Britain could capitalise on its knowledge base and compete equally with the rest of the world if its patent regime were updated, says patent attorney Nick Wallin.

The UK patent regime needs updating to reflect changes to the UK economy. Only then will it allow the country’s economy to fully capitalise on its knowledge advantage and compete on a level playing field with the rest of the world.

While the day-to-day running of the UK patent system is well managed by the UK Intellectual Property Office (IPO), there are fundamental flaws at the heart of current patent law that need to be addressed. These flaws date back over 30 years, since the introduction of the Patent Act 1977, which marked the start of a new harmonised European patent regime.

Despite the good intentions, true harmonisation has not proved easy to achieve and in recent years a divergence has arisen between the UK and Europe. The differences lie in the interpretation of a set of statutory ‘exceptions’, which prevent some specific types of invention from obtaining patent protection. These exceptions affect ‘mathematical methods’, ‘methods of doing business’, ‘computer programs’, ‘aesthetic creations’ and ‘presentations of information’.

There used to be no difference between the UK and Europe in interpreting the exceptions. In 1985, the European ‘Vicom’ case had decided that an invention couldn’t be excepted if it is deemed to have some ‘technical effect’. This test was adopted in the UK and used successfully for 20 years. Then, a series of court cases, which began in 2005, led to a change in UK IPO practice. Currently, on IPO interpretation, the technical effect of an invention should be ignored. Instead, if the contribution the invention makes over what is known already lies in one of the exceptions, then the whole invention is excluded.

This has had some curious and unwanted effects. For example, it means that many software-implemented inventions may be very difficult to protect by patent in the UK. It also impacts on business ideas. Inventions in fields as diverse as automated trading systems, workflow systems, graphical user interfaces and computer operating systems, for example, are affected.

Where does this leave UK business? The simple answer is it leaves them at a significant disadvantage compared to businesses in other parts of Europe, where more relaxed interpretations of the exceptions apply and at an immense disadvantage compared to businesses elsewhere. For example, in the US and Australia patents are readily granted for all kinds of non-technical inventions from computer software programs to financial derivatives, such as hedge funds and other investment products. The disadvantage, quite simply, is that UK businesses cannot protect in their home market the majority of their business ideas.

The problem lies in the fact that UK patent law has not been updated to reflect the changes in the UK economy over the past few decades.

The exceptions noted above were thought up 40 years ago, when our economy was very different. In the late 1960s, the UK still had a significant manufacturing and industrial base. Today, with dominant service and financial services sectors, our economy is much more knowledge-based. However, the rigidity of the current regime is preventing that knowledge from being properly protected. Without protection, exploitation and monetisation of that knowledge becomes much more difficult and can potentially deter businesses from investing time and effort in developing innovative solutions.

So what do we need to change? We could consider scrapping the exceptions altogether, thus allowing non-technical inventions to obtain patent protection in the same way as the US system. However, this could be a step too far and could stifle competition. Instead it may be better to work with the existing regime, modernising UK patent law and making it relevant to the 21st century UK economic base. One idea is to introduce a system of ‘petty patents’, for example, where the IPO could award reduced protection rights for a period of five or ten years, for inventions that fall under one of the specified exceptions. At the same time, softer penalties for minor patent infringements might be introduced. Both measures would have the effect of helping to extend protection without being too restrictive.

While subtle changes may be all that are needed, it is important that such changes are considered sooner rather than later to avoid UK industry falling behind in its bid to remain globally competitive. We may no longer lead the world in terms of manufacturing products; but our ideas in all fields of business and technology are world class and deserve to be properly protected both abroad and at home.

Nick Wallin is a patent attorney at Withers & Rogers LLP