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Monday, 22 September 2014

The Great British Vanishing Act: where has home-grown patent filing gone?

Considering that cats spend most of their time fast asleep,
they can be remarkably productive.  If only they could be
persuaded to file more UK patent applications ...
Katfriend, patent attorney and IP enthusiast Peter Arrowsmith (a partner in London-based patent attorneys Cleveland) has recently become interested in patent statistics. Having penned a brief article on the topic for our friends at Patently-O in relation to EPO statistics (cited in the piece below) Peter thought it might be interesting to look at UK Intellectual Property Office (UK IPO) filing statistics too. The figures reveal a downward trend in the number of UK patent applications filed by UK applicants. Peter, with whom this Kat agrees, thinks that this trend is not widely appreciated [in both senses of the word, suspects Merpel] in the profession and merits discussion.

This is what Peter says:
The puzzle of the British invention: where have all our patent applications gone?

What is the state of innovation in the UK?  The general sentiment seems to be that innovation and patent filings are on the rise.  Indeed, it is not hard to find newspaper articles describing the pace of development of technology by dynamic British businesses.  Such opinions are supported by research like the Taylor Wessing Global IP Index, which ranks the UK at number 2.  
Additionally, initiatives like the Patent Box [on which see here and here] have been credited with a general increase in the appetite of UK industry for filing patent applications.  An analysis of the past ten years’ data from the UK IPO reveals a contrary story: a weakening interest in UK patent applications.

Summary of filing statistics 
The graph below sets out the number of UK patent applications (including direct UK applications, and national phase entries of PCT applications) that have been filed by UK applicants in the past ten years.  These data have been put together from the ‘Facts and Figures’ publications by the UK IPO.

It doesn't look too good, folks ...
The graph reveals a steady year-on-year reduction in the number of UK patent applications filed by UK applicants.  In fact, the figures for 2013 are around 25% less than those of 2003.  In contrast, the figures for European and Patent Cooperation Treaty (PCT) applications filed by UK applicants remain reasonably stable over the same period: European Patent Office (EPO) data are available here and PCT data can be downloaded here 
As an aside, it is necessary to treat the figures from the EPO in particular with great care.  These figures can give a misleading first impression since the EPO defines the number of European patent applications as the number of direct European applications plus the number of PCT applications, whether or not these PCT applications subsequently enter the European regional phase.  More on this subject can be found in this post on the Patently-O blog, and in the April 2014 edition of the CIPA Journal. 
In the graph above, UK nationality is defined by the address of the first named applicant.  It will be appreciated that this will not always be an accurate indication of a ‘British’ invention because many foreign companies have R&D facilities in the UK.  Additionally, complex corporate structures mean that a non-UK applicant address is sometimes used, despite the fact that the invention was developed entirely in the UK and the applicant would otherwise appear to be a UK company.  On the other hand, UK companies with overseas R&D departments will sometimes be ‘credited’ with inventions developed elsewhere.  While these factors mean that the statistics must be treated with some care, the definition of applicant nationality has not changed over the period under consideration so it is still possible to pick out general trends. 
The reason for the decline in the number of UK patent applications filed by UK applicants is not immediately clear, especially since the corresponding numbers of European and PCT applications remain relatively stable over the same period.  I have discussed this issue with the UK IPO, but they have been unable to provide any official explanation, other than to suggest that it may be linked to general economic conditions.  This explanation, however, seems unlikely since there was a dip in the UK economy in 2008/09, which is not replicated in the filing statistics.  Moreover the number of applications filed was declining even in the period before 2008, at a time when the UK economy was generally growing. 
We can speculate on a number of alternative explanations.  One possibility is a general decline in British innovation, not linked to the economy.  This is possible, but it is difficult to reconcile with the stability in the figures for European and PCT applications, unless there was some counter-trend causing a relative increase in the number of European and PCT applications.  This is possible, but it seems an unlikely coincidence. 
Another possibility is a reduction in the number of UK applications that are filed by industry for more ‘incremental’ inventions.  This could perhaps be explained by a trend towards outsourcing of patent drafting from in-house departments.  In cases where patent drafting is undertaken by in-house attorneys one could postulate that more patent specifications may be prepared and filed as UK patent applications for trivial inventions, since there would be a low marginal cost for the company.  Where trivial patent applications are filed they may be filtered out at the stage of filing European or PCT applications, since the relevant official fees are higher.  On the other hand, in cases where drafting is outsourced, the cost of engaging an external patent attorney may drive down the number of applications for trivial inventions.    
A further possibility could be a decline in the number of private applicants.  These applicants may be more interested in UK patent protection than in filing European and PCT applications.  Such a reduction could perhaps be explained by a diminished appetite in courting this type of work by UK patent attorneys and/or unattractive fee structures.  Although possible this explanation is difficult to verify since private applicants cannot be readily identified in the data from the UK IPO.

The real explanation for this effect may be due to a combination of the factors above or yet other reasons that I have not considered.  Over to you dear reader: do you have a better explanation?
Merpel notices that the decline seemed to reach a plateau in 2006, but started up again in  deadly earnest in 2007 -- the very year in which the UK IPO teamed up with Wallace & Gromit to promote the latter's Cracking Ideas


Anonymous said...

Hence the problem with statistics - they do not answer the question.

Less filings on trivial or defensive inventions, while maintaining the important foreign filings seems plausible. Previously, many first filings in the UK would not have resulted in foreign filings at 12 months if they were considered of low value. The in-house/outside counsel argument seems overly speculative and without any foundation.

The steady state for EPs and PCTs seems too steady. There must be a combination of reasons giving an increase in filings for one reason counteracting a decrease for others. Possibly a decrease due to the economic downturn counteracted by a change to first filings at the EPO rather than in the UK? (speculative).

The crash of 2008 is probably not a major cause of drop in the UK filings, because most of the damage to UK R&D had already been done.

Any crash would also have lag factor, presumably. Also, does the EP figure include all those divisional application that were forced to be filed because of their stupid rule change?

Anonymous said...

ROFL - The Taylor Wessing IP Index - UK No 2. Ha Ha Ha Ha Ha.

Just because we have the second best space on the planet for IP does not mean UK industry will innovate and use it!

UKIPO data under freedom of information shows a steady rise in private applicants and self-filers. This means the decline in valuable worthwhile UK applications is even starker.

Many pundits complain that there is a lack of uptake in R&D credits in the UK and put this down to ignorance or other such factors. How about companies just doing less R&D? Ergo less invention. Ergo fewer priority UK filings.

As to the IP Index just because we build it (a cracking IP system at No.2 in the charts Pop Pickers)does not mean they will come!

Anonymous said...

In house departments do not file "trivial" patent applications. If the invention is trivial, then it is likely to be of little value. Therefore, you save your budget to pay for important inventions. Private practice however, might have different drivers for filing "trivial" patent applications. In-house departments cannot afford to waste finite budgets.

Anonymous said...

We find the common mistake to link patents to innovation. Patents are not about innovation, they are about monopoly.

As tech cycles of innovation continue to shorten (a result of the digitization of our society and technology), the cost of obtaining (and enforcing) these monopolies is, in relative terms, increasing. At the same time, their efficiency drops significantly, because innovation moves ahead so much faster.

Chris said...

The Global Innovation Index 2014 placed UK at no.2 behind Switzerland so suggesting UK's innovation capabilities and results apparently rank very highly. That position seems ludicrous given these figures.

The UK has maintained constant number of EPs and PCTs but what have other similar states done in that time, eg. NL, FR, DE, CH etc?

I suspect those other states show a rise in EP filings, meaning the EP/PCT numbers are not good news, they show UK falling behind.

Anonymous said...

I think the graphic with the multiplication of cats shows an innate view of patents.

While some may challenge a cause/correlation relationship between patents and innovation, one cannot deny the fact that more of both Should be better.

Well. one can (and certainly one does see) attempt to deny such. But any critical thinking shows the simple folly there: More patents means more though and more sharing of that thought. For discussion sake (and I have yet to see evidence to the contrary), one should take that the grant of a patent is a steady state function of meeting the laws that permit such a grant. OF course, if there is a "rubber stamping," such would affect the output.

Interestingly, it is in the face of heavier scrutiny that this phenomena of more patents is taking place - and that is not stopping the naysayers from claiming that more is bad.

Logic dictates that if in fact more is bad, and that as the cat graphic indicates more leads to more, then for the greater good we should be aiming for an active anti-patent no progress state. No one, I believe, would accept that conclusion, so why do people accept the conclusion that patents are bad?

James Wagner said...

More innovation is probably a good thing, but how much effort should be spent encouraging it is certainly a debatable subject. One could even argue that at a certain level the disruptive effect caused by changing technology, and the risk factors caused by the new technologies rapid introduction, is greater than the benefits achieved. For example, I think improvements in genetic manipulation has wonderful potential for the medical, agricultural and industrial fields, but I wouldn't want to wake up tomorrow to discover that anyone on the planet could engineer their own virus.

As to whether more patents should be better than less, that would seem to depend on 1) the quality of the patents and 2) the alternatives to patenting.

1) If the patent increase is coming about as a result of increased R&D, that's probably a good thing. If the increase is a result in a change of filing strategy, with increased divisional applications or increased filing of minor improvements, then the resulting increase in patent numbers is probably a bad thing. No new innovation will have been conducted. More may have been publicly disclosed, but the increased volume may result in a greater noise to signal ratio for anyone looking for significant advances.

2) If the alternative to patenting the idea is it being hidden away in a closet and never used, then an increase in patents, even with minor improvements is probably a good thing. If the alternative is public use and disclosure, there will be cases where it is probably more beneficial if there is no application.

Ron said...

When I was in industrial practice with what was then a large multinational UK-based company, the filing philosophy was determined by the constituent subsidiary companies and not dictated by the central patent department. While some subsidiaries only wanted filings that would lead to grant, , at least one company was always prepared to spend a couple of thousand pounds on filing a new application for any new feature, however trivial, of each new product just so that it could put a patent application number on the new product. The objective was not so much as getting a granted patent, but simply to keep the competition in the dark for up to 18 months about what the potentially patent-protected feature was. The expense was justified by the benefit of discouraging the competition from making something similar for as long as possible.

Occasionally a seemingly-trivial feature that prima facie had a snowball's chance in hell, could turn out to be patentable. I recall one case that we later used when training TA's, where the invention was for a mounting bracket for industrial fans where the main embodiment could have been knocked up in miniature from half a dozen standard "Meccano" parts. The UK Patent Office search found nothing, and the closest prior art found by the EPO as ISA on the subsequent PCT was a German Gebrauchsmuster for a bracket for mounting a cine camera on the end of a walking stick for taking movies from near ground level at the viewpoint of a small animal! We filed a PCT for it so the marketing people could say that they had provisional protection in almost 200 countries, and an EP patent was indeed eventually granted.

The shrinking UK industrial base could well be a reason for the fall in domestic applications.

Don't I recall reading a couple of years ago that the IPO had set up a special unit for dealing with private applicants? If this is still extant I would have thought it could have provided a ball-park figure for the number of applications filed by private applicants. While no information about the is publicly available about UK applications that do not proceed to publication, an estimate of UK-Cases where applicant and inventor are the same can be taken to be private applicants with small error from databases of published applications, and cases where the priority country is GB can be identified. A little project for me in my retirement perhaps, now that the nights are drawing in! I no longer have access to the searchable commercial patent databases, but the German Patent Office's DEPATISNET (in expert mode) should work.

Anonymous said...

To Anon at 16:10. I guess you work in-house for a little company with tight budgets for everything from biscuits to IP. The R&D spend is probably less than it should be, with the company's scientists/engineers being paid salaries that don't make an impact on student debt. Senior managers drive flash executive cars. IP spend is therefore restricted to the most major advance.

By 'trivial', I meant of low value to the companies I have worked for, but something the scientists were keen to have filed. Maybe sounded great initially, but after a year the interest had waned and reality of value sunk in. Many companies have budgets for wanton IP spend, so your firm is not representative of all, whether minority or majority, who knows!

The comment that private practice can file more trivial patents does not make sense. Private practice firms do not do R&D so they are spending on behalf of companies that do. The budget issues are the same for these businesses, possibly more so.

Anonymous said...

We hear an awful lot about the UK transitioning to a "knowledge economy", usually as a cover for the decline in our industrial base already mentioned by another commenter.

Are the players in a knowledge-based economy less inclined to file patent applications on innovations in their field? Perhaps they are in light of the UKIPO and EPO's approach to business methods and software. Perhaps they are also more inclined to operate on the basis of well kept secret know how rather than risk publication where grant of a patent is uncertain.

Perhaps, then, these figures are just a symptom of the move away from a manufacturing-based economy in the UK.

Or maybe patents are just going out of fashion.

Hesh said...

I think the answer lies somewhere in the UK's reception of software patents. As more and more inventions utilise software and computer programming, inventors are opting to file in regions where these type of applications are more welcome (e.g. US).
This is a shame, when you compare the ease of application between the US and the UK, the USPTO site is a confusing mess, compared to the IPO's website which is infinitely simpler and more helpful.
If only the UK's patent suitability criteria were as advanced as their website, I am certain that this graph would look very different.

Anonymous said...

@Ron If you go through this list you will find information on private applicants made available under Freedom of Information requests.

Of course the UKIPO does not like to shout about this as it masks the actual decline in UK industries patent activity, which does not sit comfortably with all the political spin from the UKIPO.

Anonymous said...

Unfortunately, Hesh, the IPO website is about to switch over to on 6 October and from what I've seen of the odd IPO page already there, I am not optimistic. This page includes a video showing what it will look like:

MaxDrei said...

After the Alice case at the US Supreme Court, EPC patent-eligibility is the world-wide benchmark. No more need then, to bleat about Europe being stuck in the 19th century when it comes to what can be patented. Where Europe is, so too, now, is the USA.

After Alice, just watch domestic US filing activity plummet.

Has anybody compared domestic UK filing activity in a country (like Germany) which still benefits from thriving chem/bio and engineering industries? Is DE national filing activity holding up?

But don't overlok the tendency these days to do your first filings at the EPO. Either pay ne EPO fees at all, or pay for a search and get a much better one than you get from the UK IPO.

So even those who make stuff in the UK, do they not file straighaway at the EPO rather than the UK IPO?

Ron said...

As the term of a patent runs from its filing date and not its priority date, our normal practice was to file first in the UK and then file an EP application at the end of the priority year. As well as benefitting from a cheap, early search, this could gave an extra year's life compared with filing first at the EPO.

Amen to the sentiments about the switch to the .GOV web site: It's bad enugh location the steeing board minmutes as it is ( about the only spin-free info to be found). It remains to be seen how ddeeply it will be buried in futurte.

I did try using the .GOV web site to locate the Comptroller's annual reports to Parliament, and there seems to be a significant gap in the records. I see from a recent notice that the comptroller looks likely to become more sidelined insofar as a report to Parliament wlll in future be made by the Minister in charge of the BIS rather than the comptroller. Mind you, compared with the older annual reports, recent Comptrollers' reports and the like have tended to consist largely of spin and good news "soundbites" with lots of fancy graphics rather than giving factual information. I seem to recall a letter in CIPA when Alison Brimelow was Comptroller, complaining about the change in content of information from the Patent Office, not that it did any good.

Anonymous said...



A drop in patenting is a good thing...?

With all due respect, I don't think you understand what is going on. Driving innovation underground into trade secret land is a loss for the benefits that the patent system provides and should NOT be celebrated, but rather, it is something to be mourned.

Anonymous said...

There would have been an increase in filings at the UKIPO if Scotland had voted for independence. Apparently we were going to give them the Patent Office because it is of no use to England anymore. The increase was expected to come from all the claims the Scots were going to make:

We Claim:
1. All North Sea Oil;
2. All North Sea gas;
3. All north sea fish;
4. All North Sea salt;
subject to a disclaimer of all debt incurred due to the English bailing out the Scottish banks.

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