SMEs don't get their fair share of EU patents

SMEs don't get their fair share of EU patents

Summary: Small businesses in Europe have filed far fewer software patents at the European Patent Office than multinationals, according to the latest study

TOPICS: Government UK

Small and medium sized businesses hold significantly fewer software patents than big businesses, according to a study published by the Business Software Alliance (BSA) on Wednesday.

The study -- which may contain inaccuracies, according to its author -- found that only 20 percent of patents issued by the European Patent Office (EPO) are held by SMEs, with the remaining patents held by larger companies.

SMEs are responsible for half of Europe's turnover and employ more than 53 percent of Europe's workforce, according to the European Commission's Web site. This shows that small businesses hold disproportionately fewer patents than they should do according to their contribution to the European economy.

Francisco Mingorance, the director of public policy for the BSA, claimed the study showed that patents are equally important to SMEs and big businesses.

"These figures explode the myth that CII [computer-implemented inventions] patents are the exclusive property of big business," said Mingorance. "European SMEs need their patents every bit as much as big companies."

Opponents of the directive on the patentability of computer implemented inventions, commonly known as the software patent directive, have argued that it will disadvantage small businesses in favour of big players.

But, while the BSA claimed that all the SMEs in the report are European, it appears that the list could include SMEs based outside Europe. The author of the study, Daniel Johnson of Colorado College in the US, obtained the statistics on SMEs by manually checking the patent applications for the names of large companies. As he did not check the applications against a list of SMEs outside Europe, he may have included non-European SMEs.

Johnson flagged up that his final list may include some inaccuracies.

"For example, in our source dataset there is one patent document assigned to William Gates III, an individual whom few would consider representative of an SME," said Johnson. "The final data extraction may have patents that are not CII, may not be SMEs and certainly we have likely overlooked some number of SME-CII patents."

The study also found that almost half of patents issued by the EPO are held by the US or Japan, rather than European companies.

The study defined software patents as patents that have been filed at the EPO under a "technology class consistent with software", or where the patent application includes one or more of the following words: software, computer aided, computer read, computer controlled, computer program, computer algorithm, computer assisted.

Topic: Government UK

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  • So while big companies all around the world are in some sort of arms race and devoting plenty of budget to that it seems that some of the smaller EU companies are also spending some of their limited budgets on a pistol here or a gun there. (perhaps to scare off the armed-to-the-teeth armies of the big businesses later on?).

    Wow. I bet that nobody saw that coming, eh?
  • So this report is supposed to prove that more SME
  • The reason multinationals have a greater number of patents is probably due to the fact that they have full time patent departments.

    I worked in a patent department of a multinational pharmaceutical company when I was younger, and it was routine to file a patent in every country which had a patent system.

    Patents were a good idea when they were first developed 200 hundred odd years ago, but nowdays you have to be a large company to successfully gain and enforce patents, and the idea of applying them to software is ludicrous

    Even if an SME pays out for a patent and has it granted (a fairly expensive process), taking action against an infringer also costs, and usually involves a lawyer, therefore only the large companies seem to bother with them, SME's just don't have the money or the staff to use the patent system to their advantage.
  • In the case of Software it simply is not worth patenting most of the work SME's do for several reasons.
    1) A project that costs 1 to 5 thousand euro's may contain a patentable idea (or several trivial patents like those awarded to Microsoft and IBM) that would require more time, cost and effort than the project itself. Examples of this can are the webshop patents by amazon and others at
    2) a business with less than 100 employees would be hard pressed to pay for the patents lawyer that would required to apply for, appeal, and defend any patents. Even if they did not retain a lawyer full or part time the costs of litigating and processing a patent would not be returned for years if at all.
    3) patenting any software will immediately make you a target for larger patent-holding rivals and patent trolls, it will also restrict your ability to work with open source and other small business who sensibly don't want to pay licenses or subsidise your legal expenses in order to work with your software.
    4) the entire software industry in europe with a handful of misguided and greedy exceptions does not want the patenting of software because copyright works well. why would they add to the problem?