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Adjusting patent term is not the answer

James Nurton

With the patent system under scrutiny, once again there are calls to change the term of protection. But critics ignore the way the market works.

In an article in the Wall Street Journal today, Reuven Brenner cites recent cases involving Apple/Samsung, Novartis and Myriad to ask: "Must All Patents Last For 20 Years?" (you will need a subscription or free trial to read it in full). He quotes comments made by founder Jeff Bezos, suggesting that an appropriate term for software patents would be three to five years. There is also an online campaign for a five-year term for software patents.

I think Brenner is right to note that different lengths of protection are appropriate for different industries. Indeed, many jurisdictions do provide shorter terms of protection for certain inventions for example in the form of utility models (which typically last up to about 10 years) or the Australian innovation patent (eight years).

But I think those who criticise the 20-year patent term overlook the fact that patents last for up to 20 years. Many – if not most – granted patents are in fact abandoned long before the 20-year term is up, due to a combination of the costs of maintenance and the advance of technology.

Research on the average lifespan of patents is hard to find (which is a pity as you would think information on maintenance would be useful in planning annuity fees, for example for the unitary patent). That's partly because data is historical (the best we could do today would be to look at what happened to patents filed in 1992, 20 years ago) and partly I suspect because the average life of patents is gradually coming down, and patent offices don't particularly want to draw attention to that.

However, we do have Kimberly Moore's 2005 article Worthless Patents (written before she was appointed to the Federal Circuit), which showed that 53.71% of US patents issued in 1991 expired before their full term due to non-payment of maintenance fees (16.04% by 4 years, 21.03% during years 4 to 8 and 16.64% during years 8 to 12). In Europe, where renewal fees have to be paid annually rather than just three times, you might expect average lives to be even shorter. My attention was drawn to an interview with the DPMA's Kirsten Halves, which suggests the average life of German patents granted in 1990 was 12 years 5 months. And WIPO's 2012 World IP Indicators report includes a chart (A9.1.2) indicating the number of patents in force as a percentage of total applications, based on available data. The report states: "Around 18% [of patents eventually granted] lasted the full 20-year patent term."

In other words, the market determines patent lifespan. In industries where technology advances quickly, or patents prove worthless, they are being abandoned. Only where they are commercially important are they kept for the full term – especially in Europe where renewal fees after the 10th year add up to thousands of euros. Common sense suggests that pharmaceutical patents protecting blockbuster drugs may well be maintained for 20 years (or longer where extensions are available) but patents for software inventions that quickly become obsolete are abandoned much sooner.

Brenner suggests that lawyers, accountants and consultants benefit from the present system, though I'm not sure why (perhaps litigation would be reduced if there were shorter patents). I would have thought, on the contrary, that introducing different patent terms by statute would be a boon for lawyers, not just because of the inevitable arguments about the legality of doing so but also in disputes about which inventions fall into which categories, were different terms available.

There are many ways in which patent laws could be improved to ensure that the system provides a reward for inventors while also promoting innovation. But playing around with patent term is not one of them.


Article Comments

Dear James -

I see another positive effect of shortening the life of certain patents to a duration that is more likely to reflect the actual need to recoup investments. In my view it will also impede owners to keep a patent alive merely for litigating purposes, to block competitors entering the market and keeping innovation locked.

Don't you think?


Carolina Apr 30, 2013

Dear Reuven, thanks for your comments (and for initiating this important debate). Your concern about litigation abuses and patent inflation (if I can paraphrase) is widely shared but I think the answers lie in more rigorous examination and an active judiciary.

Would a 14-year term reduce litigation? I'd be interested to see some research, but my hunch is that (with the important exception of pharma, a special case) fewer patent suits are initiated in the last third of a patent's life than in the first two-thirds.

One side-effect of reducing patent term though might be that patent application fees would have to go up (to compensate for lost renewal fee income): this might weed out a lot of weak applications - but would it be popular with applicants?


James Nurton Apr 25, 2013

James, thanks for your comments. The point is why have, after whatever is voluntarily abandoned, the twenty years to start with? For lack of space, the WSJ dropped the origins of the 14 years which was: " John Kemp, the Fleming, was the earliest recipient of an English patent in 1331, awarded to import his weaver’s mystery. While the English Crown continued to grant such monopolies to “qualified immigrants” to establish industries, by the seventeenth century it also bestowed monopolies both to protect guilds against competition and fill the Crown’s coffers. The abuses led the English Parliament to enact the Statute of Monopolies in 1623 by which all form of monopolies, with an important exception, were abolished. The exception remained the granting of patents for bringing ‘new manufacture within this realm.’ These monopolies were to last for 14 years, to reward immigrant entrepreneurs for training two generations of apprentices on English soil." It led to abuses then, as it does now. About the lawyers, courts, patent administration - the expansion is simple: Look at the numbers of applications and the sums spend to insure against litigation. If shorter span, you would not spend the money to start with etc. best, RB

Reuven Brenner Apr 24, 2013

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