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Who owns Intellectual Property?

Whether it is patents, trademarks, copyrights, R&D or other forms of intellectual property, as a manufacturer your IP is what makes others want to do business with you, and it should be respected, valued and protected accordingly, says E&T.

Launched aboard an Atlas V rocket on 11 February, Nasa's Solar Dynamics Observatory space probe is on a five-year mission to study the Sun. Already, the spacecraft has sent back some stunning images, as well as beaming a continuous stream of digital data to Nasa's Goddard Space Centre.

Yet, at first glance, Nasa's newest space probe has little in common with one of the agency's oldest still-operational spacecraft - the venerable Hubble Space Telescope, launched in 1990 and recently upgraded and repaired by a Space Shuttle crew in May 2009.

But Hubble, too, is renowned for sending home stunning photographs - and those images form the link between the two missions.

It turns out that E2V Technologies, which has its headquarters in Chelmsford, Essex, built the imaging devices on Hubble, the Solar Dynamics Observatory and other space probes launched by Nasa and the European Space Agency into Earth orbit as well as to Mars and Venus.

'Nasa tells us that no one in the US can match our performance and capabilities, which is why they come to us,' says Trevor Cross, E2V's chief technology officer.

But underpinning that performance, says Cross, is a compilation of carefully husbanded pieces of intellectual property (IP), built up over years of R&D and successive generations of products.

'We describe ourselves as a high-tech company, which means that we have to think IP and how we manage, protect and exploit that,' he says. 'We spend around 1-1.5 per cent of our sales turnover on IP protection, and take out between 180-200 patents each year.'

Yet arguably, in its approach to IP, E2V is very much the exception and not the rule - in the UK, at least.

According to patent attorneys Bird & Bird, for example, data from the European Patent Office shows that Dutch electronics group Philips is Europe's most prolific patent filer, with 2,556 patents filed in 2009. The highest-ranking UK companies are Shell and Unilever, in 38th and 39th respectively.

And the UK's most prolific patent-filing engineering company, Rolls-Royce, straggled in at 67th place - well behind Chinese telecommunications company Huawei, for instance, which ranked 16th with 672 patent filings.

'In general, British attitudes towards intellectual property aren't as progressive as they are in the US, Japan and Europe,' says Dr Chris Moore, manager of the engineering group at Epping, Essex-headquartered patent and trade mark attorneys HLBBshaw.

'Look at the number of patent filings, and Germany and France both outstrip the UK. British manufacturers tend to see intellectual property as a necessary evil, rather than as something to be cherished: they see the cost, in short, and not the opportunity to leverage it for income.'

It's a charge that is as perplexing as it is disturbing. For quite clearly, IP can comprise a manufacturing company's most prized assets. With its ownership rights secured by a patent, licence or brand, so too - in theory - is the business's potential income and profit stream.

Yet the evidence seems incontrovertible: while some manufacturers invest significant sums in identifying and protecting IP, many others let the prize slip through their fingers.

Talk to those closely involved in IP issue, and various reasons for this antipathy emerge. One problem, it seems, is that considerable confusion surrounds the various forms of IP protection that are available - as well as the conditions that must be met if that protection is to be assured.

Patent protection

While most people are at least superficially aware of patents, for instance, rather fewer fully understand the process of obtaining a patent, or what protection a patent actually confers. And trademarks and registered designs - two other forms of IP protection - are even less clearly understood, it seems.

'It's a complex area, and people get confused,' says Jeremy Smith, an associate at London-based patent attorneys Mathys & Squire. 'They try to patent things that can't be patented, or trademark things that can't be trademarked.'

And one of the prime reasons that a product or process can't be patented is often down to the company itself, it turns out. 'Businesses need to understand that an invention is only patentable during the time that it is kept confidential prior to patenting,' notes Gareth Morgan, a partner specialising in patent licensing and exploitation in the London office of international law firm DLA Piper.

'Once it's public knowledge, it can't be patented - which means that businesses have to educate their employees, their legal teams, and the people within the business who deal with third parties such as contractors, customers and suppliers.' Tell a customer what's special about a new product, in short, and say goodbye to your patent rights.

In addition, patents aren't always required. Guildford-based Surrey Satellite Technology, a University of Surrey spin-off recently sold to European aerospace giant EADS for £52m, for instance, didn't have a single patent to its name, says Martin Buxton-Hoare, the university's assistant director of research and enterprise support: everything the business did was already in the public domain.

'Its key proposition was the ability to use off-the-shelf products and technologies to build satellites,' he says. 'IP wasn't the point.'

International law

There's confusion, too, about exactly what can be patented or protected - confusion that isn't helped by international differences in legal systems. While American law permits companies to patent commercial processes, with online retailer Amazon.com's 'one click' shopping cart process being a case in point, British law insists that patentable advances must be 'new, inventive, and capable of industrial application'.

European law - and UK law - don't permit such non- technology based patents to be granted, but do then differ from each other in how they treat software code and advances in IT in general, with European law permitting the patenting of computer-related innovations that are deemed to be 'significant'.

And many manufacturers continue to slip up by failing to recognise that their manufacturing processes are just as patentable as their products - and may, in fact, be more so.

'A lot of companies don't really think about where the value is in their business,' notes Jackie Maguire, chief executive of London-based IP experts Coller IP Management. 'They intuitively know what is important to the business going forward, but don't always appreciate where it is coming from. And because of that, they don't understand what protection needs to be in place to keep that value safe.'

At Cambridge-based hi-tech manufacturer and technology company Sagentia, for instance, there's a growing recognition that the intellectual property locked into the company's manufacturing processes must be protected - a recognition sparked in part by observing global leaders such as Procter & Gamble and Energizer.

'A huge amount of the IP in such companies is around the manufacturing process, and not the products themselves,' notes Matthew White, Sagentia's director of innovation and intellectual property. 'And as products themselves become more difficult to protect, the opportunity is increasingly moving to the process: how to manufacture at low cost, how to manufacture at high quality or high yields, and how to apply specific technologies.'

Sagentia itself is now actively pursing the patenting of the IP tied up in a production line it is developing for a medical device to deliver a particular pharmaceutical drug, and which is presently operating on an R&D basis at one-fifth scale in a nearby warehouse.

'In this case, the IP is very much in the process,' stresses White, pointing to the 20-30 patents that Sagentia typically raises each year on its own account, as opposed to patents raised on behalf of clients for whom it is developing products and technologies. 'As our business develops, we expect more of our patents to be for processes.'

Free online searches

But why do so many firms fail to follow the example of Sagentia, and other prolific patent-seekers such as GlaxoSmithKline and Rolls-Royce? It's unlikely, for instance, to any longer be the cost of carrying out 'prior art' searches to see if an invention is in fact new. While it's perfectly possible to pay a patent attorney to do this, these days a dozen public libraries around the UK are designated providers of a specialist free guidance and advice service, helping companies to carry out free online searches of Europe's Espacenet patent database, which contains UK, European and world patents.

'You can carry out searches from home, or the office,' says Chris Goddard, resources manager at Plymouth Libraries, one such provider. 'It's not complex, but a little training does help.'

It's also unlikely to be down to a perceived lack of teeth in patent law. While enforcement standards do vary, even China is coming into line with Western practice.

It's just a matter of months, for instance, since Ronaldsway, Isle of Man-headquartered manufacturer Strix, the world's leading manufacturer of electric kettle controls, won a landmark patent infringement suit against two kettle control manufacturers in China, Zhejiang Jiatai Electrical Appliance Manufacture Co., and Leqing FaDa Electrical Appliances.

Strix holds 475 separate patents on its technology, and believes in continually adding new patents to extend its protection as existing patents expire, says Andrew Hewins, the company's group intellectual property rights and approvals manager.

'You've got to keep moving the game on,' he says. 'Patents give you a legal monopoly - but it expires after 20 years. You've got to keep refining the technology, and making it better.'

Instead, more than one expert pins the blame firmly on manufacturers' own management and engineers. 'There's something of a culture in UK engineering that tends to downplay innovation,' says David Croston, a patent attorney at London-headquartered patent attorneys Withers & Rogers.

'People think that because what they are working on isn't absolutely earth-shattering, it's not worth patenting. But that's simply not the case: incremental improvements to both products and processes can deliver significant economic value. Patents deliver real commercial value, and real competitive edge - and if you don't protect that value, you're going to give it away.'

And a role-model does exist, as critics point out. Look at leading patent-filers such as America's prolific General Electric (GE), for instance, and you'll see not only incentive payments paid to employees to draw patentable developments to management's attention, but also reward systems to encourage R&D personnel to highlight potential abuses by other companies.

'It's fairly common practice among big corporations,' says Haydn Evans, London-based vice-president of European patent search operations at international legal services provider and IP property specialist CPA Global, and himself a former GE employee.

'But it's not something that you typically see in smaller companies - despite the fact that licensing any infringements will give you a much bigger return than the nominal payments you make to someone.'

Again, E2V Technologies proves itself to be something of an exception, with a reward and recognition scheme that encourages employees to think about IP. But the focus is very much on the 'recognition' element of the scheme, rather than the reward, stresses chief technology officer Cross.

'People get a few hundred pounds when a patent is granted - and a certificate, signed by the managing director,' he says. 'What you see when you walk around the factory are the certificates: people are very proud of them.'

It's a shame, then, that the same can't be said of too many other manufacturing companies.

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