdiction on intellectual property within the EU. Companies whose patents are infringed in another European country would no longer have to refrain from lawsuits because of their cost. This might even increase investment in technical research (in this perspective, patents even play a decisive role in the fight against climate change, by improving the profitability of research on innovative technologies). It would also reduce costs for pan-European patents (a patent covering Europe’s most important economies costs between four and ten times as much as a patent covering the entirety of the United States of America). But if a pan-European patent were to reduce fees for translation and national administration, this would also mean that member states would have to accept seemingly “foreign” patents as legally binding for their territory. That is why Italy and Spain have obstructed recent initiatives in favour of a single European patent: they claimed that their national companies would be disadvantaged if the European Patent Office’s (EPO) official languages would continue to be reduced to English, French and German. As Spain’s proposal of accepting exclusively English was dismissed, and as improved financial aid for the translation of Spanish and Italian applications apparently fail to convince any of these two states, other sources suspect “less innovative” countries to veto the idea of a common EU patent system because their economies rely on copying their neighbour’s intellectual property. Whether we consider this allegation reasonable or not, the language barrier reveals that protection of copy right remains deeply connected to national sovereignty. Due to this reason, many presidencies of the EU council have failed to bring about the changes for EU-patents they had promised – some of them, though, made decisive steps forward, such as the Swedish presidency in 2009. During the current Belgian presidency, some member states have started discussions about the idea of invoking an “advanced co-operation” mechanism. This would allow a group of at least 9 member states to engage in intensified integration on common patents, which would also require the approval of a weighted majority of EU-members.
Yet, while the future might seem promising for a common EU patent system, an anonymous source from the EU’s European Court of Justice that was recently cited in the media considers that establishing a single European patent system would be incompatible with the EU treaties. A story to be continued…
Sources
Recession hits patent filings THE FINANCIAL TIMES - By Jonathan Moules Published: February 26 2010
Call to raise cost of patent filing THE FINANCIAL TIMES - By Jonathan Moules - October 9 2009
Intellectual property: Protecting ideas is crucial for eco-technology to succeed THE FINANCIAL TIMES - By Sujata Das - Published: June 3 2010
Theft of intellectual property ‘should be a crime’ THE FINANCIAL TIMES - By Hugo Greenhalgh
Published: September 24 2010
Europe's unwieldy patent regime THE ECONOMIST – Jul 23rd 2009
Plea for shake-up of patents in Europe The Financial Times - By Nikki Tait in Brussels Published: May 14 2009
The European Commission - MEMO/10/291 - Brussels, 1 July 2010
www.europeanvoice.com
Language row is likely to prevent EU-wide patent - By Simon Taylor - 07.10.2010
http://www.euractiv.com/en/euro/eu-patent-make-or-break-belgian-presidency-news-495567
EU patent to make or break Belgian Presidency
http://www.pcworld.com/businesscenter/article/204091/creation_of_common_eu_patent_system_faces_legal_setback.html
Creation of Common EU Patent System Faces Legal Setback - By Jennifer Baker, IDG News - August 25, 2010
Political push for single EU-wide patent THE FINANCIAL TIMES - By Nikki Tait in Brussels - September 28 2010
