Patents suffer as crisis hits innovation

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It may be the European Year of Creativity and Innovation, but the recession has stifled new patent applications and experts say the worst is yet to come.

The European Patent Office (EPO) has revealed that provisional figures show a fall in patent applications for 2009. The decline began at the end of 2008 and has continued in the first 10 months of this year. 

However, a spokesperson said the figures are not as dramatic as some had suggested when the crisis hit. “We’re below last year’s level, but not as strongly as could be feared at the onset of the crisis,” he said, adding that a clear picture will not emerge until the end of the year as there has been considerable variation in the number of applications from month to month. 

“It is certainly correct to say that the mixed picture seen at the end of 2008 has continued in 2009,” according to the EPO

This comes despite an unprecedented push at political level to put innovation at the heart of the EU’s strategy for growth. 

While the figures may make for grim reading, experts at an EPO conference in Vienna earlier this month offered a stark prognosis, saying new patent filings are likely to continue to decline even if the economic situation improves. 

Time-lag means further decline in new IP 

Gerard Torres of the United States Patent and Trademark Office (USPTO) said an analysis of patent filings at his organisation suggests there is usually a lag of about one year between a recession and its effect on patent filings. 

“The current recession is typical in this manner, as monthly patent filings did not begin to display weakness until late 2008, early 2009. This may mean the worst is yet to come in terms of the decline in patent filings. Total patent filings are expected to be down by about 1% to 2%,” he said. 

The EPO acknowledged that a similar picture is evident in Europe where the full impact of the recession on patent filings will not be clear for some time. A spokesperson said companies follow a range of patterns when filing patents in several countries, with timescales ranging from 12 to 32 months. 

“We may get the full picture of how the patenting activity was influenced by the crisis later this year, or perhaps only next year,” a spokesperson said. 

Finance and local issues hurt patents 

Torres also noted that the fall-off in patent applications is linked to the decline in international trade rather than real GDP. 

This view was echoed by Hans Lööf of Sweden’s Royal Institute of Technology. He said fluctuation in patent applications is linked to access to finance and firms with low solvency are particularly vulnerable to the economic climate. 

He said patent activity is influenced by international finance during and after periods of economic contraction but remains independent of the economy in times of expansion. 

Kevin Scally of University College Cork, Ireland, said local factors have to be taken into account when policymakers examine patent statistics. 

Looking at the “small entity” filings at the USPTO, Dr Scally showed that despite an improvement in Ireland’s performance on the European Innovation Scoreboard (EIS), patent filings by small Irish companies had not really increased in the same period. 

2009 is the European Year of Creativity and Innovation with a range of events taking place across the EU to mark the special year (EURACTIV 26/02/09). The first European Innovation Summit took place in Brussels earlier this month. 

Innovation has taken centre stage in the EU, with European Commission President José Manuel Barroso pledging to streamline innovation policy (EURACTIV 23/09/09). 

The move runs parallel to a debate on how to replace the bloc's Lisbon Agenda for Growth and Jobs, with innovation likely to feature heavily in any replacement strategy. The EU executive announced in September that it would bring forward a European Innovation Act by early 2010.

Patent applications are often used as a crude measure of innovation. Business groups have been calling for an overhaul of the system for protecting intellectual property rights, including a European Community Patent, but progress has been slow. Preliminary figures for the first two months of 2009 indicated a drop in patent applications of 7% (EURACTIV 30/04/09). 

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