Looking Back to See the Future

Having now commenced my retirement from Swindell & Pearson, I thought I would look back over the 30 years since I first qualified, to reflect on some broad themes that have developed over this time, and some challenges which I can see just around the corner.

In the 80s, I joined an obscure profession which very few people even knew about and even fewer understood. Indeed, intellectual property generally, and patents in particular, were themselves quite obscure. All that has changed. Intangible assets such as intellectual property now form a major part of the value of many businesses, particularly now that so much of their activity (formerly their core activity) is outsourced in various ways. We have increasingly become a knowledge economy. Businesses are therefore now much more aware of intellectual property and its implications. Investors are also much more aware - detailed questions about the patent portfolio of the company are now standard in mergers, takeovers, acquisitions etc. Even the public is aware - the subject regularly comes up on Dragons Den.

When I first joined the profession in the 80s, the structure of British manufacturing industry seemed quite simple compared to today (or perhaps I was young and naïve). Businesses set themselves up, bought a factory and started making stuff which they then sold. Or they might use a process (an electroplating process, a brewing process etc.) within the factory. This all sat very well with the patent system, which primarily looks at inventions as being either a product or process.

Bear in mind that the patent process goes back to the Victorian era, when the height of success was to have your own factory, make stuff, put it on a boat and sell it all round the world. The philosophy behind patent legislation still has the DNA of those days. This is the area I want to explore. It causes some problems in the modern world and I believe there are more to come.

But first, back to basics. At its heart, patent law works on the assumption that if industry is to be encouraged to invest in new technologies, thereby driving those technologies forward and improving life for us all, then there must be some protection available for that investment. Otherwise, no company in its right mind would be a leader - all would become second adopters and technological progress would stagnate. Even that desire for technological progress could be seen as a Victorian concept, from a time when it was taken as read that everything could be made better by more and better engineering.

So the system which was set up said that if you come up with something adequately inventive (a product or process - “stuff”) you could have a monopoly for that invention for a long period (now 20 years). In return, the public expected to be given full details of your invention so that at the end of your monopoly, the stock of public knowledge would have been enhanced and the next generation could move on to the next stage of development of the particular technology. All worked well while the basic model of industry was to build a factory, make stuff and sell it. This was still the principal model for industry in the 80s, when I joined the profession.

Then things began to change, as manufacturing began to decline in the UK. One change was a rise in outsourced, offshore manufacture for importation back into the UK. This was one of the drivers for the increased demand for patents. Companies felt more vulnerable when the products were being manufactured on their behalf by a company on the other side of the world. But overall, the patent system coped well - the patent monopoly includes protection against imports into the patented territory, so a British company could still protect itself against stuff manufactured in China, being imported into the UK.

But around the same time, software was beginning to develop as an industry. Current patent legislation primarily dates back to the 1970s. Remember the days before there was a computer in every home and on every desk and in everybody’s pocket? In the 1970s, a computer was a set of machines in a room the size of a gymnasium. Computer software was a long list of coded instructions produced over many man-weeks by huge teams of geeks (no offence!). Anything less like a commercial product (or at least, a retail product) is hard to imagine. Consequently, the legislators took the view that software isn’t sufficiently like “stuff” to warrant patent protection and said that “software as such” isn’t patentable. That phrase is still with us today.

Almost immediately that legislation had come in, software began to develop out of all recognition from its position in the 70s. Microsoft appeared on the scene. Apple appeared on the scene. Software eventually became a commercial product bought and sold for quite low prices in retail environments, by members of the general public. An app for 69p would have seemed like science fiction to most of us in 1980. Suddenly, an entire industry had grown up which seemed to meet most of the Victorian ideals of entrepreneurship, technological development etc., but seemed to be explicitly excluded from patent protection because it made software, rather than “stuff”.

After a lot of soul-searching, the patent system managed to accommodate software, to a limited extent. We now talk about computer-implemented inventions, for example. This means that if the piece of software causes a machine to operate in a new way (whether that is a mobile phone, computer, or a control system for an industrial process), then this interaction with the real world turns it from an invention which is merely “software as such” into an invention which relates to a better machine implemented in software, but not software “as such”. Don’t worry too much if you find this concept somewhat baffling- it would be the subject of a long and complex talk in its own right. The important point to bear in mind is that the traditional Victorian view that industry makes “stuff” was now being challenged, because an entire industry, the software industry, had grown up which was behaving exactly like a traditional industry except that it made software, rather than “stuff”.

As a digression, is there any reason why software “as such” should be denied patent protection, when we look at it through today’s eyes (rather than through the eyes of the legislators and their knowledge of software as it stood in the 1970s)? Is there any public policy reason why this mainstream industry should be singled out and excluded? This has proved to be a controversial question. But so much of life is now implemented in a digital fashion. We talk about “building” websites. We talk about financial “products”. In other words, we use all of the language of “stuff” in relation to things which are not “stuff” in the conventional sense. So, is patent law in danger of being left behind, as life becomes more digital and less involved with “stuff”?

Keep that thought for a minute and then step sideways into the world of copyright. Think about the music industry. They were one of the first industries to become digital to a significant extent, indeed almost entirely. They initially got it badly wrong, in my view. Once the digital file had gone out to the public (legitimately, initially), a large part of the public felt there was nothing wrong in passing a copy to their friends. Of course, that had always been the case -for years, teenagers had taped each other’s LPs - but the difference is that a digital file can be reproduced exactly (with absolutely no loss of quality), quickly (instantaneously), and for anyone anywhere in the world (over the Internet), not just for the friend who sits next to you in class (and even then, only if he goes to the trouble of buying a cassette tape and sitting for half an hour while the LP is recorded). The music industry suddenly lost substantial amounts of revenue. It was quite some time before they got to grips with how to monetise their product in new ways to cope with the digital era.

Then came e-books, the Kindle etc. The book industry was able to learn from the mistakes of the music industry, but were faced with very similar problems. The Kindle, in particular, tackled the problem in a very different way. Techniques called digital rights management allowed the digital file to be controlled so that it was not possible to distribute it freely, pirate it, give it to your friends etc.

So there we have two industries which were dramatically affected by going digital, and one coped better than the other. But we are still talking about copyright, not patents. Back in the world of patents, we are always talking about “stuff” aren’t we, so we don’t have the same problems, right? Or do we?

You will have heard of 3-D printing (rapid prototyping). It enables a prototype to be grown from a tank or stream of raw material to almost any arbitrary shape, controlled by a digital file (which will probably have been created by a designer working with a software package - no pencil, no paper - no “stuff” until the finished prototype is out of the tank). All very interesting. All very esoteric. All very specific to the world of prototypes. Or so it seemed until recently.

The concept of 3-D printing is now moving very quickly. It is moving away from the world of prototypes into the world of production manufacture. Terms such as “additive manufacturing” are becoming common. (They are “additive” because they grow a product from some raw material, rather than cutting away material until the product shape has been formed, as used to be the case with conventional metal manufacturing). Highly technical industries such as aerospace are now using these technologies to allow them to build structures which simply cannot be built using conventional technologies. For example, it is possible to grow a product by additive manufacturing and including voids or chambers within the body of the product, and features within those voids, and for all of this structure to be a single block of material, with no joints or other weaknesses. These products could never have been cast or machined by conventional processes. This can be done in advanced materials such as those used in aerospace, motorsport, the automotive sector etc. At the moment this is largely top end - high-value products; expensive raw materials; expensive printer kit etc. But you can see where all this is leading. Prices will be coming down fast over the next few years.

We used to make stuff in the UK in factories. Then we got the Chinese to make stuff for us, in their factories. Then we started giving people digital files instead of giving them an LP record. I conjecture that we will shortly (within my lifetime) be able to receive a digital file from Amazon, Argos or whoever, rather than using a courier to deliver “stuff” to us. When the digital file arrives, our home printer will bring the product (the “stuff”) into being. There will be no “stuff” anywhere in the commercial system until that point. Everything will be a digital file until the consumer decides to convert it into reality. No warehouses of stock. No logistics (other than to deliver vast quantities of raw materials for your domestic 3-D printer). Science fiction? So was a computer program for 69p, in 1980!

When we get to that point, what will it actually mean to be the owner of a patent which covers a product and is governed by legislation which talks about “where the invention is a product” and defines infringement in terms of making and selling the product, but nowhere envisages the situation where there is no product anywhere in the commercial supply chain - no product exists until the consumer makes it so. What will it mean to infringe a patent by “importing the product”, if the UK consumer is provided with a digital file from an overseas source and then prints that file on their home 3-D printer? This all raises the spectre, for the manufacturing industries, of exactly the same types of problems as were experienced by the music industry when they became the first digital industry.

Based on my current knowledge of the state of this technology, I can see ways in which patent law may be able to cope, but I can’t be sure where all of this technological development will end. It seems to me that we are on the verge of moving so far away from the Victorian ideals of making stuff in a factory and selling it, that life for patent attorneys shows no sign of becoming dull in the foreseeable future!

One thing I do predict with confidence is this – Swindell & Pearson has successfully navigated a path from the Victorian era in the late 19th century through to today, keeping abreast of the changes in technology and law which have occurred along the way, and the team which is now in place to take the business forward is very well placed in skills, attitudes and energy to ensure that clients continue to be well served, whatever the future throws at them.

Good luck to all of you!

Michael has been a patent and trade mark attorney for over 30 years, successfully helping his clients protect all manner of inventions and brands. He is now looking forward to a long and happy retirement.