Towering IP Resources in a Flat World

If you have read, or even heard about, Thomas Friedman's The World Is Flat or Fareed Zakaria's The Post-American World, you will recognize a theme in common with what patent attorneys do every day.

We write for one-fifth of a century later. Our words, building fences around ideas, are likely expressions of intellectual property grants by governments still in place 20 years hence. If there is a profession in which the long term is more consistently important than ours, it is not immediately apparent. To be sure, there are plenty of issues for the near and medium term: which inventions to protect, how to survive examination with meaningful claims allowed, etc. But selection of countries based on not just the current world, but the future world, is a province that requires us to be Economic Futurists.

Unlike trademarks that have no “drop-dead” dates, patents are like term life insurance. As you grow older, once you give it up, it is not possible to get it back. And it gets more expensive as you grow older. So you need to employ irreversible foresight of future needs.

But based on what? Certainly every invention is unique (novelty and inventive step require that), but there are macroeconomic trends that can help any patent attorney in any industry to counsel a client on the potential value of patent protection in any country, in the near, medium, and far term.

Leveling of the Economic Playing Field

The transformation of the world's economies focused on by both Friedman and Zakaria should be required reading for every patent attorney or patent portfolio manager. What you will find is unmistakable proof of a leveling of the economic playing field between the developed nations and some of the developing nations.

In 2005, your correspondent undertook a simple but revealing look at Gross Domestic Product and Gross Domestic Product Per Capita for 30+ countries reported on by The Economist using current economic and population growth rates, extrapolated out five, 10, and 15 years ' to 2020, one-fifth of the way through the 21st century. The result was that the only two countries likely to enter the top 10 largest economy countries were China and India, even though their massive populations do not put them on the list of the top 10 wealthiest countries. It is reassuring that the numbers of that simple study match what Friedman and Zakaria are reporting by observation and interviews and other statistical analyses.

But there are also geopolitical considerations to evaluate. How will the drive for energy sources distort normal trade relations? Will new political alliances upend trade considerations of the international market economy? Will the cash coming into oil-rich nations create a culture of domestic innovation or money-diplomacy?

Macroeconomic trends are no substitute for a tailored decision on the countries where a patent portfolio should live, but they start the process because a vibrant, entrepreneurial economy serves as a culture (literally and figuratively) for growth in innovation and trade. The establishment and stabilization of a middle class that flows from a vibrant economy may be a 200-year-old phenomenon for the United States, but it is literally less than 50 years old in Japan, 30 years old in Korea, and 15 years old in China. As these major economic trends accelerate in pace from beginning to end, just like any accelerating rate of product life cycles in the new markets, the role of any single patent spanning the time of a market economy's emergence and stabilization becomes more probable.

Fortunately, there are sources of information for the patent attorney or patent portfolio manager to employ at the beginning of these analyses. This article addresses one of the exciting central fact gathering resources: www.wipo.int. The World Intellectual Property Organization is not merely the International Bureau of the Patent Cooperation Treaty. It has a number of resources for any patent attorney or patent portfolio manager to review these macroeconomic trends from the world of patents. In other words, all of us, making decisions every day, contribute to what WIPO reports to all of us.

For example, the 2008 “World Patent Report: A Statistical Review” is the third edition from WIPO, reviewing the 2006 (Gregorian) Calendar Year. WIPO has an entire Patent Information and Patent Statistics Service devoted to gathering and reporting on such data. The link to the 72-page report can be found at www.wipo.int/ipstats/en/statistics/patents/wipo_pub_931.html.

Startling Statistics

Some statistics are startling. Five countries: Japan, United States, Korea, Germany, and China (in that order) contributed to 76% of the new patent application filings in 2006. Based on cumulative statistics from 2001-2005, it is just as telling that only the following percentages of each of these countries reach the English language at the USPTO and EPO (at least granted claims): Japan (23%), Korea (17%), Germany (76%), and China (4%) (Chart A.2.2. on page 19).

As previously reported by your correspondent in the January 2008 issue of this publication, searching for prior art in Brazil, Russia, India, China, and South Korea (the “BRICS” countries, on which many global economists focus their analyses of developing country growth), there is concern even at the European Patent Office about how to find the prior art in Asian languages.

China in the patent world is making the same daily headlines as China in every other context. Between 2005 and 2006, China's new filings by Chinese increased by 30%! Between 2000 and 2006, the number of Chinese new application filings increased by 5% of the total world's new filings. Korea's contribution increased by 3.4%. The United States' increased by 2%. By contrast, Japan's decreased by 6.7%, and Germany's decreased by 0.9%. So, among the top five, the world is getting flatter for patent filings based on country of origin.

The export of patent rights (as opposed to export of technology which occurs when a patent application publishes in another country) also demonstrates the differences in outlook on the world by applicants in various countries. As a first approximation of the dependence of a country on the economy of others in terms of colonizing patent rights, between 2001-2005, U.S. applicants “foreign filed” only 30% of the time. By comparison, the Dutch file beyond the Netherlands 70% of the time, but the Chinese file beyond China only 2% of the time. These statistics can reflect the inward/outward focus ratio of their patent owners, the innovators resident in any given country.

Each year, the World Patent Report will provide a rolling forecast of how those innovators will regard patenting in another country. The value of those patent applications becoming worldwide patent families of economic significance to their owners needs to be monitored on a macroeconomic scale.

The examination/granting process has the same list of top five countries, if one substitutes the EPO for Germany: United States, Japan, Korea, EPO, and China. But while U.S. grants in 2000 and 2006 increased 13% (20,000/155,000), China's grants in 2000 and 2006 increased six-fold (~10,000 and ~60,000, respectively).

Once granted, patent owners have the annual (quadrennial for the United States) decision whether to maintain a patent granted. The United States remains the giant of this category, with 1.5 million patents still in force (20% of all those granted since 1837!). Japan is next closest, with 1.1 million. No other country is above 500,000. China sits at 150,000, but ahead of Canada at 110,000.

Part of the source for making the world flat is the export of published patent applications without a corresponding patent in that country. If you live in Brazil and have a computer, you can get a free education from millions of patent documents and then need only to find those patents which are in force in Brazil (less than 3,000 were granted in 2006 and less than 40,000 are in force). A new company in a nascent industry in a developing nation can look to the vast, free evolution of product development ' to learn what mistakes not to repeat and to learn the clear description of others' inventions. In an odd sort of way, publishing in one country but not granting a patent in another country is a great but unmeasured charitable contribution to less-developed societies. One only need search using the International Patent Classification to focus on the technology of interest. The URL www.wipo.int/classifications/ipc/en/ is the hyperlink to that IPC. One can even search in “natural language” instead of Boolean format: www.wipo.int/tacsy/.

It has now been more than a decade since the formation of the WTO and the commencement of GATT'TRIPs-oriented changes to national patent law. Finding the original source text of national patent law is also a service of WIPO, established under Article 15(2) of the Paris Convention as being the repository of all patent laws, often published in English as well as the applicable domestic language. That hyperlink is www.wipo.int/clea/en/.

International Comparative Patent Law Studies

International comparative patent law studies can be performed using the source language of the laws and regulations. For example, the past two issues of this publication had articles concerning export control and foreign patent filings. In addition to the countries identified in the charts provided, one can search for the applicable law or regulation of any country which is a member of the Paris Convention for the applicable “file here first” provisions. As inventors of multi-national enterprises are increasingly located in other countries, patent attorneys will need to understand such foreign law in the country where that inventor resides.

WIPO also provides a service which may not be important during examination but can become very important during opposition or enforcement proceedings. The difference in content between the priority text and the PCT application text can be studied for any variances which concern subject matter needed for the claims.

Within the PCT PatentScope searching service, www.wipo.int/pctdb/en/, under the Documents tab, one can review the priority application. Because the PCT is frequently used as an entry into international patenting, one can use comparison text software to determine any variances between the priority document and the application filed.

For the patent attorney or patent portfolio manager, having access to these macroeconomic data is only the first part of the effort to select the correct countries for five, 10, 15, or 20 years hence. Understanding the client's business, where it makes or will make its products, whether its competitors are multi-national, whether the invention is fundamental to an emerging market or an improvement to an existing entrenched business all are factors to take into consideration. Nothing is quite as difficult at budget time as explaining why the costs of patenting acquisition or maintenance in a given country consumes what would have been a major amount of the profits of the product life cycle.

Conclusion

Only hindsight will provide the right answer to patent country selection and retention in an increasingly flat world. But using the free and accessible resources to try to get the right answer, and to understand why on a macroeconomic level, is thoroughly admirable. The pace of change in the world requires an understanding of the trends happening. Friedman and Zakaria emphasize that. A flat, post-American world is our future.

If you have read, or even heard about, Thomas Friedman's The World Is Flat or Fareed Zakaria's The Post-American World, you will recognize a theme in common with what patent attorneys do every day.

We write for one-fifth of a century later. Our words, building fences around ideas, are likely expressions of intellectual property grants by governments still in place 20 years hence. If there is a profession in which the long term is more consistently important than ours, it is not immediately apparent. To be sure, there are plenty of issues for the near and medium term: which inventions to protect, how to survive examination with meaningful claims allowed, etc. But selection of countries based on not just the current world, but the future world, is a province that requires us to be Economic Futurists.

Unlike trademarks that have no “drop-dead” dates, patents are like term life insurance. As you grow older, once you give it up, it is not possible to get it back. And it gets more expensive as you grow older. So you need to employ irreversible foresight of future needs.

But based on what? Certainly every invention is unique (novelty and inventive step require that), but there are macroeconomic trends that can help any patent attorney in any industry to counsel a client on the potential value of patent protection in any country, in the near, medium, and far term.

Leveling of the Economic Playing Field

The transformation of the world's economies focused on by both Friedman and Zakaria should be required reading for every patent attorney or patent portfolio manager. What you will find is unmistakable proof of a leveling of the economic playing field between the developed nations and some of the developing nations.

In 2005, your correspondent undertook a simple but revealing look at Gross Domestic Product and Gross Domestic Product Per Capita for 30+ countries reported on by The Economist using current economic and population growth rates, extrapolated out five, 10, and 15 years ' to 2020, one-fifth of the way through the 21st century. The result was that the only two countries likely to enter the top 10 largest economy countries were China and India, even though their massive populations do not put them on the list of the top 10 wealthiest countries. It is reassuring that the numbers of that simple study match what Friedman and Zakaria are reporting by observation and interviews and other statistical analyses.

But there are also geopolitical considerations to evaluate. How will the drive for energy sources distort normal trade relations? Will new political alliances upend trade considerations of the international market economy? Will the cash coming into oil-rich nations create a culture of domestic innovation or money-diplomacy?

Macroeconomic trends are no substitute for a tailored decision on the countries where a patent portfolio should live, but they start the process because a vibrant, entrepreneurial economy serves as a culture (literally and figuratively) for growth in innovation and trade. The establishment and stabilization of a middle class that flows from a vibrant economy may be a 200-year-old phenomenon for the United States, but it is literally less than 50 years old in Japan, 30 years old in Korea, and 15 years old in China. As these major economic trends accelerate in pace from beginning to end, just like any accelerating rate of product life cycles in the new markets, the role of any single patent spanning the time of a market economy's emergence and stabilization becomes more probable.

Fortunately, there are sources of information for the patent attorney or patent portfolio manager to employ at the beginning of these analyses. This article addresses one of the exciting central fact gathering resources: www.wipo.int. The World Intellectual Property Organization is not merely the International Bureau of the Patent Cooperation Treaty. It has a number of resources for any patent attorney or patent portfolio manager to review these macroeconomic trends from the world of patents. In other words, all of us, making decisions every day, contribute to what WIPO reports to all of us.

For example, the 2008 “World Patent Report: A Statistical Review” is the third edition from WIPO, reviewing the 2006 (Gregorian) Calendar Year. WIPO has an entire Patent Information and Patent Statistics Service devoted to gathering and reporting on such data. The link to the 72-page report can be found at www.wipo.int/ipstats/en/statistics/patents/wipo_pub_931.html.

Startling Statistics

Some statistics are startling. Five countries: Japan, United States, Korea, Germany, and China (in that order) contributed to 76% of the new patent application filings in 2006. Based on cumulative statistics from 2001-2005, it is just as telling that only the following percentages of each of these countries reach the English language at the USPTO and EPO (at least granted claims): Japan (23%), Korea (17%), Germany (76%), and China (4%) (Chart A.2.2. on page 19).

As previously reported by your correspondent in the January 2008 issue of this publication, searching for prior art in Brazil, Russia, India, China, and South Korea (the “BRICS” countries, on which many global economists focus their analyses of developing country growth), there is concern even at the European Patent Office about how to find the prior art in Asian languages.

China in the patent world is making the same daily headlines as China in every other context. Between 2005 and 2006, China's new filings by Chinese increased by 30%! Between 2000 and 2006, the number of Chinese new application filings increased by 5% of the total world's new filings. Korea's contribution increased by 3.4%. The United States' increased by 2%. By contrast, Japan's decreased by 6.7%, and Germany's decreased by 0.9%. So, among the top five, the world is getting flatter for patent filings based on country of origin.

The export of patent rights (as opposed to export of technology which occurs when a patent application publishes in another country) also demonstrates the differences in outlook on the world by applicants in various countries. As a first approximation of the dependence of a country on the economy of others in terms of colonizing patent rights, between 2001-2005, U.S. applicants “foreign filed” only 30% of the time. By comparison, the Dutch file beyond the Netherlands 70% of the time, but the Chinese file beyond China only 2% of the time. These statistics can reflect the inward/outward focus ratio of their patent owners, the innovators resident in any given country.

Each year, the World Patent Report will provide a rolling forecast of how those innovators will regard patenting in another country. The value of those patent applications becoming worldwide patent families of economic significance to their owners needs to be monitored on a macroeconomic scale.

The examination/granting process has the same list of top five countries, if one substitutes the EPO for Germany: United States, Japan, Korea, EPO, and China. But while U.S. grants in 2000 and 2006 increased 13% (20,000/155,000), China's grants in 2000 and 2006 increased six-fold (~10,000 and ~60,000, respectively).

Once granted, patent owners have the annual (quadrennial for the United States) decision whether to maintain a patent granted. The United States remains the giant of this category, with 1.5 million patents still in force (20% of all those granted since 1837!). Japan is next closest, with 1.1 million. No other country is above 500,000. China sits at 150,000, but ahead of Canada at 110,000.

Part of the source for making the world flat is the export of published patent applications without a corresponding patent in that country. If you live in Brazil and have a computer, you can get a free education from millions of patent documents and then need only to find those patents which are in force in Brazil (less than 3,000 were granted in 2006 and less than 40,000 are in force). A new company in a nascent industry in a developing nation can look to the vast, free evolution of product development ' to learn what mistakes not to repeat and to learn the clear description of others' inventions. In an odd sort of way, publishing in one country but not granting a patent in another country is a great but unmeasured charitable contribution to less-developed societies. One only need search using the International Patent Classification to focus on the technology of interest. The URL www.wipo.int/classifications/ipc/en/ is the hyperlink to that IPC. One can even search in “natural language” instead of Boolean format: www.wipo.int/tacsy/.

It has now been more than a decade since the formation of the WTO and the commencement of GATT'TRIPs-oriented changes to national patent law. Finding the original source text of national patent law is also a service of WIPO, established under Article 15(2) of the Paris Convention as being the repository of all patent laws, often published in English as well as the applicable domestic language. That hyperlink is www.wipo.int/clea/en/.

International Comparative Patent Law Studies

International comparative patent law studies can be performed using the source language of the laws and regulations. For example, the past two issues of this publication had articles concerning export control and foreign patent filings. In addition to the countries identified in the charts provided, one can search for the applicable law or regulation of any country which is a member of the Paris Convention for the applicable “file here first” provisions. As inventors of multi-national enterprises are increasingly located in other countries, patent attorneys will need to understand such foreign law in the country where that inventor resides.

WIPO also provides a service which may not be important during examination but can become very important during opposition or enforcement proceedings. The difference in content between the priority text and the PCT application text can be studied for any variances which concern subject matter needed for the claims.

Within the PCT PatentScope searching service, www.wipo.int/pctdb/en/, under the Documents tab, one can review the priority application. Because the PCT is frequently used as an entry into international patenting, one can use comparison text software to determine any variances between the priority document and the application filed.

For the patent attorney or patent portfolio manager, having access to these macroeconomic data is only the first part of the effort to select the correct countries for five, 10, 15, or 20 years hence. Understanding the client's business, where it makes or will make its products, whether its competitors are multi-national, whether the invention is fundamental to an emerging market or an improvement to an existing entrenched business all are factors to take into consideration. Nothing is quite as difficult at budget time as explaining why the costs of patenting acquisition or maintenance in a given country consumes what would have been a major amount of the profits of the product life cycle.

Conclusion

Only hindsight will provide the right answer to patent country selection and retention in an increasingly flat world. But using the free and accessible resources to try to get the right answer, and to understand why on a macroeconomic level, is thoroughly admirable. The pace of change in the world requires an understanding of the trends happening. Friedman and Zakaria emphasize that. A flat, post-American world is our future.