Monday, 30 May 2011

The Hargreaves Review in detail: Patents

Being concerned with innovation and growth - the matters identified by the Prime Minister when he announced the Review - Prof Hargreaves unsurprisingly devotes a chapter of his report to patents, and having got up a head of steam with my last posting I'll elaborate on what the Review had to say here.

The big problem is that there are too many patents, if I may put words into the good Professor's mouth, which is unfortunate given that patenting activity is so often seen as an indicator of innovative activity - so more patents are a Good Thing. The Review has evidence that this might not be the case.

Myriad patents form what the Review calls “patent thickets”, areas where too many patents crowd a market and prevent innovation, as identified originally by Carl Schapiro (of University of California, Berkeley - full reference in my Dictionary of Intellectual Property), who doesn't seem to be quoted in the Review. A different matter from a minefield of patents, where all the patents are filed by the owner of the central one and serve to protect it, and which I thought had died out in Europe at least, because of expense of obtaining them.

As an example, Hargreaves explains how one smartphone might be the subject of hundreds of patents. He identifies computer technologies and telecommunications as the areas most affected by patent thickets, areas where there is sequential innovation that encourages the growth of thickets. But this is often the inevitable result of technical standardisation and does not amount to the sort of patent thicket that obstructs innovation in the way the Review is worried about. Having patents impacting on standards is of course a problem in itself - one with huge competition ramifications, which happily are fairly thoroughly dealt with under that rubric (although there's always room for improvement).

No, I think the problem lies in the phrase I put into Prof Hargreaves's mouth: too many patents. Too many patents for incremental inventions - leading to thickets and minefields - and exiguous technical developments. Not that they are always necessarily a bad thing, of course, but when they grow into an impenetrable thicket something has gone wrong. But patents too often seem to become ends in themselves, not just means: that's what trolling is all about, of course, but it's also encouraged by investors - yes, including those Dragons - who insist on seeing a patent before they will invest (but, in my experience, don't do any due diligence to establish whether the patent stands a chance of protecting what they want to protect). Often, the investor will put money in on the strength of a patent application - and the inventor will have a sigh of relief at having someone else to foot the bill for prosecuting the application, and for the foreign filings.

Too many patents for stuff that really has no place in the patent system, too. Software and business methods are rightly excluded as such: there is no such thing as a software patent, though there are many in that grey area where software is claimed to have a technical effect - a notoriously slippery concept. Professor Hargreaves proposes preventing patents getting into these areas, where the incentive effect is small compared with the overheads imposed. His Review also suggests resetting financial incentives for assessing whether to renew patents, and ensuring that only high quality patents are granted in the first place: easier said than done, given that one concern of the patent system must be to encourage everyone with a patentable invention to come forward lest the next great invention be lost.

The quality of patents will be enhanced with international co-operation - the highways that have been created between some of the larger patent offices in the world. Hargreaves also recommends that international searches conducted under the PCT be accorded greater credence - which will also help to clear backlogs of applications (and result in more patents ...). The review also recommends that the UK government push for the unified patent, and (even harder) EU patent courts, both worthy and uncontentious aims but ones that the UK can only hope to influence, not achieve

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