EU-funded CIFRA research project (Challenging the ICT Patent Framework for Responsible Innovation) has recently published the results of a broad consultation across the ICT value chain designed to assess different experts’ perceptions of the most pressing challenges in the ICT patent ecosystem, as well as to determine potential measures to alleviate them. Research team members Knut Blind, Eduardo Fullea and Toni López-Carrasco summarise its main findings, which identify a range of issues exercising the minds of market players, including: the quality of issued patents and the extent which they should be available for computer implemented inventions; concerns about the activities of patent assertion entities; and a worrying lack of patent knowledge among SMEs (a full list of the report’s authors can be found at the bottom of this piece);

The CIFRA research was conducted by Telefónica, Fraunhofer Institute – FOKUS, Università Commerciale Luigi Bocconi and Universidad Carlos III de Madrid. It comprised a thorough literature review, followed by an empirical analysis of patent databases and came to a head with a series of interviews with industry experts and a broader survey covering organisations with different types of business model and positions in the ICT value chain. The consortium aimed to conduct an unbiased analysis of the responses, and the conclusions and recommendations of the study do not necessarily reflect the positions of either the consortium member companies and experts, or, of course, of the European Commission.

As can be imagined, viewpoints on the issues varied significantly among patent holders and entities that don’t own patents. Perhaps surprisingly, though, both groups seemed to be more aligned when asked about potential solutions. For instance, there was broad agreement as to the advantages of raising the bar in terms of the required levels of novelty and inventive step for patents, especially for computer implemented inventions, as well as with regards to reducing the scope of granted patents.

It is worth mentioning that the responses from the open source community show it is still struggling to get along with the patent system. Open source players continue to consider computer-implemented inventions, most commonly referred to by them as “software patents”, as a threat to their activities; and they asked for more demanding guidelines for such inventions to qualify as patentable subject-matter.

Assessment of the Challenges of ICT patent ecosystem

Patent owners appear to be less concerned in general with the different challenges around ICT patents. However, small and medium enterprises (SMEs) stood out as having a mostly critical viewpoint.

Among the ICT patent ecosystem challenges identified by the experts, significant concerns in the area of patent prosecution were related to what were considered to be the too-broad scope of patents and their limited quality - phenomena particularly criticised by non-patent owning companies. Furthermore, the criteria for granting patents relating to computer implemented inventions (CII) were not considered to be specific enough, with diverse approaches between patent offices also identified as a problem.

In relation to patent enforcement, the most relevant challenge was clearly seen as the legal uncertainty caused by patent assertion entities (PAEs). This was highlighted by both patent owners and non-owners. The perceived high legal costs involved in resolving ICT patent-related conflicts was the next biggest concern. Another sensitive subject was the difficulties caused by ICT patents for the use of open source software – unsurprisingly, this was a particular concern among independent software developers.

Assessment of levers to alleviate the problems affecting ICT patent ecosystem

The results of the consultation revealed a common interest among the different actors: high-quality standards for patents, in terms of the required novelty and invention step. This may relate to the significant overheads caused by licensing negotiations and eventually by litigation for licensors and prospective licensees, both of which could perhaps be reduced were patents of higher quality. Some respondents placed special emphasis on raising the bar on the requirements for obtaining patents on CIIs.

The report explains that the search for measures to mitigate issues posed by PAEs is hampered by the difficulty of coming up with an appropriate definition of what a PAE is. As a result, the study states that regulatory solutions should not be focus on a specific type of company, but instead on limiting certain kinds of harmful practices, such as forum shopping or the use of shell companies to avoid paying the court costs imposed upon losing a lawsuit.

It is worth noting that, despite the high level of backing for patent pools, other types of licensing programmes and defensive patent aggregators, public policies supporting these were not endorsed. This was particularly the case among entities without patents, which worried that public intervention could create a bias in the market.

In order to facilitate the licensing of patents, there was some support for the promotion of publication of bilateral licensing terms – this was particularly the case among implementers, non-patenting respondents and SMEs. Such an initiative, it was felt, would improve transparency for the licensing market and provide more ground for creating a corpus of cases, thus lowering overheads. On the other hand, patent owners were less convinced about the viability and effectiveness of making details of licensing agreements public.

The promotion of specialised courts, which deal only with patent disputes including both questions of patent validity and infringement, was widely supported by the experts, but most heavily by patent owners.

In addition, there was widespread support for having infringement and validity issues regarding ICT patents tried together by the same court. The bifurcated system that exists in some jurisdictions was perceived to be associated with higher costs and risks, especially for SMEs.

Patent pledges, ie voluntary commitments by patent holders to give up some of the rights associated with their patents, were not well known to the majority of the interviewed experts. Those that were aware of them confirmed their effectiveness and efficiency. The research report advises that public awareness of them should be raised, especially in combination with the promotion of specific technologies and open source.

Overall, mediation and arbitration were perceived as effective and efficient approaches to conflict resolution, but ones which require a high-level of expertise from mediators and arbitrators, as well as resources and trust. However, the majority of respondents to the survey had little or no experience of these approaches, which suggests that further measures to increase awareness about them could be helpful.

Another area in which educational initiatives would be positive, especially for SMEs, is the interplay between open source software (OSS) and patents, where only limited expertise was identified. This lack of knowledge may lead to some concerns about the usage of OSS.

The responses by SMEs, which revealed more often than not that they are not able to assess both the relevance of the IP challenges they face and the effectiveness of possible solutions to them, demonstrate they are probably the weakest players in the patent ecosystem.

Regarding patent law, there was evidence of a reluctance to push for change. For instance, there was scepticism about the effectiveness of changing application, renewal and even court fees. Reducing the protection period for and the time to obtain ICT patents, for instance via early patent office certainty programmes, were slightly more convincing to the experts. In fact, the requirement to grant ICT patents within five years was generally supported by the patent-owning respondents.

Report authors:

Knut Blind (Fraunhofer FOKUS)

Esmeralda Florez (Fraunhofer FOKUS)

Andrea Fosfuri (Bocconi University)

Luis Ignacio Vicente (Telefónica)

Antonio López-Carrasco (Telefónica)

Eduardo Fullea (Telefónica)

Ester Martínez (Universidad Carlos III Madrid)

Silvana Álvarez (Universidad Carlos III Madrid)