UK patent applications have dipped at the EPO, but is it all bad news?
According to the European Patent Office (EPO), the volume of European patent applications filed in 2021 by UK businesses has fallen slightly for the second year in a row.
This may be due to a pandemic-related “hangover” in research and development activity, which is affecting some industry sectors.
The Patent Index Report 2021, released this month, stated that patent applications made by UK businesses to the EPO dropped from 5,698 in 2020 to 5,627 in 2021, a decrease of 1.2%. However, there was an overall increase in the volume of European patent applications, reaching a record level of 188,600.
While this may seem like the UK is falling behind when it comes to innovation, the outlook might be more positive than it first appears.
Although there has been another dip in the volume of applications, it is smaller than seen in 2020, suggesting that the situation is beginning to stabilise. It’s important to note that the UK’s share of European patent applications has remained at 3%, and next year’s data should hopefully see a return to growth.
COVID-19 effects
Over the past year, the impact of the pandemic has continued to be felt by many businesses. As a result, innovation activity has slowed down or been paused, while they try to get back to normal.
However, for some sectors, including consumer goods, medtech, computer technologies, biotech, pharmaceuticals and transport, innovation activity has stayed strong.
From a UK perspective, consumer goods manufacturers have risen to the top of the leading 15 fields of technology for the UK, with patent filing activity having increased by over 55%. Transport has also seen a sharp rise in applications, increasing by 31.6%. The UK’s pharmaceuticals sector was responsible for the third largest growth in European patent applications at 11.9%.
Regarding the top UK applicants, Unilever came in top, filing 524 European patent applications – more than twice the number filed by that of Nerudia, which came in second place with 218 applications. Other top UK filers included British American Tobacco (216 filings), Linde (196 filings) and BAE Systems (178 filings).
Despite a number of sectors being affected by supply chain disruption and cost increases, the overall growth in European patent filings in 2021 shows that global economies have been experiencing a post-pandemic recovery.
International outlook
China is the driving force behind much of this growth, with a 24% increase in applications, alongside the US (+5.2%). In particular, patent filings from Chinese companies remain on an upward trajectory, more than quadrupling in the past decade. South Korea has also experienced an increase in filings, up by 3.4%, while Japan had a slight drop by 1.2%.
China’s approach to innovation activity is clearly effective, particularly in recent years. The country has gained the respect of Western investors and businesses, reaping the rewards that come with high levels of R&D activity.
The Chinese Government has made IP a priority, creating a platform for enterprise that has seen many entrepreneurial businesses succeed and scale globally.
While China might currently be in a league of its own when it comes to prioritising IP ownership, it is possible to achieve something similar in the UK. Greater government support in the form of incentives and the general promotion of IP ownership will encourage more businesses to invest in innovation, pushing it up the boardroom agenda.
The UK Patent Box Tax Relief Scheme is a good foundation, allowing companies to reduce their rate of corporation tax to just 10% on profits resulting from qualifying IP, but more can be done.
One in five patent applications made to the EPO by European businesses came from individual inventors and SMEs (with fewer than 250 employees). Offering more incentives targeted at this level could result in a considerable boost for the UK economy.
Lessons for the UK
To enable innovation-led businesses to succeed, improving access to global markets, commercial capabilities, growth capital and resources will be key. According to the Organisation for Economic Co-operation and Development, the UK ranks third in the world for start-ups, so it is essential that these smaller emerging businesses are given the opportunities they need to innovate and grow. Collaboration should be core to this, helping new businesses to enter the marketplace and form important connections.
The UK government has dedicated itself to making the country a global hub for innovation by 2035. Supporting research-led initiatives and investing further in SME-led innovation activity through bodies such as Innovate UK, will be vital in achieving this.
UK businesses may have filed slightly fewer European patent applications last year, but there is no doubt that innovation activity is already bouncing back. With further Government support, the UK can rise up the ranks and increase its share of the global innovation marketplace.
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