THE FUTURE OF THE PATENT SYSTEM

Thinking about the future is an intrinsically human feature. We are not satisfied with knowing just the past and present and that is why human beings have always tried to find out what the future will bring. Since this blog is devoted to patents, I will put myself in the shoes of a fortune teller to try to foresee what the future will bring for the patent system. Although it is a futile effort, on the other hand I am not afraid to do so because my eventual failure will be revealed either when I am no longer in this world or when this entry has fallen into oblivion. Summing up, I am about to begin a bold but harmless exercise.

Undoubtedly, if we want to get a glimpse of the future we must look at the past, as if we were in a lineal regression. If one wants to speculate about the future, returning to the origins seems to be the most appropriate move.

Although, in the fifteenth century there were already some examples of what could be the first patents (Venice, Florence, the Kingdom of Castille, among others), it was late in the eighteenth century that the first patent laws were passed; USA – (1790), France – (1791) and even Spain (1811), where under the French occupation the first patent law, almost a copy of the French one, came into force in 1811. As it can be seen, the first patent laws were passed a few years after two major revolutionary events, such as the Independence of the USA from the British Empire and the French Revolution. At this stage, it could be interesting to ponder on what has happened over the last decades so that the patent system has evolved from an essentially revolutionary concept to a conservative one, a system that current anti-establishment movements would likely abolish if they would seize power….. after a hypothetical revolution.

Before delving into the future of the patent system, it is timely to remember what this is all about. It is not unusual that patent professionals, alienated by the routine, forget their role in the system. The patent system can be described as a QUID PRO QUO (give something in exchange for somehing else ). Its goal is to promote the technological progress. With that purpose exclusive rights are granted to the inventor (See title VI from the Spanish Patent Law 24/2015), for a limited period of time (20 years from the filing date in most States, harmonized by the TRIPs, Art. 33). In exchange for those exclusive rights, the inventor must provide Society with an invention that really means technological progress. It is by meeting the novelty and inventive step requirements that the contribution of the invention to the technological progress is guaranteed. It is Patent Offices, and especially patent examiners who are in charge of checking those requirements, as well as the sufficiency of disclosure, a requirement which is of paramount importance for Society to benefit from the technological progress that all inventions must imply.

With regard to these requirements, it is appropriate to draw one’s attention to the fact that in the early days only novelty was required. That absence of the inventive step requirement brought about problems that raised the need to require something else in order to achieve a proper functioning of the patent system. The novel “Les Souffrances de l’inventeur” by Honoré de Balzac faithfully shows the first decades of the patent system and describes those problems caused by lack of inventive step and of the doctrine of the equivalents. This awareness of the need for an additional requirement for the exclusive rights being granted gave way to the inclusion of the Inventive Step requirement in all patent laws throughout the 20th century. That did not take place in Spain until 1986 when the Patent Law 11/1986 was passed.

After this introduction which is anything but brief, I am going to try to identify those factors that may influence the future of the patent system. I will follow the reasoning underlying the process of invention: whenever there is a problem, sooner or later, an invention will emerge to solve it. Likewise if one identifies elements or factors that might influence the patent system, this will try to evolve by addressing them or adapting to them. I will now list them:

• Do patents favour technological progress?
• Do patents promote commercial success?
• The patent trolls
• The avalanche of patents and the backlog
• Artificial Intelligence (AI) in the invention and the patent examination
• The blockchain technology and the patent system
• Morality.
• Pharmaceutical patents and access to drugs
• Other technologies and the patent system

Do patents favour technological progress?

Taking into account what was said above about the origins of the patent system, the answer should be “yes”, with no hesitation whatsoever. Nevertheless, since the early days of the system, there have been many cases where the contribution to technological progress has been questioned.

Although this is a very controversial issue, some experts believe that when extremely disruptive inventions appear, patents on those inventions slow down progress in innovation during their legal life:

• Patent US821393 (Wright brothers) on a “flying machine” was said to have slowed down technological progress in the field of aviation in the USA early in the twentieth century.
• Patent US223898  (Edison) on the light bulb.
• Patent US4575330 (Chuck Hall) on 3D printing.
• Lately It is said that patents on gene editing CRISPR (there has been a lawsuit concerning the ownership of the first patents on the technology) might have a similar effect.

Some economists have conducted studies based upon the hypothesis that patents do not promote technological progress. For instance, zia Qureshi, a renowned economist who held posts at the World Bank and the IMF says:

“A reform of the patent system seems urgent to soften overly broad protections and create markets open to competition, which is after all the main driving force behind innovation and its penetration in all economic sectors.”

Economists Michel Bodrin and David K. Levine wrote a study known as “the case against patentes”. These two economists are clearly in favour of the reform of the patent system and the conclusion includes a statement made by another economist Fritz Machlup before the congress of the U.S.A. in 1958:

“If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. But since we had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it. “

Among the problems of the Patent System that Bodrin and Levine highlight are the following:

• There is little evidence that stronger patents lead to more innovation.
• Free competition is always the main driving force of innovation.
• Patents are often used by dominant companies to keep competitors at bay.
• All patent systems end up being more restrictive, thus hindering competition.
• Patentes should be abolished, at least in some sectors.

Some economists make statements against patents from time to time. Last summer it was the Spaniard Juan Ramón Rallo who published the article “¿y si las patentes mataran la innovación?” (and if patents killed innovation?). His main criticism lies in the so-called “Tragedy of the anticommons”. The number of patents is incresingly growing, for example a smartphone can include elements protected by hundreds of patents. In a given sector, the number of patents can be so high (see the number of patents by Nokia en 5G) that innovating there can make easy to infringe a patent, which could slow down innovation. This growing number of patents might be creating a paralysis in innovation and the economy.

Do patents promote commercial success?

Since patents grant holders exclusive rights over the invention, it is usually taken for granted that patents guarantee commercial success but this is not true at all. There are cases where the existence of a patent has limited the commercial success of a product. Some examples:

The mechanical adhesive known as “velcro” protected by the patent US2717437 : During the patent’s legal life, the product was used for health purposes and by NASA to hold objects no longer subject to gravity, but its commercial expansion was very limited. The company holding the patent did not have an ambitious commercial attitude. Nevertheless, once the patent expired, there was a commercial boom and numerous companies used the product with various purposes, without fear of being sued for patent infringement.

The smart card or chip card was invented by the French Roland Moreno and protected by the patent US4007355 , filed in 1974. However, the technology was not widely used until the late 90’s, once the patent had elapsed.

We have recently witnessed that Elon Musk announced that he would not enforce Tesla’s patents against possible infringers. Undoubtedly the purpose is to increase competition in the electric car market so that the technology becomes more popular thus providing more opportunities to Tesla, the leading company in the sector. Elon Musk has also said that patents stifle innovation.

It can be foreseen that the patent system increasingly might be questioned in the medium term future if there is increasing criticism that underlines the negative role of patents in promoting technological innovation, at least in some sectors.

The patent trolls or NPE (Non Practising Entities)

The so-called Patent Trolls or NPE’s (Non Practising Entities) enjoyed a great popularity in the USA a few years ago, due to some judicial proceedings and some measures taken by the Obama Administration to try to hinder their functioning. These Trolls are companies that acquire patents not for the purpose of exploiting them but to sue possible infringers, only to obtain profits from granting licenses to those alleged infringers.

The NPE’s often buy patents from companies in a difficult situation. Those trolls take advantage of the peculiar features of the US judicial system where defending oneself against an infringement lawsuit usually involves high costs. As a result most defendants would rather settle and pay less than the amount needed to defend themselves in a lawsuit. That is why it is usually said that the trolls’ main weapon is the threat of massive court fees.

The main breeding ground for trolls is the abundance of low quality patents, on which they feed. There is a case usually held as an example of the way trolls work; a low quality patent granted by the USPTO had a set of claims so broad that a normal fotocopying machine was covered by those claims. A NPE bought that patent and started filing infringement lawsuits against photocopy stores throughout the Midwest. Most of those small businesses would rather settle and pay a small license fee than go to court.

Improving the quality of patents is the best weapon to fight against those trolls, which threaten to move to Europe, if one day the expensive unitary European Patent and the UPC (Unitary Patent Court) come into force.

Undoubtedly it is not straightforward to define “quality of patents” as it is well known in the SCP (Standing Committee on the Law of Patents).

The quality of patents can have several facets:

• Fulfillment of patentability and legal requirements.
• Being able to overcome post grant challenges such as oppositions, appeals and judicial proceedings.
• Proper drafting of claims taking into account the prior art so that they cannot circumvented and to facilitate prosecution of alleged infringers, thus favouring commercial success.

In order to successfully fight the patent trolls, the most appropriate facet of quality is that which has to do with compliance with patentability and legal requirements.

As for the future of the patent system, it can be envisaged that if we do not want it to be hostage of patent trolls, the quality must be increasingly improved and new AI based tools could help.

The avalanche of patent applications and the backlog

As the graph below shows, the number of patent applications filed annually is soaring. In 2017 it reached 3.17 million patent applications, of which 1.38 million were file in the People’s Republic of China.

As a result, the backlog or number of pending patent applications in the various patent offices is also very high.

This growth in the number of patent applications filed, as well as in the number of pending patent applications is likely to continue in the following years. Patent Offices will have to elaborate strategies to cope with the growing workload. These strategies can be of two types:

• Amendments in the patent granting procedure.
• Technological changes.

Amendments in the patent granting procedure.

We have recently seen some examples of what those changes could look like:

• The European Patent Office launched a proposal in 2017/2018 called “early certainty with enhanced flexibility” which meant the possibility of delaying the beginning of examination during three years. A proportion of those applications with a delayed examination would be abandoned, thus reducing patent examiners’ workload.
• The Brazilian INPI is said to have a 200.000 patent applications backlog and it has tried to make amendments in the granting procedure. A first proposal was to grant all patent applications after search if neither oppositions nor a substantive examination request were filed. This measure was eventually discarded but a new one has been implemented: patent searches carried out by other Patent Offices on other patent applications of the same patent family will be used to issue examination actions. A similar move has been taken by the Uruguayan Patent Office.

Increasing patent fees is another way of addressing the growing number of patent applications. A significant increase in these fees would probably reduce the number of applications. It seems that the demand of patent applications is of the elastic type, it is reduced when the price increases. A very sharp increase in patent fees in Ecuador several years ago caused patent applications to plummet.

In the future some of those States where the exponential growth of patent applications is bound to cause huge problems are likely to resort to amending their patent granting procedures, with a especial inclination towards worksharing with other Patent Offices.

The other option for tackling the increase in the number of patent applications is technology, which is the subject of next section.

The Artificial Intelligence (AI) and the patent system

Artificial Intelligence (AI) that can be defined as those computer systems with capacities and behaviours usually described or perceived as “intelligent” by human beings is enjoying a period of boom, especially in the media. The world of patents could not be an exception and the list of articles, studies and conferences on the subject is innumerable.

When it comes to how technology can help cope with the expected avalanche of patent applications, Artificial Intelligence plays a prominent role as we are already witnessing.

Numerous companies and patent offices have already developed AI-based tools for the prior art search and they are already being used. Although the results achieved by this technology are very promising, so far it cannot replace patent examiners. However they provide a good starting point. The following statement, made by the Finnish Patent Office, during an event on AI and PI organized by WIPO (World Intellectual Property Office) properly sums up the current situation:

“The system thus cannot be relied upon to find the relevant prior art but it may in some cases point towards a useful direction. Currently, the system does not significantly speed up the prior art search.·”

In the short/medium term, depending on how fast this technology evolves, the job of prior art will be almost completely automated .

AI is going to automate a large part of the examination of patent applications in the medium/long term, which should help cope with the prosecution of the expected avalanche of patent applications.

Artificial Intelligence and the patentable inventions

I already devoted a post to the challenges posed by AI to patentability in this blog a few months ago, but I would like to delve into one of those topics again, one that has been on the news recently and that will have a relevant role in the short and long term.

The authorship of inventions, who should be designated as inventor in patent applications?

Nowadays, most patent laws all over the world establish explicitly or implicitly that the inventor must be human.

Currently, the are two groups of experts with different opinions:

• We are still very far away from the generation of inventions autonomously by AI. Therefore, there is no need for changes in patent law (This is what the European Patent Office says).
• Inventions are already being generated by AI, and are being patented. There is a need to amend patent law.

This last group of experts has achieved protagonism in the last months. A group, led by professor Ryan Abbot has filed patent applications at the UK, US, Israel and European Patent Offices, designating as inventor an AI system. These inventions are said to have been generated, allegedly, by an AI system known as Dabus. It is said as well, that the creator of the AI system did not know anything about the field to which the inventions belong so he could not lead the system to develop those inventions so Dabus would be the legitimate inventor. The USPTO would have already requested that a human inventor was designated and it is working to adopt an official position on this matter.

Bearing in mind that the purpose of this written exercise is to speculate about the future of the patent system, the novel “The Venetian Court” comes to my mind. It was written by the U.S. patent attorney Charles L. Harness and published in 1982. Harness foresaw a time, 2014, when there would be an AI system which would generate 95% of all patent applications. In the plot there is a trial where one of the arguments used to try to invalidate the patent was that the inventor was not human. Although a few years later, we are somehow approaching that situation. This novel could be held as an example of speculative exercises which are successful.

A possible solution to “who must be designated as inventor in the case of inventions generated por AI is the designation of legal persons, such as the company which owns or uses the AI system to develop the invention”. This was requested by Beat Weivel, responsible por IP at Siemens at the event “WIPO Conversations on IP and AI” when presenting an invention obtained for Siemens by an AI system, which could not be patented because the inventor was not human.

Although with varying degrees of human intervention, there are already AI systems which are inventing or contributing to the generation of inventions. One example is the Swiss Company Iprova. The proliferation of these AI inventive systems could further increase the flood of patent applications already anticipated.

When referring to the impact that AI will have on the future of the patent system, it can be expected that in the not so distant future there will IA systems capable of generating inventions autonomously. it will have been decided hopefully, who must be designated as the inventor. On the other hand, when the “general” AI is already here, the existence of the patent system will have to be discussed. If there are general AI systems that generate inventions autonomously, with no need for incentives, the patent system might no be necessary any longer, though it could spur the creation of increasingly powerful computers and AI algorithms.

The blockchain technology and the patent system

Similarly to AI, blockchain is another technology that often appears in the media. The most commonly used definition is that of a huge ledger where different records are linked and encrypted to protect the security and privacy of those transactions. It can be applied to most fields, including patents, though they are specially known as crytocurrencies.

In the world of Industrial Property and more specifically in patents, the main use of the blockchain technology lies in the possibility of assigning dates which cannot be altered, acting as electronic notaries; for example, the date when a knowledge kept secret was created or the date on which a non patented technology started being used with the purpose of defending against an infringement lawsuit (prior user rights) or in order to establish the date when commercial information such as brochures or catalogues became prior art.

Likewise, blockchain technology is increasingly being used to create databases where there is no doubt as to the patent ownership, and all changes caused by transference of the right are automatically registered . This technology might be used by Patent Offices, also to manage the requirements of the Nagoya Protocol. This kind of technology is expected to expand in the medium and long term.

Although blockchain and AI are “buzz words” that are usually seen together, unlike AI it does not seem that blockchain technology will be disruptive as far as patents are concerned. It will be an additional tool but not a game changing one.

Morality

Most patent laws exclude from patentability some inventions for being against morality and public order. In the European Patent Convention, Art. 53 states:

European patents shall not be granted in respect of:  

• (a)    inventions the commercial exploitation of which would be contrary to “ordre public” or morality; such exploitation shall not be deemed to be so contrary merely because it is prohibited by law or regulation in some or all of the Contracting States;  

What is moral or not, evolves over time.  There are multiple examples of how morality changes over time and also of its impact on patentability:

• -“Sexual” patents, especially those which had to do with contraception were excluded from patentability until the 1960’s in Great Britain.
• Gambling inventions were excluded from patentability in the U.S.A until the 1980’s.
• Whereas late in the 19th century and early in the 20th century numerous inventions whose purpose was to prevent or hinder masturbation were patented, nowadays it is inventions designed to facilitate masturbation that are patented. (See my entry in this blog devoted to “sex, morality and patents”).
• Religious beliefs and culture also have an influence on inventions which are excluded from patentability.
• Several muslim countries explicitly exclude some inventions from patentability . As an example, the Iranian Patent Law establishes:

Bull fighting inventions that are patented in Spain, France and some Latin American countries would probably be excluded from patentability in other countries due to moral issues:

In the field of biotechnology there are some inventions which are excluded from patentability because of morality, for example, the rule 28 of the EPC states:

(1)Under Article 53(a), European patents shall not be granted in respect of biotechnological inventions which, in particular, concern the following:

• (a)processes for cloning human beings;
• (b)processes for modifying the germ line genetic identity of human beings; 
• (c)uses of human embryos for industrial or commercial purposes; 
• (d)processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes. 

Given recent technological advances in this field, one envisages that some of these inventions will be patentable in the not too distant future.

Pharmaceutical patents and access to drugs

The pharmaceutical industry can be regarded as the epitome of a sector where the patent system works properly since it promotes inventions that benefit society. The innovation the pharmaceutical industry carries out makes possible the appearance of new drugs that can cure diseases that until recently were regarded incurable such as hepatitis C.

Developing and least deceloped country have traditionally blamed patents for hindering access to medicines. Nevertheless, today some social sectors in developed countries are following suit, due to the very high price of some patented new drugs (anti-hepatitis C, CART, biologicals, Spinraza, Orkambi, etc.).

On the other hand, pharmaceutical companies resort to various strategies, such as “patent thickets” or SPC’s (Supplementary Patent Certificates) to try to extend the life of patents on successful drugs as long as possible.

In determining how the patent system will evolve concerning pharma, it is not so difficult to foresee that developing and least developed countries will continue to take steps aimed at reducing patents on drugs and that pharmaceutical companies will seek to extend the life of their patents, either by prolonging the life of SCP’s or by applying strategies equivalent to the so called “patent thickets”. This is no so different from what has been going on for many years but the popular uproar against patents as the main culprit in soaring prices of new drugs will not cease to increase in the most developed countries so it seems that measures should be taken in the short and medium term to keep the patent system alive.

Other technologies and the patent system

Additionally to blockchain and AI, already treated, other new technologies have recently emerged; nanotechnology, CRISPR, 3D printing and the so-called “Big Data”.

Regarding “Big Data”, it can be defined as the availability of huge volumes of data, which has made possible the recent take-off of AI . “Big Data” is often called the oil of the 21st century.

Another relationship between patents and “big data” can be derived from the use that some companies make of the freely available data from patent offices. Those companies elaborate the profiles of patent examiners, facilitating the definition of the most adequate strategy for the prosecution of a patent application.

What about 3D printing? A technology that has been with us for more than 30 years and which I cited above as a possible example of broad patents on new technologies which could stifle innovation. Its use is gradually expanding. If in a few years everybody could own a high quality 3D printer at a reasonable price, all kinds of objects could be obtained, perhaps protected by IP. This is a threat to patents and IP at large that is looming in the future.

Conclusions

The previous analysis can be summarised in the existence of numerous threats to the patent system, which could even jeopardize its survival in the future: First of all the misgivings about whether the patent system is useful for society to promote innovation and the possible use that some actors could make of it to earn money without promoting innovation, mainly due to the low quality of some of the patents granted. The spread of AI based tools could made possible a bigger efficiency in the management of patent applications by Patent Offices but on the other hand, the use of AI for generating inventions might bring about an avalanche of patent applications difficult to handle by Patent Offices. The appearance of a general type AI which would be able to replace human beings in most tasks could render the patent system useless. Blockchain can be regarded as a new tool which is not likely to lead to significant changes. Inventions excluded from patentability due to morality and public order are bound to vary throughout the coming decades. Likewise, if the pharmaceutical industry continues to set too high prices to the new patented drugs, popular backlash, adopted by some governments might jeopardize the patent system even before AI does.

Leopoldo Belda Soriano

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