EPO report shows why the future is patent pending

PICTURE ALT TEXT HEREThe latest EPO report highlights how much emerging technology is reshaping the industry and for companies wishing to define the next generation of manufacturing, embracing this technology will be key, says David Robinson, partner, Chartered (UK) and European Patent Attorney at Marks & Clerk

The European Patent Office’s latest annual report, published earlier in March, paints a picture of an economy being reshaped by innovation. The report reveals that patent applications to the EPO have continued to grow, and are up 4.6 per cent on the previous year.

The UK also fares well in the latest report, despite ongoing uncertainty around Brexit. In total, innovators from the UK filed 5,736 patent applications at the EPO in 2018. While the UK still lags behind European competitors such as France and Germany, the latest figures represent a 7.8 per cent increase in filings from the UK. This compares to a 4.7 per cent increase from Germany and a decrease of 2.8 per cent for France – so the gap appears to be closing.

More striking than the overall increase in filings, however, is the volume of innovation being driven by emerging digital technologies. The top applicants by volume of patent applications filed are all technology companies and tech innovation is now outstripping manufacturing led innovation significantly. The three most popular categories for patent applications filed in 2018 were medical technology, digital communications and computer technology – all three categories are underpinned by digital innovation and all have seen growth in 2018.

Between them, digital communications and computer technology accounted for 23,658 patent applications – almost the same number as in the categories of transport (9,039), measurement (8,744) and ‘other special machines’ (6,379) combined.

So what do these trends tell us about the future of manufacturing innovation?

The latest data from the EPO is further evidence of the ongoing digitalisation of the economy. While the vehicles on our roads and the energy infrastructure that powers the country rely still on innovative manufacturing, we also see that an increasing amount of the innovation contained within a car, for example, is software based.

Another recent EPO report looking at self-driving vehicles (SDVs) takes a closer look at this trend. Of the top 25 filers at the EPO in the field of SDVs, traditional car manufacturers make up a minority. While there are some expected inclusions – BAE Systems, Audi and Volvo – much of the list is made up of global tech and mobile companies.

In medical technology, pharmaceuticals and other sectors, data driven tech companies are developing innovative products and disrupting more established businesses. The EPO report would suggest that as the world gears up for the next generation of transport, the same dynamic is at work in the automotive sector.

For businesses with core and historical products based on manufacturing, the loss of market share to tech upstarts presents a challenge. Ongoing innovation will be key to this challenge, as will the strategic use of intellectual property (IP) rights.

Securing IP on digital and data driven innovation can require a different approach to those for securing IP on manufactured goods. Likewise, the rapid evolution of technology in this area poses questions not just for innovators, but for intellectual property law itself. Who owns the IP on innovation created by AI for example? As the tech evolves, so will the law and the EPO’s new AI guidelines have begun to unpick these issues.

Another strategy we are seeing businesses in this space adopt is collaboration. Rather than starting from scratch with developing their own in-house software and computing expertise, which can be difficult in a market where competition for this expertise is fierce, many manufacturing companies are opting to partner with software companies who can help them compete in, for example, the race to deliver the first mass market SDV.

This can create complicated questions of ownership; being clear at the outset about the terms of any collaboration – and about who owns the IP on any resulting innovation – will be an important step for companies pursuing this strategy.

The latest EPO report is further evidence of just how much emerging technology is reshaping industry and the economy. For the companies wishing to define the next generation of manufacturing, embracing this technology will be key.

This will pose significant challenges for those industries which haven’t traditionally been digital first but – for those who can successfully adapt to these challenges and also embrace the opportunities – the rewards will be great.

David Robinson, partner, Chartered (UK) and European Patent Attorney at Marks & Clerk