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.

Friday, 14 March 2014

A one horse town

In my posting last week [Pangloss strikes again] I looked to filing numbers at the European Patent Office.

A reader asks "Any idea why Netherlands has such a massive increase? Did some very prolific filers move their registered offices there?".  Well, Dutch filing numbers decreased from 2010 to 2012 by more than they have increased from 2012 to 2013, so it is not totally sunny yet.

And one prolific filer did not change registered office, but did take breath. From the following table showing European applications made over 2010-2013:-





Philips 1839 1160 1759 1765
% change from previous year 59% -34% 0%
Non-Philips 3987 3903 3852 4169
% change from previous year 2% 1% -8%
Netherlands 5826 5063 5611 5934
% change from previous year 15% -10% -5%

it is evident that:-
  • Philips provides innovation that matters to the Netherlands;
  • 2012 was important;
  • Philips is back on track.
It is up to guesswork as to how many of the 2013 filings represent deferred 2012 filings. 

If anyone from Philips is reading, would they care to comment?

Thursday, 6 March 2014

Pangloss strikes again

Here we are again

In a recurring ritual the EPO has announced in a press release today "Patent filings at the EPO reach all-time high".

As mentioned in previous posts EPO press releases excite more than inform. A more nuanced picture can be gained by looking to the raw data which can be found here.

So let us analyse some statements in the press release:-

"Patent filings at the EPO grew by 2.8% last year and hit another all-time high,"

Correct, but only if you define patent filings as including PCT applications that will never be subject of any activity in Europe. 

"The EPO granted 66700 European patents, which was 1.6% more than in 2012 (65600) and the highest number ever." 

Correct, and this is to be applauded. 

"Europe continues to be a key market for innovation" 

This is dubious. Looking into the statistics for patent applications [EPO filings and PCT applications entering the regional phase] a slightly different picture is presented:-

Country of Origin 2013 2012 % change
EP Member States 73,420 73,098 0.4%
United States of America 33,834 35,207 -3.9%
Japan 22,555 22,659 -0.5%
China, People's Republic of 4,056 3,732 8.7%
Republic of Korea 6,336 5,719 10.8%
Others 7,668 8,147 -5.9%
Total "rest of world" 74,449 75,464 -1.3%
Overall total 147,869 148,562 -0.5%

The overall total of applications received by the EPO has dropped by half a percent. The total from non-EPO applicants [the rest of the world] has dropped by more than one percent. 

"US with stable increase, Asian countries drivers of growth"

US declining strongly, which matters given its size. Japan down a little, only China and Korea advancing fast - but note the absolute numbers from China and Korea are still relatively low [this may change of course, particularly if the unitary patent comes into effect (see here)].

"In total, filings from Asia accounted for nearly three-quarters of the increase at the EPO in 2013"

It would be more correct to state that it was only the rise in China and Korea that mitigated the catastrophic drop in filings from the rest of the world.

"European industry maintained its patenting activities at the same level as in the previous year, with marked regional differences"

You could say that. 
Country of Origin20132012% change
United Kingdom4,5674,717-3.2%
other EPO member states12,60512,1563.7%
Total EPO member states73,42073,0980.44%

Larger countries declined, smaller ones grew. Netherlands accounted for most of the growth.


Europe is beginning to fight its way back, but "stagnation" is the best word to describe the innovation landscape, so far as this is represented by patent applications. 

The number of patent applications [European and Euro-PCT] in 2013 was over 2% down on the maximum in 2010.  

The rest of the world is doing very well, but are losing interest in Europe [or at least the EPO - it would be interesting to see what is happening to national filings].

Press reports are not always the best publicity.  

If you have a problem, face it.