Monday, 2 November 2015

Lies, damned lies, and workplace statistics

There have been recent comment on blogs such as IPKat concerning complaints made to ILOAT [the Administrative Tribunal the International Labour Organization]. 

These comments appear to indicate the EPO as being unusual in the number of complaints received. Reference is made by IPKat to an ILOAT document that contains interesting statistics, but not necessarily useful statistics.

ILOAT has an interesting  case law database.

Looking on the ILOAT database to the organisations with over 100 decisions against them [not necessarily representative of all organisations but a good proxy], and looking at the proportion where the phrase "case is dismissed" appears in the judgement, the following ranking is found:-

Complaint dismissed
% dismissed

If working in IP where would you rather work? Somewhere where an independent body finds only 11% of complaints justified enough to not merit dismissal; or somewhere where the same independent body finds about 18% of complaints justified enough to not merit dismissal? 

Looking closer, one can consider the number of staff for each justified complaint [counting “justified” as synonymous with “not dismissed”, not placing any value judgement on the severity of the complaint].

Complaint not dismissed
Number of staff
Number of staff for each complaint not dismissed

This shows that fewer than one in a hundred EPO staff files a complaint that is found justified, whereas for WIPO there is a much higher chance of a justified complaint being made.

Of course, the numbers are just numbers and do not necessarily reflect other factors at work, but:-
  • appearing third in the list of percent of complaints dismissed would on the face of it appear either a commendation of the EPO or a comment on the nature of complaints filed;
  • appearing average in the number of complaints not dismissed  per member of staff appears to show the EPO not out of the ordinary;
  • on either measure EPO appears to be a better workplace than WIPO.

Of course, simply pointing to the number of complaints and judgements does not tell the whole story, and certainly does not capture aspects of "culture".

A more detailed analysis from ILOAT would appear appropriate.

It might also be appropriate for ILOAT to have some form of case management in the form of an initial filter to weed out cases where there appears little prospect of success, perhaps with a cost penalty if the case is continued.

Time spent on time wasters is damaging to those who have real and justified grievances.  

Friday, 4 September 2015

Who does what in IP?

Statistics are fun, you can torture them to say whatever you want. Unfortunately sometimes the information produced is in the form of incomprehensible screams.

A case in point is provided by the UK statistics on "Turnover of Legal Activities" [latest issue can be found in a spreadsheet here].

These statistics provide monthly turnover figures for Barristers, Solicitors, and a combined category "copyright and patent agents" [neither term in this category being graced with a capital letter].

Using hacker's statistics (choice of a selective time period and linear extrapolation) it would appear that the economic activity of patent and copyright agents would match those of solicitors in about six years’ time [is this a 2020 vision for those described as patent and copyright agents?].

The net balance of payments for legal services in 2013 was a positive £3.3 billion and it would be nice to determine how those exports were distributed among the various legal categories.

It would also be nice to know how much of the activity of patent and copyright agents was attributable to each of these peculiarly different professions/businesses. [The word "agents" seems to be all that is in common between them, just as "ch" is all that is in common between chalk and cheese].

How much of the activity of patent and copyright agents relates to services primarily related to the exploitation of artistic, literary and musical matters? And how much to services primarily related to the establishment, creation, licensing and assertion of registered intellectual property rights?

It would also be nice to have some kind of reliable baseline to compare with, so that when the Unified Patent Court and the Unitary Patent arrive the effect on trade in services can be assessed.

In short there are a lot of nice things we could have, but haven't.

Classification is a difficult exercise, and to maintain comparability between countries it is important that reporting is on a common basis [the UK SIC classification follows the European NACE classification which follows the UN ISIC classification]. However, everyone knows that there is a difference between accounting for reporting purposes, and management accounting. Why not so with government statistics?

When adhering to a classification hides information, and aggregates wildly different professions with wildly different business models, one has to ask why the Office of National Statistics don't have statistics that inform, in addition to producing statistics that conform.

Perhaps the legal professions should lobby ONS for more informative statistics.

Thursday, 19 March 2015

Europe down the plughole?

The Select Committee for the Unitary Patent meets next week to discuss fee proposals that have been widely leaked.

The risk of damage to the reputation of Europe, and the finances of the European system, is extremely high if either proposal is adopted, both of which appear to reflect more fear of the future than a desire to improve the European system.  

Growth rates for European patents (direct filed and PCT regional phase) are already dismal compared with other major economies such as China and USA [EPO annualised growth rate over 2008-2013 was 0.3% compared with 36.9% for China and 5.1% for USA]. No amount of misleading press releases can hide this fact.

This dismal performance reflects not only the state of the European economy (which affects both the resources of European industry to file patents and the attractiveness of Europe as a market for external applicants), but also the reputation of Europe as a high cost patent system. Decisions are often based as much on reputation as reality: and the reality does not help Europe’s reputation.  

If the unitary patent too gets a reputation for being expensive, this will affect user’s decision on whether or not even to apply. Even though the alternative will exist of going for London Agreement countries, the reputation of high costs in Europe will spill over to affect demand overall.

This damage to reputation  will apply both to users within Europe and those outside Europe.

This could set the system on a death spiral:-
  • Perceived added expense to an already expensive system acts as a deterrent to choosing to protect in Europe, leading to a reduction in the number of European applications filed.
  • A reduction in the number of European applications filed affects both those EPC countries inside the unitary system and those outside, since if there are fewer European patents there will be fewer national validations, including fewer Italian patents and fewer Spanish patents.
  • Fewer patents leads to lower renewal fee income for the EPO from granted patents.
  • Lower renewal fee income for granted patents leads to more income being required from European applicants in the form of higher procedural fees and higher internal renewal fees.
  • Higher procedural fees and higher internal renewal fees leads to Europe being perceived as even more costly leading to lower demand.
  •  Lower demand leads to still higher fees to cover EPO liabilities.
  • The system spirals to its doom such that the EPO becomes financially unsustainable and national offices have to look to their liabilities for “special financial contributions” under Article 40 EPC.
  • National offices find that the reputation for high costs in Europe has led to a reduction in their national filings too.
  • No money is available and government have to step in to bail out a system that would have been sustainable had fees not been set at a level guaranteed to deter customers.

Of course, if the unitary patent is abandoned that too could lead to a different death spiral:-
  • Perceived failure to reduce the cost of an expensive system acts as a deterrent to choosing to protect in Europe leading to a reduction in the number of European applications filed.
  • A reduction in the number of European applications filed affects all EPC countries.
  • Fewer patents leads to lower renewal fee income for the EPO from granted patents.
  • Lower renewal fee income for granted patents leads to more income being required from European applicants in the form of higher procedural fees and higher internal renewal fees.
  • Higher procedural fees and higher internal renewal fees leads to Europe being perceived as even more costly leading to lower demand.
  •  Lower demand leads to still higher fees to cover EPO liabilities.
  • The system spirals to its doom such that the EPO becomes financially unsustainable and national offices have to look to their liabilities for “special financial contributions” under Article 40 EPC.
  • National offices find that the reputation for high costs in Europe has led to a reduction in their national filings too.
  • No money is available and government have to step in to bail out a system that would have been sustainable had the opportunity to send a message on costs been taken.

In short, the discussions in the forthcoming Select Committee meeting are critical to the European patent system.

The proposed Top 4 [Top 4 in later years, with matching to the EPO internal renewal fees in the early years] represents a significant increase over the EPO's current income from patent renewal fees. The proposed Top 5 represents a scandalous attempt to freeze out the very users the unitary patent was intended to benefit. Both proposals penalise SMEs who could not rationally choose a unitary patent given fees of such magnitude.

If either of these proposals is adopted, the damage to the reputation and the finances of the European Patent Office (and national offices) will be extreme.

Even Top 4 is high, since it includes two of the most expensive countries [Germany and Netherlands].

Please, Select Committee, send a message that you are serious about the future of the European patent system and decide on a renewal fee schedule Top 4 or below, and review it in a few years’ time to determine whether it is sustainable based on the pattern of take-up.  

Do not be driven by fear of what might happen to decide on fees so high they cannot meet the requirements of the regulation, and that guarantee immense damage to Europe. 

Choosing an appropriate level of renewal fees could lead to a virtuous circle of improved confidence and an improved environment for European business, rather than a self-inflicted death spiral.

Sunday, 1 March 2015

A fair assessment

Yet again, in a recurring ritual, the EPO has released a misleading press release concerning filing statistics. It would appear that a more informative press release might run on the following lines.

European Patent Office receives record number of patent filings – situation returning to normal?

Patent applications at the EPO grew by 2.7% in 2014, hitting a new record high of nearly 152 000, a mere 0.6% higher than the previous record in 2010 [that year numbers were inflated by introduction of the late unlamented divisional rules, which represented a tax on innovators at a time when innovators could least afford it].

In 2014 applications from European applicants grew by 2.2% and from non-European applicants 3.2%. These increases constitute a significant indication of a recovery in European industry, but mostly in non-European industry. [Over the period 2011-2015 applications from EPC applicants increased by 4.4%, whereas those from non-European applicants increased by 8.4%. In 2011 EPC applicants filed 50.4% of applications whereas in 2014 this has dropped to 49.5%].

As yet the recovery is weak. Had the trend prevailing for the 10 years prior to 2008 continued there would have been roughly 30,000 more applications in 2014 than there actually were. The period since 2008 represents relative stagnation.

European filing numbers still remain depressed due to the state of the economy. The following graph shows that EP filing numbers and EU GDP [EU 28 on a PPP basis – source, Eurostat] correlate closely up to 2013 [2014 data not yet on Eurostat].

It should be remembered that application numbers reflect not only the innovation within Europe: but also the attractiveness of Europe as a market. When Europe again becomes a thriving market and a place where people want to invest, the filing numbers should rise again.

The following graph shows the ratio in €m of EU-28 GDP per application. It is evident that Europe became a much more patent intensive region in the run up to the millennium: but since then has remained relatively static [apart from the year of the divisionals].

The prospect of a unitary patent [a single instrument covering a large proportion of the European market] may lead to strong growth, since this may make a European patent a more valuable asset.

As a final point it is worth noting that the term “patent filings” used in previous press releases is now thoroughly discredited as a useful measurement of anything. Combining European applications made and PCT applications made has little relevance to demand for European patents, as is indicated by the ever declining proportion of PCT applications that enter the European regional phase [a further indication that Europe has to come to grips with its place in the world].

In an effort to improve transparency the EPO will henceforth cease using the misleading “patent filings” metric and instead will quote numbers that mean something.

Let us see what happens next year.

Monday, 4 August 2014

Unitary patent rules - more reasons to be wary

Another draft of the Rules for the Unitary Patent has been leaked[1].

It should be noted that the Select Committee issued a communiqué indicating that these rules had been agreed “in principle”[2] and so these are not necessarily the final rules but provide a good guide.

The Rules are relatively simple, and it appears that in “normal” circumstances should prove no problem to those seeking unitary effect for their European patents.

However, there are a number of issues where wariness is advisable. Among these are:-

Rule 5

This rule is straightforward in most cases, but an issue arises in respect of multiple proprietors where there are different proprietors for different states [In the following, where applicant A is proprietor for countries α, and applicant B for countries β, and α + β = all participating Member States].

Since the unitary patent is a unitary instrument that has uniform effect in all participating Member States and “… may only be limited, transferred or revoked, or lapse, in respect of all the participating Member States.[3]” it appears implicit (but is certainly not explicit) that it cannot come into existence with different proprietors in different states.  Otherwise why would the Regulation permit split ownership at the outset yet forbid the creation of split ownership?

The explanatory notes to the proposed rules indicate that the Common Representative (normally the first named applicant[4]) will be able to request unitary effect where there are different proprietors for different states.

If the result of requesting unitary effect is that the ownership becomes unitary, then there is an implicit cross-assignment between the different owners to achieve the result that applicants A and B are joint proprietors for all of countries α and β. Ownership of the unitary patent as an object of property will normally have to be assessed according to the law of the first named applicant[5]. So in requesting unitary effect it will have to be assessed whether it is legal for Applicant A to unilaterally assign a share in his rights in countries α to B; and more problematically, whether it is legal for Applicant A to unilaterally assign a share in applicant B’s rights in countries β to A.

This appears extremely messy, and difficult.


Until there are court rulings from the UPC (and CJEU, and perhaps under Article 7 UP Regulation, national courts) indicating it safe for unitary effect to be requested where there are different proprietors for different states; it would appear advisable that assignment takes place and is recorded prior to requesting unitary effect.

Rules 6, 7, and 22

The notes to the Rules indicate that they place the “substantive” requirements of the rules in Rule 5, and the “formal” requirements of the Rules in Rule 6. Among these “formal” requirements are:-
  •         that the request for unitary effect be filed no later than one month after publication of the mention of grant
  •          the request for unitary effect shall be filed in writing in the language of the proceedings
  •          the request shall contain a translation of the European patent as required under Article 6, paragraph 1, Regulation (EU) No 1260/2012.

Articles 9(1)(g) and (h) UP Regulation states that the EPO has the task:-
  • (g) to ensure that a request for unitary effect by a proprietor of a European patent is submitted in the language of the proceedings as defined in Article 14(3) of the EPC no later than one month after the mention of the grant is published in the European Patent Bulletin;
  • (h) to ensure that the unitary effect is indicated in the Register for unitary patent protection, where a request for unitary effect has been filed and, during the transitional period provided for in Article 6 of Regulation (EU) No 1260/2012, has been submitted together with the translations referred to in that Article, and that the EPO is informed of any limitations, licences, transfers or revocations of European patents with unitary effect

The language “to ensure” implies that the three mentioned requirements are more than formal and indeed appears to indicate that they are conditions to be met for unitary protection to be granted.  The three conditions appear to be given equal weight.

It is interesting therefore that Rule 7 treats the conditions differently, providing an extension of time mechanism for the second and third conditions, but not for the first. It is also interesting that Rule 22 permits re-establishment of the first condition.  There appears to be no basis in the UP Regulation for providing for re-establishment of rights.


The legal basis for providing extension of times and reinstatement for mandatory conditions set out in the UP Regulation appears dubious. If any errors arise in requesting unitary effect, it may be safer to use the national route (even with the added validation costs that implies) until such time as the UPC (and CJEU?) have ruled on the legality of these provisions.

Rule 13

The payment of renewal fees appears straightforward, but calculation of the time limit for payment on extension does not. Explanatory note 8 to this Rule states that:-
The six-month period for the payment of a renewal fee with additional fee expires on the last day of the sixth month after the due date (pursuant to Rule 13(2)) and not on the day of that month corresponding in number to the due date (see Rule 131(4) EPC applying mutatis mutandis under Rule 202)(g)).
Leaving aside the point that Rule 131(4) EPC does not say that, and that the practice relied on comes from an interpretation of the corresponding EPC 1973 rule in one case J 4/91 (which amusingly discussed the effect on potential Community patents): it is not immediately apparent that this method of calculation complies with EU law. Calculation of time limits in EU matters requires that:-
If, in a period expressed in months or in years, the day on which it should expire does not occur in the last month, the period shall end with the expiry of the last hour of the last day of that month[6];          
This does not automatically extend all dates to the last day of the month.


Particular care will need to be taken with renewing unitary patents on extension.

Rule 16(n)

This rule addresses recordal of declarations of surrender. What a declaration of surrender means is uncertain and may depend on the applicable national law as it is a property right that is being surrendered, and so Article 7 UP Regulation applies.


If you see a declaration of surrender, it may not mean the patent is dead.

Rule 20

Various EPC rules are adopted “mutatis mutandis”. What the effect will be is open to interpretation.


Great care will be needed in working out what is meant; and conclusions drawn from EPO practice may not necessarily apply.

Overall conclusion

Although the Rules lean heavily on EPC practice, they do not necessarily mean the same, since a unitary patent is an EU instrument and EU law must prevail.

This does not mean that unitary effect should not be sought: just that care will be required.

[3] Article 3(2) UP Regulation (EU) 1257/2012
[4] Rule 151 EPC and Rule 20(2)(l) draft UP Rules
[5] Article 7(2) UP Regulation (EU) 1257/2012
[6] Regulation 1182/71

Saturday, 28 June 2014

Balance of patents

Those of a mercantilist tendency will be interested in the balance of patents - the number of patents filed abroad from one's country with a view to keeping Johnny Foreigner in his place, minus those filed in one's own country by Johnny Foreigner, that might pose an inconvenience in one's home country.

Balance of patents = (Pout - Pin)/(Pout + Pin)

Pout = patent applications filed abroad
Pin = patent applications received from abroad

A crude narrative might be that:-
  • early in its development a country receives more patents than it files abroad: but it does not receive many because it is  not an interesting place to invest in;
  • as it develops, it receives more patents as it becomes a more attractive place to do business in; 
  • as it develops still further, it starts to generate more patents and its balance of patents improves.
Whether true or not, this is an interesting story.  

Different countries have different engagements with the rest of the world. Large countries tend to be more self sufficient, and smaller countries tend to trade more. As countries become wealthier they can more readily afford the luxury of filing abroad. A measure of a country's interest in the rest of the world is thus the number of foreign filings compared with the number of national filings made by applicants from that country.

Conversion ratio = Pout/Phome
where Phome = number of national filings by residents in that country

Thus for any country three numbers suffice to describe engagement of the patent system with the world:-
  • the number of patent filings by residents;
  • the number of patent filings by non-residents; 
  • the number of patent filings abroad.
It happens that such numbers are available from WIPO. The following graph shows calculated figures from 1997 to 2012 for USA, China, Japan, Korea, and for EPC countries as a block [treating all filings within Europe from EPC countries as being "domestic" [e.g. a German originating UK application counted as domestic and vice versa]]. 

The most telling squiggle is the change in balance of patents for Republic of Korea from a net importer to a net exporter of patents. The most interesting squiggle is the oscillation of the USA, showing its rapid response to economic conditions. The squiggle most indicative of a possible problem in the WIPO data is that of Japan which seems to show a random bump. Europe shows a remarkable outward looking behaviour.

The smallest seeming change is that of China. However, Chinese patent applications accounted for over a quarter of all patent applications in 2012 [~28%] and are increasing rapidly.

The increase in Chinese patent applications can be seen graphically below

Growth in Chinese patent filings [excludes utility models]
A ~40% per annum growth rate in domestic and foreign filings from Chinese companies swamps a ~6% per annum growth rate in patent filings into China.

The situation looks even more interesting when account is taken of utility models. The following shows the proportion of world utility models filed in various countries by nationals of those countries with "Others" being all other utility model filings.

Domestic utility model filings as percentage of world utility model filings

To a large extent, the utility model system is Chinese.

Looking to the total of utility models and patents, China accounted for nearly 45% of world filings in 2012.

Looked at on a GDP basis, China has ~19% of world GDP and ~45% of world patent and design filings in its territory. Is it over patented?

At the start of this post I mentioned the mercantilist desire to keep Johnny Foreigner in his place. Getting your domestic industry to file a lot of patents in your domestic market might be a way to keep Johnny Foreigner out of your home market. Does this explain the rapid growth in Chinese applications by Chinese applicants?

Lastly, to simply all of the above guff, it might be as well to plot countries or regions on a ternary plot. The following shows the above mentioned regions plotted as a time series. Where does your country sit and where is it going?

Patent filings - time series

Sunday, 13 April 2014

On the importance of good data

Having an idle moment I thought to look to the WIPO IP Statistics Data Center where all sorts of fun can be had by the avid nerd. The data centre enables one not only to look to individual countries, but also to regions.

In previous posts I have commented on stagnation in filings at the EPO and so naturally, in a totally non-scientific way, I looked for more data to support my previous "findings" but for Europe at large.

By producing a time series of patent filings classified by resident and non-resident; and comparing this with a time series of patent filings classified by resident and filings abroad; the following interesting graph resulted:-

This would indicate:

  • North America having relatively static demand for patents in the rest of the world in recent years, but becoming an ever greater recipient of filings from the rest of the world; 
  • Asia showing ever greater activity abroad, and being an ever greater recipient from the rest of the world;
  • Europe showing ever greater activity abroad, but with relatively stagnant demand from abroad; and
  • Africa, Latin America and Oceania having relatively low activity.

But something more was needed. What is the situation of the whole World?

Unfortunately, there are no figures for patent filings outside the World, but one can get figures for filings in the World divided by residents and non-residents. The numbers are as indicated below.

So what does this mean for off-World interest in the World economy? The following shows the percent of patent applications filed by non-residents of the World.

From the above two graphs it can be seen that 2008 marked a distinct drop in activity by residents and non-residents alike. The World economic crisis clearly influenced alien demand for patents. However it can be seen that although alien demand has recovered somewhat, domestic demand has increased dramatically. It is to be hoped that the World is not becoming an economic backwater, but at present it seems that the 2008 economic crisis was just a minor "blip" and the increase in domestic filings indicates strong growth in domestic innovation.

It can also be seen that there is a need for improved statistics from WIPO. In particular cooperation with the GIPO [Galaxy Intellectual Property Office] should be improved to enable data for off-World patent filings to be gathered.

In the mean time, it would help for WIPO to be clearer as to how they calculate resident and non-resident filings for regions so that users of the IP Statistics Data Center are not led to false conclusions.

By the way - my apologies that this is too late for 1st April.