4iP releases highlights from new study on Computer Implemented Inventions

The economic impact of computer-implemented inventions in Europe Overview and highlights

25 March 2015

Executive Summary:

The study starts with a legal definition on patent protection on computer-implemented inventions (CII) in Europe provided by Prof. Dr. Klaus Melullis (KIT, former presiding judge at the German Court of Justice), followed by an analysis in a quantitative database research and an empirical survey amongst innovative companies the importance of patent protection on CII.

The database research showed that 35% of the patent filings at the European Patent Office (EPO) over all sectors are covering CII. The analysis shows clearly that CII is not limited to the software industry. 78% of CII patents filed at the EPO are within the manufacturing sector. Small medium seize corporates as well as large corporates are filing patents on CII.

Two thirds of the companies participating in the empirical survey have been Small Medium Enterprises (SME) with less than 500 employees. They see protection for CII as most important for their business, in particular with respect to international competition. 68% of the surveyed companies want to maintain the status quo for patent protection on CII.

The empirical study further showed that:

  • 49% of the jobs in Germany within industry using patents are directly or indirectly dependent on CII patents
  • 48% of the jobs in the European Union[1] within industry using patents are directly or indirectly dependent on CII patents
  • 51% of the revenues in Germany within industry using patents are directly or indirectly dependent on CII patents
  • 50% of the revenues in the European Union within industry using patents are directly or indirectly dependent on CII patents

Background:

It can be observed that regulators and policymakers try to limit patent protection for computer-implemented inventions. Major arguments used are:

  • Patent protection in general is hindering innovation and technology transfer
  • In particular patent protection for software is a high risk for any corporates that built their business model on open source.
  • Those kind of patent protection would only enable large international corporates to increase their profits
  • SME would suffer form patent protection on software and their economic future will be questioned

At the same time the European jurisdiction developed and practically approved a clear distinction for patent protection on computer implemented inventions excluding abstract patents without any technical or innovative content (software patents).

The aim of the study was to empirically prove two major hypotheses based on the legal definition for CII developed in Europe:

  1. Patent filings on CII are not limited to the software industry and can be found across many industry sectors.
  2. In particular small medium size enterprises are benefitting and not suffering from patent protection on CII.

Setup of the study:

First part of the study is a legal definition on patent protection on computer-implemented inventions in Europe provided by Prof. Dr. Klaus Melullis (KIT, former presiding judge at the German Court of Justice). In the second part the EPO Worldwide Patent Statistical Database (PATSTAT) has been analyzed according to this definition and an operationalization based on Xie and Miyazaki (2013). Results have been matched with company data from Bureau van Dijk's ORBIS database. The third part of the study comprises an empirical survey of companies identified as patentees of CII to identify the motives and perspectives on the European patent system.

Major findings:

The results show that the number of CII patent filings at the EPO more than tripled since 1995. A major increase could be observed between 1995 and 2004. After that period, the number of CII patent filings seems to have consolidated at a high level of more than of 35% of total patent filings at the EPO. Inventors from the U.S., followed by Japan and Germany, file most of the CII filings at the EPO.

Focusing on manufacturing sectors today more than 78% of all patent filings are related to CII, which shows that the need for patent protection on CII goes far beyond software industry. Leading sectors are computer, electronic and optical, followed by machinery, electrical equipment and automotive.

Very interesting to see is that in particular SMEs are seeking patent protection for their CII. A majority of 2/3 of the participating companies in the empirical survey has been SME with less than 500 employees. They see protection for CII as most important for their business, in particular with respect to international competition. 68% of the surveyed companies want to maintain the status quo for patent protection on CII.

The study further analyzed the correlation between patent protection on CII an key economic factors like employment and GDB in Germany and within the Europe Union[2]:

  • 49% of the jobs in Germany within industry using patents are directly or indirectly dependent on CII patents
  • 48% of the jobs in the European Union within industry using patents are directly or indirectly dependent on CII patents
  • 51% of the revenues in Germany within industry using patents are directly or indirectly dependent on CII patents
  • 50% of the revenues in the European Union within industry using patents are directly or indirectly dependent on CII patents

Conclusion:

The study clearly proved the two hypotheses:

  1. Patent filings on CII are not limited to the software industry and can be found across many industry sectors.
  2. In particular small medium size enterprises are benefitting and not suffering from patent protection on CII, furthermore patent protection for CII plays a major role for their business, in particular for international competition

CII is not limited to the software industry only. Today CII are present in the majority of manufacturing sectors. They play an important role for protecting R&D results in the innovative industry.

Patent protection on CII is not only used by large industries. In particular SME are seeking patent protection for their CII. This plays a major role for their business, in particular for international competition.

In particular SME (68% of the surveyed companies) want to maintain the status quo for patent protection on CII.


[1] Based on 2010 data for: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Netherlands, Slovenia
[2] Based on 2010 data for: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Netherlands, Slovenia