Global IP Trends Indicator underscores increasing globalization in patent filing strategies

In late June, international patent filing service RWS inovia released the 2017 Global Patent & IP Trends Indicator, a survey of global patent owners, which is designed to uncover trends in the filing strategies for intellectual property across the world. Overall, the report shows an increase in patent application filings into foreign jurisdictions which may be suggesting that the economic forces of globalization continue to impact markets across the world.

Among the key findings of the report include the more than 73 percent of respondents filed patents in four or more countries during last year. That was up from the 62 percent filing in four or more countries in 2015 from the last RWS inovia global trend indicator. Overall patent filing is becoming more international by nature as more than 41 percent of respondents filed more than half of their patent applications during 2016 in foreign jurisdictions, up from 34 percent filing in 2015. The report also found that 2016 saw patent owners file patent applications for the first time in a number of jurisdictions like Mexico, South Africa, Australia, Turkey, Brazil and India; 96 percent of these patent applications were filed under the terms of the Patent Cooperation Treaty (PCT).

Most of the respondents to the RWS inovia survey are based in the United States, the home jurisdiction for 42.6 percent of respondents. Europe was the home jurisdiction for 35.6 percent of the survey’s respondents and the remaining 21.8 percent of respondents hailed from outside those two major patent filing jurisdictions. The industrial sectors most heavily represented in the survey are mechanical engineering (17.8 percent), then pharmaceuticals (15.8 percent) followed by chemicals and materials (11.9 percent). 41.6 percent of the respondents were companies having one to 100 employees. In terms of number of in-house counsel, 43.6 percent of firms retain anywhere from one to four in-house patent attorneys.

Justin Simpson of RWS inovia noted the increase in survey respondents filing in four or more jurisdictions is a clear indication of the forces of globalization which continue to play out in the intellectual property space. “I think the world is getting smaller,” Simpson said, adding that 87 percent of the survey’s respondents have been filing into BRIC (Brazil, Russia, India, China) countries within the past five years. For the first time in the study’s history, China was not included as a first time filing destination among patent applications. The RWS inovia study also discusses anecdotes from survey respondents on why they stopped filing in certain jurisdictions; one felt that the European office was “too expensive” while another felt that Singapore’s market was “too small.”

In terms of importance of jurisdiction, the United States’ system still ranked number one among the survey’s respondents. That would seem to be a happy surprise in light of this year’s U.S. Chamber of Commerce innovation index which ranks the current U.S. system of patent rights as 10th overall, tied with Hungary. “It comes as a shock that the U.S. is ranked tenth, it’s not an attitude seen across the world,” Simpson said. Although the U.S. still maintains a lead over Europe in importance as far as the perspective of patent filing entities are concerned, the European Patent Office is used more often as a search authority than the U.S. Patent and Trademark Office; 77.4 percent of respondents used the EPO as opposed to 61.3 percent using the USPTO. That’s a big shift from the previous year, when 56 percent of respondents used the EPO as a search authority and 64 percent used the USPTO. Anecdotally, some patent filers felt that the EPO offered good speed and quality, even if the office was more expensive to use. One respondent who had a poor experience with both the USPTO and the EPO felt that the European office was “slightly better” of the two. According to Simpson, the U.S. Supreme Court’s decision in Alice Corp. v. CLS Bank International ranked high as a concern among those seeking to obtain U.S. patents.

Even as international patent application filing has increased among respondents in the RWS inovia survey, one-third of the survey respondents reported having their IP budgets reduced during 2016. The percentage of respondents reporting such reductions increased from 31 percent in 2015 to 33 percent in 2016. About 39 percent of the respondents reporting budget cuts had their budget cut from anywhere between 5 percent and 15 percent. Simpson mentioned that there might be a couple of reasons for the increase in IP budget cuts. “One question is the patentability of software, does it affect the filing rate,” Simpson said. “I think the answer there is definitely yes.” Whereas patenting in the software space was a lot more open 10 to 15 years ago when there was less prior art in the field, court decisions like Alice have lessened the degree of freedom patent practitioners enjoy in the software sector. An inventor with five potential inventions might only patent on a few and decide that one or two ideas worth patenting 15 years ago aren’t worth the filing fees today.

With patent filing activities on the rise at the same time that IP budgets have been cut, patent applicants have had to find ways to reduce costs through legal strategy. There appears to have been a recent shift in the use of local counsel versus foreign counsel. In 2011, local counsel negotiations (14 percent of respondents) were more common among respondents than foreign counsel negotiations (12 percent). By 2017, this percentage flipped in a big way, with foreign counsel negotiations being reported by 27 percent of respondents and local counsel negotiations rising slightly to 16 percent.

For non-law firm providers, Simpson believes this trend could be a positive one in terms of filing larger numbers of patent applications with less resources. “People need to be more creative with how they handle patent filing,” Simpson said. “They’re being more creative with patent budgets and figuring out how to do more with less.” He added that the percentage of respondents planning to outsource certain foreign patent filing activities has risen from 1 percent in 2010 up to 11 percent in the most recent survey. The top method that survey respondents used to reduce foreign filing costs was to choose to file in fewer countries; 43.6 percent of respondents reported this as a cost-cutting measure they had incorporated. 33.9 percent of respondents reduced filing costs by bringing steps in-house; of those respondents, 86 percent did so for cost containment purposes.

In terms of expected patent filings through 2017, the largest percentage of respondents (38.1 percent) expected to file between four and 19 patent applications this year. Simpson noted that this level of patent application filing indicated that these firms were of decent size, with about 100 employees when filing four or five patent applications in a year up to well over 1,000 employees for companies approaching 20 inventions in a year. “When you look at what is the average size of companies, those filing four to 19 patent applications in a year are typically small- to medium-size enterprises,” Simpson said. “These SMEs make up the core of all business around the world.” Topics cited by respondents as key trends to watch out for in 2017 include patent trolling, the trend against computer implemented methods in the U.S., the America Invents Act and post grant challenges, as well as development in China.


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