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What does the increase in patents do for the High Tech sector? | EP&C

High Tech patents

The Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland) recently published the 2020 patent application statistics (in Dutch). The most striking of these being a close to 13% increase in the number of Dutch patent applications compared to 2019. Another striking statistic relates to the share that foreign parties have in the total number of applications. That number increased from 451 to 816, which is a quarter of all of last year's applications. This increase in the number of patent applications and the involvement of foreign players seriously increases the chances of you, as an innovative entrepreneur, committing an infringement. This makes a so-called Freedom to Operate study all the more important.

But before I explain what this entails, it might be useful for you to have a better idea of the extent of that foreign involvement. Based on the RVO figures, it is not yet possible to identify the exact nature of applications and who is behind them. However, the European Patent Office, which keeps track of all European applications, does provide a little more information.

Important players in the high tech sector

Their annual report shows by sector from which countries the majority of applications come. A large proportion of high-tech innovations are probably in the digital communications category, where there has been an increase in the number of applications from China. Spearheaded by Huawei, the total number of applications from Chinese parties in this category is just as big as those from all European parties combined.

What does this mean for you?

In essence it means that your market is becoming more competitive. As a result you have less and less room to innovate, especially in a sector where intellectual property plays such a key role. The more players, the more patents, the greater the chance of an infringement. And this may happen to you sooner than you think. How this works is perhaps best explained by this example of a bicycle. 

How does infringement work?

Suppose manufacturer X patents a bicycle without a saddle and you subsequently develop a bicycle with a saddle. As your idea is novel and inventive, you will be granted a patent on the product. However, you are not allowed to simply start manufacturing bicycles with a saddle because you would still be infringing manufacturer X's patent: the bicycle without the saddle. Without manufacturer X, there would be no bicycle, and therefore also no bicycle with a saddle. You are only allowed to sell your bicycle with a saddle if you reach agreements about this with manufacturer X. You could, for example, purchase a licence for the bicycle without a saddle.

Freedom to Operate

A Freedom to Operate study determines how your idea compares with your competitors' innovations and whether their innovations are already protected. The study therefore looks into whether any bicycles without saddles have been patented in your market, and by whom. The annual figures show that there are more and more patents in general and presumably also within the high-tech industry. The likelihood that you will have to take someone else's intellectual property into account is increasing.

So if you are working on new innovations, you have to make sure that you are not encroaching on someone else's territory with your idea. We therefore recommend that you engage a patent attorney at an early stage who will search all databases for you and use the Freedom to Operate study to identify the opportunities and limitations for your innovation.