It hardly needs to be said that intellectual property is big business. As last year’s Hargreaves Review report said: “Every year in the last decade, investment by UK business in intangible assets has outstripped investment in tangible assets: by £137 billion to £104 billion in 2008. Global trade in IP licences alone is worth more than £600 billion a year: five per cent of world trade and rising.”
The extraordinary sum of $4.5 billion that was raised from the sale of Nortel’s portfolio of 6000 patents to Apple, EMC, Ericsson, Microsoft, RIM and Sony created quite a stir. This transaction was then topped by Google offering $12.5 billion for Motorola Mobility, a sum based largely on the strength of its portfolio of 17,000 patents.
These deals have highlighted the fact that the capitalisation of major IP-rich businesses, not least Alcatel Lucent, could be less than the potential value of their patents alone. This has led to some companies, including InterDigital, actively looking at whether shareholders’ interests would be best served if the company was sold in order to realise the value of the patents they hold.
In all the excitement about patent valuations, one voice seems to have been lost, namely that of the inventor, the person who makes these huge sums possible and who is the bedrock of the patent system.
I am not thinking here so much about professional inventors ‑ I am sure they have a host of their own issues ‑ but rather engineers and scientists within a corporate environment who are required to assign their intellectual property to their employer under the terms of their employment contract.
All is well and good when the employer commercialises the patent and both parties share any rewards that accrue from the invention. In the same way both parties, directly or indirectly, share the cost and effort that is associated with product development and marketing. This symbiotic relationship is at the heart of many high-tech enterprises.
Where it can all go wrong is when the patent becomes a commodity that is licensed, reassigned, traded, auctioned, etc.
By this point the chances are that the inventor has been left behind and almost forgotten. He or she is unlikely to gain any financial benefit from the patent and might be totally unaware of how the invention is being used (or, in many cases, not being used other than as a chip in a game of high-stakes patent litigation).
It is no wonder many inventors have become cynical about “the system” to the point that they are disinclined to engage with it. For some inventors the negative feeling about patents is more to do with the belief that the process has been trivialised and these days you can get a patent for just about anything, but that could be the subject of an article in its own right!
The situation is arguably at its worst when a patent troll, acquiring patents simply with the intention of asserting their acquired patent rights against infringers, is the custodian of a patent. The inventor has well and truly lost control.
So, I believe that if we want inventors to keep on inventing and for the patent system to do what it was originally conceived to do ‑ that is protect inventors’ creative efforts from being copied without reward ‑ it is imperative that inventors remain involved with their patents throughout the lifetime of the patents.
Our creative industry is something the UK should be extremely proud of and something that government works hard to encourage and protect. The spirit of innovation is the foundation of this whole industry and sadly it is something that shows signs of being undermined.
To remedy this we need to turn patents back into something that the creators have a vested interest in, not something that businesses trade like shares and stock.
If the recommendations in the Hargreaves Report are followed – and the jury is still out on this ‑ some of the problems and barriers in the current system may be dealt with. But if we want a sustainable patent system that is going to continue to generate wealth, let us not forget the inventor. We can then get back to inventing and innovating – what we do best.
Dr Graham Maile is director of strategic consulting at Plextek
