Patents as a regulatory tool What patent offices can do to promote innovation UNECE Team of Specialists on Intellectual Property 'Intellectual Property and Competition Policy' Geneva, 21 June 2012 Nikolaus Thumm (European Patent Office) Chief Economist
Patent Protection, Finding the Right Balance Market powers fail Free riding No incentive for R&D Temporary monopoly Access limitation to IP More transparency Patent Info available without patents with patents
Patents (IP) as a regulatory measure Welfare Protection Problem area? Too much protection? Not enough protection? Feasible measures
Too much protection? Limiting research? Anti-commons Patent thickets Royalty stacking Abuse of dominant market poistion (Myriad) Quality of grant examination? Trivial patents General inventiveness
Background European Patent Filings (1991-2011) 250 000 Total Filings 244 372 200 000 150 000 Euro PCT Int. Phase 181 813 100 000 50 000 Euro Direct 62 559 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Importance of patenting Increasing economic importance of industrial property (IP) Increasing integration of IP in top-level business strategy, especially in high-tech industry Increasing strategic use of IP information (technology, market and technology watch) Increasing exploitation of IP value as additional source of revenue and benefits (licensing, patent auctions etc.) Upcoming legally binding rules to report on IP (e.g. accounting rules) IP enforcement (litigation, etc.) with increasing economic impact on companies (revenue, profitability, stock performance, etc.)
New inventions versus multiple fillings 1,600,000 Resident First Filing Non-Resident First Filing Resident Subsequent Direct Filing Non-Resident Subsequent Direct Filing Resident Subsequent Other Filing Non-Resident Subsequent Other Filing Resident Subsequent PCT NPE Non-Resident Subsequent PCT NPE Types of Application 1,200,000 800,000 400,000 0 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: WIPO, Mosahid Khan, EC presentation June 2011
Contribution first & subsequent filings to total growth First surge period, 1983-1990 Second surge period, 1995-2007 First Filings: 71.3% Subsequent Direct and Other Filings: 20.4% Subsequent PCT National Phase Entries: 8.3% First Filings: 48.3% Subsequent Direct and Other Filings: 7.1% Subsequent PCT National Phase Entries: 44.6% Source: WIPO, Mosahid Khan, EC presentation June 2011
The value of patents Share Erfasster of Gesamt-Portfoliowert, portfolio value, % % 100 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70 80 90 100 Cumulated Kum. share Anteil of der patents, Patente, ordered geordnet by nach patent Wert value 5% really matter 15% matter a bit 80% are irrelevant Data for about 7000 EP-patents. Source: European research project PATVAL.
General findings (EPO/OECD survey 2007) 20% of European patent owners license out Firm size: licensing activity U-shaped Companies from Nordic countries and UK license out more Motives for licensing out patents: 1. Earning revenue 2. Entering into cross licensing deals 3. Stop others from infringing your patents 4. Sharing technology with other companies Obstacles to licensing: 24% of patenting firms are willing to but not able to license Difficulty in finding licensing partners
The wider regulatory framework Kyoto Protocol Figures refer to claimed priorities.
What can patent offices (regulators) do? 1. Increase transparency, reduce complexity and costs 2. Ensuring quality of granted patents 3. Improving efficiency 4. Steering applicant's behaviour 5. SME and University support 6. Harmonisation of IP systems
Example 1: Increase transparency The eight main IPC and ECLA sections A B C D E F G H Human necessities Performing operations; transporting Chemistry; metallurgy Textiles; paper Fixed constructions Mechanical engineering; lighting; heating; weapons; blasting engines or pumps Physics Electricity IPC: approx 70.000 codes; ECLA: approx 138.000 codes
New Classification Scheme: Example Wind Energy Hierarchy level Description Example 1: Increase transparency
EPO rated best patent office worldwide for quality for second year in a row Surveys by IAM magazine in 2010 and 2011 Target group: 700 in-house counsels and private practitioners 2011 Percentage who feel that patent quality is very good/excellent: 2011 2010 In-house counsels Private practitioners EPO 74% 62% JPO 57% 43% USPTO 50% 37% In-house counsels Private practitioners EPO 71% 56% JPO 55% 40% USPTO 52% 38% KIPO (Korea) 34% 24% SIPO (China) 23% 13% KIPO (Korea) 29% 21% SIPO (China) 22% 20% 18
Example 2: Patent Quality Workshop: EPO Economic and Scientific Advisory Board 'A high quality patent (a) satisfies the legal patentability requirements at a given patent office, (b) it has been granted, and (c) is likely to withstand invalidity proceedings in court or before an administrative body' Improve patent quality: -prior art search and disclosure -abstracts/titles -non-patent literature -ownership re-assignments -translations -reporting of prior art by applicants (prior art repository) -opposition and re-examination -international harmonization and cooperation -code of conduct -...
Potential conflicts between patents and standards Patent ambush (Dell, Rambus) Refusal to license unrevealed patents (LG, Philips) Failure to agree on FRAND (Qualcomm, Orange Book) Third party transfer without pass on of obligations towards SDO (Nokia, Bosch) Third party patents not in the standard (Microsoft, i4i)
Potential Remedies Early identification and disclosure of essential patents Identification of prior art documents coming out of the standardisation process (non-patent literature) Closer collaboration between POs and SDOs Competition surveillance Patent pools
Example 3: Increase transparency and efficiency Patents and standards: 2003 EPO became ETSI member 2007 EPO became observer at the Global Standards Collaboration 2009 MoUs with ETSI and IEEE 2022 High level technical agreement with International Telecommunication Union (ITU) access to standardisation documents for prior art search regular exchange with the European Commission
Filing fees vs. 100 Initial costs TRADITIONAL FEE STRUCTURE: ACCUMULATED CASH FLOWS OVER PATENT LIFE TIME Examination fees & internal renewals 50 millions 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20-50 - 100-150 - 200 Search fees vs. Search costs Internal renewal fees vs. Exam, Opposition, Appeal costs External renewal fees Final gap - excluding Patent Inf. costs etc. - 250-300 External renewal fees vs. Opposition and Appeal costs
Example 4: Steer applicants behaviour Fees at EPO amount in EUR Filing (online) 115 European search 1165 International search 1875 Renewal for European application (3rd year) 445 Renewal for European application (10th year) 1495 Examination 1555 Opposition 745 Appeal 1240 Further processing (late payment) (50%) Further processing (other) 240 Claim fee (claim 16-50) 225
Significance of small and medium sized enterprises (SMEs)
Example 5: Supporting SMEs and Universities No. of SMEs Policy? Innocent non-users Professional users Knowledge about, use of IP protection
Example 6: Harmonisation The unitary patent as a European patent Same grant procedure as for classic European patent Appeal proceedings European patent application Refusal or withdrawal of application Limitation/ revocation/ opposition proceedings Filing and formalities examination Search report with preliminary opinion on patentability Substantive examination Grant of European patent At the request of the patent proprietor UNITARY PATENT for the territories of the 25 participating states The unitary patent replaces the individual effects of the European patent in the 25 participating states
THANK YOU FOR YOUR ATTENTION www.european-patent-office.org Nikolaus Thumm nthumm@epo.org
Patenting Activity across Different Continents (1980-2009) (Selected mitigation technologies Y02, by application authority)
Patenting in Africa by Inventor Country: 2000-2009 (Patent applications registered at African patent offices, by country of the inventor)