German manufacturing is booming, and German SMEs are filing many more patent applications than their UK counterparts. A new study by the UK Intellectual Property Office (UKIPO) highlights the worrying fact that, not only are the Germans ahead in Europe wide patent protection, foreign companies also own 93% of patents which cover the UK.
Data produced by the EU IP Observatory shows that IP owning companies achieve better economic performance than their non IP owning competitors. Separate data, produced by Eurostat, shows Germany, France, and some Scandinavian countries all far outstrip the UK in patent filing (as shown in the map, above).
We suggest a low cost IP strategy for UK business with an eye on the wider European market.
Why does this matter?
A series of studies over the years since 2013 all show the value of IP. The statistics from the October 2016 update of those studies speak for themselves:
- 28 % of all jobs in the EU (60 million) can be directly attributed to IPR-intensive industries.
- 38 % of all employment in the EU (82 million) can be attributed, directly and indirectly, to IPR-intensive industries.
- IPR-intensive industries pay significantly higher wages than other industries, with a wage premium of 46 %.
- 42 % of the total economic activity (GDP) in the EU is attributable to IPR-intensive industries, worth EUR 5.7 trillion.
- IPR-intensive industries account for about 90 % of EU trade with the rest of the world, generating a trade surplus for the EU of EUR 96 billion.
In practical terms, for an individual manufacturing business, IP can allow that business to scale by generating income by licensing out their IP without the need to make large capital outlay on tooling. In addition, the ability to offer cross-licensing deals is often the most cost effective solution to any IP dispute. If a business does not have IP of their own, neither option is available to them.
Typically, companies file patent applications in their key markets, and in the countries where manufacturing facilities are located. It is no surprise therefore that the UK ranks so highly (sixth in the entire world) for the total number of granted patents. However, 93% of those UK patents are owned by foreign companies. UK markets and UK manufacturing capability are clearly of value, and foreign companies are investing heavily in UK patents to ensure their competitive edge in both.
It is startling that UK companies hold such a low number of UK patents. More worrying still is that the prevalence of foreign owned patents in the UK may decrease the freedom UK companies have to innovate, to open up new markets, and to win new investment and new business. UK companies who don’t hold IP may also be at a disadvantage when it comes to cross-licencing.
What can be done?
The UKIPO’s study shows that the UK patent office is high quality, low cost and efficient when compared with its international counterparts. Securing patent protection in the UK need not be as expensive as many people seem to assume. UK patent protection is available cheaply and quickly.
The most significant cost of any patent portfolio is generally the filing of foreign applications. Whilst the European Patent Office (the EPO) is renowned for quality, the fees they charge are higher than the UKIPO and the grant process is slow.
There may be a solution. Another German innovation is the so called “utility model” patent. These are granted without examination, which vastly reduces the cost of registration, and validity is only assessed if the utility model patent is used in legal proceedings. Their term is reduced (they only last ten years) but in fast changing markets, ten years may be enough.
One strategy UK SME’s might use is to obtain a UK patent, and a German utility model. This provides relatively low cost IP coverage in two of Europe’s key markets, and key manufacturing bases. Depending on the market, and the location of competitors manufacturing facilities, coverage in Germany and the UK together may provide a de facto block on the whole of Europe. Significantly, it can do so very much more quickly and at much lower cost than the alternatives.
Mathys & Squire specialise in supporting start-ups and SMEs on their IP strategy. For more information, please contact Sean Leach.
The map which accompanies this article was produced by Jakub Marian and has been included here with his kind permission.
The withdrawal of the United Kingdom from the European Union will create uncertainty for UK and EU27 stakeholders alike in relation to the scope of protection in the United Kingdom of certain intellectual property rights; to the treatment of applications for certain rights and to the exhaustion of rights conferred by intellectual property rights. This uncertainty will significantly affect the conditions under which goods that are placed on the market in the Union before the withdrawal date could continue to circulate between the EU27 and the UK.
To read the latest from the European Commission, click here.
The UK Intellectual Property Office (UK-IPO) recently published its latest annual facts and figures on UK Registered Designs.
Notably, the figures show that the UK-IPO received around 55% more UK Registered Design applications in 2016 (totalling over 10,000 applications) than in the preceding year.
The significant increase in filings may be attributed in part to the substantial reduction to official fees for UK Registered Designs that were adopted in 2016 (as outlined here), which has helped make the UK Registered Design system an effective alternative to the European Union (EU) Registered Design system.
Another possible explanation for the increase in filings may be the UK’s vote to leave the EU.
At present, although separate systems, both UK and EU Registered Design applications have effect in the UK. Although the UK’s exit from the EU will have an impact on EU Registered Designs, the ramifications are not immediately clear. As a result, some applicants have – out of caution – dually filed both UK and EU Registered Design applications in view of the uncertainty as to how, when and if at all existing EU Registered Designs will continue to have effect in the UK after it leaves the EU. For more details see our article on the IP implications of the UK’s move to leave the EU, here.
Encouragingly, the latest figures from the UK-IPO therefore show renewed interest in the historically-neglected UK Registered Design system.
US sportswear brand New Balance won a record payout in a Chinese trade mark case, BBC News reported today.
Three local shoemakers were found to have infringed the brand’s famous “N” logo and were forced to pay out more than 10 million yuan (£1.2m; $1.5m).
Lawyers believe this to be the highest ever awarded to a foreign company in a trade mark dispute in China. This is a substantial increase from previous penalties, as China continues to tighten its laws against infringement.
In a recent article for the MTA, Rob Hawley highlighted that Chinese businesses are very IP savvy, and clearly see the value in registration and enforcement of their IP rights in China. The numbers are staggering. China received 2.88 million single-class trade mark applications in 2015, an increase of 24% from 2014. 96% of applications were from domestic applicants. Every year, the Chinese authorities oversee hundreds of thousands of administrative trade mark disputes (oppositions, revocations and cancellation actions).
We have put together a summary of hints and tips for businesses planning to trade in China. This includes information about using agents and manufacturers, ramifications of the business and legal culture, as well as important considerations for protecting your brand. To download the guide please click here.
If you have any questions about the article, or if you are planning to begin trading in China, please speak to our trade mark team.
As part of its preparation, the European Patent Office has published a helpful Unitary Patent Guide to provide companies, inventors and their representatives with an outline of the procedure involved in obtaining a Unitary Patent.
Despite the ongoing uncertainty surrounding the UPC, the guide examines the basics of what a unitary patent is, how to acquire one, how renewals and assignment recordals work and issues around representation and the language regime.
To read more, and to download the guide, please click here.
Cross jurisdictional enforcement of legal rights can be complex. Add intellectual property into that cross-border mix and the assumption might be that complexity would only increase. In the case of registered designs however, that’s not necessarily the case.
What are registered designs?
Registered designs are an intellectual property right which can be used to control the import and export of counterfeit and other infringing goods into the EU, and across its internal borders. Significantly, EU customs authorities can be asked to impound products infringing an EU registered design as they cross EU borders.
Registered designs can be hugely valuable and registration is very low cost. For example, in 2011 a German court granted an EU wide injunction on the basis of a registered design. Registration of that design probably cost a few thousand euros, yet the estimated impact of that injunction was over 100 million euros.
The potential impact of these rights on export/import trade therefore should not be overlooked. Registration should be considered whenever the commercial value of a new product is associated with its appearance.
Protection is available across Europe, and in the UK
It is already possible to obtain design protection in just the UK or in the EU as a whole.
UK-only design registration is cheaper, but the rights it provides are limited to just the UK. However, it is worth mentioning that, unlike some forms of IP, a registered design provides a specific right to prevent exports. So, UK protection may suffice where the UK is likely to be the main market, or (if tooling cost is significant) is home to the most likely infringers’ manufacturing facilities.
An EU or ‘Community’ Design is more expensive, but it does provide monopoly rights for the entire EU including, for the moment, the UK. This may enable the design owner to scale their business without capital outlay for manufacturing – they can generate revenue by licensing their IP in other EU markets.
A key benefit is that EU design rights can be enforced by customs authorities (anywhere in the EU) to restrict the transport of goods at the border. EU customs authorities will search for and seize suspected infringing products entering or exiting the EU. Products suspected of infringing an EU design right may be detained and, if necessary, destroyed by those customs authorities without needing court approval.
Will this change after Brexit?
The current working assumption is that as of March 2019 EU design rights will no longer have effect in the UK. At present, we expect that there will be a transitional period during which EU designs can be “converted” to provide equivalent protection in the UK post-Brexit. However, nothing is confirmed at present. Whatever happens in the UK however, the EU market will remain valuable to UK business, and the need for a competitive edge in that market will certainly not lessen.
Whatever legal and regulatory regime prevails, businesses must position themselves to take maximum advantage. The ability of registered designs to control both exports from the UK, and imports into the UK, and in and from the EU, marks them out as a key commercial tool.
Want to know more?
Mathys & Squire are experts in obtaining design protection in both the UK and the EU. For more information and to find out how we can help, please contact Sean Leach.
Mathys & Squire are delighted that their longstanding client, Sevcon Inc., has entered into a definitive merger agreement with BorgWarner Inc.
As detailed in Sevcon’s recent announcement the total transaction value in the merger is expected to be approximately $200 million. This represents a 64% premium to the 30-day volume weighted average price of Sevcon’s common stock.
Mathys & Squire are proud to have played a small role in supporting this huge success. Sean Leach, a partner in the IT & Engineering team at Mathys & Squire, has worked with Sevcon since 2010 and has overseen the development of their growing patent portfolio. Sean and his team never cease to be impressed by Sevcon’s innovations, and by their team of stand-out engineers – Pete Barrass and Howard Slater in particular.
Sevcon President & CEO Matt Boyle said “Mathys & Squire have been with us since we began our transition from industrial markets into the automotive sector. In the years that we have worked with Mathys & Squire Sean Leach, and his associate Andrew White, have struck up a relationship with our technical team, and we know they can be relied upon for both their legal knowledge, and their technical expertise.
Asked to comment on patent strategy, and on the significance of IP to businesses in the North East Matt also said “It’s not just about the North East it’s true across the country, and internationally, that IP can be the starting point in many transactions. Our patent portfolio has been critical for this. Of course, there is more to IP than patents, the know-how and commercial intelligence in our people is a significant resource. We intend to increase our patent filings as we continue to grow in the automotive sector. This sector can be very patent sensitive. We often need to share information when making deals, but we also need to keep control of our IP. We need to be able to point at the background IP that’s ours.”
Sean Leach discussed intellectual property in software in a recent MTA (The Manufacturing Technologies Association) article.
Many manufacturers may think they do not have any intellectual property (‘IP’) in software or computational methods they have created. However, this is not always the case. Software is patentable. Additionally, copyright and confidential information in software may provide valuable commercial property and opportunities.
In 2016, over 10 000 patent applications were filed for computer technology at the European Patent Office. This represents an increase of over 30% in the last 5 years. This field of technology had the third highest number of applications in 2016. Clearly, this proves valuable IP is available for software.
What IP is available for software and how can it be used?
Confidential information
Rights in confidential information may be used where there has been a breach of an obligation of confidence. For example, a commercial partner, customer, or supplier may disclose your source code to another party, such as a competitor who is to replace you or that relationship. If they should have known the code was meant to be kept secret, it may be possible to recover damages from them for the breach of confidence.
Copyright
Copyright provides protection for the literary form of your software, i.e. the code itself. A third party would only infringe copyright if they directly or indirectly copy your code. This can be very hard to prove. One approach is to leave ‘fingerprints’ in your code, tell-tale signs such as pointless loops or unused sub routines or other chunks of code which would only be present as a result of copying.
Patents
Neither confidential information nor copyright will provide protection against independent creation by a third party. However, patents prevent third parties from using the functionality of your software. Therefore, a patent provides the right to prevent third parties from using the invention, regardless of how they discovered it. There is no need to prove copying.
Signs your software is likely to be patentable:
- It is used to control or carry out a technical process (e.g. processing an image or measurement/controlling an industrial process or the working of a piece of machinery).
- It provides simulations which aid the designing and/or manufacturing of goods (e.g. simulating manufacturing processes or products once manufactured).
- It is a way of approaching a technical problem (e.g. improving manufacturing efficiency by specially designed software for that manufacturing process).
What is the risk of not patenting software?
Being the first person to file a patent application for your invention is crucial. If someone else gets there first, the patent is theirs. This may leave you only with very limited rights as a “secret prior user” of the invention. You may need to prove you have these rights, and that may be difficult and costly. Even if you are able to do this, you could be restricted from making any developments to your software.
Want to know more?
Mathys & Squire have a team of Patent Attorneys and Trade Mark Attorneys who specialise in supporting manufacturing businesses. We would be happy to advise on strategies for protecting the valuable IP in your software. For more information, please contact Sean Leach.
You might also be interested in our research on IP in the manufacturing sector.
We recently collaborated with the Manufacturing Technologies Association (MTA) to gain valuable insight into some of the missed opportunities in the engineering and manufacturing sector when it comes to protecting their IP.
To read the article in full please click here. If you have any further questions please contact Sean Leach.
The Caribbean Food & Drink Conference is taking place at Lambeth College, Clapham, on Friday 18th August 2017 where David and Daniel will highlight the importance of intellectual property (IP) in the food and beverage industry, with a particular focus on the aspects of a company’s products, manufacturing techniques, and brands that can be protected. Their presentation will cover patents, trade marks, and designs as well as the commercial benefits and business growth potential associated with IP protection both in the UK and abroad.
Click here for more information.
From 7 November 2017, Thailand will become the 99th member of the Madrid System after Thailand’s government deposited its instrument of accession to the Madrid Protocol with WIPO’s Director General.
By simply filing a single international application and paying one set of fees, local brand owners in Thailand will finally be able to protect their trade marks when selling their products within the country by using the Madrid System in the 114 territories of the System’s other 98 members.
If you have any questions on this topic please contact our trade mark team at [email protected].
