Recent Enlarged Board of Appeal referral, G1/23, seeks to obtain clarity on when a product, or published technical information relating to such a product, can be considered to be state of the art, depending on the degree to which the composition and internal structure of the product may be analysed and reproduced. However, one potential consequence of a Decision on the referral could be to introduce an “on-sale bar” type exclusion from patentability, as applied by the United States Patent and Trademark Office (USPTO). This could, for example, apply to patent applications directed to commercial products historically covered by trade secrets, where reverse engineering the exact products would be expected to be extremely difficult.

Background of the case

The case giving rise to the referral to the Enlarged Board of Appeal – T483/19 – was an appeal against a Decision of the Opposition Division rejecting an opposition filed against European Patent No. 2 626 911. The patent was directed to a material suitable as an encapsulating material for a solar cell, the material comprising an ethylene/alpha-olefin copolymer and defined by a number of parameters, including melt flow rate, density and shore hardness.

In this case, novelty of the claimed material was not at issue but rather it was the availability to the public of a commercial product – ENGAGE® 8400 – named in an example of a prior art document, which was considered to be of critical importance in determining the closest prior art for the purposes of assessing inventive step. For context, ENGAGE® 8400 was commercially available and prior art data sheets show the product to have all of the properties of Claim 1, except for aluminium content. What wasn’tin the public domain was how to make ENGAGE® 8400.

The Patentee argued that, in order for the commercial product to be considered state of the art, the skilled person must be able to produce a polymer that is exactly (and not just similar to) ENGAGE® 8400 and do so without undue burden. This, the Patentee argued, was in line with established jurisprudence following the Enlarged Board of Appeal Decision in G1/92.

According to the headnote for Decision G1/92, the “chemical composition of a product is state of the art when the product as such is available to the public and can be analysed and reproduced by the skilled person, irrespective of whether or not particular reasons can be identified for analysing the composition” and the “same principle applies mutatis mutandis to any other product”.

In the reasons for the Decision, the Enlarged Board in G1/92 stated that an: “essential purpose of any technical teaching is to enable the person skilled in the art to manufacture or use a given product by applying such teaching. Where such teaching results from a product put on the market, the person skilled in the art will have to rely on his general technical knowledge to gather all information enabling him to prepare the said product. Where it is possible for the skilled person to discover the composition or the internal structure of the product and to reproduce it without undue burden, then both the product and its composition or internal structure become state of the art“.[Emphasis added] – paragraph 1.4 of the Reasons.

The Opponent in T483/19 sought to cast doubt on the reproducibility criterion in the reasons of G1/92, pointing to an alleged inconsistency between the reasons and the headnote to the Decision. The Opponent also pointed to other Decisions of the Enlarged Board (including G2/88) which might be seen to suggest that the intention was for availability to the public (so as to be considered state of the art) to be determined by accessibility of the public to the prior art product, rather than depending on whether the accessible product could be reproduced without undue burden.

On the other hand, the Patentee identified Decisions applying G1/92 and establishing three criteria for a product to be considered available to the public so as to be state of the art: 1) a member of the public is able to access the product; 2) a skilled person must be able to analyse the composition or internal structure (i.e. must be able to access the information that is inherent to the product); and 3) a skilled person must be able to reproduce the product based on common knowledge and without undue burden, as only then, it was argued, does it represent a complete technical teaching.

The submissions of both parties established an apparent divergence in the application of G1/92 which was considered justification for the referral to the Enlarged Board of Appeal for guidance.

G1/23 – The referral

The Technical Board in T483/19 referred the following questions to the Enlarged Board of Appeal:

1. Is a product put on the market before the date of filing of a European patent application to be excluded from the state of the art within the meaning of Article 54(2) EPC for the sole reason that its composition or internal structure could not be analysed and reproduced without undue burden by the skilled person before that date?

2. If the answer to question 1 is no, is technical information about said product which was made available to the public before the filing date (e.g. by publication of technical brochure, non-patent or patent literature) state of the art within the meaning of Article 54(2) EPC, irrespective of whether the composition or internal structure of the product could be analysed and reproduced without undue burden by the skilled person before that date?

3. If the answer to question 1 is yes or the answer to question 2 is no, which criteria are to be applied in order to determine whether or not the composition or internal structure of the product could be analysed and reproduced without undue burden within the meaning of opinion G 1/92? In particular, is it required that the composition and internal structure of the product be fully analysable and identically reproducible?

Thus, the referral seeks to establish the extent to which the reproducibility criterion is critical for a product to be considered state of the art and whether published technical information relating to the product can be considered state of the art, regardless of whether the composition or internal structure of the product can be analysed and reproduced without undue burden.

Clearly, the referral in G1/23 is focused on commercial products having compositions and internal structures that are not readily reverse engineered. Nevertheless, the potential reach of a Decision on the referral is significant and not only limited to polymer technologies, nor indeed only chemical inventions.

USPTO on-sale bar

Many readers will be familiar with the USPTO’s “on-sale bar” provision – a statutory bar found in Section 102 of the United States Patent Act – which excludes from patentability products or processes which have been on-sale before the “critical date”, 12 months prior to the filing of the US patent application.

The on-sale bar under the America Invents Act (AIA) even extends to confidential sales, as confirmed by the U.S. Supreme Court in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. In that Decision, it was concluded that the AIA did not narrow the scope of the on-sale bar in patent cases, and that the term “on sale” had a well-settled judicial interpretation that included confidential sales, prior to the enactment of the AIA. More recently, in an appeal to the Federal Circuit – In re Certain High-Potency Sweeteners (Inv. No. 337-TA-1264) – it has also been held that a confidential process could give rise to an on-sale bar. Thus, even confidential sales of an invention deriving from the inventor more than 12 months prior to the filing of the US application are prejudicial to the subsequent patent filing.

Potential consequences of G1/23

One might question whether it is legitimate for an innovator company who has sold a product covered by a trade secret – where the composition and internal structure of the product are not specifically disclosed and cannot be identically reverse engineered – to later apply for patent protection for the same product. A clear benefit to the public of said company pursuing patent protection is the full knowledge of the composition and internal structure of the product and an understanding of how the product is reproduced, which information would be expected to be contained in a (sufficiently enabled) patent application. In general, there is a tranche of European Patent Office (EPO) case law following G1/92 which would appear to give the green light to such a practice. However, there is the potential for the Decision in the new G1/23 referral to disrupt this notion.

Although in the referring case, T483/19, it is only inventive step which is at issue, it seems clear that the referral in G1/23 is not limited to that particular context and a Decision could equally be relevant to the consideration of novelty. This is of course particularly the case if it is decided that the reproducibility criterion is not an essential requirement in order for the commercial product to be considered state of the art (question 1 of the referral), even if its composition and internal structure is not state of the art.    

If it is decided that technical information about a commercial product can be state of the art, even when the product itself may not be analysed or reproduced, then this potentially opens the door for publicly available disclosures of such information (which pre-date the patent filing) to be taken into account from either a novelty or inventive step perspective. This is of particular relevance when considering the closest prior art and technical effects underpinning a claimed invention which form part of the EPO’s problem-solution assessment of inventive step (as we have seen in the referring case, T483/19). It is also likely to be of greater significance when claims are defined by reference to performance parameters, as opposed to purely compositional and structural features.   

In these scenarios, the result could be a shift closer to something resembling an on-sale bar, despite the fact that the commercial product could not be analysed and reproduced prior to the filing of the patent application.

Another interesting element to the referral is the notion that there could be a distinction over when a product may be considered available to the public based on the degree to which its composition and internal structure may be analysed and reproduced. Should it be necessary for its composition and internal structure to be fully analysable and identically reproduced without undue burden (question 3 of the referral) in order for the commercial product to be considered state of the art? If not, where should the line be drawn?

What if, for instance, the commercial product may be analysed and reproduced to a degree that yields a closely related (but not identical) product which shares the same or very similar performance characteristics reported in technical information for the commercial product? Would that then mean that the commercial product itself forms part of the state of the art? If that was the case, then there would again be a shift more towards something resembling an on-sale bar than currently exists at the EPO.

With increasing advances in analytical chemistry (particularly with the potential contributions of AI in the future) understanding what might constitute an “undue burden” for the skilled person to analyse and reproduce the product is clearly a concept that should evolve with the advances in the technology at the disposal of the skilled person. Thus, it also seems possible that what might constitute an undue burden now, may not be considered so in the future.

Impact on IP / commercialisation strategy

If as a consequence of the Decision in G1/23 there is the perception of at least some movement toward an on-sale bar type exclusion before the EPO, then there may be incentive for applicants to consider filing patent applications earlier, or at least before commercialising the products of their innovations. Alternatively, it may prompt a more considered approach as far as product marketing is concerned, and particularly in terms of the content of technical brochures etc., for those innovators who might still wish to seek patent protection after an initial commercial sale of a product covered by a trade secret.

If there is the potential for technical information to be considered state of the art, even where the commercial product to which it relates is not (fully) analysable or (identically) reproducible without undue burden, it may prompt applicants to consider how claims to such products are defined in later filed patent applications. For instance, there may be a preference to avoid defining such products by reference to parameters, if those same parameters are disclosed in technical brochures associated with the commercial product. This may prompt applicants to consider defining products by features of their chemical composition instead, where possible, or possibly even by features of a process used to prepare them.

Alternatively, it may encourage innovators to take additional steps to preserve their trade secrets in preference to pursuing patent protection, albeit at the risk that third parties could independently develop the same technology at some point in the future.  

Watch this space…

A Decision in G1/23 brings with it the possibility of somewhat of a sea change in the way the EPO assesses disclosures of products having compositions and internal structures of varying degrees of analysability and reproducibility. Depending on where the line is drawn in considering whether those products, or published technical information relating to those products, may be considered state of the art, it seems that there is the real possibility for the EPO to inch closer to an on-sale bar type exclusion. This could have an impact on the IP and commercialisation strategies of innovators in numerous technology fields.

We are delighted to welcome a new Partner into our Munich office, Dr. Matthias Brittinger.

Matthias brings with him 20 years of experience in the IP field. He joins from Müller Hoffmann & Partner, a boutique IP law firm in Munich. He has a breadth of expertise working across various technologies, including significant experience working on standard essential patents (SEPs) related to telecommunications, processor, and codec technology.

As well experience in SEPs, Matthias has expertise in litigation across various technical fields. He has earned recognition as one of the most reputable Patent Attorneys in GermanyTop of Form in leading German business magazine Wirtschaftswoche.

Andreas Wietzke, Partner in Mathys & Squire’s Munich practice says: “We are very excited to welcome Matthias to Munich team. Bringing in Matthias as a new partner highlights the success and continuity of our Pan-European concept since our Munich office was founded 5 years ago.”

Matthias Brittinger says: “After 10 years as a partner at a German boutique firm, I am happy to be joining a global player in IP.  In particular, I was convinced by the fact that Mathys & Squire can provide IP advice all over Europe as a one stop shop. At Mathys & Squire I’m looking forward to contributing to the firm’s litigation practice and acquisition work.”

Matthias is a German & European Patent and Trade Mark attorney, and a European Design Attorney. He is a member of VPP, the association of IP professionals, and FICPI, the NGO promoting common solutions and advocacy for private IP practitioners. He is also admitted to practice before the German Supreme Court for nullity proceedings.

This release has been published in JUVE Patent, The Patent Lawyer and Solicitors Journal.

Commentary by Partner Nicholas Fox has been featured in  Law360 and World IP Review giving an insight into the implications of the Court of Appeal’s ruling that a member of the public can have access to the evidence and pleadings in the now settled Ocado v Autostore dispute.

Read more on the subject of the ruling by Partners Nicholas Fox and Alexander Robinson below.

The Court of Appeal of the Unified Patent Court (UPC) has now ruled that a member of the public can have access to the evidence and pleadings in the now settled Ocado v Autostore dispute. However, obiter comments in the Court’s decision mean there are still outstanding questions about the Court’s commitment to openness and transparency.

Background to the Decision

On 10 April 2024, the UPC Court of Appeal finally issued a decision permitting a member of the public sight of the evidence and pleadings which had been filed by Ocado in a case brought by Ocado against Autostore

The Ocado and Autostore dispute had been brought by Ocado in June 2023. However, shortly thereafter, the two parties settled the dispute and made a request to withdraw the action and the proceedings between the two parties were declared closed on 8 September 2023.

In the short time whilst the Ocado v Autostore dispute was pending, a member of the public filed a request to be given access to the statement of claim in the case. That request was filed on 15 August 2023 and then subsequently granted by the Court of First Instance in October. However, Ocado appealed the decision granting access and access to the court documents was withheld pending the appeal. The Court of Appeal have now rejected Ocado’s appeal and upheld the original order so that now access to the pleadings has finally been granted.

Concerns about speed and transparency

The decision of the Court is to be welcomed. However, the decision still leaves troubling questions about the Unified Patent Court’s commitment to transparency.

The UPC Court Rules state that written evidence and pleadings shall be available to the public upon “reasoned request”. However, the timeline of the proceedings outlined above demonstrates that it has taken 7 months and 26 days for the Court to process what should have been an administrative matter. This is concerning for a court which has been launched on the promise of speedy and transparent justice. The fact that a party has been able to block access to court documents for such a long period of time, even when a case has been settled, raises serious questions about the ability of third parties to access court documents in anything approaching real-time.

The reality of access to court documents in the Ocado v Autostore case is a far cry from that promised in early drafts of the UPC Court Rules which provided that written evidence and pleadings lodged at the Court would be available to the public for on-line consultation. Why the content of pleadings and evidence before the UPC should be shrouded in secrecy, whereas the content of oppositions before the European Patent Office are freely available, is entirely unclear.

Equally concerning are obiter comments in the Court’s decision which seem to suggest that despite the Court rules not containing any such limitation, Court documents should only be available after the conclusion of a case and that the public should not normally be permitted access to evidence and pleadings whilst a case is on-going unless there is a “direct legitimate interest” in the subject-matter of the proceedings.

The Court’s obiter comments in this respect would seem to be in conflict with the norms set out in the Council of Europe Convention on Access to Official Documents (Tromsø Convention) and the recommendations of the Council of Europe which require limitations on public access to be set down precisely in law. If it was intended that the public should only have access to written pleadings and evidence lodged with the court after a case has concluded, then this should have been made explicit in the wording of the relevant rules. The fact that no such limitation appears in the rules, suggests that there is no justification for any kind of blanket ban.

Rather, access should only be denied if parties to proceedings can establish that there are substantial reasons specific to the case which would mean that permitting third parties access would threaten the integrity of the proceedings.

However, it is difficult to envisage why publication of pleadings in patent infringement and revocation matters would prevent parties from bringing forward arguments and evidence in an impartial and independent manner, without external interference; or why such publication would cast doubt on the integrity of the Court’s deliberations and decisions. Such public access does not appear to threaten the integrity of the EPO’s opposition procedure. Nor does it threaten the integrity of court actions in for example the UK, Sweden or Finland, where Court rules permit third parties access to pleadings and evidence in pending matters.

Mathys & Squire test case

Mathys & Squire filed a test case to secure public access to evidence in the UPC at the end of November 2023. That case was stayed, pending the UPC Court of Appeal’s decision in Ocado v Autostore. Mathys & Squire now has three weeks from the date of the Appeal decision to submit comments on the decision to the judge handling our test case, who will then invite comments from the parties to the main proceeding where we are requesting access. The judge will then rule on the substance of our request and will hopefully confirm the right of third parties’ access to court documents in on-going proceedings.

Although the Ocado v Autostore decision has clarified a number of issues, as the main proceedings had settled long before the case came before the Court of Appeal, the Court was not in a position to settle how access should be decided in relation to on-going proceedings and it looks likely that many of those questions will now be the subject of decisions in our test case.

In a display of the importance of the biotechnology industry to the European economy, the European Commission (EC) last week announced actions being taken within the EC’s strategy for boosting this industry across the continent. Details are outlined in the official EC Communication on “Building the future with nature”, linked here.

The Communication acknowledges that biotechnology is “a critical technology from the economic security perspective” and is key component to the EU’s strategy toward autonomy and resilience. Thus, the importance of supporting biotech companies is outlined in detail, with welcome acknowledgment that a “supportive” regulatory framework and more financing opportunities are needed for the industry to thrive. The EC discusses a wide range of challenges they wish to work toward addressing, ranging for the complexity of the regulatory framework and associated costs, to expertise/skill access, and even the importance of promoting public acceptance of ‘bio-manufactured’ products.

Streamlining regulatory pathways, including permitting and authorisation

Those interested in the regulatory framework will be interested to note that the Communication includes a dedicated section directed to discussing the “streamlining” of regulatory pathways. The EC recognises the need to improve conditions for moving R&D from the lab to the market, and notes “The Commission will assess how EU legislation and its implementation could be further streamlined to reduce any fragmentation, explore potential simplification, and shorten the time for biotech innovations to reach the market; as well as regulatory obstacles that arise at national or other governance levels which impede an effective single market.”  It is particularly interesting to note that “the Commission will launch a study that will map key current industrial bio-based value chains, analyse the regulatory framework and the impact of relevant legislation, and thereby lay the foundations for a possible EU Biotech Act.”

There is emphasis placed on “targeted simplifications to the regulatory framework”, as well as “streamlining/simplifying approval processes for certain product categories.”

It is helpful to note that the EC has already put some thought into how such reforms could actually be explored/tested, outlining the intention to “promote the establishment of regulatory sandboxes that allow to test novel solutions in a controlled environment for a limited amount of time under the supervision of regulators as a way of bringing more of them quickly to the market”, consistent with the observation that is has already been proposed for “breakthrough therapies under the reform of the pharmaceutical legislation.”

Artificial intelligence and use of data

Those interested in the EC’s response to growing adoption of AI tools across different industries will be interested to note that the Communication includes a dedicated section directed to discussing AI and its use in innovation within the biotech sector. After discussing advances contributed to by AI to-date, the EC goes on to outline “actions to foster the application of big data and AI in biotech and biomanufacturing companies.”   This includes discussion of the GenAI4EU initiative, and how the EC intends on supporting the accelerated “uptake” of AI.

Intellectual property

Although the Communication is not intended to be a focus-piece on biotech patents, (or IP more broadly), the EC do take the initiative to specifically point out the important of IP in the industry, including to new entrants by providing a reminder that IP is “a critical asset which emerging biotech start-up companies can offer to secure financing”. 

As part of the actions discussed in ‘stimulating’ the market, the Communication also recognises that providing “a stable, predictable, and balanced IP framework for protecting and valorising biotech innovation and facilitating access to it, especially to smaller actors across the value chain such as primary producers and SMEs, is crucial for ensuring a vibrant biotech ecosystem in the EU.”

Recognition of changes/additions with the patent system is provided: “The launch of the unitary patent (‘UP’) system in 2023, as well as the upgrade of the current EU regime for supplementary protection certificates (SPCs), proposed in the context of the Commission’s ‘patent package’ of 2023, will support ground-breaking innovation in biotechnology. Innovators across the EU, including in biotech, need to reap the full benefits of these initiatives, therefore the swift adoption of the ‘patent package’ is essential.”

The Commission provides a brief comparison of the leading territories in terms of ‘biotech patent’ filings (USA>EU>CN), indicating that the EC keeps a view on the importance of patent filings in maintaining the EU’s international competitiveness, when compared with other key international players in the biotech space.

Conclusion

It is encouraging to note the EC sees the continued importance in updating its biotech policy, and how important this industry is to society.  Policy makers in adjacent, yet important nations within biotech, (notably the UK and Switzerland), will doubtless wish to keep abreast of the EC’s plans.

Clarivate has issued its list for the Top 100 Global Innovators, 2024, which highlights the companies and research institutions that invest heavily into innovation, allowing them to act as a driving force in shaping their industries.

There are two qualifying hurdles based on inventive activity that entities must pass in order to be recognised in the top 100 list. Innovating organisations must have filed more than 500 patent applications since 2000 and be issued more than 100 granted patents within a five-year evaluation window of 2024. Institutions are then ranked by their international presence and the strength of their invention.

Samsung Electronics tops the list of global innovators

Samsung Electronics leads the list, one of 18 all-time recipients that have retained Top 100 Global Status for the last 13 years. Three companies re-entered the top 100 after a period of absence: Tencent (China), Daikin Industries (Japan), and ZEISS (Germany). Two companies have been awarded Top 100 status for the first time: Coretronic (Taiwan), and Disco (Japan).

Japan maintains its position as the biggest contributor to the top 100 (38 entities), with more than half of those that made the top 10 coming from Japan, operating in sectors such as electronics, computing equipment and automotives. Whilst Japan’s presence is strong, the representation of Japanese companies has not increased since last year. Entities from Mainland China, however, have made marginal gains in this year’s edition. 

Electronics and computer equipment the largest industry sector

Industry segments have also seen an increase in the variety of representation in this edition of the list, following the trend seen in last year’s report. Electronics and computing equipment is the largest industry sector, made up of 26 innovating organisations. Industrial systems saw an increase of 4 representatives, whilst semiconductors (+2), and software, media and fintech (+1), all saw small gains. Representation in the field of chemicals and materials declined (-3), as did industrial conglomerates (-2).

High-tech sectors predicted to lead future innovator rankings

Within the report, it is forecasted that entities within high-tech sectors such as telecommunications and software, media and fintech are expected to improve their rankings within the Top 1,000 Global Innovators ranking. Based on predictions from the top 1,000 organisations, the government and academic research segment is expected to grow, following the inclusion of three institutions from the public sector in this year’s list.

Furthermore, South Korea, Taiwan, Japan, and Mainland China are forecast to improve dramatically in the average organisational Top 1,000 Global Innovators ranking by 2028, commanding the top 4 spots.

Smaller businesses changing the patent landscape

Based on an analysis of the global innovation ecosystem, focusing on the top 1,000, it is evident that the rapid rise of patent activity has seen increased competition, with more activity coming from smaller companies. Clarivate’s findings show that the share of global innovation attributable to the top 1,000 entities is decreasing, going from over 33% in 2016 to 17% today.

With smaller organisations contributing more to new innovation, the landscape is changing. Smaller innovators pose an ever-growing risk to the market share currently possessed by larger enterprises.

Our services

At Mathys & Squire, we work with both large and small enterprises, building close and longstanding relationships with our clients to establish robust defensive and offensive IP portfolios that generate and maximise commercial value in this ever-changing landscape.

Since June last year, patent proprietors have had the option of registering their European patents as Unitary Patents. Instead of having a bundle of national rights, proprietors have the option to maintain a single Unitary Patent right extending across the member states participating in the Unified Patent Court (UPC).

The primary attraction of such Unitary Patents is the lower cost for patent protection, as protection can be maintained across 17 participating member states by filing a single translation with the European Patent Office (EPO) and paying maintenance fees similar to the costs of maintaining protection in four of those countries. The major downside of such Unitary Patents is that they are always subject to revocation in a single court action, whereas if opted-out from the jurisdiction of the UPC, individual national patents can only be revoked on a country-by- country basis.

The EPO has been tracking the uptake of Unitary Patents and according to the EPO  website patent proprietors are choosing to convert around 18% of European patents into Unitary Patents.  The EPO also reports both the technology fields where the greatest numbers of Unitary Patents have been granted and the patent proprietors owning the greatest numbers of Unitary Patents.

As of 1 March 2024, the EPO reported the following as the top ten fields for Unitary Patents and the top ten proprietors of Unitary Patents.

From the raw numbers, it would appear that the Unitary Patent System has been enthusiastically embraced by tech giants such as Siemens, Qualcomm, Samsung and Ericsson which has led to digital communications being the 6^th most common field of technology for Unitary Patents. However, such raw numbers do not take account of the fact that there are far higher numbers of patent applications in some fields than others. When this is considered, a very different picture appears.

Take up of Unitary Patents by field of technology

Scaled by numbers of patent applications in each field of technology, the take up of Unitary Patents in different fields to date are as follows:

Similarly, when compared with the numbers of patent applications various proprietors filed in 2021 (a reasonable indicator of the numbers of patent applications filed by an applicant each year), the extent to which some of the top Unitary Patent proprietors have embraced Unitary Patents is more tempered as is shown in the table below. As can be seen, in reality, Samsung and Huawei are actually converting a relatively small proportion of their patent applications into Unitary Patents.

Rather, when considering the numbers of patent applications different applicants file, the most enthusiastic users of the Unitary Patent System relative to patent filings appearing in the EPOs top users list, are Align Technology, followed by Pirelli and Vestas (see below).

Notable also are the major patent filers who appear on the EPOs top filers lists, but who have made very little or no engagement with the Unitary Patent System as are listed below.

Other, notable opt-outs appearing in the EPO’s top 50 patent filers for 2021, who appear yet to have engaged with the Unitary Patent system include: Baidu, 3M, CEA, Dow Chemical, HP and NTT Docomo, all of whom filed between 691 and 461 European patent applications in 2021 and all of whom are yet to register any Unitary Patents.

Conclusions

The picture these numbers paint is a nuanced one.

Historically, around 50% of European patent applications (most typically electronics patent applications) were validated and maintained in UK, Germany and France. A further 40% (often mechanical patents) were maintained in between 4-6 jurisdictions (often UK, Germany and France and along with a selection from Italy, Spain, and the Netherlands) with the remaining 10% of European patents (typically pharmaceutical patents) being maintained more broadly, sometimes (around 2% of patents) much more broadly.

That the fields of technology where proprietors most frequently choose Unitary Patents (e.g. civil engineering, furniture, machine tools, handling & other machines) are predominately in the mechanics field, suggests that to date, the success of the Unitary Patent has been replacing European patents which previously would have been maintained moderately broadly. Presumably, patent proprietors in such fields have been attracted by the potentially lower maintenance costs for such patents.

It is, however, also clear that different patent proprietors, even in the same areas of technology have very different approaches. Some (e.g. Volvo and Pirelli in the automotive field) are enthusiastic users of the new system. In contrast other major filers in the same field (e.g. Volkswagen who filed 459 European patent applications in 2021 and currently have 13 Unitary Patents) have barely used it.

Moving on to the electronics fields, the numbers suggest that some proprietors (e.g. Siemens and Ericsson) are choosing to covert around 15-20% of their European patents into Unitary Patents. However, many others (e.g. Samsung, Huawei & Nokia) are choosing to obtain Unitary Patents at a far lower rate or (e.g. Sony, Microsoft, NTT Docomo) not at all.

The relatively low take up of Unitary Patents in the electronics field relative to the total numbers of patent applications filed in that field suggests that the additional translation costs involved in registering a Unitary Patent compared with maintaining rights solely in UK, Germany and France (where protection can be obtained without filing a translation of a patent) is causing proprietors in those fields to delay embracing the Unitary Patent.

For large companies, a selective approach is entirely sensible. Typical translation costs for a Unitary Patent are expected to be around €5,000 per patent and translation costs will mount up to a considerable sum when a patent proprietor is filing thousands of applications each year.

As the present analysis focuses on the most active users of the Unitary Patent System and the largest filers of European patent applications, the behaviour of smaller companies is harder to discern. However, there are hints that at least some smaller companies are actively embracing the Unitary Patent System. Many of the fields of technology where Unitary Patents are proving popular (e.g. civil engineering, furniture, machine tools, handling & other machines) are fields which tend not to be dominated by exceptionally large filers of patent applications. It is also notable that it is the two smallest patent filers (Align Technology and Pirelli) covered by this study, both of whom filed less than 50 patent applications in 2021, who appear to be converting the greatest proportions of their patent portfolios into Unitary Patents.

Finally, the relatively low take up of Unitary Patents in the chemical and life science fields, would seem to confirm the reluctance of patent proprietors or at least the most frequent patent applicants, in those fields to expose potentially very valuable individual patent rights to the risk of revocation in a single court action. In most cases, this reluctance would appear to outweigh the potentially significant cost savings which the Unitary Patent route affords rights which are broadly maintained across Europe. However, even then, patent proprietors in those fields are converting around 10-15% of their granted European patents into Unitary Patents. 

Commentary by Partner Max Thoma has been featured in Accountancy Age, International Tax Review and World Intellectual Property Review, discussing how making the Patent Box relief more generous would act as an incentive for domestic firms to invest more in research and development (R&D).

Read the extended press release below.

The amount of tax saved by businesses through HMRC’s Patent Box scheme has increased by 23% over the last five years, from £1.14 billion in 2017/18 to £1.4 billion in 2021/22, says leading intellectual property (IP) firm Mathys & Squire.

The Patent Box, introduced in 2013, is a tax incentive that allows UK businesses to pay just 10% corporation tax on profits derived from any UK or EU patents. It was introduced by the Government to encourage businesses to invest more in research and development (R&D).

With Corporation Tax now at 25% that tax break has become increasingly attractive.

Max Thoma, Partner at Mathys & Squire says that making the Patent Box relief more generous would act as an incentive for domestic firms to invest more in R&D. This is possible now that the UK is no longer a member of the European Union and bound by its state aid restrictions.

The Patent Box tax relief is seen as one way to help improve the UK’s low level of R&D spend. Overall spending on R&D in the UK is estimated to be 2.9% of GDP*. This trails behind countries such as the US (3.47% of GDP), Japan (3.27%) and Germany (3.13%).

Says Max Thoma: “The Patent Box rules have had a positive effect on the amount British businesses invest in R&D. However, we still lag behind some of our global competitors – an even better Patent Box would help to close that gap.”

Additionally, the UK lags significantly behind other G7 countries in terms of the total number of patent applications. In 2022, applications to the IPO reached 19,500**- however this is dwarfed by the number of patents filed by applicants based in China (1.58 million), the United States (505,000) and Japan (405,400)***.

Despite the rising amount of relief being provided through the Patent Box system, the number of companies claiming relief has fallen from 1.540 in 2017/18 to 1,510 in 2021/22. Mathys & Squire point out that this could be a sign that the Patent Box scheme is much less well known than R&D credits.

Sectors including construction (1% of Patent Box claims) and IT (4% of claims) make very limited use of the Patent Box scheme, suggesting that businesses in these sectors are missing out of opportunities to both protect their IP and reduce their corporation tax bills.

Says Max Thoma: “A significant number of companies may not be aware of the benefits of the Patent Box or that they could be claiming a significant tax relief.”

“Construction and IT are both sectors where businesses are not always aware that they may be able to patents systems and techniques they have developed. Some are paying too much tax as a result.”

Change in number of companies claiming Patent Box relief and amount of relief claimed (in £m)

*World Bank

**IPO

*WIPO

This year for International Women’s Day, we asked a few of our partners to highlight inspiring female inventors and pioneers that have had a lasting impact on intellectual property (IP). Partners Jane Clark, Helen Cawley, Caroline Warren and Dani Kramer outline the incredible careers and legacies of Sheila Lesley, Kathi Vidal, Anna Connelly and Grace Hopper.

Partner Jane Clark recounts her experience with Sheila Lesley

Partner Jane Clark recounts her experience with Sheila Lesley OBE, one of the ground-breaking examples in the UK of women in IP and the first female President of CITMA, The Chartered Institute of Trade Mark Attorneys.

“My female role model in IP, well there weren’t many around in the UK back then, but in any event it has to be the incomparable Sheila Lesley. Sheila was a pioneer for women in the UK IP profession.”

As set out in the linked obituary, Sheila attended Girton College, Cambridge, specialising in Natural Sciences and Law but decided not to pursue a career in chemical research after being inspired by seeing John Logie Baird, the inventor of television, walking across the golf course in Bude. Instead, Sheila joined Forrester Ketley & Co. (now Forresters IP) qualifying as a UK Chartered Patent Agent (as UK Patent attorneys were then known) in 1953.

“Ours was then a male-dominated profession, so much so that Sheila was the first woman in 29 years to qualify as a UK Chartered Patent Agent (as UK Patent attorneys were then known)!”

Sheila went on to become the first female president of The Chartered Institute of Trade Mark Attorneys and her contributions were recognized with an OBE in 1988.

“I started work as a trainee patent attorney at what was then Forrester Ketley & Co. when Miss Lesley (as we were expected to call her) was already a senior partner. As a senior partner of the firm, she was employing far more women trainees than any other patent attorney firm in the UK at that time.”

“Despite the fact that Miss Lesley focused on trade marks, she always found time to support the female trainee patent attorneys. Indeed, I vividly recall taking a general inquiry call from a “gentleman” who said to me he didn’t want to talk to a girl and would I put him through to a man. I was polite but obviously offended, explained to the “gentleman” that I would transfer the call to one of our senior partners and transferred the call to Miss Lesley explaining before I transferred the call exactly what the “gentleman” had said. Miss Lesley told me later that she had politely told the “gentleman” concerned that we did not want his business. I would still love to know exactly what Miss Lesley said to him!”

Partner Helen Cawley showcases the work of Kathi Vidal

Partner and Head of Trade Marks, Helen Cawley, wanted to highlight Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).

“Kathi is clearly a very intelligent lady who is at the top of her profession.  At the same time as being a role model she invests time in others to help them reach their full potential.”

As chief executive of the USPTO, Kathi Vidal heads one of the largest Intellectual Property (IP) offices in the world, with an annual budget of $4 billion and over 13,000 public servants. Kathi was named as one of Managing IP’s top 50 most influential people in IP in 2022.

Attending Binghamton University at the age of 16, Kathi received a bachelor’s in electrical engineering and accepted a position at General Electric Aerospace, (now Lockheed Martin), prior to graduating. During this time her time at General Electric Aerospace, she designed one of the first A.I. intelligence systems for aircraft, as well as aircraft engine-control systems that are still used today.

She has helped to protect intellectual property rights, representing a broad spectrum of companies from start-ups with limited resources to some of the world’s most well-known companies.

Throughout her career, Kathi has shone a light on the importance of mentoring and creating opportunities for women from diverse backgrounds.  She continues this important work today.

Partner Caroline Warren outlines Anna Connelly’s lasting impact on public safety

Partner Caroline Warren wanted to celebrate Anna Connelly, a famous innovator that developed an external metal staircase in 1887, which is considered to be one of the earliest systems specifically designed as a fire escape.

One of America’s earliest female patentees, Anna Connelly’s contributions to public safety has seen her responsible for saving thousands of lives for over a century. She was one of the first women to be granted a patent for an invention after the American Civil War, and revolutionised building safety through her system of exterior metallic staircases and platforms that enabled people to escape a building in the case of a fire.

“Anna’s invention is one of those ideas that seems so obvious after it’s been thought of, but it was a real revolution at the time and has saved countless lives since.”

An extract from Anna Connelly’s original patent (US368816A) describes the logic behind her ingenious design:

“My invention relates to improvements in fire-escapes; and it consists of a bridge surrounded by a railing and having openings in the ends of the floor thereof, as herein described, the said bridge being adapted to be placed on the roofs of adjoining or adjacent buildings, thereby permitting the ready and safe passage from one roof to the other.”

Partner Dani Kramer highlights Grace Hopper’s legacy in computer programming

Partner Dani Kramer wanted to showcase the incredible work of Grace Hopper, a pioneer in computer programming.

“The trailblazing contributions that Grace Hopper made to the early development of computer programming languages and the compiler led to the computing industry as we now know it. “

In 1952, Hopper developed the first ‘compiler’, a computer program that allows written instructions to be translated into computer code.

“What I was after in beginning English language [programming] was to bring another whole group of people able to use the computer easily … I kept calling for more user-friendly languages. Most of the stuff we get from academicians, computer science people, is in no way adapted to people,” Hopper explained in a 1980 interview.

Born in 1906, Grace Hopper graduated from Vassar College with degrees in mathematics and physics, later joining the US Navy following the bombing of Pearl Harbour. She was assigned to the Bureau of Ships computation project at Harvard following an initial rejection due to her age and diminutive size, according to a Yale University biography. This project saw her work on the Mark I, the first US electromechanical computer, calculating rocket trajectories, anti-aircraft gun range tables and calibrating minesweepers.

After the war, she joined the Eckert-Mauchly Computer Corporation, later Sperry Rand, where she pioneered the idea of automatic programming. It was here that she developed the compiler.

Nvidia, the global market leader in computer chips used in AI applications, and CEO Jensen Huang, recognise the importance of Hopper to AI computing and named one of their latest chips after her – the GH200 Grace Hopper Superchip. The company’s H100 chips (H for Hopper) are specifically designed for AI applications, and power generative AI services like ChatGPT.  

On 6 March 2024, Mathys & Squire sponsored and attended the inaugural Non-Law Into Law Conference at the London School of Economics (LSE). The event brought together (and was co-organised by) students and law societies from LSE, Imperial College London, University College London, Queen Mary, Warwick University and Durham University, alongside firms from across the legal field.

Partner James Pitchford and Technical Assistant Louis Brosnan ran an intellectual property (IP) workshop in which the attendees worked in groups to tackle different challenging scenarios. Participants were encouraged to first think like an inventor and then as patent and trade mark attorneys – to devise solutions to real-world problems and then analyse the ways in which the innovative elements of their ideas could be protected as valuable IP assets.

Later in the evening, Technical Assistants Louis Brosnan and Annabelle Carver participated in a panel discussion on joining law from a non-law background. They sat alongside trainees from Linklaters, Slaughter and May and Jones Day and discussed questions relating to navigating the interview process and the fresh perspective that a non-law degree can bring to the industry. Louis and Annabelle provided insights on topics such as getting the most out of training sessions, how Mathys & Squire promotes diversity & inclusion in the workplace, and our approach to environmental considerations and social responsibility. They also discussed in detail what the day-to-day job of a patent attorney entails, and how the cooperative working environment at Mathys & Squire really makes a difference to those stepping onto the first rung of their career ladders.

Left to right: Technical Assistant Annabelle Carver, Partner James Pitchford and Technical Assistant Louis Brosnan of Mathys & Squire

Mathys & Squire is proud to continue fostering the development of those interested in pursuing a career in IP.

A three-day hearing began on Monday 19th February to address an appeal against the initial judgment which concluded that Tesco had infringed Lidl’s trade marks and copyright. Additionally, Lidl has appealed the decision to revoke one of its trade marks.

The Court of Appeal is tasked with determining whether the High Court’s finding that Tesco’s ‘Clubcard Prices’ logo infringed upon Lidl’s logo, both featuring a yellow circle within a blue square (Fig.1), was correct.

This case covers a range of intellectual property rights, including passing off, trade marks, and copyright. The anticipated decision of the Court is expected to provide clarity on various aspects, notably claims of ‘evergreening’ and issues of bad faith.

Should Tesco’s appeal prove unsuccessful, it will be required to remove the Clubcard logo which has become very familiar across its stores.

As the hearing has now concluded, we eagerly await the decision.

See our previous coverage of the case here.