Assessing the Unitary Patent and the Unified Patent Court

Lead Research Organisation: Queen Mary, University of London
Department Name: School of Business and Management

Abstract

Suppose that you are a British firm deciding whether, and how, to patent a new technology across Europe. Similar firms, operating in sectors reliant on intellectual property rights, add 4.7 trillion Euros to the European economy annually (http://europa.eu/rapid/press-release_IP-13-889_en.htm). Research has also shown that obtaining a patent is associated with significant growth and productivity improvements on average (Balasubramanian and Sivadasan, 2011). Currently, you have only one option when it comes to patenting across Europe -- the misleadingly named European Patent. This is based on a single patent application, but only takes effect through a `bundle' of national patents in different European countries. This means that you have to pay additional translation and validation fees in each country in which you need protection. Also, you can only defend your patent, or challenge other companies' patents, country by country.

Soon, you will have a new option: a European Union unitary patent (UP), overseen by a Unified Patent Court (UPC), parts of which will be located in London. Agreement on this unitary patent was only reached after late-night discussions between European Union heads of government, including David Cameron. The agreement has support from the UK's government because the potential economic benefits are large. The European Commission has estimated the cost savings alone at 193 million Euros per year; the knock-on effects due to higher rates of innovation and growth thanks to simpler patenting are potentially larger still.

These potential benefits are uncertain, not least because many decisions about the new patent system must still be taken. Decisions about patent fees, the rules followed by the UPC, and the quality of the judges deciding patent cases, will affect the attractiveness of the UP and UPC. The new patent system is also being grafted on to an existing European patent system, which may mean the system ends up being more, not less complicated. Current holders of European Patents will have to choose whether to enforce their patents in national courts, or in the UPC.

Our project therefore looks at the likely benefits of the UP and the UPC -- no easy task, given the complexity of the proposed system, the pre-existing European Patent system, and the patent systems in different European Union member states, and the possible changes in behaviour that result from a new institution. The project brings together researchers from the University of East Anglia with economists and managers at the Intellectual Property Office and specialists at the Max Planck Institute for Intellectual Property and Competition Law (MPI IC) and the Centre for European Economic Research (ZEW) to work on research into the existing European patent system.

We will work on three main areas: the Unitary Patent itself (demand for the patent compared to other alternatives, and opportunities for gaming the system); the Unified Patent Court (the quality of judges on the court, the incentives to litigate, and the volume of litigation); and the ties between small and medium enterprises and national patent offices (in particular, the routes to greater cost-effectiveness for SMEs interested in patenting).

The questions we ask are informed by our conversations with practitioners at a number of recent events, including a large workshop at the European Patent Office in Munich. Those conversations revealed that substantive knowledge gaps remain about how patenting costs and inefficiencies in existing patent litigation systems affect patent applicants. Many workshop participants expressed fear that large patent active firms would misuse the new patent system to obtain advantages over their rivals. Our project will show whether these fears are well-founded or not, and also establishes an invaluable baseline of patenting activity and patent litigation at the beginning of this new intellectual property regime.

Planned Impact

In December 2012 the European Parliament and the Council of the European Union adopted two regulations (Regulations (EU) No 1257/2012 and (EU) No 1260/2012) establishing a Unitary Patent (UP) for the EU. In February of 2013 representatives of 25 EU member states signed an Agreement on a Unified Patent Court (UPC). This agreement will enter into force once it is ratified by 13 member states including France, Germany and the UK. These measures represent the most ambitious reform of the European patent regime for at least a generation, affecting innovators, firms, consumers, national courts and national patent offices. The reform has the potential to reinvigorate innovation and growth in the EU. The reform should lower the costs and complexity of patenting in Europe to achieve these aims. The effectiveness of the new patent regime will depend on key parameters such as the costs of renewing a UP, the salaries of the UPC's judges and the procedural rules of the UPC. Research into how users are likely to react to levels of these parameters currently proposed will be highly relevant to the process of completing the reforms.

The proposed project consists of three work packages. These will focus on: i) the UP, ii) the UPC and iii) the role of national patent offices and their interactions with SMEs. Results from research we propose will deliver answers to questions about the way in which the currently on-going reform of the European patent regime is likely to affect i) patent applicants, ii) firms litigating patents and iii) national patent offices and SMEs throughout Europe. These answers will help policy makers and national and EU civil servants in implementing and overseeing this patent reform.

The most direct impact of the project will be on the Intellectual Property Office of the UK (IPO) as a partner in this project. We have planned three internal knowledge exchange workshops at IPO to transfer methods, information about data and results to the economists working at IPO. IPO are tasked with the evaluation of the European patent reform for the UK government, once the reform has been fully implemented. Much of the work to be undertaken in this project is relevant to laying the academic and practical foundations for this future task. Results from the evaluation will feed back into the process of governance for the new patent regime.

Both the IPO and the Max Planck Institute for Innovation and Competition (MPI IC) have strong reputations for policy relevant research and advisory work. Both organisations have connections to the Economic and Scientific Advisory Board (ESAB) of the European Patent Office (EPO), which regularly provides a forum for users of the European patent system to discuss pressing policy questions. Results from our work will be communicated to this forum quickly. In addition, we will directly interact with policy makers and representatives of the EPO and the UPC through presentations at the workshop planned for the end of the project and at conferences such as the annual European Policy for Intellectual Property (EPIP) conference. We will contribute to specialised blogs such as IPKat and VoxEU that are widely read by policy makers, patent attorneys and judges.

Finally, the project aims to benefit patenting firms in Europe. This has two dimensions. First, research on strategic behaviour within the European patent system is designed to identify patenting behaviour that may reduce the efficiency of the new patent regime and ways to mitigate such behaviour. Second, it is highly likely that in future national patent offices like IPO will focus on interactions with SMEs. Due to SME's lack of resources such interactions are currently inefficient. The project will deliver new methods to improve the effectiveness of the IPO's interactions with SMEs. This work has potential to be replicated at other national patent offices. In these ways the project will also support European industry.

Publications

10 25 50
 
Description This grant was to address three main themes:

i) research on patenting in Europe
ii) research on patent litigation in the UK
iii) research on the patent granting process in the UK

Work on themes ii) and iii) was significantly more complex than we had anticipated. Specifically our partner, the IPO UK, were less happy to collaborate with the research proposed under theme iii) and withdrew funding and support for research on theme ii). We are continuing work on theme i) and have made some significant findings already.

Under theme i) we have found that firms patenting in Europe very significantly rely on national offices and continue to rely both on these and the European Patent Office. More specifically we have found that firms respond to changes in the ease and costs of patenting at EPO by shifting patenting activity to national offices as soon as EPO become less attractive. We have been able to quantify the economic significance of this behavior and have identified economic impacts for other users of the patent system. To do this we currently collected and analysed historical data on costs of patenting from archives across Europe. We also improved routines that identify and link patent owners across various national patent databases. This work alone will help us to undertake further work on patenting in Europe in the future.

Under theme iii) we have shown that attempts to speed up the the patent granting process by nudging applicants are unlikely to work well at overcoming applicants' optimism bias and their overconfidence bias. That is, patent applicants think they're less likely to suffer an negative outcome than they are, and overestimate their abilities.

More detail on theme iii):
We have developed a new controlled experimental framework which tests how compliance periods in certification procedures affects the investment behaviour of applicants and the overall efficiency of the system. For example, during amendment rounds in patent examinations, would it be better for overall outcomes if applicants are forced to abide by short compliance periods, or is it better to be generous with deadlines? This is seen to be relevant in connection with the introduction of the UP and UPC, as some expect this to shift the composition of applicants for national patens towards those who, due to less professionalism, require more amendment rounds during examination.
We measured efficiency of the system by looking at a combination of how much work and effort is being wasted on certification attempts, without any chance of meeting the required threshold, on the one hand, and how often a promising outcome is forgone, on the other. We compared short compliance periods of one week to long ones of three and six weeks.
Most of our experiments were conducted in a computer laboratory with a relatively homogenous group of mostly student participants. However, to make sure our results can be transferred to professionals, we also recruited participants at an international congress of the IP service industry and another industry event. In total, 370 people participated in our experiments in Munich and Newcastle upon Tyne, and results show that changing the available time has only limited impact between a short and intermediate deadline. In the six week long treatment, however, we find large and significant differences in overall efficiency. Compared to the one week treatment, the number of participants who engage in wasteful investment of effort declines by 6.5% and the number of participants who invest into a promising outcome increases by 10.9%. Our results therefore show that switching from a short to a generous time framework, can be efficiency enhancing.
At the same time, our results raise some questions, as to how people decide in such situations. For one, we were unable to find a clear pattern of changes in behaviour between the short and very long deadline which could explain the change in efficiency. Furthermore, we found indications for substantial overinvestment in one of our control treatments where participants had full information about prospects. These questions need to be addressed in further research.
Exploitation Route Our findings are already feeding into work by the European Patent Office in the process of implementing the Unitary Patent Package across Europe. We expect this impact to grow as we improve the quality of our empirical results.

Detail on theme iii)

Compliance periods are relevant in many procedures and our results can be applied to various certification processes. Next to patenting, examples are certification for quality management, for eco labels or certificates of compliance with social standards, or processes of accreditation. Our findings suggest that outcomes of such processes can be improved for everyone, if applicants are not forced to abide to short deadlines.
We have, furthermore, developed a new experimental setting to study such decision environments, and our results suggest follow up questions for further research. Why do we observe overinvestment, and what can explain our results?
Sectors Aerospace, Defence and Marine,Agriculture, Food and Drink,Chemicals,Digital/Communication/Information Technologies (including Software),Electronics,Energy,Environment,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology,Pharmaceuticals and Medical Biotechnology,Transport

URL http://www.create.ac.uk/blog/2016/04/18/much-ado-about-patents-posts-ipkat-blogger-nicola-searle/
 
Description We have shared out results with policy makers working for the UK IPO and the European Patent Office. They are affecting the further implementation of the Unitary Patent Package. We presented a draft paper at the 2017 IP Statistics for Decision Makers Conference in Mexico, which was organised by Organization for Economic Cooperation and Development (OECD) and the Mexican Institute of Industrial Property (IMPI), in cooperation with the United States Patent and Trademark Office and the Canadian Intellectual Property Office (CIPO). It was attended by the staff from international agencies such as the World Intellectual Property Organisation and OECD as well a staff from national and transnational patent and IP offices. Our findings have contributed to an understanding of how companies use IP systems during significant economic crises, such as that of 2008. We presented a second draft paper at the 2nd TILEC Conference on "Competition, Standardization, and Innovation" in Tilburg, Netherlands. There we recieved feedback from colleagues, which has allowed us to substantially improve our analysis. We are in the process of finalising an updated draft of our paper for submission. The paper will then be circulated to policymakers at EPO and the European Commission who are aware of the ongoing analysis. We have followed up on our work from this award with two further papers. One describing patenting in Europe and a second which focuses on patenting during and after the Global Financial Crisis. The first paper led to a widely read blog post, while the second was presented at a CEPR policy conference in February in London.
First Year Of Impact 2019
Sector Government, Democracy and Justice
Impact Types Economic,Policy & public services

 
Description CREATe New Funds
Amount £40,000 (GBP)
Organisation CREATe (RCUK Centre for Copyright and New Business Models in the Creative Economy) 
Sector Academic/University
Country United Kingdom
Start 06/2015 
End 12/2016
 
Title Parsing tool for electronic records 
Description We have developed a cross-platform software tool (Java) to extract text snippets from electronic records in text form such as court judgements or letters. 
Type Of Material Data handling & control 
Provided To Others? No  
Impact We are currently using the tool to build a database of outcomes of UK High Court outcomes. 
 
Title Scoreboard linked to patents and trade marks 
Description We have linked data obtained from the JRC - Institute for Prospective Technological Studies, Unit Knowledge for Growth - to data on patents from PATSTAT and data from OHIM's register of EU trade marks. 
Type Of Material Database/Collection of data 
Year Produced 2015 
Provided To Others? Yes  
Impact Work analyzing the data is ongoing. 
 
Description Data exchange with JRC - Institute for Prospective Technological Studies 
Organisation European Commission
Department Joint Research Centre (JRC)
Country European Union (EU) 
Sector Public 
PI Contribution Linking of data from the EU R and D Scoreboard to IP data (Patents, Trade marks)
Collaborator Contribution Provision of raw data.
Impact Work on a paper is ongoing. We will supply the linked data back to JRC.
Start Year 2015
 
Description Visiting PhD Student 
Organisation University of Padova
Department Economics Department
Country Italy 
Sector Academic/University 
PI Contribution Training of a visiting PhD student.
Collaborator Contribution Sending of the visiting PhD student who is working on data and two papers.
Impact Firm level data based on the EU Scoreboard.
Start Year 2015
 
Description 2019 I3PM Meets Academia Conference 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact The International Institute for IP Management is an association of IP Managers dedicated to promoting the field of IP Management, and thereby to enhance the emergence of a dynamic IP-driven economy.

I3PM gathers managers from diverse international corporations and organisations, forming a unique experience pool in the management and realisation of value from immaterial assets.

Via it's contacts with the academic world, I3PM actively supports the development and spreading of knowledge and best practice in the area of IP Management. I3PM has in particular been recognized as a "Global Office for the Knowledge Economy" by Prof. Alexander Wurzer, from Strasbourg University and Steinbeis Institute of Management.
Year(s) Of Engagement Activity 2019
URL https://www.i3pm.org/
 
Description 2nd TILEC Conference on "Competition, Standardization, and Innovation" 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact On 18 and 19 December 2017 TILEC organized it's second two-days Conference on "Competition, Standardization, and Innovation". The Conference took place in Tilburg, the Netherlands.
Year(s) Of Engagement Activity 2017
URL https://www.tilburguniversity.edu/research/law/show-law/event-2nd-conference-competition-standardiza...
 
Description Blog post on "Entry into Patenting" 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact Blog post at VOXEU on "Patent thickets and first-time patenting: New evidence"

by Bronwyn Hall, Christian Helmers, Georg von Graevenitz
published on 23 April 2016

Abstract: Patent filings have proliferated globally in recent years. While some may see this as a direct consequence of increased innovation, this column uses evidence from the UK to show that patent thickets - patents belonging to many companies protecting overlapping technology - reduce innovation. Patent thickets decrease entry (i.e. first time patenting in an area) by 20%, which is substantial bearing in mind that the average probability of entry into a technology area is only about 1.5%.

This is an internationally visible blog for economics research. The post has been read over 4000 times to date at VOX EU and over 1000 times at the Centre for Globalisation Research (QMUL). Due to the nature of the medium it is hard to know which effects the post has had.
Year(s) Of Engagement Activity 2016
URL http://voxeu.org/article/patent-thickets-and-first-time-patenting-new-evidence
 
Description Brexit Britain - Will the Industrial Strategy Deliver? 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Blog post on intensity of patenting by UK firms in comparison to other EU countries. Discussion of R&D investment by UK government and the industrial strategy.
Year(s) Of Engagement Activity 2019
URL https://busanalyticsblog.wordpress.com/2019/01/19/brexit-britain-will-the-industrial-strategy-delive...
 
Description EPIP Conference Invited Panel on the Unitary Patent 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Invited session at the EPIP 2015 conference in Glasgow on the Unitary Patent involving Bronwyn Hall (Berkeley), Bruno van Pottelsberghe (Solvay School of Business) and Esther van Zimmeren (Antwerp).
Year(s) Of Engagement Activity 2015
URL http://www.epip2015.org/the-unitary-patent-and-unified-patent-court/
 
Description EPO Academic Research Programme Workshop 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Workshop to evaluate results from European Ptent Office's first round of grants under their Academic Research Program.

The EPO recognises the importance of high-quality research on patent-related intellectual property (IP) matters to inform policymakers and facilitate sound business decisions in a context where intangible assets, innovation and IP rights have become pivotal in the economy. With this research programme, introduced in 2017, the EPO seeks in particular to encourage more academic research on the role of patents in the European economy and to promote the dissemination of research results.
Year(s) Of Engagement Activity 2019
URL https://www.epo.org/learning-events/materials/academic-research-programme.html
 
Description Industrial Strategy & patenting blog post 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Blog post on UK Industrial Strategy, patenting in the UK.

Invitation to give seminar at ZEW in Mannheim.
Various emails adding additional insights around the topic.
Year(s) Of Engagement Activity 2019
URL https://busanalyticsblog.wordpress.com/2019/01/19/brexit-britain-will-the-industrial-strategy-delive...
 
Description Participation Bayerischer Patentkongress 2015 (04/11/2015) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Participation at a meeting of patent attorneys in Germany with the primary aim of recruitingprofessional participants for an experiment.
Year(s) Of Engagement Activity 2015
URL https://www.baymevbm.de/baymevbm/Pressemitteilungen/Bayerischer-Patentkongress-2015-Innovationen-und...
 
Description Participation IP Service World 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Participation at a meeting of patent attorneys in Germany with the primary aim of recruiting professional participants for an experiment.
Year(s) Of Engagement Activity 2015
URL http://www.ipserviceworld.com/fileadmin/managementcircle/documents/veranstaltungen/pdf/ip_service_wo...
 
Description Quetzalcoatl: God of IP and Big Data? 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Blog post summarising some results from the 2017 IP Statistics for Decision Makers (IPSDM) conference in Mexico City.
Year(s) Of Engagement Activity 2017,2018
URL https://busanalyticsblog.wordpress.com/2017/11/20/quetzalcoatl-god-of-ip-and-big-data/
 
Description Seminar at the University of Bordeaux 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Postgraduate students
Results and Impact Seminar to present current results from work on the Patenting Strategies in the European Patent System
Year(s) Of Engagement Activity 2018
 
Description The 2017 IP Statistics for Decision Makers (IPSDM) conference 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact The 2017 IP Statistics for Decision Makers (IPSDM) conference took place in Mexico City, Mexico, on 14-15 November, co-organised by the Canadian Intellectual Property Office (CIPO), the Mexican Institute of Industrial Property (IMPI), the United States Patent and Trademark Office (USPTO) and the OECD.

The IPSDM conference aimed to discuss how intellectual property data, statistics and analysis are used and can be used to inform decision-makers in both the public and private sectors, and to identify key information needs and possible shortcomings. We presented findings on how firms changed their use of the European Patent System in response to the financial crisis of 2008. The presentation led to a number of questions from the audience regarding our findings.
Year(s) Of Engagement Activity 2017
URL http://www.oecd.org/site/stipatents/
 
Description The Financing of R&D and the Global Financial Crisis 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact CEPR conference for the FRAME programe on understanding the interaction between macroeconomics and innovation policy
Year(s) Of Engagement Activity 2019
URL https://cepr.org/40031/frame-final-policy-conference-papers
 
Description Workshop Litigation at IPO 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact 29/05/15 KE Workshop for WP 1: Validation and Patenting Strategies IPO London Participants: Daniel Zizzo (Co-I), Sven Fischer (RA), Georg von Graevenitz (PI), Prashant Gupta (RA), Pippa Hall (IPO), David Humphries(IPO), Emily Jones(IPO), Janis Mackarewitch-Hall (IPO), Roger Burt (Inudstry), Michael Jewess(Inudstry), Vickie Salmon (Patent Lawyer), David Barron (Patent Lawyer), Alan Johnson (Patent Lawyer) 60 Minutes
The meeting was undertaken to discuss work on the litigation track of the award.
Year(s) Of Engagement Activity 2015
 
Description Workshop Patent Process at IPO 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact 26/06/15 KE Workshop for WP 3: SMEs and the Patent Process IPO Newport and London (video link) Participants: Daniel Zizzo (Co-I) , Georg von Graevenitz (PI), Sven Fischer (RA in Newport), Dietmar Harhoff (External member of research team), Pippa Hall (IPO), Enrik Noka (IPO), Phil Thorpe (IPO), Emma Porter (IPO), Guy Robinson (IPO), Emma Ward (IPO), Debbie Cooke (IPO), Roger Burt (Industry)

Workshop to agree strategy for the experiments proposed under WP 3 of the award.
Year(s) Of Engagement Activity 2015
 
Description Workshop on the Unitary Patent Package at EPIP 2016 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Other audiences
Results and Impact Workshop on the Unitary Patent Package at the European Policy for Intellectual Property annual conference 2016 in Oxford.

The audience included representatives of business associations in the UK and European policy makers from the European Patent Office and the European Commission.
Year(s) Of Engagement Activity 2016
URL http://www.epip2016.org/program/
 
Description Workshop on the Unitary Patent and Copyright Litigation 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact We organised a workshop at QMUL to bring together colleagues and industry representatives interested in research on the unitary patent and copyright related litigation.

The workshop ran over two half days and involved up to 50 people from different parts of public life.
Year(s) Of Engagement Activity 2016