The Problem With Patents

Are patents worth the paper they’re written on?

According to Lexology, US patent filings have experienced a sudden decline, and it looks as if the US patent system has been surpassed by those in other parts of the world. Given the inherent difficulties when filing a patent, especially in such a competitive market, this isn’t surprising. But are patent applications really in decline? And, if so, why? D/SRUPTION spoke to Gwilym Roberts, chartered and European patent attorney and chairman at major UK patent firm Kilburn and Strode, to find out.

To patent, or not to patent

Following the Alice decision of 2014, the US was brought into greater alignment with global patent requirements. In the high profile court case, the US government changed its position on software patentability. Roberts explains that most of the world has decided that software can be patented if it has a technical effect, such as governing the way that an engine operates, or improving how a computer processes information.

“For a long time, the US was more relaxed than that, and pretty much allowed software which was in relation to non technical subject matter, like banking for example,” he says. “That opened up vast amounts of patentability that hadn’t really been considered. It made it difficult for people to know if they could innovate traditionally. The Alice decision had an impact on the US patenting system – they have seen a downturn in the numbers in this area.”

There may have been fewer patent applications in the US, but the rest of the world has experienced quite the opposite trend. The number of filings in China, Japan, and the Republic of Korea has gradually increased, and they now lead by a huge margin. European players such as Denmark, Germany, and Switzerland have now caught up with or overtaken the US.

If it ain’t broke…

Roberts explains that the current system relies on striking a balance between the requirements for innovation, and protection against copying. Once an application has been filed it enters the public domain, which means that anyone can view it. The aim of the patent system is to stop or at least partially control how third parties use that information. The problem, he says, is that this can lead to monopolies. But, for the most part, there are sufficient checks in place to stop patent domination from happening.

“The way the system has developed to resolve that conflict is to provide a limited monopoly as a reward for the innovation. You have to obtain a patent on a territory by territory basis. They are temporally limited, with a maximum of 20 years life protection, and you cannot have a patent for a trivial improvement. You must have what is described as an invention. Those three concessions mean that there are limitations on the monopoly, and it is considered that there is a decent balance against the risk of monopoly.”

For the most part, the 150 year old system in place today appears to have been largely successful. For Roberts, it has been particularly good at encouraging collaboration. But, of course, there are challenges.

Quality over quantity

Despite general success, today’s patent system is certainly not perfect. A major issue is the ‘troll phenomenon’. With enough resources, it is possible to create or buy existing intellectual property (IP) from others without actually making anything yourself. This IP is then used to scupper legitimate manufacturers. This is clearly bad practice, but is legally valid. Another surprising setback is the outdated application infrastructure.

“The actual IT around the patent system across the board is very old school. The way that information is presented is still effectively paper based. That hasn’t actually changed since the Victorian era,” says Roberts.

Understanding the system and making nuanced decisions also requires heavy intellectual input. To work at the European Patent Office, Roberts says that not only do you need a degree in science, but you also have to be trilingual. As such, finding the appropriate employees is not easy. Perhaps this is where automation comes in, to carry out tasks that don’t need intellectual power. Although it would be difficult to find a system that addressed all of these issues, for Roberts the major requirement for any patent system is quality. This is now a key part of China’s strategy to become an innovating economy.

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“China started by growing its own internal patent system, which is world class. The number of patents that comes through China is unbelievable, it has now reached around two million a year. China is now recognising that it needs to be more interested not just in getting patents, but also in monetising innovation using the patent system. They are now getting more and more sophisticated.”

Seeing a high number of patents is all well and good, but these patents must deliver value to make them worthwhile. Before applying for a patent, businesses need to be clear about what it means for them. Roberts advises companies to make an initial call on whether to collaborate or not.

“They need to have a project plan for their product or offering, and within that they need to work out how they want to monetise it and get it to market. Do they want to do it through a collaborative model and make money from the secondary sales, or do they need exclusivity? They need to go into the process with that in mind, to decide whether or not to do it.”

Today’s legacy patent system has many flaws. It can take years for a patent to be granted, firms and regulators have to navigate a challenging talent gap, and the application process is stuck in the 1800s. Despite the full knowledge of the courts, there are loopholes that can and have been taken advantage of by patent ‘trolls’. While Roberts recognises that the current system is far from perfect, on the whole he believes that it has provided checks and balances, and encouraged collaboration. It is within this collaborative model that everybody wins. In light of open innovation and growing technological monopolies, the future of the patent process is unclear. The general lack of litigation cases points to a largely successful system. Nonetheless, new technology has emerged as a major area for dispute. In a rapidly digitalised global market, it’s worth considering the pay off between collaboration and exclusivity.

What other problems are there with the current patent system? Would collaboration or exclusivity make most sense for your business in the patent process? Does the patent application system need to digitise? Comment with your thoughts.

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