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. 

Analysis 

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.