If we plot for each year the numbers of granted Dutch patents for the last century against the GDP per person, the following image emerges:
Here a positive correlation appears between wealth and patent numbers. Whether it reflects a causality, is a more difficult question to answer. However if we look at some of the most influential countries on the planet, all of them, no exception, show a positive correlation between wealth and number of patents:
A larger patent number relates somehow to an increased wealth. With this knowledge in mind, if we plot Dutch patent statistics from the last two and half century, a neat historical fingerprint emerges:
In this fingerprint, we see the devastating effects of the French occupation, of the split up of Belgium and the Netherlands, of the patent free era and, much to my surprise to a lesser extend, of the German occupation during world war II. As far as the number of patents is concerned, it can be concluded that -not surprisingly- a foreign occupation is bad news, as is the split up of a country. Cooperation, such as the start of the European Patent Office is good news, as can be seen in the rising numbers from 1977 onward. Remarkably, throughout the last 265 years, the filing numbers grew on average with a 3,5% per year as indicated by the orange (excel fitted) line.
Cooperation gears up wealth
Early patent applications in the Netherlands, roughly from the 16th century up to 1780 could be filed for individual provinces. From 1780 onward, only patents were filed for the combined provinces, the so called "Staten van Holland". Here the level of cooperation gradually stepped up from a provincial level to a country level. The cooperation further stepped up, about a century later, around 1883 when some basic international recognition of foreign patents was agreed upon in the Paris Convention. Yet another century further in time, in 1977, the European Patent Office started. It had begun granting patents for some cooperating European countries and gradually became the patent authority for the entire European continent. In line of this development a new level of cooperation is likely to take place, where the next level is unavoidably global. While the European unitary patent is still in its fragile pre-birth pregnancy state, it will sooner or later form the template for a global patent.
A global patent
To my opinion, it is only a matter of time until we have such a true global patent. The World Intellectual Property Organisation (WIPO), the organisation most likely to guide us there, has already been established in 1893. Ever since, the WIPO is enhancing global cooperation for all kinds of intellectual property, including patents. The Patent Cooperation Treaty, now only codifying for a joint patent application procedure, is the most likely candidate to be adapted to codify for a global patent as well. It has been in force since 1978. Till now 150 states are member of this treaty, almost the entire globe:
A global patent, Yes it may take another century until it is actually here, and yes it will be good news for all of us. And I cant wait to learn where the global patent court will be seated, hopefully it is announced before I die and hopefully it is a truly centralized court in one location only.
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.
On the Wipo website , 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 ), 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
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 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.
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.