Extract of p. 52-72 from the pdf at: http://www.regeringen.se/sb/d/6308/a/74193
Review of the economic aspects of patenting for company growth
– summary and recommendations
Part I
The inquiry’s commission, background, frame of reference, design and
method
I.1 The directive for the inquiry
The Swedish Government decided on 15 April 2004 to appoint a special
investigator to survey the economic aspects of patenting for corporate
growth and development. According to the directive (Dir. 2004:55),
patent protection is of great importance for entrepreneurship and
growth, and the investigator is to:
Make an analysis of how protected intellectual capital can
contribute to export and trade. The inquiry must procure opinions from
both industry and other actors.
The directive further specified that the inquiry must
include an analysis of how Swedish companies deal with patenting as a
means of competition, especially in comparison with companies in other
European countries and the rest of the world, as well as how patenting
is distributed among companies of different sizes. Here, the latest
developments in the EU region were to be considered. The study was also
tasked with including a Nordic comparison and identifying problems and
opportunities on the Nordic patent market.
According to the directive, the commission’s remit was to:
− lead to proposals that can create
understanding and insight, particularly in small
knowledge-intensive firms, about the economic profits – and costs – of
patenting;
− lead to proposals of how knowledge-intensive
firms can be stimulated to patent their
innovations to a greater extent;
− illuminate the relationship between
patenting and economic growth;
− contain an analysis of the decline of the
patenting frequency in Sweden and the most important causes of this
trend.”
The entire directive is
given in Appendix 1. Supplementary directives stated that the
commission was to be reported upon by 31 December 2005.
I.2
Interpretations for carrying out the commission
A review of just over twenty SOU reports in the area shows that
research-based material has traditionally been
collected to a rather small though growing extent – especially
regarding primary material,
i.e. material collected via studies made during the inquiry’s time
framework. (See e.g. SOU
1977:64, SOU 1983:52, SOU 1993:84 and SOU 2003:66.) The possibilities
of carrying
out an evidence-based approach must, however, be adapted to the state
of knowledge and the
access to resources, including time. A good time margin in policy
research is advantageous
here. Such a margin has not existed regarding economic aspects of
patenting, i.e. within
patent economics, due among other things to the rapid progress in the
patent field and to
economists’ traditional lack of interest in patent issues.
At an early stage, the
following interpretations and plans were made in regard to the
commission:
1. Direct collection of new
empirical primary data can be limited to Sweden. For other countries,
available secondary material
can be used. An evidence-based approach for policy design
should be sought; that is, a policy analysis should be based, as
far as possible within given resource limits, on empirical and
theoretical evidence (rather than on different interest groups’
opinions).
2.
Concerning the concept of intellectual capital, the focus lies upon
patents and neighboring rights, such as trade secrets in licensing.
The expression “Swedish patent application” is ambiguous and can
refer partly to a patent application submitted by a
Swedish company (regardless of where the inventors happen to
be located) or by an inventor who is Swedish (regardless of
where he happens to be located) or by an inventor active in
Sweden (regardless of his precise nationality), as well as to a patent
application submitted to the Swedish PRV. The expression will be
defined more precisely in its context.
The concept of a patent is used in its accepted sense. Formal
definitions of a patent vary somewhat internationally, but in
general a patent on an invention refers to a time-limited, transferable
exclusive legal right to use the invention commercially, i.e., an
exclusive right to the invention’s
commercial utility. This exclusive right entitles the holder to
act through a court procedure to prevent others from
manufacturing, using or selling the invention, and in some
jurisdictions
from importing infringing products as well.
3. Export and trade will refer to both products and services, as
well as technology and shares in technology-based
firms.
4. The concept industry is to be interpreted widely and corres
pond to the business sector, thereby including,
e.g., the service industry.
5. The concept Swedish companies is to comprise companies with
Swedish majority ownership, multinational companies
with a clear Swedish nationality or bi-nationality (e.g.,
ABB, Akzo Nobel, AstraZeneca, Stora Enso), and foreign-owned
companies located in Sweden. Unless stated otherwise,
large companies have at least 500 employees and small companies
fewer than 50 employees, with medium-sized companies falling
between these ranges.
6. The concept of competitive means will also refer to means for
exploitation and growth when appropriate.
7. The concept of the Nordic patent market will refer to the
Nordic market for technology trade, i.e., trade with
patent licenses, know-how licenses, R&D services and R&D
companies, or corresponding activities.
8. The expression decline of the patenting frequency in Sweden is
to be interpreted as the decline in national first
filings (i.e., priority filings) submitted to PRV (Swedish Patent and
Trademark Office).
9. The commission’s third task, illuminating the reciprocal
relationship between patenting and economic growth, can
be broadened to include patent-related recommendations
for increasing growth. The increasing of growth is also a
means of generating resources for R&D and thereby
increasing patenting in knowledge-intensive companies. The connection
between patenting and growth is thus reciprocal.
Clarification of this reciprocal relationship is a main task of the
inquiry.
Growth, which then will chiefly refer to growth in turnover,
is therefore made central to the inquiry.
I.3 The commission’s frame of
reference,
design and method
A frame of reference for the
inquiry, in the form of a so-called “patent/growth spiral,” has
been developed in several steps for studies of diverse links between
patenting and growth; see, Figure 1. In termediate variables related
to R&D and innovations have been introduced, and the mutual
influence between different companies has been taken into account.
The frame of reference has also been broadened into a model of
the Swedish system of innovation and entrepreneurship.
Figure
1 The patent/growth spiral with
intermediate variables
Growth/welfare
Investment/
Diffusion
financing
Innovations/
R&D/knowledge
new business
Patent/IP
Exploitation/
strategies
commercialisation
Patents/IP
A relatively large number of
substudies have then been designed with different levels and
units of analysis (countries, sectors, com panies, innovations,
technologies and patents), with different methods of data collection
(e.g., interviews, case studies, questionnaires, and/or statistics).
For reasons of time and space, a basic sampling principle has been
to choose units of analysis which, in some sense, represent high
growth levels or high patenting and R&D levels. Several
substudies with relatively small selections have been preferred to a
few with
large selections. A large questionnaire study of large companies
has, however, been conducted. Totally, around 75 persons have been
visited for long interviews, in addition to a large number of short
telephone interviews and conversations, and around 200 companies
have been approached with survey questionnaires. Further, there
has been participation in 14 conferences, mostly international; see,
Appendix 6. The inquiry’s substudies have involved around 10
project assistants. The substudies are fundamental to the inquiry, in
accordance with an evidence-based ap-
proach for policy design. The most important results are presentedin
Part III, specifically, as well as in special appendices and background
reports.
Part II Introduction to the economics of knowledge, patents,
innovationand growth – and relationships between patenting and growth
II.1 Emergence of an increasingly
knowledge-based economy with a new IP
regime
While few observers nowadays question the emergence of an evermore
knowledge-based economy, the expression ‘the new economy’ can be
questioned. “New” is the fact that the economy has come to be dominated
by intellectual capital in different forms –defined as non-physical,
non-financial capital. At the same time,fundamental old capitalistic
institutions have survived. Intellectual property (IP) and legal rights
to it (IPRs) have consequently be-come much more important, and a new
IP regime, including a “pro-patent era,” has developed since the 1980s.
Its effects are per-vasive on diverse levels, not least
internationally. Countries and companies arm themselves with
strengthened IP rights as competitive means, at present with the USA
and Japan in the lead.
Patent and IP issues, once obscure secondary questions for specialists,
have thereby become strategic and risen to high levels of political and
industrial management. On the other hand, difficulties are created in
integrating these issues with other economic policies and company
strategies – although these difficulties appear by and large to be
temporary. A trend toward more aggressive patenting policy can be
expected in countries such as China, Taiwan and Korea, which are thus
further increasing their technology-based competitive power and,
therefore, should be watched closely.
II.2 Economics of innovation and
patents
– an introduction
A special chapter gives a general introduction to patent and
inno-vation economics, from the perspectives of both business and
soci-ety. In this regard an inventory has been made of basic
concepts,such as innovations of different kinds (technical,
organizational, financial, product and
process innovations, etc.) and size (large/ small or
radical/incremental), diffusion of innovations among buy- ers and
sellers, imitation
and invention. Another inventory has been made of fundamental
models, such as the product life-cycle model and an interactive
innovation-activity model. Moreover, a typology of generic
strategies for investment in new technology and in technology
exploitation has been described, with special treatment of in- and
out-licensing. These strategies are becoming ever more common and have
important effects on growth. Differ- ent forms of financing have
also been presented.
The patent
system’s structure and processes have been descri- bed, and
social-economic
motives for the patent system have been examined, along with their
advantages and disadvantages on diverse levels and the theories
underlying the system. In this connection, customary as well as new
criticisms of the patent system’s draw- backs have been reported.
The customary criticism of the patent system concerns its costs
for society in the form of static limita- tions on competition and
monopolistic pricing, administrative costs and transaction costs,
including high costs of disputes, di- storting effects, and
opportunities for abuse. This is reinforced by the more recent
criticism
that too many patents, also of poor qual- ity, are granted in too many
sectors where they hinder progress more than promoting it, for
example, in the electronics and tele- communications domain,
especially the software sector. Further, critics argue that there is
unfair treatment of small companies, and of developing countries
which are becoming too dependent on the technology of large
companies and developed countries. In addi- tion, the system as it has
evolved during the pro-patent era is criti- cized for paying excessive
attention to big industry’s interests in the developed world, notably
in the USA. Society’s interest in, for example, open access to
R&D results has been deferred in this respect. In sum, the recent
criticism implies that not only static competition, but also
dynamic competition, is restricted by an overly strong patent system,
which thereby counteracts its funda- mental aim of promoting
dynamic competition – that is, innova- tion-based competition –
partly at the expense of static compe- tition. Of course, these
critics acknowledge that each individual patent right expires
completely after 20 years, and, therefore, focus their criticisms on
the
active 20-year period.
II.3 Economic growth – general description
Growth studies of different kinds (empirical, theoretical) have rather
unambiguously indicated the decisive role of technological and
organizational development for economic growth on the macrolevel, in
the form of different kinds of innovations. Here, the pa-tent system,
historically weak, especially in Europe, has tradition-ally played a
secondary role, with certain important exceptions.
On the microlevel, the links are more varied and unclear.
No ge-neral results exist that point to a single size group of
companies as being most important for growth. Rather, the synergies
between companies and their strategies in an innovation system are of
great importance. Studies during recent years have shown, for instance,
the significance of technology diversification, generic technologies
and convergent technologies, and “creative accumulation” for tech-
nology-based companies’ growth – companies which thus become
multi-technological. Structural changes in the form of company
acquisitions and spin-offs also have high growth potential.
Finally, it can be demonstrated theoretically that
innovations of different kinds usually contribute to companies’ growth
– but not always, and especially not for process innovations even if
these have perfect patent protection or secrecy protection.
II.4 Previous studies and other inquiries
The state of knowledge about the role of patenting in company growth
and development is generally vague. This fact is connected with a
formerly weak patent system and a low interest among eco-nomists in
patent issues, which traditionally have been handled by lawyers and
licensing executives. However, foreign and Swedish studies have
revealed certain positive links, although weak, between patenting and
corporate growth. These studies have also revealed a
related “patenting paradox” – the fact that companies, especially in
chemistry and pharmaceuticals, nonetheless do considerable paten-ting
despite uncertainty about the economic value of any given pat-ent. That
growth generates R&D, which in turn generates patents, has been
shown more clearly across industries, albeit again withvariations.
Thus, growth generates patents while the opposite rela-tionship is
weaker and less clear.
Still, the
state of knowledge will very probably be strengthened in the
future, just as the
links between patenting and economic de- velopment have probably been
strengthened by the pro-patent era’s emergence. At the same time,
the fact remains that the variations in economic importance between
different patents are very large, and this hinders or sometimes
totally frustrates statistical inference with reasonable confidence.
A major
Swedish study conducted by the Royal Swedish Aca- demy of Engineering
Sciences
(IVA) and PRV during the early 1990s pointed to the Swedish
“growth paradox” of strong R&D development and weak growth
development. At the same time, the development of Swedish
patenting was quite weak, especially in comparison with Japan.
Further, the study identified a number of weaknesses regarding
exploitation of technology in the Swedish system of innovation and
entrepreneurship.
Abroad,
numerous inquiries and reforms are being carried out after the advent
of the
pro-patent era. The investigative work on many issues in Europe,
regarding, e.g., the proposal for a com- munity patent, common
policies for patent dispute resolution, pro- posals to reduce the
number
of translations, and common policies for computer-related
inventions, has made little progress, whereas strong measures have been
introduced in countries such as Japan
and Korea.
A concerted
patent reform effort began in the USA in 2000 and has been ongoing
ever since, via continual implement- tation of a series of small
changes. The ultimate shape of the reforms in the USA is still
emerging and somewhat unknown as the reforms ultimate involve
the competing interests of major eco- nomic players. National
economic aspects play a great role in all this reform work. The
situation in China and India is less clear, although both countries
have
experienced substantially increases in domestic patent filings, and
they must be kept under surveillance via preparation of
comparative studies. IP questions, especially in China, have been
raised to
the highest political level – largely be- cause of America’s
international activism against pirate copying, but also due to Chinese
actors’ growing self-interest in patenting.
Part III The inquiry’s empirical studies
III.1 Patents, innovations and growth in Sweden – a
description and
analysis
The many substudies in the inquiry have been performed in order to
illuminate the often complex connections between R&D, pa-tents,
innovations and growth in Sweden. The results shed light onmany
disparate connections that do not readily lend themselves to
summarization. A substudy of the principal Swedish innovations pointed
to several structural problems in the Swedish innovation system. These
were the low overall frequency and proportion of innovations in SMFs
(small and medium-sized firms), large companies’ low frequency of
radical innovations in new business areas, and the rapidly increasing
foreign ownership of innovative Swedish companies, especially in the
pharmaceutical industry. The interplay between large and small
companies, as well as that between companies and universities was
important in the processes of innovation and diffusion, while the
growth rate and the speed to international markets did not differ much
between large and small companies. Another substudy, of how
exploitation has occurred for important Swedish patents, indicated once
again the dominance of
large companies and how seldom they arise from small companies, even
from those small companies that have good patent protection.
Here, too, foreign ownership of important Swedish patentees has
increased markedly.
Fast-growing small companies in general grow for many
diffe rent reasons, and patents could not be proved to play any role in
this group of companies. However, their patent awareness was strikingly
low and the selection very small, with a large share of service
companies. This result suggests further investigation of the role of
patenting for fast-growing companies in general. On the other hand, and
not surprisingly, patents had a clearer connection with growth in
fast-growing small technology firms, which were also patent-aware even
if their patent know-how was low. In these firms, patents also had
great significance for attracting risk capital.
The study of small companies in the IT sector, including software
companies, demonstrated the great importance of product innovations for
software companies’ growth, although patenting was less important for
growth. The proportion of IT companies that engage in license trading
was comparatively high. A major part of
the software companies
believed that legal patent protection should be extended to pure
software, as did nearly all the patent bureaus asked in a separate
substudy. A number of short case descriptions provided more
situation-specific clarifications. Further, one should remember that
several of the
substudies’ sample sizes were relatively small, which calls
for caution in their interpretation.
A large
questionnaire survey of 50 large companies in Sweden, of which 38
answered, showed in
sum what importance patents and patenting possibilities have
for their R&D, innovations and growth.
The
companies’ product development rate is high in a Nordic comparison.
Much of the
companies’ sales, and most of their in ventions in both products
and processes, are protected by patents.Patenting in order to delay
or prevent competition by imitations is also the most important
commercialization strategy for new products, and is now considered
more important in big Swedish companies than previously, as
well as by comparison to companies in the USA.
The
relative strength (elasticity) in different variable relationships in
the companies’
patent/growth spirals is also clearly and consistently positive.
The
companies’ own R&D also often grows through other companies’
patenting, which
causes extra work in order to circumvent blocking patents. At the
same time, although much less often, one’s own R&D is reduced
through others’ patents and patent information, since duplicate
work is avoided but one’s own R&D is obstructed so much that it
is discontinued.
Finally,
the patent system itself has great influence on large companies’
inventions, new
products and R&D efforts, which would be reduced by roughly
one third – and product sales by a fourth – if the possibilities of
patenting were to disappear.
The study
of large companies also concerned the question of reasons for the
decline in
patent applications to the PRV. This part of the study of large
companies is reported in Chapter 9. A ques tionnaire survey of 12
respondents from 14 large patent bureaus with a similar focus,
however, was reported in this chapter. This patent bureau study
confirmed, on the whole, corresponding parts of the picture reported in
Chapter 9 – i.e. that the PRV’s share of first, or priority, filings
is decreasing, mainly due to greater use of PCT and EP applications,
and
that the primary reasons for the
decreasing number of first filings to the PRV are more selective
patenting and more emphasis on quality instead of quantity. The
turnover in the patent bureau business, though, did not decrease during
2001–2004.
A survey of the IP education offered in Sweden indicated,
among other things, that fewer than 10 % of the graduate Master’s
students in technology, economics, and law have been given any course
in IP; that almost no qualified education exists in IP economics; that
qualified advice is scarce throughout the IP sector’s range of
competence, despite the abundance of actors in the area of
innovations and entrepreneurship; and that business managers in
Swedish technology-based companies do not receive any substantial
education in IP issues. Moreover, there is a great shortage
of certified patent specialists in Sweden. These conditions are far
from consistent with the dominance of intellectual capital in an
ever more knowledge-based and IP-oriented economy.
III.2 Has Swedish patenting declined, and if so,
why?
As one of the inquiry’s four main tasks, a description and analysis
have been made of changes in Swedish companies’ patenting frequency and
in numbers of patent applications received by the Swedish PRV,
especially priority application filings. The patenting frequency as a
concept can then refer to both patent-application frequency and
patent-granting frequency, where as a rule “frequency” refers to number
per year. Various factors lie behind companies’ patenting frequency and
patent propensity – that is, the propensity to patent a given
patentable invention – as well as the frequency of filing patent
applications at PRV. When counting patent applications, it is important
at least to separate the four main paths by which a first filing can be
submitted: as a national application in Sweden or in some foreign
country, and as an EPO or a PCT application. These paths can then be
combined in several ways, e.g., a patentee could co-file an application
with the EPO and the UK Patent Office, with the intention of receiving
an early search report from the UK Patent Office to show to investors
or others but with the intention of ultimately protecting the invention
via the EPO.
Large multinational companies such as Nokia, with large
and internationalized R&D and large patent portfolios, are to an
increasing extent
internationalizing their patenting work and their application
procedures. This
leads, all things being equal, to a decline in the number of patent
applications received by the national patent offices of small
countries
that have many large multinational companies, such as Sweden. But
this does not necessarily mean a decline in the number of EPO
applications designating Sweden, e.g., the application will be
reviewed by the EPO and not the PRV. The statistics also show that a
decline occurred for national filings in Sweden, Norway and Finland
during the last five years, simultaneously with a steady rise on
the whole throughout the pro-patent era in filings in the USA,
Japan, and the PCT. The decline in Sweden was attributable
mainly to Swedish applicants and, to a greater extent, to large
companies’ patenting. The percentage decline, though, was roughly
similar for the two groups of patent seeking companies and
individual inventors, which were about equally large in 1998. The
turnover in the population of applicants was moreover very high. Of
the applicants who, at least in some year during the seven-year
period 1998–2004, submitted a first fil- ing to PRV, only around 5 %
had submitted further first filings during each of four or more
of the seven years – i.e., around 95 % of the applicants submitted
first filings less often than every other year. The flow of patentable
inventions for an actor to consider is thus of great significance.
This flow’s size depends mainly on R&D resources and patenting
resources.
The
decline in Sweden also varied a good deal according to the area of
technology in
question, with a striking drop in the electrical and electronics sector
from
2000 until 2004. The large companies in this sector – Ericsson,
ABB and TeliaSonera – dominated the decline both in this sector
and among the 20 companies which were largest in terms of numbers
of first filings to PRV during the pe- riod 1998–2000. This
indicates that the decline owed much to a bu- siness recession within
the
IT and telecom sector, although not solely in view of other
specific problems, chiefly at Ericsson and ABB.
To
simplify, one can say that the IT bubble burst and, with it, a patent
bubble. At the same
time, companies sensitive to business cycles within the mechanical
engineering sector, such as Volvo, Scania, Sandvik, Electrolux
and Atlas Copco, increased their pa- tent-application frequency.
If Ericsson and ABB are counted out, the increase among these
companies roughly compensates for the decline among other companies on
the top-20 list of most frequent
patentees at PRV.
A questionnaire study among the largest R&D-intensive
compa-nies, with a control group among SMFs, then showed that changes
in R&D resources and patenting resources are important factors
behind changes both upward and downward in patenting frequency for both
large and small companies, in line with previous studies.
Besides these factors, a main explanation given for a decline in
pa-tenting frequency is a decline in patent propensity, in the form of
a more selective and quality-oriented patent strategy which, in
seve-ral companies, followed a period of quantity-oriented patenting
during the 1990s. This view was generally confirmed by a ques-tionnaire
study among the largest patent bureaus in Sweden. Fur-ther, for SMFs,
patents played a much smaller role in financing after the IT bubble
burst, when access to risk capital decreased sharply as a whole in
Sweden.
The quality and cost-efficiency of PRV services were
considered satisfying by most of the large companies, even though a
substantial potential for improvement of customer satisfaction could be
noted. The PRV’s share of the Swedish large companies’ first filings
was also generally constant during the period 1998–2004, while the
USPTO’s share of Swedish large company priority filings dropped
greatly, according to the study. The share of PCT applications has also
grown among the large companies during the period, and most of these
applications went to the PRV as the international receiving office.
However, the PRV’s share of the PCTapplications as international
receiving office has declined on the whole. More Swedish applicants are
also electing either the European Patent Office or the WIPO Internation
Bureau as their international receiving office.
Swedish large companies did not, on average, decrease
their patenting in the USA to any substantial extent during the period
1998–2004 in absolute numbers, although they did so proportionally.
Sweden has also, on the whole since 1994, retained its tenth place on
the top-20 list of most frequent patentees in the USA. On the other
hand, several countries in Asia have climbed up this list
–Taiwan, South Korea, China and Singapore – and dominate, together with
Japan and Hong Kong, over the European countries on the list, in terms
of numbers of patents in the USA.
Part IV The inquiry’s recommendations
IV.1 Discussion and general
recommendations
The inquiry’s general
recommendations are largely concerned with the wider context of
patenting – R&D, innovations, business development and growth, and
the mutual relationship between pa- tenting and growth. The more
specific recommendations address the inquiry’s first two
tasks – to increase understanding and insight in patent economics
and to
increase companies’ patenting. Since this patenting, in turn,
tends to increase when growth increases, the general and specific
recommendations are intimately related to each other. A number of
common principles also underlie these recommendations.
An
economy that increasingly evolves in the direction of being ever more
knowledge-based,
IP-oriented and globalized creates greater and different
opportunities, but also problems of control.
These in turn require
changes of roles for, and interplay between, the state and the business
sector in order to achieve high goals of growth and welfare.
Sweden’s economy has several good possibilities for developing
favorably toward an
increasingly knowledge-based economy through good knowledge
resources in the form of good education and high R&D intensity,
highly diversified and internationalized industry, and so on – but
also through good access to natural resources per capita, which is
lacking in economies such as those of Japan and South Korea. To
take better advantage of these possibilities, for example, in the
form of synergies between knowledge resources and natural
resources, a national culture for IP and business development,
including
entrepreneurship, should be built up and strengthened in diverse
ways. Here, focusing on patent and IP issues is no end in itself.
On the other hand, such a focus is instrumental for creating more
economically efficient innovative activity in business and government,
similarly to how focusing on quality issues and lead times was
previously instrumental for broader aims in the business sector’s
vitalization and transformation.
The
Swedish entrepreneurial system, including the Swedish innovation
system, should be
strengthened by reinforcing both state (public) and private
entrepreneurship. That the state directly acts as an entrepreneur, and
does
not just indirectly promote entrepreneurship, illustrates a changed
role in a changed economy. This role is especially strong in a small
country with a large and important technology-based service sector,
which to a great extent is public.
This sector is heterogeneous and includes the university and college
sectors, the telecom and energy sectors, the financial sector, the
defense and security sector, the medical and health sector, and others.
These technology-based service sectors have considerable innovation
potential and business opportunities. Their patent and IP orientation
is in general weakly developed, however.
Private entrepreneurship should be strengthened in various
ways. The innovation-based entrepreneurship in small and medium-sized
companies needs to be made stronger, as does the will and ability of
Swedish large companies to create new business areas and radical
innovations – activities beyond merely renewing their existing business
areas, which has historically been a strength for these companies.
Further, collaboration between the innovation activities in Swedish
large and small companies needs to be maintained and strengthened. A
divergence between technology-based new firms and large firms can be
feared, for instance, as well as a thinning in other respects of the
domestic network of buyer/ seller relations. Moreover, regional
entrepreneurship should be strengthened by taking better advantage of
the growth opportunities in already strong, entrepreneurial regions and
along geographical axes of growth.
Finally, economic competence should be raised in the
Swedish entrepreneurial system, just as the Swedish appropriation of
growth should be increased. For example, growth is created in the
R&D sector (which is a service sector) at the same time as
technology sales of licenses and shares in R&D companies occur to
foreign buyers and manufacturing abroad does not generate other
domestic growth to a sufficiently great extent. It is not credible that
a knowledge-based economy in international competition can be based
merely on a dominant R&D service sector.
A number of general recommendations for the IP sector can
then be formulated, such as continuing to work for (a) Nordic
collaboration; (b) English as the language for business, patents and
IP; (c) further implementation
and development of the interna tional
patent system in differing old and new respects, for example, regarding
international harmonization and rationalization, development of the PCT
system and the enforcement system – as well as change in patentability
judgment, mainly in the form of raising the requirement of
inventiveness and reformulating the require ment of technical
character;
and (d) offensive transformation of the PRV toward greater
internationalization, diversifycation and rationalization. In this
context, a change of law is proposed so that patent applications to PRV
are allowed to be written in English without requiring later
translation (in other words, accepting the London Protocol
without
requiring its full ratifycation throughout Europe). The PRV should also
test the issuing of non-binding examinations of validity and
infringement, according to the British model.
A final
recommendation, due to the future importance and generic character of
these
questions, is the creation of an interministerial Strategy Council for
IP
and innovations, directly under the Prime Minister’s office.
Active, clear support from leaders in the business sector and in
government is of decisive significance for implementation of the
above
recommendations.
IV.2
Special recommendations for increasing patent
awareness, insight and propensity to patent
A basket of specific
recommendations has been designed, partly in order to increase
companies’
understanding and insight in patent economics, and partly to
increase their possibilities and will to patent. Greater understanding
of patent economics can be assumed to increase patenting
propensity, which in turn increases the patenting frequency, all things
being
equal. The patenting frequency, however, is influenced by a
number of additional factors within and beyond both the companies’
and the state’s control, factors which also have been basic to
structuring the recommendations.
Understanding patent economics involves some fundamental difficulties.
Patent issues
are complex and interdisciplinary, with many interwoven economic,
legal and technical aspects. The costs and earnings are long-term
and therefore of investment character, while the patent costs are
much clearer than the patent earnings. In addition, patent earnings
have such a highly skewed distribution that the simple counting of
patents is often misleading. A number of primary deficiencies in
the patenting competence of Swedish companies were also
reported, such as deficient competence in business strategy and
business
economics, with consequent deficiencies of integration and
interplay between business strategies and IP
strategies in companies. Additionally, there is a widespread lack of
basic patent awareness within the business sector, especially in SMFs,
as well as in the academic and the political spheres.
The problems of raising awareness and understanding of
patents and patent economics are neither new nor solely Swedish, but
have been accentuated by the pro-patent trend, which has led to efforts
of different kinds in different countries. Experiences indicate
thatpatent disputes, large awards of damages, and aggressive patent
behaviors of competitors have great importance for raising patent
awareness and patent understanding – as do good examples of new
business opportunities and national studies with competitor comparisons
(“benchmarking” studies). State and/or state-supported programs and
efforts for advice and support can play a great rolehere, e.g. to
reduce expensive learning within companies.
A number of state-supported programs and measures, partly
for increased patent awareness and patent advice, and partly to increase
patent understanding, are proposed. A series of programs, cam paigns,
prizes, studies, and media efforts for greater awareness (“awareness
programs”) should be specified, purchased, conducted and evaluated
through the Ministry of Industry, Employment and Communications. These
programs should be coupled with programs and efforts for business
development, innovations and entrepreneurship in general. They should
also be coupled with patentadvice efforts in the form of subsidized but
qualified advice, and subsidized application fees for first- and
second-time applicants within a five-year period. A number of
positions, corresponding to 15–20 full-time positions at first, should
be established for IP and
business development, and placed at national competence centers,
including the PRV, and regional development centers. A system for
quality assurance that sufficient patent and license competence is
available in state-supported R&D programs and R&D collaboration
should also be designed.
The overall responsibility for these measures should rest
upon the Ministry of Industry, Employment and Communications, in
co-operation with other ministries which are involved. The Ministry of
Industry, Employment and Communications should be
strengthened in this regard, especially with competence in patent, IP
and innovation economics.
The measures proposed to increase understanding of patents
and patent economics – although once again in a wider context of busi-
ness development and entrepreneurship – are to establish 3–4 national
competence centers
for education, advice and research; 3–4 new professorships in IP
and
innovation economics with responsi bility for teacher and
postgraduate education; diverse specialized and differentiated
Master’s
programs for technologists, economics and lawyers; obligatory
“conscript education” in patent economics (including licensing
economics), patent law and patent technology in the university and
college education, and in all education for en trepreneurship,
innovation
issues and the like; and financial sup port to companies’ internal
and further education in IP, including support for IP executive
training and IP trainees. Moreover, two concentrated educational
efforts should be carried out as soon as possible: one to cover an
educational need for the IP advisers mentioned above, and one to
educate patent specialists for certification as European Patent
Attorneys
– a category of specialists in which Sweden has a serious and
increasing shortage. All of these educational efforts should be
quality-assured, and a certification system for IP specialists should
be
developed in addition to certification of European Patent Attorneys.
The
overall responsibility for these measures should rest upon the Ministry
of Education,
Research and Culture in close co-operation with the Ministry of
Industry, Employment and Communi cations.
The direct
measures proposed to increase companies’ possibili ties and will to
patent
comprise, besides the above measures, also giving special state support
for investments in patents and patent education coupled to other
state support for R&D; giving special stimulation to employment of
internal patent and IP specialists; supplementing companies’ own
stimulation measures with special reward systems; supporting
the design of guidelines for company boards’ and business
managers’ handling of patents and IP; and a number of specially
directed
efforts, particularly to technology-ba- sed service sectors with a
large public part. Special inquiries into issues of business
development and IP within the military and me- dical sectors should be
carried out, for instance to judge potential and forms of technology
procurement and technology trade.
For those
measures above which can be coupled to other current state measures for
supporting and increasing the R&D resources in the Swedish R&D
system,
an ear-marking should be done in the form of a 4 % goal for costs
of patent and IPR work as a share of the R&D costs, with
variations of ±1 % depending on the sector and type of company.
Also proposed are better financing opportunities for
invest-ments in patents in SMFs, especially in early phases, where
leverage can be obtained for financing via private risk capital. For
this pur-pose, the proposals are special patent loans with advantageous
con-ditions, reduced fees for first- and second-time priority
applica-tions to PRV, the possibility of faster, prioritized handling
by PRV, and stronger advisory assistance, including language
assi-stance. This requires a change in the PRV’s rules and operating
di-rectives.
In other respects, methods for IP evaluation need to be
impro-ved and quality-assured, not least in connection with the
utilization
of new accounting rules for immaterial assets, that is, IP. At the same
time, there is a need to increase the Swedish damages for pa-
tent and IP infringement and to improve the grounds for calculating
damages. A review of these matters together with tax issues
that bear upon patents and the licensing trade should be made.
Likewise, a review of the patent system’s regulations, including rules
for the area of patentable inventions, needs to be performed
and coordinated with corresponding work in the EU.
In good time, before
a review of rules within the EU,
which hopefully will come soon, preparations should be made for a
wideningof the patentable area through a reformulation of the
requirement of technical character – in order to take better account of
the need to balance and coordinate investments in innovation in
general, and thereby also investments in innovation within the service
sector.
Regardless of how this requirement is formulated, a raising of the
requirement of inventiveness should take place.
Finally, it is proposed that there be an increased use of
patent information and patent analyses for design of patent policies and
their coupling to policies of R&D, innovation and growth. Examples
of important areas in this respect are nanotechnology and bio-
health technology.
IV.3 Summary of the recommendations
A short summary of the commission’s recommendations is given
below.
IV.3.1 General
Recommendations
1. Change the roles of, and
the interplay between, state and indu-stry
in an economy which is ever more knowledge-based, more
internationalized, and more IP-oriented
2. Build up a national
culture for IP and business development/
entrepreneurship
3. Strengthen the Swedish
entrepreneur system by
3.1
Strengthening state (public) entrepreneurship, especially within the
technology-based service sector, and in particular
− the university and college sector (university entrepre-
neurship)
− the telecom and energy sector
− the financial sector
− the defense and security sector
− the medical and health sector
3.2
Strengthening the innovation-based entrepreneurship in small and
medium-sized firms (SMFs), with adaptation to the conditions for
− SMFs outside the seats of universities and colleges
− SMFs connected with universities and colleges
3.3
Safeguarding Swedish large companies’ will and ability to create new
business areas in addition to renewing the existing ones
3.4
Strengthening the collaboration between innovation efforts in Swedish
large and small companies
3.5
Strengthening the regional entrepreneurship
3.6
Raising the economic competence in the Swedish entrepreneur system and
refining its financial support institutions
4. Safeguard the Swedish
growth appropriation
5. Strengthen the Nordic
cooperation within the IP sector and in
business development
6. Promote English as an
international language parallel with
Swedish
7. Strive for greater
effectiveness of the international patent system, especially regarding
− Harmonization of the international patent system
− Rationalization of the international system of patent
offices
− Support for
development of the PCT system
− Support for
development of a unified patent system in
Europe
− Support for development of
a unified European court
system specialized in patent cases
− The assessment of
patentability in some respects, na mely
−
Raising the inventive step requirement
−
Reformulating the requirement of technical character and supplementing
it with economically and ethically motivated requirements
−
Developing economic principles for patenting therapeutic methods within
an ethical framework
8. Transform the Swedish Patent
and Trademark Office (PRV) offensively
towards internationalization,
diversification and rationalization. PRV should thereby be commissioned
to
investigate the legal situation and need of legislation and
changed in structions in order that:
a.
PRV can handle applications in English without requiring translation
into Swedish
b.
PRV can use price differentiation and subsidy of application costs in
line with the present inquiry’s recommendations
c.
PRV can make non-binding assessments of validity and infringement
according to the British model
d.
The requirement of technical
character can be replaced by a
reformulated interpretation of the concepts “industrially applicable”
and “investment character.”
9. Create an interministerial Strategy Council for IP and innovation
policies at the highest political level.
IV.3.2 Special recommendations to increase understanding, insight
and propensity with
regard to patenting
1. Raise the awareness of patents and the contribution of advice.
1.1 Raise awareness of patents by
−
Conducting state-supported programs for raising
IP awareness (“IP-awareness programs”)
−
Carrying out a special “patent year”
− Establishing competitions and prizes
− Procuring broad national studies and
inquiries
which also in themselves yield increased awareness
of patenting
− Providing media support for IP-oriented publication
− Carrying out special program measures directed to
“under-aware” company types and sectors
1.2 Increase advice by
− Subsidizing advisory activities
− Establishing and locating about 15–20 positions for
advisers in IP and business development
− Coordinating the efforts with EU efforts
− Ensuring patent and license competence for contract agreements and
promoting Swedish jurisdiction
2. Improve the understanding
of patents by
− Building up education in IP and innovation economics by means of:
− Master programs
− Graduate and teacher education
− Obligatory minimum education (“conscript training”)
− Procurement of teaching aids and information
material
− Specialist education for EPO certification
− Education of IP advisers and IP managers
− Continued education
− Company-internal training
− Establishing 3–4 national competence centers for
education, advice and research in IP and innovation
economics
− Establishing 3–4 new professorships in IP and innovation economics,
coupled to national competence
centers
− Developing and introducing a certification system
for IP competence
3. Stimulate companies’
possibilities and will to patent by
− Creating greater awareness of patents and understanding of patent
economics as specified above
−
Introducing a special state patent-fund for invest
ments in patenting and patent education, coupled
to other state R&D funding
−
Giving special stimulation to employment of internal patent specialists
−
Supplementing companies’ internal stimulation
measures and reward systems
−
Supporting the design of guidelines for handling of
patents and IP by company boards and business
managers
−
Carrying out specially focused measures
−
Increasing the resources for R&D
−
Improving the financing possibilities for patenting
in SMFs, particularly during early innovation phases
−
Improving the patent economy in cases of dispute
−
Striving to expand the area of
patentable inventions
in the long run
−
Integrating active patenting policies with general
R&D, innovation and growth policies, for example
through better utilization of patent information
−
Earmarking 4 % ± 1 % of state
R&D for patent
and IPR efforts