donderdag 28 juli 2016

Patent tip: In which innovation to invest?

Commercially successful inventions are rare

The chances that you find a commercially successful technology by randomly picking a patent from say the Espacenet database of the European Patent Office, is about 3 percent. This means that about 97 percent is commercially unsuccessful. Why are these numbers so depressingly low? Well it resembles a statistical law of nature. If we look at the DNA of the human body that is actually coding, it appears to be 3 percent as well, meaning that 97 percent is junk. The commercial selection of innovation appears to be much like the natural selection of successful "properties".

The "junk" stuff however does serve a purpose, if it wasn't there, both in nature and in innovation, the good 3% would not be able to exist. And still the "junk" may provide for insights that later on become slightly twisted or applied in a different technical field, commercially successes.


How to judge inventions before they have proven to be successful? 

In selecting inventions from an investor point of view, two factors make all the difference. If both these factors are absent, the invention is likely to commercially fail. If one or both factors are present, the invention has a high chance of becoming commercially successful.



Factor 1: The innovator solves a problem at existing, paying clients

The innovator is a person working for company having clients in a specific field of business and the person sees a specific problem at the client, and provides a solution. Since the company already has clients in the very field of technology of the invention, most likely some of the clients are willing to try the innovation and actually may be willing to pay for it. 

Factor 2: The innovator is dying to have the innovation himself

The innovator is dying to have the proposed innovation himself. The innovation thus finds a intrinsically motivated person, that is wanting to solve a problem he is confronted with. This innovator most likely is a private person, but can also be a group of people eventually be a group of people within a company. 

These factors are no guarantee for success, yet a great filter to select the most promising innovation to invest. To inventors: if you find none of these factors resonating in your invention, please be careful not to spend to much resources on that specific invention.

I wish you all happy inventing!

Hendrik de Lange
Dutch and European patent attorney
www.octrooifabriek.nl


zondag 3 juli 2016

Patent tip: Are patents good for us?

On the Wipo website [1], some neat patent statistics are published, from 1980 onward for all countries in the world. If we plot the figures of the granted patents in some of the globe's most influential countries against a their national wealth indicators, in this case the GDP per person in 2005 $ ppp (obtained from the Gapminder database [2]), the following plot emerges:



In all these countries, a positive correlation exists between the number of granted patents and the local wealth. Apparently inventing and protecting is not only good for the patent stakeholders, also good for the economy at large.

Good to consider when arguing against the patent system.

I wish you all happy inventing,

Hendrik de Lange
Dutch and European patent attorney


Sources: 


[1] WIPO IP Statistics Data Centre: http://ipstats.wipo.int/ipstatv2/index.htm

[2] Gapminder:  https://www.gapminder.org/data/

dinsdag 29 maart 2016

Patent tip: obscure publications

Sometimes disclosing an invention is a way to prevent others from being able to patent it. But the publication also makes competitors aware of the invention. This dilemma has led to the so called obscure disclosures.



Obscure disclosures are available to the public, yet nearly impossible to find. There are numerous possibilities in obscure disclosing, of which I will give you some to consider.

The non tech local newspaper

This  used to be the trick in obscuring disclosures, however more and more newspapers, even local ones are being scanned and becoming digitally available.   

The uncommon foreign language 

If the local newspaper is still to open to the public, it might be sensible to translate the invention to a less available language, and then have it printed in the local newspaper. It may be odd, that inside a local newspaper, suddenly a technical document in for instance a native African or native American local language is published.  

The obscure library

A book or a magazine, delivered at a department library of an unrelated university sub department may also do fine. If your invention is for instance about making cheese, submitting a paper at a library of aerodynamics will render this publication by nature hard to find.   

The third parties observation

A very efficient, yet greatly unknown trick is filing a (preferably hand written) third party observation at the European Patent Office in a patent that has already been granted. The office has to attached the observations to the file and make it publicly available. Yet if the invention is about making cheese and the documents are added to a file concerning nuclear fusion reactors, no-one is going to find the cheese related docs soon.

The reason to submit the documents hand written, is because more and more the documents filed at the European patent office are scanned and the characters are optically recognized and made available in searchable documents. Hand writings are simply a lot harder to make searchable. 

Be careful 

Be however careful, that the obscured document is not so obscure, that in fact no-one can find it, no matter how hard they try. Than the obscured publication, may after all not be a publication at all.

I wish you all happy inventing,

Hendrik de Lange
Dutch and European patent attorney
http://www.octrooifabriek.nl



zaterdag 30 januari 2016

Patent tip: Patents are good for us!

In the World Economic Forum, this interesting image was shown [1,2]:



Each dot is a country, ordered in global competitiveness ranking versus IP protection ranking. Not surprisingly a country with a good IP protection system in place is more competitive.

The fall back in competitiveness of the Netherlands during its patent free era is further proof of the beneficial effects of a good IP system [3].

Summarizing:

Patents are good for us!

I wish you all happy inventing,
Hendrik de Lange
www.octrooifabriek.nl




[1] Ideas Matter:
http://www.ideasmatter.com/blog/item/108/ip-and-global-competiveness-go-hand-in-hand#.VqyF-rIrKUl

[2] Global Competitiveness Report, Klaus Schawb
http://www3.weforum.org/docs/gcr/2015-2016/Global_Competitiveness_Report_2015-2016.pdf

[3] http://octrooifabriek.blogspot.nl/2015/06/patent-tippatents-contribute-to.html

dinsdag 26 januari 2016

Patent tip: Top ten reasons to patent

1. To protect a competitive advantage

By preventing others from entering a market or using a specific technology, a monopoly can be obtained with patents. Thus a patent portfolio becomes a business insurance against infringement, abuse or technological piracy.



2. To increase value of your business

Because of an obtained monopoly, higher margins can be generated, leading to higher profits and a higher company value. Patents can simply help in generating a higher return on investment.

3. To increase credibility of your business

By filing patent applications, there is some evidence of a technological progression in your company. This can help attract higher skilled staff and can convince potential clients that you are advanced and innovative. Thus you are likely offering them state of the art service, leading them to have a competitive advantage as well.

4. To enhance your power in negotiation

In mergers or takeovers, a patent portfolio represents additional value, especially when the underlying products or services are commercialized. A party with a portfolio is being taken more serious by competition. Competitors will rethink copying and forcing you out of the market, when there is a risk of legal procedures. A takeover or merger is a more likely option.

5. To raise licensing revenue

By licensing out technology, passive income can be generated, with relative low expenditure of resources, such as production facilities, distribution facilities and aftersales. Licensing partners may have far superior resources, which can be used to the advantage of both licensing partners. Licensing contracts can be made with non competitors in various different fields or even with competitors in the field of business the patent holder is active in.

6. To convince investors to invest

It is a great advantage if the technology at stake is protected, so that higher value can potentially be generated. Especially granted patents present a proof that the technology can be monopolized. For start ups, the existence of a patent portfolio can even be the essential feature for attracting investors and can be instrumental for the survival of the company.

7. To obtain a positive image of your business

Patents are still seen as a high value publication, and can be used as a marketing tool, both for innovative aspect as well as for a perceived level of quality. Your patents portfolio is a strong indication that your business delivers state of the art products or services.

8. To improve defense against infringement cases

In infringement cases, if the infringed portfolio can be more powerfully countered with an own portfolio. It makes a cross license deal more likely and greatly enhances the chances of avoiding any verdict to pay damages. "If you sue me with your patents, I will sue you with my patents" is a wonderful medicine against over aggressively litigating competition.

9. To promote innovation among employees

If there is a patent policy in place, employees are given some incentive to innovate and apply for patent protection. This can be -an often underestimated- aid in boosting personal scientific publication strength of employees and in honoring the inventors. Thus patents can provide a considerable intangible value for staff engagement.

10. To reduce profit taxes in innovation stimulating fiscal regimes

A number of tax incentives are provided for innovative industries. In most cases tax authorities accept granted patents as a valid proof of innovation.


11. To prevent others from protecting specific technologies

For a considerable number of companies,this is the main reason to pursue patent protection. However it actually does not lead to a very profitable, society contributing business. Numerous industries hoard patents, and sit on them doing nothing. In most countries however, "non usus clauses" prevent this practice from being very successful, except in the USA, where "non usus clauses" are absent in patent law. Thus, non-producing entities (NPE's) with huge patent portfolios, are very much a US-phenomena. NPE's mainly dominate the US-market and are rarely seen in e.g. the European countries.

Since this last reason reflects an objective to hinder someone else rather than to progress ones own business, it is placed where it belongs, outside the top 10.


I wish you all happy inventing!


Hendrik de Lange
Dutch and European patent attorney.
http://www.octrooifabriek.nl

vrijdag 22 januari 2016

Patent tip: License out your technology! An offshore technology example why to do so.

Superior technology

Some technologies are overturning an entire existing market, just because they are superior in at least one aspect. If a technology is superior in a number of aspects, the overturning can be very rapidly. Let me introduce one of such overturning technologies, one that is still in its infant years. This technology is invented by Antoon Buitenhuis, who is the founder of the company Siron B.V.. His invention concerns a new and improved way of testing open type fire extinguishing systems, especially for the offshore, hydrocarbons producing industry. Typically these fire extinguishing systems are equipped with a number of open spray heads, a distribution net, a pump and a seawater intake. Once a fire is registered, the pump switches on and the entire installation is showered in seawater. It may be no surprise, that these systems are known as deluge systems. 

Until recently, these deluge systems were tested on a regular basis, as prescribed by safety standards, with seawater. This testing however poses quite some problems: by this testing, corrosive seawater is introduced in the system, leading to corrosion and blockages as is illustrated in the following image.


The clogged interior of a real life, no longer safe, fire extinguishing spray head 

This is a true the nightmare of any site operator: a safety system, that is no longer safe. By conventional testing, equipment, production and most important the lives of the staff aboard is at risk.  

The idea

By testing with specific, dense smoke, the corrosion and blockage problem is eliminated. Furthermore, the on site equipment is no longer unnecessary exposed to corrosive seawater. this means that with this technology, expensive shut-downs for deluge system testing virtually belong to the past. The smoke testing has obviously been baptized "dry deluge testing". One very important aspect is that testing according this technology is in full conformity with the NFPA standards for testing open fire extinguishing systems. The NFPA is globally accepted as the leading standards institute for this specific industry and is recognized by most jurisdictions.  

Blocked spray heads can be individually identified and replaced.

Commercial aspects

Till today, some seven sites have been tested with the dry deluge testing system, and another ten are projected for 2016. Now there is a first licensing partner selected in the UK, and from other countries, more and more licensing requests poor in. Even outside the offshore industry major interest is received form nuclear power plants, where the wet testing poses considerable threats as well. A first mayor British nuclear power plant has successfully been inspected in 2015 with the dry testing system, more will follow soon.

So how does the future look?  Well from the yet early data and a global estimate of a market size of 1470 relevant producing offshore production platforms, an S-curve can be calculated. The data, as currently available, predicts an contagiousness of 0,703 per year, leading to an estimated 97% saturation of the market in 2031, the year in which the patent expires. The time span in which the technology is protected, thus covers a market penetration of 97% in the current model.  

If we discard the effect of licensing on the number of platforms, a contagiousness of about 0,451 can be deduced, leading to a market penetration at the year of patent expiration of less than 43% market penetration.   



To license or not to license, that is the question

So in this situation, a single patent will cover the time span from start until predominantly the entire market is provided, a scenario almost to good to be true. Yet key to this rapid deployment is a clear licensing strategy. The size of Siron B.V. makes it impossible to service all these rigs without partners. So the choice to license was relatively easy made.  

Thus it becomes evidently clear from this neat example, that without proper licensing, it is impossible to sufficiently rapid expand the business to full scale and to seriously loose potential. Yet in most offshore related companies, licensing is seen as a no go area. This case clearly proofs the opposite can be true and urges a strategical reconsideration of technology commercialization.

I can only say: check your technologies and see if you can expand your business by licensing!

I wish you all happy inventing!


Hendrik de Lange
Dutch and European patent attorney
http://www.octrooifabriek.nl



donderdag 7 januari 2016

Patent tip: The extend of offshore patents

Patents in offshore technology

In the offshore industry, increasingly technology is being protected with patents, as can be seen in the below image. This image is showing the published patent applications relating to fixed offshore platforms (IPC class E02B17). In the last five years, patent filing numbers on fixed offshore platforms have tripled, from around 200 to around 600 patents per year:



The increased activity in patent application has not yet lead to increased patent litigation. Patent disputes within the offshore operating industry still are rare. Thus in most countries, the extend of patent protection and its enforcing potential has not been trialed. In those countries where some case law has developed, diverging visions on the extend of enforcement have ensued, leading to differences in geographical protection of inventions.

Honestly, it was a client who came with the question, and I had no real insight in where a patent could be enforced offshore and where not. Luckily, two law students, while obtaining their bachelors degree, helped me a lot in sorting out this rather complex matter [1,2].

The main question in their search was: What is the offshore extend of patent protection in various jurisdictions around the globe?



UNCLOS

In order to fully grasp the legal situation of patents offshore, first of all we have to dig into the United Nations Conventions on the Law of the Sea, known by the UNCLOS acronym. The latest of these conventions is the 1982 version UNCLOS. This convention divides the sea into basically five zones: 
  1. Territorial zone: 12 nautical miles from the coastal baseline.
  2. Contiguous zone: 24 nautical miles from the coastal baseline.
  3. Exclusive economic zone 200 nautical miles from the coastal baseline
  4. Continental shelf: from the coastal baseline up to the outer edge of the continental margin or up to 200 nautical miles from the baseline where the outer edge of the continental margin does not extend up to that distance. The continental shelf is limited to a maximum of 350 nautical miles from the coastal baseline  
  5. High seas: anything beyond previous zones.

Graphically the UNCLOS zones can be represented by the following image:  




National situation

Although the UNCLOS made numerous sea activity and legal situations clear, the enforcement of patents offshore have not been clearly worked out. This has led to the situation, that it still greatly depends on the national law and national case law, how these various zones are interpreted in patent enforcement. Although it could be argued  that the exclusive economic zone would also be valid for the laws on patents, this is anything but the case. Below I have listed some countries relevant for offshore activity, of which we could find information on this topic. The list is far from complete, and seen the divergent national approaches, there is a need for harmonization.


UK

In the UK, for instance, patents can be enforced both in the territorial sea and the entire exclusive economic zone, even extending to the continental shelf as is indicated in patent dispute between Rockwater and Coflexip. So offshore infringement can be halted up to the outer edge of the continental shelf [2,3,7].


The Netherlands

In the Netherlands, enforcement outside the territorial zone, in the exclusive economic zone is likely restricted to methods for exploration and exploitation of natural resources, as is suggested in the patent dispute Prodect versus Smulders [2,4]. The word methods is put in italics, because it appears that patent protection on objects or products as such is not deemed possible in the exclusive economic zone. 


United States of America

The USA have not ratified the 1982 UNCLOS. In a relative recent decision, the US federal court decided, in referral to a 1983 Presidential Proclamation on territorial boundaries, that the Exclusive Economic Zone lies beyond the USA territory and beyond the territorial sea. Patent enforcement therefor is only possible up to 12 miles from the baseline  [1,5,7].  

Australia

Under Australian law, a patent gives the patentee the exclusive rights to exploit, or to authorize
another person to exploit, the invention throughout the patent area which includes the Australian continental shelf and the waters above the Australian continental shelf. Thus, in Australia, patent enforcement is possible on or in the waters above the Australian Continental shelf [1,6].

South Africa

In a relative recent South African Court decision, the court noted the controlling Maritime Zones Act, the object of which is to bring South African law in line with the Convention, provided that “any law in force in [South Africa] applied to ‘installations,’ such as pipelines, within the Exclusive Economic Zone.” Therefor in South Africa, patent enforcement is possible up to 200 nautical miles from the coastal baseline [7,8].


Germany

In German patent law, no reference is made to any offshore territorial effect on patent enforcement. Germany is however signatory state of the UNCLOS. No case law could be found, from which any indication of the offshore patent protection could be deduced. In German legal literature, the general opinion is that specific laws do extend offshore, if and only if there exists an extension clause (Erstreckungsklausel) in that specific law. Since there is none in the German patent law, this would mean that the patent protection and enforcement would stop at the 12 nautical mile limit [9]. 

Norway

In Norwegian patent law, much like in Germany, no reference is made to offshore territorial effects on patent enforcement. However from the Norwegian petroleum act, it can be deduced, that patent law is applicable to devices that engage petroleum activities on the Norwegian continental shelf. However this is an implicit regulation, and does not clarify patents on other technical fields, such as tidal energy, wind energy and transportation of energy [10].

Canada

Canada did ratify the UNCLOS. In the Canadian Patent Act however, no provisions are given that expressly extend the enforceability of patents offshore. Neither does this act have provisions limiting the enforceability of patents to a “territory or possession” of Canada. Since there are no limitations to any of the nautical zones, there is a sound basis for concluding that Canadian patents would extend to resource exploration or exploitation installations and fixtures located within Canada’s Exclusive economical zone or on the Canadian continental shelf.

Thus, it is likely that Canadian patents would be deemed as being enforceable against infringing entities that are active in the field of offshore resource exploration (or exploitation) and performing the infringing actions within Canada’s exclusive economical zone or on the Canadian continental shelf.

However, it is possible that a Court could interpret the statutes more narrowly and deem the Patent Act inapplicable to such offshore facilities, since there is no Canadian statutory or case authority directly on point[1].


Nigeria

The nautical stretch of the enforcement of patents is not implemented in the Nigerian patent law. Nigeria however did ratify the UNCLOS. Most likely in an Nigerian trial on offshore patent infringement, the courts will follow the UK practice. This is however not yet proven [1].

European Harmonization 

In the historic versions of EU-regulations relating to the community patent, explicit reference was made to the UNCLOS (and to the UNCLOS continental shelf regulation). In these issues, a neat harmonization in line with the UNCLOS, i.e. that enforcement would be integrally possible in the exclusive economic zone, or even on the continental shelf had been proposed [11, 12, 13]. Sadly none of these versions had succeeded to become in force.

The now soon to become in force regulations on the Unified Patent Court and the Unitary Patent are silent about the nautical extent of territories [14, 15, 16]. Somehow in the excitement over this long awaited break through, the nautical territories have been forgotten.

There is however a relative recent EU Court decision on the extend of European regulations offshore. Although this decision concerns an employment relationship and a social security dispute, the conclusions in the opinion of  Advocate General Cruz Villalón refer to the functional equivalent of the continental shelf and the State territory [17]. In the Court decision, following this opinion, in item 37, it has been established that EU law is applicable to the continental shelf adjacent to a Member State [18]. 

So this is very promising:
1. The Unitary Patent and Unified Patent Court are EU-law.
2. The Salemink versus UWV EU-Court decision dictates that EU-law is applicable to the continental shelf.

With the Unitary patent system coming in force, as a surprise gift, an automatic harmonization and broad extension of offshore patent protection can be welcomed. The system that is currently in force under the European Patent Convention (EPC), is not EU-law and territorial issues, as dictated by the EPC are solely underlying national jurisdiction.

Those applying for any offshore related patents, I can strongly advice to opt in the unitary patent system as soon as it becomes available. This is in order to avoid eventual narrow, national territory judgments by national courts on infringement disputes offshore, such as the Prodect versus Smulders case illustrates [4].



Exceptions for ships passing through territorial waters

All the above does not apply to ships passing through. This ship exception is dictated by Article 5ter(i) the Paris Convention, in its latest version:

‘In any country of the Union the following shall not be considered as infringements of the rights of a patentee: (i) the use on board vessels of other countries of the Union of devices forming the subject of his patent in the body of the vessel, in the machinery, tackle, gear and other accessories, when such vessels temporarily or accidentally enter the waters of the said country, provided that such devices are used there exclusively for the needs of the vessel.


Flag of the ship

In UNCLOS, the state shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag. Possibly patent infringement on passing through ships and on ships in the high seas can still be trialed in the flag state, provided there is patent protection in force in the flag state in question.


Wrapping up 

The extend of offshore patents in various nations remains a yet to be harmonized, rather complex topic. Obtaining information from well informed local patent specialists is key to understanding the national peculiarities of offshore patents.  


I wish you all happy inventing,
Hendrik de Lange
http://www.octrooifabriek.nl





Sources and literature:

[1] De werking van offshore octrooihandhaving in Australië, Canada, Nigeria, Noorwegen, Venezuela en de Verenigde Staten, Myrthe van Till

[2] Europese Octrooihandhaving Offshore, Harmen Priekaar
https://hbo-kennisbank.nl/record/E6EEF1A8-EF3C-469C-B2A2F8078622D6CF

[3] [2003] EWHC 812 (pat), Rockwater versus Coflexip

[4] 285153/KG ZA 07-385 Prodect & Alberts versus Smulders & Van Oord, items 4.5 en 4.6

[5] 4:09-cv-1827 S.D. Tex (02-03-2011) WesternGeco versus Ion Geophysical Corp. et al.

[6] Off the Shelf Patent Protection,  M.Turonek
http://www.lexology.com/library/detail.aspx?g=5ff48d32-6944-4575-a5bb-8ce9d326c3d2

[7] The extent of patent coverage in offshore waters: a comparison, G. Matthew McCloskeyHiroshi Sheraton and Ashley Tarokh
http://www.lexology.com/library/detail.aspx?g=4fd8f8b9-b426-4307-abb2-6d8a24ee136c

[8] 700/98 [2000] ZASCA 25 Schlumberger Logelco Inc. v Coflexip S.A. 

[9] Sonderausgabe Windforce 2012, Rundbrief zum Recht der Erneuerbaren Energien, Geltung von EU-Recht für Offshore-Windparks in der AWZ, F. Fändrich.

[10] Får patentloven anvendelse på norsk kontinentalsokkel? Jan Martin Rostveit,  http://munin.uit.no/handle/10037/1789

[11] (draft) community patent convention (15-12-1976) Article 97(8)

[12] 89/695/EEC: Agreement relating to Community patents Article 9
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:41989A0695(01):EN:HTML

[13] proposed council regulation on the Community patent Article 3
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52000PC0412&from=EN

[14] Regulation (EU) No 1257/2012 of the European Parliament and of the Council, implementing enhanced cooperation in the area of the creation of unitary patent protection.
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:361:0001:0008:EN:PDF 

[15] Agreement on a unified patent court.
http://www.unified-patent-court.org/images/documents/upc-agreement.pdf

[16] 17th draft of the Rules of Procedure of the Unified Patent Court
http://www.unified-patent-court.org/images/documents/UPC_Rules_of_Procedure_17th_Draft.pdf

[17] Opinion of Advocate General Cruz Villalón, C347/10 Salemink versus UWV
http://curia.europa.eu/juris/document/document.jsf?text=&docid=109265&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=172814  

[18] Judgement of the EU Court, C347/10 Salemink versus UWV
http://curia.europa.eu/juris/document/document.jsf?text=&docid=118001&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=172814