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IP Cases & Commentary – Details

19 November 2012

Valuing IP - Eureka Survey - Q&A

Anthony Albutt

Q16. Obtaining broad IP protection is stretching our ability to maintain protection. How can I deal with this?

Q1. What can we do with patents we can no longer afford to keep paying for?

In the UK you may register that 'licences as of right' are available for your patent. This means that any person will be allowed a licence to the technology encompassed by your patent, either on agreed terms or on terms agreed by the UK Intellectual Property Office. The advantage: it will halve your yearly renewal fees.

In some areas and in some fields of technology, grants may be available specifically for assistance with intellectual property. If you are looking for such assistance, a good place to start would be industrial bodies associated with your field. You may be able to find some advice on this from the government advisory service 'Business Link':

Another option would be to sell your patent, passing the responsibility of renewal fees onto the new owner. Or you could license your patent with an agreement that the licensee was responsible for renewal payments. Finally, you may allow you patent to lapse through non-payment of renewal fees.

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Q2. Why are so many patents granted which are similar or seemingly identical?

Patent thickets exist in some technologies. This sometimes occurs where there is a problem with existing technology which needs to be solved, and many solutions are possible. Companies then try to obtain a patent for each solution.

An invention which is similar to existing inventions can generally be patented in most jurisdictions, as long as it is new and not obvious in view of any existing technology. As the 'thicket' grows it often becomes more and more difficult to reach the requirements of non-obviousness over the existing technologies.

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Q3. What can be done to reduce the risk of rivals reverse engineering our products?

The risk of reverse engineering exists whenever you release a product onto the market. In some cases, the risk can be limited by suitable contractual terms, for example, by the use of a software licence that prohibits reverse engineering. However, for many products, especially mechanical, this is not a feasible option.

The risk of reverse engineering means that it is difficult to use confidentiality (trade secrets) to protect the IP in a product. Hence it becomes more important to see if patent protection is available for the IP. Although patent protection cannot prevent reverse engineering, it does help to limit what competitors can do with any information gleaned in this manner. In other words, even if a competitor does reverse engineer your product, they may still find it difficult to launch a competing product if there is a patent protecting your product in the marketplace.

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Q4. Does an application have to have any realistic chance of working or can anyone patent any crackpot idea in the hope that sometime in the future other technology advances will make their (currently) crackpot concept possible?

Patent law is clear in this respect - you have to be able to implement the invention, based on the teachings of the patent, together with common general knowledge at the time of filing the patent; otherwise the patent is invalid for lack of sufficiency (sometimes called 'enablement').

So devices that are contrary to the laws of physics, eg, perpetual motion machines, are fairly easy for the patent office to reject. This type of patent application is typically filed by "lone" inventors, since companies are not interested in spending money on such projects.

Sometimes the situation is a little more complicated. Consider, for example, a method of re-creating dinosaurs as described in the movie 'Jurassic Park' (using dinosaur DNA extracted from blood in a mosquito that was preserved in amber). This is not impossible in theory, but is not feasible in practice with current technology, so that a patent to this technique would again be invalid for insufficiency.

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Q5. How can I expedite the patent application process?

The UK Intellectual Property Office (UK IPO) offers a range of schemes which enable an applicant to expedite prosecution of their patent application. It is important to speak to your attorney to establish what specific options are available to you.

One option is the 'Green Channel' which provides a 'fast-lane' for environmentally beneficial technology.  We have seen examples of applications being granted in under a year from the start of proceedings before the UK IPO. The service is free; all that is required is a request for entry with convincing reasons as to why the technology is 'green'. There are no environmental standards which need to be met, and to date the bar to entry appears to be quite low.

It may also be possible to accelerate examination. This effectively allows your application to jump the queue although you must demonstrate good reasons for requiring this eg, a potential infringer.

The 'Patent Prosecution Highway' (PPH) allows applicants who have been successful in obtaining a patent at any of the participating offices to request accelerated examination of a corresponding patent application filed in another participating office. At present the UK IPO have agreements in place with Japan, Korea, and the US and are trialling schemes with Germany and Canada.

Applicants can also request accelerated examination in the UK national phase if their international application has received a positive 'International Preliminary Report on Patentability' (IPRP).

Finally, there are a number of general tips for expediting prosecution of your patent applications such as filing a request for search and examination at the same time.

There are similar options for accelerating your application at the European Patent Office (EPO) too. Your attorney will be able to assist you.

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Q6. I only wish to protect the product I have invented, but why is the application drafted in broader terms?

Patents are legal documents which provide the patentee with a right to prevent others from working the claimed subject matter. In return, the patentee discloses the invention in a manner that enables others to perform the invention; the idea being this leads to further innovations.

Accordingly, a patentee's business is always vulnerable to someone developing a very similar product which may take away some of their market share. Therefore, a patent application is often drafted to cover the embodiment of the invention which is critical to the business as well as covering all obvious modifications of this embodiment. However, the skill of drafting a patent application comes from getting the scope of the invention claimed just right ie, not so broad that the claims cover already disclosed subject matter (thus invalidating the patent) and not so narrow so that a third party may be able to make non-inventive modifications to the application which fall outside the scope of the claims.

If you think your application is too broad, talk to your attorney about limiting the scope. This can also potentially save you money.

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Q7. How do I know if I’m infringing someone else’s patent?

Prior to developing an invention, and certainly prior to putting an invention on the market, it is advisable to conduct a 'freedom to operate' analysis (FTO) if resources are available. The aim of a FTO is to find patents that have been granted and are in force. The problem is that detailed FTOs are expensive and time consuming.

A FTO begins with a search of the relevant patent literature. Following the search a patent attorney prepares a legal opinion on whether your proposed activities are likely to infringe any patent or whether certain pending applications may cause problems if they proceed to grant.

Unfortunately, freedom to operate is never 100% certain, as documents may not have been picked up on the search, and opinions can differ as what is and is not encompassed by certain claims. Therefore, a FTO is about minimizing risk.

One way to reduce costs is to focus on known competitors or inventors. The search can be narrowed to focus on a particular area of technology thereby reducing search and analysis costs.

The 'UK Patent Act' contains a defence to so called 'innocent' infringers. To the extent that an infringer is able to prove that at the time of the infringement they were not aware of the patent concerned, or had no reasonable grounds for supposing it existed, then damages or account of profits are unlikely to be awarded against them. The UK courts often find that large companies with a large amount of resources ought to be able to take steps to become aware of relevant patents in the area concerned. Accordingly, this defence is of more value to small and medium-sized companies.

Obtaining a FTO is an important step is being able to demonstrate that there are no reasonable grounds for supposing a relevant right existed.

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Q8. We own a large number of patents and find it a challenge to manage. What can we do?

As a patent portfolio grows the administrative burden can be a head-ache for SMEs. It is essential to keep good records, particularly of due dates and annual renewal dates. These dates need to be monitored to keep your rights in force and to prevent patents or applications lapsing.

Various software packages are available for portfolio management; some with online hosting which can reduce costs.

Another option is to make use of your patent attorney. Patent attorney firms already have records systems in place and many will provide clients with free direct access to their databases allowing you to manage and monitor your IP remotely.

This also applies to renewal fee payments. Here, it is often a good idea to have a default position to pay fees as they become due. That way you avoid the risk of not instructing your attorney to pay a fee in time.

Unfortunately there is no short cut to portfolio management. You may be managing your rights in many different jurisdictions with numerous dates and deadlines. Solid records are essential and it is often therefore advisable to seek professional support.

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Q9. How can I cover an invention in multiple countries?

An invention can be pursued in multiple countries by filing, at the same time, a patent application in each of the desired countries. However, there are several systems in which multiple countries can be encompassed in a single application. These systems include the Patent Cooperation Treaty (PCT), the European Patent Office (EPO), the African Regional Intellectual Property Organization (ARIPO), the Organisation Africaine de la Propriete Intellectuelle (OAPI), and the Eurasian Patent Organization (EAPO).

Care should be taken in selecting the appropriate countries to seek protection in. Obtaining and maintaining patents can be expensive and so it is important to consider your business needs as well as your competitors' activities and your customer locations.

Below, we describe the PCT and the EPO system in further detail.

The PCT provides a centralised filing system. By filing one international patent application, under the PCT it is possible to simultaneously seek protection for an invention in each of a large number of countries throughout the world. The PCT includes over 140 jurisdictions worldwide, of which the EPO is just one.

However the PCT does not provide a centralised granting system. National and/or regional applications must subsequently be pursued for a patent to be granted. One advantage of using the PCT system is that the decision as to which countries patent protection is to be pursued can be delayed.  

In Europe the EPO provides a centralised filing and granting system. A single application is filed in one of the official languages of the European Patent Office (English, French or German) which undergoes centralised examination before being granted in as many of the contracting states as the applicant cares to designate. The EPO includes 38 contracting states (plus 2 'extension' states) all of which are located solely in Europe.

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Q10. How can I exploit my company’s IP assets?

Companies instinctively consider either using or selling their intellectual property assets. However, not all companies consider the option of licensing their IP assets. There are different types of licences:

  1. Exclusive licences – only the person granted the licence can use the IP (the IP owner cannot use the IP); 
  2. Sole licences – both the IP owner and the licensee can use the IP; and
  3. Non-exclusive licences – the licensor may use the IP and license the IP to more than one licensee (there is no limit on the number of licensees).

The terms and conditions on which IP is licensed are varied. The licensor and licensee usually agree the terms and conditions by negotiation. A useful resource (pdf download) when starting to consider licensing your company's IP assets can be found at the UK Intellectual Property Office (UK IPO):

It is worth remembering that licences can be used to divide up the market geographically. For example, you could issue a licence in China to one company, in the US to another and so forth. For the right product a healthy revenue stream can be realised by licensing.

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Q11. Timing - when should I file a patent application?

Knowing when to file your patent application can often be a difficult balance between trying to protect your invention, having sufficient data to support your invention and having sufficient funding.

Time is a trade-off. If you file too early the invention may not be complete and the subsequent patent application may not reflect the eventually commercialised product. File too late and your competitors may file before you.

If you feel that a patent application has been filed too early then, as long as the application has not been published, you could chose to withdraw your application (leaving no rights outstanding) and re-file your application at a later date. Of course, if you re-file your patent application then any disclosure which is available to the public before the re-filing date is prior art. Discuss your options with your patent attorney.

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Q12. Why do payments to the European Patent Office have to be in Euros?

Under the rules of the European Patent Convention (EPC), fees which are due to the EPO have to be paid in Euros (Rule 5 of the 'Rules Relating to Fees'). It is not possible to pay the EPO fees in any other currency.

Although the EPO does hold bank accounts in various contracting states, these accounts are Euro accounts (ie, the accounts only accept payment in Euros). Even if there are significant currency fluctuations (eg, the Euro 'crashes') then the fees due will still need to be paid in Euros and the amount of each fee will not change simply because of the currency fluctuations.

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Q13. Can software be patented?

Software can be covered by a patent. For software to be patentable, the method carried out by the software must be new, not obvious, and achieve a technical effect.

For example, if someone invents an image processing method for removing motion blur from an image, the method can be patented if the method has not been disclosed before and is not obvious. It does not matter that the method is implemented in software.

On the other hand, if software merely automates a previously known method, then it cannot be patented.

Also, software cannot be patented if it only performs a non-technical method. For example, software which only implements a business method or the rules for a game cannot be patented as these are not considered technical in Europe. Your patent attorney will be able to advise on whether a particular kind of software is likely to be patentable.

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Q14. Do we have freedom to operate against future patents?

There may be patent applications which have been filed before your product or service is launched or otherwise disclosed to the public. These patent applications could be granted afterwards, and could limit your freedom to operate, depending on the scope of their patent claims and whether they are valid in the light of what was known before they were filed.

However, patent applications with a filing date or priority date after details of your product or service have been made public cannot limit your freedom to operate in connection with that product or service.

Therefore, as long as you do not want to obtain a patent yourself at a later date, one way of providing freedom to operate against yet to be filed patents is to publish details of your product or service (for example on your website). Make sure that you keep a record of what has been disclosed and on what date.

However, this will rule out later patent applications of your own. If you want to get a patent for your product or service then you will have to file the application before disclosing the invention. Also, some details may be best kept secret for commercial reasons, so disclosure is not always an option.

If you have any concerns about whether you have freedom to operate, then you should contact a patent attorney who can analyse your product or service and prepare a freedom to operate report.

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Q15. How can I check whether other companies are infringing our intellectual property?

It can be useful to keep an eye on your competitor's products to monitor whether they may be using your invention.

If you think a competitor's product is potentially infringing, then you should contact a patent attorney who can advise on whether the product is likely to infringe your intellectual property.

The attorney may need detailed information about the competitor's product in order to determine whether it is infringing. If possible, go and buy the product to obtain evidence of when and where it was on sale and of how it works. Keep the receipt and any accompanying documents such as instruction manuals. If you do not want to approach your competitor specialist agents are available who can obtain 'trap purchases' on your behalf.

There may also be other means of obtaining information about the product. For example, information on the competitor's website or in advertising materials may also be useful. The more information you can gather, the better.

We strongly recommend that you discuss any correspondence with the alleged infringer before you write to them. There are threat provisions to protect individuals and companies and so care should be taken when contacting alleged infringers.

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Q16. Obtaining broad IP protection is stretching our ability to maintain protection. How can I deal with this?

Obtaining worldwide intellectual property protection is going to be expensive. However, often obtaining protection in a large number of countries may not be necessary for your business. For example, you may not be interested in commercializing your product in certain countries.

Also, it may be that your competitors will be reluctant to produce different versions of a product in different countries depending on whether a patent is present or not. In this case, a patent in a few key countries may be enough to put your competitors off copying your invention.

Therefore, by targeting certain important countries for IP protection, it is possible to maintain useful protection at a reduced cost.

Also, if protection is desired in a wider range of countries, central systems such as the European patent and the Community Registered Design (RCD) can allow intellectual property protection to be obtained more cheaply than if national rights were obtained separately in each country.

Your patent attorney should be able to discuss your needs with you to suggest a suitable filing strategy.

Depending on your product consider using registered designs to protect the appearance of the product. Designs are cheaper than patents and represent an economical way of protecting a product if its aesthetic appeal is why customers buy the product.

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