One of the aims of this column is to be provocative, so here goes: there are good reasons to think that the continual and impressive growth in patent filing reported in the latest IP5 report will not continue, and that before long the number of applications will decline.
That proposition is counter-intuitive. Filings grew 11% in the five biggest IP offices in 2012. And, despite the economic downturn and R&D cuts, the trend over the past five years has been solidly upward: it's been party time for patent investors, attorneys, offices and lawyers. Surely that trend is bound to continue? Well, there are a few reasons for doubt.
First, note that the growth in the past few years has mostly been a story of emerging Asian economies catching up. According to the IP5 data, first filings in China increased by 271% between 2007 and 2011, while they actually declined in the EPC states, Japan and the US. This is largely a story of Chinese industry making up lost ground, a trend that is likely to plateau at some point, particularly if China tightens up on patentability.
Second, consider which industries use the patent system. Across the IP5 (with, surprisingly, the exception of SIPO), the biggest sector for patent applications in 2012 was electrical engineering, which accounted for 29% of EPO applications, 36% at the JPO, 37% at KIPO and an astonishing 50% at the USPTO. But I suspect much of this has been driven by high-tech companies patenting defensively to prepare for cross-licensing and infringement suits. Allen Lo of Google says as much in our interview with him on page 16.
Patent practitioners in these companies would not put it like this, but I will: it is effectively an arms race, where each combatant needs to have a patent arsenal – even though everyone knows that much of that arsenal is impotent (that is, invalid) or ineffective (not likely to be infringed). It's the numbers rather than the quality that matter. With the reforms introduced by the America Invents Act such as the CBM procedure, and the changes proposed in the Innovation Act, we might expect patenting in this field to slow down. If it does, I predict many corporate executives – and their accountants – will breathe a sigh of relief.
But (you might say), at least we can always rely on the pharmaceutical industry to keep filing patents. However, I wonder if that too may slacken? With compulsory licensing, challenges to blockbuster drugs (such as Glivec) and the difficulty of protecting second medical uses, some companies may conclude patents are more trouble than they're worth. One senior executive in the industry recently told me that he would happily stop filing patents altogether if there was effective regulatory data protection worldwide. I'm still not sure if he was joking.
Another challenge to the patent system is Big Data, which Joren de Wachter has discussed in detail on his website and in a TEDx presentation. He argues that the exponential growth in information available as prior art should mean that, if offices do their job right, 100% of patent applications will be rejected.
I am not arguing that the patent system will or should cease to play an economic role, nor that it will suddenly stop being used by many inventors and companies, nor that all patent specialists are going to be out of a job overnight. But it is worth reflecting on some of these big trends: one thing we've all learned in recent years is that booms rarely last forever, and it is best to be prepared before they come to an end.
Do you agree? Join the debate at ManagingIP.com/blog or on Twitter @ManagingIP
James Nurton
Managing editor
Managing IP
