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By Mercy King’ori

Typically, corporations more than individual inventors, are known to spearhead inventions and make use of the patent system as a tool of protection. In fact, statistics on patent applications and grants indicate that most patenting activity is done by companies more than individuals.[1] Nevertheless, the situation is not uniform throughout the world. According to a study interrogating whether patents and utility models encourage innovation in Kenya, it showed that the number of individual inventors applying and receiving patents is more than corporations.[2] However, despite more individuals applying and receiving patents, the number of patents is still low and there is a high rate of abandonment of patents.[3]  The study reveals that more individuals were granted utility model certificates than corporations. Additionally, it reveals that despite corporations having fewer patents in Kenya, there is still inventive work happening in the companies.

To anyone who has interacted with news of innovation levels in Kenya, this might come as a surprise since Kenya has been and continues to be hailed as a hub of innovation. Infact, the Global Innovation Index (GII), continuously ranks Kenya among the highest of the African countries.[4] This is despite the mentioned low number of patents. However, this can be attributed to the fact that the level of innovation in a country is not measured by the level of patenting activity only.[5] The 2019 GII indicated that there are other indicators of innovation in a country such as the amount of venture capital deals in a country, level of high technology imports, mobile app downloads and political and operational stability among other indicators.[6] According to GII, patent applications is just one of the sub- indicators under the sub-pillar of knowledge creation which is under the larger pillar of “knowledge and technology outputs”.[7] The GII uses uniform indicators to rank all the countries. For example, under the sub-pillar of knowledge creation where patent applications fall, it shows that Kenya ranks as number 72 out of the 130 countries.[8]

However, there exists fundamental reasons why patenting is still important as a standalone measure of innovation hence the call for corporations to increase their involvement. The aforementioned study reveals that corporations do develop inventive products since there are a few of them that have inventive products that are new to the world.[9] However, it recognises that corporate inventors are not engaging with the patent system. This post seeks to provide a convincing argument why corporations should seek to engage with the system. It proposes the engagement at two levels: the inventor level and/or the licensee level.

Engagement at the Inventor Level

Inventions are made through natural persons. The law defines an inventor as the person who devises the invention as a natural person.[10] A corporation becomes an inventor through engaging natural persons at different levels. Engagement can be through “employee inventors” or it can be commissioned works.[11] In both cases, unless there are agreements to the contrary the invention belongs to the person who commissioned the works in the case of the employees, this is often the employer. For employees, the contribution to the creation of the claims could be directly or indirectly.[12]  Compared to an individual inventor, there are several benefits of having a corporation engage with the patent system as an inventor. To demonstrate these benefits, this section  proposes engagement based on two key challenges that individual inventors may face that corporations would be able to deal with or mitigate.

  1. Cost of research and development

In Kenya, the number of granted patents is lower than the number of utility models (UMs).[13] The requirements of obtaining a UM are less stringent than those of acquiring a patent. To be granted a UM certificate, an invention does not have to involve an inventive step, a key requirement for patents.[14] Statistics show that similar to patents, individuals are the highest applicants for UM certificates.[15] This is due to many UM applications failing to attain the “inventive step” requirement of patents.[16]

Financing inventions is the “principal pitfall of invention commercialisation projects”.[17] This is because the process of developing something inventive is resource intensive, something that can be a luxury enjoyed by corporations with capacity to engage in experimentation. Corporations are known to set aside annual incomes for purposes of research and development. More often than not, individual inventors will not have this capacity hence preferring UMs to patents.

Therefore, given the high cost of developing inventions that negatively affects an individual inventor’s ability to apply for patents, corporations could commit their research and development to inventing.[18] In the event, inventions are developed, it is advisable that corporations apply to be granted patents. This can leapfrog applications from that of UMs to patent level as an indicator of innovativeness.

  1. Capacity to deal with patent infringement

Patents “grant the owner of the patent the right to preclude any person from exploiting the protected invention”.[19] Therefore, when a person uses an invention without the permission of the inventor, it leads to infringement. To enforce the patent rights, the owner is entitled to approach the high court or the Industrial Property Tribunal for relief such injunctions, damages.[20] Despite these avenues being available to inventors, it has been shown that individuals with patent infringement claims rarely approach the courts. This is despite having a valid legal claim against a large infringer.[21] In the event the plaintiff patent owner goes to court, most of them choose to settle before the process goes far.[22] This is attributable to the prohibitive cost of litigation as a dispute resolution mechanism especially intellectual property matters. It is shown that due to wealth inequality between corporations and individuals, “an individual plaintiff has only half as good a chance as corporations to win patent infringement suits”.[23] Therefore, wealth disparity can perpetuate infringement.

The importance of litigation-worthy patent claims cannot be overstated since the inventor risks losing if infringement is perpetuated. A loss in a patent claim that would otherwise have been won had there not been financial difficulties means that the patent owner loses more. Their losses include their investment in research and development, their competitive edge in the market meaning they cannot use it to attract potential investors among other negative effects. In turn, the infringing corporation that can afford “litigation capital” succeeds in obtaining monopoly over the patent.[24]

The numerous successful court cases brought by corporations and the resulting decisions on patent infringement point to why corporations are well suited to bring claims of patent infringement. In a recently decided case between VirnetX,  Apple Inc and Cisco Systems Inc, the court found that Apple Inc had infringed the patents of VirnetX with its FaceTime and “VPN on demand” features on iphone devices.[25] The case has been ongoing since 2010 and was concluded in 2019. Based on evidence that most individual inventors usually settle a short time into a suit, it is highly unlikely that an individual inventor would have sustained  the suit for that long.

At the Licensee Level

As mentioned earlier, evidence from the study indicates that more patents were granted to individual inventors than to corporations.[26] This is a good sign of diligence among individual inventors. Corporations can come in to propel this phenomenon by licensing out the inventions that are useful to them. One key reason for calling corporations to be engaged as licensee is the high abandonment rate of inventions as demonstrated by the study.

Despite individuals being the largest patent owners, there was a high level of abandonment particularly by local inventors.[27] The state of abandonment cannot be attributed to the cost of renewing since the cost is not “unduly burdensome”.[28] They attribute abandonment to the inability to find a licensee as some individuals invented with the aim of licensing the invention, a common intellectual property protection strategy.

Corporations can be involved to solve the problem of abandonment. Corporations do not have a monopoly of knowledge since invention is not done methodically but might have a wide breadth of knowledge on the market needs from where inventions might be created. In this case, corporations can collaborate and partner with the individual inventors to license-in inventions that are useful to an entity.

Inventions may also be abandoned where they lack usage in a particular market. Corporations have the benefit of access to research and development funds, knowledge of market needs and challenges but do not have a monopoly of skills. Therefore, they could enter agreements with individual inventors to create solutions for the market. These agreements do not have to be an employment contract or a commissioned one as envisioned under the law.[29] The law stipulates that where an invention is made in the course of an employment contract or is commissioned, it belongs to the person who commissioned or the employer.[30] However, it also gives leeway to parties to contract otherwise.[31]  This reduces instances of abstract inventions where an individual inventor creates “in the hope” it can be licensed out. Intentional invention does not ignore the fact that many successful inventions have actually developed accidentally such as Velcro[32] and the now universal “Post-it”.[33]

Conclusion

Corporations in Kenya have shown less engagement with the patent system compared to individual inventors. This is despite them having resources and capacity to invent even without engaging with the patent system. The result is that more individual inventors engage with the system despite them facing the challenges explained here. The challenges faced or likely to be faced by individual inventors can be successfully dealt with if corporations engage with the system either at the inventor level or as licensees.


[1] Special section The top 100 global patent applicants, WIPO, 11 https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2015-section1.pdf

[2] Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010

[3] Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010

[4] According to the Global Innovation Index, Kenya was ranked as the third most innovative country in 2017, in 2018 Kenya was ranked 3rd with the index reporting that Kenya is one of the countries that stand out in innovation achievements three times over the last eight years (2011-2018) and in 2019 was ranked 2nd

[5] https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-to-take-the-measure-of-innovation accessed on 27 February 2020.

[6] Global Innovation Index, ‘Creating Healthy Lives-The Future of Medical Innovation’, 2019 https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019.pdf

[7] Global Innovation Index, ‘Creating Healthy Lives-The Future of Medical Innovation’, 2019 https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019.pdf

[8]  Global Innovation Index, ‘Creating Healthy Lives-The Future of Medical Innovation’, 2019 https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019.pdf.

[9]  Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010

[10] Section 2, Industrial Property Act, 2001.

[11] Section 32(1), Industrial Property Act, 2001.

[12] Section 32(1), Industrial Property Act, 2001.

[13]  Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010.

[14] Section 22, Industrial Property Act, 2001.

[15] Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010.

[16] Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010

[17] Cohen J. ‘Inventors’ options for invention financing’ APLA Quarterly Journal, 8(2), 1980187.

[18] National ICT policy, 2019

[19] Section 54, Industrial Property Act, 2001.

[20] Section 105, Industrial Property Act, 2001.

[21] Beron B, Kinsella J, ‘David vs. Goliath Patent Cases: search for the most practical mechanism of third party litigation financing for small plaintiffs’ Northern Kentucky Law Review, 38(4), 2011, 606.

[22] Beron B, Kinsella J, ‘David vs. goliath patent cases: search for the most practical mechanism of third party litigation financing for small plaintiffs’, 606.

[23] Beron B, Kinsella J, ‘David vs. goliath patent cases: search for the most practical mechanism of third party litigation financing for small plaintiffs’, 606.

[24] Borkin J, ‘The Patent Infringement Suit- Ordeal by Trial’, 637. https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2630&context=uclrev

[25] https://edition.cnn.com/2020/02/24/tech/apple-virnetx-patent-fight/index.html accessed on 27 February 2020.

[26] Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010.

[27]  Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010.

[28]  Isaac M. Rutenberg, Jacquelene Mwangi, Do patents and utility model certificates encourage innovation in Kenya?, Journal of Intellectual Property Law & Practice, Volume 12, Issue 3, March 2017, Pages 206–215, https://doi.org/10.1093/jiplp/jpx010.

[29] Section 32(1), Industrial Property Act, 2001.

[30] Section 32 (1), Industrial Property Act, 2001.

[31] Section 32(1), Industrial Property Act, 2001.

[32] https://www.microphotonics.com/biomimicry-burr-invention-velcro/ accessed on 21 February 2020.

[33] Bartow, A ‘Inventors of the world, unite a call for collective action by employee-inventors’, Santa Clara Law Review, 37(3), 1997, 673.