1. hobbies and interests
2. inventors and patents

Intellectual Property Rights in the 21st
Century - a Regulatory Tool to Promote
Innovation?
INSEAD Innovation Breakfast Series
Dubai, 26 May 2015
Dr. Nikolaus Thumm
Senior Fellow
European Commission
Institute for Prospective Technological Studies
Presentation outline
I.
II.
III.
IV.
V.
VI.
VII.
Introduction
Open innovation versus proprietary knowledge
Competitiveness
Economic value and IP strategies
Intellectual property markets
Technology transfer
Intellectual property in the 21st century
2
Overview of intellectual property
Legal right
What for?
How?
Patents
New inventions
Application and
examination
Copyright
Original creative or
artistic forms
Exists automatically
Trade marks
Distinctive identification
of products or services
Use and/or
registration
Registered
designs
External appearance
Registration*
Trade secrets
Valuable information
not known to the public
Reasonable efforts
to keep secret
3
Some IP found in a mobile phone
Trade marks:
• Made by "Nokia"
• Product "N95"
• Software "Symbian", "Java"
Patents:
• Data-processing methods
• Semiconductor circuits
• Chemical compounds
•…
Trade secrets:
?
Copyrights:
• Software code
• Instruction manual
• Ringtone
•…
Designs (some of them registered):
• Form of overall phone
• Arrangement of buttons in oval shape
• Three-dimensional wave form of buttons
•…
© Nokia
4
Examples of valuable intellectual
property
Optional
Harry Potter
Coca-Cola®
Apple® iPod®
Instant camera
DNA copying process
5
The "social contract" implicit in the patent system
Reveal
invention
Get
exclusivity
… so that others can learn from it
and improve upon it!
6
Patents in nutshell – basic principles
• Patents are not secrets, they are published
• Worldwide patents do not exist
• International applications do exist (PCT applications)
• Patents are bound to a territory (mostly countries)
• Life of a patent: maximum 20 years of protection
• Patents can be granted for new and inventive
technology
• Improvements (by others) on existing patents is possible
• Patents can be owned by multiple applicants in dif.
countries
• Patents are classified according to technologies
7
II. Open innovation
versus
proprietary knowledge
8
“Open innovation is the use of purposive inflows and outflows of knowledge to
accelerate internal innovation, and expand the markets for external use of
innovation, respectively. [This paradigm] assumes that firms can and should use
external ideas as well as internal ideas, and internal and external paths to
market, as they look to advance their technology.”
Henry Chesbrough, "Open Innovation:
Researching a New Paradigm", 2006
Source: Chesbrough, 2003
9
More Examples for "Open Innovation"
LEGO Mindstorms (software/robotics):
open source based on copyright
strong reliance on trademark
BiOS initiative (Biotechnology Open Source): open
source based on patents and/or MTAs
BMW Customer Innovation Lab
(service ideas): all rights transferred to BMW
10
Open Innovation and Intellectual
Misconceptions: Property
Open innovation = Open source
Open innovation = public domain
Open innovation = no Intellectual Property
Reality:
Open source is one mode of open innovation
Open innovation results can be protected or released into the public domain
Open innovation needs a functioning IP system and an effective market of IP rights
"The effective management of IP is crucial, not only in identifying useful external knowledge but
especially to capture the value of a firm’s own IP rights." (OECD Report 2008 "Open innovation in
global networks")
"From Intellectual property to intellectual partnering" (Chesbrough, 2006)
11
III. 'Competitiveness'
12
Total European patent filings
+5,2%
1
1
+2,8%
Direct European filings under the EPC and International filings under the PCT
13
Technical fields with the most
applications (2012)
1
2
1
2
Classified according to the IPC and technology concordance table compiled by the Fraunhofer ISI for WIPO
Based on European patent applications filed with the EPO
14
European Patent Office top applicants 2013
15
European Patent Office: Top patentees 2014
Analysis based on granted patents published in 2014.
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Company
SIEMENS AG
SAMSUNG GROUP
ROBERT BOSCH GMBH
LG GROUP
L M ERICSSON AB
BASF SE
HUAWEI TECHNOLOGIES CO. LTD.
PANASONIC CORPORATION
GENERAL ELECTRIC COMPANY
QUALCOMM, INC.
KONINKLIJKE PHILIPS N.V.
JOHNSON & JOHNSON
SONY CORPORATION
CANON INC.
AIRBUS GROUP
Grants
757
712
633
630
574
543
493
447
434
427
409
392
380
368
364
16
Main drivers: Filings from Japan/Asia
EPO Filings: Geographical Origin (2002-2011)
(Average Annual Growth)
250 000
6%
7%
Others
(5%)
5%
200 000
CN
(35%)
24%
KR
(16%)
150 000
19%
100 000
US
(2%)
JP
(7%)
50 000
38%
EPC
(3%)
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
17
Patent Filings World Wide (Les Echos 11 avril 2013)
18
IV. Economic value and IP strategies
19
‚Intellectual property rights intensive industries:
contribution to economic performance and
employment in the European Union´
European Patent Office (EPO) and
Office for Harmonization in the Internal Market (OHIM) 2013
www.epo.org
www.oami.europa.eu
20
E.g. patent intensive industries
21
E.g. copyright intensive industries
22
E.g. trademark intensive industries
23
‚Intellectual property rights intensive industries: contribution
to economic performance and employment in the European
Union´ (EPO/OHIM 2013):
24
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.)
25
% %
Gesamt-Portfoliowert,
Erfassterof
portfolio value,
Share
The value of patents
100
90
80
70
60
50
40
30
20
10
0
0
10
20
30
40
50
60
70
80
90
100
CumulatedKum.
share
of der
patents,
ordered
patent
Anteil
Patente,
geordnet by
nach
Wert value
5%
really
matter
15%
matter a
bit
80%
are
“irrelevant“
26
Data for about 7000 EP-patents. Source: European research project ‚PATVAL‘.
Source: PATVAL II survey, Torisi et. al 2015
27
V. Intellectual property markets
28
Economic Theory of Licensing
Licensing ...
• increases exploitation of technology,
• increases diffusion of technology,
• facilitates vertical specialisation and division of tasks,
• but may reduce competition and innovation.
Firms license in order to ...
• leverage economic revenue from unused inventions,
• establish technologies as de facto standard,
• influence competition and stimulate market demand,
• expand the range of uses (markets),
• exchange knowledge (cross licensing),
• solve conflicts with intellectual property rights.
29
Licensing
(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
30
Source: PATVAL II survey, Torisi et. al 2015
31
European Commission expert group
on patent aggregation (2015)*
Mandate:
"Explore the need for and identify the feasible options for EU
level action to foster aggregation of patents that could be
(partly) funded or in other ways promoted at the EU level."
Specific tasks: explore the benefits, costs and risks of…
… a potential creation of a partly EU funded IP financial facility,
… fostering the formation of patent pools,
… fostering the formation of other forms of IP aggregation.
*http://ec.europa.eu/research/innovation-union/pdf/expertgroups/report_of_the_expert_group_on_patent_aggregation__2015.pdf
32
VI. International Technology Transfer
33
'How can licensing facilitate diffusion and implementation of renewables?'
Technology Transfer via:
•Imitation
•Trade in goods and services
•Foreign direct investment
•Joint venture
•Cross-border movement of personnel
•Licensing
34
Patent rights and Technology Transfer
Important factors for technology transfer
• access to real know-how from source companies (often "Trade secrets")
• suitably skilled staff
• scientific infrastructure
• favourable market conditions
• finance
35
Example: patenting trends solar photo voltaic technologies *
Patenting between source country (“inventor country”) and countries in which IP protection is sought.
Source: UNEP/EPO/ICTSD 2010: Patents and clean energy – bridging the gap between evidence and policy
36
Developing countries important for
IP related activities
India; 17%
China; 25%
Brazil; 12%
Russia; 10%
Other; 25%
Malaysia; 4%
Thailand; 4%
South Africa; 3%
Source: UNEP/EPO/ICTSD 2010: Patents and clean energy – bridging the gap between evidence and
policy
37
Conditions for licensing or cooperation with DCs
'When your organization is making a decision whether or not to enter into a licensing
or cooperative development agreement with a party in a developing country, to what
extent would the following factors positively affect your assessment?'
50%
45%
40%
Not a factor
A basic precondition
Significantly attractive condition
Compelling reason
44%
42%
37% 37%
35%
28% 29%
30%
25%
20%
18%
16%
13%
15%
27%
26%
25%
13%
14%
15%
16%
10%
5%
0%
Protection of intellectual
property rights
Scientific capabilities,
infrastructure and human
capital
Favourable market conditions
Favourable investment
climate
Source: UNEP/EPO/ICTSD 2010: Patents and clean energy – bridging the gap between evidence and 38
policy
Co-invention patterns – a statistical analysis
Co-invention indication for international cooperation :
– 12 % of mitigation technologies
worldwide
– only 9 % of all inventions worldwide
– 23% of African mitigation inventions
(with OECD countries)
•
Almost no intra-African co-invention
•
Africa’s most frequent partners
– US, UK, Belgium, Germany, Sweden,
France and Canada
•
Adaptation technologies
– little co-invention
– mostly in desalination
– primarily with South Africa\
Source: UNEP/EPO 2013: Patents and clean energy in Africa
39
Conclusions (Africa)
• Africa has vast untapped potential for clean energy technologies
• Patenting activity
– less than 1% of CET patents filed in Africa
– focus on climate mitigation technologies (much less adaptation
technologies)
– inventive activity dominated by South Africa
– foreign patenting mainly: OECD Countries (D, USA, F, UK ...), almost
no BRIC
• Rate of growth of patenting activity higher than world average
• Rate of co-invention much higher than in the rest of the world
• Little evidence of intra African co-invention and cross border patenting
40
VIII. Intellectual property in the 21st century?
41
‘If we did not have a patent system, it
would be irresponsible, on the basis
of our present knowledge of its
economic consequences, to
recommend instituting one. But since
we have had a patent system for a
long time, it would be irresponsible,
on the basis of our present
knowledge, to recommend abolishing
it’. (Fritz Machlup 1958)
42
Patents as a regulatory measure
Welfare
Protection
Problem area?
Too much
protection?
Feasible measures
Not enough
protection?
43
Challenges for IP Systems?
•
open, collaborative innovation asks for
– easy access to IP
– timely, simple procedures
– high presumption of validity of IP rights
•
new business models focus on
– branding
– customer relation
– first-mover-advantage
– lock-in
– combinations of open and proprietary models
•
new technologies/innovation processes might demand
– alternative forms of protection (license of right, shorter/longer IP
terms, sui generis systems)
– enlarged public domain: e.g. for basic research tools, interoperability
standards
44
What patent offices can do:
– Increase transparency, reduce complexity and costs
– Ensuring quality/validity of granted patents
– Improving efficiency
– Steering applicant's behaviour
– SME and University support
– Harmonisation of IP systems
Sustainable situation for
– Service innovations,
– New business models,
– Open innovation systems?
45
Example: 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
- ...
46
Example : Steer applicants behaviour
Fees at EPO
Filing (online)
European search
International search
Renewal for European application (3rd year)
Renewal for European application (10th year)
Examination
Opposition
Appeal
Further processing (late payment)
Further processing (other)
Claim fee (claim 16- 50)
amount in EUR
115
1165
1875
445
1495
1555
745
1240
(50%)
240
225
47
TRADITIONAL FEE STRUCTURE:
ACCUMULATED CASH FLOWS OVER PATENT LIFE TIME
Filing fees
€100
vs.
Initial costs
Examination
fees & internal
renewals
€50
millions €0
1
2
3
4
-€50
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Internal renewal
fees vs.
Exam, Opposition,
Appeal costs
-€100
19
20
Final gap excluding
Patent Inf.
costs etc.
-€150
-€200
Search fees
vs.
Search costs
External
renewal
fees
-€250
-€300
External renewal fees
vs. Opposition and Appeal
costs
48
Significance of small and medium sized enterprises (SMEs)
49
Example: Supporting SMEs and Universities
No. of
SMEs
Policy
?
Innocent
non-users
Professional
users
Knowledge about, use of IP protection
50
Example: Harmonisation; the Unitary Patent
Same grant procedure as for classic European patent
Appeal
proceedings
European
patent
application
Filing and
formalities
examination
Refusal or
withdrawal
of
application
Search report
with preliminary
opinion on
patentability
Substantive
examination
Limitation/
revocation/
opposition
proceedings
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
51
The Unitary Patent: Advantages
• For inventors
– protection in one single step for the 25 states currently participating
– significant cost savings (translation, validation, administration)
– simplified validation procedure (instead of up to 25 different
procedures)
– simplified and more cost-efficient renewal procedure
– increased legal certainty due to uniform litigation system
• For Europe
– optimal protection in the participating states as a whole
– better framework conditions for innovative companies and
organisations
– simplified European protection mechanism for companies from outside
Europe
– improved competitiveness of the European patent system
52
53
Recent conference on patents in the European Digital Single Market:
https://ec.europa.eu/jrc/en/event/conference/european-digital-single-market-role-patents
54
Thank you!
Contact: [email protected]
55