Prevailing impact trends in patenting

Science and Public Policy October 2009 0302-3427/09/080587-08 US$12.00 © Beech Tree Publishing 2009 587

Science and Public Policy, 36(8), October 2009, pages 587–594 DOI: 10.3152/030234209X475894; http://www.ingentaconnect.com/content/beech/spp

Prevailing impact trends in patenting

Matthew J Elsmore

Patents are at the heart of science and public policy. Getting European patent policy right is a daunting task and involves listening to numerous voices. Part of this process must entail a full understanding of the dominant trends that challenge the effectiveness of the present system. Some challenges are constant, others are fluid and each tends to vary from sector to sector. This paper evaluates key recent developments in patenting which impact upon the European system, notably increasing numbers of applications and grants. An analysis of these factors and their underlying causes means we are in a much better position to debate and build an effective policy rearguard.

OR THE MOST PART, the patent system has been a positive factor in promoting innovation and the diffusion of knowledge, leading to

greater competitiveness and improved economic per-formance (STOA, 2008). If the European patent sys-tem is to continue to be effective and improve, it is critical that due account is taken of the challenges it currently faces. Patent trends and the causes under-lying them influence the system at a fundamental level: whether it remains structured as it is or morphs at some future point into a truly ‘European Community’ system.1

This analysis focuses on rising ‘patenting activity’ by relying heavily on data. Reliable and valid empiri-cism is helpful in trying to grapple with patent sys-tems where so many influences and spillover effects can make it daunting to draw out and understand the landscape at any one time. This paper also outlines other prevailing trends, such as changing modes of applicant and user behaviour and the costs of patent-ing. Explanations are suggested for each trend that is described. Inevitably, there is a certain crossover as many trends are interrelated. The paper ends with some remarks about the future of the system.

What are we talking about?

It is worth quickly defining the system that this spe-cial issue of Science and Public Policy is considering.

The ‘European patent system’ refers to the multi-layered, regional system that exists in Europe for patent-related activity. The system as it stands is outside the EU, and is implemented by the European Patent Organisation (EPOrg) which was established by the European Patent Convention (EPC) in 1973 (now updated as the EPC, 2000). The task of the EPOrg is to grant European patents. The European Patent Office (EPO), as supervised by the Adminis-trative Council, acts as its executive body.2

The result is a centralized system effectively ad-ministered on a day-to-day basis by the EPO, which provides a uniform application procedure for individ-ual inventors and companies seeking patent protec-tion in any or all of the 38 EPC countries.3 The EPO’s mission is to support innovation, competitiveness and economic growth for the benefit of the citizens of Europe. The core activity of the EPO reflects its authority to examine patent applications and, upon successful applications, grant ‘European patents’.

The system that is in place reflects the collective political determination to establish a uniform patent system in Europe, comprising standardized grant processes and providing for one, unitary right. This vision remains unfulfilled. Even though the granting is mainly centralized, the legal rights are still largely determined by the national laws of the EPC’s con-tracting states. Effectively, there were conflicting views on whether or not such a patent convention should allow accession to non-EC states. An initial split was made between setting up a uniform grant-ing system, which would also be open to non-EC states (via the EPC) and a truly integrated EC system which was to be created in the future: the latter has

F

Matthew J Elsmore is at the Centre for International Business Law, Aarhus School of Business, Aarhus University, Frichs-huset, Hermodsvej 22 8230 Åbyhøj, Denmark; Email: [email protected]; Website: www.asb.dk; Tel: +45 8948 6882.


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yet to be established. In a few words, this explains why the European patent system is distinct from the EU, and has a somewhat unusual set-up.

The rise and rise of patenting

Increasing patent applications

The dominant trend is the continuing climb in patent filings. The ‘big three’ patent offices: the EPO, the United States Patent and Trademark Office (USPTO) and the Japanese Patent Office (JPO) are known collectively as the ‘Trilaterals’. Figure 1 is a snapshot of the growing demand for protection over the decade up to 2006. Relative growth rates are broadly comparable, though the US leads, as would have been seen if looking at a 25-year timeline. Taken together, the Trilaterals recorded a combined 2.5% annual increase in patent applications for 2006, with the strongest surge continuing at the USPTO (9%), the office that has experienced the sharpest climb recently (Trilateral, 2007).4 Since its

formation in 1977 and except for 1991, the EPO has only known increases in year-on-year filings. Clearly, the actual number of filings is much lower in Europe. The USPTO and JPO receive around three times as many filings as the ‘total’ figure at the EPO. In 2008, 146,500 applications were filed under the EPC, compared with 141,400 in 2007 (a 3.6% increase) (EPO, 2008). These are the lower, more ‘realistic’ figures (in line with Trilateral and EPO policy).5

It is important to appreciate the role of patent of-fices (POs) of rapidly growing economies such as Korea and China. We should really now refer to the ‘big five’ or ‘Pentlaterals’.6 The current pecking or-der is: the US, Japan, Korea, China, and then Europe. At the State Intellectual Property Office of China (SIPO), the goal is to be the world’s leading intellectual property rights (IPRs) office. The Chi-nese authorities have adopted a national IPRs strat-egy aiming to develop into the most innovative world economy by 2020 (Qu and Oliver, 2009). To help with this, the number of SIPO staff has more than doubled in the seven years up to 2006 (4,400 in total which includes 2,000 examiners) and filings rose by 845% in the decade since 1995 (175,000

Dr Matthew J Elsmore is an associate professor at the De-partment of Law, Aarhus School of Business, University of Aarhus, Denmark. He graduated from University College, Southampton, UK in law and obtained his PhD from Not-tingham Trent University, UK. Before his current research and teaching post, he worked in industry for several years, mostly with PricewaterhouseCoopers UK. Today, he contin-ues private, non-contentious consultancy alongside his main academic interest in intellectual property rights. Mat-thew actively pursues interests centred round law, including the use of economic and philosophical perspectives, and all things China-related. He regularly publishes in pre-eminent international sources on a range of commercial topics. Starting in 2010 he will lead a new interdisciplinary investi-gation into the migration of international skilled labour.

It is important to appreciate the role of patent offices of rapidly growing economies such as Korea and China. The current pecking order is: US, Japan, Korea, China, then Europe

Figure 1. Numbers of patent applications received at the JPO, USPTO and EPO (1997–2006) Source: STOA (2008)

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filings in 2005). While the expected avalanche at the EPO has not materialised, it is only a matter of time before the current number of Chinese-based EPO fil-ings surges upwards (several thousand per year at present compared to over 37,000 from the US, which leads country-of-origin filings) (EPO, 2008).

An explanation?

There are many complex and fluid reasons for the substantial climb in numbers. Patent data is inher-ently historical and is hampered by the long time it takes in Europe for applications to mature into grants,7 together with the worldwide backlog of mil-lions of applications. Filing figures do not tell us anything about if and how rights (and unregistered innovations) become active in the market.

Still, certain explanations are plausible. For a start, the territorially separated patent systems are closer than previously. The quarter-century of coop-eration between the Trilaterals is significant, as is the strengthening domestic levels of protection and enforcement of rights by individual nations by bod-ies such as the World Trade Organization, the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) and the appearance of new international ‘governing’ bodies and non-governmental organizations with an interest in pat-ents. In Europe, the Internal Market and Euro attract innovative and post-grant activity by ensuring a higher degree of integration of many affluent economies. Given that all EU member states are part of the EPC system, the incentive for European rights (compared to national rights) is high, and is confirmed by the large numbers of non-resident ap-plicants applying in multiple EPC states. Systems are generally more ‘user-friendly’ and also proce-durally flexible. For instance, to move in line with other systems, the EPO has reduced the direct costs of patenting.8

That said it remains unclear if greater patent activ-ity reflects greater economic activity. There is gen-eral scepticism as to whether the impressive statistics necessarily reflect greater levels of innova-tion and research findings have doubted whether so-cial benefits increase in line with more patenting (STOA, 2008; Elsmore, 2009; Opperman, 2009). It is interesting that since 1995, the average annual rate of nearly 5% growth for worldwide filings to more than 1.76 million in 2006 is directly comparable to the overall rise in economic activity during the same period (WIPO, 2008). On their own, however, patent indicators (mainly application data) are not a fool-proof method for measuring innovative activity. Ar-guably, other criteria such as gross domestic product (GDP), growth, and research and development (R&D) levels are better measures of innovation.

Prima facie R&D helps to increase the stock of knowledge and stimulate patenting. Global R&D spending has continued to move upwards, even if now at a slower pace. A cursory look at patent-related

R&D data reveals the number of patent filings by residents per million US$ of R&D expenditure has changed very little since 2000 (WIPO, 2008). Dur-ing that period, patent numbers have climbed con-siderably. If one looks at country levels, sometimes R&D actually fell when patents filings rose.9 Year-on-year comparisons are problematic, but these fig-ures may simply be because patenting activity has no direct correlation with levels of innovation. A more subtle account is that innovation strategies are no longer so focused on the isolated firm, even for big business; more and more economic activity is cooperative with patents emphasised for a variety of firm strategies, like developing favourable partner-ships in integrated markets such as information and communications technologies (ICT) and licensing.

Another factor is a possible rise in the inventive activity of established innovators and applicants, fu-elled by continuous opportunities reflecting the fast pace of progress in technical fields. Individuals, businesses and other organizations must protect a rising numbers of patentable inventions. Some sup-port is found in Figure 2, which shows the ‘10 fast-est-growing technologies’ at the EPO. Around half of these applications will probably be rights in the market by now, and the large numbers are in the ICT sectors on the back of incredible growth, which with biotechnology and electronics are the most dynamic fields. The combined growth rate among ICT filings has been around 12–14%, well in excess of the 8% average. A reason is that science-based and complex technologies have seen changes in law, and often expansion of what lawmakers define as patentable subject matter. This also extends to the university sector (Mowery and Sampat, 2005). That filings have risen due to this legal manoeuvring of the goal-posts is itself a trend, as witnessed in areas like semiconductors, software and business methods, over which jurisdictions can have sharply differing views on patentability.10

Grant information

Recently, worldwide patent grants have increased at an annual average annual rate of 3% with about 727,000 issued in 2006 and a total of 6.1 million patents in force. Almost a third of issued rights are US-based, though the Japanese are the majority owners on a global basis (WIPO, 2008). In 2008, the EPO handed out close to 60,000 registrations, below the slightly higher level for 2006, but up 10% on 2007, moving the total to nearly one million ‘Euro-pean patents’, equivalent to many millions of ‘national patents’ (EPO, 2008).

It is unclear whether grant levels are better indices of innovative activity. Not all innovations become inventions, and not all inventions become patents (and not all applications become grants etc.). We do not know much about induced withdrawals pre-examination and even less about aborted filings, partly because this can be ‘strategic’. We do know



businesses choose among a delectable range of proprietary alternatives for protecting innovative investment, including trade secrecy, brands and trademarks; the latter two are much cheaper and ar-guably more manageable methods, particularly for the dominant economic actor in Europe; small- to medium-sized enterprises (SMEs), the vast major-ity of which are service providers.11 Compelling evidence is elusive, but a recent re-thinking of the corporate ego, historically epitomized by ‘Corporate America’, to own everything and have safety in (pat-ent) numbers, will probably take effect. Increasingly, open source is a viable business model option. Qual-ity, and not quantity is the commercial buzzword in current patent parlance. In Europe, the EPO presi-dent has recently expressed concern about compa-nies seeking the status of having ‘pending patents’ as a perception in the market of innovativeness (re-gardless of whether actual patent rights mature or not) (Brimelow, 2009).

The amount of applications, grants and conver-sion ratio can fluctuate considerably between POs. This reflects varying typologies of user, strategy and disparity in regulatory standards. For example, the approach to the unity of an invention varies between Japan and Europe. While the EPO grants one patent for any given inventive system, for the JPO, the same invention could constitute up to 10 separate patents with every technological aspect of the inven-tion filed independently. The USPTO, unlike the EPO, does not require its patents to have a ‘technical effect’ and historically has adopted a continuation approach allowing inventors to file successor appli-cations (to a pending application) to update with any improvements. The US’s ‘everything man makes

under the sun can be patented’ mentality permeates political and administrative behaviour and influences the way users ‘use’ the system. Though the JPO and USPTO appear to handle far more innovations that Europe, disparities in law, culture, and political atti-tude are at work.

In addition, a perception that EPO practice is ‘stricter’ or more ‘selective’ than other offices shows up procedurally (longer examination) and substan-tively (patentability requirements). After adjusting for the fact that year-on-year comparisons are not really possible (a four-year delay is used), some ba-sic grant conversion rates are calculated and tenta-tively support this perception. Figures from the past 10–15 years show the EPO’s conversion rate is quite high at around 50–60%, compared to the US (usu-ally a little higher). These rates may also reflect user perceptions about strictness, such that European ap-plications are in better initial shape and more likely to be accepted.12

Subsidiary trends

Applicant profile

A rise in global patent filings reflects the greater volume and breadth of users. The European system is starting to see applicants who have not used the processes before either at all or that much, whether for lack of economic incentive, insufficient inventive activity, or some other reason.13 The number of fil-ings from EPC states rose only slightly in 2006 to 61,000, whereas 147,500 EPO applications came via the Patent Cooperation Treaty (PCT) international

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Figure 2. Number of applications at EPO for 10 fastest-growing technologies (1990–2003) Source: EP-CESPRI database



route. The PCT attracts users worldwide, such as from Mexico and the Russian Federation and for these applicants filings have grown at an average annual rate of around 5% in the past few years, compared to a rather static rate in the number of EPC resident patent filings. Non-Europeans continue to outnumber Europeans. 2007 was a record year for PCT filings, with inventors from Korea (fourth place) and China (seventh) consolidating their lead-ing positions, and for the fourth year running, the North East Asia region leads PCT filings (26% global share in 2006). Korean users have the highest and second highest global filing rates, relative to GDP and population, respectively (WIPO, 2008). This region of the world has always had high inno-vation potential but only now is this transferring to actual patenting activity. In Europe, Korean compa-nies such as Samsung and LG are among the most active patent users.

However, these figures are misleading. Patenting activity remains dominated by several countries whose technological leadership goes undisputed. Ja-pan, Germany, France, and the US represent pre-cisely 65% of all EPO filings, with another 20% coming from just six other countries, including Ko-rea, Switzerland and the UK (EPO, 2008). In terms of actual grants, non-EPC residents receive Euro-pean patent rights in around half of EPO cases, broadly the same as the US. Of the major offices, SIPO leads with over 60% of applications and grants to non-residents; in Japan, a measly 10% of grants are to non-Japanese entities (WIPO, 2008). Pre-dictably, the percentages skew the opposite way for smaller offices like Canada, Hong Kong and Mexico where close to 100% of patent awards are to non-residents.

Right-holders too remain highly concentrated among the Trilaterals, accounting for well over 50% of worldwide patent grants. At firm level, the picture is even more concentrated, especially in sectors like electronics. The vast majority of rights are shared out among just a few companies (e.g. Philips, Sam-sung and Siemens) each holding huge portfolios. That few owners hold many patents goes some way to showing that a majority of SMEs (representing

99% of all European businesses) are unlikely to own any patents. This is a major cause for concern, espe-cially for EU policymakers. There are at least timid signs the surge in global patenting activity is, albeit slowly, bringing about a decrease in concentration patterns. It is also probable that once filings from Korea, China and others begin to flow to grant, ownership will diversify.14 Firm-level change is slower, and if it does occur, one effect may be to di-lute the market power of large patent holders, which may increase conflict and litigation as the techno-logical and commercial range of more patent holders overlaps.

Applicant strategy

Within the European system opportunity for ‘strat-egy’ reflects changes by the EPO over the years to boost procedural flexibility and become more user friendly. For example, through priority rights, users effectively have an ‘option to patent’ (Martinez and Guellec, 2004). Private decision-making is not just about how to use patents (assuming they are ac-quired) but how to acquire them in the first place. Such concerns may be far removed from innovation issues and are seen in a range of strategy types, broadly categorised as involving either good or bad will. An example of ‘bending’ the rules entails de-liberate abuse by applicants in a conscious up-front decision to disrupt the patent process, manifested regularly in a drafting style that can make the text unnecessarily cumbersome and complicated for the patent examiner. A popular ploy is to include lengthy specifications and many tens of claims, re-sulting in much paperwork and adding to the com-plexity of the examination process. This increases workload, uncertainty and delay (Stevnsborg and van Pottelsberghe, 2007; Hagel, 2008). Opposition parties can also use this type of tactic. Interestingly, these ‘abuse-type’ applicants are strongly associated with the non-EU route to the EPO. They mainly come through the PCT or directly from the US. Poorly drafted applications, especially noted in the US system, are a cause for concern.

The stable rise in the volume and complexity of individual filings means that the average size (in terms of number of pages and claims) of a European application has doubled since the start of the 1980s. Today, the average direct EPO application contains 15 claims, which means more than four million claims per year and examiners facing a colossal six million pages. This represents a massive 20-fold in-crease in workload over the past 25 years (Guellec and Van Pottelsberghe, 2007) with the PCT inter-national route resulting in appreciably more work per application (up to an extra two-thirds in claims and pages) for the EPO. Another factor is the rise in document-intensive applications from biotechnology and computer-related technologies, where the high-est levels of claims are found (for 2006, 35 and 26 claims per file, respectively).

Patenting activity remains dominated by several countries whose technological leadership goes un-disputed. Japan, Germany, France, and the US represent 65% of all EPO filings, with another 20% coming from just six other countries, including Ko-rea, Switzerland and the UK



The greater ‘cost’ of patenting

The drain on resources necessary to navigate through busy, overlapping patented technologies, such as in electronics, is well documented. Equally, a persistent rise in patenting activity is costly at a structural level, and passes an ever-increasing work-load to the examiners and also a huge strain on the administrative capacity of the European system. As the complexity of the filing goes up, so does the in-volvement of the examiner via communications, such as amendments. The process suffers consider-able delays and the fees increase. Understandably, backlogs and pendency rates are rising (IAM, 2008), and this also has a negative effect on legal certainty and innovation, according to the EPO president (Brimelow, 2009). This is a worrying trend as inter-est from outside the normal channels is rising and is set to intensify. It is conceivable that SIPO will be the busiest PO in a few years, and large numbers of Chinese-based inventors will be keen to secure par-allel rights overseas, as China continues to ‘global-ize’ its own patent laws in line with Western standards.15 The EPC will continue to be an attrac-tive option. However, the duplication of effort must be increasing with applications subject to separate search and examination by POs, though enhanced work-sharing among the Trilaterals is well under-way.16 Worldwide, non-resident applicants make up more than a third of filings and it is logical to as-sume that, due to territoriality, a very high propor-tion of these filings are ‘secondary’ and follow primary applications in the state of origin.

Another trend is more requests, searches and ex-aminations. In 2008, the EPO received more than 200,000 search requests for the first time, a 4% rise on 2007 (EPO, 2008). Even though the EPO man-aged to increase the number of searches it com-pleted, the number of outstanding search requests rose again by over 10% to 122,000. The EPO, like most POs, is expanding capacity on a rolling basis just to keep up with these commitments. In 2008, 286 new examiners started at the EPO, over 27% more than the year before (EPO, 2008). Currently, the EPO has approximately 6,600 staff members. This means it has a much higher staff-to-applications

ratio (over 50% for examiners) than either the JPO or the USPTO. This may be having an effect, given consistent falls in the average processing time up to grant. Despite faster processing and higher output in examination, the number of pending examination procedures continued to rise; the number of Euro-pean examination files awaiting a final outcome rose by 5.9% to 485,700 (EPO 2008).17 The figures in the US and Japan are even higher. Together they have in excess of two million pending applications, more than a third of total patents in the world. Some might say these jurisdictions are paying the price for adopt-ing an approach that is too open or applicant friendly. In the US, this also applies post-grant, where a rush of business methods litigation (patent infringement-based) came in the wake of key judi-cial decisions in the 1990s that widened the scope of patentability. Since then, the USPTO has been trying sporadically to stem the flow and impact of business methods patents, as has the US Supreme Court.18

In spite of more staff and various other initiatives, the bare facts indicate a lack of administrative capac-ity, with no sign of the situation improving. The key question is whether or not an under-resourced EPO and examiners who are clearly facing extreme pres-sure can maintain the highest possible standards. Fortunately, changes are underway to the metrics of EPO performance and will push the emphasis away from ‘grant’ numbers. However, greater complexity in the technologies, claims and applications will make it harder for examiners to accurately determine the state-of-the-art. As a result, much more emphasis needs to be placed on the role of, and support given to, the examiners (Elsmore, 2009).

Conclusion

The main headline is that in Europe (and globally), patenting continues to ride on the crest of a very large wave. The rapidly increasing demand for rights is straining an already strained system. Most worry-ing is the extent to which it jeopardises the quality of European patent-related output. Thus the dominant policy challenge is to prevent this from happening within the European system. Other challenges to the system and its effectiveness flow from related activi-ties and the proliferation of diversifying users and uses. The high speed at which new technologies have been introduced also makes it harder to deter-mine that the scope of patents that are granted is adequate. The main challenge is to ensure that over broad patents are not granted within Europe. It will be interesting to see if hitherto embedded patterns of patent ownership change and whether the legal envi-ronment in Europe looks different as 2020 ap-proaches and the shadow cast by China probably grows.

It is apparent that some of the explanations do not really fit. Historical patent data is not to blame, but nor is it particularly reliable at face value. For

It is conceivable that SIPO will be the busiest patent office in a few years. Many Chinese-based inventors will be keen to secure parallel rights overseas, as China continues to ‘globalize’ its own patent laws in line with Western standards



example, the place and time of filing may not corre-spond to the place and time of inventive activity. R&D conducted in a given country will not routinely lead to a patent application in that country, and if it does, it may take place sometime afterwards. Since an invention may be the subject of several patent fil-ings at home and abroad, there can also be multiple counting of the same invention. Amid territorial legal systems, globalization strategies may also artificially inflate the real level of ‘innovation’. We might also surmise that larger macro-economic trends are at play. For example, the life cycles of manufactured goods markets, with which patents are traditionally associated, are decreasing.

Thus, we must caution policymakers against the apparent clarity of the empirical data. The likelihood is that the real picture of European patenting activity is a lot greyer than the statistics indicate. There is some doubt whether or not increased and high levels of patenting ‘activity’ are synonymous with, or even related to, greater and/or better innovation. One area not touched upon for instance is sector variance. Economists talk of patents doing good in some sec-tors and harm in others (Foray, 2009). Many com-mentators have suggested that the rolling boom in sector patenting activity is not explained by a drive to innovate more but by the need for the firms to ac-cumulate large enough sets of defensive rights or patent ‘thickets’. The notion of a patent thicket is well known and understood.19 It is difficult to gauge to what extent a category of applicants, let’s call them system ‘abusers’, prefer to have a ‘doubtful’ (i.e. weak and less costly) registration than none at all; or for that matter, a stronger (more costly) set of patent rights (Elsmore, 2009). Patent rights are after all negative in nature and ‘pending rights’ may be sufficient to indicate innovative activity.

Two final comments: first, an encouraging market development is the modification of the underlying technology-related business model, as the strength of individual patents becomes more important than quantity. Amid reducing profit margins and the un-justifiable cost of maintaining idle rights, an atmos-phere of collaborative innovation is gathering momentum.21 Broadly, this involves proprietary-based patent owners entering relationships with open source businesses, even if they are rivals. Microsoft and Novell is a case in point from a complex sector where this adapted business model is well suited. The patent environment is diverse and fluid but more and more ‘patenting’ tactics come to reflect wider commercial objectives as companies look to align their IPRs strategy with that of the overall business.

Secondly, the net effect of the trends, explana-tions and complexity of the patent world means it is increasingly problematic to make informed commer-cial or policy-based decisions. Against a backdrop of renewed public scrutiny and technological shifts, it is not easy to simply and automatically award (legal) monopoly rights. Deep, continuous analysis is

needed to help get the formula right, more of the time. A way to help is to affirm that the sole purpose of the patent system is not to reward inventors for their inventions per se, in an isolated, abstract man-ner. To do so means shifting the emphasis away from headlines figures (and proprietary ownership) to understanding the subtleties behind the numbers. An obvious method is to scrutinize patent statistics with more rigour and pursue reliable and valid met-rics of innovative activity, while recognizing how an overview of behavioural patterns remains important and can inform the European patent policy debate.

Notes

1. As is the case now for European Community trademarks and designs.

2. See Article 4(3) EPC 2000. 3. The EPO operates on behalf of all EPC contracting states,

i.e. all EU states plus others, including Croatia, Iceland, Nor-way, Switzerland and Turkey.

4. It is noticeable though that growth rates in Japan have been negative at various points, including recently.

5. The reasoning for the two EPO figures reflects the sources of applications, and the availability of an international filing route. To obtain a fuller picture of European patent filings in Europe, we should also understand that patent protection can come through a national office of an EPC state (as well as di-rectly at the EPO), and that POs in EPC states still attract high numbers of first filings from applicants based there (Mar-tinez and Guellec, 2004). On both counts, Germany leads with around 50,000 filings per annum, of which 90% are do-mestic (OECD, 2008).

6. The cooperation and trust amongst the ‘big five’, which for-mally began in Korea in October 2008, continues to deepen and is discussed by Drahos (pp 641–647 in this issue of Sci-ence and Public Policy).

7. The average time is 43 months, though this jumps to an enor-mous 60 months for biotechnology applications (EPO, 2008).

8. The London Agreement, under which contracting states largely or entirely waive the requirement for translation of European patents (post-grant), came into force across many EPC states on 1 May 2008.

9. This is seen in the US from 2000–2004 (Opperman, 2009). 10. For an interesting study, see Hall and Ziedonis (2001). The

results suggest that the 1980s strengthening of US patent rights spawned ‘patent portfolio races’ among capital-intensive firms (STOA, 2008).

11. To derive competitive advantage, service providers tend to rely more heavily on non-technologically based rights such as trademarks (Elsmore, 2008).

12. Talk of low-quality filings is dominating US-based commentar-ies and critiques, where patent grant ratios are in the range 50–60% in recent years, forcing the patenting community to reassess its filing approach (Opperman, 2009).

13. The rise of ‘academic’ or ‘university’ patenting is discussed by Lissoni et al (pp 595–607 in this issue of Science and Public Policy).

14. Brazil, India and South Africa are also increasing their over-seas filings (WIPO, 2008).

15. Patent reforms are well underway in China. For instance, the way ‘state-of-the-art’ is determined has been changed. Thus, as is the case elsewhere, the global picture is increasingly relevant (Chu and Tsoi, 2009).

16. Initiatives include the patent prosecution highway, where an application which is determined to be patentable in the office of first filing is suitable for an accelerated examination by the office of second filing. More details are available at <http:// www.trilateral.net/projects/worksharing.html>, last accessed 24 September 2009.

17. Note that this number includes cases for which examination has not yet started.

18. In the recent Bilski decision (re Bilski. 545 F.3d 943 (US Fed-eral Circuit, 2008)), the US Supreme Court decision effec-tively excludes pure business methods that are not tied to a



particular machine. This case is subject to appeal and much anticipation. It is discussed in greater detail by Borràs and Kahin (pp 631–640 in this issue of Science and Public Policy).

19. See Hall (2004). This is discussed further by Schovsbo (pp 609–618 in this issue of Science and Public Policy).

20. Many patents relate to only minor improvements or variations or are never used commercially (Booz, 2007).

References

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Brimelow, A 2009. Brimelow stresses need for better patent system; discusses harmonisation (17 September 2009). Avail-able at <http://www.ip-watch.org/weblog/2009/09/17/brimelow-stresses-need-for-better-patent-system-solutions-lacking>, last accessed 24 September 2009.

Chu, R and A Tsoi 2009. Patent law improves again. China Law & Practice, February 2009.

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Prevailing impact trends in patenting