The IPO’s recent analysis in its report entitled ‘UK patent system: Building the evidence base’ has provided some fascinating insights into the UK patent system and how it compares with patenting systems in other countries. Globally, the incidence of new patent applications rose by over 5% on average between 1995 and 2006, but the UK apparently lags behind this statistic, the trend actually declining around 6% in the same period. Is this a reflection of the state of UK innovation? Or, more likely, is this a reflection of shifting consumer markets and, in turn, patentees having more market savvy about the categories and jurisdictions in which they need to file patents?
A particularly remarkable statistic that comes out of the report is the apparently low patenting propensity of UK companies compared to companies in other countries – the UK has the lowest proportion of domestic applicants in Europe at just 7%. This figure is less than half of that in France, and almost one fifth of that in Germany. Add to this the fact that UK companies that do patent tend to have very small patent portfolios – in 2014 the large majority of UK companies had only one to five UK and European patents – and questions surrounding the efficacy of the patenting system in the UK begin to be raised.
Further statistics provide some conciliatory insight. While the UK comes 6th in the world for the number of patent applications filed – behind China (1st), the US (2nd) and Germany (4th) – similar levels of patent applications are found between the UK, Germany and France when adjusted for GDP (European Patent applications are included in these counts), which is generally considered an accurate proxy for the size of the country in terms of economic activity. This is a positive finding, especially when considering the fact that Germany’s manufacturing base is twice as large as the UK’s. However, with a relatively stable GDP spend of 1.6-1.7% on R&D in the UK between 2003 and 2014, investment in R&D in the UK is the lowest in Europe, and well below that of Japan and South Korea, which respectively take the 3rd and 5th spots for most patent applications filed in the world. In contrast, South Korea’s investment in R&D has almost doubled across a ten-year period to more than 4% GDP, coinciding with a marked increase in patent filings in the country.
Areas of strength
Furthermore, the UK market area is known to be business and services oriented – twice that of Germany’s, but a market area with a generally low inclination towards patenting compared to manufacturing. This is also reflected when comparing the most patented technologies between countries. In the UK, patents for Computing and Electric Communication dominate, with 12% and 10% of applications in these areas, respectively. The US shares the same top patenting areas, which also adds weight to reasons behind the high number of US filings in the UK. By comparison, in the manufacturing-stronghold of Germany, the top technological areas for patenting are vehicles and engineering and machines, each with 10% and 8% of the national application count, respectively. This is no surprise with Germany being home to a large percentage of the world’s luxury car brands such as BMW, Mercedes-Benz, Audi and Porsche, as well as white goods companies such as Miele, Siemens and Bosch.
Where are UK companies patenting?
Data provided in the IPO’s report suggests that countries with a lot of patents have a strong presence both in their domestic jurisdictions and abroad. When reviewing where UK companies patent, they were found to primarily patent in the US (3,259 patents in 2014) and in Europe (including 1,519 patents in the UK in 2014). As discussed above, this further supports the idea that patenting based on where a company’s consumer market is located, and not necessarily where manufacture or competition is based is contributing to these figures.
Patentee perception of the UK patenting process
Turning to how the patenting process is viewed within the UK, respondents of the IPO’s surveys agreed that the standards of patent examination and customer service are very high, with favourably low application and renewal costs. Overall average customer satisfaction in 2015-16 measured just below 85%, capably exceeding the IPO’s target. The cost of patent legal advice is, however, comparatively high in the UK when compared to other European countries and it has been suggested that this presents a barrier to patenting for small companies and individuals. Nevertheless, the UK’s lower official fees are not necessarily a factor for larger companies when considering a patenting strategy. Instead, market attraction is the prime factor.
A reflection of innovation?
More patent applications are filed by American, German and Japanese applicants in the UK than those from British applicants. Could this be a reflection of the state of UK innovation? Innovation is considered to be a driver for economic growth, and the patent system is recognised as being an important part of the innovation ecosystem. However, ‘innovation’ is a difficult term to define, and as patents are not the only means of protecting innovation, they cannot be the sole marker for levels of innovation. Indeed, unpatentable business methods, processes and other aspects of the services industries are key elements of the UK’s innovative strength.
Other factors that could influence UK patenting trends
An issue raised in the IPO’s report which could also affect the declining trend of UK patenting is the apparent knowledge gap amongst patentees of various favourable options for patenting in the UK, including the Patent Box and acceleration options such as Combined Search and Examination and the Green Channel. This highlights an area where greater effort on the part of the IPO and patent professionals is surely required.
Ensuring future success of the UK patent system
The data assimilated by the IPO makes clear that the patenting system is underpinned by economic drivers, but that these do not necessarily reflect ‘innovation’ per se. Cultural differences not readily presentable in terms of hard data, such as differing incentives to invest and patent, can also be considered. Even if much of the insight garnered from the published results is somewhat predictable, it highlights that companies and patent professionals have a responsibility to work together to ensure the future success of developing a patent system that continues to play to our strengths, thereby supporting UK innovation and economic growth. Forming part of the next phase of the UK Government’s industrial strategy, the UK IPO is currently running a consultation that seeks views on different ways that would promote collaborative innovation and maximise IP value. Responses are welcome until 15 November 2017.