As discussed throughout this volume, utility models are a form of intellectual property law that offer protection for ‘minor inventions’ through a regime similar to the patent system.Footnote ¹ The German gebrauchsmuster, introduced in the 1891 Utility Models Act, is widely regarded as the prototype for such second-tier protection.Footnote ² Indeed, Hausser (Reference Hausser1987) said that ‘the utility model, as an industrial property right, was “invented” in Germany’.Footnote ³ Utility models have also been seen as foreign to the United Kingdom. The Department of Trade and Industry’s Green Paper on Reform of the Law relating to Copyright, Designs and Performers’ Protection (1981), a follow up to the Whitford review of the British law of copyright and designs, declared that the United Kingdom has ‘set its face’ against such a scheme.Footnote ⁴ In this chapter, we argue that while it has often been suggested that utility models are a product of late nineteenth-century German thinking and that they are foreign to the United Kingdom, utility model protection was first introduced to the United Kingdom in the Utility Designs Act 1843.Footnote ⁵ As such, it is clear that utility model protection has a long-established (albeit somewhat tarnished) pedigree in British law and that utility model protection came into force in the United Kingdom some fifty years before its German counterpart. In this chapter we highlight the key features of the Utility Designs Act 1843, the way the Act was received, and speculate on the reasons why the Act was forgotten.

3.1 The Background to the Utility Designs Act

In the early part of the nineteenth century, patent law in the United Kingdom, which was a blend of custom, prerogative, statute law and judicial intervention, was a mess. As the 1829 Select Committee investigation revealed, there was uncertainty over what was protectable, over the nature and function of specifications, and of the role of claims and drawings.Footnote ⁶ Moreover, the system for the administration of patents that existed at the time was complex: in order to obtain a patent for the whole of the United Kingdom, patent applications had to be lodged in offices in London, Edinburgh and Dublin. In order to obtain an English patent,Footnote ⁷ applicants needed approval from at least eight offices.Footnote ⁸ The upshot of this was that the procedure for the grant of patents was both time-consuming and costly. As the Report on the Signet concluded in 1849, ‘the number of successive stages through which a patent for a new invention must pass before its final completion is productive of great trouble, delay and expense to the party seeking the grant, without any corresponding benefit to the public’.Footnote ⁹ Furthermore, it was very difficult to ascertain the nature of pre-existing patents because existing patent specifications were (until January 1, 1849) deposited in any of three offices (Rolls, Petty Bag and Enrolment) so all three had to be searched in order to ascertain whether an applicant’s invention was new and therefore whether any resulting patent would be valid.Footnote ¹⁰ The complex nature of patent administration not only meant that it was very difficult to ascertain the nature of pre-existing patents,Footnote ¹¹ it also had knock-on effects for the cost of a patent, which in the 1830s might be as much as £250 or £300.Footnote ¹² One commentator, using the soubriquet ‘Vindicator’, bemoaned in 1835 the ‘exorbitant fees demanded, paid to and received by certain automatons who represent certain antiquated bags and things, whose vested interests are deemed sacred’.Footnote ¹³

If obtaining patents was problematic, so too was their enforcement, which could be very expensive and time consuming.Footnote ¹⁴ Although interim injunctions were readily granted in relation to patents that had subsisted for some time,Footnote ¹⁵ infringement was determined through proceedings at law, which required a trial (at so-called ‘nisi prius’) and was then usually subject to legal review by the relevant court (Common Pleas, Exchequer or Queen’s Bench) sitting in full (with the possibility of further trials and further reviews). However, to obtain relevant evidence, proceedings first had to be commenced in Chancery seeking ‘discovery’. Writing to the Morning Chronicle, Cornelius Ward (a woodwind instrument maker who had patented a drum and a flute) cited a situation where a patentee decided against litigating ‘for fear of the direful expense and hopeless chicanery of law’.Footnote ¹⁶ And at a meeting of the Inventors Patent Law Reform League early in 1851, the chairman reported an instance of litigation over a patent for military drums that had lasted for five and a half years at an expense of £7,000.Footnote ¹⁷

A second significant aspect of the intellectual property landscape was the early system of protection for designs.Footnote ¹⁸ In the late 1780s, protection was provided by Parliament to the designers of patterns for printed calicos, linens, cottons and muslins.Footnote ¹⁹ While this protection was initially limited to two months, in 1794 it was extended to three months.Footnote ²⁰ By the 1820s and 1830s, calls were made for extension of these laws to cover a wider array of designs and for the lengthening of the term of protection. In the 1830s this movement for reform was linked to arguments for reform of the law and administration of letters patent, through proposals for the introduction of laws of ‘art and manufacture’.Footnote ²¹ While it ultimately proved impossible to obtain any real reform of patents, the push for the protection of designs bore fruit in the form of the Design Registration Act 1839,Footnote ²² which provided up to three years protection, on registration, to designers of the shape and configuration of any article of manufacture.

While the 1839 Design Registration Act brought about a number of significant changes, it was soon replaced by two new Acts. The first was the Ornamental Designs Act 1842, which gave protection to designs for purpose of ornamenting any article of manufacture.Footnote ²³ The other Act, which was passed the following year, was referred to variously as the Utility Designs Act, the Non-Ornamental Designs Act, the Utility Registration Act, the Configuration Act, the Registration Act, and (perhaps facetiously) ‘the Useful Act’.

The main impetus for reform was that the designers of patterns for cloth printing, previously protected automatically under the Calico Printers Acts, decided that they were prepared to accept registration as the quid pro quo for extension of the term of protection from 3 months to 9 months.Footnote ²⁴ At the same time, the Registrar of Designs, F. B. Long, took the opportunity to rectify problems in the operation of the 1839 Registration Act.Footnote ²⁵ The vague language of that Act, which The London Journal of Arts and Sciences described as ‘an undigested chaos of confusion, inutility and obscurity’Footnote ²⁶ had led to the registration of many designs for objects of utility (some of which were enforced successfully, as in Grassby v Westerdale (Patrington petty sessions 1842),Footnote ²⁷ while others were treated as invalidly registered: Evans v Harlow (Stockport Borough Court 1843)). In response, the Registrar recommended that the Board of Trade remove the incentives to register such shapes as ornamental designs by establishing a separate regime. The Board of Trade did this through the Utility Designs Act.Footnote ²⁸

The Utility Designs Act 1843 (UDA) protected ‘any new or original Design for any Article of Manufacture having reference to some purpose of Utility, so far as such design shall be for the Shape or Configuration of such Article’. Protection under the Utility Designs Act 1843 (as under the 1839 and 1842 Acts) required application to the Design Registry and, once granted, lasted for three years. The application was required to include a title, two drawings of the design, and such description in writing as was thought necessary to render the same intelligible.Footnote ²⁹ According to the rules, the description was required (i) to indicate the useful purpose; (ii) distinguish the several parts of the design by reference to letters, figures or colours; and (iii) indicate which parts were not new and original.Footnote ³⁰ The drawings were to be no more than 24 inches by 15 inches and ‘on a proper geometric scale’ (UDA 1843, s. 8). The price of registration was £10.Footnote ³¹ Importantly, and in contrast to the Ornamental Design Act 1842, registrations were – like patent specifications – open to the public,Footnote ³² and the titles of all the registered useful designs were widely circulated.Footnote ³³ However, copying of the designs was not permitted until the rights had expired.Footnote ³⁴

The scope of the new right was defined and its enforcement regulated by reference to the Ornamental Designs Act.Footnote ³⁵ This meant that the right was infringed by applying ‘any such design, or any fraudulent imitation thereof for the purpose of sale, to … any article of manufacture, or any substance’ or publishing, selling or exposing for sale any such article or substance to which the design had been applied, knowing that consent had not been given to such application. In addition to proceedings for damages, and in Chancery for an injunction, remedies included the recovery of penalties of £5–£30 per offence (though not to exceed £100 per person per design), as well as costs, by way of an action for debt, an action on the case, or by way of summary proceedings before two magistrates.Footnote ³⁶ Fifteen years later, the county court was also explicitly given jurisdiction to hear cases and award damages.Footnote ³⁷

3.2 Reception of the Utility Designs Act

The Utility Designs Act 1843 received a mixed reception. While some commentators welcomed the new regime, others, who complained that the Act was anything but transparent,Footnote ³⁸ likened it to an attempt to present a picture to one ignorant of anatomy by using ‘dry bones’.Footnote ³⁹ Beyond these criticisms of the nature and form of the Act, a more serious dispute arose as to the relationship of the utility design system to the patent system: a matter over which the 1843 statute said nothing. The question of the relationship between the two legal regimes, which became more heated as the Utility Designs Act increased in popularity,Footnote ⁴⁰ was played out in tracts, textbooks and in such specialist periodicals as the London Journal of Arts and Sciences, the Repertory of Patent Inventions, and the Mechanics’ Magazine. While views on this matter varied somewhat, they fell into two general approaches.

On one hand, commentators such as Alexander Prince, Joseph C. Robertson (Editor of the Mechanics’ Magazine) and Thomas Turner (barrister and legal commentator) took the view that the Utility Designs Act and the patent system were alternative ways of protecting mechanical devices. Under this view, applicants could elect between the protection offered by the Utility Designs Act, which cost £10 for three years of protection throughout the whole nation and the patent system, which cost £300 but lasted for the longer term of 14 years. As the Mechanics’ Magazine explained:

Other commentators such as William Carpmael (patent agent), William Spence (patent agent) William Hindmarch (barrister) and Thomas Webster (1811–1875, barrister and from 1865 QC) took a different view, arguing that the subject matter of each system was essentially distinct. In particular, they suggested that the Utility Designs Act merely protected the form of an article, whereas patent law protected the ‘principle’ by which an invention worked, that is, its ‘function’.Footnote ⁴²

The divergence of opinion played an important role in the way the Utility Designs Act was perceived, utilised and evaluated. For example, the way the Act was interpreted influenced the way its success was measured. For those who took the view that the Act was ‘an act to make patents cheap’, its success was judged in terms of whether it offered a speedy, simple and cheap system of registration: irrespective of what was actually registered. As such they welcomed the registration of table lamps, ball cocks, heel tips, screw wrenches, sash fastenings, weft distenders, light reflectors and pneumatic life preservers which occurred in the first month of the Act’s operation.Footnote ⁴³ For those who took the view that the Utility Designs Act merely protected the form of objects, most of these registrations were thought to be mistaken and worthless.Footnote ⁴⁴ Carpmael called the Act ‘a perfect curse’ that had produced ‘most pernicious results.’Footnote ⁴⁵ According to Webster, registration was tantamount to robbery.Footnote ⁴⁶

3.2.1 The Nature of the Conflict

At one level, the conflict over the appropriate scope of what ought to be registered under the 1843 Act was expressed in two different though related ways. The first turned on the notions of ‘form’ and ‘principle’. For the proponents of the narrow view, the scope of the Utility Designs Act was confined to the outward or visible form of the object registered. It was said that form only extended to encompass principle – which was taken as the primary concern of patents – in the very limited circumstance where the form of the article happened to be the only shape that could be used to perform the function in question. This meant, for example, that while the Utility Design Act could protect the form of the stem or oil vessel of a table lamp, it could not protect any new way of raising the wick in the lamp or supplying the lamp with air.Footnote ⁴⁷ Given the belief that utility model protection was limited to the visible exterior form of objects while patent protection extended to principles, and that form and principle were readily separable, those who favoured the narrow view were able to deny that there was any real overlap between the two systems of protection.Footnote ⁴⁸ In contrast, the proponents of the broad view of the Utility Designs Act took a different view of the ‘form/function’ dichotomy. For these commentators, the divergence between form and principle was much less clear. As Robertson, writing in the Mechanics’ Magazine, explained:

We really see it as a matter of some difficulty to imagine any cases of mechanical improvement which will not come within the exceedingly comprehensive terms of this Act. Such an invention as Watt’s great discovery of condensing in a separate cylinder might possibly fall without the line; but the direct-setting engine, the oscillating engine, and a score of others of the like character, would as undoubtedly fall within it. All paddle-wheels, and all stern-propellors would be most clearly included. So would all agricultural machines; all railway bars, chairs, sleepers etc; all wood pavements. In short, mere processes only, and such chiefly as are of chemical description, will be excluded.

Arguing that every principle presumed some understanding of form, it was said that the two concepts were inseparable. Or, as Turner said, ‘you cannot have principle without special form, more than you can have respiration without lungs’.Footnote ⁴⁹

The second issue that distinguished the conflicting views of the Utility Design Act related to the way the design was represented. More specifically, it turned on a difference of opinion over how the visual and textual elements of the design registration were construed and the relative weight that each played in determining the scope of the property protected. It is important to recall that when registering a design, applicants were required to include three things: a title, two drawings of the design which were to be no more than 24 inches by 15 inches and on a ‘proper geometric scale’, and such description in writing as was thought necessary to render the same intelligible. In practice, the representations varied, with many (especially those prepared by registration agents) including lengthy written explanations of the drawings. For example, Registration Number 9, for an improved ball cock (Figure 3.1) (which had been drafted by Joseph Robertson) included two figures and the following description:

Fig. 1 is an external view of the ball cock. Fig. 2 is a sectional view. A is the water supply pipe. B is the ball cock which is connected to the supply pipe by means of a spur C and hinge D …

CLAIM

The parts of the said design which are not new or original are the branch A of the supply pipe and the ballcock B. The parts claimed as new are FIRST the spur C and hinge D by which the ballcock B is attached to the branch A of the supply pipe and SECOND the branch A2 of the supply pipe with the valve box F and Valve G attached thereto.Footnote ⁵⁰

Figure 3.1 Improved ball cock, registered on September 9, 1843, by Robert Wilkins (with J. C. Robertson and Co as registration agent): BT 45/1/9

When proponents of the narrow construction of the 1843 Act spoke of the outward form of objects, they meant the visible form which was represented in the drawings of the design. In this situation visual representation was assumed to have two characteristics: first, it was believed that drawings were capable of being appreciated and understood by any viewer; there was no specific knowledge or skill required to interpret the visual element of the design application. Secondly, the drawing or visual representation operated to confine protection to the detailed specific embodiment that was found in the registration. In this context, the textual features of a utility design application, which the Act required applicants to submit in order to render the drawing intelligible, were seen to perform the limited role of enabling the new and old elements of the shape to be differentiated: the text played no role whatsoever in understanding the drawing and thus determining the property protected. In contrast, these commentators believed that patents captured the essence of the invention – the principle – through the medium of text, that is, the patent specification: a document which was interpreted from the standpoint of the community skilled in the art and in such a way that the protection encompassed multiple embodiments.

While those who favoured a narrow reading of the 1843 Act prioritised the visual representation of the design over its textual supplements, opponents of this approach took a more open view of the relationship between the visual and the textual. Moreover, for this group the roles of the divergent techniques of representation – visual and textual – were by no means as fixed as the proponents of the narrow view made out. That is, they did not think that there was a single, universal relationship between text and image. Instead, they were able to imagine diverse ways in which text and image might interact in identifying an intangible object or subject matter of rights.

Proponents of the more expansive view of the 1843 Act differed from those who construed it more narrowly in two more specific ways. First, some of those who favoured a more open interpretation of the 1843 Act argued that visual representation was not as confined, specific and limiting as had been suggested. Importantly, this meant that the protection offered to registered designs extended to include geometrically different shapes which were functionally equivalent. This more expansive understanding of visual interpretation was based on the idea that visual representations did not require universal understanding. Rather, the visual representations were to be interpreted by a skilled community, a community which would understand the essential rather than the accidental shape of the article.Footnote ⁵¹ As one commentator observed,

[T]he essential and important shape and configuration of an article of utility is not by any means necessarily outward and manifest, but may be such as can only be carefully appreciated by persons conversant with articles of its class …

In addition, based on the idea that ‘a word gives the essential principle of a shape’,Footnote ⁵² it was also suggested that while visual images were capable of being interpreted in different ways, the text which was attached to the drawings informed the way the image could be construed. Specifically, it was argued that the text tied down the meaning of the visual image, allowing the image to constitute the basic representation of even functional attributes of the protected design.Footnote ⁵³

3.3 Judicial and Administrative Responses

Although the 1843 Act allowed the Registrar to reject non-ornamental shapes from the register of ornamental designs under the 1842 Act, the Registrar was unable to reject an application from the utility designs register on the ground that the application was properly the subject of a patent.Footnote ¹¹⁸ Nevertheless, shortly after the 1843 Act came into force on September 9, 1843, the Registrar issued a noticed stating that no design

Quite what was the legal basis for this notice (and the practise it purported to foreshadow) is unclear,Footnote ¹²⁰ but the notice was influential. The London Journal of the Arts and Sciences, edited by the patent agent William Newton, which had regarded the scope of the Act as ambiguous,Footnote ¹²¹ narrowed its position in response saying that interpretation of the Utility Design Act as protecting inventions involved a ‘misconception’,Footnote ¹²² and after listing the titles of designs registered under the 1843 Act, repeatedly warned readers of the dangers that these registrations were invalid.Footnote ¹²³ The Registrar’s notice had also emphasised that decision to register was a matter of personal risk for applicants.

As the patent agent William Spence pointed out, the subject matter and scope of protection under the Utility Design Act was not a matter that could be resolved administratively: it turned on the judicial interpretation of the Act. Unfortunately, a clear resolution of the different interpretations was unlikely. This was because proceedings to enforce the rights of registrants could be brought before magistrates and most complainants chose that course. If the Utility Design Act was an act to make patents cheap, and in the absence (until 1846) of a cheap county court,Footnote ¹²⁴ there was a certain logic to their being enforced in the police courts which were thought of by some as a ‘poor man’s court’.Footnote ¹²⁵

It was the view of contemporaries that the 1843 Act had not generated a great deal of litigation.Footnote ¹²⁶ In the period between 1843 and October 1852 (when the Patent Law (Amendment) Act 1852 came into operation), there were at least twenty-four sets of proceedings before magistrates for infringement under the Utility Design After Act (see Appendix 1). All but one (Twigg v Kemp (Public Office, Birmingham 1848)) were brought in London, including sixteen at the police court in the Guildhall. Just under half of the cases resulted in the defendant being fined – though the convictions in Motte v Welch and Dixon v Bessell (1850 Guildhall Police Court) were overturned. The fines were mostly £5, often referred to as the ‘mitigated penalty’ applicable where the accused undertook not to repeat the offence, but in at least one case, Margetson v Wright, the defendant made no such undertaking and the penalty (a mere 20 shillings) was insufficient to deter further infringements. Complainants do not seem to have sought to exploit the potential for very significant penalties through cumulation of the fine on a per article basis (up to a maximum of £100).Footnote ¹²⁷

The issue of the relationship between design and patents was raised in many of the design cases by defendant’s counsel. The argument was usually made that the subject-matter for which protection was being sought was properly a matter for the patent regime and thus the registration was invalid. In Wolferstan v Warner (Guildhall Police Court 1845), concerning an improved boiler tap (Figure 3.2), William Clarkson argued that

by endeavouring to evade the expense of taking out a patent at an expense of as many pounds as he had paid shillings for the registration, had overreached himself. The part for which registration had been obtained was a mechanical contrivance, and not a mere change of form or configuration, to which alone that act applied.Footnote ¹²⁸

Figure 3.2 ‘Safety boiler tap’ registered by Thomas Wolferstan on May 28, 1844, and litigated in Wolferstan v Warner (November 5, 1844, Guildhall Police Court): BT 45/1/190

The defendant raised other objections (including that the designs were different in important ways, and that the complainant had not marked all the taps sold with the word ‘registered’ as required by the 1843 Act). Although the magistrate dismissed the summons, the aldermen refused to explain their decision, so it was not clear whether doubts about whether the tap was eligible for protection influenced the decision (and the arguments of counsel were a subject of trenchant criticism in the Mechanics’ Magazine (1844) 41: 331).

In Webb v Hughes (Guildhall Police Court 1847), the claimant’s registration (Figure 3.3) related to a tray for storing lace ribbon; the defendant registered (Figure 3.4) and sold an improved version adapted to store more lace.Footnote ¹²⁹ Clarkson, again appearing for the defendant, argued that the ‘Act had reference only to matters of form. It was nothing that the same principle or idea was taken, if the form and means were different. Principles were protected by patent law, and mere shape by the registration law’.Footnote ¹³⁰ The argument did not seem to land: the magistrates declined to decide the case, one thinking there was infringement, the other finding that the defendant’s design was sufficiently different from Webb’s and as such that there was no infringement.Footnote ¹³¹ In Haynes v Brown (Guildhall Police Court 1848), concerning the design of a windlass controller, Benjamin Rotch and William Clarkson argued that as the complainant had themselves applied for a patent, the registration under the Utility Design Act was evidently invalid:

The magistrate dismissed the complaint, but on the basis of the absence of novelty of the design (given prior disclosure).

Figure 3.3 ‘Protection rouche tray’ registered by George Webb on January 13, 1847, and litigated in Webb v Hughes (April 12, 1847, Guildhall Police Court): BT 45/5/920

Figure 3.4 ‘Protection rouche tray’ registered by Hosketh Hughes on February 25, 1847, and litigated in Webb v Hughes: BT 45/5/977

In three cases, the magistrates seem to have taken the broad view of the Act. In Fox v Evans, (Guildhall Police Court 1848) the magistrates found infringement of the complainant’s ‘Alarum for time pieces’ (Figure 3.5) because the defendant reproduced the dial, even though the defendant’s version had no alarm. The magistrates, Aldermen Finnis and Lawrence, were unmoved by the fact that the clocks involved different mechanical mechanisms. In Dixon v Bessell (Guildhall Police Court 1850), in relation to a ventilator in a window (Figure 3.10), Alderman Wilson expressed the view that Dixon’s design was so ingenious that he deserved at least seven years protection and the defendant had engaged in ‘bare-faced piracy’. In neither Fox nor Dixon was the defendant represented by counsel, and likely the tribunal was not exposed to the narrow reading of the Utility Design Act. In contrast, in Motte v Welch (Guildhall Police Court 1850), concerning a registered design for an improved portmanteau (Figure 3.6), the defendant’s counsel explicitly argued that as the improvements involved the use of rivets rather than sewing and the use of one piece of leather, rather than several, there was no new shape and thus no new design. Nevertheless, having heard copious evidence, Alderman Challis found for the registrant.

Figure 3.5 ‘Alarum for time pieces’ registered by Edward Fox and James Brown on July 25, 1846, and litigated in Fox v Evans (May 6, 1848 Guildhall Police Court): BT 45/4/776

Figure 3.6 ‘Design for an improved portmanteau’ registered for Auguste Motte on July 23, 1849, and litigated in Motte v Welch (March 30, 1850 Guildhall Police Court) and Motte v Lancaster (June 19, 1850 Guildhall Police Court) : BT 45/10/1970

Sometimes a narrow view of the Utility Design Act clearly motivated the decision of the tribunal. In Kennedy and Asprey v Coombs and Finlay (Marlborough Street Police Court 1845), the registration, which was drafted for the complainants by J. C. Robertson & Co, was for ‘an improved portable ink and light box for writing desks and travelling cases’ (Figure 3.7). The novelty lay in the hinging which enabled the lid of the box to be thrown back without pulling its base from the case. The experienced magistrate, John Hardwick, seems to have accepted Thomas Webster’s submission that the novelty was a matter of mechanical contrivance rather than a new design in shape or configuration. Dismissing the information, the magistrate explained:

Figure 3.7 ‘Improved portable ink and light box’ registered for Francis Kennedy and Charles Asprey on August 27, 1844, and litigated in Kennedy and Asprey v Coombs and Finlay (February 15, 1845 Marlborough St Police Court): BT 45/2/255

In Woolley v Warner (Guildhall Police Court 1845), the dismissal of the action also seems to have turned on the view that the registered design was really an invention outside the Utility Design Act. The registration was entitled ‘Improvements in the shape and configuration of lamps and apparatus connected therewith for the burning of oil of turpentine, camphine, naptha etc.’ (Figure 3.8). The description identified which of the different components were new and old. In defence, Clarkson argued that ‘any new mechanical action must, it is clear, be the subject of a patent’. Benjamin Rotch, counsel for the complainant, responded that he did not admit that. Nevertheless, the information was dismissed. Alderman Hughes Hughes – who, unusually for an alderman, had something of a legal backgroundFootnote ¹³² – said he was satisfied that ‘it was a new application of a mechanical action and not a mere alteration of form or configuration’, a conclusion with which Alderman Charles Farebrother agreed.Footnote ¹³³ The decision received some criticism in Robertson’s Mechanics’ Magazine, albeit attributed to ‘Civis of Gray’s Inn Square’.Footnote ¹³⁴ When reflecting on the fact that many of the prosecutions in the police courts had been unsuccessful, the barrister Thomas Turner explained that this was attributable to ‘fastidiousness about mechanical action, etc.’

Figure 3.8 ‘Improvement in the shape and configuration of lamps’ registered for Fletcher Woolley on February 21, 1844 (and litigated in Woolley v Warner (March 22, 1845 Guildhall Police Court): BT 45/1/127

A writer in the legal journal The Jurist, using the initials ‘G.S.’, referred to the ‘known incompetency’ of the justices,Footnote ¹³⁵ adding that ‘such functionaries are naturally averse to be troubled with discussions for which they are so little qualified by education or habit’. The aldermen who sat in the police courts at the Guildhall were often businessmen rather than lawyersFootnote ¹³⁶ and, despite having a legal clerk,Footnote ¹³⁷ frequently seemed uncomfortable with their responsibilities. Writing to the Mechanics’ Magazine after the first two decisions of the aldermen, S.Y. observed that ‘the persons appointed by the Act to settle disputed points, are those most likely to prove unable to comprehend the merits of the question on which they have to decide, and […] are in every way irresponsible for their decision’.Footnote ¹³⁸ Reflecting this, the Guildhall judges seemed to have looked for ways to avoid dealing with the complaints. As Turner put it, the aldermen took ‘prejudices and crotchets on the points of interpretation that arise’.Footnote ¹³⁹ Thomas Webster gave a similar assessment to the Select Committee on the Protection of Inventors Bill (in March 1851) thatFootnote ¹⁴⁰

There was certainly evidence to support such a conclusion. In an early case, Margetson v May (Guildhall Police Court 1844), concerning the design of a shirt collar (Figure 3.9), one of the magistrates, Alderman Charles Farebrother, an auctioneer, had been inclined to dismiss the proceedings because the matter was too trivial (though he was persuaded by his colleague not to do so).Footnote ¹⁴¹ In Wolferstan v Warner (Guildhall Police Court 1845), the aldermen concluded that the complainant had not established its case, but when counsel asked in what respect, the alderman, Sir George Carroll, a stockbroker, refused to explain. In contrast, other magistrates thought that the issues were so serious that they were better dealt with elsewhere. In Besley v Gallie (Bow Street Police Court 1848), dismissing the summons on a technical point (that it was not sent to the defendant’s residence as opposed to its business premises), the Bow Street Magistrate, barrister David Jardine (d. September 1860), said he thought the matter ‘far too important to be disposed of by a magistrate in a summary way. It was quite foreign to the general business of the police courts’.Footnote ¹⁴²

Figure 3.9 ‘Improved collar’ registered for Welch, Margetson & Co on February 29, 1844, and litigated in Margetson v May (October 1844 Guildhall Police Court): BT 45/1/133

One can easily imagine that the magistrates were ill at ease, as the cases often involved difficult points of law (particularly in terms of the relationship between patents and the Utility Design Act), whereas their usual diet would have been making findings of fact.Footnote ¹⁴³ Moreover, the magistrates may have also resented the amount of time the cases were taking: the magistrates had plenty of work and were used to resolving matters speedily – ‘the justice that was meted out at the police courts could be very abrupt’.Footnote ¹⁴⁴ Certainly those that reported the cases on designs noted that they consumed a considerable time.Footnote ¹⁴⁵ On the other hand, it may be that some of the tribunals overcame their initial discomfort, particularly at the Guildhall Police Court given the frequency of hearings.Footnote ¹⁴⁶ In Motte v Welch (Guildhall Police Court 1850), Alderman Challis initially asked counsel to present more evidence and in his conclusions explained that he had given ‘a great deal of time and careful attention to this case, in order that it might not be said he had decided hastily’.Footnote ¹⁴⁷ The result was overturned, but the tribunal had certainly done its best.

While patent barristers such as Turner and Webster might have been able to point to instances such as these to justify their criticisms of the magistrates, their views might also have been informed by the fact that the day-to-day operation of magistrates was unfamiliar to them. Magistrates were used to exercising a wide degree of freedom which they often used to ensure that the outcome was consistent with their vision of their role.Footnote ¹⁴⁸ One wonders whether the criminal barrister William Clarkson would have shared Webster’s view: the reports identify him as counsel in nine such prosecutions, four times for the complainant and five for the defendant, with a 75 per cent success rate (six wins, two losses, the ninth case being undecided). He probably had a better idea as to how to present cases to magistrates. Moreover, one might wonder what a criminal law barrister might have made of the practice of trying patent cases before juries (the value of which were increasingly questioned during the 1840s).Footnote ¹⁴⁹ Even with the widespread use of special juries,Footnote ¹⁵⁰ the outcomes were hardly always satisfactory. In Ward v Key (nisi prius, 1847), for example, the jury initially ignored Cresswell J.’s instruction to find that the defendant had not infringed, finding (as it seems all juries did at that time) for the plaintiff patentee. However, the jury revisited the matter when the judge explained to it that if it did not so find, the members would face the prospect of being compelled to hear the defendant’s witnesses. Evidently, the lengthy and hugely costly processes of patent litigation were not guaranteed to produce just results.

Perhaps most significantly, the magistrates were not a suitable vehicle for establishing precedent. Not only were the cases reported inconsistently and sparingly in the newspapers,Footnote ¹⁵¹ the magistrates rarely reserved judgment and never offered more than the briefest of reasoning. While many of the outcomes were noted in periodicals of interest to inventors (such as Robertson’s Mechanics’ Magazine or Newton’s London Journal) and made their way into commentaries, these were not as precedents so much as indications of the inclinations or instincts of these tribunals. It is fair to say that the magistrates mostly preferred the narrow interpretation of the Utility Designs Act of the likes of Carpmael to the broader reading of Robertson and Prince – but whether this was because they wanted to minimise this part of their workload, avoid the consequences of wrongfully convicting a defendant,Footnote ¹⁵² or because they thought this was the best interpretation of the statute, is difficult to say.

There was no appeal from the magistrates,Footnote ¹⁵³ but proceedings could be taken to have their decisions quashed by way of the writ of certiorari,Footnote ¹⁵⁴ and an authoritative view of the Utility Design Act was most likely to come from such decisions. This was the course of action taken by the defendants in Motte v Welch (Guildhall Police Court 1850) and Dixon v Bessell (Guildhall Police Court 1850). In R v Welch (Queen’s Bench 1851), Lord Campbell overruled the magistrates’ decision because of a technical defect, but in R v Bessell (Queen’s Bench 1851) the Court ruled on the scope of the Utility Design Act. The design in issue was for a ‘ventilator’, that is a mechanism for opening the pane of a window (Figure 3.10). As can be seen, the drawings indicate the overall operation of the system for opening the window and focus in detail on the form of the screw. Apart from describing how the various components (pane, frame, screw and pulley) interacted, the textual component specified that ‘[t]he part or parts of this Design which are not new or original are all the parts and apart from the purposes thereof What is Claimed as new is the general configuration and combination of parts marked A, B, b, D, c, e, a, c exclusively of Figs 5.6. and which are subsidiary or illustrative’…). Quashing the conviction, the court held that Dixon’s design was not within the statute because in the description it specified the design as being a combination of features to produce a result and thus was not dependent on the specific shape or configuration of those features. Indeed, the Court observed that the same effect could be produced using different shapes and that had Dixon’s protection been limited to the shape then Bessell, who used a different shape of screw, would not have infringed. The potential importance of the holding was apparent to patent agent Frederick Campin who suggested that it placed ‘some hundreds’ of registrations ‘at the mercy of the pirate’.Footnote ¹⁵⁵

Figure 3.10 ‘Improved window ventilator’ registered by William Dixon on January 26, 1849, and litigated in Dixon v Bessell (October 1, 1850, Guildhall Police Court): BT 45/9/1750

The only case in which the alternative route to the magistrates,Footnote ¹⁵⁶ that of using the superior courts, was taken was Margetson v Wright, which concerned the design for a ‘Protector label’ with a metal eyelet that prevented the label being ripped off (Figure 3.11). The defendant had registered its own version, the ‘Direction label’ (Figure 3.12). The complainant succeeded in summary proceedings and was awarded 20 shillings.Footnote ¹⁵⁷ Nonetheless this did not prevent the defendant from continuing to make and sell its label. Margetson therefore issued a bill for an injunction. When the Vice-Chancellor (Knight-Bruce) refused to grant injunctive relief,Footnote ¹⁵⁸ Margetson sought to establish his rights at law. Unfortunately, in proceedings before Denman LCJ, sitting with a common jury out of term, the defendant was able to prove the availability of the design before the date of registration.Footnote ¹⁵⁹ The authority thus gave no guidance on the interpretation of the Utility Design Act.

Figure 3.11 ‘Protector label’ registered by Margetson on January 9, 1847, and litigated against Wright in the Guildhall Police Court on June 3, 1848: BT 45/5/917

Figure 3.12 ‘Direction Label’ registered by George Wright on November 17, 1847, and said by Margetson to infringe his registration in the Guildhall Police Court on June 3, 1848, as well as subsequent proceedings in Chancery and common law: BT 45/7/1261

Two other cases concerning Utility Design Act registrations were brought in the common law courts for money owing under licensing arrangements and tried at nisi prius: Millingen v Picken and Rogers and Beedle v Driver. In both cases, the defendant sought to justify non-payment of licensing money ostensibly owed under the contracts by asserting that the registration was invalid. The more complicated of the two cases, Millingen, related to a parasol which could be opened using a single hand. The defendant had entered an agreement to make and sell the parasol. However, the defendant considered the design to fall within scope of an earlier patent for ‘Constructing umbrellas and parasols’ owned by Joseph Barker and wrote to parasol manufacturers, under Barker’s name, asserting this.Footnote ¹⁶⁰ The agreement between Millingen and Picken contained a penalty clause, for £100, should Picken do anything to prejudice Millingen’s right and title. The plaintiff brought proceedings claiming that it was entitled to the sum. Millingen won at trial, but before the Court of Common Pleas en banc, Serjeant Byles argued that:

Tindal LCJ initially awarded the rule nisi, but on June 3, 1845, the Court en banc affirmed the verdict stating that the defendant was not free to defend the action by claiming the plaintiff was not entitled to the registration. The case, therefore, ultimately provided no clarification as to the scope of the Utility Design Act.

In Rogers and Beedle v Driver, Beedle had invented a shape of brick, twice the size of a normal brick but with a cylinder cut out so that when laid against a corresponding brick the combination created a channel that would allow the passage of air (Figure 3.13).Footnote ¹⁶¹ Calling the design the ‘universal ventilating brick’, Beedle had entered into a partnership with Rogers to exploit it. They licensed Driver to make the bricks for the Southampton area, Driver in return promising a fee of £100 plus a 7 per cent royalty on sales. When Driver failed to pay the full fee, Rogers and Beedle brought an action at Berkshire Assizes for the remainder. Driver sought to argue that the registration was invalid on various bases including that the subject matter was properly that of a patent, and thus not registered design. Patteson J said he could see no reason why the statutory right should not be available for matters that were also patentable,Footnote ¹⁶² and the full court of Queen’s Bench agreed. Without offering a conclusive view as to whether the brick was patentable, the judges were unanimous that there was no reason to think that the patentability of an article precluded its registration under the Utility Design Act.

Figure 3.13 ‘Ventilating brick’ registered by Edward Beedle on and litigated in the Berkshire Lent Assizes, 1850, in Rogers and Beedle v Driver: BT 45/10/1915

It is hard to assess the impact of the 1843 Act. Writing in 1851, Thomas Turner noted that ‘we have very little of an authoritative nature to guide us in deciding what proportion of the registered designs might have been or may be maintained’.Footnote ¹⁶³ One ‘eminent member of the bar’ had, by 1850, apparently expressed the opinion that ‘it is impossible to protect any machine, or portion of a machine, under [the Act]’ leading one commentator to suggest that only one in ten had been validly registered.Footnote ¹⁶⁴ Some thought the uncertainty merely an opportunity for ‘puffing and pretence’.Footnote ¹⁶⁵ Others offered more positive appraisals. Charles Barlow and Philip Le Capelain, patent agents, agents for registration and editors of the Patent Journal and Inventors Magazine argued that while the 1843 Act was ‘singularly obscure and indefinite’ nevertheless it ‘has worked well, and conferred incalculable advantages on inventors’.Footnote ¹⁶⁶ As we have seen, registrants succeeded in a reasonable proportion of cases and, magistrates frequently adhered to their own sense of justice. The Builder anticipated that in future reform proposals ‘Justice will be done to the Registration Act as an irregular improvement in, or rather substitute for, the law as it stands – as a “small patent law” in short, as the public have not been slow in making it.’Footnote ¹⁶⁷

According to the Society of Arts, the Act had a very positive effect on the morality of ‘inventors’. Although offering no empirical evidence, the Society of Arts was convinced that manufacturers respected the registrations, irrespective of their validity.Footnote ¹⁶⁸ Clement Johnson, the successor to F. B. Long as the Registrar of Designs, claimed that ‘on the whole the Act has worked to the satisfaction of inventors and the public in general.’Footnote ¹⁶⁹ In particular,

3.4 The Demise of the Utility Design Act

While the parameters of the subject matter of the Utility Design Act and its relationship to patentable subject matter remained undefined, after 1852 the level of concern with the overlap between the two regimes waned rapidly. This was because of the reform of patent administration which simplified the patent system, united the three patents of England and Wales, Scotland and Ireland into one, and established a central patent office. Most importantly, reductions in the cost of a patent to £25 for three years enabled the patent system to compete with a £10 Utility Design Act registration.Footnote ¹⁷¹ Although some had suggested that if the patent system was reformed that the Utility Design Act should be abolished,Footnote ¹⁷² others suggested that it should be left to die a natural death,Footnote ¹⁷³ which was what happened. Following the patent reforms, utility design registrations fell to about 100 per year after 1860 (a number maintained until 1883), while patent registrations increased exponentially after 1852 (prompting further reflection on the desirability of making patents even cheaper).

With fewer registrations, fewer cases were reported.Footnote ¹⁷⁴ With no significant developments in the jurisprudence on the Utility Design Act in the next three decades, the precise boundary and the degree of overlap remained uncertain. In 1872, giving evidence to a further Select Committee on Letters Patent, Bennett Woodcroft, the clerk to the Commissioners of Patents (established under the 1852 Act), observed that there were many patents that had been taken out that were ‘properly the subjects for the registration of designs’ and that ‘many inventions go to the Design Office, which belong to the Patent Office’.Footnote ¹⁷⁵ In line with this, treatises continued to warn of the dangers of assuming that protection under the Utility Design Act was in some way equivalent to that of a patent;Footnote ¹⁷⁶ nonetheless, the practice continued.

In 1883, it was decided to merge the Ornamental and Utility Designs Acts into a single regime.Footnote ¹⁷⁷ The Memorandum which accompanied the Patents, Designs and Trade Marks Act 1883 acknowledged that prior to 1883 many matters that were patentable had been protected under the Utility Design Act.Footnote ¹⁷⁸ As Joseph Chamberlain, the President of the Board of Trade, told the House of Commons, the Utility Design Act

However, because the 1883 Act reduced the costs of patents to £4, the attraction of design registration (at £10) disappeared: ‘such useful designs as embrace a mechanical action would be treated as subject matter for a patent’.Footnote ¹⁸⁰

The implication from this was that the 1883 reform was not intended to change things substantively; the Registry would be simplified by removing the formal classification that relied on the distinction between shape, etc., which served the purpose ornament versus utility. As the barrister Edward Daniels observed, the distinction between the two forms of design ‘was abolished’.Footnote ¹⁸¹ Nothing in the move implied that if an applicant were to choose the now more expensive design protection over patenting, that utility of form would not remain a consideration in the assessment of the novelty of a design or its infringement.

Whatever the intention, the effect of the merger of the Ornamental and Utility Designs Acts did have important consequences. This is because, in practice, administrative changes and judicial interpretation ended the feasibility of using the design regime as a utility model scheme: it was not so much the ‘distinction’ between ornamental and utility designs that was abolished so much as the category of utility designs itself.

On the administrative side, presumably anticipating that such applications would no longer occur because of the cheapening of patents, the implementing apparatus for the registration of designs was altered so that it no longer provided for the application to include a title, let alone ‘such description in writing as was thought necessary to render the same intelligible’.Footnote ¹⁸² As Edmunds explained, ‘no elaborate explanation by the author of the design is required or allowed’.Footnote ¹⁸³ Moreover, while under the Utility Design Act, the drawings were to be ‘on a proper geometric scale’,Footnote ¹⁸⁴ the drawings required under the 1883 Act only needed to enable the registry to ‘identify the design’.Footnote ¹⁸⁵ While the 1883 Act still required a statement as to the ‘nature of the design’,Footnote ¹⁸⁶ rule 9 of the Design Rules 1883 interpreted this as merely an indication of whether the design related to ‘pattern’, ‘shape’, or ‘configuration’ and an indication as to the method by which the design was to be applied to the article. Importantly, too, the 1883 Act conferred on the comptroller the power ‘if he thinks fit, to refuse to register any design presented to him for registration’.Footnote ¹⁸⁷ Thereafter, the Office could reject applications that it thought inappropriate, for example because the application appeared to relate to mechanical actions or principles. Finally, under the 1883 Act, all designs were secret – so that if useful designs had remained protected a person could incur penalties even though they could not have known of the registered design.Footnote ¹⁸⁸

In effect, the post-1883 design regime was no longer structured to function as a utility model. This is vividly illustrated by comparing the registrations under the 1843 Act with a registration under the 1883 regime.

On November 10, 1884, Walker, Hunter & Co registered a design for a fire door (Figure 3.14).Footnote ¹⁸⁹ As is evident, the representation used under the 1883 Act had no text (whereas those used under the 1843 Act had plenty of text). Elsewhere in the register book, under ‘Statement of Design’ Walker, Hunter & Co wrote ‘range fire door with moulding on to fit. Moulding forming front of range. Shape to be registered’.Footnote ¹⁹⁰ There was nothing to indicate the function of the moulding beyond the words ‘to fit’. (The entry in the newly published Official Journal of the Patent Office was even less informative, referring just to the registration number, proprietor, date of registration and class).Footnote ¹⁹¹ As we will see, this change in form had implications for the judicial interpretation of the scope of protection afforded by a representation.

Figure 3.14 Walker, Hunter, & Co’s registration under the Patents, Designs and Trade Marks Act 1883, dated November 10, 1884, litigated in Walker, Hunter, & Co v Hecla Foundry (1889 House of Lords): BT 50/21/16596

The administrative changes fed into judicial interpretation of the scope of eligible subject matter under the Patents, Designs and Trade Marks Act 1883. With the exception of one or two first-instance decisions,Footnote ¹⁹² the courts began to develop case law that limited the potential to protect the function or functional components of an article through design registration. The first judicial move in this direction was to declare that the purpose of any particular shape was irrelevant and that novelty and infringement were to be assessed simply by ‘the eye’. The second was to re-evaluate the relationship between design and patents and bit by bit to embrace the principle that anything that could be patented was ipso facto not protectable as a design.

The first move was taken by the House of Lords in its 1889 decision in Walker, Hunter, & Co v Hecla Foundry (1889 House of Lords). In this case the claimants registered a design for a fire door for a kitchen range, with the representation as set out at Figure 3.14. The key characteristic of the door was the moulding on the door, which the registrant claimed operated to exclude cold air from the range (a function that would not have been obvious to a non-expert from looking at the representation). As already noted, the text accompanying the registration indicated that protection was for ‘the shape’ of the door but said nothing about function. While the court below had treated the purpose of the moulding as being relevant to determine whether the defendant’s fire door infringed (so that any suitable moulding would infringe), the House of Lords indicated that this was not the correct approach. Instead, they said that the purpose of the shape was an irrelevant consideration: all that mattered was the similarity of shape viewed by the eye. As Lord Herschell stated, ‘I do not think the object which the designer has in view in adapting the particular shape, or the useful purpose which the shape is intended to serve, or does serve, ought to be regarded in considering what is the design protected’.Footnote ¹⁹³

In many ways, this reasoning was the inevitable consequence of the changes in the administrative rules which precluded the possibility of claim-like descriptions that had been commonly used under the Utility Design Act. In the absence of such statements, courts would either have had to identify the purpose of a design from circumstantial matters, or treated the purpose of the shape as being irrelevant to its legal evaluation. The House of Lords chose the latter approach. The ruling meant that the 1883 Act had been more than a mere formal merger of two classes of ornamental and utility designs into one (as Chamberlain had put it). The removal of the textual aspect of the representation had deprived the courts of a key feature that had facilitated the identification/interpretation of designs.

By leaving the appraisal of any registration or alleged infringement to the ‘eye’ alone,Footnote ¹⁹⁴ the merger effected in 1883 assimilated the scopic regime of representation/interpretation to that of the Ornamental Design Act. In Hecla Foundry, Lord Watson declared that the decision of the House of Lords in Holdwsorth v McRea (1867 House of Lords), a case decided under the Ornamental Design Act, was equally applicable to the 1883 Act. In this case, the issue was whether depositing a specimen of a fabric pattern had been satisfactory for the purposes of section 5 of the 1858 Act. All members of the House of Lords held that the registrant had complied with the Act and as a result that the design protected was for the entire combination of features in the sample. Lord Westbury elaborated further: ‘the appeal is to the eye, and the eye alone is the judge of the identity of the two things. Whether, therefore, there be piracy or not is referred at once to an unerring judge, namely, the eye, which takes the one figure and the other figure, and ascertains whether they are or are not the same’.

As there was nothing ‘below the surface’, it was assumed that no explanation was required as to the meaning and purpose of ornament. Lord Westbury’s test was premised on the belief that vision was universal and self-explanatory, requiring neither education nor expertise.Footnote ¹⁹⁵ In this context, it was the judge who determined similarity by comparing features side by side. As David Fulton explained, ‘the Court will not look beneath the surface, but must find the reasons for registration apparent to the eye’.Footnote ¹⁹⁶ The indirect effect was to exclude many functional features from consideration at all because they would go unnoticed to the ‘universal’ as opposed to the trained or informed ‘eye’. As Baron Pollock indicated in Moody v Tree (High Court 1892), small changes to shape or configuration which achieved functional effects could be disregarded if they were not ‘pleasing to the eye’.

The second move was to frame the concept of design within the broader context of other industrial property rights (a concept recognised internationally in the Paris Convention of 1883 and implicitly in domestic legislation enacted that same year). More specifically, judges started to define design protection by reference to patent protection, giving the latter some sort of historical precedential and normatively superior status. In this characterisation, patent protection was recognised as historically and normatively prior while design law was seen as a legislative supplement. As a result, whatever the purpose of design law may have been, it could not have been intended to overlap with the subject matter of patents. If subject matter were patentable, it ipso facto should not be regarded as falling within the field of design protection. This mode of thinking tallies with what we have referred to elsewhere as the ‘denigration of design’.Footnote ¹⁹⁷

This form of reasoning can be seen most clearly in Moody v Tree. The case, which concerned a registered design for a basket (Figure 3.15), had initially been heard at Kent County Court, where a jury ruled the claimant’s design to be novel. The Court allowed the defendant to apply to the Divisional Court for a ruling on whether, even though new, the registration related to a design, and the superior court concluded it did not. Below the representation of the basket the applicant had indicated that the pattern involved the osiers being worked in singly and all the butt ends being outside.Footnote ¹⁹⁸ The Divisional Court concluded that this described a mode of construction, not a design. Baron Pollock (a survivor from the pre-Judicature Court of Exchequer, though now in the High Court) initially expressed some discomfort in dealing with design protection ‘in consequence of the novelty of this Act of Parliament, which in one sense is founded on patent law, but in another sense is entirely distinguishable from patent law’.Footnote ¹⁹⁹ However, having satisfied himself that ‘the Act with which we are dealing now is founded upon a different basis to the Patent Act’, Baron Pollock reasoned that ‘the Designs Act was intended to add to the Patent Act by making that which was not patentable – the subject of a design’. In contrast to previous authorities that had foreseen the possibility of overlap, Pollock utilised the historical priority of patent law to interpret the concept of design as necessarily excluding material that was patentable. Concurring, Vaughan Williams J. argued that ‘it was not the intention of the Act of Parliament that processes which could not, either for want of novelty, or want of utility, or some other reason, be protected as patent rights should be protected by reason of … the provisions contained in this Statute with reference to designs’.Footnote ²⁰⁰

Figure 3.15 Thomas Isaac Moody’s registration of a design for a basket, dated June 17, 1891, and litigated in Moody v Tree (High Court 1892): BT 51/64

These judicial manoeuvrings reinforced the perception that the protection of ‘useful designs’ had been abolished in 1883. In 1930, looking back, the Chair of the Sargant Committee observed that ‘in 1883 registration of such [utility] designs was abolished, and that since that date registration had been possible only in respect of ornamentation’.Footnote ²⁰¹ In turn, these judicial manoeuvrings also prepared the ground for statutory amendment of the definition of ‘design’. Following a report of the Board of Trade in 1916,Footnote ²⁰² judicial limitations were statutorily confirmed by the introduction of an exclusion from the registered design system of ‘any mode or principle of construction or anything which is in substance a mere mechanical device’.Footnote ²⁰³ With these exclusions, the utility design regime was finally brought to an end.

3.5 Forgetting the Utility Designs Act 1843

Almost immediately after the final vestige of the 1843 Act was removed from British law in 1919, there were calls for the introduction of some kind of short-term, cheap and speedy protection for minor innovations in the United Kingdom. The first came in 1928 in the form of a report by the British Science Guild,Footnote ²⁰⁴ a pressure group made up of scientists keen to have scientific insight incorporated into public policy.Footnote ²⁰⁵ Entitled, Reform of British Patent System, the committee led by the electrical engineer, William Eccles, proposed the introduction of a ‘short term patent’ for new and useful variations of known constructional forms and arrangements and compositions characterised by new ingredients, but not for processes.Footnote ²⁰⁶ The proposal was rejected by a governmental committee established by the Board of Trade,Footnote ²⁰⁷ though it regarded the question as ‘one of the most important and most controversial subjects’ that it had to consider.Footnote ²⁰⁸ The question was raised again in the early 1960s in another departmental inquiry on industrial design (the Johnston Committee), which indicated that though the question was a ‘live one’ it was outside the Committee’s terms of reference. The idea was rejected again in the Banks report in 1971. Despite what might have been regarded as a conclusive rejection, just over a decade later a Green Paper issued by a committee headed by the then Chief Scientific Officer to the Cabinet Office recommended adoption of a regime of ‘registered inventions’.Footnote ²⁰⁹ The recommendation did not, however, make it onto the statute book.Footnote ²¹⁰

Despite the persistent interest in some sort of utility model through the twentieth century, none of the various proposals or reports built upon the Utility Designs Act 1843.Footnote ²¹¹ Instead, the German gebrauchsmuster was consistently used as the legal model for the proposed new rights.Footnote ²¹² The gebrauchsmuster, introduced in 1891 to fill the ‘gap’ perceived to exist between registered designs (which were limited to aesthetic appearance) and the high level of inventiveness necessary to merit patents,Footnote ²¹³ protected ‘working appliances or articles of utility, or parts of the same in so far as they serve the object of the work or use through a new shape or arrangement’. Even though the gebrauchsmuster was itself very likely inspired by the British precursor,Footnote ²¹⁴ it was the German version that had become the key reference point in the United Kingdom.

Why was the Utility Designs Act so quickly forgotten? One potential reason for this is strategic: whether one supported or opposed proposals for a second tier of protection, the 1843 Act probably offered little to buttress one’s case. For supporters, the experience of the 1843 Act could hardly have been presented as a huge success. While the German gebrauchsmuster proved to be as popular as patents in terms of registrations,Footnote ²¹⁵ after 1852 there were rarely more than 100 utility designs registered each year in the United Kingdom. Moreover, the fact that the gebrauchsmuster was a feature of the law of an important foreign trade rival had rhetorical force: the fact that the gebrauchsmuster benefited and supported German innovators was a strong argument for its adoption in the United Kingdom.Footnote ²¹⁶ For opponents of the adoption of a utility model in UK law, the experience of the 1843 Act might have enabled them to argue ‘we tried it, and it was a failure’. However, as we have seen, it would have been difficult to assert that it had clearly been a resounding failure.Footnote ²¹⁷ For those aware of the history, it might have been better to ignore the British experience and instead emphasise that the German gebrauchsmuster was linked to distinct features of German law and procedure – for example the high standard of patent examination – which made its adoption in the United Kingdom unnecessary or problematic. (Interestingly, perhaps, nothing was said at this point about divergent approaches to the drafting of claims and their interpretation.) This would also have allowed more xenophobic opponents to characterise the utility model not only as unnecessary or undesirable, but also as intrinsically foreign.

While strategic decisions to remember history selectively and to ignore inconvenient aspects from the past help to explain the absence of references to the 1843 Act, the collective amnesia is more likely as much a consequence of prevalent ways of thinking about intellectual property law. As we described in The Making of Modern Intellectual Property Law, by the end of the nineteenth century a particular way of thinking about ‘intellectual property law’ had fallen into place, according to which the field was divided into particular branches – patents, copyright, designs and trademarks – each with its own self-image and logic.Footnote ²¹⁸ By the last decades of the nineteenth century each branch had its own treatises, many of which remain today – volumes by Copinger and Scrutton on copyright; Terrell, Edmunds, and Frost on Patents; Edmunds on designs. The distinctness of these categories was further cemented through the twentieth century, for example by way of international and regional arrangements for registration. In this categorisation, the history of the Utility Designs Act was included in the category of history of design law (even if only as a historical aberration),Footnote ²¹⁹ whereas proposals for utility models and short-term patents were conceptualised within the field of patent law. As a result, the 1843 Act was simply not part of the ‘memory’ of British patent law.Footnote ²²⁰

The dominance of such a way of thinking about the shape and nature of the law is evident in many of the twentieth century documents that considered introducing a utility model law into the United Kingdom. For example, in arguing for the adoption of a British gebrauchsmuster the British Science Guild said that ‘the new body of law that must be created should preferably conform to the model of patent law rather than of design law’.Footnote ²²¹ The Sargant Committee’s response, rejecting the proposal, argued that the entire idea of a ‘useful design’ was confusing, if not self-contradictory, because the very word ‘design’ implied in law the protection of appearance rather than utility.Footnote ²²² The Committee went on to suggest that the confusion arose because ‘patents’ and ‘designs’ were placed within the same legislation – a curious comment given that the Committee was itself charged with reviewing the law of patents and designs but one entirely consistent with the idea that the different branches of ‘intellectual property’ comprise distinct regimes with their own ontologies, epistemologies, teleologies and histories.Footnote ²²³ When the Johnston Committee was asked by various parties in 1961 to consider recommending the introduction of a ‘utility model’,Footnote ²²⁴ it regarded the matter as falling beyond its terms of reference:Footnote ²²⁵ presumably conceiving the issue to be one for the ‘more important’ branch of patent law rather than design law.Footnote ²²⁶ The Committee’s historical review of legislation had mentioned the protection of ‘useful designs’ under the 1843 Act,Footnote ²²⁷ but clearly did not think this sufficient to consider utility models as falling within ‘law relating to protection of industrial designs’.Footnote ²²⁸ Perhaps least surprisingly, the Banks Committee, with its focus on patent law treated the proposal as a ‘petty patent’ entirely within the normative (and implicitly historical) framework of patent law.Footnote ²²⁹ Even though the Nicholson Committee came to a very different conclusion from Banks, the framing was the same, even if the language ‘two-tier patents’ and ‘registered inventions’ was slightly distinct.Footnote ²³⁰ It seems likely that the dominance of the modern framework for intellectual property thinking, coupled with the characterisation of gebrauchsmuster/utility models/petty patents as properly belonging within patents, goes a long way to explaining why most commentators and policy-makers have failed to draw a connection between these various proposals for reform and the forgotten Utility Designs Act of 1843.

In Denmark, a specific Act for the protection of utility models was introduced by Act No. 130 of 26 February 1992. The regulation of utility models in Danish law has been elaborated in close connection with Danish patent law. Even though the rules are enacted separately, the wording of the Patent Act and the Utility Model Acts is very similar. The close interaction between the two systems is built into the design of the Acts. For example, branching-off from a patent application or patent under opposition to a utility model application is permitted. The core area for utility models is the protection via registration of “minor inventions”, so-called creations (Danish: frembringelser). These differ from “real patents” (Danish: opfindelser) mainly by having a lower threshold for “inventive step”. Whereas a patentable “invention” must differ “essentially” (Danish: væsentligt) – a “creation” should only differ “distinctly” (Danish: tydeligt) from the state of the art. Moreover, utility model protection can be obtained without substantive examination whereas patent protection always requires a full evaluation both of the formal and substantive requirements. The term of protection for utility models is less than that of a patent. Since 1998, there has been a decline in the demand for utility model protection in Denmark.

4.1 The Regulation of Utility Models in Denmark: Background

The first Danish act for the legal protection of utility models was adopted in 1992.Footnote ¹ Prior to this, Danish law only provided protection for the technical features of products or useful and technical methods, etc. via the Patent Act. Moreover, it was generally assumed almost as a dogma that utility could not be protected against imitation via any of the existing legal systems otherwise aimed at promoting innovation in product designs such as the Industrial Designs Act, the Copyright Act or the (liberal) protection afforded by the Marketing Practices Act. It was therefore quite a novelty when the Utility Model Act was introduced and an extra dish of exclusivity was added to the already quite impressive Danish smorgasbord (Danish: smørrebrødsbord) of exclusivity provisions.

The Utility Model Act basically aims at serving the needs of small and medium sized enterprises (SMEs) which were active in certain areas of innovation, for example hand tools and kitchen utensils.Footnote ² Protection was lacking, in this area. For hand tools and other such types of invention made by SMEs, patent protection would often be overly burdensome in terms of costs and effort, and a shorter term of protection might well suffice. Moreover, the Act was intended to filling the gap between industrial designs law (focused at a the shape of products) and utility patent law (focused at a product’s technical function (utility)). The perceived gap between a product’s “form and function” was most likely exacerbated by the tradition in Denmark (indeed in the Nordic countries) for “functional design” where – as it is normally stated – “form follows function”. The protection of minor technological advances and minor inventions featured highly on the statutory rationale for the utility model protection in Denmark as did the lack of substantive examination. In addition, utility models can be obtained more rapidly and at lower cost than patents. In short, utility models are a cost-efficient, faster and easier way to obtain sui generis protection aimed at the needs of SMEs.

The 1992 Act was amended in 2007.Footnote ³ At first blush, the changes appear to be substantial, but in fact they had more to do with form than content. Whereas the 1992 Act simply referred to the Danish Patent Law Act, the 2007 Act abandoned this approach. Since 2007 the Utility Models Act has been an independent Act in addition to the Patent Act. In terms of content, most of the provisions of the Consolidated Utility Models Act No. 91 of 29 January 2019 and the Danish Consolidated Patents Law Act No. 90 of 29 January 2019 have identical wording. The Utility Models Act is supplemented by a Ministerial Order on the examination and other processing of utility model applications and registered utility models.Footnote ⁴

4.2 Protectable Subject Matter and Substantive Criteria

Today, the protection of a utility model is not only relevant to those areas of innovation that were anticipated when the first Act was adopted in 1992. The scope of the Act has expanded beyond its original focus on hand tools, etc. Today, the subject matter for which protection can be obtained is open ended, as in the Patent Act: “Any creations” can be protected (unless specifically exempted, see below). Thus, apart from physical products, protection is open within every field of technology including chemistry, pharmaceuticals and mechanical and electrical engineering.

The substantive criteria for obtaining protection for utility models are novelty, “inventiveness” (“distinctly” different), and industrial application. The Consolidated Danish Utility Models Act states:

As mentioned above, the word creations reflects the intent – from a linguistic viewpoint – to distinguish the subject matter from that of “inventions” in patent law. Importantly, the word “creation” should not be understood as suggesting an element of “creativity” (or “originality”) in copyright’s sense as a precondition for obtaining protection. “Creation” in the Utility Model Act is simply meant to differentiate between “real inventions” (which may be protected by patents) and “small inventions” which may be protected only as utility models.

“Novelty” should be understood in the same way in both the Patent and the Utility Model Acts. Thus, whether something is “novel” is assessed on the principles of universal (absolute) novelty. It is against this that the creation must “differ distinctly” to be protectable. Even if it differs “essentially” from the state of the art, the doors to the Patent Act open, too.

The inventive step criterion in the Patent Act implies that inventions differ essentially from the state of the art. Creations on the other hand need only differ distinctly therefrom to qualify for utility model protection.Footnote ⁶ It can be difficult to measure the exact content of this requirement but trivial, obvious or insignificant differences from the state of the art will not be sufficient.

Some doubt remains as to the exact profile of “the person skilled in the art”, and whether one should apply the same standards as in patent law or different ones. Precedent is scarce. However, administrative practice and case law from the Danish Maritime and Commercial High Court seem to suggest that for the assessment in utility model law, the person skilled in the art should be expected to have a more narrow focus when compared to patent law and to include only the exact scope of the claimed creation and (very) little beyond. The combination of a “narrow” scope of the person skilled in the art with a “low” threshold may lead to a very broad scope of protection and might be hard to align with the starting point that “trivial, obvious, or insignificant differences” from the state of the art do not suffice. Also, it would seem to depart from the starting point of parallelism with patent law to rely on a different type of skilled person in utility model law. So far, the Danish Supreme Court has not decided on the matter, so the nature of utility model law’s “person skilled in the art” remains unclear at the moment.Footnote ⁷ The assessment of inventiveness regarding utility models is based on the problem-and-solution-approach (known from patent law).

According to Section 2(1) and subsection 2 (ii), creations cannot be registered as utility models if they relate to war material or to methods.Footnote ⁸ At this point, the scope of the Act differs from the Patent Act where methods can be (and to a large degree are) protectable. The modification on methods is further qualified in subsection 3, which states:

It is not quite clear why the Act does not follow the lead of the Patent Act on the issue of methods. For some technologies – chemical and computer programs – the effect of the limitation is to reduce the scope of protection offered significantly. Arguably, method claims might be much more complicated to draft when compared to product claims. Many of the SME creators envisaged by the Act would therefore find it hard to draft the claims themselves. Furthermore, even if they did succeed in drafting them, such claims might not provide a suitable basis for future infringement suits. It was probably to avoid such complications that the legislator simply decided to shut the door on method claims and to leave it only for patent law.

4.3 Utility Model Statistics

During the first 10 years after the act came into force (1992–2002), approximately 4,500 utility model applications were filed in total. In 1994, with a total of 471 applications, interest in the newly instituted legal protection peaked. Since then, interest in utility model applications has declined, and it reached a low ebb in 2022 with only 85 applications. More than 60 percent of applicants are Danish (Table 4.1 and Figure 4.1).Footnote ⁹ From 2013 to 2022 the average was 118 utility model grants per year (Table 4.2 and Figure 4.2).Footnote ¹⁰

Figure 4.1 Number of utility model applications (total number of applications and applications with a Danish applicant)

Figure 4.2 Total number of registrations with a Danish applicant

The Danish empirical data from IPLytics on utility models from 1992 to 2009 and the empirical data from the DKPTO from 2010–2012 made up a total of 7,416 grants (Table 4.1 and Table 4.3). The data therefrom also clearly verifies a sheer decline in the demand of utility model protection.

Based on the IPLytics’ data in Table 4.4, one may also notice that (major) users from 1992 to 2009 were to be found in industries limited to mechanical engineering, consumption and process engineering (civil engineering (consumption), machine tools, electrical machinery, process engineering (special equipment), medical technology (instruments), furniture games).

Utility models (issued and published applications) are searchable and accessible in a database administered by the Danish Patent and Trademark Office (DKPTO).Footnote ¹²

When registered, utility models are published on the digital platform https://tidender2.dkpto.dk/ (Dansk Brugsmodel Tidende), cf. Section 21(1) and below for international utility model applications under the Patent Cooperation Treaty (PCT) designating Denmark.Footnote ¹⁴

4.4 Granting Procedure

Utility models are granted by the Danish Patent and Trademark Office (DKPTO) by a simple registration procedure. The granting procedure requires the applicant to file an application for the registration of a utility model containing a statement of the subject matter for which protection is sought.Footnote ¹⁵ In addition, the creation must be described or shown in a manner sufficiently clear to enable a person skilled in the art to carry it out. As for creations involving the use of biological material, a sample can be deposited.Footnote ¹⁶ Additional details regarding the procedure are described in Part 3, Section 19 of the Order no. 1605 of 8 December 2006, requires that the claims contain a statement of novelty and the state of the art, which can be made in the form of a reference to the description, including drawings or photographs.Footnote ¹⁷

The simple registration procedure entails only a cursory examination. Hence, novelty and inventiveness need not be assessed ex officio by the DKPTO.Footnote ¹⁸ In 2023, the Danish Maritime and Commercial High Court ruled that the DKPTO is not obligated to consider ex officio the risk of double patenting for utility models, cf. U 2023.2178 SHR. To file an application, the applicant shall pay a fee, and he can request an optional examination if an additional fee is paid according to Section 19(2). In doing so, the requirement of novelty and inventiveness, cf. Section 5, must be examined before registration. For a detailed description of the examination procedure, see order No. 1605 of 8 December 2006.Footnote ¹⁹

Except for the lack of substantive examination, the granting procedure for both patents and utility models are rather similar. The applicant may also claim priority of a previous patent or utility model application according to Article 4 of the Paris Convention (‘convention priority’), provided that the subsequent application is filed within 12 months from the date of filing the previous application.Footnote ²⁰

If the application complies with the requirements, the creation will be registered and a notification published by DKPTO, Section 21(1). As a rule, the creation will not be registered earlier than 15 months from the date of filing the application.Footnote ²¹ Accordingly, by then the files shall be available to the public, even if the creation has not been registered, Section 24(1). Most utility models are registered prior to the statutory 15 months of publication, but the registration is not effected prior to the publication. Upon a request by the applicant, the publication or registration may be effected earlier.Footnote ²² In contrast, the files of a patent application will be available as of the date on which the patent is granted, cf. Section 22(1) of the Consolidated Danish Patent Law Act. However, according to subsection 2, the statutory requirement for publication is 18 months from the date of filing even if a patent has not been granted. By request, the publication of the grant can be postponed until the 18 months’ limit has expired. Measuring pendency for utility models and patents will have to take the above differences into account. However, there is no publicly available empirical data on the differences in pendency for utility models and patents.

4.5 Fees, DKPTO

The basic fee per application is 2,000 DKK (approx. 250 EURO), and the basic fee for subsequent filing of a Danish translation of an international application is 1,100 DKK (approx. 147 EURO).Footnote ²³ The basic fee for resumption is 400 DKK (approx. 53 EURO) and for re-establishment 3,000 DKK (approx. 400 EURO). If the applicant requests substantive examination before or after a registration, the basic fee is 4,000 DKK (approx. 530 EURO).

Utility model protection lasts three years from the date of filing and may be renewed for further two periods of three or four years, respectively, against payment of the prescribed fees.Footnote ²⁴ The maximum term of protection is ten years. The renewal fee for the first period is 2,000 DKK (approx. 267 EURO) and for the second period 3,000 DKK (approx. 400 EURO). Renewal fees paid after the expiry of the registration period concerned will be increased by 20 percent.Footnote ²⁵ Finally, the basic fee for publication of notice of amended registration and publication of amended text amounts to 1,000 DKK (approx. 133 EURO). The basic fee for appeal is 5,000 DKK (approx. 667 EURO).

4.6 The Administrative Appeal Procedure and Revocation by a Court Decision

As a utility model can be registered without substantive examination, it is not possible to file an opposition with the DKPTO, as is the case for granted patents.

A utility model registration may be revoked by a court decision on the grounds listed in Section 47(1): if the registration has not been effected in accordance with the basic requirements in Sections 1 to 5, if the description of the creation is not sufficiently clear, or if the application has been amended after it has been filed or if the scope of protection has been extended after the registration. The division between DKPTO and the courts is clear as the courts cannot rephrase the claims.Footnote ²⁶

Revocation proceedings may be instituted by any person.Footnote ²⁷

After a utility model registration has been granted, any person may file a request with the DKPTO for examination of the registration, cf. Section 50(1). The request for examination may only be based on the grounds for revocation referred to above (Section 47(1)). If proceedings are instituted before the courts prior to a final decision from the DKPTO, the DKPTO will suspend the examination until the case has been finally decided unless the request has been filed by the proprietor of the utility model, Section 50(4).

Finally, the applicant may appeal the final decision of the DKPTO to the Board of Appeal for Patents and Trademarks. The same applies to the proprietor of the utility model when a utility model registration is revoked entirely or partially after a request for examination of the registration under Section 50.Footnote ²⁸ Appeals must be filed no later than two months after the DKPTO has notified the party which is affected by the decision, cf. Section 25(2). Other parties having an interest in the decision may file a similar appeal no later than two months after the publication of the decision. The decision of the Board is final and cannot be appealed to any other administrative authority.Footnote ²⁹

Once the decision has been brought before the Board of Appeal, it may not be brought before the courts until the decision from the Board has been given.Footnote ³⁰

4.7 Utility Model Infringement, Damages and Injunctions

Utility models may be enforced against an infringer in court. However, only the injured party may institute proceedings, unless the institution of proceedings is required in the interest of the public, cf. Section 54(4). It follows from Section 54(1) that any person who intentionally or with gross negligence infringes the exclusive right conferred by a utility model registration shall be punished with a fine. The penalty may increase to imprisonment of up to 18 months if the infringement has been committed intentionally and under aggravating circumstances unless heavier penalty is provided for by Section 299b of the Danish Penal Code (where the range of penalty is up to 6 years). Aggravating circumstances are considered to exist if a significant and obviously unlawful profit is intended by the infringement.

As for monetary damages, it is stated that any person who intentionally or negligently commits utility model infringement shall pay (i) a reasonable compensation, and (ii) damages for any further injury, which the infringement has caused, inter alia the loss of profit suffered by the injured party and the illicit profit obtained by the infringer, cf. Section 55(1) and (2). Additional compensation may also be fixed to the injured party for non-financial injury, cf. Section 55(3).

The infringed party may also claim that a product infringing a utility model shall be (i) withdrawn from the market, (ii) removed definitively from the market, (iii) destroyed, (iv) surrendered to the injured party or (v) altered in a specified manner, all at the expense of the infringer, cf. Section 56(1) and (3).

A prohibitory or mandatory injunction may be granted according to Section 413 of the Danish Administration of Justice Act, if the party applying for the injunction proves on a balance of probabilities or by clear and convincing evidence: (i) that the party holds the right for which protection by way of a prohibitory or mandatory injunction is sought; (ii) that the conduct of the opposing party necessitates the granting of the injunction; and (iii) that the ability of the party to enforce its right will be lost if the party has to await a full trial.

The court may decide that the granting of a prohibitory or mandatory injunction is to be conditional on the party providing security for any detriment and disadvantage inflicted on the opposing party because of the injunction, cf. Section 415.

In connection with a temporary injunction, the party that believes it has been injured can request the bailiff’s court to carry out preservation of evidence with the other party, just as the party can be required to provide information, cf. Part 29 a Responsibility for finding and presenting evidence in the case of infringement of intellectual property rights, etc. of the Danish Administration of Justice Act.

4.8 Branching-Off from a Patent Application or Patent under Opposition

Utility models and patents are closely connected in Danish law. An applicant can file applications and combine protection in several ways. It is possible to file an application for the same creation/invention combining an application for a utility model with an application for a patent, which can be filed at the same time. Double protection is only possible if all requirements stated in the act are fulfilled. Hence, a registered utility model may pave the way for injunctions long before a corresponding patent is issued.

Furthermore, as a right of priority, for the purpose of Section 5(1) and (2) and Section 9, the applicant may also claim priority of previous patent or utility model applications filed in or for a state party to the Paris Convention, provided that the subsequent application is filed within 12 months from the date of filing the previous application.Footnote ³¹

Finally, a patent application may be used as a basis for a utility model application. Thus, a patent application may be used in whole or in part as a basis for a utility model application in respect of the same creation. The priority date of the patent application may be relied upon for the application for the utility model, cf. Section 12(1). The branching-off is provided by Section 13 of the Ministerial Order no. 1605 of 8 December 2006 on the Examination and Other Processing of Utility Model Applications and Registered Utility Models, which states that a patent application may be used as a basis for a utility model application for up to ten years from the date of filing the patent application or from the date which is deemed to be the date of filing. In this regard, a patent application for Denmark means (i) a Danish application; (ii) an international application proceeded with in Denmark; (iii) a European patent application designating Denmark and (iv) a European patent application converted into a Danish patent application.

In France, certificats d’utilité were introduced by the Law n°68-1 of January 2, 1968. According to article L. 611-2 of the French Intellectual Property Code, French certificats d’utilité are regulated by the same rules as French patents, with the main exceptions being a shorter duration, the absence of a requirement for a research report, and the lack of opposition proceedings.

5.1 Historical Background

Certificats d’utilité (hereinafter utility certificates) were created in 1968 as a way for inventors to obtain protection for their invention, but with fewer requirements than full patents.Footnote ¹ Notably, utility certificates can be granted by the French Intellectual Property Office, called INPI (Institut National de la Propriété Industrielle) without providing any research report on the elements of the state of the art that can be taken into consideration to assess the patentability of the invention. An influential author has suggested that utility certificates were introduced as “petit (small) patents” in order to increase the prestige of regular patents.Footnote ²

However, it should be noted that in the past, regular patents, introduced just after the French Revolution by the law of 5 Vendémiaire An IX, did not require any examination of priority, merit or success of the inventions, and patents were therefore always designated as “SGDG” (sans garantie du gouvernement – without guarantee of the government). Their validity could only be assessed by the courts.

The French Patent Law of 1844 maintained the absence of prior examination, and it was only in 1968 that the examination of patents was introduced through a research report. However, even then, for more than fifty years, the effectiveness of that provision has been very limited: indeed, the INPI could only refuse to grant a patent if the research report showed that the invention was manifestly lacking in novelty.Footnote ³ In other words, there was still no substantial examination by the INPI of the novelty or nonobviousness of the invention.

It follows that, until very recently, these former French full patents were, in practice, as regards their examination, not very different from utility certificates of the time, even though a research report was formally required for patents as part of their application.

The examination of novelty and inventive step for French Patents only became greater with the enactment of the loi n° 2019-486 du 22 mai 2019 relative à la croissance et la transformation des entreprises, also known as the loi PACTE, which allows the INPI the right to refuse to grant a patent for an invention that does not comply with the requirements of novelty or inventive step.Footnote ⁴ Thus, the research report is now of practical use during application proceedings before the INPI, since its content can lead to the refusal of the patent, and it is not a mere formal requirement anymore. However, and rather strangely, that legislative reform also applies to utility certificates and therefore allows the INPI the right to refuse to grant a utility certificate for lack of novelty or inventive step, although a research report is not required, and will in practice not be provided to the office at that stage, which practically prevents an effective examination of these requirements.

Therefore, since 2020, utility certificates have become somewhat different from patents in practice, since the absence of a requirement of a research report as part of the application proceedings can be of practical use for inventions that are nonnovel or that lack an inventive step. Indeed, the research report that is requested for patent applications can now be used by the INPI to refuse to grant a patent, whereas a utility certificate might still be granted, although the INPI is also supposed to examine the requirements of novelty or of the inventive step for utility certificates, because of the references which are needed in order to examine these requirements are not required for a utility certificate.

5.2 Application Procedure

The application procedure for a utility certificate follows the rules of a patent application, except for the requirement of research report, and that no opposition proceedings are possible. Indeed, article L. 611-2 of the French Intellectual Property Code states that “the provisions of this chapter relating to patents shall apply to utility certificates with the exception of those laid down in Article L. 612-14, the first paragraph of Articles L. 612-15 and L. 612-17 and Articles L. 613-23 to L. 613-23-6”.

The application for a utility certificate is therefore regulated by Articles L. 612-1 et seq. of the French Intellectual Property Code. According to Article L. 612-2 of the French Intellectual Property Code, the filing date of the [utility certificate] application is the date on which the applicant has filed documents that contain: (a) an indication that a [utility certificate] is sought; (b) information identifying or communicating with the applicant; and (c) a description […] or a reference to a previously filed application under conditions prescribed by regulation.

The invention must be set forth in the [utility certificate] application in a manner sufficiently clear and complete to enable a person skilled in the art to carry it out.Footnote ⁵ The claims define the subject matter of the protection sought. They must be clear and concise and based on the description.Footnote ⁶

Additional details concerning the content of the application are provided by Article R. 612-3 of the French Intellectual Property Code, which states that the [utility certificate] application shall comprise a request for the grant of a [utility certificate], the model for which shall be laid down by decision of the Director General of the National Institute of Industrial Property, and to which shall be annexed: (1) a description of the invention, accompanied, where appropriate, by drawings; (2) one or more claims; (3) an abstract of the technical content of the invention; and (4) where appropriate, a copy of the earlier filings.

After filing, the conformity of the utility certificate application with the legislative and regulatory provisions referred to in Article L. 612-12 is formally examined by the Director of the Institut National de la Propriété Industrielle, according to Article L. 612-11 of the French Intellectual Property Code.

Notably, Article L. 612-12 of the French Intellectual Property Code states that any application for a [utility certificate] shall be rejected, in whole or in part: […] (4) the subject matter of which is an invention that is not patentable under Articles L. 611-16 to L. 611-19; (5) whose subject matter cannot be considered as an invention within the meaning of Article L. 611-10, paragraph 2; (6) whose description or claims do not allow the application of the provisions of Article L. 612-14; (7) whose subject matter is not patentable within the meaning of Article L. 611-10, paragraph 1; (8) whose claims are not based on the description […]. If the grounds for rejection affect the [utility certificate] application only in part, only the corresponding claims will be rejected. In the event of partial noncompliance of the application with the provisions of Articles L. 611-17, L. 611-18, L. 611-19 (4° of I) or L. 612-1, the corresponding parts of the description and drawings will be deleted ex officio. Therefore, although in theory, an application for a utility certificate where the invention is not novel or lacks an inventive step should be rejected, the INPI might, however, encounter serious difficulties for seriously examining these requirements without any research report, which the law does not require for utility certificates.

The next step is the examination of the invention by National Defense. The Minister in charge of Defense is authorized to take cognizance of patent [and utility certificate] applications at the National Institute of Industrial Property, on a confidential basis. Inventions that are the subject of patent [and utility certificate] applications may not be disclosed and freely worked until authorization has been granted to that effect.Footnote ⁷ During this period, patent [and utility certificate] applications may not be made public, no true copy of the patent [or utility certificate] application may be issued without authorization, and no transformation of a patent into a utility certificate or vice versa may be initiated, and no publication of the invention may be initiated. These authorizations, which shall be granted by the Director of the National Institute of Industrial Property on the advice of the Minister responsible for defense, may be granted at any time, and the first authorization shall be acquired as of right at the end of a period of five months from the date of filing of the patent [or utility certificate] application.Footnote ⁸

Afterwards, the application for a utility certificate is published, according to Article L. 612-21 of the French Intellectual Property Code.

Only then can the utility certificate be granted. The title (certificate) shall include the description, if applicable, the drawings, and the claims.Footnote ⁹

Utility certificates are now issued for a period of ten years from the date of filing of the application.Footnote ¹⁰ Before the law of May 22, 2019, and its implementation decree n°2020-15 of January 8, 2020, the duration of a utility certificate was only six years from the date of filing of the application. Utility certificates that have been issued for less than six years before January 10, 2020, the date of publication of the implementation decree, have their duration extended to ten years.Footnote ¹¹

As of 2024, the filing fee for a utility certificate are 26€ for an online application. The delivery fee is 90€, and the annual tax varies from 38€ for the second year to 220€ for the tenth year.Footnote ¹² In case the utility certificate is used in court proceedings for infringement, and only in that case, a research report will be required, which will add 520€ to the cost.

5.3 Practical Use of Utility Certificates

In 2022, there were 673 applications for utility certificates made to the Institut National de la Propriété Industrielle, which corresponds to only 4.5 percent of all French patent applications. In addition, on that year, only 5 of these utility certificates were transformed into regular patents, whereas there were 188 transformations of utility certificates into regular patents in 2021 and 137 in 2020, which were the first two years following the legislative reform allowing that possibility.

The number of applications seems to be slightly increasing, since, in 2005, only 390 applications for utility certificates were made, whereas in 2010 this number had increased to 484, and reached its peak to 1019 in 2020.

In practice, according to the INPI, in 2010, 44 percent of the applicants for utility certificates were French, whereas 30 percent of applicants were from China, Taiwan and Hong-Kong.

5.4 Publication of Utility Certificates

Like patents, utility certificates are published in the Bulletin officiel de la propriété industrielle (BOPI).

Article L. 612-21 of the French Intellectual Property Code provides that the Institut National de la Propriété Industrielle shall ensure publication, under the conditions defined by decree in Council of State, by mention in the BOPI, by making the full text available to the public or by dissemination by means of a data bank or distribution via computer storage medium the file of any application for a patent or utility certificate at the end of a period of eighteen months from its filing date or from the priority date if priority has been claimed, or, at the request of the applicant, before the expiry of that period.

French utility certificates are also available in public databases, notably in the Espacenet database of the European Patent Office.

5.5 Effectiveness of Utility Certificates

Although utility certificates are granted by the INPI without any research report, and therefore without any serious possibility for the office of examining of the requirements of novelty and inventive step, it should be noted that these “paper tigers” can only produce actual legal effects if they are valid, which notably means that they concern an invention which is new, which involves an inventive step and which is susceptible of industrial application.

For this reason, infringement proceedings before courts require the owner of the utility certificate to provide the research report that is mandatory for the granting of a Patent.

Article L. 615-6 of the French Intellectual Property Code provides that in infringement proceedings brought pursuant to an application for a utility certificate, the applicant shall file a research report drawn up under the same conditions as the report provided for in Article L. 612-14 (i.e., for a patent application).

That research report and the challenging of the validity of the utility certificate by the presumed infringer will allow the court to check whether that utility certificate is valid, and therefore whether or not to allow it to be asserted.

Although license agreements of utility certificatesFootnote ¹³ technically do not require a research report, the validity of such license agreements can be challenged in court proceedings, on the basis of the nonvalidity of the utility certificate, for example, for lack of novelty or inventive step. Indeed, a judgment of the Paris Court of First Instance stated that a license agreement and an assignment of a utility certificate were void for lack of purpose (“absence d’objet”: former article 1126 of the French Civil Code) since the owners of this utility certificate had not proven the novelty and the inventive step of the invention protected by the licensed utility certificate.Footnote ¹⁴

Unlike the French patents, opposition proceedings are expressly excluded for French utility certificates by Article L. 611-12 in fine of the French Intellectual Property Code.

Therefore, the validity of a utility certificate can only be challenged in court proceedings. According to Article L. 611-12 in fine of the French Intellectual Property Code, Article L. 613-25 relative to challenging the validity of a French patent in court is also applicable to French utility certificates. This means that the [utility certificate] shall be declared invalid by a court decision: (a) if its subject matter is not patentable under Articles L. 611-10,Footnote ¹⁵ L. 611-11Footnote ¹⁶ and L. 611-13 to L. 611-19;Footnote ¹⁷ or (b) if it does not set forth the invention in a manner sufficiently clear and complete for a person skilled in the art to carry it out; or (c) if its subject matter extends beyond the contents of the application as filed or, where the [utility certificate] has been granted on the basis of a divisional application, if its subject matter extends beyond the contents of the original application as filed; or (d) if, after limitation […], the scope of protection conferred by the [utility certificate] has been increased.

5.6 Enforcement of Utility Certificates against Infringers

Utility certificates may be enforced against an infringer before the Paris Court of First Instance.Footnote ¹⁸ As already mentioned, this requires the owner to request a research report for that utility certificate. Indeed, Article L. 615-6 of the French Intellectual Property Code provides that in infringement proceedings brought pursuant to an application for a utility certificate,Footnote ¹⁹ the applicant shall file a search report drawn up under the same conditions as the report provided for patent applications.

As regards the proof of infringement, the very efficient French proceeding called Saisie-contrefaçon can be used for establishing infringement of a utility certificate.Footnote ²⁰ This specific form of action can be ordered by the president of one of the specialized courts in whose jurisdiction the action is brought.Footnote ²¹ The order need only include a simple request and recitation of the utility certificate to be enforced.Footnote ²²

The saisie-contrefaçon proceedings are detailed by Article L. 615-5 of the French Intellectual Property Code, which first states that infringement may be proven by any means. It then adds that, to this end, any person having standing to sue for infringement shall be entitled to have an infringing product, or document describing it, seized for evidentiary purposes. This seizure may be conducted in any place and by any bailiffs, and if necessary assisted by experts appointed by the plaintiff. The court may order, for the same evidentiary purposes, a seizure of a detailed description or materials and instruments used to manufacture or distribute the allegedly infringing products or to carry out the allegedly infringing processes.

The remedies that are available against an infringer of a utility certificate are the same as for the infringement of a patent.Footnote ²³

Therefore, the rules concerning the determination of damages are provided by Article L. 615-7 of the French Intellectual Property Code, which provides, in accordance with the European Directive 2004/48 of April 29, 2004, on the enforcement of intellectual property rights, that in determining damages, the court shall take into account separately (1) the negative economic consequences of the infringement, including the loss of profit and loss suffered by the injured party; (2) the intangible harm caused to the injured party; and (3) the profits made by the infringer, including the savings in intellectual, material and promotional investments that the infringer has derived from the infringement. Finally, the court may, as an alternative and at the request of the injured party, award a lumpsum as damages, and that this sum, which is not exclusive of the compensation for the intangible harm caused to the injured party, shall be greater than the amount of the royalties or fees that would have been due if the infringer had requested authorization to use the right infringed.

In addition, products recognized as infringing and the materials and instruments that were used primarily for their creation or manufacture may be recalled from commercial channels, permanently removed from those channels, destroyed or confiscated for the benefit of the injured party.Footnote ²⁴ The court may also order any appropriate measure to publicize the judgment, in particular its posting or publication in full or in excerpts in the newspapers or on the online public communication services that it designates, in accordance with the terms that it specifies. Naturally, these measures are ordered at the expense of the infringer.

In addition, injunctions can be issued by the courts.Footnote ²⁵

However, it should be noted that utility certificate enforcement proceedings seem to be very rare in practice. In any case, since such proceedings would in practice imply discussion of the validity of the utility certificate, and hence raise the same issues of fact and law as a full patent litigation, the cost of litigating a utility certificate would probably be as high as the cost of a full patent litigation.

5.7 Conversion between Utility Certificates and Full Patents

Under the recent loi PACTE and the decree n°2020-15 of January 8, 2020, effective as of January 11, 2020, it is possible to convert a utility certificate application into a French patent application. Before this, a patent application could be converted to a utility certificate but not the reverse.

Accordingly, Article L. 612-15 of the French Intellectual Property Code now provides that an applicant may convert its application for a patent into an application for a utility certificate under conditions laid down by regulation, but also that an applicant may convert its application for a utility certificate into an application for a patent, within a time limit and according to a procedure specified by regulation.

Additional details are provided in the regulatory part of the French Intellectual Property Code. According to Article R. 612-53, and subject to the provisions of Article R. 612-31, the request for conversion of the utility certificate application into a patent application must be made in writing at any time during the period eighteen months from the filing of the utility certificate application or from the priority date if priority has been claimed and, in any event, before the start of the technical preparations, provided for in Article R. 612-39, undertaken with a view to publication of the utility certificate application. Where the patent application is the result of the conversion of a utility certificate application in accordance with the provisions of the second paragraph of Article L. 612-15, the search report fee shall be paid within one month of the date of receipt of the request for conversion.Footnote ²⁶ Likewise, a request for conversion of a patent application referred to in Article R. 612-3 into an application for a utility certificate maybe made in writing at any time during the period of eighteen months from the filing date or from the priority date if priority has been claimed and, in any event, before the start of the technical preparations provided for in Article R. 612-39, undertaken with a view to publication of the patent application.Footnote ²⁷

As a result, conversions between patents applications and utility certificates applications are now possible in both directions. This means that an invention which is novel and involves an inventive step can be protected at first with a utility certificate application, which can shortly after be converted to a full patent application, since it deserves it. Conversely, an invention which is either not very promising from an economical point of view, or which might not comply with the requirements of a patent (e.g., because it is obvious) can be “downgraded” and still be the subject of a utility certificate application, even though there is now a (rather theoretical, at least if the research report has not been made yet) risk of rejection of that utility certificate application because of the lack of novelty or inventive step, and, even if granted, that utility certificate will only be effective in a court proceeding if the invention is novel, nonobvious, and the research report has been made at that later stage.

Utility certificates are therefore not necessarily third-rate patents: indeed, they can also be a step towards a full patent.

5.8 Practical Use of Utility Certificates

Utility certificates are designed and mostly used for inventions that have a shorter lifespan, in order to lower the costs and delays compared to regular patents.

However, the protection is shorter (ten years instead of twenty years), and the research report is still required a posteriori if the utility certificate is asserted in infringement proceedings, which means the cost of the research report is not avoided, but only delayed until the litigation stage (for those few utility certificates that are eventually litigated).

The new procedure to convert a utility certificate application into a patent application may allow utility certificates to constitute an intermediate step before an applicant incurs the expense of obtaining a regular patent.

A key use of utility certificates is to prevent, on the grounds of lack of novelty,Footnote ²⁸ a third party from applying for a patent in France concerning the same invention. Utility certificates can also be used to obtain international priority for applications made by the owner of the utility certificate.Footnote ²⁹

In a more questionable way,Footnote ³⁰ utility certificates can be used to obtain protection for inventions that would not meet the requirements for a regular patent, taking profit from the lack of research report at the application stage, which does not allow for an effective control of novelty and inventive step, and of the lack of opposition proceedings. For this reason, in such cases, a utility certificate might still be granted by the INPI, although that invention doesn’t comply with the legal requirements (novelty, inventive step, etc.) for a utility certificate. However, such a utility certificate will be held invalid in court because the defendant will, at that stage, be able to prove that it did not satisfy the legal requirements. This strategy might be used by the inventor either ab initio, or through a conversion from a patent application, but before the research report for a patent application has been issued, since an already issued unfavorable research report can now be used by the INPI to reject the application for a utility certificate if the invention lacks novelty or inventive step. In such cases, utility certificates may be used (abusively) as leverage in negotiation against small entities or weak competitors.

6.1 General Overview

In Germany, the utility model is a type of intellectual property right that provides protection for novel and useful inventions. It is governed by the German Utility Model Act (Gebrauchsmustergesetz – GebrMG) which was enacted in 1891, making it the oldest still-existing utility model system in the world.Footnote ¹ Utility models grant the right holder exclusive control over the use and commercialization of an invention for a period of ten years from the date of filing, subject to the payment of annual renewal fees. In a way, the utility model is the “little sister” of a full-fledged patent (also called a “petty patent”), protecting the same type of subject matter (technical inventions) with a more limited scope (discussed in more detail below).

The origins of the German utility model date back to the late nineteenth century, a period of rapid industrialization in which industry endorsed strong legal protection for its innovations. After the introduction of the first German patent law in 1877, it was soon recognized that patent law might not be suitable for all types of inventions and that an additional protection regime for inventions with less stringent protection requirements was desirable.Footnote ² Unsurprisingly, demand for utility models was high from the outset. Just about two weeks after the German Utility Model Act entered into force on 1 October 1891, sixty-eight utility models had already been applied for in different technical categories.Footnote ³ Today, approximately 10,000 utility models are issued in Germany each year,Footnote ⁴ predominantly in the construction sector (mechanical engineering and machinery), followed by transport, furniture, games, electric machines and devices, and medical technology.Footnote ⁵ All registered utility models are accessible in a searchable database administered by the German Patent and Trademark Office (“Deutsches Patent- und Markenamt”; DPMA).Footnote ⁶ After a peak of utility model grants in the late 1990s, a general downward trend in applications can be observed which seemingly corresponds to a downward trend in the filing of patent applications.Footnote ⁷ Some scholars propose far-reaching adjustments to the utility model protection system.Footnote ⁸ Others wonder whether the use of utility models will intensify, for example, for the protection of standard-essential technology that tries to escape patent and competition law’s stricter FRAND licensing guardrails.Footnote ⁹ So far, however, German utility model law and use have proven rather stable.

6.2 Protection and Granting Requirements

According to § 1 (1) Utility Model Act, utility model protection requires an invention that is new, industrially applicable, and embodying an inventive step.

6.3 Application Process and Associated Costs

According to § 4, 4a GebrMG the application for a utility model is filed with the DPMA. The DPMA provides an application form for the registration of a utility model on its website.Footnote ¹⁹ The application must be accompanied by a description of the known prior art and the structure and advantages of the applicant’s invention. The description may be supplemented by one or more technical drawings. The application must contain claims which delineate the essential features of the invention and determine the scope of protection (§ 4(3) GebrMG). There also is a novelty grace period pursuant to § 3(1)(3) GebrMG that caters to the need, for example, of individual inventors or R&D companies, to disclose inventions early on, prior to filing.Footnote ²⁰ Due to the grace period, protection is still available if an inventor applies for a utility model registration within six months after the publication of the invention.Footnote ²¹

In principle, anyone can file a utility model application without the need to involve an attorney. However, applicants not domiciled in Germany must be represented by a duly authorized attorney.

6.4 Challenging Validity

According to § 15(1) GebrMG anyone can challenge a registered utility model and request its cancellationFootnote ³⁰ either (a) if the subject matter of the utility model is not eligible for protection according §§ 1 to 3 GebrMG; (b) if the subject matter of the utility model has already been protected on the basis of an earlier patent or utility model application; or (c) if the subject-matter of the utility model goes beyond the content of the application in the version in which it was originally filed. If the grounds for cancellation concern only part of the utility model, the cancellation takes effect only to that extent. If the subject matter of the utility model is challenged for lack of eligibility, the court evaluates the substantive criteria of novelty, inventive step and industrial applicability during the procedure. This ex post review thus steps in for a full-fledged ex ante examination of the utility model.

The utility model division of the German Patent and Trademark Office decides validity challenges by way of a formal decision (§17(3) GebrMG). This decision can be appealed to the Federal Patent Court and, ultimately, to the Federal Court of Justice (§ 18 GebrMG).

The relatively low threshold for a validity challenge, especially broad standing, renders utility models considerably less resilient than patents and has, for this reason, attracted some criticism.Footnote ³¹ On the other hand, the easier assailability of utility models may counterbalance the lower requirements for obtaining a utility model, especially the lack of a full-fledged ex ante examination.

6.5 Enforcing Utility Models

A utility model can be enforced against an infringer in court according to §§ 24 seq. GebrMG. Any person who, without the consent of the proprietor of the utility model, manufactures, offers for sale, puts on the market, uses, imports, or possesses a product which is covered by the subject matter of the utility model may be sued by the proprietor for an injunction if there is a risk of repeated infringement (§ 24(1)(1)GebrMG). The right to injunctive relief already exists if there is a substantiated threat of a first offence (§ 24(1)(2) GebrMG). Neither the motives of the (possible future) infringerFootnote ³² nor fault on its partFootnote ³³ matter. However, the right to injunctive relief is limited by the proportionality defense (§24(1)(3) GebrMG): Insofar as the claim would, due to the special circumstances of the individual case and the requirements of good faith (Gebote von Treu und Glauben), lead to a disproportionate hardship for the infringer or third parties that cannot be justified by the exclusive right of the rightsholder, the rightsholder is to receive only an appropriate financial compensation (angemessener Ausgleich in Geld). The claim for damages, however, remains unaffected (unberührt) by the proportionality defense (§24 (1)(5) GebrMG). This provision was introduced in utility model law together with an equivalent provision in German patent law in August 2021,Footnote ³⁴ thereby transposing existing, but still developing, case lawFootnote ³⁵ regarding a proportionality defense into statutory law.Footnote ³⁶

In case of fault, the infringer of a utility model is also liable for damages (§ 24(2) GebrMG). When assessing damages, courts may also consider the infringer’s infringement profit (§ 24(2)(2) GebrMG). According to § 24 (2)(3) GebrMG, the claim for damages may also be calculated based on the amount that the infringer would have had to pay as reasonable remuneration if it had obtained permission to use the invention (“license analogy”).

Furthermore, the rightsholder may demand the destruction of infringing products (§ 24a(1) GebrMG), as well as their recall and definitive removal from the channels of distribution (§ 24a(2) GebrMG). These claims are equally subject to a proportionality requirement which takes the legitimate interests of third parties into consideration (§24a(3) GebrMG).

The holder of a utility model can also require the infringer to provide information on the origin and the distribution channels of the infringing products (§24b(1) GebrMG). Further claims go to the production of specific documents or to inspections (§24c(1)(1), (2) GebrMG). If there is a legitimate interest, the court may grant the winning party permission to publish the judgment at the expense of the losing party (§ 24e GebrMG).

Intentional infringement – including the exercise of rights conveyed by a granted patent which results in the infringement of a previously granted utility model – can, upon request by the rightsholder or in case of sufficient public interest, be punished under criminal law with up to three years of imprisonment or a fine (§25(1) GebrMG), for commercial activity up to five years imprisonment (§ 25(2) GebrMG). The attempt is punishable as well (§25(3) GebrMG).

6.6 Coexistence of Utility Models and Patents

Both utility models and patents protect technical inventions, and they share protection requirements, such as novelty, inventive step/activity, and industrial applicability. The German legal framework allows for the usage of both patents and utility models in a combined or complementary fashion.Footnote ³⁷ This “two-tiered patent system”Footnote ³⁸ can be used better to coordinate the protection of inventions, for example, by using a joint priority date (c.f. § 5 GebrMG).

As outlined above, utility models, unlike patents, do not require a substantive ex ante examination of novelty, inventive step, or commercial applicability to be granted, making the application process much simpler, faster, and cheaper. On the other hand, they provide a much less reliable legal position as challenges have a higher likelihood of success.Footnote ³⁹ Self-assessment costs regarding a utility model’s validity (e.g., in preparation for a potential infringement litigation) may even reduce or remove the utility model’s cost advantages over a full-fledged patent that issues only after full examination.Footnote ⁴⁰ Against this background, utility models are in practice often used by rightsholders that eventually want to obtain a patent but need to quickly secure rights during the period between the patent application and the grant of the patent.Footnote ⁴¹ Holding a utility model for the same invention can also prove advantageous in litigation if the patent applicant wishes to fight an infringement during the patent application procedure.Footnote ⁴²

6.7 Utility Models in Switzerland?

Under Swiss law there does not exist a utility model. Swiss patents are, essentially, subject to the same protection requirements as German patents.Footnote ⁴³ However, the protection requirements of novelty, inventive step (“non-proximity”; Nicht-Naheliegen), and industrial application are not examined prior to the grant of a Swiss patent.Footnote ⁴⁴ In this regard, the Swiss patent is similar to the German utility model. Hence, to obtain greater legal certainty, many Swiss inventors do not file for a Swiss (national) patent but instead seek a – fully examined – European patent, granted under the European Patent Convention and whose scope of protection they opt to extend to Switzerland.

To make the Swiss patent more attractive to users and to better comply with international standards, a revision of Swiss patent law is currently under way, with a view to introducing a patent (alternative) that will have a substantive examination system covering novelty and inventive step. Early in the legislative process, the introduction of an unexamined utility model complementing the patent was on the table as well. During the consultation process, however, the idea was dropped because stakeholders preferred the stronger protection offered by the current patent without full-fledged ex ante examination.Footnote ⁴⁵ Instead of introducing two separate intellectual property rights, the draft now favors a flexible designFootnote ⁴⁶ of the new patent right: Upon filing an application, the IPI will conduct obligatory research on the state of the art and publish its finding in a report.Footnote ⁴⁷ During the application process the applicant will have the option to request a full-fledged examination of the patentability requirements, including novelty, inventive step, and commercial applicability.Footnote ⁴⁸

In January 2023 the Swiss Parliament began deliberations on the revision of the Patent Law. As of this writing, the outcome and timeline seem open.Footnote ⁴⁹

Utility models fall within the definition of “Industrial Property” provided for by Art. 2 of the Industrial Property Code (IPC) enacted by legislative decree 30/2005. Accordingly, their protection follows the general rules established by the Code for all industrial property rights (Art. 1–6; Art. 117 ff.), the provisions specifically dedicated to utility models (Art. 82–86), as well as the rules governing patents to the extent they are compatible with the specificities of utility models. Of limited relevance appear Articles 2592 and 2594 of the Civil Code, which offer a summary of the basic rules governing this intellectual property right.

7.1 Sources of Law and Historical Development

The first law protecting designs and models dates back to 1868.Footnote ¹ It granted a two-year exclusive reproduction right to the “inventors” of “new industrial designs and models” upon deposit and subject to revocation in case of failure to work the design or model within the first year from grant. Absent a definition of “designs and models”, it remains disputed whether the law referred to ornamental creations only, or to functional ones too.

Over the first three decades of the twentieth century, considerable efforts were made to reform the laws protecting intellectual property.Footnote ² The outcome was Royal Decree 1602/1934, which separately addressed utility models, on one hand, and ornamental designs and models, on the other, in its Titles III and IV, respectively.

Although it never entered into force,Footnote ³ the Royal Decree of 1934 substantially influenced the next generation of laws aimed at establishing a comprehensive and coherent system of protection for industrial property. Industrial designs and models became the subject matter of a separate law, namely Royal Decree 1411/1940, which replicated with minor amendments the rules on utility models and ornamental designs and models of the law of 1934.

Royal Decree 1411/1940 remained in force until the enactment of the IPC, which regulates utility models today. During its life, the Royal Decree underwent three major reforms. First, the law 265/1977 extended the term of protection from four to ten years in the case of utility models, and fifteen years for ornamental designs and models. Second, the law 60/1987 reshaped the relationship between utility models and patents with the introduction of the possibility of transformation of applications for patents into applications for utility models, and vice versa, and conversion of invalid patents into utility models, and vice versa. Third, the Legislative Decree 95/2001, by implementing Directive 98/71/EC on the legal protection of designs, reformed entirely the rules applicable to ornamental designs and models. The nineteenth-century legislative scheme, in which new utilitarian and ornamental features of industrial products faded into a blurred and indistinct legal concept, got finally, and completely, overhauled.

7.2 Subject Matter

According to Article 82 IPC, utility model protection can be issued for new designs that confer particular efficacy or convenience of application or use to machines, or parts thereof, instruments, tools, or any other object, such as new designs which consist of particular shapes, arrangements, configurations, or combinations of parts. It follows from this definition that utility models cannot protect methodsFootnote ⁴ and are of little to no relevance for products whose formal configuration does not impact functionality.Footnote ⁵ Indeed their relevance is fundamentally restricted to the field of mechanics and excludes chemical, biological, and similar innovations.

7.3 Requirements for Protection

Utility models must be “new”, as required by Art. 82 IPC. Despite the silence of the law, it is generally accepted that novelty should be understood in absolute terms.Footnote ⁶ This follows from the reference made by Art. 86 IPCFootnote ⁷ to provisions dealing with patents, which are also applicable to utility models, so long as the provisions are compatible. The compatibility of these provisions seems to be fulfilled in the case of novelty, considering that Art. 82 IPC mentions it without providing a definition.

According to a view adopted early on in the jurisprudence and never abandoned, utility models also need to show some sort of originality. Again, this follows from the reference made by Art. 86 IPC to provisions regarding patents, among which is the requirement of inventiveness regulated by Art. 48 IPC. However, this requirement must be adapted to the specific subject matter of utility models, which – following the definition provided by Art. 82 IPC – consists in a configuration of a known product conferring particular efficacy or convenience of application to it. In the courts’ view, the matter here is not to evaluate the nonobviousness of an invention because, by definition, a utility model is not an invention, that is, the solution of a technical problem, which entails the creation of new scientific knowledge through discovery of a cause–effect relationship that translates into a new product. What utility models protect is an innovative concept which relates to the configuration of a known product and enhances its efficacy or convenience of application. Therefore, the question to be answered is whether such new configuration originates from the application of elementary technical rules or from a banal combination of preexisting inventions or models. Some degree of inventiveness and the overcoming of technical difficulties are required.Footnote ⁸

7.4 Relationship to Patents

As already mentioned, utility models cannot protect methods. In this respect, any potential overlap between utility models and patents is avoided.Footnote ⁹ In the remaining cases, it has always proven difficult to master the relationship between these two kinds of intellectual property rights. Hurdles have emerged over the years, though.

7.5 Conclusion

Despite repeated legislative interventions aimed at coordinating the Italian national patent system with the UPCA, a conundrum still exists.

So far, Italian courts have refused to base the distinction between patents and utility models on the degree of originality of innovations that can be protected under each regime. Their preferred “qualitative” approach implies that a patent can be invalidated if it claims protection for a utility model, and vice versa. However, neither the EPC nor the UPCA or other rules governing European patents with or without unitary effect provide for a similar ground of invalidation. Therefore, the UPC will not be in a position to invalidate a European patent on this basis, either with effect limited to the Italian portion of a traditional European patent or for all countries participating in the “unitary patent package”. During the transition period, this might in turn lead to unintended consequences, such as differentiating the regime applicable to the same traditional European patent depending on the court that judges its validity, or to differentiate the regime applicable to European patents which have, or do not have, unitary effect. Also, as observed above, the execution of UPC decisions affirming the validity of European patents that protect – according to the “qualitative approach” – a utility model might raise difficult legal issues.Footnote ⁴⁷

Solutions to these issues are not easy to identify. At the end of the day, insistence of the Italian courts on the qualitative approach seems more to express a concern about granting protection to utility models devoid of any substantial merit than an attempt to restrict access to full patent protection for inventions impacting the configuration of a known object. However, translating this concern into practical rules that do not deprive utility models of any relevance, while being both compatible with the regime of European patents and consistent with domestic legislative texts, as they emerged over a century of not well-coordinated interventions, appears at the moment to be a problem without an entirely convincing solution.Footnote ⁴⁸

Poland has a relatively long tradition of providing utility model protection, a tradition that goes back to 1919. Polish law has been strongly influenced by German law where utility model protection originated in the second half of the nineteenth century.Footnote ¹ This influence is still visible in the 2022 Explanatory Memorandum to the draft of the Industrial Property Law (Explanatory Memorandum).Footnote ² The release of the draft of the new Industrial Property Law (draft IPL)Footnote ³ has spurred numerous debates about the need to modernize Polish utility model protection to make it more attractive for innovators. These local debates reflect the debates underway in many other countries, as well those at regional and international levels.

This chapter starts by providing historical perspective on the evolution of the Polish regulatory framework for the protection of utility models. Interestingly, the draft IPL takes us to legislative solutions already tested in the past. One might even say nihil novi sub sole (there is nothing new under the sun). In the next section, data about the functioning of the regime currently in force is presented. This is followed by a more general discussion, drawing on experience from other jurisdictions, of how various aspects of the regulatory framework might affect the ability of the system to promote innovation. Then, the current legislative framework will be presented against the backdrop of the solutions proposed in the draft IPL. Finally, the chapter will end with conclusory remarks.

8.1 Historical Perspective

Utility models have been protected under Polish intellectual property law for over a hundred years. Early forms of utility model protection were introduced shortly after Poland regained its independence in 1919 in a Decree on protection of designs and models.Footnote ⁴ The 1919 Decree was repealed in 1924 by the Law on inventions, utility models and trademarksFootnote ⁵ and then subsequently in 1928 by a Presidential decree on inventions, utility models and trademarks.Footnote ⁶ The 1928 Presidential decree remained in force after the end of World War II and was the basis for utility model protection until 1962.

8.2 Relative Success of Utility Model Protection in Polish IP Law

A recent OECD-sponsored study Enhancing intellectual property use for a stronger innovation ecosystem in PolandFootnote ²⁶ provides data that might be helpful in explaining the relative popularity of the utility model protection in Poland. It shows that almost 70 percent of those taking part in an online survey conducted by OECD on IP use in Poland believe that utility models provide important protection for companies.Footnote ²⁷

That should not be surprising. The OECD study shows that a vast majority of Polish companies are small and even “micro” companies.Footnote ²⁸ Given that utility models are generally regarded as suiting the interests of small and medium enterprises (SMEs), a large number of such enterprises creates a solid base of potential users of the utility model system.

Data published by the Polish Patent Office shows that the number of utility model applications has remained stable over the past decade. In 2022 – the last year for which the data is available – there were 673 utility model applications filed.Footnote ²⁹ In the period from 2013 till 2021 that number varied from 759 to 1,151.Footnote ³⁰ The number of utility model applications has remained relatively stable over the past 20 years.

Domestic applicants have always outnumbered foreign applicants. In 2022 – there were 63 foreign applicants.Footnote ³¹ In the period from 2013 to 2021 – there were between 37 and 79 utility model applications filed by foreign applicants per year. The number of foreign applicants has also remained relatively stable over the past 20 years, with a tendency to rise slightly.Footnote ³² In 2003 there were only 27 foreign applicants. The local character of utility model protection is further confirmed by the fact that rights are primarily obtained in a national procedure – in 2022 the national procedure was used in the case of 660 applications whereas the international Patent Cooperation Treaty (PCT) was used only 13 times.Footnote ³³ In the period between 2018 and 2021, the PCT procedure was used in only 1.0–2.5 percent of cases.Footnote ³⁴

Data published by the Polish Patent Office reveals an interesting trend when broken down by the category of applicants. The 2022 Annual Report shows that publicly funded research and education institutions such as universities, the Polish Academy of Sciences and research centers accounted for 13 percent of domestic applicants.Footnote ³⁵ In the top 10 of the applicants for the utility model rights, these publicly funded institutions had 5 representatives, whereas in the top 38 applicants there were 16 publicly funded institutions.Footnote ³⁶ Natural persons accounted for 23 percent and business entities for 64 percent of domestic applicants.Footnote ³⁷ The numbers for 2022 are similar to those from 2017 through 2021.Footnote ³⁸

Polish Patent Office reports also break down the data concerning applications by business entities. Here data is available only for patent and utility model applications jointly. The data for 2022 shows that among applicants that are business entities 60 percent employ less than 9 employees, whereas 13 percent employ between 10 and 49 employees.Footnote ³⁹ This shows that over 70 percent of patent and utility model applicants are SMEs. These numbers are very similar to data available for the period from 2017 through 2021.

Data published by the Polish Patent Office is also broken down by field of technology. The majority of utility model applications cover civil engineering, handling, mechanical elements, and machines including electrical machines and apparatuses, consumer goods, medical equipment, and transport.Footnote ⁴⁰ None or single applications are filed in such fields as telecommunications, digital communications, semiconductors, biotechnology, basic and foods chemistry.Footnote ⁴¹

As of December 31, 2021, there were 3,529 utility models in force.Footnote ⁴² This number was relatively stable in the five-year period from 2017 through 2021.Footnote ⁴³ The overall number of utility models however has steadily risen over the past 20 years. Shortly before Poland joined the European Union in 2004, there were 1,978 utility model rights in force.Footnote ⁴⁴

Interesting conclusions can also be drawn when comparing the data for both patents and utility models. Whereas in 2022 there were 3,529 utility models in force, in the same year there were 16,243 national patents in force and over 94,156 European patents validated in Poland.Footnote ⁴⁵ Whereas utility models are predominantly held by Polish applicants, the situation is different in the case of patents. European patents validated in Poland are generally held by foreign patentees, European patents validated in Poland by Polish applicants are only a small fraction of the overall number of European patents validated in Poland.Footnote ⁴⁶

Analysis of data concerning utility models in Poland confirms many of the assumptions usually made with respect to second-tier patent protection. First, utility model protection is predominantly used by national applicants, with foreign applicants constituting only a fraction of the overall number of applicants. Second, business entities constitute the largest group of applicants. Within that group, however, SMEs account for over 70 percent of the applicants. Individual applicants constitute the second-largest group of applicants. Third, publicly funded research and education institutions are also among the key groups who file for utility model protection. Their role in the field of “technical IP” becomes even more crucial when utility model applications are combined with applications for patents – then it reaches over 45 percent of the overall number of applications.

The third of the conclusions is probably the most surprising. It is even more puzzling when combined with the very low commercialization rate of the inventions and utility models coming from the publicly funded scientific and research sectors. The vast majority of protected inventions or utility models are neither licensed out nor practiced by these institutions themselves. Nor are these rights transferred to business entities. Though moving from invention to commercialization is always fraught with difficulties, in the case of IP owned by Polish educational and scientific institutions, the examples of successful commercialization are even harder to find.Footnote ⁴⁷ This suggests that motivations behind obtaining IP rights by these institutions must be distorted in some way. One possible explanation is that both utility model and patent applications are used as indicators of academic achievement and are considered for assessment of academic activity and decisions on funding academic research.Footnote ⁴⁸ Thus, to some extent at least, IP applications may substitute for publications in peer-reviewed journals.Footnote ⁴⁹

8.3 Rationale for Utility Model Protection

The Explanatory Memorandum to the new draft Industrial Property Law explicitly states that the availability of utility model protection should incentivize investment in innovation.Footnote ⁵⁰ This rationale for the protection of technical solutions, including utility models, has generally been accepted, including in Poland. The draft Industrial Property Law – in an attempt to make the system even more capable of providing incentives for technical innovation – simplifies the procedure for obtaining utility model protection. Instead of a full substantive examination it provides for a registration model, a change that is supposed to reduce the time necessary for obtaining the right from 24 months, which is the average time under the current legislation, to no more than 12 months.Footnote ⁵¹

However, before analyzing specific rules on utility model protection – both those currently in force and those proposed in the draft legislation – it would first be interesting to look more generally at selected aspects of the regulatory framework that might influence the pro-innovation potential of utility model protection.

First, the criteria for granting utility model protection are crucial. On one hand, the bar for protection might be set very low. For example, it is possible – as is the case under Polish law – to require nothing but novelty of the utility model. But, IP legislators might also decide that at least some degree of inventiveness is required. That degree of inventiveness might be set at a low level. It is also possible, however, to demand the same degree of inventiveness as required under patent law. Generally, the higher the bar for inventiveness, the more difficult it is to obtain protection. With strict protectability criteria, obtaining utility model protection does not differ much from the traditional patent protection, consequently it becomes less attractive for SMEs.

It is also essential for the national legislators to frame the concept of novelty properly. When novelty is framed as absolute – obtaining protection is much more difficult.Footnote ⁵² SMEs, especially those operating locally, might not be aware of what has been disclosed to the public in other jurisdictions. If utility model protection is to provide an incentive for this group of applicants, then a limited concept of novelty would be preferable. The choice of a particular concept of novelty also influences the understanding of the concept of inventiveness.Footnote ⁵³ If novelty is understood as absolute, then the concept of state-of-the-art covers anything that has been made available to the public irrespective of the territory in which it has been made available. For purposes of evaluating inventiveness, one always considers whether the particular invention is sufficiently distant from state-of-the-art. This assessment is made from the perspective of a person skilled in the art, that is a skilled practitioner in the relevant technology field. It is assumed that such a person is familiar with the state-of-the-art. Thus, the novelty concept influences the benchmark against which the inventiveness of a particular solution is assessed. Absolute novelty broadens the state-of-the-art and consequently raises the bar for the assessment of inventiveness.

Second, the definition of the subject matter protected is of paramount importance. The legislative choices with respect to the subject matter protected will determine the fields of technology in which utility model protection may provide incentives for innovation. The laws in various jurisdictions differ substantially in this respect. For example, some jurisdictions do not differentiate between patentable subject matter and the subject matter that is capable of protection as a utility model. Others limit protection to shapes and structures of products, excluding chemical substances, products containing biological material, or processes and new uses of known substances or devices.

The selection of protected subject matter must be very careful. When making that choice one should consider that the traditional purpose of utility model protection was to provide protection for minor technical improvements and adaptations of products, such as mechanical devices or apparatuses. Whereas patents may be used to protect breakthrough innovations, protection of utility models have always been envisaged as a means of protecting merely incremental innovation.Footnote ⁵⁴

It is not the purpose of this distinction to diminish in any way incremental innovation. Incremental innovation builds upon breakthrough inventions and enables the full exploitation of the potential of breakthrough innovation.Footnote ⁵⁵ Minor adaptations are often required to enter new product markets, new market segments or new geographic markets.Footnote ⁵⁶ They permit adaptation to changes in the legal and regulatory environment.Footnote ⁵⁷ Frequently, they also enable an innovator to maintain market leadership by adopting customer requirements for new features, thereby helping to maintain or increase margin levels. Generally, incremental innovation is crucial for businesses to remain competitive in the market. The economics literature teaches that a successful innovator always relies on a mix of various types of innovation, consisting of more radical, sometimes breakthrough inventions, supplemented by lesser innovations that build upon earlier efforts.Footnote ⁵⁸

Incremental innovation also characterizes economies at a certain level of development. The economic literature describes three phases of development. Initially, economies aim at manufacturing products according to specifications provided by investors. Incremental innovation becomes possible once businesses have become reliable producers. Finally, business entities in such catching-up economies turn to more radical and disruptive innovation.Footnote ⁵⁹

The micro- and macro-perspectives on incremental innovation shed some additional light on possible regulatory choices for utility model protection. On one hand, utility model protection seems to suit economies at certain levels of economic development. This explains the popularity of this type of protection in countries like South Korea and Japan through the 1970s. These economies, having achieved greater economic development, have moved from incremental innovation to more radical forms of innovation. That shift resulted in fewer applications for utility model protection as the business entities turned to more advanced forms of innovation for which patent protection is more suitable.Footnote ⁶⁰ This might lead to a conclusion that after a certain point in time utility model protection might no longer be a desirable form of protection and could simply be abandoned. It is reasonable to claim that at a certain state of economic development patent protection of more advanced inventions would be sufficient, as it allows control over more radical and breakthrough inventions upon which incremental innovation is based.

One of the problems with second-tier patent protection in countries that are at a lower level of technological development is that once in place, protection must be available to nationals and entities from other countries as a result of national treatment clauses in international agreements such as the Paris ConventionFootnote ⁶¹ and the TRIPS Agreement.Footnote ⁶² This opens utility model protection to foreign business entities and might allow them to “hijack” this IP right. This could, contrary to motivations behind the introduction of utility model protection, lead to even stronger barriers for effective competition by local business entities, for whom the system was designed in the first place.

Third, utility models are generally exclusive rights with the scope of protection being determined by the wording of the claims. The approach towards claim interpretation is one of the most contentious issues in patent law.Footnote ⁶³ In some jurisdictions a more literal and strict interpretation of patent claims is the preferred option, while in others there is a tendency to interpret claims broadly.Footnote ⁶⁴ Also, the approach towards equivalents varies significantly. Finally, the role of descriptions and drawings is perceived differently among jurisdictions.

With respect to utility model protection, similar problems need to be resolved. The solutions that will be adopted will likely influence freedom to operate by competitors. It seems that, given the nature of utility model innovation, namely its incremental character, that interpretation should be rather strict and literal. That does not exclude the use of utility model description or drawings. However, expanding the scope of the claims would not be justified for a utility model system. A lesser degree of inventiveness requires commensurate – in this case narrower – scope of protection.

Fourth, utility model protection is usually obtained faster than patent protection. Usually, it is also a cheaper form of protection. This is largely due to the fact that utility model applications are checked for formalities only, rather than subject to full substantive examination. The fact that patent offices do not examine utility model applications does not mean that there are no disputes over protection criteria. These are simply shifted in time, usually to the post-grant stage.

The registration system for utility models, though cheaper and faster than patent protection, comes with a significant and potentially anticompetitive downside. The ease of obtaining utility model protection might result in a significant number of rights that might create thickets, a phenomenon well-known in patent lawFootnote ⁶⁵ and at times also described with respect to other IP rights.Footnote ⁶⁶ Thickets can be problematic, as they create uncertainty for competitors, especially in quickly evolving markets. Thickets make innovation riskier; they may discourage businesses from entering a market or force market exit in other cases. This problem will be further exacerbated when protectability criteria are set at a low level. Such thickets might also welcome abusive enforcement practices aimed at exploiting uncertainties surrounding validity and scope of protection in order to obtain excessive royalty payments.

8.4 Current State of Utility Model Protection in Poland and the Planned Reform

The modern Polish Industrial Property (IPL) Law was enacted in 2000.Footnote ⁶⁷ The 2000 IPL was a comprehensive act that regulated virtually all types of industrial property rights including patents, utility models, industrial designs, geographical indications, trademarks, topographies of integrated circuits, and supplementary protection certificates. The IPL has been amended on numerous occasions. The most recent amendments to the chapter on utility models were adopted in 2019.Footnote ⁶⁸ Currently, discussions are under way with respect to a draft of a new Industrial Property Law. The draft IPL envisages significant changes to the utility protection regime.

Set forth below, is an analysis of a number of selected aspects of the utility model regime currently in force, together with the proposals for amendment found in the draft IPL. These will include: the concept of the utility model, protectability criteria, and the procedure for the grant of utility model rights.

8.5 Conclusions

The protection of utility models has a long tradition in Poland, and it is unlikely to be abolished in the foreseeable future. Instead, discussions have centered around necessary reforms of the system. In many respects, the design of utility model protection in Poland resembles regulations in other jurisdictions – utility model protection can be obtained faster than patent protection. It is also cheaper than patent protection. Utility model protection is also easier to obtain since only novelty and industrial applicability are required. At the same time, it is shorter than patent protection and only lasts up to 10 years. Protectable subject matter is also limited, and the breadth of protection is likely to be narrower, as broad interpretation of claims is not an option with respect to utility models.

At the same time there are concerns that utility model protection might be used for purposes that have little to do with innovation. One concern relates to use of the system by academic institutions. Utility model and patent grants are playing an important role in academic evaluations and are also considered when decisions to finance research are made. This leads to granting patents and utility models that might not be intended for commercialization, while diverting academic focus away from valuable research, the results of which would otherwise be published in peer-reviewed journals.

So far, utility model protection has been popular particularly with individual inventors and SMEs. Reform of utility model protection is likely to make the system even more attractive for SMEs. It remains to be seen whether changes in the law could lead to creation of thickets and possible abusive litigation by right holders. It also remains to be seen whether expected changes in the law would make the system more attractive for foreign filers. These concerns, however, might be overrated. Utility model protection is relatively narrow and design arounds are much easier. Therefore, utility models are less likely to be used abusively; rather, it is patents and copyrights that are more prone to such abusive use.

The design and functioning of patent systems have been evaluated empirically for a long timeFootnote ¹ thanks to increasingly accessible patent data and statistics,Footnote ² but much less is known about the functioning of utility model systems (or more generally second-tier patent systems)Footnote ³ and their interaction with patent systems. Both patents and utility models are protection methods for technical inventions, but the latter is often considered to be a flexible complement to the patent system that offers protection particularly for small and incremental inventions that have shorter lifecycles and for small and medium sized enterprises (SMEs) that have fewer resources to invest in patent protection.Footnote ⁴ Generally, there exists very little systematic empirical evidence on the benefits and positive impacts of national utility model systems, particularly in advanced economies.Footnote ⁵ Hence, the fundamental question remains whether societies are better off with or without utility model systems that bring flexibilities to the more harmonized patent systems.

The contribution of this chapter to the existing empirical literature utilizing utility model statistics,Footnote ⁶ is to apply the framework introduced by Heikkilä (Reference Heikkilä2023a) to the analysis of the functioning of the Finnish utility model system. The focus is not solely on economic impacts (e.g., innovation incentives and diffusion of innovations), but rather the aim is to provide a more holistic and comprehensive assessment which comprises dimensions such as the extent to which utility models bring flexibility and inclusiveness to the patent system and how the quality of utility models coevolves with that of patents. Finland is a European export-driven small open economy, so the external validity of the observations is limited but the findings are particularly interesting for countries with similar characteristics. It should be emphasized that the analysis is purely based on utility model and patent statistics and legal analyses of the evolution of the Finnish utility model system are beyond the scope.

The chapter is structured as follows. Section 9.1 describes the evaluation framework for the functioning of utility model systems. Section 9.2 describes the Finnish institutional context briefly and presents the empirical analysis and findings. Section 9.3 concludes.

9.1 Key Performance Indicators for Utility Model Systems

The World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) sets the minimum standards for patent systems but not for utility model systems, which countries can design as they see fit.Footnote ⁷ Common rationales for a utility model system include ameliorating the defects of the national patent and design right systems and promotion of SMEs’ innovation activity.Footnote ⁸ Thus, utility model systems cannot be evaluated without considering their interaction with the patent system. In principle, when an intellectual property (IP) office offers for applicants both patent and utility model protection, it provides a menu of options and applicants self-select – that is, make strategic choices between patents and utility models given their preferences. Therefore, there is sorting between patents and utility models (or other type of second-tier patents) by applicant and invention type.Footnote ⁹ It should be emphasized that in the European context one cannot ignore the interaction of utility model and other national IPR systems with the evolving European IPR institutions,Footnote ¹⁰ particularly European patents and registered Community designs (RCD).

As the chapters in this volume demonstrate, there are significant differences across utility model systems (and each country has its own mix of innovation policy instruments that interacts more or less with its national utility model system). Hence, there is a need to conduct country-specific case studies that focus on specific institutional settings. Among others, Suthersanen (Reference Suthersanen2006, Reference Suthersanen, Drexl and Sanders2019), Björkwall (Reference Björkwall2009), Prud’homme (Reference Prud’homme2014, 2017a), Radauer et al. (Reference Radauer, Rosemberg, Cassagneau-Francis and Goddar2015, Reference Radauer, Rosemberg Montes, Cassagneau-Francis, Goddar and Haarmann2019) and Heikkilä and Verba (Reference Heikkilä and Verba2018) have provided comparative analyses of selected national utility model systems. In addition, there are increasingly country-level statistical analyses of utility model and two-tiered patent systems.Footnote ¹¹ To our knowledge, there are no studies that quantitatively analyze the interaction between the European Patent system (and registered Community designs) and European national utility model systems.

Recently, Heikkilä (Reference Heikkilä2023a) reviewed the existing utility model literature and the information that 64 national IP offices provide about their national utility model systems on their websites and reported that shorter protection period is emphasized by approximately 60 percent of IP offices, the lower inventive step requirement by more than one third (approx. 38 percent) and the quicker and simpler process to obtain protection compared to patents by approximately 30 percent of IP offices. As there are no established performance measures for utility model systems, Heikkilä (Reference Heikkilä2023a) suggested a systematic framework and “key performance indicators” (KPIs) for the holistic analysis of utility model systems. These are illustrated in Figure 9.1 and Table 9.1. Figure 9.1 distinguishes between intermediate effects and economic impacts. In the next section, we apply this framework to the Finnish utility model system and focus particularly on intermediate impacts and its coevolution with the Finnish patent system.

Figure 9.1 Framework for multidimensional analysis of utility model systems’ performance.

Source: Adapted from Heikkilä (Reference Heikkilä2023a)

9.2 Empirical Analysis of the Finnish Utility Model System

9.2.1 Institutional Setting in Finland

Finland is a developed small open economy and has been a member of the European Union (EU) since 1995. In 2022, Finland had a population of approximately 5.5 million and a gross domestic product of about 270 billion euros. Finland has been ranked among the most innovative countries in EuropeFootnote ¹² and the worldFootnote ¹³ and Park’s (Reference Park2008) IPR index assigns a high score to Finland.

The Finnish utility model (“hyödyllisyysmalli”) system is one of the “utility model-intensive” ones in which there are more than 100 utility model filings per year.Footnote ¹⁴ The system was established in 1992 shortly before Finland joined the EU in 1995 and the European Patent Convention (EPC) in 1996. The decision of Finland and Denmark (see Chapter 4) to establish national utility model systems in 1992 while other Nordic countries Sweden, Norway and Iceland chose not to, marked a divergence from the collaborative development of Nordic IPR institutions.Footnote ¹⁵

In total there have been slightly more than 15,000 utility model applications in Finland by the end of 2022 and in 2023 there were slightly more than 2,000 utility models in force or pending in Finland.Footnote ¹⁶ Figure 9.2 shows the trends in utility model, patent and design right filings using data from the Finnish Patent and Registration Office (Patentti- ja rekisterihallitus, hereafter PRH), WIPO and EUIPO. The declining trend in utility model filings since the adoption of the system coincides with the decreasing utility model application trends in Germany and DenmarkFootnote ¹⁷ as well as the declining trend in national design right filings. There is a negative correlation (−0.63) between the trend-like decline of utility model filings and increasing aggregate business sector R&D expenditure. The most visible impact in Finnish patent statistics is the drop related to the accession of Finland to the EPC in 1996 after which applicants could validate granted European patents in Finland instead of filing national patent applications at the PRH. Later, the introduction of the RCDs by EUIPO (OHIM at the time) in 2003 led to the collapse of Finnish design right filings.Footnote ¹⁸ However, it seems that these significant institutional changes had no radical immediate impact on the demand for Finnish utility models.

Figure 9.2 Evolution of utility model, patent and design right filings in Finland.

Sources: The sources of data are WIPO IP Statistics Data Center (design rights, information for 2002 missing), PRH, www.prh.fi/fi/patentit/tilastoja/eurooppapatentit.html and EUIPO, www.euipo.europa.eu/en/the-office/about-us/what-we-do/statistics. Finland joined the EPO on 1 March 1996 (scattered line) and unitary patent system on 1 June 2023. EUIPO (OHIM) introduced RCDs in 2003 (solid line). Statistical information on the Unitary Patent system is available online: www.epo.org/en/about-us/statistics/statistics-centre#/unitary-patent. By 31 December 2023, there were 16,482 registered unitary patents which are in force in Finland. *The source of R&D data is Statistics Finland, deflated using GDP deflator (in 2015 prices), interpolated for 1990, 1992, 1994 and 1996 https://data.worldbank.org/indicator/NY.GDP.DEFL.ZS?locations=FI

Important motivations for establishing the Finnish utility model system were that it would provide protection for inventions that do not satisfy patentability criteria and that cannot be protected with design rights as well as quick protection.Footnote ¹⁹ Furthermore, Radauer et al. report that “According to the Finnish Patent and Registration Office (PRH), the intention was to create a system for small innovations, i.e. one that would provide cheaper and faster protection than patents for simple objects.”Footnote ²⁰ Björkwall (Reference Björkwall2009) reports, based on a survey, that the Finnish respondents’ most important reasons to apply for utility models were that its cheaper and quicker than the patent option. As of December 2023, PRH describes Finnish utility models on its website as follows: “Similar to a patent, a utility model is a way to obtain an exclusive right to an invention and prohibit others from exploiting the invention commercially. Utility models are quicker and cheaper to get than patents.”Footnote ²¹

Finland joined the European Patent Organisation (EPO) in 1996 after which patents in force have been increasingly those granted by the EPO instead of PRH. In 1997, the European Commission proposed a European community utility model (see discussion in Chapter 20). At the time, the EU had 15 member states of which 12 had some sort of utility model system and the proposal would have meant that Luxembourg, Sweden and the United Kingdom, which at the time did not have utility model systems, would have needed to introduce one into their domestic law. The proposal was abandoned in early 2000s and the EU has since expanded to 27 member states (after Brexit). Hence, as discussed in Chapter 20, the landscape of European utility model systems has remained unharmonized to date. Recently, Finland joined the Unitary Patent System and Unified Patent Court that began their operations in June 2023. Heikkilä and Peltoniemi (Reference Heikkilä and Peltoniemi2023) provide a description of how the Finnish IPR service sector has evolved over the same period and particularly how this has impacted the business of Finnish patent attorneys. The key developments since 1980s include among others the following events:Footnote ²²

• 1983 The Association of Finnish Patent Attorneys expressed a wish to the Ministry of Trade and Industry to evaluate the need for the Finnish utility model system

• 1985 Utility model committee set up by the Ministry of Trade and Industry

• 1986 Utility model committee recommends establishing the Finnish utility model system

• 1991 Act on utility model rights 800/1991 and Decree on utility model rights 1419/1991

• 1992 Introduction of the Finnish utility model system

• 1994 The European Union Intellectual Property Office founded (formerly known as the Office for Harmonization in the Internal Market, OHIM, until 2016), WTO’s TRIPS agreement signed

• 1995 Finland joins the EU

• 1996 Finland joins the EPC, European trademark system introduced

• 1997 European Commission proposes Community utility model

• 2003 European registered Community design system introduced

• 2006 Commission decides to halt the development of the community utility model

• 2011 The London agreementFootnote ²³ enters into force in Finland

• 2023 Launch of the Unitary Patent System and Unified Patent CourtFootnote ²⁴

Table 9.2 provides a comparison of selected key dimensions of the Finnish utility model systems and selected other interacting IPR institutions. It is important to highlight some peculiarities of the Finnish utility model system. There is no substantive examination of utility models at PRH but rather they are simply registered after formal examination (grant rate is close to 100 percent for those that are not withdrawn). Utility models are not granted for process inventions. There is inventive step requirement for Finnish patents but for utility models the requirement is lower: inventions must “differ distinctly from the prior art” to be eligible for utility model protection.Footnote ²⁵ Utility models are granted for four years and can be renewed for an additional four years and two years so that the maximum term of protection is ten years (4 + 4 + 2). Since November 2011, as a consequence of the London agreement, there is no longer a need to translate Finnish patent applications filed in English to the Finnish language, but this does not apply to utility models, which still need to be filed in either Finnish or Swedish.

Table 9.2 Selected characteristics of the Finnish utility model system and other interacting IPR institutions

Formal protection methods in Finland
	Technical inventions			Designs
	Finnish patents	EPO patents (European patents)	Unitary patents	Finnish utility models	Finnish design rights	Registered Community design
System introduced	1842	1977, Finland joined 1996	2023	1992	1971	2003
Regional scope	Finland	Validation possible in Finland and 38 other member states, one extension state and four validation states.	Finland and 16 other EU member states	Finland	Finland	Finland and 26 other EU member states
Official application languages	Finnish, Swedish or English	English, French and German		Finnish or Swedish	Finnish or Swedish	Any official language of the EU
Examination	Substantive examination	Substantive examination		Registration process	Registration process	Registration process
Novelty requirement	Global	Global		Global	Global	Global
Inventive step requirement	Inventive step	Inventive step (not obvious to a person skilled in the art)		Must differ distinctly from the prior art	Must have individual character	Must have individual character
Grant lag	Years	Years		Months	Months	Months
Maximum term of protection	20 years	20 years		10 years	25 years	25 years
In force in Finland	6,454*	50,014*	16,482**	2,254*	1,384*	296,912***

Information source is WIPO Lex (see also Björkwall Reference Björkwall2009; Prud’homme Reference Prud’homme2014; Radauer et al. Reference Radauer, Rosemberg, Cassagneau-Francis and Goddar2015); *Patents: PRH, 2022 information, www.prh.fi/en/patentit/Tilastoja/patentit.html; utility models: https://patenttitietopalvelu.prh.fi/fi/, Accessed 31 December 2023; Design rights: https://mallioikeustietopalvelu.prh.fi/, Accessed 31 December 2023; **www.epo.org/en/about-us/statistics/statistics-centre#/unitary-patent, Accessed 31 December 2023; ***WIPO IP Statistics Data Center, 2022 information.

The most important trading partners of Finland include Sweden, Germany, the US, the Netherlands and China.Footnote ²⁶ Historically, Russia has also been a significant import and export country for Finland. Of these countries, Sweden, Germany and the Netherlands are EU members states and Germany, China and Russia have utility model systems in place as of 2022. Particularly, the Finnish companies that have exported to these countries must have been at least to some extent aware of the functioning of the local utility model systems. Regarding the “stepping stone” hypothesis (companies using utility models learn and shift to use patents increasingly)Footnote ²⁷ and from the perspective of IPR-related learning, it is interesting to analyze in which countries Finnish applicants apply for utility models beyond Finnish borders. According to the WIPO IP Statistics Data Center, the top foreign countries where Finnish applicants registered utility model applications from 1992 to 2021 were Germany (1,892), China (756), Austria (187), Russia (145) and Denmark (108).Footnote ²⁸

9.2.3 Findings

9.2.3.1 Intermediate Impacts

9.2.3.1.1 Quantity and Quality of Utility Models and Patents

Figure 9.2 shows how the quantities of Finnish utility models and patents have evolved over time. Finland’s accession to the EPC led to a sharp decrease in patent filings, but there was no similar drop in the case of utility models. Figure 9.3 distinguishes between resident and non-resident applicants. It illustrates how the utility model system increases particularly the filings by resident applicants whereas there were only a very small number of filings by non-residents. According to PRH, 675 (4.4 percent) utility model applications were filed by foreign applicants and the rest 14,509 (95.6 percent) were filed by Finnish applicants between 1992 and 2022. Figure 9.3 demonstrates how Finland’s accession to the EPC led to collapse in Finnish patent filings by non-resident applicants at the PRH as they began to validate EPO patents in Finland instead. It seems that Finland’s accession to the EPC did not have visible negative nor positive impacts on the utility model filings.

Figure 9.3 Patent and utility model applications by applicant origin at the Finnish patent office.

Note: Dashed line indicates Finland’s year of accession to the EPC.Source: PRH. utility models: www.prh.fi/en/hyodyllisyysmallit/Tilasto.html, patents: www.prh.fi/en/patentit/Tilastoja/patenttihakemusten_arkisto.html, Accessed 18 December 2023

Diminishing demand for utility models may be a result of various factors. It may reflect a declining number of incremental inventions or the gradual learning process regarding the usefulness of utility models in innovation activity:Footnote ³¹ utility model holders and industries learn only gradually over time how effective utility models are in promoting their businesses and competitiveness and, for instance, excluding imitators from copying utility model-protected technical solutions. It may also reflect the recommendations by patent attorneys between patents and utility models. Heikkilä (Reference Heikkilä2021) documented using PRH register data that a smaller share of utility model filings has a named professional representative (53.6 percent) compared to patents (69.9 percent) and that firms are more likely to have named representatives than individual applicants both for patents and utility models.

A patent family refers to all the patents and utility models that protect the same invention across countries and it consists of one or multiple priority filings and no or multiple subsequent filings.Footnote ³² Utility model protection is often sought for inventions where the idea is to obtain purely national protection.Footnote ³³ Figure 9.4 illustrates how the share of priority filings has developed in patent and utility model filings over time. When Finland joined the EPO, the share of priority filings in the case of patents increased from some one-fourth to more than four-fifths. Concurrently, the number of national patent filings collapsed when particularly foreign firms quit filing national Finnish patents and instead used the EPO channel to obtain protection in Finland by validating EPO patents in Finland. This is consistent with the observations of Hall and Helmers (Reference Hall and Helmers2019). Clearly, Finland’s accession to the EPC had a major impact on patenting strategies of foreign applicants in Finland, whereas there seems to be no comparable impact on the utilization of utility models. Foreign applicants’ demand for Finnish utility models has remained at a low level over the whole period.

Figure 9.4 Patent families – share of priority filings.

Source: PRH, Finnish patents and utility models

The use of utility models as part of international patent filing strategies may reveal interesting patterns.Footnote ³⁴ Figure 9.5 illustrates the evolution of patent family size (DOCDB) for both Finnish utility models and patents. Consistent with observations by Radauer et al. (Reference Radauer, Rosemberg, Cassagneau-Francis and Goddar2015), Heikkilä (Reference Heikkilä2017), Heikkilä and Verba (Reference Heikkilä and Verba2018), the patent family size of utility models is systematically and significantly smaller compared to patents. As patent family size correlates with the value of the invention,Footnote ³⁵ this can be interpreted as evidence that Finnish utility models are applied to protect less valuable inventions than Finnish patents, on average.

Figure 9.5 Patent families – average patent family size by filing year cohorts.

Source: PATSTAT Online 2023 Autumn, Accessed 18 December 2023. Patent family refers to DOCDB patent family. The years are the years when the Finnish patent or utility model was filed as a member of the DOCDB patent family

A singleton patent family is a peculiar patent family that has only one member – a single priority filing, be it eventually granted or not – and no subsequent related filings.Footnote ³⁶ Hence, the number of utility models and patents that are singleton families reflects the number of inventions that would not otherwise be published in patent registers. Singleton patents and utility models have the minimum patent family size of 1 and, given that patent family size and value of the invention correlate, they presumably relate to the least valuable inventions for which the applicant has no value in extending the protection. In the absence of these singleton filings in patent registers there might be duplicative R&D (re-inventing the wheel) of these inventions.

Moreover, singleton patent families may also indicate a defensive publication strategy and production of registered and novelty-destroying prior art that prevents others from patenting the same technical invention (“pre-emptive patenting”). There were 14,626 utility models in the PATSTAT Online database (Autumn 2023 version), of which 83.5 percent (12,212) were singletons and approximately 16.5 percent (2,414) were members of patent families with at least two members. This indicates that Finnish utility models are indeed in the majority of cases related to less valuable inventions for which protection is sought solely in Finland and not in other countries. Of the non-singleton utility models there were 367 utility models (approximately 2 percent of all utility models) that are members of patent familiesFootnote ³⁷ where there is also a Finnish patent filing. Of these 26 were filed on the same date, in 279 cases the patent application was filed before the utility model (the mean lag between patent and utility model filings was 617 days, with a median of 364) and in 62 cases a utility model was filed before a patent application (mean lag between utility model and patent filings was 354 days, with a median of 338.5 days). More detailed analysis of the patent families could reveal whether the cases correspond to using utility models for double-protection, as “fallback” options or as quick protection during the time when the patent is still pending.

Figure 9.6 shows that the average number of inventors (inventor team size) is systematically smaller in the case of utility models compared to patents. This is in line with earlier observations.Footnote ³⁸ In approximately 75 percent of utility models there is only a single inventor while only approximately 40 percent of patents have only one named inventor.Footnote ³⁹ The large number of sole inventors in utility models contrasts the more general trend that developing patentable inventions is increasingly international teamwork.Footnote ⁴⁰ Nevertheless, the larger number of “lone inventors” in utility models compared to patents is consistent with the motivation of utility model systems as a particularly appropriate protection method for small inventors and for incremental inventions.Footnote ⁴¹

Figure 9.6 Quality of inventions – average inventor team sizes.

Source: PATSTAT Online (2023 Autumn). Years refer to filing years. There is only a small number of patents (75) for which the number of inventors information is available for 2022

Patent citations are the most common quality measure for patented inventions.Footnote ⁴² Figure 9.7 shows the evolution of average received citations for Finnish utility models and patents. Clearly, utility models have received only a limited number of citations: the average number of citations received by patent families (DOCDB) where Finnish utility models are members has hovered around 0.5 for most of the cohorts between 1992 and 2019. This illustrates that utility models seem to play only a minor role in cumulative innovation activity – very few inventions seem to be impacted by the technical content of Finnish utility models documents based on the “paper trail” of patent citations. Presumably, the fact that Finnish utility models are written in the Finnish or Swedish language further reduces the number of citations.

Figure 9.7 Quality of inventions – average received citations.

Source: PATSTAT Online (2023 Autumn), Accessed 19 December 2023. The decreasing trend for citations is (partially) explained by the fact that more recently published patent documents have had less time to accumulate citations

9.2.3.1.2 Flexibility and Inclusiveness

Quick protection is an important reason for the existence of the Finnish utility model systemFootnote ⁴³ and Figure 9.8 illustrates the evolution of grant lags (time between filing and registration) for Finnish utility models and compares that to patents. Indeed, as also noted by the PRH, utility models provide quicker protection: The registration lag from filing to grant is several years in the case of Finnish patents but measured in months for utility models. For registered utility models the average grant lag between 1992 and 2021 was about five months (ca. 150 days) and Prud’homme (Reference Prud’homme2014) reported that it was three months as of 2014.

Figure 9.8 Grant lags of patents and registration lags of utility models.

Source: PRH, situation as of December 2021. The “declining” pattern of the average grant lag of patents is partially explained by the fact that for more recent cohorts the share of pending patents is higher

The overlap between patent and utility model applicants and inventors sheds light on the extent to which a utility model system stimulates innovation activity by those applicants and inventors that do not file patent applications – that is, how inclusive the utility model system is. Heikkilä (Reference Heikkilä2023b) made some back-of-the-envelope calculations using uncleaned Finnish patent and utility model applicant and inventor data from PATSTAT and reported that the patent registers have at maximum 40 percent (approx. 6,000) more unique applicants and 20 percent (approx. 6,500) more Finnish inventors than in the case if there was no utility model system. These rough estimates make the crucial simplifying assumption that there would be no substitution to patent filings in the absence of utility models and, thus, should be regarded as potential maxima. Another limitation is that the applicant and inventor data is not cleaned which leads to falsely distinguishing those applicants and inventors as “unique” where there is just some different format for the name or misspelling. Nonetheless, it seems that the utility model system has acted as an inclusive institution, and we observe more inventors and applicants in patent registers than we would in the absence of the utility model system. However, Heikkilä (2019) documented that the gender gap is larger and not decreasing in the context of the Finnish utility models compared to patents: over the period 1992–2013 the share of women among utility model inventors remained steadily at approximately 5 percent.

With the PRH and PATSTAT data, we cannot distinguish SMEs from large corporations. However, the Community Innovation Survey (CIS) contains questions regarding the use of IPR protection among Finnish companies. Figure 9.9 shows that the use of utility models as well as patents and design rights is positively correlated with firm size so that the larger a firm is the more likely it is to use IPR protection. Generally, the use of utility models is relatively rare as only approximately 2 percent of sampled respondent firms use them. The use of utility models is significantly less common compared to patents (approx. 8 percent) and approximately as common as the use of design rights. It should be noted, however, that the CIS questionnaire does not clarify in which countries companies have used patents, design rights and utility models so it is not entirely clear whether companies refer to Finnish utility models (patents, design rights) or utility models in other countries such as Germany or China.

Figure 9.9 Share of firms using IPR protection by firm size.

Source: Statistics Finland, Community Innovation Survey 2020, https://pxdata.stat.fi/PxWeb/pxweb/en/StatFin/StatFin__inn/statfin_inn_pxt_13k6.px/, Accessed 19 December 2023

9.2.3.2 Economic Impacts: Rate and Direction of Innovation

The contribution of utility models to innovation incentives and R&D investments is challenging to investigate directly as we lack firm-level data. Like the patent system, the utility model system impacts industries and technology fields at different intensity. In other words, the utility model system may direct the rate and direction of technological progress towards those fields where it increases innovation incentives and promotes diffusion of innovations the most. Regarding the latter aspect, Figure 9.7 indicates that Finnish utility models are cited very seldom, so using this traditional metric we do not find significant impact (“a paper trail”) on cumulative innovation and innovation diffusion. The language barriers are a potential reason for this as descriptions of utility models are written in Finnish or Swedish and the claims are available in Finnish and Swedish in public patent registers.

Table 9.3 shows the shares of Finnish innovative companies that have filed utility model or patent applications or registered design rights by industries with the highest utility-model-user intensity. Paper and machinery industries are clearly the most active users of utility models and, interestingly, in the furniture industry a larger share of firms uses utility models than patents and design rights. The Green Paper by the European Commission mentions that, “An industry-by-industry breakdown of utility model applications in the European Union shows that the industries most often concerned are mechanical engineering, electrical engineering, and precision instruments and optics.”Footnote ⁴⁴ We observe from the Finnish patent and utility model register data that, indeed, there is different type of concentration between specific industries in the number of patent and utility model applications. It should be kept in mind that with utility models (in Finland) one cannot protect process inventions.Footnote ⁴⁵

Table 9.3 Industries where the largest share of Finnish innovative firms used utility models 2018–2020

	Share of firms (%) with innovation activity applying IPR during the survey period 2018–2020
	Utility model application	Patent application	Design right registration
C17 Manufacture of paper products	20.1	36.1	10.8
C28 Manufacture of machinery and equipment n.e.c.	13.6	50.3	8.4
C23 Manufacture of other non-metallic mineral products	11.4	14.6	2.5
C13 Manufacture of textiles	9.7	25	9.7
C31 Manufacture of furniture	7.7	4.7	2.3
C25 Manufacture of fabricated metal products, except machinery and equipment	7.5	8.4	3.3
C21 Manufacture of basic pharmaceutical products and pharmaceutical preparations	7.1	57.1	14.3
C32 Other manufacturing	6.9	10.1	18.7
C22 Manufacture of rubber and plastic products	6.3	17.3	12
C29 Manufacture of motor vehicles, trailers and semi-trailers	6	20	0
All firms with innovative activity	3.1	12.1	2.8

Source: Statistics Finland, Community Innovation Survey, https://pxdata.stat.fi/PxWeb/pxweb/en/StatFin/StatFin__inn/statfin_inn_pxt_13kx.px, Accessed 20 December 2023.

With information about the international patent classes in which utility models are classified, it is possible to move from industry level to invention level in analyzing the use of utility models. Figure 9.10 shows the evolution of the average number of IPC classes for both patents and utility models. If the number of IPC classes is considered to be a proxy for the complexity of the invention so that more complex inventions are classified in more IPC classes, then Finnish utility models are clearly systematically “simpler” according to this measure compared to patents.

Figure 9.10 Number of IPC classes in Finnish patent and utility model applications.

Source: PRH

Due to field restrictions, utility models “direct” the technological change differently compared to patents if we judge on the basis of IPC classification of patent and utility model documents. In other words, they provide innovation incentives and promote the documentation of technical knowledge with different emphases across technology fields. As illustrated in Figure 9.10, the number of IPC classes in which patents and utility models are classified has increased over time: in 1992, patents were classified on average in 2 IPC classes and utility models in 1 whereas in 2020 utility models were classified on average in 3 while patents in 3.5 IPC classes. From 1992 (the introduction of the utility model system) until the end of 2021, the data indicates that patents were classified in 2.4 IPC classes on average whereas utility models had on average 1.8 IPC classes. The difference has remained roughly the same in absolute terms so that patents are classified on average in 0.5 more IPC classes. Also, utility models are more often classified in only one IPC class (slightly more than 50 percent of utility models) compared to patents (approx. one-third of patents).

The top 10 (first) 4-digit IPC classes with the highest number of utility models and patents are shown in Table 9.4.Footnote ⁴⁶ In both cases these top 10 IPC classes account for approximately one-fourth of all first IPC classes. The fact that there is no overlap among top 10 IPC classes suggests that utility models promote innovation activity in other technology fields compared to patents. Moreover, among the top 10 IPC classes for patents there are very few utility model applications. While Finnish patents have been particularly utilized to protect inventions in chemical, medical, telecommunication and paper technology fields, the top IPC classes for utility models include inventions, for instance, in building and furniture technology fields.

Table 9.4 Top10 first (4-digit) IPC classes of Finnish patents and utility models 1992–2021

		Utility models		Patents	UM/patent ratio
Top10 (first) IPC classes with most UM filings		Obs.	%	Obs.
1B65D	Containers for storage or transport of articles or materials, e.g. bags, barrels, bottles, boxes, cans, cartons, crates, drums, jars, tanks, hoppers, forwarding containers; accessories, closures, or fittings therefor; packaging elements; packages	493	3.76	2,640	0.187
2E04B	General building constructions; walls, e.g. partitions; roofs; floors; ceilings; insulation or other protection of buildings	481	3.67	1,222	0.394
3A01K	Animal husbandry; aviculture; apiculture; pisciculture; fishing; rearing or breeding animals, not otherwise provided for; new breeds of animals	339	2.59	568	0.597
4E06B	Fixed or movable closures for openings in buildings, vehicles, fences, or like enclosures, in general, e.g. doors, windows, bunds, gates	289	2.21	815	0.355
5A47B	Tables; desks; office furniture; cabinets; drawers; general details of furniture	286	2.18	356	0.803
6F24F	Air-conditioning; air-humidification; ventilation; use of air currents for screening	264	2.01	829	0.318
7A01G	Horticulture; cultivation of vegetables, flowers, rice, fruit, vines, hops or seaweed; forestry; watering	239	1.82	1,005	0.238
8A47C	Chairs; sofas; beds	231	1.76	357	0.647
9E04C	Structural elements; building materials	226	1.72	568	0.398
10E04F	Roof coverings; sky lights; gutters; roof working tools	205	1.56	340	0.603
		Patents		Utility models	UM/patent ratio
Top10 (first) IPC classes with most patent filings		Obs.	%	Obs.
1C07D	Heterocyclic compounds	2,477	4.4	14	0.006
2A61K	Preparations for medical, dental or toiletry purposes	1,913	3.4	35	0.018
3H04L	Transmission of digital information, e.g. telegraphic communication	1,579	2.8	14	0.009
		Patents		Utility models	UM/patent ratio
Top10 (first) IPC classes with most patent filings		Obs.	%	Obs.
4D21F	Paper-making machines; methods of producing paper thereon	1,404	2.49	167	0.119
5GO1N	Investigating or analysing materials by determining their chemical or physical properties	1,134	2.01	71	0.063
6HO4B	Transmission	1,082	1.92	8	0.007
7HO4W	Wireless Communication Networks	951	1.69	22	0.023
8D21C	Production of cellulose by removing non-cellulose substances from cellulose-containing materials; regeneration of pulping liquors; apparatus therefor	942	1.67	15	0.016
9HO4M	Telephonic communication	906	1.61	79	0.0987
10C07C	Acyclic or carbocyclic compounds	851	1.51	5	0.006

Source: PRH, covering the period 1992–2021.

9.3 Conclusions

This chapter provides a quantitative evaluation of the Finnish utility model system from its introduction in 1992 to early 2020s by applying the framework of Heikkilä (Reference Heikkilä2023a) and relying on patent and utility model statistics from various sources. Its findings suggest that the Finnish utility model system has been used mainly by local applicants and there is evidence that it has promoted flexibility and inclusiveness of the Finnish patent system. There are systematic differences between Finnish utility models and patents: (1) utility models are members of smaller patent families, (2) utility models have smaller inventor teams, (3) grant lags for utility models are significantly shorter than for patents and (4) both Finnish patents and utility models receive few citations, but utility models systematically receive less. Patent and utility model statistics indicate that Finland’s accession to the EPC had much more significant impact on the patenting activity in Finland compared to the utility model system. The aforementioned average differences between Finnish patents and utility models were larger before Finland joined the EPC in 1996, which emphasizes the need to consider European integration and the evolution of European IPR institutions when evaluating utility model systems. Since, at the economy level, there is no positive association between Finnish utility model filings and R&D investments, more fine-grained industry or technology field-level analyses are needed to analyze the impact of the utility model system on innovation-based competition and industry dynamics. The role of professional patent attorneys in the demand for utility models as well as applicants’ choices between utility models and patents is an interesting topic for future research.

In Australia, the credibility and legitimacy of second-tier systems for intellectual property has been the subject of ongoing debate and controversy.

In 2001, a patent attorney called John Keogh was issued an innovation patent by IP Australia for a ‘circular transportation facilitation device’.Footnote ¹ There were also patent claims relating to rubber wheels and tires. The field of the invention was a ‘device for facilitating transport of goods and persons’.Footnote ² The background explained that a ‘circular transportation facilitation device’ would be an improvement on walking, and on other devices, like ‘skis, sleds, toboggans and the like’.Footnote ³ The application was accompanied by an illustration of a wheel (Figure 10.1).

Figure 10.1 John Keogh, ‘Circular Transportation Facilitation Device’

There was also a perspective drawing of a cart incorporating ‘a series of circular transportation facilitation devices in accordance with a preferred aspect of the present invention.’Footnote ⁴

Keough said that he patented the wheel in order to establish that the innovation patent system was flawed because it did not need to be examined by the patent office. He explained his concerns:

Keogh noted that he had no immediate plans to patent fire, crop rotation, or other fundamental advances in civilization. John Keogh had previously written about the dangers of innovation patents, warning: ‘These junk patents may bring the entire Australian patent system into disrepute’.Footnote ⁶

The intervention received wide attention in the Australian media,Footnote ⁷ international news,Footnote ⁸ and even in august scientific magazines and journals, such as New Scientist.Footnote ⁹

IP Australia were publicly outraged at the patent application. Commissioner of Patents Vivienne Thom commented that there was a danger of patent fraud: ‘To obtain the patent for a wheel would require a false claim, which is a very serious matter and would certainly invalidate the patent as well as amounting to a misrepresentation on the part of the applicant and unprofessional conduct by any professional advisor.’Footnote ¹⁰ IP Australia later revoked the patent application. John Keogh won an Ig Nobel Prize for his efforts.Footnote ¹¹ The prize ceremony stated: ‘The Ig Nobel Prize for Technology is awarded jointly to John Keogh of Hawthorn, Victoria, Australia, for patenting the wheel in the year 2001, and to the Australian Patent Office for granting him Innovation Patent #2001100012.’Footnote ¹² Keogh hoped that the Ig Nobel Prize would result in a rethink of the innovation patent: ‘I was amused and it just shows the silliness of it all that people around the world are giving us awards for silliness.’Footnote ¹³

The intervention certainly follows in an Australian tradition of hoaxes,Footnote ¹⁴ fakes, and tall stories. Yet, this controversy cannot be dismissed as a mere joke. It highlights problems both with the operation of the innovation patent system, and the public perceptions of the legitimacy of the regime. The ignominious case of patenting the wheel has been re-invoked – as further scandals over innovation patents have emerged.Footnote ¹⁵

This chapter charts the historical evolution of second-tier patent systems in Australia – looking at the establishment of the petty patent system, the rise and fall of the innovation patent, and the new focus of the Albanese Government upon breakthrough inventions. In terms of its methodology, this chapter provides a historical study of intellectual property reform in Australia.Footnote ¹⁶ It follows in the rich tradition of historical research in respect of intellectual property in the jurisdiction.Footnote ¹⁷ This chapter also uses socio-legal methodologies to highlight the gap between the aspirations for the innovation patent system, and the operation of the system in practice.Footnote ¹⁸ It also draws upon empirical research into intellectual property registration data.Footnote ¹⁹ This work is an investigation of litigation in respect of innovation patents – the so-called ‘patent wars’.Footnote ²⁰ As well as exploring intellectual property, the chapter also considers Australia’s innovation policies – particularly in respect of small-to-medium enterprisesFootnote ²¹ and lone inventors.Footnote ²² It highlights the tensions between the nationalistic vision of Australian policy-makers, and the larger forces of globalization.

This chapter is organized according to the chronology of the policy debate over second-tier innovation systems in Australia. Section 10.1 details the establishment of the petty patent system in Australia in the 1970s; the hopes of Australian policy-makers for this regime; and the reasons for its demise. Section 10.2 explores the institution of the innovation patent regime – the replacement for the petty patent system. Section 10.3 focuses upon filing and registration data on innovation patents. Section 10.4 charts litigation over innovation patents – particularly highlighting the decision of the High Court of Australia in Aristocrat v. Commissioner of PatentsFootnote ²³ on patentable subject matter, and the precedent on the threshold of an innovative step in Dura-Post (Aust) Pty Ltd v. Delnorth Pty Ltd.Footnote ²⁴ Such disputes have highlighted both fundamental issues around patentable subject matter as well as the threshold required for an innovation patent. Section 10.5 focuses upon the reflections of the Advisory Council of Intellectual Property upon the innovation patent system and its relation to other intellectual property regimes. Section 10.6 looks at the work of the Productivity Commission in its analysis of Australia’s intellectual property arrangements. Section 10.7 charts the work of IP Australia on the innovation patent – particularly in respect of the data on the innovation patent, and the economic impact of the regime. Section 10.8 looks at the abolition of the innovation patent regime – with the support of major parties in the Australian Parliament. Section 10.9 focuses on the new approach of the Albanese Government in promoting breakthrough innovation in key industries – rather than, so much, incremental innovation. The conclusion questions the future of utility models of patent protection – given the extinction of petty patents and innovation patents in Australia.

10.1 The Petty Patent System

At the outset, it is helpful to engage in archaeological historical examination of the political debate over the petty patent system in Australia in the 1970s.

There was a concern that Australia’s standard patent system, and regime for designs protection, was ill-suited for small-to-medium enterprises and lone inventors in the 1960s and 1970s.Footnote ²⁵ In 1973, the Franki Designs Law Review Committee produced reports on designs law, and utility models of patent protection.Footnote ²⁶ The Committee preferred the language of ‘petty patents’ to that of ‘utility models’: ‘The name “petty patent” appears to use to convey slightly more meaning on first sight and we think it is also a more appropriate name in view of the recommendations we have to make in respect to this form of protection.’Footnote ²⁷ The Committee referred to previous consideration of the topic of petty patents in the United Kingdom. The Committee undertook detailed research of the utility models adopted in Germany and Japan. The report noted the lack of harmonization: ‘It appears clear from our investigations that the nature of the protection afforded by the various systems differs greatly and that there is no single recognized field for the operation of a petty patent system.’Footnote ²⁸

The Franki Designs Law Review Committee recommended the ‘introduction in Australia of a system of petty patents to form part of the patent system’.Footnote ²⁹ The Committee was satisfied that petty patents should ‘cause the minimum of inconvenience to Australian industrial and manufacturing interests and we hope that, at least in the long term, the introduction of our recommended system might result in an improved patent system by encouraging applications for petty patents in respect of all inventions other than those for which a short term of protection and the limitation of a single claim would be inappropriate.’Footnote ³⁰

In 1979, the Australian government introduced the petty patent system to assist Australian small to medium business enterprises.Footnote ³¹ The government intended the system to provide a quicker and cheaper form of patent right for inventions with a short commercial life.

The Hon. Ian Macphee, Member for Balaclava and Minister for Productivity, introduced the Patents Amendment Bill 1979 (Cth).Footnote ³² Macphee was laudatory of the petty patent system:

Macphee concluded his speech recognizing the uniqueness of the Australian petty patent system: ‘Because the particular petty patent system of this Bill is unique and has no counterpart in other industrial property legislation in the world, the introduction of the system is to a large degree experimental.’Footnote ³⁴ He recognized that there could be a dissonance between the plans for the legislation, and the operation of the regime in practice: ‘In view of its unique character, it is not possible to predict the exact effects which the system will achieve in practice, although its broad impact is clear enough.’Footnote ³⁵ Macphee assured the Australian Parliament that ‘the system will be continuously monitored with a view to making such alterations as from time to time appear necessary to ensure that the basic aim of assisting innovation and productivity in Australia is fulfilled.’Footnote ³⁶

From the Government, Liberal MP Gordon Dean (member for Herbert in Northern Queensland) discussed the legislative reforms in the House of Representatives of the Australian Parliament.Footnote ³⁷ Dean discussed the merits of the petty patent system:

Dean concluded his speech, observing: ‘Invention and technological change are essential elements in the continuing and increasing competitiveness of industry, and industry must learn about and make use of all relevant information, in particular that information available through the patents system.’Footnote ³⁹ This speech on the petty patent system is underpinned by an Australian nationalism, and a desire to remain competitive with other nations in the Asia-Pacific, such as Japan: ‘It is clear from the experience of countries, such as Japan, which have a very high usage of patent systems that the Australian patent system has the potential to play an increasingly important role in our future industrial development.’Footnote ⁴⁰

The Hon. Peter Shack also added his comments to the debate over the legislation.Footnote ⁴¹ Shack welcomed the legislation, noting that ‘it is proposed to bring into operation an optional form of patent protection that has been devised specifically to assist small Australian industries and businesses and in doing so to encourage the inventive activity of Australians in fields that are particularly suited to commercial exploitation by small Australian enterprises’.Footnote ⁴² Shack supported the legislation as a means of economic modernization: ‘I see the legislation as part of a process by this Government to upgrade Australia’s industrial property laws through a process of reform which the Government believes … will make those laws more responsive to the economic needs of the nation.’Footnote ⁴³

The representative of the Opposition Australian Labor Party, Chris Hurford (MP for Adelaide), expressed some early misgivings as to whether the petty patent regime would fulfil such high hopes.Footnote ⁴⁴ Hurford outlined the purpose of the Bill:

Hurford raised several reservations. First, Hurford questioned whether ‘the new system [will] really give a much needed boost to inventive activity?’Footnote ⁴⁶ He noted in particular that the Inventors Association was ‘not convinced that that the proposed petty patents system will directly aid individual inventors but believes instead that it may be of value only to small manufacturers.’Footnote ⁴⁷ Second, Hurford wonders ‘whether we can be guaranteed that the new system achieves a proper balance between the need to stimulate inventive activity on the one hand and freedom of access to all publicly available technology on the other hand.’Footnote ⁴⁸ Third, Hurford was sceptical of the claims that the petty patent system was unique: ‘After all, many other countries have had, as I mentioned earlier, a two-tiered system for some time.’Footnote ⁴⁹ He wondered ‘why our legislation differs from the two-tiered systems elsewhere.’Footnote ⁵⁰ (Such a concern is at the heart of this comparative collection.) Finally, Hurford questioned whether there was a need to give so much discretion to the Commissioner of Patents in the operation of the system. The member of Adelaide wondered ‘if the legislation were much more detailed it could become a jungle such as the tax legislation has become a jungle.’Footnote ⁵¹ Such questions seem prophetic – not only in relation to the operation of the petty patent system, but in respect of its successor, the innovation patent system.

However, the petty patent system was not well used, as well documented by Sam Ricketson and Megan Richardson.Footnote ⁵² The textbook writers commented: ‘Although it is clear that petty patents are potentially a very appropriate form of protection for particular kinds of inventions that can, by their nature, be brought to commercialization more rapidly than others, there has scarcely been an extensive usage of the regime.’Footnote ⁵³ Ricketson and Richardson said of petty patents: ‘Petty patents are essentially “quickie” patents intended for innovations that are more readily commercialized.’Footnote ⁵⁴

The Advisory Council on Industrial Property reviewed the operation of the petty patent system in 1995.Footnote ⁵⁵ It recommended that there should be a new second tier patent system in Australia to fill gaps in the range of intellectual property regimes (including in between patent law, designs law, and copyright law).

Likewise, the Intellectual Property and Competition Review Committee – with Henry Ergas, Professor Jill McKeough, and John Stone – recommended that the petty patent system should be replaced with an innovation patent system.Footnote ⁵⁶ In its advice, ‘The Committee strongly supports the Advisory Council on Intellectual Property (ACIP) Review of Petty Patents recommendations on the innovation patent, and urges the Government to expeditiously progress the relevant changes to the Patents Act.’Footnote ⁵⁷ The Intellectual Property and Competition Review Committee commented: ‘We believe that the role of the innovation patent will be enhanced if the Committee’s proposals for higher thresholds for the standard patent are implemented.’Footnote ⁵⁸ The Intellectual Property and Competition Review Committee observed: ‘The Petty Patent was supposed to particularly encourage SMEs to innovate and patent, but it is not widely used.’Footnote ⁵⁹ The Intellectual Property and Competition Review Committee later noted that utility models of patent protection were popular in comparative jurisdictions: ‘Many countries have a lesser patent (often called a ‘utility’ patent), which attempts to balance lower threshold tests with a lower level of protection (length and breadth) to encourage lower levels of innovation, particularly by small to medium enterprises.’Footnote ⁶⁰

Professor Jill McKeough has been an influential figure in intellectual property law reform in Australia.Footnote ⁶¹ She has been insistent that intellectual property should be redesigned to better promote competition policy.Footnote ⁶²

10.2 Innovation Patent

In his 2000 second reading speech, the Hon. Warren Entsch – the parliamentary secretary to the Minister for Industry, Science, and Resources – explained the impetus for the Patents Amendment (Innovation Patents) Bill 2000 (Cth):

The Secretary said: ‘A major factor contributing to the reduced cost of obtaining an innovation patent will be the grant of a patent without substantive examination – the time consuming and costly process during which an application is assessed against relevant statutory criteria.’Footnote ⁶⁴ He noted: ‘Substantive examination will only occur if directed by the Commissioner of Patents or requested by the patent owner or a third party.’Footnote ⁶⁵ Entsch commented: ‘However, to reduce the scope for unsubstantiated threats, the owner of an innovation patent may only take action to exercise their rights if their patent has been substantively examined.’Footnote ⁶⁶

Entsch added: ‘Although innovation patents will be available for most of the types of invention currently covered by standard patents, they will not be available for plants and animals, or biological processes for the generation of plants and animals.’Footnote ⁶⁷ He noted: ‘This exclusion does not include microbiological processes and innovation patents will be available for processes such as cheese and wine making and the synthesis of industrial compounds using micro-organisms.’Footnote ⁶⁸ Entsch observed: ‘Over 48 other industrialised countries, including Japan and Germany, have already introduced second-tier patent systems.’Footnote ⁶⁹ He contended: ‘Overseas experience suggests that the innovation patent should provide better access to intellectual property rights and foster innovation by local enterprises.’Footnote ⁷⁰

The main opposition, the Australian Labor Party, supported the passage of the legislation. The Hon. Bob McMullan expressed his party’s enthusiasm for the innovation patent regime:

McMullan hoped that ‘when subsequent reviews are done, they will say that Australia’s international patent performance is at the international cutting edge, instead of just fair to middling, and that our research and development performance is improving.’Footnote ⁷² He trusted that the adoption of the innovation patent system would encourage further investment in Australian research and development:

In retrospect, the Australian Labor Party could have been more circumspect about the adoption of the regime, and questioned whether the scheme was likely to achieve its objectives.

His colleague Dick Adams agreed that the patent regime had a significant role to play in innovation policy: ‘The protection provided through the patent scheme has had a big part to play in this success and will encourage people to continue their research to develop new and innovative products, exploit new technology and promote the transfer of technology to Australia.’Footnote ⁷⁴ Nonetheless, he was doubtful as to whether the Coalition Government had provided sufficient support for education, research, and science: ‘It seems a great pity that so much can be achieved by Australians all over the nation, yet this government is not prepared to put decent amounts of funds into research and development, or create policies to do so.’Footnote ⁷⁵ In his view, ‘It cannot just be left to the business community to put up the wherewithal to develop ideas’ because ‘there are times when there is insufficient risk capital available for the private sector to invest.’Footnote ⁷⁶

In the Senate, Senator Kay Patterson of the Government noted: ‘The Patents Amendment (Innovation Patents) Bill 2000 (Cth) is a key part of this process, building on the government’s commitment to providing a patent system which better meets the needs of Australian business and ensuring that Australian intellectual property laws remain internationally competitive.’Footnote ⁷⁷ She was pleased that the opposition was prepared to support the regime: ‘As I said, I welcome the opposition’s support of the bill, which will enable both large and small businesses to profit from their investments in innovation.’Footnote ⁷⁸

While these excerpts represent key contributions of politicians in the debate, it should be noted that there was some other commentary from politicians about the proposed new innovation patent system as well.

In 2001, the Australian Government replaced the petty patent system with the innovation patent regime as a lower tier patent to supplement the standard patent system. Essentially, this scheme offers protection for a maximum term of eight years in respect of inventions that display an innovative step. Substantive examination will only occur if directed by the Commissioner of Patents or requested by the patent owner or a third party or if there is an infringement suit.

There was significant discussion about the threshold for an innovation patent – namely, the requirement for an innovative step, as opposed to an inventive step in relation to a standard patent.

10.3 Filing and Registration Data on Innovation Patents

In its 2016 inquiry, the Productivity Commission reviewed the filing and registration data on innovation patents.Footnote ⁷⁹ The Productivity Commission observed: ‘In 2015, there were around 6500 active innovation patents in Australia (compared to over 130,000 standard patents).’Footnote ⁸⁰ The Productivity Commission highlighted that the innovation patent system had a significantly lesser level of use: ‘Between 2010 and 2015 the number of innovation patents granted each year ranged between 1300 and 1800 (compared to around 18,000 per year for standard patents).’Footnote ⁸¹ The Productivity Commission commented that most innovation patent applicants only used the system once: ‘Parties that use the [Innovation Patent System] typically do so only once.’Footnote ⁸²

The Productivity Commission also charted the use of innovation patents across various technology fields: ‘Most active innovation patents in 2015 were in the fields of civil engineering, furniture and games, IT methods for management, and electrical machinery, apparatus, and energy.’Footnote ⁸³ They observed: ‘Use of innovation patents relative to standard patents varies across technology fields.’Footnote ⁸⁴ The Productivity Commission commented: ‘Relative use of innovation patents is highest in the IT methods for management technology field, where they make up around 20 percent of total patents.’Footnote ⁸⁵ Nonetheless, the Productivity Commission observed that there was little use of the innovation patent system in the life sciences: ‘At the other end of the scale, innovation patents comprise less than 1 percent of total patents granted in chemistry-related technologies such as organic fine chemistry and biotechnology.’Footnote ⁸⁶

In a scathing review, the Productivity Commission questioned the social value of a number of innovation patents. It provided a gallery of absurd innovation patents in its policy analysis. The Productivity Commission highlighted a ‘Heart rate path optimiser (2015101130)’, which was ‘A device for determining the heart rate of a user comprising, among other things, a sensor configured for providing heart rate signals.’Footnote ⁸⁷ The Productivity Commission noted an innovation patent for ‘A Bed for a Pet (2013100250)’ which consisted of ‘A mat and a frame that elevates the mat.’Footnote ⁸⁸ The Productivity Commission also showcased the innovation patent for a ‘Pizza Box Bib (2015100884)’ which consisted of ‘A pizza box where the lid includes a removable section, which when removed forms a recess that accommodates the neck of a user.’Footnote ⁸⁹ The Productivity Commission emphasized that ‘Innovations are of greater social value where they advance technology and human knowledge, and generate knowledge spillovers in other areas of the economy.’Footnote ⁹⁰

The mass media also raised concerns about questionable innovation patents being granted for sex treatments and therapies.Footnote ⁹¹

10.4 Litigation over Innovation Patents

It is a difficult exercise to engage in empirical research in respect of litigation involving innovation patents. There were a range of lawsuits, which emerged over the twenty years of the innovation patent. The Australian Legal Information Institute (AustLII) database brings up 120 documents related to the innovation patent from the Australian Patent Office database.Footnote ⁹² The AustLII database also contains a number of instances of litigation involving the innovation patent – raising issues about patent validity and patent infringement.

10.5 The Advisory Council on Intellectual Property

The Advisory Council on Intellectual Property was a specialist body established by the Federal Government to provide expert advice on intellectual property law reform (particularly in the areas of industrial property).Footnote ¹³⁵ The organization included representatives from business and manufacturing, the legal and patent and trademark attorney professions, academia, and research.

There was also debate about the interrelationship between the innovation patent system and secondary forms of intellectual property – most notably plant breeders’ rights.Footnote ¹³⁶ The Advisory Council on Intellectual Property led by Professor Andrew Christie of the University of Melbourne investigated the interrelationship between plant breeder’s rights and the innovation patent.Footnote ¹³⁷

An issues paper was released in 2002.Footnote ¹³⁸ The Advisory Council on Intellectual Property sought comment on a number of questions. Is the current ‘gap’ in IP protection for inventions with a lower level of threshold, that involve plant and animal subject matter, seen as an existing or potential problem? Given the existence of the standard patent system and the PBR system, is there a need for those involved with plant and animal subject matter R&D in Australia to be able to protect their research with the innovation patent? What, if any, are the national benefits of excluding plant and animal subject matter from the innovation patent? What impact would the innovation patent have on non-IP-rights holders were it to include plant and animal subject matter? There were strong objections from the plant breeders’ rights community who were concerned that the innovation patent system could provide competition and duplication for its system.

A final report was delivered in November 2004.Footnote ¹³⁹ The Advisory Council on Intellectual Property observed: ‘Where a proposal to restrict competition lacks clear benefits, the status quo should be maintained.’Footnote ¹⁴⁰ The Advisory Council on Intellectual Property demurred from expanding the innovation patent system: ‘As relatively little concern has been expressed over the innovation patent exclusion for animals and processes for their generation, ACIP considers that there is insufficient reason for change at this stage.’Footnote ¹⁴¹ The Advisory Council on Intellectual Property did contemplate that there was scope for a reconsideration of the issue in the future: ‘However, in the future innovation patent protection may be needed due to an increase in the development of genetically modified organisms, which is a potentially more costly form of breeding.’Footnote ¹⁴²

There was also concern about overlap between the regime for industrial designs, and the innovation patent. There has been ongoing process of law reform in Australia in respect of the industrial designs system.Footnote ¹⁴³ Nonetheless, the designs regime is still only used in a minor way compared to the heavy use of patents and trademarks.

The Advisory Council on Intellectual Property conducted a full-scale inquiry into innovation patents.Footnote ¹⁴⁴ There was an issues paper.Footnote ¹⁴⁵ There was an options paper.Footnote ¹⁴⁶ There was a Final Report published in 2014, and revised in May 2015.Footnote ¹⁴⁷ There was also an accompanying Verve Economics Report on the Economic Value of the Innovation Patent.Footnote ¹⁴⁸

Initially, in the 2014 version of the final report, the Advisory Council on Intellectual Property equivocated as to the fate of the innovation patent.Footnote ¹⁴⁹ The organization argued that ‘ACIP has been unable to obtain adequate empirical evidence as to whether the system does or does not stimulate innovation in Australian SMEs.’Footnote ¹⁵⁰ Accordingly, ‘ACIP is therefore unable to make a recommendation on whether to retain or abolish the innovation patent system.’Footnote ¹⁵¹ The Advisory Council on Intellectual Property did make some contingent law reform recommendations: ‘If the government chooses to retain the system, then ACIP urges it to consider various recommendations in this report to enhance its effectiveness and to reduce some of the system’s unintended consequences.’Footnote ¹⁵² In particular, the Advisory Council on Intellectual Property recommended raising the innovative step threshold; adoption of substantive examination; rules on the use of the term ‘patent’; the operation of manner of manufacture for innovation patents; and the use of remedies for infringement of innovation patents.

In a May 2015, Corrigendum, the Advisory Council on Intellectual Property further revised its position on the innovation patent, calling for its abolition.Footnote ¹⁵³ The Advisory Council on Intellectual Property took note of the economic analysis of IP Australia: ‘A key finding in this research paper is that Australian SMEs are less likely to use the patent system after filing an innovation patent than a company that has not previously filed an innovation patent.’Footnote ¹⁵⁴ The Advisory Council on Intellectual Property concluded that ‘innovative activity is not being stimulated among these groups by the innovation patent system.’Footnote ¹⁵⁵ The Advisory Council on Intellectual Property observed: ‘In light of the information made available by the IPGOD dataset and the analysis presented in this research paper, ACIP is now able to make an assessment of the innovation patent system’s effectiveness in stimulating innovation among SMEs.’Footnote ¹⁵⁶ The Advisory Council on Intellectual Property concluded: ‘ACIP considers it likely that the innovation patent is not achieving this objective and the Government should therefore consider abolishing the system.’Footnote ¹⁵⁷

The Advisory Council on Intellectual Property was subsequently dissolved by the Abbott Government – as part of its effort to reduce ‘red tape’ in the operation of government. This decision meant that IP Australia has had to increasingly do its own ‘in-house’ law reform and public policy work, because of a lack of a specialist advisory body. Moreover, other generalist law reform bodies like the Productivity Commission and the Australian Law Reform Commission have had to take up major work in respect of intellectual property law reform. Parliamentary committees have often questioned whether they are best placed to deal with the technicalities of intellectual property law reform. It is doubtful that the abolition of the Advisory Council on Intellectual Property has led to any further efficiencies in the law reform process in Australia in relation to intellectual property.

10.6 The Productivity Commission

The Productivity Commission is a unique Australian policy body, which provides independent research advice to the Australian Government on economic and social issues affecting the welfare of Australians. The Productivity Commission is known for conducting extensive empirical research in respect of public policy issues. The Productivity Commission has been influential in driving law reform and public policy debate in Australia across a range of fields.

The Productivity Commission has been given a number of references over the years in respect of matters of intellectual property. The Productivity Commission has considered the interaction between intellectual property and trade policy.Footnote ¹⁵⁸ The Productivity Commission has examined the operation of flexibilities in respect of compulsory licensing and crown use for the patent regime and industrial designs.Footnote ¹⁵⁹ The Productivity Commission has also engaged in a systematic evaluation of the entirety of Australia’s intellectual property regime.Footnote ¹⁶⁰

The then Treasurer Joe Hockey asked the Productivity Commission to investigate Australia’s intellectual property system – making specific reference to ‘the findings and recommendations of the Advisory Council on Intellectual Property’s Review of the Innovation Patent System’.Footnote ¹⁶¹

A key issue in its inquiry into Australia’s intellectual property arrangements was the question of the innovation patent regime. The Productivity Commission produced an issues paper and a discussion paper, and sought feedback from a wide array of stakeholders. There were submissions on the topic of an innovation patent from various interested parties.

The generic pharmaceutical company Alphapharm was an opponent of innovation patents, expressing concerns that such a regime could be exploited for the purposes of ‘evergreening’.Footnote ¹⁶² In other words, the generic company was concerned that pharmaceutical drug companies would seek to extend the life of an initial patent, with further innovation patents. Alphapharm maintained that innovation patents should not be available for therapeutic goods: ‘Immediately amend the Patents Act 1990, with retrospective effect, so that an innovation patent cannot contain a claim relating, concerning or associated with a therapeutic good.’Footnote ¹⁶³

While Apple had filed many innovation patents, Microsoft was by contrast a staunch opponent of innovation patents.Footnote ¹⁶⁴ Microsoft commented: ‘Microsoft agrees with a number of the Draft Report’s conclusions and recommendations relating to various improvements to Australia’s patent regime (including the proposed abolition of the innovation patent system and adoption of a more stringent standard for inventive step).’Footnote ¹⁶⁵ Microsoft clearly took the strategic view that it had a much more sophisticated system of standard patents than many of its rivals and competitors, and could operate without a second-tier regime of innovation patents.

The key defender of innovation patents was the patent attorney profession. They mounted a rearguard action, calling for the maintenance or reform of the innovation patent system, instead of abolition of the system. Patent attorney and blogger Mark Summerfield bemoaned the push to terminate the innovation patent system, as an over-reaction by the Federal Government.Footnote ¹⁶⁶ He argued that ‘the overwhelming majority of those advocating to retain the system support reforms to mitigate some of the problems that have become apparent, and improve its effectiveness as a second-tier right that can support the needs of SMEs.’Footnote ¹⁶⁷

In its key points, the Productivity Commission commented: ‘Australia’s patent system grants exclusivity too readily, allowing a proliferation of low-quality patents, frustrating follow-on innovators and stymieing competition.’Footnote ¹⁶⁸ The Productivity Commission observed: ‘To raise patent quality, the Australian Government should increase the degree of invention required to receive a patent, abolish the failed innovation patent, reconfigure costly extensions of term for pharmaceutical patents, and better structure patent fees.’Footnote ¹⁶⁹ In its overview, the Productivity Commission stressed that ‘the “second-tier” patent experiment has failed.’Footnote ¹⁷⁰ The Productivity Commission noted: ‘Some participants have called for the IPS to be abolished; others have called for its reform.’Footnote ¹⁷¹

The Productivity Commission questioned whether it was viable to reform the Innovation Patent regime, making reference to the film Groundhog Day, directed by Harold Ramis, and starring Bill Murray and Andie MacDowell:

The Productivity Commission concluded: ‘The community’s interests, and the interests of SMEs, would be better served by abolishing innovation patents and directly tackling the IP issues of greatest concern to SMEs, such as patent infringement and enforcement costs.’Footnote ¹⁷³

In its analysis of Australia’s intellectual property system, the Productivity Commission devoted a full chapter to the innovation patent system in its final report.Footnote ¹⁷⁴ The Productivity Commission were critical of the operation of Australia’s innovation patent system, questioning whether it was serving its original purpose. The Productivity Commission lamented: ‘By failing to target socially valuable, additional innovations, the IPS can have unintended consequences.’Footnote ¹⁷⁵ The Productivity Commission commented: ‘Some participants linked the low innovative threshold to a proliferation of obvious patents, legal uncertainties and patent thickets, which in turn raise barriers to entering markets and blunt competitive pressure, itself a driver of innovation.’Footnote ¹⁷⁶ The Productivity Commission lamented: ‘A multitude of low-value patents make it harder for an innovative firm to be sure it is not infringing someone else’s patent.’Footnote ¹⁷⁷

Ultimately, the Productivity Commission supported the abolition of the innovation patent system:

The Productivity Commission submitted its report to the Treasurer Scott Morrison – who was subsequently the next Conservative Coalition Prime Minister of Australia.

10.7 IP Australia

In addition to the work of these other law reform bodies, IP AustraliaFootnote ¹⁷⁹ has also undertaken its own empirical research into the operation of innovation patents.

The economics unit of IP Australia engaged in data analysis of Australia’s innovation patent system. This study raised questions as to whether the scheme was operating as it was intended – namely, to support inventors and small-to-medium inventors. The report found as follows:

The research paper observed: ‘Only 23 SMEs have become moderate users of the innovation patent system, filing at least 5 innovation patents, with at least one enforceable right, and entering the patent system via an application for an innovation patent.’Footnote ¹⁸¹ The research paper added: ‘The average SME or private inventor files once and never again (74%) does not receive any enforceable right (83%), and lets their patent expire early because they see its value at less than the $110–$220 cost of renewal (78%).’Footnote ¹⁸² The research paper concluded: ‘The low levels of repeated use by SMEs suggest that the innovation patent is not fulfilling its policy goal of providing an incentive for Australian SMEs to innovate, and the evidence shows a reduced likelihood of patenting after participating in the innovation patent system.’Footnote ¹⁸³ The research paper maintained: ‘Given the low private value of the system, it is likely that the system is a net cost to most of the SMEs that use it, and the system has imposed a regulatory burden of more than $100m since its introduction.’Footnote ¹⁸⁴

10.8 Abolition of the Innovation Patent

As a result of these various investigations, the Australian Government decided to abolish the innovation patent. IP Australia observed that ‘innovation patents were being used by large firms as a strategic tool to stifle competition’.Footnote ¹⁸⁵ IP Australia was worried that ‘low standards for innovation patents inhibit genuine innovation and competition’.Footnote ¹⁸⁶ Moreover, IP Australia expressed concerns that ‘innovation patents put Australian innovators at risk in overseas markets’, because there was not necessarily matching protection in other jurisdictions.Footnote ¹⁸⁷

There was some resistance to this proposal for the abolition of the innovation patent. Professional organisations representing patent attorneys and trademarks mounted a desperate but ultimately futile political campaign to save the innovation patent, lobbying policy-makers to reconsider the issue.Footnote ¹⁸⁸ Nonetheless, the Conservation Coalition that made up the Federal Government was unmoved, and proceeded with its plan to phase out the innovation patent.

Opposition Labor Senators argued that ‘the evidence provided from a number of parties suggests a significant gap could emerge if the innovation patent is removed without alternative mechanisms being put in place to specifically assist small- and medium-sized enterprises (SMEs) to access the patent system and innovate.’Footnote ¹⁸⁹

The Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2019 (Cth) has enabled the phase out of the innovation patent system. In her second reading speech, the Hon. Karen Andrews – the Minister for Industry, Science, and Technology – explained the decision.Footnote ¹⁹⁰ She said: ‘This second-tier patent was intended to incentivise small to medium-sized Australian businesses to invest in research when it was introduced in 2001.’Footnote ¹⁹¹ Andrews commented: ‘However, in the 18 years since then, it has become clear that the second-tier patent has been more harmful than helpful for SMEs.’Footnote ¹⁹² She observed: ‘There is widespread agreement among stakeholders that the system is not fit for purpose.’Footnote ¹⁹³ Andrews noted: ‘Some people argue that the second-tier patent should be reformed, but there is no agreement on a workable alternative.’Footnote ¹⁹⁴ She pointed to the outcome of law reform reviews: ‘Both the Productivity Commission and the former Advisory Council on Intellectual Property recommended that the innovation patent system be abolished’.Footnote ¹⁹⁵ Andrews noted: ‘Both found there is no evidence that the second-tier patent stimulates innovation or research in Australia.’Footnote ¹⁹⁶ She stressed: ‘What it does do, according to both bodies, is lead to uncertainty, confusion and a higher regulatory burden, particularly for our Australian SMEs.’Footnote ¹⁹⁷ Andrews commented: ‘The amendments ensure that existing rights, filed before commencement, are maintained and protected, ensuring a balanced phasing out.’Footnote ¹⁹⁸

The Australian Labor Party recognized that there were flaws with the regime. The Shadow Minister the Hon. Clare O’Neil – the member for Hotham – questioned whether the abolition of the innovation patent would be helpful for SMEs:

O’Neil said that the Australian Labor Party had two proposals: ‘The first was that we want to make sure that there’s a proper, thorough statutory review done into the appropriateness of the IP system for small business, to make sure that we are thinking about these 2.2 million small businesses when we create a system and when we make legislative change.’Footnote ²⁰⁰ She also noted that the opposition party wanted there to be more time before the phase out of the innovation patent system: ‘The second part of this was just giving small business a bit more time.’Footnote ²⁰¹

The Australian Labor Party’s Graham Perrett worried: ‘Removing the innovation patent scheme without any alternative mechanisms being put in place simply creates a significant and serious gap for small and medium businesses seeking support to access the patent system and to innovate.’Footnote ²⁰²

The Australian Labor Party’s Hon. Anika Wells MP expressed concerns that ‘some law firms specialising in intellectual property are strategically using these very innovation patents as a way to increase uncertainty over the scope of rights for competitors and improve their own clients’ bargaining position in patent disputes and to frustrate entry by competitors.’Footnote ²⁰³

South Australian Senator Rex Patrick (of the Centre Alliance originally, and then later an independent) called for the retention of the innovation patent system.Footnote ²⁰⁴ He observed that SMEs would be hurt by the abolition of the regime. Likewise, Senator Malcolm Roberts of One Nation opposed the removal of the innovation patent system.Footnote ²⁰⁵

Senator Matthew Canavan of the National Party, and a Minister in the Coalition Government closed the Senate discussion, observing: ‘This bill will help ensure that Australia’s intellectual property system remains fit for purpose into the future and balances the needs of innovators and users of technologies with those of the general public too.’Footnote ²⁰⁶

The Australian Government has taken a further step in the process of phasing out the innovation patent which began in February 2020, with final applications accepted on 25 August 2021. There are no plans to reintroduce a second tier system of patents in Australia. The New Albanese Government of the Australian Labor Party has shown no enthusiasm for revisiting the question of innovation patents.

10.9 Breakthrough Patents

The new Albanese Government has a strong emphasis on the promotion of breakthrough inventions by Australian researchers in the private sector and the public sector. The Institute of Patent and Trademark Attorneys called for a reintroduction of a modified version of innovation patents.Footnote ²⁰⁷ However, the Australian Labor Party does not seem interested in revisiting the demise of the innovation patent system. Indeed, the Albanese Government is very much focused upon pioneering inventions – rather than incremental innovation.

The new Minister for Industry and Science, Ed Husic MP, gave a landmark address to the National Press Club, outlining the innovation policy of the new Albanese Government.Footnote ²⁰⁸

Husic said that the Albanese Government was ‘encouraging Australians to invest in new ideas and new businesses that could be our next big breakthrough.’Footnote ²⁰⁹ He highlighted in particular quantum technologies, robotics and sensing technologies, and clean energy generation and storage technologies. The Minister emphasized: ‘Having coherent, national approaches to the development and uptake of key emerging technologies, are part of ensuring these technologies don’t just deliver economic growth, but safeguard our national wellbeing.’Footnote ²¹⁰

Husic did note the Government’s commitment to small to medium enterprises: ‘For this manufacturing base to be sustained, we must provide more opportunities for Australian businesses to develop and market their products within Australia and overseas.’Footnote ²¹¹ He highlighted the Buy Australia plan, a significant procurement reform program. Husic said that this programme ‘aims to level the playing field for SMEs, regional and Indigenous-owned businesses, and support the creation of new jobs.’Footnote ²¹² It is a different policy lever to support small to medium enterprises (as opposed to say a second-tier patent system).

In conclusion, Husic stressed: ‘Our government is laying the foundation for Australia’s future prosperity and wellbeing: a nation that makes things here and trades them with the world.’Footnote ²¹³ He maintained: ‘The decisions we are making today are all in pursuit of a vibrant future for science, industry and manufacturing in Australia.’Footnote ²¹⁴ Noting ‘We come up with big ideas’, Husic observed that ‘as a country we must cultivate the courage to follow them through.’Footnote ²¹⁵ Husic commented: ‘We must make these investments in our human capital, in these big ideas, and in our technological potential, work together.’Footnote ²¹⁶ He emphasized: ‘The Albanese Government has faith in Australian know-how; faith in our people; faith in our ability to build things here.’Footnote ²¹⁷

10.10 Conclusion

Starting with the case of study of the innovation patent application for reinventing the wheel, this chapter has sought to chart the rise and fall of the innovation patent system in Australia. This historical study has certainly highlighted how perennial these debates have been around on second-tier patent systems in Australia. It has highlighted the initial enthusiasm and exuberance of policy-makers for the adoption of a second-tier utility patent system in Australia – with first the petty patent system, and then the innovation patent system. This chapter has also highlighted the dysfunction of the innovation patent system. The lack of proper substantive examination raised questions about the legitimacy and credibility of the system – most notably, with the innovation patent granted for a wheel. There has been debate about the limits of patentable subject matter for innovation patents – particularly in light of the Myriad dispute. There remain profound philosophical differences amongst judges as to how to define the limits and boundaries of patentable subject matter. There has also been angst about the threshold requirement for an innovative step under an innovation patent. There has been a concern about the abuse of innovation patents in infringement proceedings – with worries about the rise of patent trolls and gamesmanship amongst patent applications. The Productivity Commission, the Advisory Council on Intellectual Property, and IP Australia have all undertaken incisive reviews into the operation of the innovation patent regime, highlighting malfunctions in the system. This chapter has reviewed the efforts of law reform bodies to overhaul and eventually abolish the innovation patent system. It has observed that the new Albanese Government has focused on breakthrough innovation – rather than incremental innovation. The Australian story of the innovation patent is a cautionary tale for other jurisdictions in setting up and running a second-tier patent system. The disappearance of the petty patent system and the extinction of the innovation patent regime in Australia raises questions on whether utility models of patent protection will survive elsewhere around the world.

It is widely acknowledged in the world today that the fundamental goal of the patent system is to encourage invention and creation, promote technological achievement, international technological exchange, and economic development by recognizing and protecting the intellectual achievements of inventors. In this respect, ChinaFootnote ¹ is no exception. Patents have been playing an important role in stimulating technological innovation in the process of China’s modern development. Especially noteworthy, the number of patents has exploded in the past decade.Footnote ²

Although the initial establishment of China’s intellectual property system started relatively late, this transplanted legal system has maintained rapid development in recent years. The fast-growing increase in the number of granted patents is one of the typical signs of this rapid development process. In general, the sharp increase in the number of patent grants reflects the fast-reviving progress of China’s contemporary science and technology to a certain extent, but it should not be forgotten that the number of granted patents is merely one of the oft-used indicators of innovation ability.Footnote ³ In contrast, the quality of granted patents, invention patents in particular, is usually the best indicator of technological advancement. Unfortunately, the recent explosion in the number of patents in China has been accompanied by the emergence of low-quality patents, seriously eroding the legislative purpose of the patent system.Footnote ⁴ Such low-quality patents are closely linked to patents in the category of utility model patents. Naturally, many take a dim view of this patent sphere with relatively low quality, or even no quality at all, that is, so-called “junk patents”.Footnote ⁵ These institutional and practical deficiencies suggest a pressing need for systemic improvement. As a result, China has steadily taken measures to improve the quality of its issued patents.Footnote ⁶

Since April 1, 1985, when China’s first Patent LawFootnote ⁷ came into effect, China has established a legal protection system for utility models. At present, after four revisions of the Patent Law, China’s utility model patent legal system has also been improved to a certain extent. However, among the authorized utility model patents, those that fully meet the necessary conditions of novelty and inventive step have not yet dominated. Of course, this phenomenon is not unique only in China. Historically and globally, utility model patents have been dubbed “petty patents” essentially on account of their limited scope, lower requirement for inventiveness, lack of stringent substantive examination, uncertainty of validity, and shorter term.

The purpose of this chapter is to illuminate the ongoing optimization of the Chinese utility model patent system in the context of the development of China’s overall patent system. Accordingly, Section 11.1 traces the emergence of China’s Patent System, including the Chinese utility model patent-based subsystem. Section 11.2 centers on the basic contours of the Chinese utility model patent system. Section 11.3 then summarizes existing deficiencies of the Chinese utility model patent system and future development trends. It concludes with a discussion of potential implications of proposed revisions to the Chinese utility model patent system.

11.1 Foundation and Formation of China’s Utility Model Patent System

11.2 Main Features of Existing Chinese Utility Model Patent Legal System

11.3 Deficiencies and Development Trends of Chinese Utility Model Patent Legal System

China’s current utility model patent legal system has pros and cons. On one hand, it has advantages such as “the rapid protection of short-lived innovations”.Footnote ⁴² On the other hand, deficiencies have long been identified, particularly over the past decade, which have resulted in national attention and corresponding multi-level official institutional revisions to the law.

11.4 Conclusion

China originally introduced the Chinese utility model patent system in response to external pressures on its intellectual property system. Then, in an effort to bolster domestic innovative activity, it introduced a series of incentives and subsidies that resulted in overuse of the Chinese utility model patent system, yielding a large number of low-quality utility model patents for which it has received both domestic and international criticism. In an effort to reform this system, China has introduced new procedural requirements to its utility model patent legal system, including, most importantly, a substantive examination to determine whether an application obviously lacks inventiveness. While the precise definition of this threshold is yet to be developed, policy makers should seek to maintain at least some difference between utility model patents, which serve valuable social goals, and ordinary patents, which are subject to a higher standard of inventiveness. Hopefully, these essentially self-driven ongoing technology-enhancing initiatives may benefit not only China but also contribute to a globally virtuous cycle of technological competition.Footnote ⁶⁷

Japan introduced its utility model system in 1905, twenty years after the introduction of the patent system in 1885. Although the utility model system has been maintained to this day, the content and use of the system have changed considerably over the past century.

In rough summary, Japan’s utility model system played a major role in the development of Japanese industrial technology until the 1970s. That is, until the 1970s, the number of applications for utility model registrations exceeded that for patents. However, with the improvement of the Japanese industry’s technological capabilities and other factors, patent applications began to outnumber utility model applications around 1980, and the number of utility model applications declined sharply from 1985 onward. In response, the utility model system was extensively revised in 1993, including the abolition of substantive examinations, with the aim of making the system more attractive by ensuring that the system provides early protection for technologies with short life cycles. However, this revision caused problems, such as the loss of stability of rights, and the number of utility model applications has continued to decline to the present day. The recent utilization of the utility model system in Japan is about 5,000 applications/registrations per year.

This chapter first provides an overview of the current utility model system in Japan. Second, the historical background of the system is reviewed. Third, the recent use of the utility model system is presented. Fourth, an evaluation and some proposals for the revision of the utility model system in Japan will be presented.

12.1 Outline of the Current Utility Model System in Japan

12.1.3 Application Procedures and Costs

The utility model application procedure is shown in Figure 12.1.

Figure 12.1 Procedures for obtaining a Japanese utility model right

The cost of the application is as follows.Footnote ¹⁵

• application fee: JPY 14,000

• registration fee per year: JPY 2,100 + number of claims × 100

• patent attorney’s fee (estimate): JPY 150,000 – 250,000

12.2 Historical Development of Japanese Intellectual Property Law and the Utility Model Act

12.3 Status and Use of the Utility Model System

12.3.1 Trends in Applications and Registrations

Figure 12.2 shows trends in applications for utility model registrations and patents up to the year 2000. The number of applications for both types increased significantly during the period from around 1955 to 1973 which is called the “high-growth” period of the Japanese economy. Until around 1980, the number of applications for utility model registration was higher than that for patents. Thus, the utility model system was actively used until that time.

Figure 12.2 Applications for Japanese patents and utility models.

Based on Advisory Council for the Japan Patent Office 2004, 8

However, after around 1980, patent applications continued to increase significantly, while applications for utility model registrations remained almost flat and declined sharply from the late 1980s onward. This is believed to be due to the rise in the level of technology in Japan.

Recent trends in applications and registrations are shown in Figure 12.3 and Table 12.1.Footnote ⁵²

Figure 12.3 Applications and registrations for utility models (in units in the right axis) and patents (in units in the left axis) from 2011 to 2022

Table 12.1 Utility models in Japan (2011–2022)

Year	Utility models		Patents
	Applications	Registrations	Applications	Registrations
2022	4,513	4,615	289,530	201,420
2021	5,239	5,499	289,200	184,372
2020	6,018	5,518	288,472	179,383
2019	5,241	5,033	307,969	179,910
2018	5,388	5,303	313,567	194,525
2017	6,106	6,024	318,481	199,577
2016	6,480	6,297	318,381	203,087
2015	6,860	6,695	318,721	189,358
2014	7,095	7,017	325,989	227,142
2013	7,622	7,363	328,436	277,079
2012	8,112	8,054	342,796	274,791
2011	7,984	7,595	342,610	238,323

12.4 Recent Discussions on the System

A research committee established by the Japan Patent Attorneys Association in 2021 has identified the following problems with the current utility model system in Japan.Footnote ⁵⁴

• It is difficult to exercise the rights. Because the rights are registered without substantive examination, the rights are not stable, and there is a restriction that rights can be exercised only after a warning is given by presenting a Utility Model Technical Opinion, making the system difficult for users to utilize.

• The scope of protection is too narrow and does not adequately respond to recent technological trends.

• With respect to the inventive step requirement, although the Act adopts a standard of being not “very easy to devise,” distinguishing it from the inventive step requirement under the Patent Act, there is no substantive difference in the actual examination by the JPO.

• In recent years, the examination of patent applications in Japan has become more expeditious and the accelerated examination mechanisms are also available, making the advantages of early grant of rights in the utility model system relatively small.

Therefore, the committee recommended reform of the utility model system. Specifically, the proposed amendments include the following:

• Expand the scope of protection. The limitation that a device must relate to the shape, structure, or combination of articles should be abolished, and general devices (technological ideas) should be eligible for protection.

• Substantive examinations should be introduced as a mandatory or optional system.

• With regard to the inventive step requirement, the examination guidelines should be revised in order to appropriately implement the statutory language that it is not “very easy to devise.”

• Shorten the term of rights protection.

A prominent scholar has also proposed a reform to make the utility model system more user-friendly for individual inventors and small high-tech companies, including by expanding the scope of protection, simplifying disclosure and claim forms, simplifying examination, and granting statutory nonexclusive licenses to third parties who agree to cross-license in the future.Footnote ⁵⁵

Despite the above recommendations, at this point, there is no explicit indication that the JPO will review the utility model system, and for the time being the status quo is likely to continue.

13.1 History of Utility Model Protection in Korea

Just after the liberation of Korea from Japanese colonial rule, the US Military Government enacted the Patent Act in 1946, which contained statutory provisions on utility models as well as patent protection. However, due to the Korean War and social unrest, utility model applications under the Patent Act of 1946 were extremely insignificant. The National Reconstruction Supreme Council, which was established as a result of General Park Chung-hee’s coup, enacted the Utility Model Act on December 31, 1961, while planning the first 5-year economic development plan.

Until the mid-1980s, Korea’s economy developed rapidly with an average annual GDP growth rate of 9.5 percent, which depended mostly on highly educated workers with Korean companies learning Western technologies and improving them to suit domestic manufacturing conditions. Naturally, companies and technicians with low technological standards preferred utility model protection to patents.

Rapid economic developments in KoreaFootnote ¹ have caused substantial changes in both the country’s general economic structure and the role of IP law. In the mid-1980s, Korea experienced numerous labor disputes and such rapid wage increases that its economic structure had to shift from labor-intensive industries to technology-intensive ones. And with its aggregate R&D/GDP ratio increasing to more than 2.5 percent, indigenous R&D capabilities of Korea began to grow markedly.Footnote ² In 1986, all the relevant statutes regarding intellectual property rights were amended to significantly strengthen their protection. Since then, while the number of patent applications increased rapidly, the growth rate of utility model filings began to decline. In order to facilitate utility model registration, in 1999 the Korean government introduced a non-examination advance registration system by amending the Utility Model Act. The introduction of the advance registration system increased the number of utility model applications slightly, but after the abolition of the advance registration system in 2006, the trend of decreasing utility model applications accelerated.

13.2 Statutory Rationale

The Utility Model Act is designed to contribute to industrial development by protecting and encouraging the creation of practical devices and promoting the utilization thereof to promote the development of technology. The statutory rationale of utility model protection is exactly the same as that of patent protection with the only difference that the subject matter is a utility model device or a patentable invention.Footnote ³ Utility model devices are usually small inventions, that is, inventions that are one level lower than patented inventions. Until the mid-1980s, during the course of learning and improving Western technologies, domestic companies made some small inventions, that is, utility model devices which have been subject to legal protection under the Utility Model Act. The absence of utility model protection might have reduced incentives for domestic companies to engage in incremental innovations. In this sense, utility model protection allows developing economies to build up their indigenous innovative capacities. The statutory rationale for utility model protection is well supported by the statistical data showing that foreign applicants who filed the most utility model applications in Korea were Taiwanese companies in the 2000s and Chinese companies in the 2010s.

13.3 Subject Matter

A utility model right is granted for a device related to the shape or structure of an article or a combination of shape and structure of an article which is industrially practicable, novel, and nonobvious. Unlike the German Utility Model Act (see Chapter 6), the Korean statute protects only devices that are embodied in a specific form. Accordingly, a gaseous or liquid substance without a fixed shape, a new animal breed, a new plant, or a computer program as such is not subject to utility model protection in Korea. Likewise, a method that is not embodied in a specific form (such as a manufacturing method, usage method, or processing method) is also beyond protection. A manufacturing method may be described in the claims for utility model registration, and the utility model registration is not invalidated by the description of such a manufacturing method. However, it is not possible to claim the nonobviousness of a utility model based only on the manufacturing method described in the utility model claims.Footnote ⁴

13.4 Substantive Requirements

To obtain a utility model registration, a device must be industrially practicable, novel, and nonobvious, which is equivalent to the requirement for patent registration.Footnote ⁵ The only difference is that the nonobviousness of utility model devices may be lower than that of patentable inventions. Although the level of nonobviousness is described differently under the statutory provisions, neither examiners nor judges know how to distinguish the level of nonobviousness of utility model devices from that of patentable inventions.

During the course of examining the novelty of a utility model device, patented or patentable inventions are also considered as prior art. Likewise, utility model devices act as prior art against patent applications. The Patent Act denies patentability of an invention if the invention is identical to a device described in the specification or drawings initially accompanying an application for registration of a utility model when the utility model application has been filed before the filing date of the patent application at issue.Footnote ⁶ In addition, when an invention for which a patent application is filed is identical to a device for which an application for registration of a utility model is filed, only the applicant who filed first is entitled to a registration. If they are filed on the same date, only the person agreed upon both by the patent applicant and the utility model applicant may obtain registration.Footnote ⁷ In any event, the number of utility model applications has recently decreased so much that utility models are rarely cited in patent applications and such first-to-file disputes today are rare.

13.5 Procedure

The basic process for obtaining a utility model is the same as for patents. Utility model devices have a relatively short lifespan in the market. Due to the long examination period of 37 months in Korea, utility model applications began to decline in the mid-1990s. Looking at the patent examination period in foreign countries at that time, it took 19 months in the US, 24 months in Japan, and 24 months in Europe.Footnote ⁸ The government introduced an advance registration or quick registration system to protect utility models or small inventions at an early stage and promote commercialization of technologies by small and medium-sized companies. According to the advance registration system that took effect on July 1, 1999, the Korean Intellectual Property Office only examines whether an application for utility model registration has formal and basic details. If there is a utility model registration application, anyone can request a technical evaluation of the filed utility model device to the Commissioner of the Korean Intellectual Property Office.Footnote ⁹ The examiner at the Korean Intellectual Property Office examines whether or not the substantive requirements like novelty and nonobviousness for utility model registration are met as a result of technology evaluation, and then makes a decision to maintain or cancel the utility model registration.Footnote ¹⁰ In order for a utility model right holder or an exclusive licensee to assert or exercise their rights against an infringer, they must present a certified copy of the decision to maintain their utility model registration and give a warning to the alleged infringer.Footnote ¹¹

In the 2000s, the Korean Intellectual Property Office drastically increased the number of examiners and outsourced prior art searches to shorten the examination period by a third, taking 12.2 months as of 2021.Footnote ¹² As the examination and processing period was dramatically shortened and the problem of misuse and abuse of utility model registration was raised, the previous examination-and-registration system was restored in 2006. Although the introduction of the advance registration system led to an increase in utility model applications in the short term, the number of applications started to decrease again from the fifth year after its introduction. After the abolition of the advance registration system, the number of applications began to decrease even more rapidly. Now there are debates as to whether the utility model system is still necessary or useful in Korea as there is no practical benefit to distinguish it from a patent in terms of registration requirements or examination period.Footnote ¹³ Since the government uses patent applications as the standard for research fund execution and evaluation, universities and public research institutes also prefer patent applications to utility model applications.Footnote ¹⁴

The application fee for utility model registration is $16 (20,000 Korean Won) for online applications and $23 (30,000 Won) for paper applications. For applications written in a foreign language, the online application fee is $25 (32,000 Won) and the written application fee is $33 (42,000 Won). The utility model registration fee starts with $10 (12,000 Won) annually from the time of registration until the third year and increases to $20 (25,000 Won) annually from the fourth to sixth years, and $46 (600,000 Won) from the seventh to ninth years and $123 (160,000 Won) thereafter.Footnote ¹⁵ The cost of a patent attorney is typically less than $1,000 per case, so individual inventors can apply for utility model registration without much financial burden. That is why there are still some utility model applications.

It is also possible for a patent application (or its particular claims) to be converted to a utility model application. If a patent application for an invention is rejected by an examiner for failing the inventive step requirement and is then converted to a utility model application, registration may be obtained. An applicant for a patent may convert their patent application into an application for utility model registration within the extent of the descriptions in the specification or drawings initially attached to the patent application. A converted application may not be made, however, when 3 months have elapsed since a certified copy of the initial decision of rejection was served in connection with the patent application.Footnote ¹⁶ A conversion application in the opposite direction is also possible. In other words, a utility model applicant can convert their initial application into a patent application within the scope of the descriptions in the initial specification or drawings.Footnote ¹⁷ Once registration is done, a conversion is not allowed from a patent to utility model registration, nor from a utility model to a patent registration.

13.6 Registration

Until the 1980s, the number of utility model registrations in Korea outnumbered that of patents. Patent applications and registration increased more rapidly than utility model applications beginning in the mid-1980s. The number of patent applications exceeded that of utility models in 1989 and the number of patent registrations did in 1991, as shown in Figure 13.1. When the advance registration system disappeared in 2006, the number of utility model applications and registration began to decrease sharply. The number of utility model registration was merely 1817 in 2021, which is equivalent to just 1.2 percent of patent registration.Footnote ¹⁸

Figure 13.1 Korean patent versus utility model applications and registrations

Looking at the details of registration, it is worth noting that foreign utility model registrations are negligible compared to domestic ones. Out of the 413,229 utility models issued in 22 years from 2000 through 2021 in Korea, only 10,272 came from abroad, which is little more than 2 percent of the total. In case of patent registration, 23 percent were issued to foreign patentees in the same period. The rights to register varies significantly from country to country. While applicants from the United States, Japan, and Germany obtained an overwhelmingly large share of patent registrations, applicants from China and Taiwan obtained far more utility model registration than applicants from other countries.

While patents are used mostly by corporations, utility models are used more by individual applicants. For example, there were 145,882 patents issued in 2021, of which 85 percent were issued to corporations. In contrast, there were only 1,817 utility models issued in 2021, of which 50 percent were issued to individuals.

13.7 Invalidation

The elements of inventive step are central in both infringement and invalidation actions, which are separated under a two-tier system in Korea. While infringement actions are brought to judicial courts, invalidation actions have to go through the IP Tribunal first. Like the Patent Act, the Utility Model Act of Korea only negates the effects of a utility model right through an invalidation trial at the IP Tribunal.Footnote ¹⁹ An appeal against the decision of the IP Tribunal must be filed with the Patent Court of Korea. Since the Patent Court is a court of appeal, it takes appeals not just from the IP Tribunal but also from the decisions of judicial courts on patent infringement.

The two-tier system has often led to time-consuming and high-cost dispute resolution processes.Footnote ²⁰ For example, the courts have allowed the “publicly known or worked invention/device” defense even in infringement actions. Thus, even before the IP Tribunal’s decision to invalidate a patent has become final and conclusive, judicial courts that tried infringement lawsuit have made findings as to whether there are grounds for invalidation. Reflecting on the lower courts’ findings and decisions, the Supreme Court eventually held that, even before an IP Tribunal’s decision to invalidate a patented invention is confirmed, if it is clear that the patent will be invalidated due to the lack of an inventive step, a claim for injunction against infringement or a claim for damages based on the patent right constitutes an abuse of right.Footnote ²¹ The same theory of abuse will certainly apply to utility model infringements even if there is no decision by the IP Tribunal on validity.

13.8 Infringement

In case of infringement, remedies such as injunctions and damages are available to the owner of utility models, just as they are to the owner of a patent. Whereas injunctions are an equitable remedy in the United States, injunctions are automatically granted by courts in Korea when utility model infringement has been found. As an exception, the court may decline to grant an injunction when the owner of a utility model is found to have abused its rights. For example, when a utility model device clearly lacks novelty or nonobviousness, the courts can find that its owner has committed an abuse of rights by bringing a lawsuit to seek an injunction. Accordingly, the court will often deny an injunction in such cases.

Even if there is an infringement that has been proved with enough evidence, it has been difficult to prove the actual amount of damage caused by the infringement. Accordingly, the Utility Model Act provides that Section 128 of the Patent Act shall apply mutatis mutandis to the protection of the owners of utility model rights.Footnote ²² Several methods of calculating damages are suggested in Section 128 of the Patent Act: “Damage based on the amount of sales,” “damage based on the infringer’s profit,” “damage equivalent to royalties,” or “amount of damage subject to the discretion of the court.” At the court of first instance, plaintiffs have claimed “damage based on the infringer’s profit” in 66 percent of cases, and “damage equivalent to the royalties” in only 12.9 percent of cases. Despite the plaintiff’s preference for “amount of damage based on the infringer’s profit,” the highest proportion (61.3 percent) of judicial decisions were made on the basis of the “amount of damage subject to the discretion of the court.”Footnote ²³ In relying on its discretion to calculate the amount of damages, courts usually take into account the infringer’s sales, the infringer’s profit, reasonable royalties or any other available factors. The court’s preference for its discretion is understood as enabling the court to determine the most appropriate level of damages.

The amount of damages not only becomes an important variable in the value of intellectual property rights, but also significantly affects technological innovation in the long run. The level of damages awarded in courts of Korea is so low that there have been concerns that Korean intellectual property rights may be undervalued. With the low number of utility model registrations over the past decade, there are few litigations concerning utility model infringement. In 2021, there were 2,500 claims filed at the IP Tribunal, but only 43 concerned utility models. In the same year, while there were 853 cases alleging invalidity of patent rights and confirmation of the scope of rights at the IP Tribunal, only 23 utility model cases were filed.

This chapter describes the issuance and litigation of Utility Models in Brazil. Although considered “Patents” in Brazil, utility models have a different treatment from Patents of Invention, having some specificities such as those related to the requirements for protection and the term of duration. This chapter will provide an overview of the Brazilian Patent System by outlining the scope of protection and requirements to obtain a utility model Patent in comparison with patents on invention, and by commenting on the enforcement of these rights in the judicial and administrative spheres.

14.1 The Brazilian Legal Framework on Utility Models

Regarding the international context, although Brazil is not a party to a few IP international treaties like the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), it is a signatory to most of the main IP-related treaties including the Patent Cooperation Treaty (PCT),Footnote ¹ the Berne Convention,Footnote ² the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS),Footnote ³ and the Paris Convention,Footnote ⁴ among others.

Internally, the origins of the patent laws in Brazil can be traced to the year 1809 with an Order (Alvará) granting 14 years’ “exclusive privilege” to inventors.Footnote ⁵ The first Brazilian Constitution of 1824 also provided that inventors would have property rights in their productions or discoveries during a limited period of time.Footnote ⁶ When it comes to Utility Models, although there are documented sources indicating their official recognition in Brazil during the twentieth century,Footnote ⁷ art. 1 of Law 3.129/1882 already contained a definition that bears resemblance to what is recognized as a utility model today:

Currently, the Brazilian legal framework on IP includes multiple federal laws related to copyright,Footnote ⁹ integrated circuit topographies,Footnote ¹⁰ plant varieties,Footnote ¹¹ and, central for the purposes of this chapter, industrial property.Footnote ¹² The Brazilian Law on Industrial Property (LPI) addresses issues related to patents (both patents of inventions and utility models),Footnote ¹³ industrial designs,Footnote ¹⁴ trademarks,Footnote ¹⁵ geographical indications,Footnote ¹⁶ unfair competition (which may also encompass issues related to slogans, and other advertising signs, consumer confusion, and trade secrets),Footnote ¹⁷ and crimes against industrial property.Footnote ¹⁸ It also provides some regulatory aspects on licensing, and the administrative procedure carried out by the Brazilian Industrial Property Office (INPI).

The interpretation and content of all federal laws mentioned above must be in accordance with the Brazilian Federal Constitution of 1988, which also expressly addresses Intellectual Property Rights, mainly in art. 5, XXVII, XXVIII and XXIX.Footnote ¹⁹ In Brazil, the right to property is a fundamental right (art. 5, XXII, CF88). However, this right is not an absolute one, since “property shall observe its social function” (art. 5, XXIII, CF88).Footnote ²⁰ Several authors have argued that there is no legitimate property without it being tied to its social function,Footnote ²¹ agreeing with the idea that “[…] property endowed with a social function, which is not fulfilling it, will no longer be the object of legal protection.”Footnote ²²

To exercise such a right according to its social function can be understood under a more objective lens, as it is seen in the case of rural property under art. 186 of the Brazilian Federal Constitution, as to which cumulative factors must be considered in order to assess whether the social function is met.Footnote ²³ Nevertheless, the “social function” of property, and therefore intellectual property, is more than complying with a list of factors.Footnote ²⁴ Regarding IP rights, limitations and exceptions (L&Es) can help to define the social function of property,Footnote ²⁵ reaffirming that the property right is not absolute and must consider the social interest.Footnote ²⁶ It becomes clear from the reading of the text of art. 5, XXIX of the Brazilian Federal Constitution that the granting of IP rights (including those related to utility models) is subject to consideration of the social interest and the technological and economic development of Brazil.Footnote ²⁷

The next section will address how Patents of Invention and Utility Models are regulated under federal law, that is, the LPI, in Brazil.

14.2 Patents on Invention and Utility Models

Today, the LPI provides two types of patents: Patents on Invention and Utility Models. Patents on inventions are granted to those inventions “that meet the requirements of novelty, inventive step, and industrial application,” Footnote ²⁸ whereas a utility model is an “object of practical use, or part thereof, susceptible to industrial application, which includes a new form or arrangement, involving an inventive act resulting in a functional improvement to the use or manufacture.”Footnote ²⁹ Table 14.1 summarizes the principal requirements for patents on inventions and utility models in Brazil.

While the LPI formally treats “novelty” and “industrial application” in the same way,Footnote ³⁰ the same cannot be said for the “inventive act/step.” Art. 13 of the LPI clarifies the scope of “inventive step” requirement for patents on invention: “An invention is endowed with an inventive step provided that, to a technician versed in the subject, it is not derived in an evident or obvious way from the state of the art.” Regarding utility models, art. 14 provides that a “utility model is endowed with an inventive act provided that, to a technician versed in the subject, it is not derived in a common or ordinary way from the state of the art.”

The Utility Model Patent Examination Guidelines provided by the Brazilian Patent Office (INPI) (2012, p. 5) establish that an inventive act is characterized by the presence of an unusual difference between an already existing object in the state of the art and the new invention. In other words, the difference must not be ordinary for a person skilled in the art. The inventive act presupposes a lower degree of inventiveness:

According to Barbosa, identifying the inventive act in utility models is a more complex endeavor than that concerning the inventive step in patents on invention:Footnote ³³

Despite the differences between utility models and patents on invention under Brazilian Law, there is the possibility of the conversion (usually referred to as “change of nature”) of a Utility Model to a Patent on Invention and vice-versa.Footnote ³⁵ Arts. 35, II and 36 illustrate scenarios in which such change of nature may occur:

Finally, another difference between Patents on Inventions and Utility Models is their term or duration: “[a]n invention patent shall remain in force for a period of 20 (twenty) years, and a utility model patent for a period of 15 (fifteen) years from the date of filing.”Footnote ³⁶

14.3 Administrative Procedure before the INPI

In Brazil, Patents, and therefore Utility Models, are granted by the Brazilian Patent Office (INPI). Created in 1970,Footnote ³⁷ the INPI is the federal authority responsible for administering Industrial Property in Brazil, and for making enactments “on the advisability of signing, ratifying and denouncing conventions, treaties, covenants and agreements on industrial property.”Footnote ³⁸ In addition to analyzing applications and granting patents, the INPI is also responsible for registering trademarks, industrial designs, software,Footnote ³⁹ geographical indications, integrated circuit topography, and technology transfer agreements.Footnote ⁴⁰

When it comes to utility model filings in Brazil, data from January and February 2022 show that 98% of the applicants are Brazilian residents, which is a very different scenario when we compare to Patents on Inventions during the same period (USA 31%, Brazil 17%, Germany 7%, China 7%, Japan 6%, Switzerland 5%, UK 4%, and France 4%).Footnote ⁴¹ With regard to the nature of the applicants, 64% of the utility model applicants for January/February 2022 were Individuals, 20% were small businesses, and individual entrepreneurs (MEI) and medium or large size companies represented 13% of the applicants.Footnote ⁴² In terms of overall applications, and comparing the applications filled for patents on invention and utility models it is clear that, in Brazil, patent on invention applications are substantially higher than those for utility models. These results are illustrated in Figure 14.1.

Figure 14.1 Patent on invention and utility model applications and decisions (2018–2021)

Source: The authors (2023) based on official data from INPI available at: www.gov.br/inpi/pt-br/central-de-conteudo/estatisticas/arquivos/publicacoes/boletim-mensal-de-propriedade-industrial-marco-de-2022.pdf

Reducing the time between filling a patent application and having it granted has been one of the priorities of the INPI, mainly for patents on invention, which may have contributed to the growth of Decisions on patents on invention between 2018 and 2020, as shown in Figure 14.1.Footnote ⁴³ As of October–December 2022, the average time for a technical decision once the Request for Examination is filed is 2.6 years for utility models.Footnote ⁴⁴ Compared to patents on invention, it is difficult to compare the pendency time of utility models and patents on invention because the pendency of patents on invention varies according to the nature of the invention. While the average time for a technical decision for inventions in the field of cosmetics is 2.1 years, the time for biopharmaceuticals is 5.4 years, once the Request for Examination is filed.Footnote ⁴⁵

Today, the complete administrative procedure to obtain a patent for a utility model can be carried out online via the “e-INPI” and “e-Patentes” systems.Footnote ⁴⁶ Briefly stated, the user must sign in to the system, gather all relevant documentation regarding the utility model, the inventor, the applicant, the invention, pay the necessary official taxes, fill out forms and file the application online.Footnote ⁴⁷ The application must be filed according to art. 19 of the LPI and “shall contain: I. the request; II. the specifications; III. the claims; IV. drawings, if applicable; V. the abstract; and VI. proof of payment of the filing fee.”Footnote ⁴⁸

Once it is filed, the user can keep track of the application online and must respond to any office actions and any further requests for additional information/documentation.Footnote ⁴⁹ On the INPI side,

According to art. 34 of the LPI, “[a]fter the examination has been requested, [a set of documents listed art. 34] must be submitted within a period of 60 (sixty) days, whenever requested, under penalty of having the application dismissed.” The technical examination will encompass the preparation of a search report and an opinion by the INPI regarding: “I. patentability of the application; II. appropriateness of the application given the nature claimed; III. reformulation or division of the application; or IV. technical requirements.”Footnote ⁵¹

In case INPI finds the “non-patentability of the application or the incompatibility of the application to the nature claimed, or makes some demand, the applicant shall be notified to submit comments within a period of 90 (ninety) days.”Footnote ⁵² In case the applicant does not respond to the request from the INPI, the application will be dismissed, and if there is any response, the examination will continue.Footnote ⁵³ Finally, according to art. 37, “[o]nce the examination has been concluded, a decision shall be handed down, either approving or rejecting the patent application.”

It should be noted that additional costs to those paid at the time of the patent application filing may arise from, for example, compliance with Office Actions, the issuance of the Patent Certificate, and the payment of annuities.Footnote ⁵⁴ In accordance with art 9 of Law n. 5648/70,Footnote ⁵⁵ all the official information provided in the online system is also published in the INPI’s official gazette.Footnote ⁵⁶

14.4 Enforcing Utility Models in Brazil

Enforcing exclusive rights in Utility Models is possible both in the administrative and judicial (civil and criminal) systems in Brazil, and the choice of one does not exclude the other.Footnote ⁵⁷

14.4.1 Administrative Procedure

According to art. 51 of the LPI, and within six months of the date of the grant of a patent, it is possible to file an Administrative Nullity Proceeding (“ANP”) on grounds that the patent (either patent on invention or utility model) is not compliant with the requirements provided in the law and administrative regulations (e.g., legal and formal requirements, specifications, and claims).Footnote ⁵⁸ The “procedure may be initiated ex officio or at the request of any person with legitimate interest.”Footnote ⁵⁹ Once the ANP is initiated, the titleholder may submit comments after sixty days of its publication,Footnote ⁶⁰ which will be followed by an Opinion of the INPI.Footnote ⁶¹ Then, both the applicant and the titleholder will have an additional sixty days to submit their final comments.Footnote ⁶² The final step of the administrative procedure is the analysis of the case by the president of INPI.Footnote ⁶³ Figure 14.2 shows an overview of the number of ANPs filed per year between the years 2012 and 2022.

Figure 14.2 Total Administrative Nullity Proceedings (ANPs) (2012–2020).

Source: The authors (2023) and INPI 2023b, 132–133

Focusing on the acts of the utility model division, Figure 14.3 shows the INPI decisions nullifying the patent and those in which the patent was maintained (even with a restriction, which is called “partial nullity”). From the data below, it is clear that the majority of the decisions issued by the utility model Division on ANPs reject the ANP and uphold the utility model.

Figure 14.3 Decisions/status of ANPs filed at the utility model division (2012–2022).

Source: The authors (2023) and INPI 2023b, 228–229

According to data made available by the INPI for the period between 2012 and 2022, an average of 1–2 percent of the total decisions for approvalFootnote ⁶⁴ (for patents on invention and utility models) are subject to an ANP.Footnote ⁶⁵ When analyzed by market sector, the highest number of cases of ANPs appear in the “Division of Patents of Agriculture and Engineering Elements” (“Divisão de Patentes de Agricultura e Elementos de Engenharia”) with 2.35 percent of the decisions being followed by ANPs and the Division of Utility Models Patents (“Divisão de Patentes de Modelo de Utilidade”), with 2.97 percent.

The nullity of a patent can also be judicially requested while the patent is in force, and must be filed before the Federal Court with the participation of the INPI (even if it is not the plaintiff).Footnote ⁶⁶ Once the Court decision is final, the INPI will make it public in its official gazette and the parties informed about it.Footnote ⁶⁷

14.4.2 Judicial Procedure

To better understand the current number of legal actions involving patents on invention and utility models, both in the Criminal and Civil spheres, we used a private third-party software “webseek” owned by LDSoft.Footnote ⁶⁸ This software uses the existing data in the INPI database with the possibility of applying different filters in the searches.

For this particular purpose, we searched for all the patents and applications with decisions tagged with codes 15.23 (“notice of legal action concerning the application”) and 22.15 (“notice of legal action concerning the patent”) for the last thirty years (between January 1, 1993, and January 1, 2023). The results are provided in Figure 14.4.

Figure 14.4 Notices of legal action for patents on invention and utility models (1993–2023).

Source: The authors (2024) with information from the INPI database on the number of patents and applications with decisions tagged with codes 15.23 and 22.15

While the above figures provide insight into the volume of legal proceedings involving patent on invention and utility models, it should be clarified that they may not reflect the exact and total number of cases discussing patents in Brazilian courts. These statistics likely only account for cases where details about the judicialization were formally documented in the administrative records of the INPI.

When it comes to criminal actions, the Brazilian legal framework is quite peculiar, since industrial property crimes are not listed in the Criminal Code anymore but are included in the LPI. Nevertheless, “[c]riminal action and the preliminary proceedings of search and seizure, in crimes against industrial property, shall be governed by the Criminal Procedure Code, with the modifications set forth in the Articles of this Chapter [of the LPI].”Footnote ⁶⁹ Moreover, in Brazil, the procedure concerning crimes against patents usually starts with the filing of a criminal complaint by the offended, often the rightsholder, and not by initiative of the State, which can be represented by the Public Prosecutor’s Office.Footnote ⁷⁰

Subject to fines, search and seizure,Footnote ⁷¹ destruction of the infringing products,Footnote ⁷² and even imprisonment (the penalty varies from one month to one year depending on the crime committed),Footnote ⁷³ there are several acts like manufacturing, exporting, importing, or supplying patented products without authorization that are considered as crimes against patents in Brazil.Footnote ⁷⁴ Imprisonment time can be extended when the infringer is or was a representative, agent, partner, employee, or licensee of the patentee.Footnote ⁷⁵ Similarly, fines could be majored in certain cases.Footnote ⁷⁶ Additionally, there are unfair competition crimes that are closely related to patents. We provide a summary of these crimes in Annex I.

In addition to criminal procedures, holders of patent on invention and utility model can also file civil infringement lawsuits. If successful, these suits can result in the payment of compensation, which is “determined by the benefits that the injured party would have gained had the violation not occurred.”Footnote ⁷⁷ When it comes to the calculation of “lost profits,” the LPI provides multiple criteria, from which the most beneficial to the injured party can be applied, these being: (i) “the benefits that the injured party would have obtained if there were no infringement”;Footnote ⁷⁸ (ii) “the benefits obtained by the infringing party”Footnote ⁷⁹ and (iii) “the remuneration that the infringer would have paid to the rightsholder for a licensee that would allow it to lawfully use the asset.”Footnote ⁸⁰

15.1 Contextualizing the Kenyan UMC

From independence in 1963 until 1990, patents in Kenya were extensions of patents filed and granted in the United Kingdom. From 1990 until 2001, patent and UMC (utility model certificate) applications in Kenya were filed under The Industrial Property Act, Cap. 509, which commenced on February 2, 1990. The same law created the Kenya Industrial Property Office (KIPO, now known as the Kenya Industrial Property Institute, KIPI), which, unusually for African patent offices, includes an examiner corps for carrying out substantive patent examination. Applications are currently filed under the Industrial Property Act of 2001 (“IPA2001”), which repealed Cap. 509 and was passed in response to the requirement for modernization under TRIPS. In practical terms, however, the Industrial Property Act of 2001 is similar in most respects to Cap. 509, and changed little for the procedures applied to applications for patents and UMCs.

To obtain exclusionary rights in Kenya for inventions, applicants have numerous options. The legal framework includes the option to file national applications directly at KIPI, and the applicant may file the application as either a patent or UMC. In both cases, the applicant may also elect to file the application as a “provisional” or “final” specification – in the case of the former, a final specification must be filed within 12 months from the filing of the provisional application, and must claim priority to the provisional application, which automatically expires at the end of that period.

Alternatively, applicants can enter the national phase in Kenya after filing an application through the Patent Cooperation Treaty (PCT). Applications can enter the national phase either as patent or UMC applications. Local applicants can access the PCT either through KIPI, as a Receiving Office, or by filing directly through the International Bureau. PCT applications can claim priority to Kenyan national applications, whether such applications are for patents or UMCs.

As a third option, protection can be obtained through the regional system, the African Regional Intellectual Property Organization (ARIPO), for which Kenya is a founding member and a signatory of the Harare Protocol on Patents and Industrial Designs. ARIPO receives, processes, and grants or rejects applications independently of the national patent offices for its various member states. Both patent and UMC applications are possible through the ARIPO route. After ARIPO receives, examines, and decides to grant a patent or UMC, it notifies the member state national offices that have been designated by the applicant, and gives such offices a period of time to object to the grant of the patent or UMC.Footnote ¹ If no objection is raised, the application proceeds to grant, and the granted patent or UMC has the effect of a patent or UMC granted by the national office.

The IPA2001 takes a very favourable position toward encouraging innovation, in particular by allowing UMCs that grant patent-like protection for inventions that do not meet the threshold of inventive step. The law goes even further, providing a form of intellectual property referred to as “technovations”, which are designed specifically to reward innovation and innovative thinking by employees of companies. A “technovation” is defined as

This definition means that, in contrast to patents and UMCs, technovations require neither global nor national-level novelty, but rather merely require company-level novelty (i.e., the technology is novel within the company in which the employee works). An employee may suggest to their employer a technology that they developed or that was found from another source. If the company had not yet used or considered using the technology, and certain other requirements are met,Footnote ² the employee is then entitled to receive a Technovation Certificate from the company. The employee may, then, also be entitled to receive remuneration from the company. The origin of technovations is a model law developed by WIPO in 1980, and that model law was adopted almost verbatim by Kenya.Footnote ³ Technovations appear to exist, however, only in the laws of Kenya and Uganda.Footnote ⁴

15.2 Notable Aspects of the Legal Framework for UMCs in Kenya

The legal framework for UMCs in Kenya consists of a mere three sections in the IPA2001; more detail was not necessary, as the legislative drafters applied many of the provisions of patents mutatis mutandis. The UMC therefore resembles patents, with the same bundle of rights and mechanisms of enforcement, but with key distinctions. The three sections, then, specify the differences between UMCs and patents, and are described below.

The substantive requirements for a UMC are novelty and industrial applicability; inventive step is not required, as it is in patents. Substantive examination by KIPI is a requirement for patents, and was originally also carried out for UMC applications. A major change occurred in 2014 when KIPI ceased to perform substantive examination of UMC applications after an applicant claimed that the IPA2001 did not authorize that procedure.Footnote ⁵ The validity of this claim has been reviewed and refuted, although KIPI did not resume examination, and all applications since 2014 remain unexamined. Without a substantive examination process, UMCs are now granted roughly 18 months after the filing date (assuming all fees are paid). This also means there is not (or should not be) a presumption of validity in any litigation involving a UMC granted after 2014.

The term of a UMC was, under the original IPA2001, 10 years as measured from the date of grant of the UMC. Considering that patent terms were 20 years measured from the filing date, and that substantive examination and grant procedures for patents could take numerous years, the effective term of UMCs could be relatively similar to that of patents. This was changed in a 2007 amendment to the IPA2001, and UMC term is now 10 years from the filing date.

In another key distinction, potentially inconsistent language in the IPA2001 raises questions about eligible subject matter. Section 82 of the IPA2001 lists sections of the patent law that “shall not apply” to UMCs, but does not include Sections 21 and 26, which collectively address subject matter eligibility. Section 21 provides that “inventions” are patentable, including both products and processes, while a subsequent subsection as well as Section 26 list non-patentable subject matter (discoveries, scientific theories, etc.). This framework seems to imply that the subject matter available for UMCs is the same as the subject matter available for patents. This interpretation is either conflicting with, or perhaps modified by, the express definition of “utility model”, which is provided in Section 2 of the IPA2001:

This express definition seems to exclude processes (among other things allowed for patents) from eligibility for protection by UMCs. Nevertheless, as noted above, Section 21(2), relating to patent subject matter, applies to UMCs, mutatis mutandis, and specifies that inventions can be either products or processes. No judicial decisions and no guidance from the Office of the Registrar at KIPI have clarified this apparent contradiction.Footnote ⁶

Under the IPA2001, infringement and legal proceedings pertaining to revocation or invalidation are the same for UMCs and for patents. Notably, for both patents and UMCs, Section 103 of the IPA2001 provides that revocation and invalidation may be litigated on grounds of lack of novelty,Footnote ⁷ lack of sufficient written description, subject matter ineligibility, lack of disclosure of the best mode, or material misrepresentation in the filing documents, but may not be based on the grounds that there is a lack of inventive step.

15.3 Trends in the Acquisition and Use of Kenyan UMCs

As a fully fledged form of intellectual property right, a variety of tactics are possible for users of UMC systems. As discussed throughout this volume, in some countries, the utility model and patent systems are integrated, or are intended to operate in a complementary fashion. One or more of a variety of factors may lead to this situation: applications may be easily converted from UMCs to patents (and vice versa), or it may be possible to hive off a UMC from a patent application; there is no prohibition against obtaining a patent and UMC for the same invention; one system covers classes of inventions that are not eligible for protection in the other system, etc. In Germany, for example, UMCs are used primarily by patent applicants in a strategic manner, particularly since the (unexamined) UMC can be filed based on an existing patent application, and will proceed to grant substantially more quickly than the (examined) patent application (see Chapter 6). An applicant might obtain a UMC in order to signal to the market their claim of ownership to a particular technology, and to quickly initiate legal proceedings without waiting for the examination process.

In contrast, the UMC and patent systems exist in Kenya largely as substitutes for one another. Although conversion between patent and UMC applications is possible under Section 83 of the IPA2001, rather than a strategy for using the systems in a complementary manner, it typically is the result of a substantive rejection during examination of a patent application. It may also occur where the applicant decides not to wait through the process of substantive examination, or would prefer to forgo examination fees and to pay the lower annual fees of a granted UMC as compared with the granted patent.Footnote ⁸ Although there is no prohibition under the IPA2001 against simultaneously holding a patent and UMC for the same invention, it is not common in practice.

The first application for a UMC in Kenya was filed in 1993 by the International Centre for Insect Physiology and Ecology (ICIPE), an international research institution with strong ties to the region. Growth in the number of applications remained slow for some time, and by 2011, only about 240 applications were on file, with 60 of those having been granted as UMCs.Footnote ⁹ As noted above, KIPI ceased substantive examination of UMC applications in 2014. Without the gate-keeping function of examination, the number of granted UMCs increased after 2014.

The applicants for UMCs in Kenya are predominantly local (i.e., the applicant has a Kenyan address).Footnote ¹⁰ In UMCs granted through 2016, applicant identity was reported as follows: 87% local filers, 1% foreign filers, and 12% unknown.Footnote ¹¹ This trend remains consistent: for the 210 UMCs granted in the period 2020–2023, 200 (95%) have local applicants and 10 (5%) have foreign applicants.Footnote ¹² Interestingly, comparing the same periods for patents, the proportion of local applicants has dramatically increased. Whereas 168 of the 725 patents (23%) granted through 2016 had local applicants, local applicants accounted for 65 of the 162 patents (40%) granted in the period 2020–2023. This may represent an increase in the level of innovation, and/or an increase in the use of the patent system by local innovators.

The identities of UMC applicants have evolved over time. Out of the 210 UMCs granted within the period 2020–2023, 84 (40%) list a company as the applicant, 22 (10%) list a university, and one (<1%) lists a government entity.Footnote ¹³ The remaining 103 UMCs (49%) list an individual (or several individuals) as the applicant. These percentages indicate strong growth in filings in the corporate sector – for all granted UMCs until 2016, only 20% listed a corporate applicant.Footnote ¹⁴ This suggests that the innovation ecosystem in Kenya is increasingly favouring innovation in the private sector (or, at least, that the private sector is increasingly using the UMC system).

Litigation involving UMCs is rare, and most of it proceeds in the Intellectual Property Tribunal (IPT). In one case before the IPT,Footnote ¹⁵ the UMC at issue was directed to “a computer implemented banking system” consisting of components that are enumerated and described, and the system “is utilized for payment processing between conventional and business banking channels.”Footnote ¹⁶ In response to the accusation of infringement of the UMC, one of the defendants argued that “the invention does not relate to an art, process, use, machine, manufacture, or composition of matter”, as well as arguing that the protected invention lacked industrial utility, lacked a complete written description, and lacked novelty, among other arguments. Interestingly, in view of the discussion above regarding allowable subject matter for UMC protection, the defendant did not argue that the UMC was invalid for claiming unprotectable subject matter (i.e., a process). The IPT also did not address whether UMCs may claim processes, but instead held the UMC invalid for being directed to a “mere method of doing business” which is “not capable of protection as provided under section 23(3)(b) of the industrial property Act.” The IPT also held that the invention lacked a “technical effect,” and on this point cited, as informative, precedent in the Supreme Court of the United States.Footnote ¹⁷

In a second case before the IPT,Footnote ¹⁸ the defendant was accused of infringing seven separate UMCs (all owned by the plaintiff) drawn to various household fixtures. The case was dismissed as the IPT concluded that there was insufficient objective evidence on record to support the accusation of infringement. The case is therefore notable for setting a minimum evidentiary standard in cases of UMC infringement.

15.4 Trends in the Acquisition of UMCs at ARIPO

The Harare Protocol, which implements the patent system at ARIPO, entered into force in 1984, and the first patent applications were filed at ARIPO that same year.Footnote ¹⁹ Although the Harare Protocol also provides for utility models, the first UMC application serial numbers date from 2001. It is unclear whether there were no utility model applications before 2001, or whether ARIPO was not at that time assigning serial numbers that identify them as such.

Although ARIPO receives and processes a large number of patents compared with the national patent offices of member states, it receives a relatively low number of utility models. Data were obtained for filings between 2001 until the beginning of 2023.Footnote ²⁰ During that period, 224 utility model applications were received and assigned filing numbers. In contrast, by the end of 2021, over 13,000 patent application serial numbers had been assigned at ARIPO. The pool of patent and UMC applicants at ARIPO is diverse inasmuch as it represents a large number of countries – both within and external to the regional membership. This includes applications originating from countries without Utility Models, such as the United States. It is not surprising, then, that the more popular filing option is the patent route.

15.5 Conclusion

The Kenyan legal framework for UMCs provides a cheaper, faster alternative to patents. The UMC is also attractive as it is available to inventions that are merely novel, and would not necessarily satisfy the inventive step requirement for patents. These advantages are balanced by the shorter term and unexamined nature of the UMC, which may make a granted UMC less valuable to applicants seeking longer, more certain protection. In general, UMCs are primarily used by local applicants, and are a valuable legal instrument for delivering patent-style rights to local innovators.

Unlike most of the other jurisdictions discussed in this book, the United States (US) does not currently have, nor did it ever have, a utility model or other system of second-tier patent protection. This being said, discussion and debate over the institution of such a system in the US has been ongoing for more than a century. In this chapter, we discuss the history and current status of this debate, as well as alternative approaches that US agencies and legislators have taken to address the needs and concerns of small and medium-sized inventors.

16.1 Current Forms of Invention Protection in the US

16.2 The Debate over Sub-patent Protection in the US

Despite the assortment of special-purpose statutes described above, the US does not have a general system for the protection of functional innovations that fall below the threshold for utility patent protection. This absence, and the discrepancy between US law and that of many other large economies including Germany, France, China, Japan, and South Korea has led to ongoing discussion of a utility model or other sub-patent innovation system in the US.

16.3 Reflections on the Future of Utility Models under US Law

In 1999, one of us (Janis) examined the history and then-existing practice of second-tier patent regimes outside the US (incorporating within that label utility models and a variety of subsidiary patent regimes), and argued that the US should not create a utility model system.Footnote ⁵⁰ As of the time of this writing – nearly a quarter century later – much has changed in US patent law and policy, and in approaches to second tier patents around the globe. And, still, a good deal has remained the same. A fresh look is warranted at the issues likely to arise if the US were to contemplate introducing a utility model system today.

We have divided the discussion into three parts. First, we consider the doctrinal issues concerning the grant of utility model rights, focusing on the nonobviousness doctrine. Second, we consider how the existence of a utility model system might change the patent enforcement landscape in the US. Finally, we address a few key questions about the politics and political economy of utility model rights.

16.4 Conclusion

The US is one of the few major patent-granting jurisdictions that lacks a utility model or other sub-patent innovation protection regime. While a number of domain-specific protection regimes have arisen over the years to fill this gap for specialized technologies such as semiconductor topographies and vessel hulls, a broad, generalized sub-patent protection regime has never been established or meaningfully considered.

Part of the intuitive aversion to sub-patent systems in the US may arise from the canonical American myth of the “lone genius” inventor exemplified (largely inaccurately, from a historical standpoint) by folk heroes such as Thomas Edison, Robert Fulton, Eli Whitney and the Wright Brothers.Footnote ⁸⁸ Patents, according to the myth, should reward “extraordinary inventions”, with more ordinary innovations accepted only grudgingly. During the mid twentieth century, this perception even seemed to find favor among some Supreme Court justices. As Justice Douglas wrote in 1950:

Against this backdrop, it is not surprising that the US has not adopted a formal regime of sub-patent protection. Yet in its absence, scholars and the USPTO have proposed a range of mechanisms that could address perceived cost and access issues with the invention patent system. Any such proposals, if implemented, would invariably result in conflicts with, and potential alteration of, the invention patent system in ways whose benefits are far from clear. As such, it does not appear that a utility model or similar system is likely to emerge in the US in the foreseeable future.