Tuesday, 20 October 2015

Not quite white elephants, but more patents have been sent packing

Patents are potentially assets of great value -- but if you have to keep paying for their upkeep and for the protection of their validity but they aren't earning you anything, they come preciously close to being white elephants (though you can just let them lapse, an option not open when it comes to pachyderms). Assiduous followers of the media may have picked up a short item on Business Matters ("The UK's leading SME business magazine") yesterday with the alarming title "“Abandoned” patents jump as businesses slash intellectual property costs". This piece picked up on recent detailed research, published in IAM as "Assessing patent renewal decisions in the United States and Europe", by Ocean Tomo's Matthew Beers and Maria Lazarova, and reads thus, in relevant part:
As abandoned patents rise, the number of new patent applications filed is also soaring, by 47 per cent in the US and 39 per cent in Europe over the past decade.

Joff Wild, editor of IAM, told CityAm that “patent hoarding” was no longer a viable option for businesses as cost pressures rise: these figures suggest that calculating which patents to ditch is becoming almost as much a business-critical issue as protecting them [this is actually the norm in most sectors at most times, though in recent years the notion of retaining patents in the hope that they may be licensed or infringed has played a more prominent part in some business models than simply retaining patents to protect their own products and processes].

While some major corporates – notably the tech giants – may still have the power to stockpile huge numbers of patents, this research suggests that many intellectual property owners are having to be much more strategic in prioritising which assets to keep.

The study found that cost-cutting and legislative developments were the main factors driving this change.

This news follows on a recent study which found that one in three intellectual property experts worry about the low quality of US patents [this might be taken as a reflection on the quality of US patents or on the quality of IP expertise]. ....
In an earlier Aistemos post this August, "Can the death of a patent be a sign of life for the patent system?", here, we wrote:
Lapsed and lapsing patents and patent applications are arguably an important sub-class of their own. Apart from their technical content, they provide a wealth of information about the business decisions taken by those who have initially filed for them and then let them go. They also provide a sort of snail-trail that describes the path taken by a technology as its players try out new product lines, new manufacturing techniques and so on.

Taken in bulk, the abandonment figures look large and might be viewed as a problem in terms of wasted effort by competitors in the market and resources consumed in vain by patent-examining offices. Is there any need to be despondent about this waste? No. It exists wherever competition within and between products can be found. Whether there is a good patent system, a bad one or none at all, you will still be likely to find businesses committing resources towards developing the same products or creating processes that achieve the same objectives. One will always be ready first and that fact can render the investment by others theoretically wasteful. Most products do not succeed in the market place, just as most brands do not become successful and most trade marks on the register are of little or no commercial value. 
Clearly, cost-cutting and legislative developments, not to mention case law developments such as the Alice decision, on the patent eligibility of computer-implemented inventions, have an impact both individually and cumulatively on the decision to keep a patent or ditch it. Ultimately, however, the decision to retain or abandon patents and patent applications remains a question of what to do with one's resources. If you can't earn money by persisting with them and can't find a buyer for them, there is no commercial rationale for retaining them.

There's one further point to ponder. Now that we are some years from the economic crash of 2008, the money invested in new products and things you can do with them is starting to come to fruition. Technology does not stand still; nor does it travel in linear progressions. It would be good to know what proportion of the lapsed patents and inventions in the past couple of years can be accounted for by the fact that they have been sidelined by history, as the technology they relate to becomes outdated, unfashionable, expensive or environmentally unfavourable.

Questions like this can be addressed on a sector-by-sector basis by appropriate analytics, though the answers may still seem a little historical: after all, it's the patents that we don't yet know about -- the ones that have not yet been applied for but which reflect investment in innovation over the past couple of years -- that are likely to give the closest guidance as to which patents to keep and which to let go.

1 comment:

  1. City.AM has picked this up too: http://www.cityam.com/226778/abandoned-patents-jump-as-businesses-slash-intellectual-property-costs