Patents

Patents are granted for inventions that are new, involve an inventive step (nonobviousness) and are capable of industrial application. They can play a very important role in the innovation process both by granting exclusive rights to inventors and by promoting information disclosure, as well as potentially increasing access to finance and opportunities for commercialization via licensing agreements or sales on markets for technology. In terms of granting procedure, patents can be obtained following national, regional or international routes, but once granted, they are national titles subject to national legislations and courts.
What is a patent?
A patent is an exclusive right granted to inventions that meet certain conditions. In general, patents are available for any inventions (in all fields of technology) that are new, involve an inventive step and are capable of industrial application (TRIPS, Article 27(1), WTO, 1994). On that basis, or on the basis of case law, in most counrties the patent subject matter excludes certain types of creations, like  scientific theories, mathematical methods, plant or animal varieties, discoveries of natural substances, business methods (patentable under certain conditions in the US) or methods for medical treatment (as opposed to medical products). Once granted, a patent right confers on its owner the right to prevent third parties (usually for a 20-year period from filing date) from making, using, offering for sale, selling or importing the patented invention (TRIPS, Article 28, WTO, 1994). Minimum standards for patent protection have been defined with the WTO’s Trade-Related Intellectual Property Rights Agreement (TRIPS) (see International dimensions of IP systems). Patents give the right to preclude others from exploiting the technology without the patent owner’s permission.   
 
The alternatives to patenting include secrecy,  lead-time advantages, use of complementary sales and service capabilities, technical complexity, on-going innovation, relationships based on trust or contract (see Innovation without IPand use of trademarks (see Trademarks) (Levin et al., 1987; Kitching and Blackburn, 1998; Cohen, Nelson and Walsh, 2000).
How are patents related to innovation?
Patents-based statistics are frequently used as indicators of technology output. Patent-based statistics allow for measuring the inventiveness of countries, regions, firms or individual inventors, under the assumption that patents reflect inventive output and that more patents mean more inventions (see Measurement for innovation policy). By providing IP rights to inventions with industrial applicability—as opposed to inventions designed solely around theoretical concepts and ideas—they provide IP titles for potential future innovations. That is even more the case as they can themselves serve as a means for commercializing inventions (see IP and markets for finance and Access to knowledge and inventions). 
 
Nonetheless, whereas patent applications are an indicator of successful research, they do not reflect all of the research and innovative efforts behind an invention. Conversely, an invention covered by a patent (a new product or process) need not actually be industrially applied. It is reported that many patents are never implemented, as in the case when an inventor, having submitted an application, realises that the invention does not have sufficient economic potential or that a superior invention has been marketed more rapidly. Patents provide IP rights for inventions, which makes them an intermediate step between inputs to inventions, such as R&D spending, and innovations (OECD, 2009). Patents can be obtained at different stages of the R&D process, as in incremental or cumulative inventions. In this sense, patents can be seen not only as an output of R&D but also as an input to innovation, and thus as both inputs and outputs in the innovation process. This intermediate character makes patent data a useful bridge between R&D data and innovation data (both of which are collected through business surveys). Moreover, not all inventions are patented; and other types of IP are equally important (see Types of IPR).
How are patent rights used in practice?
To obtain a patent, the inventor files an application at a patent office, which checks whether the invention fulfills the relevant legal criteria, then grants or rejects it accordingly. A patent is valid only within the country in which it is granted, thus it is subject to national laws and any litigation is settled in national courts (OECD 2009). Once granted, a patent can be maintained for a maximum duration, usually of 20 years from the filing date, subject to the payment of renewal fees. 
 
A patent can be granted by a national patent office  after searching and examining the application, which is published 18 months after it has been filed. The time between filing and a patent grant or refusal ranges from two to eight years, with significant differences across patent offices (OECD, 2009).Patents can also be granted by a regional office assigned to a number of countries, such as the European Patent Office. Similarly, the WIPO-administered Patent Cooperation Treaty allows inventors to file a single international application and request patent protection in one or more signatory states. In those countries where the application is successful, depending on a decision by the national patent office, the patent will have the same effect as national applications filed in those countries (OECD, 2009).
 
As Figure 1 shows, patenting activities vary substantially across sectors and countries. In middle-income countries, where only a few actors in the innovation system have the research capacities needed to be granted patents, other types of IP rules can be equally important for innovation. This is reflected in the fact that the national-to-foreign application ratio is lowest for patents compared to other types of IP protection for various emerging countries (Table 1). 
 
Figure 1: Patenting activity by sector, 2007–09, as % of patents filed at EPOa and USPTOb
OECD Science, Technology and Industry Scoreboard 2011 — © OECD 2011 
Source: OECD calculations based on the Worldwide Patent Statistical Database, EPO, April 2011; and ORBIS© Database, Bureau van Dijk Electronic Publishing, December 2010; matched using algorithms in the Imalinker system developed for the OECD by IDENER, Seville, 2011.
Notes:  a. EPO= European Patent Office;
b. USPTO = U.S. Patent and Trademark Office.
c. Patenting firms were linked to the ORBIS© database using combinations of string matching algorithms that maximise the precision of the match. The patent portfolio of firms refers to patents applied at the European Patent Office (EPO) and at the U.S. Patent and Trademark Office (USPTO) between 2007 and 2009. Only countries with matching rates above 60% of patent filings over the period considered are shown.
The list of industries follows the ISIC (International Standard Industrial Classification), revision 3. High and medium-high-technology manufactures cover sectors 24, 29-35 less 351; medium-low technology manufactures include 23, 25-28, 351; and business sector services—excluding real estate—refer to 50-67, 71-74.
d. For Israel: “The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. … It should be noted that statistical data on Israeli patents and trademarks are supplied by the patent and trademark offices of the relevant countries.”
 
Table 1. IP applications by IP office, by resident and non-resident applicant (%), 2011 or latest available year
Source: WIPO Statistics Database
 
Contributor: Marta Diaz Pozo, OECD
 
References
  • Cohen W., R. Nelson and J. Walsh (2000), “Protecting their intellectual assets: Appropriability conditions and why U.S. manufacturing firms patent (or not)”, NBER Working Paper 7552, National Bureau of Economic Research, Washington, DC.
  • Kitching J. and R. Blackburn (1998), "Intellectual property management in the small and medium enterprise (SME)", Journal of Small Business and Enterprise Development, Vol. 5/4, pp. 327—35.
  • Levin, R., S. Klevorick, R. Nelson, and S. G. Winter (1987), “Appropriating the returns from industrial research and development”, Brookings Papers on Economic Activity, Vol. 1987/3, pp. 783–831. 
  • OECD (2011), OECD Science, Technology and Industry Scoreboard 2011, OECD Publishing. doi: 10.1787/sti_scoreboard-2011-en
  • OECD (2009), Patent Statistics Manual, OECD Publishing, Paris.
  • OECD (2004), Patents and Innovation: Trends and Policy Challenges, OECD Publishing, Paris.
  • WTO (1994), Agreement on Trade-Related Aspects of Intellectual Property Rights, Articles 27(1) and 28, World Trade Organization, Geneva. (http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm)

 

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