back to article Patent trolls, innovation and Brexit: What the FT won't tell you

In 2017, the EU is going to open the Unified Patent Court. This court will make it much easier for patent trolls and corporations in the US – armed with dodgy patent applications and IP attorneys – to reach into the UK and strangle your startup at birth. Think about it. Last week the Financial Times reported that two-thirds of …

Really?

In or out you still have to deal with the EU. Would dealing with them from the outside be better? Hard to know for sure but countries that already have a trade deal with the EU are bound by EU laws and have signed up to the EU freedom of movement agreement (Switzerland, Norway) and other treaties in negotiation are heading in the same direction (Canada, Turkey).

It may not be easy to deal with the EU but you can't avoid it if you want to do business with it.

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Switzerland is currently out of the free movement agreement. Unlike the EEA countries, they've got a bilateral agreement... or perhaps it's better to call it a bilateral disagreement now. If the UK vote out and the government decide to join the EFTA (not the EEA), Switzerland would have an ally.

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I'm not EU law expert but my (possibly flawed) understanding is that Switzerland has applied immigration quotas to the free movement agreement but those quotas aren't part of the EFTA agreement both parties signed up to. Disagreement is right because I think the EU would say that the Swiss are still part of the free momevement agreement.

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Hard to know for sure but countries that already have a trade deal with the EU are bound by EU laws and have signed up to the EU freedom of movement agreement

Disclaimer: I don't believe we'd be likely to get a free trade deal with the EU without allowing freedom of movement. Though it might just be possible after a decade or two of negotiation?

But, Canada have a trade deal without. Most of the EU's trade deals don't involve freedom of movement. It's a political decision to insist on it around here, which I'd say is unlikely to change. Though there's talk of a free trade deal with North Africa, and I bet there won't be freedom of movement on offer there But then Norway and Switzerland are both in Schengen and the Single Market (well only partially for Switzerland). Which is different to a free trade deal.

Although Norway and Switzerland are agreed to free movement (or disagreed in the Swiss case), they don't have to harmonise access to benefits in the same way. So were we to leave we could refuse to pay in-work, unemployment and child benefits to people we don't choose to, and I assume the same might be true for the NHS, we could make people pay an insurance for that too, until granted "permanent residence status" of some kind. There are many options, which we might use to reduce low-skilled migration. Although one of the best ways to cut the migration numbers to the UK would be if the fucking Eurogroup would sort their shit out, and actually fix the Eurozone! But there's not much sign of that happening any time soon. The latest IMF prediction in the bail-out debt sustainability analysis, is that Greek unemployment will fall from it's current 1930s Depression level of 25% to about 12% by 2040! Now that's how to run an economy! And quite a lot of that fall is expected to be achieved by emigration. Well with youth unemployment at 50%, wouldn't you?

Also, Switzerland and Norway are only signed up to something like 20% of EU rules by being in the Single Market. That still leaves them the ability to sign their own trade deals, and out of the Common Fisheries and Agriculture Policies. As well as safely out of the Euro, and the Foreign Policy and tax harmonisation stuff.

Any country that exports into the Single Market is subject to large chunks of the same regulations, in order to make their products compliant. In the same way that you have to comply with lots of US laws in order to trade in the US.

The upside of being in the EU is that you can influence the rules. Subject to getting outvoted. The downside is that you're subject to a lot more of those rules than any flavour of leaving (either EEA or even fully out).

In my opinion the only sane option on Brexit is the Norway option. Nothing else can be negotiated in a sensible time. But done as a temporary deal with more negotiations to slowly follow. That means we pay in a bit less cash and get a bit less inward migration, in the short term and that gives everyone time to calm down and come up with a sensible agreement.

Either that or the other governments accept a 2 speed Europe, which is what we actually have anyway with some countries unwilling to join the Euro. If they'd done that, then Cameron would have won the referendum easily, but they only gave the minimum concessions that looked likely to work - and that may now backfire spectacularly. To be honest I still think it's more likely than not that the Euro will implode when the next recession comes (not that Souther Europe have ever really got out of recession) - and quite possibly take the EU with it. But the Italian economy is now smaller than when it joined the Euro, with deflation, youth unemployment of 40%, extremely low growth and a huge government debt which it can only service with some growth or inflation. Plus a half-collapsed banking system that the new Eurozone banking rules make it impossible to restructure. That's the quiet crisis currently going on. Spain, Cyprus and Ireland are doing OK-ish, Portugal is too small to matter if/when it goes wrong again, and Greece is a shameful stain on the reputations of the governments that have fucked it up for short-term political gain.

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If the thing I read yesterday is true, Norway pays 90% per person of what the UK does, making 'little' = 10%. Except we get handed back nearly half that money and I rather doubt Norway get EU subsidies or rebates.

So the Norway deal appears to give them EU regulations, they're Schengen anyway so free movement is neutral, they probably pay more than we do & have no influence from that payment. Sounds like a pretty poor deal, a high price to pay for letting local incompetent or dishonest politicians & civil servants make a few decisions some other crooked and incompetent ones makes now.

Farrage&co of course hope brexit has them supping closer to the trough and getting a good deal for the country is the last thing on their minds.

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Paul Shirley,

I've done a quick check around and it's hard to find decent figures, but as I suspected it looks like nobody is quite telling the truth here. Norway probably pays in about half as much as we do, but doesn't get anything back. Whereas we're full participants in the EU, so obviously receive CAP payments, regional funding and other stuff. Thus their net contribution is about 90% of ours.

I've seen Remain people argue that they pay 90% of what we pay and don't get our rebate - which is a huge distortion of the facts as that figure is being compared to our net contribution (payments less receipts).

Links:

http://infacts.org - a remain site

Their analysis probably slightly understates Norway's net contribution and overstates ours, but it's bugger-all difference in the grand scheme of things.

Norway's EU Mission site

The calcs are done on GDP per head on a pro-rata basis for each are of funding you choose to join in on. Net of whatever cash you get back.

There's an argument that we could negotiated to pay in less and still get Single Market access. But a lot of this money is cash we want to be spending. Regional funding to help boost the economies of Greece and Eastern Europe is something we'd have done anyway, after the Cold War. It was us that were one of the strongest voices calling for the EU to allow the ex Warsaw Pact countries in. And for the accession process with Turkey too, and there's a good argument that Turkey has only taken a turn to the authoritarian because it was clear that France and Germany (and others) weren't going to let them in. So they've been busily reversing all the rule-of-law reforms that they'd been implementing under EU pressure for the last 2 decades. I'd say the EU's great success is that the Eastern European countires have managed to integrate into the system and build working democracies. Compared to the appalling state of politics in the ex-Soviet countries that didn't get to join.

Anyway we'd be well out of the Common Agricultural Policy if we left, which makes up about a third of the EU budget, and our contribution. And is partly the reason for our rebate, in that our farmers in general get fewer subsidies from it.

But we'd want to continue infrastucture funding in Eastern Europe, I imagine we'd stay in the EU science and space programmes so contribute and receive from both. So I'd expect our net contribution to drop a bit, but not a huge amount. We'd lose the rebate, but then also lose the reason for it, and since Blair gave away a chunk of that in exchange for promised reform of the CAP that never happened, plus our lower GDP per head than Norway, I'd expect our net contrubution to drop a bit below theirs.

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"It may not be easy to deal with the EU but you can't avoid it if you want to do business with it."

I heard a brexiter arguing that "only" 6% of UK businesses actually trade with the EU so on behalf of the 94% who don't, we should leave. He was careful not to mention the amount of trade those "only 6%" actually do with the with the EU and that the vast majority of the other 94% are "one man and a dog" businesses.

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One small thing. The European Patent Office, which issues European patents, is nothing to do with the EU (beyond being in the same part of the world). It's not controlled by the EU, or set up by the EU, nor is its membership the same set of countries as the EU.

Joining or leaving the EU does not materially affect our status as members of the EPO. The new Unified Patent Court is something to do with the EU in that it has been set up for participating nations to have one place to litigate, rather than having to do it in each individual country. That's sensible enough on the face of it.

It _might_ make the troll problem worse (as a patent-specific court did in the US), or it might not. Avoiding the problem by making ourselves ineligible to use the court seems unlikely to help much. This is only useful if you don't want to sell anything outside the UK. As soon as you do you are subject to foreign patent courts. On the whole the UK patent office has been a helpful force within the EPO to keep it reasonably honest.

Software patents remain complete bollocks, and 80% of other patents are no better IMHO, but much progress has been made in the last few years to push back on the garbage and mostly things are not too bad in the EU, although we do have some egregious examples of how the system doesn't work (MS patent charges for FAT for example).

It remains to be seen how the UPC works out, but like all beureaocracies, you are better off setting the rules than just waiting to be affected by them. Indeed it was my experience campaigning against the evils of EU software patents 12 years ago, which led me to discover that the EU parliament is a lot more useful than the UK one when trying to reach reasonable conclusions over such divisive matters. I was actually quite impressed as how the place operated (and how much it was nothing like the cartoon portrayed in the UK media).

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that's nailed it

Thanks for the info, wookey. The thrust of the article is completely voided by it.

-A.

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Anonymous Coward

Hey wookey 12 years ago - was that the software patent directive that got destroyed in just two days a few weeks before the official vote?? If so I was with you, good job. Agree completely about the European Parliament.

Oddly though, I got on very well with the UKIP folk as fun people, though I don't much agree with their politics.

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Good luck with marketing your great idea outside of brexit blighty

No matter what you do, the American lawyers will come and sit (expensively) on your lawn if there is even a hint of your product going on sale in the US and some patent troll looks at you funny.

Putting blightly in a snowglobe on the worlds mantlepiece is not the answer.

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Re: Good luck with marketing your great idea outside of brexit blighty

Considering Phillip Morris is trying to bankrupt small countries in law courts to peddle their wares (admittedly under TTIP, but I think it's good example of companies regard for everyone who is not on the profit line), then yes absolutely will British inventors get shafted, when a American company starts pushing itself around. If we leave the EU we just become an easier target.

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Re: Good luck with marketing your great idea outside of brexit blighty

" If we leave the EU we just become an easier target."

Yup.

As it is the EU (about the same size as the US) is having a tough time negotiating the TTIP with the US. The UK (about 1/10 the population of the US) is unlikely to find it any easier to negotiate a treaty like that on its own. Somehow I'm finding the claims by Farage and co that we'll quickly and easily negotiate a favourable deal with the US rather difficult to digest.

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The UK voted this in, so even if we leave the EU then the UK would be likely to vote this in again.

If we leave the EU then will the gov put blocks on talking about things like Thalidomide?..

The gov now is all about big business, the only time it really makes news is when it's big business -v- big business.. Sure some others get highlighted, small cases by small producers going against small resellers.

The whole system needs to be reworked from start to finish. Code theft is wrong (in part or whole), some code, and ideas, should be "public domain". There should be more ways for the population to put input on if a idea is novel or not. These days it seems that most of these patents are only considered valid if they are pushed and developed by a huge multinational, this has to stop. If Intel makes lenses with embedded electronics small enough for me to have a phone/table type of device as contact lenses but I produce three of them, does that make me the owner, or is it Intel, or would it be apple because they make them too, but sell thousands of them. If a patent is ever "Sold" then the max payout should be limited to the amount that the patent was "Sold" for... That would stop a huge chunk of this trolling... Invested $25,000 into something and want to sue 50,000 customers... Okay, $0.50 each (plus court cost) should be enough! The idea behind the system was to "protect" the idea and "protect" the profit from the idea. Courts seem to not care about this.

I do like your argument at the end that says we will be so poor after we exit that no one will want to take us to court. It suggest that the UK is going to go down the drain.

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Don't see how your idea can work

If a company goes bankrupt and someone buys up its patents, what is the value of each individual patent (i.e. what you recommend as the maximum damages) If they are bought for $1 million and there are 100 patents, do you just want to claim they are all equal and therefore $10,000 per patent? What if other assets are bought at the same time, how much of the purchase price is allocated to them versus the patents? It also destroys the value recognized by a smart buyer who may realize there are very valuable patents that others miss. It would be like claiming that if you bought a dusty painting at a yard sale for $100 because you realized it was a previously unknown Picasso, you couldn't insure it for the $1 million it was worth but only for the $100 you paid for it!

A patent may be relatively worthless at the time it is created, because the technology cannot be implemented and commercialized cost effectively. If it cost $50,000 to make a multitouch screen, multitouch patents would not be worth very much. The lower the price the more valuable the patents because they can actually be used in mass market products like smartphones.

Patent trolls who produce no products and only buy patents and sue people making products are a problem, but simplistic solutions like yours aren't the answer. If it was so simple, someone would have thought of it long ago and it either would have been implemented, or every time the issue came up people would say "there's a simple solution to this problem, why can't we just make it happen"

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Trade with the US

The EU has history of standing up to US bullying. Even if it has, at times, hinged on a single courageous member (remember ThankPoland?). UK is more likely to roll over and take it from Uncle Sam.

A post-brexit UK, in need of trade agreements with anyone who'll play, will be desperate for whatever it can get. So that'll be US patents automatically enforceable here. Along with all those other little things - like no question of labelling US food imports that might contain growth hormones illegal here, lest such labelling be prejudicial to their ability to sell (and of course the corollary, nothing to be labelled as free of such things, or GM, or whatever).

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Anonymous Coward

Yeah but any trade deal with either EU or US will likely involved "harmonisation" of patent laws.

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Ignoring the main point...

Whether you're for staying, or leaving, it seems like the US is just a giant cancer, that will continue to cause misery.

I don't have faith in a post leave UK government, not rolling over to all US demands.

Think I'll stick with the EU tbh.

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I am a Patent Attorney...

...and I cannot count the number of errors in this article.

Firstly, the UPC will apply to Unitary Patents, which patentees will have to opt into, and 'normal' European patent bundles (and EP paten grants and forms a number of national patents) - but the patentee can opt out of the UPC free of charge for at least the next 7 years.

So for most patents, the UPC will not apply.

Secondly, all the panic in the article is based on something called 'Bifurcation' - a German court practice where patent infringement is decided before patent validity. It's bonkers and it's hurt German firms and patent attorneys throughout Europe have been discussing this for the last couple of years, and the Judges for the UPC have all confirmed it will not be used.

Thirdly, there is the question of the business model for patent trolls. The US does not have a 'loser pays' system for court fees, making patent trolling a comparatively low risk exercise. The UPC is fully aware of trolls and the cost structure is set up to make the process less attractive for trolls.

Fourthly, the existing European patents almost always cover the UK, France and Germany (you can choose the countries you want), since these cover the most European GDP for the least cost in terms of patent renewal fees. So UP/UPC won't change the number of patents we are 'subject' to.

So - is the UPC a problem for European firms? Not if it's the European firm that has the UP patent and is using it to stop imports of dodgy Chinese knock-offs into the resale market through whatever port in Europe they are trying to use, and not if British innovators want to reach out to their economic backyard in a cheap and efficient manner.

Meanwhile, does the UPC help Trolls? It ups the stakes in that if they win, they win big, but if they lose, they lose everything - at the moment, they can have multiple bites of the cherry by picking on certain countries (e.g. Italy) with slow legal systems and forcing EP businesses to settle out of court.

In any event, it does not warrant the Brexit hysteria and BS coming from the article.

The real damage would be done if international firms moved headquarters to Europe because that's where they could get relevant IP rights, and the skilled workers from across 26 countries needed to generate the IP in the first place.

Don't kid yourself that if we vote out, the airports of Germany won't be packed with German businesspeople the next day, flying to every corner of the globe to tell our customers that we are no longer reliable or relevant in the European market - and many of them will believe it.

My little 2p'orth for accuracy in reporting, and remaining in Europe.

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I am not a Patent Attorney...

...but it is evident to me, as it ought to be to any sentient being, that this article is politically motivated bollox. Apart from anything else, it implies (citing a broken hyerlink) that obtaining a patent is difficult and expensive, while at the same time somehow trivially easy for trolls.

I've read the linked FT article, and I find the description "pro-EU" somewhat baffling, unless that means "reporting facts". The Daily Mail comparison from, of all organs, the Spectator was a good laugh.

The best evidence of prior art is to patent your own invention before going public. Why didn't the author do this with the magical things he claims to have "pioneered" but now seems so sore about?

-A,

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Re: I am a Patent Attorney...

"Meanwhile, does the UPC help Trolls? It ups the stakes in that if they win, they win big, but if they lose, they lose everything"

In theory. But patent trolls tend to operate through shell companies, I believe? Which means that if they lose there is nothing there to collect. Perhaps this is also dealt with in UPC, unlike in the Texas cowboy system?

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Unhappy

Didn't the Brexit supporting economist Minford say the UK would lose all Mfg jobs?

A price he seemed to think worth paying

I'd love to find the report.

I'm not an economist but I'm guessing something like 20% of the UK workforce becoming "economically inactive" will go a good way to starting a recession.

1 data point. IIRC after the global financial crash of 2008 it took the FTSE 5 years to recover the share prices it was showing pre crash and I think the real economy has lagged that.

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Mushroom

fscking yank patents...

anything that mentions 'plurality' or attempts to patent an algorithm or flowchart (i.e. mathematics) should be void... same as anything that does xxx but on yyy should be void...

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For b***ocks patents go for birth control pills

Natural products cannot be patented (hence the fondness for finding better than natural estrogen like compounds)

The packaging and dispensing design is a whole other matter.

I nearly went blind with the number of the damm things and how you have to fine comb the claims to identify exactly what makes this one different from the (nearly) identical dispenser in the previous patent.

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Facepalm

Ok, so how do I...

make a disability utility? Or aid?

Just say I imagine a product that is totally possible to make now, but no one is selling/making it? Can I risk getting sued into the ground?

Do I open source it?

How do I produce it without the risk? Or do I just risk it?

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Bah!

Kudos for the Hat Doffer art.

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It won't be compulsory to file unitary patent applications will it? Can file nationally if better strategy, depending on what the applicant can afford, which markets require protection and so on.

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Anonymous Coward

This was written by someone who knows nothing about patent law. Sorry, but it's just a parroting of the zeitgeist, like they've hired someone from arstechnica or techcrunch to write the article.

Never mind the real statistics, that 90% of patent judges say they've never seen a patent troll and don't believe they exist. Never mind that patents take years and generally tens if not hundreds of thousands of dollars to obtain. Never mind that "sketchy patents" if such exists, get invalidated by courts when found.

No, much easier to say that non-inventors are pretending to be inventors, writing fuzzy abstracts that somehow pass the muster of tens of lawyers and engineers tasked with finding fault in them before approval, and then these magically savvy charlatans can convince multiple judges and an entire jury body that they invented the wheel in 2010. No, it just doesn't pass your, my, or anyone's sniff test. What is happening is that bankrupted inventors are forced to sue to get royalties because big companies know they don't have to pay anyone ever and the legal system won't do anything about it. That's what's hampering invention--the knowledge that if you mortgage your house to finance a lab in your garage, the fruits of that sacrifice will be stolen by someone in silicon valley if not China, and there will be nothing you can do about it besides starve under a gag order.

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"reach into the UK and strangle your startup at birth"

Well, they are obviously going to wait until the startup has money, before going after it. That's the whole point of patent trolling. And they will go for a settlement, threatening lengthy and massively expensive legal proceedings that the medium sized company can't deal with. And the patent (or more usually, several patents) doesn't even have to be valid to do its job. That's the scariest part.

The example of Apple in the article isn't really trolling as such, even if the patent was unenforceable in the end.

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