In the previous section, the large number of independent individuals who patent were left out of the analysis. This is an important part of the population and a study which strives to provide comprehensive information on the use of the IPR system by SMEs should attempt to incorporate them into the study. We therefore consider some characteristics of patent applications in order to find out more about the applicants. In this section, we compare the technical areas of the patents (according to patent classes) with the size-classification of the 12,894 Norwegian applications. This gives us a full tally for which we can discuss the distribution of applicants by size and activity.
A note here is required on the patent classes used for this analysis. Patent applications received by the Norwegian Patent Office are categorized according to the International Patent Classification (IPC). This type of classification indicates the technically delimited areas where the applications claim novelty. The IPC is dynamic and currently consists of 120 classes, 630 subclasses, and a large number of sub-groups. In order to make this complicated classification system more applicable to the interpretation of patent statistics, IPC sub-classes are here converted into 5 technical areas consisting of a total of 30 sub-areas. The conversion is made according to the revised OST-INPI/FhG-ISI Technology nomenclature, an earlier version of which has been used in a number of other studies, notably in the work of the OECD. (See: OECD 1989, 1994).
Figure 2.13. Norwegian applications79by size-class and status (N=12277)
The success rate of SMEs is substantial. Forty percent are granted. Large enterprises as a group enjoy a success rate of over 50 per cent and a withdrawal rate that is half that of SMEs and a third of that of independent applicants. There may be many factors behind the differences in success rates, where “success” is measured in patent grants. At least part of the explanation, however, is probably a better working understanding of the IPR system, and the fact that it is more comprehensively built into the enterprise’s business strategy. In principle, a national IPR system should aim to reduce the number of withdrawals that result from misconceptions of the system or in poor competences in dealing with it. The following figure breaks down the SME definition to see if the level of non-grant (especially because of withdrawal) is indeed dependent on size. Those applications that are still being examined are removed, as are the Unknown and Unregistered enterprises. In this way, the size-based trend becomes clearer. Patent grants climb with size, from 24 per cent in the case of individuals to 65 per cent for large enterprises.
Figure 2.14. Norwegian applications according to size-group and simplified status (N=5751)
79 2,042 Unknowns and Unregistered applications are removed.
Almost 80 per cent of the patent applications from large firms (N=2,681) came from four of the 19 Norwegian districts. Not surprisingly, more than a third came from Oslo proper (36 per cent), while nearly a quarter of these large enterprise patents are from Rogaland, where much of the offshore activity is located. A further fifth come from Buskerud and Akershus, which are near Oslo. In addition, Oppland (where Lillehammer is located) and Aust-Agder (where Kristiansand is) are also the origin of more large enterprise patents than SME patents.
10. Status
In order to understand the way SMEs patent in relation to other economic populations, it is also important to consider what happens to the applications. Applying for a patent is one thing, but if the application never leads to a granted patent, then it may well represent only a cost and not a benefit for the small enterprise. This section looks at the status of patent applications that were active during the 1990s. By “active,” we mean any patent that was applied for and/or granted during the 1990s AND any patent applied for before then but granted during the nineties. In total there were 14,319 such patents involving 6,303 Norwegian entities. In general, one of three things can happen to a patent application. It can be granted, it can be not granted or it can still be under examination. It should be understood that an application takes over a year to process. There are, however, subcategories. The “Not Granted” category includes cases where the applicant withdraws the application, where he allows it to lapse, or where it is rejected. “Grants” can include those with alterations as well as those that have lapsed.
Figure 2.12. Norwegian Applications (N=14,319) by Status.
We should note first that more than 40 per cent of Norwegian applications are withdrawn by the applicant. In our population (which has been widened to include granted patents), about a third (34 per cent) have been granted, 12 per cent remain under examination, and the rest have been terminated with a non-grant. Are SME patents more often withdrawn than those of large entities? The next figure confirms the hunch that the success rate of these applications falls with size. Consider the situation of independent applicants. 60 per cent of their applications are withdrawn! Why is this number so high? Is it because these applicants misunderstood the IPR system far more than other applicants? Or is it another weakness in the strategy of these applicants? The explanation is probably a combination.
There is thus a strong indication that this population could use greater assistance when approaching the patent system. The withdrawal rate of SMEs, while not as dramatic, is still substantial. One in three applications are withdrawn or otherwise rejected. This also means a loss of resources (both time and money) for a population which in general can ill-afford such loss.