Guido Kucsko, head Schoenherr ip team in conversation with Mariana Karepova, president of the Austrian Patent Office, about secrecy and the value of disclosure by patent application.
Q: A patent office is perhaps not the right place for keeping technological developments a secret, because it publishes inventions as patent specifications and thereby adds them to that which is state of the art. So what could motivate inventors and innovative enterprises to give up keeping new developments a secret?
A: First of all, I must tell you that I disagree: the patent office is perfect at keeping secrets. At least until publication, there is no better place for new ideas and company secrets. This guaranteed non-disclosure is supplemented by many other assets: the date of filing an application triggers a very productive period: you (the person registering an invention), will receive an expert opinion, enjoy advisory services and receive a search report. This means you can prove the date of birth of your innovation towards third parties. At some point, however, a decision must, of course, be made. Now coming back to your question "Why should people give up secrecy?" Well, I would say we offer a good deal. You are compensated for publication by a monopoly right for the exclusive use of your invention. Globally speaking, this seems to be a lucrative offer for hundreds of thousands of cases per year – in short "an offer you can‘t resist."
Patents create a monopoly and curtail competitors‘ opportunities. How do you justify such monopolies? Shouldn't any kind of knowledge, every innovation be jointly owned by all?
This is very simple, the justification is a failure of the market: research, development and innovation take time and are expensive and risky undertakings for all companies. Just imagine your development takes several years, costs a lot of money, and you cannot protect it afterwards. I think we would have far fewer great breakthroughs without industrial property protection. Companies need incentives to invest in research and development. Nobody can bear the associated risks alone, therefore the state intervenes with research support and the patent system. Companies need time to earn back the costs of their development work. This sounds like dry theory – but inventors deserve recognition. When filing a patent, they make their acquired knowledge available to everyone. In addition to the sole right of use, inventors should therefore also be recognised for a certain period of time.
An innovative idea is the basic foundation of every startup. How do patent offices – in particular the Austrian Patent Office – contribute to promote innovation and patent applications?
Start-ups are very special clients. They have to do everything at once, under immense time pressure: talks with investors, searching for partners and distribution channels. Under such circumstances they often forget the essentials: to file an application for their idea, to secure it before telling "family, friends and fools" and to make it tempting for possible investors. Unfortunately start-ups often lose million-dollar ideas this way.
We have therefore created a special procedure for young enterprises to file patents quickly and at a moderate cost: the provisional patent application, which young inventors can deposit in the "safe" of the Patent Office, even without having everything formulated as required for a patent application. The "date of birth" is secured – an upgrade to a full patent application is possible at any time during the first year. This possibility is used proactively by many start-ups – meanwhile 7% of all patent applications are provisional.
Of course patents are not the only instrument. We have also created a fast procedure for logos and brands: Fast Track, the new online trademark application. We are really proud of this superfast procedure: 10 days from the online application to the registered logo. That is not all – we have many plans such as creating a customer management model where individual mentors should be available for universities, heavy users and young users.
Under which conditions would you recommend innovative enterprises to keep their innovations a secret?
As the President of the Patent Office I would never recommend such a thing, because it is bad for my business. But seriously, there are criteria which might be taken into account for a decision. These criteria are generally known: this would be a long period of use which by far exceeds the lifetime of a patent and the quick and simple way to exclude re-engineering. Such a strategy may be successful in some cases. For example, Coca Cola as well as KFC use secrecy as a strategy. The recipe of the famous soft drink and the spice blend of the fast-food giant are kept in the utmost secrecy. But the risk remains. It is certainly always advisable to combine secrecy with other intellectual property rights such as trademarks and designs.
All countries discuss cost-cutting programmes by reducing costs of public administration. What is the economic benefit of a patent system?
Austria is one of the countries with the highest expenditure for research and development. Statistics Austria estimates the total expenditure in 2017 to be about EUR 11.33 billion. This is a very high investment in R&D made by companies, research institutions and governmental funding agencies. If you want, we can see the patent system as investment to protect at least parts of this expenditure. Results from research and development must be sufficiently protected to lead to marketable results. Without protection these investments would be lost, also for the public sector.
We are now on the eve of the European Union Patent, possibly even including the UK, despite Brexit. Do you expect new economic incentives from the EU Patent?
If we are now on the eve, there is probably a long night coming – at least a longer night, as we expected, because there seems to be further delay. The advantages are obvious: the EU Patent will make simultaneous patent protection in several countries possible, will be less expensive and will promote internationalisation. But of course this development also brings new challenges. One thing is very clear: we will not only file many patents, but will also be confronted with hundreds of thousands of rights to exclude from all over the world, which will suddenly be effective here in Austria. There will be a lot of work for us – for your profession and for us as the Patent Office.
Thank you for the interview.