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Small firms 'failed' by patent law

There is growing consensus that the UK patent laws need to be reformed, with Microsoft and the Patent Office adding their backing. But the LSE has sounded a note of caution
Written by Tom Espiner, Contributor

Small businesses are being failed by the patent system, according to Andrew Gowers, the man leading an independent review into intellectual property law in the UK.

SMEs are a disadvantage when applying for patents because of the expense of having a patent awarded, Gowers told ZDNet UK on Thursday.

"The cost of protecting IP rights for UK firms is an issue — we're looking to find practical ways of reducing it," said Gowers.

Gowers was attending a seminar in London, where he also said that some companies were using patents to prevent other firms from developing new products.

The UK Patent Office (UKPO) also said there was a need for the patent system to be reformed because of the complexity of patent law.

"The complexity can affect an SME. We must work to make the system simple and accessible, yet robust enough for the patent to hold up if challenged," said Ron Marchant, UKPO's chief executive.

"There is also a need for operational reform in duplication of effort internationally. Each country you apply for a patent in incurs costs for the same work, and it's a resource hungry process. It's very expensive and unnecessary, and can be a barrier for international patenting for Web-based SMEs with access to selling across the globe," Marchant continued.

Microsoft also called for better collaboration between patent offices around the world, but said it doubted there would be international consensus over patent legislation.

"In the UK we don't believe there's the political will to have an EU-wide system of patents," said Chris Parker, senior director of law and corporate affairs for Microsoft.

Microsoft also said it would throw its weight behind the interests of SMEs, as this would benefit both business and society.

"Microsoft is extremely interested in helping SMEs to protect innovation, because that's one of the key drivers of expanding knowledge. We think the benefits for business and society in general are compelling, and we'll do everything possible to prime the pump," said Parker.

Microsoft called for the government to provide incentives for SMEs to pursue patents. "We think tax credits are really important to protect SME intellectual-property rights at the outset."

But the London School of Economics (LSE) was more cautious about reforming current patent legislation. "Streamlining the process is not unambiguously a superior move," said Danny Quah, professor of economics at LSE. "There is a danger that companies that win patents are those with the best lawyers rather than the best engineers."

"If the government were to provide incentives for patent production, the danger is that successful companies would become the ones with a good legal department rather than the best engineers," Quah explained.

The creation of monopolies had to be balanced against the benefits to creativity, said Quah.

"Strong intellectual-property rights encourage the use of legal weapons, because forces in the system encourage litigation. We need more evidence before making a decision to streamline the process, as it will lead to more monopolies in the system. We have to balance the trade-off with potentially higher creativity."

Gowers said that SMEs have gaps in their knowledge about how patents can increase revenue that need to be addressed.

"There appears to be a low level of awareness among SMEs about the value of intellectual property to their business — with perceptions about the high cost and complexity of obtaining and defending intellectual property rights that imply they are the preserve of large corporations. This is something we are interested in remedying," said Gowers.

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