UK's reputation as a nation of innovators in jeopardy?

Nic Ferrar, UK and European Patent Attorney, considers the recent European patent protection statistics for exporters and what the current trends may mean for the UK in particular.

It has been a clear and ongoing part of the UK government’s agenda over recent years to promote manufacturing and export. Changes in exchange rates since the Brexit vote and the level of quality associated with UK-originating goods seem to have cemented this agenda. Recent reports have indicated a surge in exports from the UK to the EU in light of the weaker pound.

It could be expected that the rate at which UK companies are protecting their inventions overseas might also have increased over recent years. However, statistics published by the European Patent Office (EPO) [1] show that the numbers of European patent applications by UK residents have been essentially flat over the decade 2007-2016. 

In 2016, European patent applications for which the first named applicant had UK residence accounted for 3.2% of all European patent applications filed. That is 5,142 in a total of 159,353 new European patent applications. In 2007 the UK achieved approximately the same amount, at 4,919 applications. The UK’s contribution in 2016 is shown below.

These are not small numbers and in 2016 the UK ranked 9th in a list of countries of residence for new European patent applicants. However, everything is relative and the chart below indicates the general trend in European patent applications, comparing the numbers of applications filed by applicants in member states of the European Patent Convention (marked as EPO in the chart), with those filed by applicants from other key countries.

The overall trend shows an average annual increase of approximately 3.5% over the decade, whereas the UK’s average increase was negligible. China managed more than a five-fold increase in its percentage share of new European patent applications, from 0.8%(1,133 applications) to 4.5% (7,150 applications).

Other countries show a less dramatic change with the US, France, Switzerland and South Korea, all of which rank above the UK, showing closer to the average percentage increase over the same period. Japan came in 3rd and The Netherlands 7th. The US consistently tops the table but what might be less expected is that German applicants, in second place, accounted for 25,086 new European patent applications in 2016. That is close to five times more than the UK.

Simple numbers do not give an account of the quality of those patent applications. When the number of European patent applications filed at the EPO each year is compared with the number of patents granted by the EPO in the same year, a ratio of between 0.40 and 0.45 was normal up to 2015. In 2016, the ratio jumped to 0.6. One might hope that UK-originating patent applications are more likely to succeed. However, it seems highly unlikely that this could significantly offset the difference in application filing rates given above.

Another possible explanation is that the increasing numbers of patent applications might be due to a boom in computer-related technology in smartphones and the like. However, the two charts below show that this is not necessarily the case and the UK’s contribution (at the centre of the lower chart) is relatively well-rounded.

So, are we to assume that the UK’s reputation as a nation of innovators is in jeopardy? ‘Not yet’ is the likely answer. When one considers the size of population relative to the number of European patent applications filed, then the UK can be reasonably proud of its position. There may also be other factors, such as potential reluctance of UK companies to make use of the European patent system, compared to some other European countries that favour it more strongly.

However, the current trend is that the UK’s appetite for European patent protection has relatively weakened over recent years compared to other leading nations. In short, there would seem to be a contrast between the existing patent filing trends and the current UK aim of a sustainable increase in high-value manufacturing and export.

[1] All European patent application data and information obtained from the European Patent Office annual reports and statistics are available for download at https://www.epo.org/about-us/annual-reports-statistics.html.

[2] Analysis based on the European patent filings (Direct European filings under the EPC and international filings under the PCT). Statistics are based on the first-named applicant. Figures are based on data from the EPO and WIPO (for PCT filings) as available on 27/01/2017. The PCT filings for 2016 are therefore estimates.

EPO: the 38 member states of the European Patent Organisation, including EU28.

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