We are on the brink of a fourth industrial revolution, attributable in large part to the rapid expansion of the Internet of Things (IoT).
A new study by the European Patent Office (EPO) estimates that by 2025 26-30 billion devices in the home and the workplace will be equipped with the technology to connect to the internet and operate autonomously based on data that they collect and share. Combined with innovations in fields such as big data, cloud computing, artificial intelligence and 3D systems, the IoT is set to have a transformative impact across industry.
With access to many of the very latest patent applications from around the world, the EPO is uniquely placed to identify and follow the technological innovations which signal the onset of this new technological era.
The study has identified patent applications which relate to the building blocks of the fourth industrial revolution (4IR). These applications describe inventions that combine features of computing, connectivity, data exchange and smart devices. They relate to the core technology fields of hardware, software and connectivity that make it possible to transform an object into a smart device, to the enabling technologies such as analytics and security that are used in combination with the connected objects, or to the so-called ‘application domains’, where the potential of connected objects can be exploited.
More than 5000 4IR patent applications were filed at the EPO in 2016 alone, compared to 300 in 1995, and 944 in 2000. In the last three years, the rate of growth for 4IR patent applications was 54%, which far outpaces the overall growth of patent applications in the last three years of 7.65%.
While this still represents a modest share of all incoming patent applications at the EPO – about 3.3% in 2016 – the share has risen significantly in recent years. The study refers to the ‘technological life cycle’ for assessing technical maturity, with the results suggesting that 4IR technologies have passed the ’emerging’ stage – a period with a relatively low number of patentable inventions – and are now maturing into the ‘growth’ phase, indicating that a further acceleration in inventive activity and market penetration can be expected in the next few years.
The study shows Europe, the USA and Japan as the established leaders in 4IR innovation, but South Korea and China are rapidly catching up. And of the twenty companies which accounted for 42% of all 4IR patent applications filed with the EPO between 2011 and 2016, most are located in Asia. Within Europe, Germany and France are ahead, although the UK has also shown strong inventive activity, with 3% of all 4IR inventions between 2011 and 2016 originating in the UK.
An interesting implication of 4IR is that innovation is increasingly taking place in the virtual layer of software rather than in hardware components. Even in the manufacturing sector, the focus of innovation is rapidly moving from hardware to software. As a result, an increasing number of patent applications will fall within the definition of a so-called ‘computer implemented invention (CII)’ and may face objections that a patent cannot be granted because the invention relates to a computer program “as such”.
CIIs are treated differently by patent offices around the world, but in Europe, in addition to the requirements of novelty and inventive step, it is necessary for an invention to have a technical character that distinguishes it from a computer program “as such”. In practice this requires some kind of further technical effect beyond the normal physical effects of the execution of a program by a computer. For example, the control of an industrial process or the working of a piece of machinery, or the internal functioning of the computer itself (e.g. memory organisation or program execution control), under the influence of the computer program.
The EPO claims a stable and predictable framework for assessing the patentability of CIIs. However, it will be interesting to see the effect of the computer program exclusion in fields such as manufacturing, as increasing numbers of applications fall under this umbrella.
Overall, the results of the EPO study indicate that 4IR innovation is set to have a transformative effect across industry over the next few years, presenting new challenges to businesses as the automation of routine intellectual tasks changes the nature of human work and the balance of the labour market. At the same time, it presents exciting new avenues for innovation and creating economic value.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.