Yann Ménière, Chief Economist, European Patent Office

25 May 2018

Yann Ménière, Chief Economist at the European Patent Office, talks to 4iP Council about his role, patent trends, notably regarding inventions relating to autonomous objects, and the Unitary Patent.

The Chief Economist unit of the EPO was set up to provide economic insights into issues relating to patents, innovation and economic growth. Yann Ménière is the unit’s fifth Chief Economist. He is on secondment from MINES ParisTech, where he was leading the Chair on "IP and Markets for Technology" until joining the EPO. Yann’s research and expertise relate to the economics of innovation, competition and intellectual property. In recent years, he has been focusing more specifically on IP and standards, markets for technology, and IP issues in climate negotiations. Besides his academic publications, Yann has also written a number of policy studies for the European Commission, French government and other public organisations. Outside MINES ParisTech, he has been teaching the economics of IT standards at Imperial College Business School and the economics of IP law at the Law School of Université Catholique de Louvain.

Yann Ménière, Chief Economist, European Patent Office

Here Yann talks to 4iP Council about his role at the EPO and recent studies published by the Chief Economist unit.

1. What does your role at the EPO entail?

My task and that of the unit, is to analyse the role of the patent system within the economy and, in particular, within the European economy. We aim to assess the contribution that patents are making to the economy and to understand the many roles that patents play in this context.

Patents are most commonly seen as a means to protect inventions and creative investment, but they have many other purposes such as supporting trade and financial investment in technology intensive sectors - a signal for venture capitalists to invest and a tool to organise a market for technology through e.g. licensing contracts or R&D collaboration. These are increasingly important functions of intellectual property rights.

Another facet of my role is to dialogue with the public, policy makers, industry and academics to understand and communicate the mechanics of the patent system. We also encourage research: For instance, the EPO recently reinstated an Academic Research Programme, under which grants of up to EUR 100 000 are awarded to selected research proposals on patent-related matters.

2. What trends you are currently observing?

The EPO’s latest Annual Report shows a continued increase in the number of patent applications (+4% in 2017 following an even development in 2016). The data shows innovation to be really dynamic and increasingly international. What’s more, innovation is no longer happening in silos. Digital technology is pervading all industries, as our recent report on the Fourth Industrial Revolution (4IR) shows. Industries are converging and the practice of managing patent portfolios within industries is becoming increasingly sophisticated.

More than 5 000 patent applications for inventions relating to autonomous objects were filed at the EPO in 2016 alone and in the last three years, the rate of growth for 4IR patent applications was 54%. This far outpaces the overall growth of patent applications in the last three years of 7.65%. In 2016, Europe, the USA and Japan were the main innovation centres for 4IR technologies[1].



3. Can you elaborate on the factors driving EPO patent growth?

The growth in granted patents is occurring because innovation is increasing, globalising and levelling internationally. An increase in demand for patents granted by the EPO comes from within the European Union, but also from other regions of the world, in particular North America and Asia. Patent statistics clearly demonstrate that countries such as South Korea and China have become major innovation centres. There is also evidence that innovation is the growth engine of the European economy today, and that the EPO is the preferred gateway to patent protection in European markets.

4. What does the high growth rate (54%) in inventions related to autonomous objects mean for the European economy and society?

The high growth rate in inventions related to autonomous objects identified in our report means there is a growing focus on digital technology in all industries. European companies are actively seizing opportunities in this area and are doing well. Asian firms and some large EU players such as Nokia and Ericsson are strong in the core ICT technologies that make it possible to transform any object into a smart and connected device. Europe is doing particularly well in the so-called enabling technologies (such as artificial intelligence, data security or user interfaces) that are needed to derive value from connected objects. A number of European companies in traditional sectors such as the automobile industry, medical equipment or manufacturing have also taken a lead in developing applications of connected objects. Our data shows these industries to be innovating and actively seizing opportunities in a timely manner.

5. Has your time at the EPO given you additional insight into the attributes of the patent system?

Like all economists interested in patents and innovation, I knew before joining the EPO that patent quality is a key determinant of the impact of the patent system on the economy. But I see much better now what ensuring high patent quality practically means for a patent office. At the EPO, quality primarily depends on the recruitment and training of highly-skilled examiners and on massive investments in collecting prior art. This effort has to be continuously and carefully steered to adapt to a moving innovation landscape. Technology forecasting is also important to establish clear and predictable rules for the users as new forms of innovation (such as artificial intelligence today) emerge.

The Fourth Industrial Revolution is a good illustration of these challenges. Because innovation is increasingly reliant on software implementation, patent offices are faced with a growing number of computer-implemented inventions (CII) occurring also in traditional sectors, such as automotive or medical technologies. To secure a consistently high level of patent quality throughout, examining divisions at the EPO are always composed of three members with different technical backgrounds, including CII experts when and where appropriate. At the same time, our Guidelines for Examination are regularly updated to reflect the latest technology developments, and are being communicated throughout the entire operational area with the help of dedicated training events.

6. Industries with above average use of IP – especially patents –are known to make a greater contribution to GDP and external trade. What would further this trend in Europe?

First of all, the environment for innovation should remain favourable. By this I mean that we should maintain patent quality and ensure a legally stable and procedurally efficient IP system. Initiatives have for instance been put in place at the EPO to have examinations in patents completed within 12 months.

Secondly, the Unitary Patent will also play a major role in supporting the development of innovative industries in Europe. The current system contains institutional limitations, making it difficult for innovators to achieve effective legal protection across the EU single market. This means that an EU single market for technology is not yet achieved and its potential benefits not fully exploited. The Unitary Patent is a game changer because it will better align patent protection with the EU single market. It will especially benefit the SMEs, start-ups and universities that are currently not able to operate on a truly European scale.

7. What is the current status of the Unitary Patent?

The agreement establishing the Unified Patent Court - which forms a part of the Unitary Patent Package - needs to be ratified by 13 EU Member States, including France, Germany and the UK as the ones with the most European patents in force. To this day, 16 states have ratified it already, among them France and the UK. The ratification process has been finalised at parliamentary level in Germany, but the bill has not been signed by the German President as a constitutional complaint is still pending. We are optimistic that the complaint can be overcome, and are looking forward to seeing the decision of the German Constitutional Court that has been announced for this year.

(Further information on the Unitary Patent)

8. What would be the impact of a weakening of the patent system in Europe?

A weakening of the patent system would harm IPR intensive industries and the attractiveness of Europe as a place of innovation.

There is territorial competition at a global level to attract investment in innovation so any weakening of the system is tied to a weakening of the European economy.

Industry perceives Europe as having a stable and predictable innovation environment. Our patents are high quality, which provides stability for innovators and investors. For example, Europe has, for the past fifteen years, had a reliable and rigorous approach to patents related to Computer Implemented Inventions. We focus not on the software itself, but on the technical solution that the software enables. This pragmatic method has been applied consistently providing stability and legal certainty, and enabling quality.

An illustration of the strength of the European patent system is the fact that two thirds of US companies designate the EPO as their internal search agency, meaning that they work through the EPO to evaluate whether an international patent application is worthwhile. In this respect, the EPO is a global service provider.

9. Large companies file the highest volume of patents in Europe. How easy is it for a small company to file a patent and realise its value?

SMEs and universities file a sizable share of patents in Europe - around a third of all applications, which is not negligible, especially when you consider that the EPO is mostly an office of second filing for smaller organisations. The fact that smaller entities file with the EPO signals that they are both innovative and willing to develop in international markets.

Besides protecting their technology in the market, SMEs use patents to attract investors and find partners for technology transfers and collaborations. However, SMEs typically have limited resources to achieve protection all over Europe. Today, a patent granted by the EPO has to be transformed for use in each European country, meaning multiple sets of validation costs, attorney fees and renewal costs. And things can become very complicated to manage in the event of litigation: the SME can be subject to parallel litigation in the courts of multiple countries applying different rules of procedures leading to different decisions related to the same invention.

The Unitary Patent significantly cuts down the administrative and financial costs and reduces the procedural complexity and red tape SMEs are encountering today. Through the EPO, the new system will provide them with a one-stop for truly Europe-wide patent protection, removing the significant constraint of having to validate their European patent in several selected national markets at an early stage. If there is litigation, disputes will be settled before the Unified Patent Court for all participating 26 EU Member States.

10. What topics related to innovation and IP do you feel would benefit from further research?

We need to increase our knowledge of the geography of IP. Patents are territorial rights, and each territory has its specificities. There is a tendency to have an overly broad view of patent systems that are not fully homogeneous. This leads to an oversight of important characteristics at national and regional levels. The US and EU systems, for example, do not work in the same way and so the policy questions are not the same. This is too often overlooked. Likewise, a better understanding of the specificities of national and regional patent systems is a first necessary step to correctly address the important question of international harmonisation.

Another important area for further research is on the uses of patents for transactional purposes, such as the interplay between licensing and R&D. And IP management is important too: What do companies and inventors do with their patents? Industry practice is sophisticated and needs academic analysis.

11. What advice would you offer policy-makers seeking to stimulate innovation in Europe?

Keep and maintain the stable, high quality, balanced system. Launch the Unitary Patent and raise awareness and educate on IP, especially among SMEs and universities.

12. What advice would you offer a European inventor today?

Now is a good time to innovate and the EU is the right place to do it. Don’t see patents as a by-product of innovation but as an asset and a lever to capture and develop value. Case studies on how SMEs use IP show the value of a proactive, forward-looking approach. (See 4iP Council’s area ‘4 SMEs’for links to EPO, WIPO and other SME case studies).

13. What future EPO studies should 4iP Council’s subscribers look out for?

We are proud of our report on The Fourth Industrial Revolution mentioned previously because it is based on the most recent and complete patent data possible, which has been analysed using the unique expertise from our patent examiners. We’d like to develop further reports of this nature. The 2017 Annual Report, released in March, is also a very valuable tool for understanding market evolutions on invention and innovation.

Author: Emma Bluck

The views expressed in this feature are those of the interviewee and may not reflect the views of 4iP Council or its members. The purpose of this feature area is to reflect thinking on the topic of intellectual property and enable open discussion.

[1] Source: Patents and the Fourth Industrial Revolution The inventions behind digital transformation, EPO in cooperation with Handelsblatt Research Institute, December 2017