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Unitary patent figures don’t add up

James Nurton

The unitary patent and UPC will bring UK business benefits worth £40 million, while earning lawyers an estimated £200 million – according to a UK government statement. What’s going on?

The UK government last week published a bill to ratify the agreement on the unified patent court (UPC) (it’s not the unitary patent court, despite what you sometimes read, for the good reason that it will ultimately have jurisdiction over European patents as well as the proposed new unitary patents.)

The bill was accompanied by a press statement from the Department for Business, Innovation and Skills (BIS). This said that the unitary patent “would lead to direct benefits to business of up to £40 million per year” while the location of one branch of the central division of the court in London “will benefit the economy an estimated £200 million per annum”.

The Rolls Building - home of the England & Wales Patents Court

If that’s right, then it means the new system will line the pockets of lawyers far more than it benefits industry. I suspected that was not what the government intended so we asked them to clarify.

First, the £40 million figure: this is what applicants will save on translations, after the transition period has ended: it is the sum of a predicted saving of around €22,000 (£18,500) per patent based on coverage in 25 countries, 20 pages and translation costs of €85 a page and taking into account that there are around 2,000 European patents in force owned by British companies.

I’m grateful for that clarification. However, critics will be quick to point out that it doesn’t factor in renewal costs (not surprisingly, as we don’t know what they will be yet), or the fact that many European patents are validated (or renewed) in fewer than 25 states.

But it’s the £200 million figure that is more challenging. All the BIS spokesperson said was: “The estimate of £200m in benefits to the economy from the London Unitary Patent Court [sic] is based on a 2011 survey by retired Judge Sir Robin Jacob and is based on gains to London lawyers.”

I’m pretty sure they’re referring to the May 2012 report titled Economic Impact of Alternative Locations for the Central Division of the Unified Patent Court, which was prepared for the IP Lawyers Association, the Law Society and the city of London Law Society by FTI Consulting. (In other words, the report was essentially propaganda by the UK legal profession, who were putting the case for hosting the central division in the UK. Nothing wrong with that, but it needs to be read in context.)

As part of this study, Sir Robin compiled confidential information on patent litigation revenue for UK law firms. When estimates for barristers, patent attorneys and others were added in, total annual fees came to “£150 million to £200 million” (at 2011 prices). The study suggested that relatively little of this work – perhaps £30 million – might be retained if the central division were lost to another country, but that gains of up to £1.936 billion (an extraordinary figure) would be made if it were located in London. In the event, of course, politicians decided that the central division should go to Paris, with two branches in London and Munich handling pharma and mechanical cases respectively.

The BIS statement

The important point to note is that the £200 million figure is what would hypothetically be lost if the entire central division were not located in the UK, and most patent litigation work went elsewhere. That is not the same as saying (as the BIS statement does) that the UK economy will benefit by an extra £200 million by hosting just one branch of the central division.

For sure, having a local division and the central division (pharma) in London will probably be good for UK lawyers overall, and may lead to extra work. But that £200m figure is simply misleading.

In the big picture, this misrepresentation doesn’t really matter much. Parliament will almost certainly ratify the agreement whatever the numbers say, and in any case most reasonable people know you shouldn’t trust any data put out by governments.

But next time you blame journalists for misunderstanding or misinterpreting IP matters, remember that they have to try to make sense of this kind of rubbish, often on a tight deadline.


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