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 Temporary monopoly

Free riding Access limitation to IP

More transparency
No incentive for R&D
Patent Info available

without patents with patents

 Patents (IP) as a regulatory measure
Welfare

Protection

Too much
protection?
Problem area? Feasible measures
Not enough
protection?
 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
Euro PCT
Int. Phase
181 813
150 000

100 000

Euro Direct
62 559
50 000

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

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

1,600,000
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%
First Filings: 48.3%
Subsequent Direct and Other Filings: 20.4%
Subsequent Direct and Other Filings: 7.1%
Subsequent PCT National Phase Entries: 8.3%
Subsequent PCT National Phase Entries: 44.6%

Source: WIPO, Mosahid Khan, EC presentation June 2011

 The value of patents
% %

100
portfolio value,

90
Gesamt-Portfoliowert,

80
70
60
50
40
Erfassterof

30
Share

20
10
0
0 10 20 30 40 50 60 70 80 90 100
CumulatedKum.
share of der
Anteil patents, ordered
Patente, geordnet by patent
nach Wert value

5% 15% 80%
really matter a are
matter bit “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 Human necessities

B Performing operations; transporting

C Chemistry; metallurgy

D Textiles; paper

E Fixed constructions

F Mechanical engineering; lighting; heating; weapons; blasting engines or pumps

G Physics

H Electricity

IPC: approx 70.000 codes; ECLA: approx 138.000 codes

 Example 1: Increase transparency
New Classification Scheme:
Example Wind Energy
Hierarchy level Description
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 Private In-house

counsels practitioners counsels Private practitioners

EPO 74% 62% EPO 71% 56%

JPO 57% 43% JPO 55% 40%

USPTO 50% 37% USPTO 52% 38%

KIPO (Korea) 34% 24% KIPO (Korea) 29% 21%

SIPO (China) 23% 13% 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
 TRADITIONAL FEE STRUCTURE:
ACCUMULATED CASH FLOWS OVER PATENT LIFE TIME
Filing fees Examination
€100
vs. fees & internal
Initial costs 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
Internal renewal
fees vs.
Exam, Opposition, Final gap -
-€100 Appeal costs excluding
Patent Inf.
costs etc.
-€150
Search fees External
vs. renewal
-€200 Search costs fees

-€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 Refusal or Limitation/

patent withdrawal revocation/
application of opposition
application proceedings

Filing and Search report Substantive Grant of UNITARY PATENT

At the
formalities with preliminary examination European request
examination opinion on patent for the territories of the
of the patent
patentability 25 participating states
proprietor

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)