For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Wednesday, 23 December 2009

Why automotive engineers don't end up as patent infringers

The most recent issue of the UK Intellectual Property Office's Insight carries a fascinating short piece entitled "Patent infringement clearance: What? When? How?" [Whatever happened to 'Why?', wonders the Kat]. The piece, by Ian Hartwell of the Centre for IP Policy and Management, Bournemouth Business School, reports the findings of a survey of UK and German engineering companies. It goes as follows:

"[If you have the good fortune to work for a large patent-owning member of a cartel which has been sanctified by the name of a 'standards setting organisation', you can start cooking your Christmas goose now. If not, read on ...] How much effort should a company invest in trying to avoid patents belonging to its competitors? Should the IP manager investigate competitor patents at an early stage in the product development project and risk wasted effort if the product design subsequently changes? Or wait until the product has been developed before searching for blocking patents? Faced with a blocking patent, should the IP manager try to invalidate, design around or seek a licence? And how much money to spend - there is no point carrying out comprehensive clearance if it leaves no money to bring the product to market. [The range of options is more subtle in reality, since IP managers are constantly able to reassess their position in relation to each piece of information, or response from a third party patentee, as they receive it.]

With a view to providing IP managers with more guidance on how to deal with these pressing issues, a survey has recently been completed by Ian Hartwell of CIPPM Bournemouth, himself a former IP manager for Cambridge-based companies Xaar and Cambridge Display Technology and now a consulting European Patent Attorney with Maguire Boss. The study was supported by the Research Fund of the European Patent Office [Well done, EPO: money well spent!].

What?

Based on confidential interviews with the IP departments of ten UK and German companies in the automotive industry [A small and highly-focused sample, in an industry where players and fields of technology are relatively easy to identify: it will be good to run this research again an a less homogenous sector, such as industrial software applications], the survey revealed wide variations in practice. For example, forty percent of the companies surveyed did not consider it necessary to monitor new patent publications in their area of technology. Of those companies that did monitor, most delegated the task to technologists [Do patent attorneys count as 'technologists' for this purpose, wonders the Kat].

Patent office search reports are another source of patent publications and, although the primary purpose of such reports is the assessment of patentability, a majority of IP managers indicated that they also reviewed the claims of any patent documents cited in the report for relevance to the company’s new product development (NPD) plans.

When?

IP managers or professional searchers also carried out dedicated searches for third party patents relevant to a company’s NPD plans. Most dedicated searches were carried out mid-way through a development project, although a smaller number of companies carried out searches at the initial "ideation" stage [Presumably, midway is the point at which the NPD has got to the stage at which the searching is less speculative and more focused].

How?

Where a problematic patent was identified, the preferred action of most companies was to carry out searches to discover earlier publications that might put the validity of the patent in doubt. Only if this was not successful would most companies try to change the design of their product to avoid the patent. Seeking a licence to the patent was a measure of last resort for most of the companies surveyed [This is really sad. It generally costs less to seek a licence, and the nuclear option of going for invalidity remains available if no licence is forthcoming].

However, the survey revealed that, even if relevant earlier publications are found, this does not necessarily lead to the problematic patent being revoked. One tactic, known as "umbrella protection", is for an IP manager to seek a free licence from the patent proprietor in return for not seeking revocation of the patent. Since this free licence is not granted to other companies, the IP manager also gets the exclusionary benefit ("shelters under the umbrella") of the patent [Unless, presumably, another prospective infringer develops a product that cuts across the earlier patent's claims too?].

Commercial approaches

The full survey report paints a picture of an industry where, as a result of swingeing financial penalties for stopping automotive production lines, court injunctions are infrequent and licences are typically available [This makes it look as though the system is working quite well, then]. Consequently, few companies feel the need to pursue a policy of "never knowingly infringing a valid patent", employing more nuanced, "commercial" approaches instead".
Fumbling around on his browser, the IPKat hasn't been able to track down the full research report, to which the Insight article offers no link. He hopes that it will be available soon, since he thought this to be one of the most refreshingly practical and valuable bits of contemporary empirical IP research that he has seen for a while.

3 comments:

Ian Hartwell said...

Jeremy - thanks for your constructive comments. I hope that the full report will publish shortly - I'll let you know where and when.

Japser said...

Very interesting information. One remark, though:

This is really sad. It generally costs less to seek a licence, and the nuclear option of going for invalidity remains available if no licence is forthcoming

Well, this carries the presumption that the competitor would be willing to grant a licence. In particular smaller companies may not want to give such licence to keep healthy margins on their products.

But also some large companies rather not give out any licence (pharma).

twr57 said...

Always check validity before seeking a licence. You may not need one. If you do, it usually helps your bargaining position if you know something about the prior art.

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