The European Patent Office (EPO) has announced the introduction of transitional measures to encourage applicants towards an early uptake of the Unitary Patent effect. Details can be found here, but to make it slightly more accessible, we have put together a short summary for you.

The interrelated measures in question will be made available once the following requirements are met:

• The deposit of Germany’s instrument of ratification of the UPC Agreement has taken place. This date lies between three – four months before the official start of the Unified Patent Court and thus the Unitary Patent system. In other words, expect the measures to be available within the next approximately three – six months. Please note that we are monitoring developments on a daily basis and will publish any updates as soon as they occur.

• In addition, a communication under Rule 71(3) EPC must have been despatched already for the European patent application(s) in question, i.e. the final phase of the grant proceedings has been reached.

Option 1: You may request delayed grant

A so called “request for a delay in issuing the grant” may be filed if a 71(3) communication has been received but approval of the text has not yet taken place. Note that “a request for delay filed on the same day as the approval of the text intended for grant will be considered to have been validly filed”.

Option 2: You may file an early request for unitary patent effect

Such a request will allow the EPO to “register unitary effect immediately at the start of the system”, provided the above requirements are met. 

If either of these options are of interest to you and/or you would like to find out more, please do get in touch with your usual contact at Mathys & Squire or email us at [email protected].

Data provided by Mathys & Squire has featured in an article by City A.M. highlighting a surge in trade mark applications following Brexit, which has in turn increased the wait time for trade mark application approval. Click here to read the article in City A.M.

An extended version of the release is available below, and has been published by World Trademark Review, GB News, Irish Legal News, Scottish Legal News, Institute of Export & International Trade and The Scotsman.

Brexit has triggered a record number of applications for trade marks in the UK, with 195,000 registered in the past year*, up 54% from 127,000 the year before, says leading intellectual property law firm Mathys & Squire.

Since 1 January 2021, the UK is no longer part of the European trade mark regime, meaning that any business looking to trade mark a brand or logo across Europe now has to make a separate application in the UK.

Prior to 1 January 2021, UK trade mark owners could file a single EU trade mark application and secure pan-European protection. Since the end of the Brexit transition period, two separate applications (one for the UK and one for the EU) have been necessary.

The huge surge in trade mark applications since Brexit has forced the Intellectual Property Office (IPO) – the Government agency that handles trade marks, patents and design registrations – to recruit more than 100 new staff to clear the backlog. Waiting times for trade mark applications reached three to four months in the early part of 2021, up from the usual wait of around a couple of weeks.

The IPO has also been inundated by applications from overseas trade mark holders to register with a UK trade mark attorney and address for service in the UK, which is now required post-Brexit.

Mathys & Squire points out that the UK’s departure from the European trade mark regime is permanent, meaning that the sharply increased number of applications represents the ‘new normal’ rather than a spike in activity.

Gary Johnston, Partner and Co-Head of Trade Marks at Mathys & Squire, comments: “The Brexit-fuelled rush to file trade marks and appoint UK attorneys in 2021 has been unlike anything we’ve ever seen in the UK.”

“Businesses from around the world have been forced to spend much more time and money on protecting their intellectual property separately in the UK. UK businesses have had exactly the same problem with their European IP. We’ve been tremendously busy filing applications for UK businesses in Europe too.”

“This huge volume of filings is unlikely to go away. Now we have left the European trade mark regime, this is the level of activity we can expect in the future.”

* Year end 31 October 2021 | Source: IPO

Mathys & Squire has featured in an article published by City A.M. relating to new data* around global patent applications relating to Covid-19 that have been published since the start of the pandemic. Click here to read the article in City A.M.

An extended version of the article is available below and has also been published by The Patent Lawyer.

The most common type of patent application relates to Covid testing and diagnosis, accounting for 1,668 patents (33% of the total 5,070 applications). 325 patents related to face masks (6%), while just 55 related to sanitizer and 38 to ventilators/respirators.

Mathys & Squire says a key reason why testing is the most common subcategory of Covid patents is the growing acceptance that the virus has become endemic and societies will have to learn to live with it. As a result, Covid testing has become a viable long-term business model.

The law firm says many more Covid patent applications can be expected next year, as it can take up to 18 months for the patent publication process to be completed.

So far, China accounts for the highest proportion of Covid patents by some margin, with 2,652 covid patent applications, 52% of the total number. Indian-registered patents were the second-most common, with 388, and the US was in third place with 383 (7.7% and 7.6%, respectively).

Mathys & Squire say China’s dominance so far is partly due the size and global importance of the country’s manufacturing sector. However, other countries are expected to narrow the gap as patent applications continue to be filed.

Juliet Redhouse, Partner at Mathys & Squire, says: “Covid has sparked an unprecedented wave of innovation in the healthcare sector within a very short timeframe.”

“Pharmaceutical companies and scientific researchers worldwide have done remarkable work in identifying diagnostic and therapeutic solutions to the virus. If businesses are going to continue to invest in R&D in the healthcare sector, they need to be able to protect their intellectual property.”

“We are likely to see even more patent applications as society finds innovative ways to adapt to the presence of the virus. This is likely to include more innovation in testing and treatments.”

*Data covers the period from 01.10.20 to 30.09.21 | Source: World Intellectual Property Office

Mathys & Squire has been recognised in JUVE Patent‘s UK Rankings in the ‘Patent Filing’ category for the third consecutive year in the fields of ‘Pharma and biotechnology’, ‘Medical technology’, ‘Chemistry’, ‘Digital communication and computer technology’, ‘Electronics’ and ‘Mechanics, process and mechanical engineering’.

As well as a practice-wide recommendation for the firm, four of our partners have maintained their status as Recommended Individuals: Hazel Ford and Philippa Griffin (for ‘Pharma and biotechnology‘), Chris Hamer (for ‘Chemistry‘) and Jane Clark (for ‘Digital communication and computer technology‘ / ‘Mechanics, process and mechanical engineering‘).

Partner Chris Hamer has also received a specialist Leading Individual ranking again this year for his expertise in Chemistry, one of only nine UK patent attorneys noted for their technical speciality – see here.

In its third annual UK rankings since the guide launched in 2020, the JUVE Patent editorial team has conducted research on how external developments have impacted the UK patent market. Based on this research, the UK 2022 Rankings bring together the top-ranked patent lawyers, patent attorneys and barristers who are making a national and international impact.

To see the JUVE Patent UK 2022 rankings in full, please click here.

Update: 21 December 2021

In an update to the September 2021 Court of Appeal decision featured below, the Legal Board of Appeal of the European Patent Office (EPO) has, in oral proceedings held yesterday, confirmed that an inventor on patent applications must be a human being, thus dismissing appeals that an AI should be recognised as an inventor. We await the board’s written decision and reasons, which we will cover once they become available.

In a September 2021 judgment, the Court of Appeal has upheld that, within the current legal framework in the UK, an artificial intelligence (AI) machine cannot be named as the inventor in relation to a patent application for an invention which it created. The full decision is available here: Thaler v Comptroller General of Patents Trade Marks And Designs [2021] EWCA Civ 1374.

Dr Thaler applied for two UK patents in respect of inventions which he claims were created by his AI machine known as DABUS (‘Device for the autonomous bootstrapping of unified sentience’). The applications were considered withdrawn by the UK Intellectual Property Office (UKIPO) by failure to identify the inventor and how Dr Thaler derived the right to be granted a patent from the inventor in accordance with section 13 of the Patents Act 1977. Dr Thaler claimed that DABUS was the inventor and that he derived the right to be granted a patent as owner of DABUS. This was first appealed to the High Court in 2020, but was dismissed, and in turn was appealed to the Court of Appeal and came before experienced patent judges, Lord Justice Birss, Lord Justice Arnold, and Lady Justice Laing.

In essence, the court considered three main questions:

1. Does DABUS qualify as an ‘inventor’ within the meaning of the Patents Act?
2. Is Dr Thaler entitled to apply for a patent in respect of inventions made by DABUS?
3. Was it correct that the applications were deemed withdrawn?

1. Does DABUS qualify as an ‘inventor’ within the meaning of the Patents Act?

All three judges agreed that the Patents Act makes it clear that only a person can be an ‘inventor’. The Act does not actually explicitly state this requirement, merely that the inventor is the actual deviser of the invention. Lord Justice Arnold explained that the Act nevertheless implies that the inventor must be a person, supported, for instance, by the dictionary definition of a deviser being ‘a person who devises’. Other indications can be found in the Act, such as section 13(2) which imposes a requirement on the applicant to identify the person whom they believe to be the inventor. In addition, section 13(1) states the inventor has a right to be mentioned as the inventor in a patent – and only a person can have such a right. Moreover, section 7(2) states that a patent may be granted: (a) primarily to the inventor, (b) to any person who is entitled by an agreement or rule of law, or (c) to the successor in title of either (a) or (b) (e.g. to whom the rights have been assigned), but to no other person. Because this is an exhaustive list, it seemingly follows that the inventor must be a person. Therefore, the judges were in agreement that an inventor can only be a person – and DABUS is clearly not a person.

In answer to question (1): No, because an inventor must be a person.

2. Is Dr Thaler entitled to apply for a patent in respect of inventions made by DABUS?

As set out above, section 7(2) provides that a patent can be granted to someone who is not the inventor if they are entitled by virtue of an agreement or a rule of law. Such a rule of law may include the UK legal mechanism that inventions devised by employees will broadly be owned by their employers. Dr Thaler claimed that he had derived the right to be granted a patent by rule of law as the owner of DABUS. This was seemingly based on a principle in property law, where the owner of pre-existing property owns the new property resulting from it (such as the fruit which is produced from a tree). However, Lord Justice Arnold held that this principle did not apply to intangible property such as intellectual property rights like the right to be granted a patent. An example was provided to contrast the fruit tree analogy, where, if person A took a digital photograph using person B’s camera, although person B owned the camera (the original property), person A may own copyright in the photograph and not person B (the new intangible property). Similarly, intangible property such as the right to be granted a patent for an invention resulting from an AI machine would not automatically flow to the owner of the machine. Accordingly, Lord Justice Arnold held that there is no rule of law that would enable Dr Thaler to possess the right to apply for the patent, and therefore he cannot be entitled.

In answer to question (2): Dr Thaler cannot be entitled.

3. Was it correct that the applications were deemed withdrawn?

According to Lord Justice Arnold, it logically follows that, because (i) DABUS is not a person and cannot be an inventor, and (ii) Dr Thaler was not entitled to apply for the patents, Dr Thaler had failed to identify the person whom he believed to be the inventor, and had also failed to provide an indication of how he derived the right to be granted a patent.

It is worth noting that Lord Justice Birss, also a very experienced patent judge, dissented from this judgment and found that, although DABUS was not a person so could not be an inventor, simply because Dr Thaler had filed a statement identifying whom he believed to be the inventor and indicating the derivation of his right to be granted the patent, he had satisfied the requirements necessary. He considered that it is not the function of the UKIPO to substantively examine whether the statement is correct – instead, since the statement honestly reflects Dr Thaler’s belief, it satisfies the statutory requirements. Lord Justice Birss considered that this fulfilled Dr Thaler’s obligations under section 13(2) and the applications should not have been withdrawn.

However, Lord Justice Arnold and Lady Justice Laing did not agree, finding that, although the factual accuracy of the statement does not need to be considered, the UKIPO is entitled to deem the application withdrawn if it clearly does not fulfil the statutory requirements. For example, it was a statutory requirement that the applicant identify the person who he believes to be the inventor, not merely their belief about who the inventor is. In these judges’ view, it was clear that the statements filed did not comply with the legislation because Dr Thaler did not identify a person as the inventor and did not identify a valid legal mechanism for deriving the rights. As a matter of law, and not as a matter of fact, the UKIPO can identify that the statements are defective, and that the requirements have not been met.

Accordingly, on a 2-1 majority, the Court found that the applications were correctly deemed withdrawn, and the appeal was dismissed.

In answer to question (3): the applications were correctly deemed withdrawn.

Comments

The fact that such an experienced patent judge as Lord Justice Birss would have found in favour of Dr Thaler indicates how the concept of AI inventorship is not clear-cut. It must be said that, following this judgment, it appears quite clear that, under current UK law, there is no room for an AI machine to be named as an inventor of a patent. It is worth noting that this decision referenced submissions which relied on where the law ought to be, and not where it is, and from the judges’ comments it is evident that, whether or not an AI machine should be identified as an inventor for a patent, a legislative change is required in order for AI machines to be allowed within the definition of inventor within the Act – and the judges are constrained in this decision by what the law currently is.

This judgment appears logical in that DABUS should not be an inventor because it is obviously not a person (whether a natural person, such as a human, or even a legal person for that matter, such as a corporation). As the inventor cannot have any rights, it follows that there are no rights which can be transferred to the owner of the machine, whether a legal mechanism exists or not. Furthermore, ownership of the machine appears to be a rather arbitrary mechanism to obtain rights from the machine (if such rights could exist). This would raise questions of what would happen if ownership of the machine was transferred, especially with respect to when the invention was devised by the AI machine.

If an AI machine cannot be named as inventor on a patent, in the absence of a change in legislation or at least until the time of any such change, applicants will have to determine how to apply for patents which are created by such AI. This raises the question of whether the owner of the AI could validly be named as the inventor, or whether it is the person developing or creating the AI; training the AI with data; setting the specific technical problem the AI has solved; or even identifying the inventive step of the invention created by the AI. In the UK at least, there is an argument that if the applicant identifies the person that they truly believe to be the inventor (whether that is the owner of the AI or otherwise), the requirements of section 13 are satisfied. This could only be questioned by someone who contests that they are instead entitled to the grant of the patent.

Looking forward, the UKIPO has since commenced a consultation on AI with respect to intellectual property rights. The outcome of this could well be the first step towards a solution to a problem that was likely not envisaged when Parliament decided on the wording of the Patents Act over 40 years ago.

Data provided by Mathys & Squire has been featured in an article published by City A.M. which highlights a 59% rise in global patents for electric vehicle (EV) technology filed with the World Intellectual Property Organisation (WIPO) in the last year, compared to filings five years ago.

Click here to read the City A.M. feature: ‘EV patents rise as net zero deadline drives fossil fuels down’.

An extended version of the article is available below, which has also been published by The Scotsman, Renewable Energy Magazine and The Patent Lawyer.

Global patent filings for electric vehicles are rising, while those for petrol and diesel vehicles are falling rapidly as the 2030 deadline for the end of carbon-emitting car sales gets closer.

14,000 global patents for electric vehicle technology were filed with WIPO in the last year*, an increase of 59% on the 8,794 filed five years earlier. In contrast, the number of patents for fossil fuel vehicles has fallen to 24,801 in the past year, a decline of 19% on the 30,499 filed five years ago (see graph below).

The figures show that there remains much to play for in the electric car industry. The rise in global patents filed for electric vehicles has been much more gradual, increasing by just 4% and 1% in the last two years.

Sean Leach, partner at Mathys & Squire, says that much innovation is yet to be done to bring truly affordable electric cars to all consumers, as manufacturers must do over the next decade. The cheapest new electric car** available in the UK is currently priced at £19,795, compared to £7,995 for the cheapest new petrol car.

He adds that it will be interesting to see whether patent filings for fossil fuel vehicles fall more quickly as more countries and cities put in place challenging deadlines for the end of new petrol and diesel car sales. The UK, Germany, India, Netherlands, Denmark and Sweden are among the countries that have committed to a deadline of 2030, while the US, Japan, South Korea and Canada have 2035 deadlines.

Sean Leach says: “Electric vehicle innovation has picked up some speed but not as much as many would have hoped.”

“There is still a great deal of research to be done to make choosing an electric car an easy choice for every consumer. Prices are still too high for many people and that simply must change by 2030. Manufacturers are competing to deliver an electric car that sells in the £10,000 range. That will require a great deal of R&D.”

“With the end of new fossil fuel cars now less than a decade away in a number of major economies, some will be surprised to see patents for petrol and diesel vehicles only starting to fall more sharply in the past two years. The product development cycle is long in the automotive industry and it is still going to take some time for a few carmakers to really pivot to electric vehicles.”

US leads the way for electric vehicle patents

Organisations in the US were the most prolific filers of global patents related to electric vehicles last year. Data shows that the US registered 49% of all global EV patents at WIPO (6,827 patents in 2020/21). By these same measures, Chinese filers are the second most prolific, filing 28% of all global electric vehicle patents in 2020/21 (3,901 patents).

The US has long been a hotbed of electric vehicle innovation, with Tesla and businesses in its supply chain playing a key role in commercialising fully-electric cars. 

The UK saw a comparatively tiny number, with data showing as few as 65 patents for electric vehicle technology were filed in 2020/21. This makes up only 0.4% of all filings in the category at WIPO. The list of leading UK filers is dominated by lithium-ion battery development businesses, and the Government is hoping to increase UK innovation in this area through the UK Battery Industrialisation Centre in Coventry, which opened in July 2021.

Adds Sean Leach: “This picture is worrying, but statistics alone don’t tell the whole story. UK engineering experts and entrepreneurs are already making the UK a hub for electric vehicle development. The UK Battery Industrialisation Centre is a significant step forward in that regard, but once it has been developed, new technology must be protected if it is going to provide real value to business over the long term.”

“We hope to see the number of EV patents from UK filers rise – there are some very innovative UK businesses in the battery supply chain in this country, and they need to keep pace with their German, US and Chinese counterparts.”

Carmakers begin to move away from petrol and diesel car research – number of patents for fossil fuel vehicles down 20% in two years

* year end 30 June 2021

** excluding two-seater cars and quadricycles

Following the order issued on 16 July 2021, the Enlarged Board of Appeal (EBA) has now published its full written Decision in G 1/21. The procedural objections raised throughout the earlier part of the proceedings have been covered in a previous article, and so this article focuses on the opinion of the EBA on the status of oral proceedings by videoconference in the context of the European Patent Convention (EPC).

Although the EBA considered it necessary to restrict the referred question to proceedings before the Boards of Appeal, as opposed to departments of first instance, the Decision issued provides general guidance with respect to the circumstances under which oral proceedings by videoconference may be imposed on parties without their consent. The EBA acknowledged that in-person proceedings should be the ‘gold standard’ default, with videoconferencing able to provide a suitable alternative in some cases. The EBA also commented that the parties’ preferences (with good reason) should be given due consideration by a Board when deciding on the format of oral proceedings. Thus it seems that we can expect a return to the ‘old normal’, at least for Board of Appeal proceedings, following the current pandemic.

Scope of the referral

The EBA opened by reformulating the referred question in view of the particular need for clarification in the referring decision (CLBA 2019, V.B.2.3.3). In doing so, they considered that the choice facing the referring Board in T 1807/15 was not between in-person and videoconference, but instead between videoconference and postponement – the question was thus limited to periods of ‘general emergency’, such as the Covid-19 pandemic. However, the EBA has not provided further comment as to which parties able to declare a ‘general emergency’ (or when it is over).

The EBA did consider it appropriate to evaluate compatibility of videoconferencing with the EPC more generally, and not solely in regard to Article 116 EPC, as “the right to oral proceedings is an expression of [the right to be heard under Article 113(1) EPC]”.

Where does videoconferencing stand?

The fundamental question of what legal status is given to a videoconference may usefully be considered in several parts, summarised as follows:

(1) Do oral proceedings by videoconference constitute ‘oral proceedings’ within the meaning of Article 116 EPC?
     YES

(2) Is a videoconference equivalent to in-person oral proceedings?
     NO

(3) Is a videoconference a suitable format for conducting oral proceedings?
     YES

The first of these questions focuses on the interpretation of Article 116 EPC, which is actually concerned with when oral proceedings are to take place, rather than what constitutes ‘oral proceedings’. The EBA considered the term ‘oral proceedings’ to be very general so a broad interpretation, requiring only verbal communication between parties, was adopted. However, it was later noted  that a telephone interview would not be ‘suitable’ in the context of the third question. In dismissing allegations about the intention of the legislators of the EPC 1973 and 2000, the EBA stated that the purpose of the Convention is to “provide a system for the grant of European patents with the aim of supporting innovation and technological progress”, and therefore considered that it would be at odds with the fundamental object and purpose of the EPC to exclude the use of newer technologies in the conduct of oral proceedings. It was also pointed out that the use of laptops, PowerPoint presentations, and digital whiteboards would equally not have been envisaged by the original legislators, but these forms of technology have nevertheless formed a useful part of oral proceedings for some time.

On this topic, the Decision makes an interesting point that, if videoconferences were not ‘oral proceedings’ within the meaning of Article 116 EPC, the validity of certain aspects of such videoconferences even with the consent of the parties could be called into question. For example, giving parties the opportunity to make oral requests (in accordance with their right to be heard), or the rendering of an oral decision by a Board, might have different legal status as compared with the same procedural acts performed in-person.

The second and third questions were considered under the same heading in the Decision, but there seems to be an important distinction between them. Specifically, the second question appears to relate to the effectiveness of videoconferencing in general, whereas the third assesses simply whether it meets the needs of users of the European patent system where necessary, e.g. to avoid postponement of oral proceedings in the height of a pandemic. It is noteworthy that the EBA agreed (at least with a number of the amicus curiae briefs) that communication by videoconference “cannot, at least for the time being, be put on the same level as communicating in person”, i.e. it is not equivalent to in-person proceedings. However, the EBA considered that the essential features of oral proceedings can be ensured by a videoconference, namely (as set out in R 3/10) “.. to allow each party to make an oral presentation of its arguments, to allow the Board to ask questions, to allow the parties to respond to such questions and to allow the Board and the parties to discuss issues, including controversial and perhaps crucial issues”. This is consistent with the analysis above with respect to the legal validity of acts performed via a videoconference. The EBA also noted that the extent to which body language can be interpreted (which was a feature of a number of the submissions by those taking a position against videoconferencing, including the appellant) is a matter of degree; the point was made that interpretation of body language could equally be impacted by distance or layout in a physical courtroom.

Thus, the Decision concludes that videoconferencing does provide a suitable alternative to in-person proceedings.

In what circumstances may a party’s request for in-person oral proceedings be denied?

Before turning to this final part of the question, the Enlarged Board noted that oral proceedings are most often held on the request of a party. It was therefore concluded that the choice of format for oral proceedings should be made by the party requesting them, particularly as they could have good reasons to prefer in-person proceedings (since it has been established that these are the ‘gold standard’).

Despite this conclusion, it was considered that the Board of Appeal could overrule the party’s preference in format under certain circumstances. The conditions for doing so as set out in the Decision are that:

(i) there must be a suitable, if not equivalent, alternative (such as videoconferencing); and

ii) there must be circumstances specific to the case which justify the decision not to hold the oral proceedings in person.

The EBA specified that the decision as to whether the specific circumstances justify deviating from a party’s wishes “must be a discretionary decision of the Board of Appeal summoning them”.

Whilst the present Decision may have addressed the issues raised in light of T 1807/15, it remains to be seen how the Boards of Appeal will apply the guidance and to what extent they will exercise their discretion. The Decision does feature statements with which we are now all too familiar, including ‘general travel restrictions’, ‘quarantine obligations’, and ‘other health-related measures’ preventing travel to an in-person hearing, and so there is the potential for some variation in the interpretation of these deciding factors. One helpful point, although seemingly less relevant after over a year of trialling videoconferencing in European Patent Office (EPO) proceedings, is that the decision should not be influenced by administrative issues including the availability of rooms and interpretation, or by intended efficiency gains.

Conclusion

Whilst we might still expect some discussion in the coming months about the suitability of videoconferencing as an alternative to the ‘gold standard’ of in-person hearings in particular cases, the overall impression based on the reasoning of the present Decision is that the EBA envisages the EPO maintaining the status quo for the time being (at least until an end date to the most recent state of ‘general emergency’ is announced). Nevertheless, the Decision has now provided particular terms as a springboard to open discussion with the Boards of Appeal surrounding parties’ particular circumstances, and it will be interesting to see how broadly or narrowly these terms are applied in the coming months, including whether the departments of first instance look to follow the same procedure.

For the moment, it seems that we can conclude that the EBA does not see videoconferencing becoming a ‘new normal’ in its current form, and we hope to see a return to the premises of the EPO for those of us who are keen to do so.

Chancellor Rishi Sunak has delivered the Autumn budget 2021 statement, with a target of building a stronger post-pandemic economy for the UK. Of particular interest to us is the government’s focus on science and technology through research & development (R&D) and its recognition of innovation in supporting sustainability to combat climate change:

R&D

Reinforcing the sentiment set out in the Queen’s Speech in December 2019, Sunak commented that a boost in R&D investment will help to “secure the UK’s future as a global science superpower”. A 33% increase (£5bn) to the current research budget of £15bn a year has been announced, and with the majority of this funding planned to come into effect in 2023, this highlights the government’s emphasis on the importance of innovative science and technology businesses in recovering the UK’s economy. £2bn of this £5bn increase has been allocated to the UK’s membership of ‘Horizon Europe’, an EU collaborative research programme which brings together researchers from industry and academic research institutions.

An increased investment in UK R&D to £20bn per year by 2024, as well as a reform of R&D tax relief to support modern research methods on domestic activities, were also announced, but this £20bn sum falls short of the previously proposed (in March 2020) commitment of £22bn per year – a target that has now been pushed to 2026. In addition to supporting UK businesses carrying out research within the UK, a new ‘Scaleup visa’ has been introduced in an attempt to attract highly skilled people from abroad to growing UK businesses. With this new visa scheme, the chancellor announced the launch of a ‘Global Talent Network’ to attract “the best global talent in key science and tech sectors”.

Overall, the total investment in R&D investment will increase from 0.7% of GDP (in 2018) to 1.1% of GDP in 2024, which puts the UK ahead of Germany, France and the US; which once again confirms this government’s emphasis on the importance of adequately supporting science and innovation through funding.

Private R&D investment has also been prioritised, with an increase to £1bn per year by 2024 for core Innovate UK programmes (£300m more per year than in 2021). Sunak has further confirmed the new £800m government funding for the Advanced Research and Invention Agency (ARIA), as proposed in the March 2020 budget.

Sustainability funding

The subject of sustainability and the UK’s impact on climate change remains prominent in this year’s budget announcement, which comes just days before the start of the COP26 summit. The chancellor has confirmed that more than £11.4bn will be invested into a new fund for the government’s net zero strategy in support of “new green industries of the future”, bringing the total invested in the UK’s ‘green industrial revolution’ to £30bn since March 2021. A further £6.6bn will be spent on international climate finance, and the UK Infrastructure Bank (UKIB) will invest £107m in offshore wind in an effort to meet its target of all electricity coming from renewable sources by 2035. A £1.4bn package – the Global Britain Investment Fund – has been designed to encourage investment in the UK’s innovative green and renewable tech sectors, with over £800m of this reserved for the production of electric vehicles.

Alongside these promising steps to reaching a greener economy, Sunak also announced changes to air passenger duty and slashed taxes on domestic flights. The Office for Budget Responsibility predicts a 3.5% increase in passenger journeys a year as a direct consequence of this latest initiative; which has sparked concerns regarding our carbon footprint, especially in the run up to the COP26 summit.  

In an effort to encourage smaller businesses struggling to prioritise sustainability, the chancellor announced an investment relief to encourage businesses to adopt green technology, e.g. solar panels and wind energy. Sustainability and a green economy are only achievable if change is implemented at every level of society – starting with legislation and governmental funding, through to individual households; the Autumn Budget is a step in that direction.

Looking ahead

Through the Autumn budget, the government is highlighting its trust in innovation and R&D as building blocks to becoming a ‘global science superpower’ and rebuilding the UK economy. We look forward to seeing the outcome of such investment and how this will impact the science and technology space.

Mathys & Squire has featured in an exclusive article published by The Telegraph, covering the introduction of so-called ‘security bonds’ of at least £50,000 for UK businesses seeking to litigate in the EU post-Brexit.

Partner Andreas Wietzke, from the Mathys & Squire Munich office, commented: “For British businesses, defending your intellectual property (IP) in the EU has become a much more costly affair since Brexit. This could have a chilling effect on actions by UK litigants in Europe, particularly for startups and SMEs with limited funding.

“For those in the UK with valuable patents or trade marks that are being infringed by businesses in Europe, the decision whether to pursue litigation is not quite so simple as it was before Brexit. Having to put up £50,000 or £100,000 to have your case heard in Germany, France or the Netherlands will give some of them pause for thought.”

Despite these expensive ‘bonds’, with the help of a patent attorney – e.g. through creating inter-EU IP entities, moving IP, or setting up internal licence agreements – businesses still have options when it comes to protecting their intangible assets through litigation.

For more information regarding IP litigation, wherever you are based, get in touch with a member of our team.

Click here to read The Telegraph article in full (login required): ‘Brussels stings British firms with extra legal charges’.

A version of this article has also been published by City A.M. – click here to read in full.

In this article for The Patent Lawyer, Mathys & Squire partner Dani Kramer and associate Dylan Morgan review the response of patent offices to blockchain filings with a particular focus on the United Kingdom Intellectual Property Office (UKIPO), the European Patent Office (EPO), and the United States Patent and Trademark Office (USPTO).

In the last decade or so, blockchain has become an area of increasing interest both commercially and from a patenting perspective. While blockchain has not yet become a part of daily life for most people, the technology can be applied to many fields and offers the potential to improve various existing technologies. Unsurprisingly, many companies are keen to protect their blockchain developments via patents.

Throughout this article, comparisons between patent offices will be drawn in particular by comparing the treatment of exemplary patent families in the various offices. In general, most of these jurisdictions seem to be amenable to blockchain filings. The exception to this is the UKIPO, which has granted relatively few blockchain patents and has objected to many applications on the basis of unallowable subject matter. Thus, at least for the time being, applicants seeking protection for blockchain inventions in the UK might be best served by pursuing patent protection via the EPO.

Introduction

The majority of patent offices have yet to rule on the patentability of blockchain in any seminal cases, and present guidance from patent offices is typically that blockchain inventions should be treated the same as other computer-implemented inventions.

For example, in a conference report titled ‘Talking about a new revolution: blockchain’ from 4 December 2018, the EPO set out its position that: “… blockchain inventions are essentially computer-implemented inventions (CII), so they are examined by the EPO according to established stable criteria, developed in accordance with CII case law.”. “Realising that blockchain inventions are in fact CII is a big relief,” said Lievens. “We are on known territory. We know how to do this. Applicants will have legal certainty and will get what they expect.”

Other patent offices have taken similar positions, that blockchain inventions should be treated much the same as any other computer-implemented inventions.

Of course, in practice different types of computer-implemented inventions can be treated rather differently by different patent offices. Below, we have compared the treatment of blockchain filings by certain offices to identify any discernible trends.

UKIPO

There have been hundreds of blockchain filings at the UKIPO, with most of these applications being filed within the last five years. Many of these applications have not yet received search or examination reports and so there is a limited pool of filings from which conclusions can be drawn.

However, enough applications have been examined to observe an apparent pattern of UK blockchain filings being rejected on the basis of unallowable subject matter.

An indicative application is GB2555496A, filed in 2017 by Trustonic. Corresponding applications have been filed in Europe (EP3312756B1) and the US (US20180114220A1) – and these applications will be commented upon later.

In a first examination report for the UK application, the Examiner stated:

“I note that the US equivalent to this application has been abandoned following significant amendment, and the EP equivalent granted again following significant amendment (note conflict warning below.) Given also the substantive excluded matter objection, which would not in my view be addressed by either the US or EP form of claims, I have not therefore at this stage completed an updating top up search on this application.”

While this application is still pending, it seems that overcoming these objections will be challenging. This examination report is also interesting because it succinctly expresses a number of conclusions that are borne out of our review of other UK filings.  In particular:

1. Blockchain filings are likely to draw subject matter objections at the UKIPO.
2. The UKIPO seems to take a harsher stance on blockchain filings than other offices.
3. The UKIPO is typically unwilling to perform searches until subject matter objections have been addressed.

This being said, certain companies have managed to secure patent protection for blockchain inventions at the UKIPO (e.g. via GB2549085B and GB2561107B).

Filings that manage to achieve grant in the UK are typically linked to a physical system or input; for example, the claims of GB2561107B require the obtaining of biometric data and the comparison of this biometric data to a biometric hash.

EPO

As will be apparent from the Examiner’s comments in the UK examination report cited above, the EPO is generally more amenable to blockchain inventions than the UKIPO.

Indeed, for EP3312756B1 (the EP filing in the above-mentioned Trustonic patent family) the Examiner’s objections were almost entirely related to novelty and inventive step, with the patentability per se of the subject matter attracting very little attention.

This trend is played out across European patent filings. Novelty and inventive step tend to be the determining factors, with patentable subject matter tending to be of subsidiary relevance. This is partially due to the way in which the EPO approaches inventive step – and as with all applications, non-technical aspects are of limited relevance during the determination of an inventive step – but, as a general rule, the EPO seems willing to consider blockchain technologies as being technical and to more readily grant blockchain patents.

Another application that illustrates this difference in approach between the EPO and the UKIPO is EP3577593B1, which was filed by PHM Associates in 2018 claiming priority to a GB application filed in 2017. On the face of it, this is a fairly innocuous European application. Following entry into Europe via a Patent Cooperation Treaty (PCT) application, the Examiner raised various novelty and inventive step objections. Once these were overcome, a patent was granted by the EPO.

Conversely, the corresponding UK application GB2566741A has thus far received a total of four examination reports from two different examiners, with each of these examination reports objecting to the claims as relating to unpatentable subject matter.

Turning then to an application that has fallen foul of EPO subject matter objections, EP3376456A4 is an application filed by Nippon Telegraph and Telephone Corp in 2016 that relates to the determination of whether a party is qualified to add blocks to a blockchain. This application has been refused by the EPO Examining Division and is currently under appeal.

Justifying the refusal, the Examining Division stated:

“The present application relates to decisions for granting the right to generate the next block in a blockchain as typically used in cryptocurrencies such as Bitcoin.”…

“This problem is addressed by a blockchain generation and verification method in which the decision for granting the right to generate the next block in a blockchain is based on the number of “transaction patterns”, i.e. the number of transactions with different transaction partners in which a party has participated (e.g. determined in the form of the sum of the number of unique identifiers of transaction partners in the transaction datasets). This is regarded as an index of trustworthiness of the generating party based on the assumption that a transaction is conducted with trust on the transaction partner built by revealing each other’s identities and knowing who the transaction partner is. …”

“The problems which are thus addressed do not appear to refer to a technical solution of a technical problem, but rather address business-related or behavioral considerations for the selection of a parameter in a consensus algorithm.”

This decision makes it clear that not all blockchain applications will be considered by EPO examiners to be technical in nature and hence allowable by the EPO. In particular, those applications that are interpreted to be business methods per se (and inventions relating to consensus mechanisms might be at increased risk of this) are likely to face difficulty at the EPO, unless – as with any computer-implemented or business method invention – it is possible to demonstrate a clear technical effect. As mentioned above, this application is currently under appeal, and the outcome of this appeal might well have implications for future blockchain applications.

In summary, the EPO has shown itself willing to grant blockchain patents – but applicants should be careful in particular to avoid straying towards business methods.

USPTO

Turning to US practice, it is useful to consider again the patent families that have been mentioned previously – the Trustonic, PHM, and Nippon families.

The US application in the Trustonic family (US20180114220A1) received a first Office Action that raised numerous patentability objections. The claims were rejected under 35 USC § 101 as being “Certain Methods of Organizing Human Activity”.

Following a response from the applicant, and the issuance of a subsequent final Office Action, the application was abandoned.

Relevant extracts from that final Office Action include:

• “Applicant also argues that rather than verification of the chain of trust being implicit from the authentication of one stakeholder by another stakeholder, the chain of trust can be verified using a public ledger which tracks the chain of cryptographic identities established for the electronic device to improves the way in which a new cryptographic identity is established for an electronic device. The Examiner respectfully disagrees. The specifics of how the verification works is not reflected in the claims. Besides, transfer token and values of the counter are non-functional descriptive material and are not functionally involved in the steps recited.”
• “Claim 20 recites [a] similar abstract idea. That is, other than reciting “electronic”, “digital” nothing in the claim element precludes the step from practically being organized by human activity.”

In contrast, the US application in the PHM family has received no subject matter objections under 35 USC § 101. Similarly, the US application in the Nippon family received no subject matter objections under 35 USC § 101 and has recently proceeded to grant.

While the Trustonic US application received subject matter objections, it is notable from the above extracts that these objections do not focus on the blockchain aspects. Furthermore, the case file contains an Examiner’s summary of an applicant interview that suggests the objections could have been overcome with further amendments.

More generally, it is notable from a review of US applications that the ‘abstract idea’ objections faced by blockchain inventions at the USPTO seem more likely to be surmounted than subject matter objections at the UKIPO or EPO. For example, US10291627B2 is a patent filed by ARM in 2016 and granted in 2019 and US10803022B2 is a patent filed by Uledger in 2018 and granted in 2020. Each of these filings faced initial subject matter objections that were overcome via amendment and argumentation.

Comparatively, blockchain filings seem to be viewed relatively favourably by the USPTO – and in many cases where subject matter objections have been raised, it has proved possible to overcome these objections.

Summary

In summary, most patent offices seem to be willing to grant blockchain patents – and although they have not been discussed here, the China National Intellectual Property Administration (CNIPA) and the Japanese Patent Office (JPO) also seem to be willing to grant such patents.

As with other computer-implemented inventions it is helpful to show a clear technical effect and to illustrate that any claimed method could not be performed by humans. And as with other computer-implemented inventions, applications that stray too far towards pure business methods are at particular risk of receiving subject matter objections.

The UKIPO is perhaps a notable outlier that views blockchain filings somewhat unfavourably. Therefore, where UK protection is desired it might well be beneficial to seek patent protection by filing an application at the EPO.

This article was published in The Patent Lawyer Magazine in October 2021.