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How 2018 EU patent law will affect Photonics
Understanding how forthcoming changes in patent legislation may affect your photonics business
At the recent Laserworld in Munich, we caught up with Dr. Robert Harrison, a Munich based business executive who specialises in high-tech intellectual property. He gave us an update to changes in the European patent legislation and why it is good news for global photonics companies thinking about basing their Research and Development in the PhotonDelta region. This is what you need to know.
Coming Soon - the European Unitary Patent
Let’s first define what we’re talking about.
Patents are granted for innovative products, materials, uses and processes ("inventions”). They primarily provide protection against unauthorised imitations, but can also be licensed to others – and indeed in the photonics industry licensing between companies is becoming increasingly important. The patent is a territorial right and is currently only valid in the country in which it was granted.
There is some good news, especially for those wishing to build a photonics company in Europe. There will soon be a single patent valid for almost the whole of the European Union that will greatly simplify patent protection across the European continent.
Early access to IP is a major benefit to being part of the PhotonDelta Cooperative. It’s a brilliant idea to enable high-tech companies to accelerate their business. Robert Harrison
The Changes are Good News
The new unitary patent system is expected to come into force by early 2018 - the final details are being worked out right now. It should be a lot cheaper than the existing system of validating patents separately in individual countries (e.g. The Netherlands, France, Germany, Belgium, etc.). It will be easier to grant technology licenses and will simplify administration. Over the next few years, national legislation will be amended in EU member countries to incorporate the decision of the directive.
There was a lot of discussion because of Brexit whether the law would come in to force or not. But the UK has decided to implement the single European patent. The Netherlands has always been a strong proponent, France has passed the necessary changes to its laws and its going through the parliament in Germany. Only Spain has decided not to be part of the scheme. Poland is also opting out of some parts.
The big challenge with intellectual property is identifying what is going to be really important in the future. It means a deep understanding of the roadmap for the next 5 - 10 years. I find hardware companies understand this better than those working in software and apps. It also means deciding which IP will your company develop and invest in, what IP are others expected to develop and anticipating if and how they match.
Too many people just look backwards. They look at what they have already done and then ask for help from lawyers to protect it as a patent. I believe we need to be far more forward thinking, anticipating what's coming, not dwelling on what's already been discovered. That will be our unique proposition to position Europe as a world-class centre of expertise and develop a strategic plan to better protect our intellectual property.
How it works in future
Let’s take the example of a Dutch photonics company that wants to get patent protection. At the moment, once the European patent has been granted by the European Patent Office in Munich, you must validate it in each of the European countries where you want protection.
In future, you will simply go to the European patent office in Munich and you will be granted a patent that gives you protection in at least 26 countries. That means:
- You will no longer have to file the current translation requirements that some countries currently require.
- There are no supplement fees, just a single annual payment to the European patent office.
Cheaper and faster
This not only means lower costs. It is going to be easier (and faster) to licence patents across the European Union. That's important as the life-cycle of many high-tech products is now much shorter and anything that speeds up time to market is valuable.
Not everything can be patented
A prerequisite for a patent to be granted is that it is directed to a technical invention which is new, inventive and can be put to commercial use.
Patents are valid for a maximum of 20 years from their date of filing. In most countries, renewal fees must be paid regularly to maintain the patent. Protecting patents can therefore become expensive.
Remember, not everything can be patented: Plans, rules and methods for performing mental activities, for games or doing business, as well as reproductions of information are excluded from patent protection. In Europe, at least, patents cannot be granted for surgical or therapeutic methods of treatment on the body of humans or animals or for diagnostic methods. Some computer software can be patented – that’s a grey area.
I’m encouraging late-stage photonics companies who have validated their product with customers to develop a broad forward-looking vision, glancing occasionally into the rear-view mirror to keep an eye on competitors who might be a threat to your future existence.
The growing importance of Singapore
There are genuine fears from European photonics companies about protecting their IP when doing business in Asia. But there are exceptions, like Singapore, which is good for patent protection.
Let’s assume a Dutch company wants to transfer some technology to a Chinese company. That will often have a licence agreement attached to that. If there is a dispute though, where do you go for resolution or arbitration? Singapore is becoming an interesting place to arrange the mediation or arbitration because their patent laws are based on the European patent laws. You can show a European patent agreement to the Singapore authorities and get a Singaporean equivalent very quickly.
One of the benefits of joining the new PhotonDelta cooperative is early access to relevant IP. Is that really a good idea?
It’s a brilliant idea. It demonstrates the power of a professional collaborative network. It will enable smaller companies to accelerate their business by accessing IP they cannot develop themselves and to know that their own IP won't be blocked. Exchanging IP is designed to speed up research and development as well as reduce costs.
In the pre-competitive research phase, it's all about showing what your contribution is to a particular project. The PhotonDelta cooperative agreement ensures there are no free-loaders on the IP system.
Members of the Cooperative are automatically given a research license to everything they see on the PhotonDelta IP Cloud. However, if they wish to or need to use that intellectual property in a commercial setting, they will need to take out a license.
The license has a low threshold – a standard upfront fee of €10K and an annual lease fee. The lease fee varies depending on the size of the licensee and are fixed in advance. There are no milestones and no royalties. Such payments that licensees must make are nothing more than a cost to the company.
Rather than charging milestones and royalties, PhotonDelta wants to encourage companies to invest in further research either on that same technology or a different area of interest. Through this mechanism, companies will have low threshold access to licenses and be able to bring the licensed technologies to the market faster. PhotonDelta cooperative members get a full return on their investment and a fair price for their contribution into the ecosystem.
Dr. Robert Harrison is an experienced business executive with almost 30 years’ experience in advising clients at the interface of technology management, business development and intellectual property. His focus is on developing intellectual property portfolios and commercialisation strategies for start-ups and small and medium-sized businesses, particularly in the field of semiconductors, electronics, biophysics and software. He has advised investors on legal aspect of intellectual property and its value as well as on third party infringement risks.
He has lectured extensively on the business aspects of intellectual property, licence programmes and valuation methodologies and is a regular contributor to the IP Finance blog as well as training materials from the European Commission. His interests lie in commercialising technology developed in research institutes and universities.