Humans generate a mind-boggling amount of data each day. This explosion in data has stimulated innovators to develop new ways of harnessing massive data, which in turn has seen a transformation in various strands of technology. We live in a world where interconnectivity and smart technology are set to become ubiquitous and at the heart of the way we live. The term “Fourth Industrial Revolution” is used to describe the rapid, wide-ranging technological changes that are driving us towards a data-driven economy.
Given the likely commercial importance of some of these dramatic technological developments, it is no surprise that in parallel there has been a remarkable uptick in patenting activity in related areas. The European Patent Office (EPO) recently published a study of trends in patenting activity in fields relating to so-called 4IR technologies that revealed how the patenting world is affected.
Growth in patent activity
The headline figures from the EPO study are unsurprising. There is significant growth across all fields relating to 4IR technologies. However, the EPO breaks down this overall growth to provide further insights. The 4IR technologies are divided into three sectors: (i) core technologies, which relate to underlying infrastructure and data communication techniques; (ii) enabling technologies, which provide the means by which data can be handled or manipulated, and (iii) application technologies, which represent the specific end uses for the data.
As one might expect, the EPO study shows a dramatic rise in patenting activity in the third sector, as businesses seek to protect the results of integrating smart technologies into the products in their markets. Growth is particularly marked in the sub-sectors of personal devices (for example, smart phones), enterprise, vehicles (self-driving cars and related technology) and home (the Internet of Things).
However, the EPO study also shows remarkable growth in the core technologies sector. Here the critical areas are connectivity and software. This not only reflects the technological developments in these areas, but also gives an indication of the commercial importance of these underpinning technologies.
It is likely that patents in the core sector include those that relate to various standards in the ICT and telecommunication space. the rapid spread and adoption of technology, and is particularly relevant for technologies that rely on communication between a wide variety of devices. If the pace of technological development is maintained, one can speculate on the establishment of new standards in addition to the revision or update of existing standards. In a future market dominated by standards, a strong patent position may assist in protecting or establishing a significant market share, which may go some way to explain the increased activity levels seen in this sector.
The enabling technologies sector also exhibits strong growth, although not yet on the same scale as the core and application sectors. Enabling technologies are however at the heart of this technology revolution. These technologies are application agnostic, in that they are capable of being utilised in a range of different scenarios. Important examples include data analytics, artificial intelligence and security.
From a patenting perspective, application agnostic inventions provide an interesting conundrum. On the one hand it can be seen that their generic applicability can make them extremely valuable. Take for example an artificial intelligence tool with improved performance on large data sets. In principle it is applicable in a vast range of fields, from bioinformatics to autonomous driving. Each application is potentially an independent commercialisation opportunity. On the other hand, the absence of established markets for generic solutions in some of the areas under this sector may encourage a more application-focussed patenting strategy.
It will be interesting to monitor how patent activity in this sector changes as specialised markets in the newer sub-sectors such as artificial intelligence and massive data analytics become more mature. It is possible that patenting activity for these sub-sectors will follow a similar trajectory to the growth seen in the already established market of data security.
From a geographical perspective, the EPO’s study does not yield any surprises. The main source of patenting activity are Europe, US and Japan. However, growth from China and Korea is notable, although in the data examined for the study that growth was concentrated in a small number of countries.
The EPO study also indicates that a large proportion of the growth in patenting activity is concentrated in a relatively small number of corporate entities. The top 10 applicants account for nearly a quarter of 4IR patent families submitted in the period 2011-2016. The behaviour suggests that these companies are taking a proactive approach to establish intellectual property rights that will help them to preserve or improve their market position as they navigate both the transformation of their existing markets and the emergence of disruptive technology and new competition.
What does the future look like?
The EPO’s study gives us insight into some patterns of past patenting activity for 4IR technologies. But if we project forward from these patents, what might we expect?
At a simple level, we can expect the level of patenting activity to continue to accelerate. The EPO study considers much of the growth already seen to be in areas that are at the “emerging” stage of their technological life cycle. As the report states, “further acceleration in inventive activity and market penetration can be expected in the next few years, before the speed of technological development reaches an inflection point on the way to technological maturity”.
Beyond this, one can of course observe that an increase in patenting activity and hence patent numbers now is likely to eventually lead to a commensurate increase in contentious matters. What might that look like?
As mentioned above, standardisation seems likely to be one area where the landscape will be forced to evolve as new interconnected technologies come to market. The litigation of standard essential patents and the manner in which they are enforced and licensed is already a hot topic. The high levels of patenting activity of large corporate entities, especially in the core technologies, may suggest that this type of litigation is likely to feature strongly in future as companies vie for market share. As more and more consumer items become interconnected and hence capable of engaging in communication under various standards, so the question of how licensing operates for these items arises. Already the Düsseldorf Regional Court has referred several questions to the Court of Justice of the EU seeking to clarify where the line might be drawn for licences where standard-essential technologies are implemented within larger consumer items (in this instance cars).
A similar burst of litigation may be expected in various areas of the application technologies sector, as products are developed to a point where they are launched to market. Here we can expect disputes to include application specific litigation, where parties seek to obtain an advantage over direct competitors. However, one can also envisage the emergence of entities that seek to commercialise, across a range of markets, patents that encompass generic enabling technology concepts. Whether this type of litigation will be dominated by non-practising entities or will arise from the creation of new economic sub-sectors remains to be seen.
Aside from patent litigation, one can also ask whether the advent of 4IR technologies poses fundamental questions for patent law itself. One topic already being grappled with by patent offices is the extent to which artificial intelligence could, or should, influence questions of inventorship and hence patent ownership. It is already the case that AI-based tools are making significant contributions to product developments in a wider range of fields. As such AI-tools become ‘normal’, the extent to which their use to solve problems constitutes inventive activity is likely to be increasingly scrutinised.
Furthermore, as 4IR technologies are databased, it is inevitable that resulting patent activity includes a large proportion of computer implemented inventions. From a European perspective, this raises the prospect of increased scrutiny on the mechanism by which the EPO distinguish between patentable and nonpatentable subject matter. The EPO’s underlying framework, which requires computer-implemented inventions to have “technical character” is well-settled. However, as smart technology infiltrates all aspects of our lives, the line between technical and non technical may become increasingly blurred, and hence open to challenge.
The EPO’s study provides a snapshot of the importance that patents are likely to play in the commercialisation of technical ideas across the entire sphere of 4IR technologies. The strong link to the existing fields of communications and computing give a hint of how patenting strategies will be executed.
Patenting strategies are likely to focus on assembling thickets of multiple patent families around commercialisation opportunities, rather than seeking single flagship patents. Such a strategy finds support in the UK Supreme Court’s recent decision Unwired Planet v Huawei (2017), where the court recognised that it is industry practice to license on a portfolio basis. In this context, the acceleration of patenting activity in the areas reported on by the EPO’s study seems set to continue.
One justification for the patent system is its role in the stimulation and promulgation of technological innovation. The EPO’s study suggests that this role remains relevant for the current age, as we head into a period of technological advancement that is likely to have a transformation impact across the globe.
This article was originally published in The Patent Lawyer Magazine March / April 2021. View the original article here (pages 80 - 82).
Tom Furnival also discussed this topic in World IP Review. Access this article here.
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