Who Will Knock These Heads Together?
By Richard Poynder
Last month, I reviewed the current state of the patent
information industry and concluded that commercial
vendors are caught in a vicious circle of rising costs
and falling revenues. The decision by patent and trademark
offices (PTOs) to start offering patent information
on the Internet appears to be a major source of pressure.
In particular, all the major patent officesincluding
the U.S. Patent and Trademark Office (USPTO), the European
Patent Office (EPO), and the Japanese Patent Office
(JPO)have launched free Web-based services. While
users welcome this, commercial vendorsboth database producers and online hostsare becoming increasingly
angry about it.
Vendors argue that in unleashing a flood of free
data on the world, PTOs have gone beyond their mandate,
which is primarily to grant patents. In the process,
they add, PTOs are threatening to destroy the commercial
market for patent information.
The PTOs dispute this, arguing that the distribution
of patent information is a core part of their mission.
As USPTO spokesperson Brigid Quinn explains, a patent
represents a quid pro quo between the government and
an inventor. In return for getting a 20-year monopoly,
patent holders disclose how to make and use their technology.
To spur further technological development, the government
(USPTO) then makes that information available to the
public. "What is known can be improved upon," says
Quinn. "Thus, disclosure is critical to advancing technology."
The EPO concurs. "Patent offices are the instruments
responsible not only for a fair granting process but
also for the efficient publication of information on
the details of inventions," says EPO spokesperson Rainer
Not a Threat
Besides, adds Osterwalder, the PTO sites are not
a threat to vendors, whose services are aimed at professional
searchers. The purpose of the PTO sites is simply to
provide the general public with "easy access to patent
documents using simple search features which are not
comparable to those needed by patent professionals
or offered by commercial operators."
Doing so, Osterwalder says, allows vendors "to concentrate
their investments on the creation of value-added services
which the EPO does not produce." To assist in this,
he adds, the EPO sells raw patent data to vendors at
marginal costs. In short, there's room for both commercial
services and the PTO sites.
As we saw last month, however, vendors maintain that
the PTO sites are also increasingly being used by patent
professionals, thereby depriving them of sufficient
revenue to provide the value-added services.
Moreover, says Richard Burgess, CEO of Sensory Publishing,
this revenue leakage is exacerbated by the ineffectual
way in which PTOs have sought to limit the functionality
of their sites. This allows professional users to exploit
the free data in ways that were not intended. For instance,
while the EPO and the USPTO have sought to limit the
downloading of patent documents to one page at a time,
circumvention tools are available that can bulk-download
complete patent documents.
"Just like computer disk copy-protection schemes,
the single-page-access limitation has been circumvented
by several 'entrepreneurs' who now sell or annually
lease their software to law firms and companies to
download the data (in an unattended fashion) in much
larger volumes than was originally intended by PTOs," explains
Burgess. "This has several obvious negative effects
on the industry as a whole."
"We are very concerned with the medium and long-term
damage that free patent information will have on the
industry," confirms David Dickens, director of QuestelOrbit's
Vendors also question claims that PTO data is available
to them at marginal costs. This year, for instance,
the USPTO hiked its prices by an inexplicable 50 percent,
If vendors are truly only charged marginal costs,
how could prices have risen by 50 percent in 1 year? "The
USPTO sells information priced only to recover dissemination
costs. All USPTO operations are fully funded by the
fees it collects for its products and services," replies
Quinn unhelpfully, rebuffing all requests for a clearer
But circumvention software and price hikes, say vendors,
are not their greatest concerns. What really worries
them are the constant incremental enhancements to the
functionality of PTO sites, each one making further
inroads into their revenues.
The bulk of the criticism here is leveled at the
EPO, which, says Dickens, is constantly adding new
data and improving the features of its free site, esp@cenet,
in a way that "directly competes with the private sector."
In 1999, commercial vendors became so concerned about
the activities of the EPO that they formed an association
called PATCOM to lobby on the issue. As Thomson Scientific's
Brian Gore writes on the Web, PATCOM was a response
to the EPO's "confusing statements" and mounting concern
about "specification drift."
Vendor concern has only increased over time, says
Willem-Geert Lagemaat, CEO of Dutch-based vendor Univentio. "When
we first had discussions with the EPO within PATCOM,
we were told esp@cenet was only for basic searches,
to give, for instance, SMEs in Europe a tool to look
quickly at patents and get a sense of what is happening
in the field. But that they would then be expected
to go to their patent attorney or patent search firm
for a proper search."
Lagemaat adds that the EPO's actions belie such public
statements. First, there was the downloading issue,
in which per-page download limits were circumvented
and which neither the EPO nor the USPTO has sought to prevent. "Then esp@cenet
began offering legal-status information. But why would a novice user working
for an SME, who has no idea what a legal status is, want this information?"
One can sympathize with vendors. Consider for instance
the EPO's attitude to the circumvention issue. Acknowledging
that the EPO is aware that robot software is available
to bulk-download patent documents, PR director Godehard
Nowak explains that it "sees the present system offering
documents on a page-per-page basis, not as a final
solution, and aims in a direction to allow download
of full documents."
In short, rather than block the software (a simple
process), the EPO has chosen to remove the page-at-a-time
Consider also, adds Lagemaat, the breadth of data
now being offered. "What, for instance, are Mexican
patents and Mexican full text doing on esp@cenet? There
is also Brazilian full text and Singapore full text.
I can't see why a European-based governmental agency
with the obligation to publish European patents needs
to offer access to Brazilian patents to its European
"esp@cenet does not provide indexed searchable full
text, but facsimile data of patent documents," responds
Osterwalder. Moreover, he adds, it does not offer "facsimile
data of Mexican, Brazilian (although we do have some),
and Singapore patents, only basic bibliographic information
of these documents completed by abstracts of family
But why does the EPO provide access to non-European
patents? "In order to do its work as well as possible,
the EPO must maintain the largest possible documentation
collection," explains Osterwalder. "It therefore tries
to gather patent data (and nonpatent data) from anywhere
in the world. Since it has this data available for
its own purposes, the EPO can, and does, make it available
to the public via esp@cenet, the only limits being
those imposed by copyright laws for nonpatent literature."
If, as Osterwalder points out, PTOs effectively need
the entire corpus of patent information for internal
purposes and the only limit to its dissemination to
the public is copyright lawwhich does not cover
patent documentsthe inevitable logic must be
that everything will eventually be freely available
on the Web. It's not surprising that vendors are concerned.
In justification, Osterwalder says that the EPO now
invites the PATCOM group to regular meetings. Here,
he says, the "EPO openly discusses its plans with PATCOM
and shares information about projects planned in the
area of patent dissemination."
Nonsense, says Lagemaat indignantly. That is simply
not true. "In September 2002, for instance, we had
a meeting with the EPO. The next month, at EPIDOS,
things were introduced that we didn't even discuss
or know of at the September meeting."
In short, vendors complain, the EPO says one thing
and does quite another.
Battle of Words
One thing is clear: Vendors and PTOs are engaging
in an increasingly bitter battle of words. Users, meanwhile,
are becoming more and more frustrated.
"To try to protect the commercial services by preventing
the patent offices from improving their services
is economic nonsense," commented Ursula Schoch-Grübler,
senior vice president of BASF Group Information Center,
at a recent conference. "The order of the day for their
vendor survival is to quickly rationalize their data
input and to develop innovative added-value products
with the help of the patent-office data."
Unfortunately, she added, this appears not to be
happening. "Whilst the patent offices have made great
strides with their provision of first-level data, we
get the impression that some commercial providers have
not yet been able to utilize the opportunities open
to them. I strongly hope that this is not the result
of a lack of goodwill among the partners."
It's hard not to conclude that there's indeed a shortage
of goodwill on the part of PTOs. But what about vendors?
Are they simply crying wolf and exaggerating the financial
impact on them?
Ron Simmer, proprietor of PATEX, a Canadian search
and consulting service, certainly thinks so. Vendors,
he says, should stop "sniveling about people saving
a few bucks" by using PTO sites. "Better they should
work on making their products compete rather than trying
to monopolize a commodity business."
But as we saw last month, the patent information
industry has never been a gold mine, and PTOs are chipping
away at vendors' revenues at a time when the cost of
developing and maintaining value-added products is
growing. We also saw that many companies have already
disappeared as a result of PTO activities and that
the industry has undergone intense consolidation. Maybe
there's no more slack in the system?
Even if there is, the intransigent and bullying attitude
of PTOs, coupled with vendors' awareness of their duty
to preserve shareholder interests, could force large
value-added providers like Thomson Derwent to exit
Would that matter? After all, the patent information
industry has never been a hothouse of entrepreneurial
talent or go-ahead innovation. Any vacuum would surely
soon be filled by other, more resourceful, companies?
The problem, says Lagemaat, is that the PTOs are
now developing their products so rapidly that it's
approaching the point at which no company can hope
to compete effectively in the patent information market. "The
scary part of this is that if commercial organizations
are investing in developing new products and services,
they need to have a certain amount of time in order
to be able to generate revenues from those new developments.
If during that time period the PTOs go in the same
direction and launch a similar product, they are going
to put more companies out of business."
And that, vendors argue, is precisely what the PTOs
appear bent on doing. Indeed, Lagemaat believes the
hidden agenda is to slowly starve commercial players
out of the market, leaving PTOs as the only game in
town. "I have even heard patent-office employees talking
about it in these terms," he says.
Would it matter if PTOs became monopoly suppliers?
Yes, says Burgess. "Invariably, when governments step
in to compete with private industry (killing it off
or hurting it badly in the process), it is very, very
rare for them to provide the level or range of services
and support the private sector is capable of supplying."
This, he adds, is not because government employees
are less smart, but because "they answer to a different
master, and that master is no longer the customerthe
attorneys, professional searchers, and commercial concerns
in this caseand these 'clients' will not be footing
the bill or helping to make the payroll each month."
What is certain is that PTOs would not provide
the value-added indexing currently offered by database
producers. Nor would they ever replicate the search
platforms developed by online hosts to exploit this
indexing or the other sophisticated search tools that
But in the age of Google-type search technology,
couldn't Web search engines sift through the data on
PTO sites to equal effect? Might it be that human-intensive
manual indexing-and-abstracting services have become
an expensive luxury, and commercial vendors have become
Absolutely not, says David Saari, a patent searcher
at Schering-Plough Research Institute. At least, not
where chemical information is concerned. "Chemical
information in patents usually cannot be searched in
full text because of the absence of text descriptions
for the chemical substances (the information is disclosed
in one or more structural drawings) or the complexity
of chemical nomenclature rules. Further, the authors
of the patents make up their own nomenclature."
In short, many patent documents are simply too opaque
to give up their secrets to Web search engines, so
value-added services remain essential. Moreover, with
inventions becoming more and more complex, Schoch-Grübler
believes the importance of indexing is growing. As
such, she suggests, it needs to be updated, not dispensed
Vendors provide many other vital services too, not
the least of which is translating patents into a uniform
language (English). "We cannot expect that national
PTOs will be prepared to translate their patent literature
into English for our convenience or vice versa," argues
But if the PTOs remove the financial incentive for
vendors to provide these services, who then will provide
them? "We should think carefully about the consequences
if the commercial services were to disappear," concludes
The Stakes Are High
But the most absurd aspect of the current situation,
says Lagemaat, is that if they were to destroy the
patent information industry, PTOs would create serious
problems not just for industry, but for themselves
too, since they also rely heavily on the products of
PTOs do not dispute the need for the commercial patent
information industry. As Osterwalder says, to promote
a knowledge-based society in Europe, "it is necessary
that not only patent information as such is easily
available, but also that value-added services are offered,
which are not a byproduct of the activities of the
What is in dispute is the ability of vendors to continue
operating in a market where more and more of the raw
material on which their business is based is becoming
freely available on the Web and the functionality of
PTO sites is constantly being enhanced. In turning
a deaf ear to their complaints, PTOs are presumably
gambling that vendors are crying wolf. But what if
the PTOs are wrong?
Let's be clear about what's at stake. If the commercial
market did collapse, it would impact not just on industry
but on the patent system itself, since the ability
of PTOs to judge the novelty of new applications could
be seriously compromised.
The stakes, then, are high. Isn't it time the PTOs
stopped acting like bullies and started listening to
vendors? And if vendors really do have a valid
case, isn't it time they made it more persuasively
to the PTOs? Who will knock these heads together?
Richard Poynder is a U.K.-based freelance journalist
who specializes in intellectual property and the information
industry. His e-mail address is firstname.lastname@example.org.