Towards Global Collaboration

1. Towards Global Collaboration Ruud Peters Philips Intellectual Property & Standards September 18, 2009

2. What does industry need? • More and more companies operating on global level • Companies need patents in increasingly more countries in support of their business • Open Innovation drives increased need for more global protection • Different patent systems hamper development business and cooperation • Need for uniform, efficient and predictable patent systems around the • world

3. What does industry need? • Patent systems should provide: • High quality patents • Timely delivered • Fair cost • High quality patents is interest of both applicants and third parties • Guide R&D investments • Determine risks in product development • Certainty in commercial transactions  PTOs and users have shared responsibility to accomplish goals

4. Global Patent Warming  Global patent filings will continue to increase Globalization: more international filings by existing users patent system New participants patent system in developed countries New users in BRIC-countries: explosion of local filings With growing GDP of BRIC-countries: increasing international filings

5. Global Patent Quality Major patent offices have not been able to cope with steep increase in patent filings Huge backlog of unexamined applications built up (EU > 500K; US > 850K) Over time it has become easier to get a patent granted Average amount of R&D investment per patent filing decreased in US R&D Investment (M$) per patent filing Source: USPTO’s annual report combined with US R&D data  Average patent quality has decreased

6. Reaction PTOs • More front loading instead of back loading patent cost • Percentage of patents granted by Patent Offices is decreasing • This trend is aimed to: • slow down growth in patent filings • reduce backlog patent offices • longer term: increase quality • With decreasing economic lifetime of patents (8-10 years) this creates financial problem for PTOs

7. What needs to be done? • Raise the bar to increase quality patents • Examine patents when needed taking into account maintenance practices • Cost may fairly reflect strategic and commercial value patents • A high quality and efficient patent examination is needed  Co-operation among PTOs and users offers gains in quality, efficiency and cost

8. What Patent Infrastructure should be developed? • The main infrastructure is already in place: PCT • PCT is well established, successful system • When more fully used PCT can help to: • reduce patent pendencies • reduce backlogs PTOs • increase patent quality • improve PTO income structure  Both PTOs and users need to contribute to the solution

9. What could be done? • Reducing pendencies / backlogs priority of major PTOs. • How can we achieve this objective? • Proposed is 3-step process: • Incentivize applicants to use PCT • High-quality PCT search/examination • Require applicants to respond to PCT report before designated offices start national search / examination

10. Why this 3-step process will help • PCT: A single international phase before one office leads to abandonment (double-digit percentages!) before national phase entry and thus less cases to process by all designated offices • Significant lower abandonment with national applications. Therefore these give more work. • Increased quality as PCT report is taken into account before designated offices start working. • Improved income structure as because of increased quality PTOs will for higher %-age of all applications receive both procedural fees and maintenance fees.

11. How does it work? Three step process: • Incentivize applicants to use PCT • High-quality PCT search/examination • Require applicants to respond to PCT report before designated offices start national search / examination

12. 1. Incentivize applicants to use PCT For e.g. US national applications entry fees (filing + search + examination) are much lower than similar PCT fees  applicants will prefer national US route instead of PCT. Make entry fees of national applications more expensive but compensate for instance by lowering the issue fee Will increase front loading fees, which is needed anyhow

13. How does it work? Three step process: • Incentivize applicants to use PCT • High-quality PCT search/examination • Require applicants to respond to address issues in PCT report before designated offices starts national search / examination

14. 2. High-quality PCT search/examination • Quality and extent of PCT search / examination should be at least as good as for national applications. • PCT requires (Art.16(4)) : • The ISA … shall endeavor to discover as much of the relevant prior art as its facilities permit, and shall, in any case, consult the documentation specified in the Regulations. • The higher the quality and the larger the extent, the higher the dropping-rate and the lower the inflow into the national phase.

15. 2. High-quality PCT search/examination • ISA will mostly also be designated office (or a national office in a parallel national application) • Efforts put in PCT search & examination are not wasted as ISA has to do work anyway in the national procedure • Make ‘examination as to disclosure / claims’ mandatory instead of optional (art. 5/6 PCT) • The more work is done in international phase the better

16. How does it work? Three-step process: • Incentivize applicants to use PCT • High-quality PCT search/examination • Require applicants to respond to PCT report before designated offices starts national search / examination

17. Require applicants to respond to PCT report • Applicant should demonstrate that application meets national requirements notwithstanding PCT objections and make any necessary amendments • Responsibility of designated office remains unaffected • Result: • Applicants are forced to think before entering national phase • Fewer national phase entries • Higher quality input • No duplication of efforts by designated office Philips Intellectual Property & Standards, September 18, 2009

18. 3. Require applicants to respond to PCT report • Under New Rule 161(1) EPC applicants have to respond to written opinion before entering national phase • This is step into right direction, but not applicable to Euro-PCT applicants with non-EPO PCT report. • Rule 161(1) EPC should apply to all Euro-PCT applications

19. Three step process in summary Philips Intellectual Property & Standards, September 18, 2009 Helps to reduce workload, backlogs and pendencies Increases quality input of national phase applications Improves income structure of PTOs

20. Patent Prosecution Highway Philips Intellectual Property & Standards, September 18, 2009 • Basic PPH idea makes sense, but… • PPH is not a fundamental solution to reduce workload / pendencies • PPH limited to low percentage of cases; does not work for large number of applications • PPH discourages using PCT: it can only be used if a positive national report is available and not with a positive PCT report.

21. Towards Global Collaboration  PCT first, PPH second To fundamentally address global workload and pendencies: • PCT should be the preferential system, using the 3-step procedure involving high-quality PCT reports and mandatory applicant response upon national phase entry before national phase processing starts • With high-quality PCT reports, no reason anymore to discriminate against PCT reports in PPH framework • As long as PCT is not the preferential system, further PPH developments are putting the cart before the horse