Patenting Processes in Europe and the Unitary Patent

Papers and Contributors:

  1. The Effect of Time Pressure on Real Effort Investment Under Ambiguity – Daniel Zizzo (Newcastle University), Sven Fisher (Newcastle University) and Marco Kleine (Max Planck Institute)
  2. Patenting Strategies in Europe – Dietmar Harhoff (Max Planck Institute), Antanina Garanasvili (Padua) and Georg von Graevenitz (QMUL)
  3. Patent Appeal Cases at the UK High Court – Chris Hanretty (UEA), Georg von Graevenitz (QMUL) and Prashant Gupta (Swansea)

This session brings together contributions from the ESRC Knowledge Exchange “Assessing the Unitary Patent and the Unified Patent Court”. This project was set up to investigate the patenting process in Europe before the introduction of the Unitary Patent System to provide a baseline against which to evaluate the impact of the Unitary Patent.

The session provides new evidence on three aspects of the European patenting process:

  1. Effects of cooling off periods in patent application processes
  2. The choice between national patents and validation of the EPO’s patent in multiple countries
  3. Litigation at the UK High Court – importance of judge effects on outcomes

Each paper addresses aspects of the European patenting system that are relevant to discussion surrounding the Unitary Patent at present. The first paper addresses the question of how applicants’ incentives to pursue a patent are affected by delays enforced by the patent office. This is particularly important in the UK, where patent applicants are not required to seek representation by a patent attorney.  The second paper focuses on the choice between national and EPO patents made by firms patenting in Europe. It provides descriptive evidence at the firm level on firms’ patenting strategies (including validation choices) and analyses the relative impact of national, sectoral and technological influences on these strategies. The third paper analyses how important the characteristics of judges and particularly their experience and educational backgrounds are for the outcomes of patent litigation in the High Court of the UK. 

Each of these papers provides evidence on the current patenting process in Europe that is currently not available. This evidence is intended to inform decisions on the design of patent application processes, the pricing of patents and the education of patent judges that will shape the way the Unitary patent and the existing patent systems in Europe interact.

Consuming copyrighted media without paying

Daniel John Zizzo (Newcastle University), Piers Fleming & Sven Fischer, “Consuming copyrighted media without paying – A controlled experiment with a representative sample”

We report the results of controlled experiments on unlawful consumption of non-rivalry consumer goods such as film and music, with a sample of 1,200 participants, representative for the adult population aged 18 to 65 in the United Kingdom. Our study allows us to identify how consumer behaviour is affected by equity considerations towards the right holder, deterrence, intrinsic and social norms, and empirical expectations of how others behave. We are furthermore able to correlate experimental and real-world behaviour with reported norms, personality measures and socio-demographic characteristics. This main study with a representative sample has been preceded by an experiment with a student sample population. More specifically, the experiments replicate a situation in which a consumer can decide whether to pay a small price for the consumption of a non-rivalry consumer good (such as media) he likes very much, or obtain it without paying the seller or rights holder. The good is linked to a ͞rights holder͟(represented by another participant), who is the recipient of the price paid, whenever the consumer decides to pay.  Obtaining it without paying, on the other hand bears the risk of being detected, which results in a fine in excess of the gain from consumption.  We systematically analyse the effects of several aspects on consumer behaviour in such an environment.  i) We compare consumption of goods the rights holder worked to produce, to those she herself received for free. Equity considerations would predict a higher willingness to pay from consumers in the first case. ii) We manipulate deterrence, by varying the detection probability from 0%, to 1%, 10%, or 20%. This tests standard financial risk considerations. iii) We force some consumers to reflect on their own norm, that of others, and their expectations of how other consumers behave, before they make their own purchasing decision. This enables us to get an understanding of consumers’ social norms and whether reflecting on them nudges behaviour. We elicit and compare perceptions and attitudes towards consumption of music to that of films, and of downloading such media versus consuming it by stream. In a follow up survey, two months after the first one, we test whether real world consumption of either films or music was related to the choices our participants made in our main study.

Patent Thickets and Licensing: Empirical Findings from Japanese Listed Companies

Xingyuan Zhang (Okayama University) & Jiaming Jiang (Okayama University), “Patent Thickets and Licensing: Empirical Findings from Japanese Listed Companies”

In this paper, we employ licensing contract information disclosed in the ``Important Technology Contracts in Business" section of the Annual Securities Reports of Japanese listed companies to construct a licensing dataset, and propose alternative methods of measuring patent thickets to examine the effects of patent thickets on licensing contracts and patent portfolio races of Japanese companies. Our empirical results show that patent thickets are positively associated with licensing activities, and the patent applications of both licensors and licensee, while licensing activities help to alleviate patent portfolio races both for licensors and licensees.

Market for Trademark

Maryam Zehtabchi (WIPO), “Market for Trademark”

This paper focuses on the notion of “market for trademarks”.First, welook at trademark market vis-à-vis patentto unveil theirmarketdifferences which unveilstrademarks have higher  market visibility,  less complementarity,  less value  rivalry,  lack  of repugnance, indefinite renewabilityandareemployedinbroader range of products. Second weposit a formal  model  to  discusses  how  fluctuation  inmaintenance  costimpacts trademark transactions.  Our  model explainsthat,  an  increase  in  trademark  maintenance  cost increases rate of transactions, thesetransactionsare more likely to be in form of security interestand among parties in distant locations.

Addressing Climate Change: Domestic innovation, international aid and collaboration

Joy Xiang (IIT Chicago-Kent College of Law), “Addressing Climate Change: Domestic innovation, international aid and collaboration”

Climate change is a pressing issue confronting the global community. The rapid development and diffusion of clean technologies (i.e., technologies necessary for adapting to or mitigating climate change) must be a central part of the solution. However, a stalemate has persisted in global climate change negotiations at the United Nations, caused by diverging views regarding the role of intellectual property rights (“IPR”) in the international transfer of clean technologies. Developed nations insist on strong IPR for clean technologies, while developing nations claim that IPR is a major barrier to the international transfer of clean technologies and demand to remove or reduce IPR for clean technologies. This article explores two questions: (1) Is the existence of IPR a major barrier to the international transfer of clean technologies, and (2) why has the international transfer of clean technologies to developing nations been limited? Analyzing evidential data available, this article concludes that IPR probably has not been a major barrier to the international transfer of clean technologies. However, sustainable international transfer of clean technologies requires the joint efforts of developing and developed nations. To prepare for sustainable international transfer of clean technologies and to advance the effort for addressing climate change, this article proposes a new paradigm based on domestic innovation, international aid and international technology collaboration.

Patent Trolls as Financial Intermediaries? Experimental Evidence

Stephen H. Haber & Seth Werfel (Stanford University), “Patent Trolls as Financial Intermediaries? Experimental Evidence”

Why do individual patent holders assign their patents to "trolls" rather than license their technologies directly to manufacturers or assert them through litigation? We explore the hypothesis that an asymmetry in financial resources between individual patent holders and manufacturers prevents individuals from making a credible threat to litigate against infringement. First, individuals may not be able to cover the upfront costs associated with litigation. Second, unsuccessful litigation can result in legal fees so large as to bankrupt the individual. Therefore, a primary reason why individual patent holders sell to PAEs is that they offer insurance and liquidity. We test this hypothesis by experimentally manipulating these financial constraints on a representative sample of inventors and entrepreneurs affiliated with academic institutions that are particularly known for their innovative activity: Stanford University and the University of California, Berkeley. We find that in the absence of these constraints, subjects were significantly less likely to sell their patent to a PAE in a hypothetical scenario. Furthermore, treatment effects were significant only for subjects who were hypothesized to be most sensitive to these constraints.

"Display At Your Own Risk”: Misconnections Between Cultural Institutions and Users When Enabling Online Access to Public Domain Works

Andrea Wallace (University of Glasgow), “"Display At Your Own Risk”:  Misconnections Between Cultural Institutions and UsersWhen Enabling Online Access to Public Domain Works”

It is common practice during the digitization of public domain works to claim new intellectual property rights over the digital surrogates. Whether this practice is generally accepted, however, is becoming increasingly controversial: by enforcing copyright to digital surrogates, cultural institutions have begun to expose such practices and generate greater public awareness and interest. Underlying digitization efforts is a genuine intent to make collections more available online. Yet, what the public understands about copyright, its expiration, and the reuse of public domain works online is often vastly different than what an institution formalizes and makes transparent through its policies and in practice. This article examines these points of genuine confusion and how they may have a chilling effect on engagement and use. By approaching the issue from a user’s perspective, the article presents research gathered during the curation of an experimental exhibition, which examines the various levels of access granted by cultural institutions to digital surrogates of public domain works. In doing so, this article addresses the gap between a user’s understanding of the public domain and a cultural institution’s approach when making works available online, which is translated through and guided by both institutional and legal norms. Ultimately, these access-driven policies are a product of systemic tensions and uncertainty in copyright law, and they result in misconnections between users and cultural institutions when enabling online access to public domain works.

Modeling Knowledge Flow on the Global Innovation Network Reveals “Keystone Technologies”

Michael Verba (UNU-MERIT), “Modeling Knowledge Flow on the Global Innovation Network Reveals “Keystone Technologies””

In this paper we model technological knowledge as a dynamic network in order to identify technologies that are the drivers of innovation at the global level, which we term “keystone technologies.” The sphere of technologically relevant knowledge is conceptualized as a reflexive, directed, link- and node-weighted complex network, with distinct spheres of knowledge (or technology domains) representing network nodes and learning (or knowledge flows) across domains acting as inter-nodal links. The empirical knowledge network is constructed from a sweeping database, including records from 105 patent-granting authorities, and containing almost all patents granted anywhere in the World during the period of coverage. We instantiate the nodes of the knowledge network from patent categories of the International Patent Classification (IPC) system. Links between technology domains, representing knowledge transfer between fields of technology, are constructed from patent citations provided by inventors, aggregated at the patent subclass level. Modeling the evolving dynamics of knowledge flow on the World knowledge network allows us to identify the technologies that make the greatest contribution to the dynamics of technological progress and reveals trends in technology over the 22-year period spanning 1991-2012.

The Creation of the Patent Mediation and Arbitration Centre as Part of the Unitary Patent Package

Esther van Zimmeren (University of Antwep), “The Creation of the Patent Mediation and Arbitration Centre as Part of the Unitary Patent Package: A Comparative Case Study Analysis of Various IP Arbitration and Mediation Institutions”

The unique attributes and potential advantages of Alternative Dispute Resolution (ADR) for dealing with intellectual property (IP) disputes are increasingly being recognized by both companies and policymakers. Several institutions with special expertise in IP law are now offering ADR services, including for instance the World Intellectual Property Organization (WIPO) Arbitration and Mediation Centre in Geneva, the EU Intellectual Property Office (EUIPO) in Alicante and several national IP offices. In December 2012, the EU Member States adopted the “Unitary Patent Package” aimed at fundamental reforms of the European Patent System consisting of the creation of unitary patents and the establishment of a specialized patent court (the Unified Patent Court, hereinafter UPC), including a Patent Mediation and Arbitration Centre (PMAC). The current paper focuses on the PMAC, which until now has been basically ignored within the gradually growing academic literature on the Unitary Patent Package. The research question of this paper relates to the lessons that can be learnt from a systematic comparative analysis of a number of key International, European and national institutions specialized in IP mediation and arbitration for the future operations of the PMAC.

Inventing inclusive patents

Geertrui Van Overwalle (KU Lueven), “Inventing inclusive patents”

Open innovation is the subject of increased scholarly debate. A lot of attention has thereby been paid to firm-centered open innovation, characterized by a for-profit motive and the interplay between patents and contracts, resulting in restricted openness. Inspired by the increasing call for more openness and triggered by the strong ethos of sharing in innovator communities the present paper examines how the law can assist in establishing a new approach to open innovation (‘new’ open innovation) and craft legal tools establishing universal and sustainable use of high quality, technical inventions going beyond the realm of software. Resonating contemporary legal philosophy on property rights, we propose the introduction of a new, alternative patent: the inclusive patent. The inclusive patent is perceived as a one-sided right geared to include rather than to exclude others, and encompasses as an attribute the right to enforce sharing behaviour and take non-sharing users to court. The inclusive patent is further conceived as a registration patent obtainable at low cost. The inclusive patent regime may be developed as a semi-codified regime where the inclusive patent entitlement is provided by law and the open source copyleft type license is built on top by private parties, or as a fully-codified regime where the legislature imposes universal and sustainable access and use ex ante. The inclusive patent may meet the needs of both innovator firms and innovator communities: it is a valuable alternative for firms making use of non-assert clauses and provides more legal certainty to users, and it meets the needs of innovator communities, and offers a powerful property entitlement to enforce the sharing ethos.

Digitisation, Multi-territorial Licensing and Copyright Management Organisations

Ruth Towse (University of Glasgow, CREATe), “Digitisation, Multi-territorial Licensing and Copyright Management Organisations”

This paper extends the author’s earlier work (Towse, 2016, presented at EPIP2015) on the effect of digitization on the economics of collective rights management and now considers the impact of new arrangements for multi-territorial licensing on the institutional organization of Collective Management Organisations (CMOs) due to the EU Directive on Collective Management of Copyright and Related Rights 2014/26 EU. CMOs manage the various rights granted in copyright law to creators and performers, offering pooled services of rights administration to rights holders and users. CMOs are typically non-profit collectives, governed by members. They operate through blanket licensing of a specific right or bundle of closely related rights in their own territory with international agreements that mutually offer rights management services between them, enabling users to obtain a licence to effectively a world repertoire. This scenario is being challenged by the demands of users of digital works (initially of music) who wish to obtain one licence for all territories in the EU as part of the common market. The supply and demand for creative goods, however, vary radically between states in the EU and all CMOs are not able to offer equivalent digital licensing and digitised services to their members as required by the EU Directive. The larger CMOs are in a position to corner the market in copyright management, however and that may be detrimental to national cultures. This paper discusses these issues from an economic and cultural point of view.

Patent citations as a measure of knowledge flows

Salvatore Torrisi (University of Bologna), Marco Corsini & Myriam Mariani, “Patent citations as a measure of knowledge flows: a replication exercise with extensions”

This paper compares direct information about knowledge interactions to patent citations to assess the “validity” of patent citations as a measure of knowledge flows. For a sample of about 10,000 inventions patented at the European Patent Office, we collect: (1) data about backward patents citations; (2) primary survey data about the use of knowledge flows as reported by the inventors who took part in the inventive process. By comparing the two datasets, we substantiate possible measurement errors associated with the use of patents citations. We replicate and extend a study of Roach and Cohen (2013) based on US patents. Replication is a research endeavor that has proven to be crucial for the advancement of research in ‘hard sciences’. Only recently, social scientists and management scholars have highlighted the role of replication as a key mechanism to the accumulation of scientific knowledge.

Knowledge Creates Markets

Andrew Toole (USPTO), Dirk Czarnitzki, Katrin Hussinger, Paula Schliessler & Thorsten Doherr, “Knowledge Creates Markets: The Influence of Entrepreneurial Support and Patent Rights on Academic Entrepreneurship”

We use an exogenous change in German Federal law to examine how entrepreneurial support and the ownership of patent rights influence academic entrepreneurship. In 2002, the German Federal Government enacted a major reform called Knowledge Creates Markets that set up new infrastructure to facilitate university-industry technology transfer and transferred patent rights from university researchers to their universities. Based on a novel researcher-level panel database that includes a control group not affected by the IP policy change, we find no evidence that the new infrastructure resulted in an increase in start-up companies by university researchers. The transfer of patent rights may have strengthened the relationship between patents on university-discovered inventions and university start-ups; however, it substantially decreased the volume of patents with the largest decrease taking place in faculty-firm patenting relationships.

The Value of Patent and Trademark Pairs

Grid Thoma (University of Camerino), “The Value of Patent and Trademark Pairs”

The valuation of patents is assessed with respect to complemental IP strategies, such as trademarks and design patents. I elaborate a novel method and database to gauge the combination of IP strategies regarding the same innovative project, when the patentee pairs the patenting strategy with other formal IP mechanisms. In particular, I analyze jointly the content of legal documents using textual matching algorithms, and I link them with estimates on the premium value of patent protection. I find ample evidences that a pairing strategy based on the combination of patents and trademarks has a large impact on patent valuation with a net increase of about twice the average premium value. The results hold after controlling for several patentee demographic characteristics and patent value indicators typically used in the literature. To interpret these finding I argue on the signaling function of the combined IP strategies. A patent and trademark pair constitutes a signaling device of the high expected value of the underlying invention from a commercial point of view.

The Value of Tacit Knowledge: Dynamic Inventor Activity in the Commercialization Phase

Roger Svensson & Per Botolf Maurseth (BI - Norwegian Business School), “The Value of Tacit Knowledge:  Dynamic Inventor Activity in the Commercialization Phase”

The inventor generally knows more about the invention than what is written down in a patent application. Because of such tacit knowledge, it might be necessary that the inventor has an active role when the patent is commercialized. We build on Arora (1995) and model firm-inventor co-operation in commercialization of a given invention. Because of tacit knowledge, inventor activity is warranted. Due to moral hazard problems, incentives for inventor activity are limited. We analyse when first best inventor activity is achieved in a two-stage contract. In the empirical part, we analyze when inventor activity is important for a successful commercialization of patents by using a detailed patent database.

IP Claims, Privacy Harms and Equal Protection

Jessica Silbey (Northeastern University), “IP Claims, Privacy Harms and Equal Protection”

This paper is part of a larger research project excavating fundamental values in intellectual property discourse and regulation. It develops case studies and analyzes qualitative data from interviews to engage a discursive and cultural analysis of intellectual property claims, harms and dispute resolution. Taking my recent book as a point of departure, The Eureka Myth: Creators, Innovators and Everyday Intellectual Property (Stanford University Press 2015), this new project asks about the contested but dispersed and deeply embedded function of fundamental values such as privacy, equality and distributive justice in diverse IP regimes.

Connect the Dots: Interdisciplinarity and Patent Doctrine

Michal Shur-Ofry (Hebrew University), “Connect the Dots: Interdisciplinarity and Patent Doctrine”

Research in various domains suggests a positive link between interdisciplinarity and innovation. Transcending disciplinary boundaries, this literature indicates, allows innovators to “connect the dots” between seemingly disparate fields, stimulates the development of innovative and valuable technologies, and is more likely to yield breakthrough inventions. Adopting this article’s proposals and incorporating the concepts of interdisciplinarity and recombinations into patent doctrine holds numerous potential advantages for patent law. First, it would introduce a relevant, concrete and measurable criterion into the nonobviousness analysis, famously criticized for its uncertainty and ambiguity. Second, it would allow to calibrate and refine specific legal doctrines, particularly the doctrine of “analogous art” and the treatment of combination inventions. Finally, and more generally, it would enable patent law to realize some of the enormous potential of the information that can be drawn from patents databases—a goldmine which the current legal regime leaves untapped.

Another Brick in the Wall: the Doctrine of Abuse of Right and Its Role in Increasing the Consistency of EU Copyright Law

Caterina Sganga (Central European University) & Silvia Scalzini (Scuola Superiore Sant), “Another Brick in the Wall: the Doctrine of Abuse of Right and Its Role in Increasing the Consistency of EU Copyright Law”

The great expansion of EU copyright law has paved the way to several rightholders’ abusive or dysfunctional conducts, without providing adequate solutions to prevent or remedy them. The answer of EU sources is characterized by extreme fragmentation, with tools mostly borrowed from external bodies of law. Paradoxically, the doctrine of abuse of right has long been neglected as a potential solution, mainly due to its flaws – difficult evidence-taking and weak remedies - and its incompatibility with the discretionary nature of continental author’s rights. Yet, the notion emerges between the lines of several ECJ’s decisions, and finds its way from civil codes to copyright in a number of national courts’ precedents. Due to the paradigm shift towards a market-oriented and industry-based inspiration, EU copyright seems now open to admit the possibility of misuses.

Starting from these premises, this article argues that a unitary doctrine of copyright misuse may constitute an effective balancing tool for most of the dysfunctional conducts that copyright law and other bodies of law are still unable to resolve. In addition, it may also act as regulatory paradigm to ensure greater certainty and transparency in the judicial development of key principles and rules of EU copyright law. To this end, the paper (a) proposes a four-prong-test of abusiveness, embedding criteria of proportionality and reasonableness inspired to the normative function(s) of exclusive rights; (b) offers new perspectives on potential remedies; and (c) shows selected examples of the positive impact of the doctrine on the systematization of the current copyright legislative framework.

Download the paper here

Knowledge Spillovers and their Impact on Innovation Success

Florian Seliger (ETH Zurich), Spyros Arvanitis & Martin Woerter, “Knowledge Spillovers and their Impact on Innovation Success – A New Approach Using Patent Backward Citations”

We propose a new patent-based measure of knowledge spillovers that calculates technological proximity between firms not just based on a firm sample, but on all firms that can be identified via patent backward citations links. We argue that this measure has a couple of advantages as compared to the “standard” measure proposed by Jaffe: First, it reflects spillovers from both domestic and foreign technologically “relevant” firms, second, it is more precise because it only takes into account knowledge relations with “relevant” firms. Our empirical results indeed show that the measure performs better in an innovation model than the standard measure. We find that knowledge spillovers measured in this way have a positive and significant impact on innovation success. However, the knowledge spillovers appear to be localised as spillovers from geographically distant areas such as the USA and Japan matter, if at all, less than spillovers from near destinations such as Europe and particularly Switzerland itself. Moreover, the spillover effect on innovation performance increases with decreasing number of competitors on the main product market so that this effect would appear only in niche markets or oligopolistic market structures.


Changing Business Models in the Creative Industries: Industry Response to Copyright Challenges in the Digital Era

Nicola Searle (University of London), “Changing Business Models in the Creative Industries: Industry Response to Copyright Challenges in the Digital Era”

Adopting a longitudinal case study approach, this paper reports on analysis of the interaction between business models and copyright. Beginning in late 1990s, business models were touted as the solution to market and technological changes, including increased copyright infringement, stemming from the advent of the digital era. In the ensuing years, business models have received mixed reviews from scholars who question business models’ ability to manage market change and the enforcement of copyright. This academic critique is in contrast to the widespread adoption of business model strategies by practitioners. This paper reports on a follow-up, longitudinal study of six case studies constructed in 2010, on the interaction between business models and copyright in the creative industries. It suggests that copyright is a secondary force in shaping business models, highlights wider challenges to the creative industries, and provides copyright policy recommendations.