With the publication of the Hargreaves Review, the UK Government has completed its fourth appraisal of the intellectual property (IP) system in six years. The review itself acknowledges the history, arguing that now is the time for implementation rather than further discussion if its main objective – promoting innovation and growth – is to be achieved.

Hargreaves’ very structure highlights its clear focus on copyright matters and – in view of the importance of this area to the UK economy – such a focus might seem merited. But just one chapter is devoted to patents, including only three recommendations. This has resulted in correspondingly vague objectives that do little to advance the patent system.

In the chapter on patents, the review identifies three principal problems with the current system:
i) the backlog of pending patent applications, giving rise to increased uncertainty;
ii) the risks of applying current laws to newer or emerging technologies; and
iii) the growth of patent thickets – that is, the impenetrable array of similar patents surrounding certain technologies.

The limited discussion of these problems reflects the apparently scant attention given to the topic in general.

Glossing over complexities?

While the period of uncertainty attributable to pending patent applications is increased by lengthy backlogs, and while this can be used strategically in favour of enthusiasts of the system, the greatest risk associated with tackling backlogs is that patent quality may be compromised.

Accordingly, the challenge facing the UK Intellectual Property Office (UK-IPO) is the same as for many other offices – the need to process an increasing number of patents with effectively unchanging resources. This must be achieved without allowing any lapses in the application of existing laws and procedures. Most importantly, any effort to reduce a backlog should ensure that it does not become easier, nor more difficult, to obtain patents for subject matter that meets well-defined legal criteria. Although the review identifies the desirable goal of reducing backlogs, it is nonetheless woolly as to how this can be done without the projected benefits being outweighed by increasing uncertainty.

The review is also at real risk of glossing over a highly complex issue by simply stating that caution should be applied when applying patent law to new areas of technology. Until it can be shown that the basic balances within a system designed to stimulate innovation by providing fair monopoly should not be applied to certain kinds of technology, the evidence-based approach that the review favours is at risk in practical terms.

One particular area of concern – computer technology and telecoms – leads into the third problem identified by the review: patent thickets. Here, once again, the attendant uncertainty raises a real problem and there is no doubt that new entities attempting to navigate their way around a patent thicket can view it as a significant barrier to entry.

Of course, this barrier is part of the point of the patent system – but the question is whether the balance has shifted too much in favour of the original patentee, as against the follow-on innovator. Again, the debate is a little more complex than presented in the review, and the example of standards-related patents in the telecommunications field – which Hargreaves cites as a model for a potential solution – is actually a great example of the paradox. On one hand, it is clear evidence of the patent system successfully allowing collaboration between multiple entities in an area of enormously complex and highly interoperable technology: the patent system has provided the main protagonists with a means of negotiating reasonable royalties. On the other hand, it is highly thicket ridden.

Maximising incentives

Perhaps the greatest omission in the review is in looking at other ways of addressing uncertainty. In particular, patent litigation is currently a lengthy and expensive process in almost every territory. If it were not, then uncertainty in the administrative process would be less of an issue, as patents could be challenged or enforced quickly and effectively. As Hargreaves recognises, a key objective for the IP system must be to maximise the innovation incentive while minimising transaction costs. The enforcement angle is certainly one area where the transaction costs seem disproportionate – yet the recommendations within the review stop short of addressing them.

The Hargreaves Review has admirable goals, and in relation to copyright issues provides a number of concrete proposals that could go a long way to achieving some of those goals. In the area of patents, though, it simply has not spent enough time on the issues, nor dug deeply enough into the underlying problems. The sad fact is that we may yet need a ‘review number five’ to address properly the problems within the patent system.


Gwilym Roberts is a partner at Kilburn & Strode LLP