tensions between patents and standards - oecd.org · tensions between patents and standards:...

Tensions between Patents and Standards: Reasons and Remedies

Paris, 11 May, 2012

OECD Expert Workshop on Patent Practice and Innovation

Nikolaus Thumm, Chief Economist, EPO

Background

0

50 000

100 000

150 000

200 000

250 000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

European Patent Filings (1991- 2011)

Total Filings 244 372

Euro PCT Int. Phase 181 813

Euro Direct 62 559

EPA Mission:

'As the Patent Office for Europe, we support innovation, competitiveness and economic growth across Europe through a commitment to high quality and efficient services

delivered under the European Patent Convention.'

European Telecommunications Standards Institute (ETSI)

• ETSI ... plays a central role to ensure the proper functioning of the internal market. This is achieved by the prompt and efficient production of harmonized European standards that are referenced to support the implementation of EU legislation and public policies to ensure the free movement of goods within the single European market and allow enterprises in the EU to become more competitive.

Potential conflicts between patents and standards

• Patent ambush (Dell, Rambus) • Refusal to license unrevealed patents (LG,

Philips) • Failure to agree on FRAND (Qualcomm,

Orange Book) • Third party transfer without pass on of

obligations towards SDO (Nokia, Bosch) • Third party patents not in the standard

(Microsoft, i4i)

Demand for patenting and patent grant on time Competition conflict?

The Concept of Uncertainty

• Applicants strategically – increase pendency time – enlarge the scope of the claims

• Results in: – More work for the office – Higher uncertainty for third parties – Consumption of considerable Patent Office

resources Welfare objective: -reduction of uncertainty in the system -put dis/incentives right

Drop out stages by JC (1990-2000)

0%

20%

40%

60%

80%

100%

EEM HP AVM HN IC POL ELE POC COM BIO TEL MO CET VGT

Before Search Report (bsr) After Search Report (asr) Before Exam after Search report After 1st or 2nd Commun.After 3rd of more commun. After oral proceedings After Intention to grant

Uncertainty by filing practice (1) Practice Description

1. Drafting of applications with too broad claims from the start

Applications are drafted with claims that are non-inventive and unclear. Basis is created in the description that can establish inventive step/clarity, if necessary.

2. Amendment(s) creating new deficiencies / Multiple amendments

In reply to the examiner's communication, amendments are filed that meet the objection but that create new deficiencies such as lack of clarity or new deficiencies under Art. 123(2) EPC.

The examiner has to write another communication in reply to which another amendment is filed that may give rise to yet other deficiencies (multiple amendments).

3. No constructive reaction until summoned for oral proceedings

Frequently, constructive responses, such as claim restrictions or the filing of experimental data are not submitted until oral proceedings are summoned.

4. Filing of divisionals applications with similar scope than parent

One or more divisionals are filed claiming subject-matter similar to that of the parent application. Very often, the divisional creates problems with Article 76(1) EPC (not supported entirely on parent).

Often, the parent is withdrawn before a final decision is taken (often a day before the oral proceedings for the parent).

Alternatively the parent is not withdrawn and therefore refused, and goes to the Board of Appeals. That means that the same subject matter is treated in parallel by the Board of Appeals (the refused parent) and the Examining Division (the divisional, filed before refusal).

Proceedings for the divisionals are very often delayed by the applicant.

Uncertainty by filing practice (2) Practice Description

5. Auxiliary request(s) in examination and opposition proceedings

Auxiliary requests are filed in examination and opposition proceedings. The filing of auxiliary requests occurs very late, typically after summons to oral proceedings.

The number of requests is felt by examiners to be high and very often without reasoning.

The requests are very often filed by the attorney while knowing that his main request is not allowable.

6. Appeal against refusal and immediately filing of new/amended claims

First instance is not considered. Some applicants do not bring all arguments in the examination phase. They go for a straight refusal and an appeal.

At appeal, amendments are submitted for the first time.

7. Filing of a bundle of similar to overlapping applications in parallel and such that spread among many directorates

Filing of applications with similar but not identical scope or appearing to relate to different technical fields due to wording.

Frequency Effect on Office Resources

Effect on Pendency Time

Development over time

Case study: Essential Patents with ETSI* Hypothesis:

Participants in SDO's have a strong incentive to have own patents included in a standard's list of essential patents (patents that are necessary to use a specific standard)

The development of a standard within the committee is a dynamic matter, technology and standards developments carry an inherent uncertainty.

Applicants have an incentive to delay (adopt) the grant decision

Essential patents have longer pendency time than comparable patents

Claims of essential patents are amended more often than those of comparable patents

* Berger, Blind, Thumm, Research Policy 2012

Creation of new data sample:

• sources: several EPO databases (data assembled by PD Business Services)

• all files active between 1998 and 2008 (1,529,007 files)

• detailed information on – status of application, date of filing, examination – relevant time information (filing, search,

examination, intention/decision to grant, refusal, oral proceedings etc)

– number of claims, cited X/Y documents, amendments made by applicant, communications during examination

Data:

EPO dataset of all applications in IPC G/H (Physics/Electricity) active between 1998 and 2008 (583,241 files)

Database on patents declared to be essential in ETSI IPR database

Matching of information on essentiality with EPO data on claims, amendments, divisionals etc.

Comparison of "Treatment" and Control Group

Essential Patents with SDOs

Description of Essential Patents Sample

86

153

96

64

36

2828

1998

1999

2000

2001

2002

2003

2004

2005

2006

per filing yearNumber of Essential Patents Total of 824 unique EP

patents could be identified in ETSI database

Top Applicants: Nokia (262) Qualcomm (156) Ericsson (102)

IPC G/H

(Physics/Electricity)


Parameter: Pendency Time

60.565.4

020

4060

80A

vera

ge P

ende

ncy

Tim

e in

mon

ths

Only finished files (grant, refusal, deemed withdrawn) - Divisonals excluded Pendency Time calculated from Filing Date until Date of Intention to Grant

for filings in IPC G/H 1998 - 2001

Average Pendency Time

Control Group Essential Patents


Parameter: Multiple Amendments

0.8

1.6

0.5

11.

5A

vera

ge N

umbe

r of

Am

endm

ents

Average Number of Amendments

0.05

0.13

0.0

5.1

.15

Sha

re

Share of Grants with 3 or more Amendments

for closed files in IPC G/HAmendments



Parameter: Filing of Divisionals

0.03

0.090

.02

.04

.06

.08

Sha

refor closed files in IPC G/H

Share of Divisionals



Summary Patents in standards are of 'higher value' than non

standard related patents

Higher number of X references, pendency time, number of amendments and divisional filings are significantly connected with the application being relevant for standardization

Overall 25 % more amendments

Time until final decision essentially longer with essential patents

Black box

Potential Remedies

• Early identification and disclosure of essential patents

• Identification of prior art documents coming out of the standardisation process (non-patent literature)

• Closer collaboration between POs and SDOs • Competition surveillance

• Patent pools

Patent pools versus bilateral agreements • Patent pools

– decrease transaction costs – one-stop shop for access to standards – accelerate technology transfer – faster access to patents – provide evaluation of essentiality in relation to

standard – provide a benchmark for essential patent royalties – but not with vertically integrated pool members – increase prices with complementary patents? – increase patenting rather than innovation – facilitate anti-competitive behaviour?

Patent pools: elements of success • essentiality of patents of pool members • fair sharing of revenue • encourage small patent holders: royalties per

company rather than per patent (don't count divisional applications)

• independent licensing agent to be appointed • including evaluation of essentiality (essential to

standards, technically, commercially) • proper governance rules to avoid competition

conflicts • pools per technology rather than products • fix licensing fees early (royalty distribution usually at

the very end)

Patent pools: regulatory perspective

• avoid competition conflicts by – only essential patents in the pool – be open for new participants – no dominant market position – licensors must be free to license outside

the pool

European Patent Office and SDOs

• 2003 EPO became ETSI member • 2007 EPO became observer at the Global

Standards Collaboration • 2009 MoUs with ETSI and IEEE • 2022 High level technical agreement with

International Telecommunication Union (ITU) • access to standardisation documents for

prior art search • regular exchange with the European

Commission

Many thanks!

[email protected]

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