7.3.4VARIO recommendations in advisory report 30 'Strengthening Flanders' technology position with regard to patents'

Recommendation 1: Take into account the limitations of indicators

VARIO reiterates the important caveat that must be made when using indicators. In order to correctly assess the possibilities offered by this tool, the limits and restrictions of the use of indicators are pointed out:

Indicators are only a ‘snapshot’ of reality. They do not demonstrate a causal relationship between a policy measure and a particular outcome. Indicators are 'pointers'; a 'black and white'-representation of a complex reality, where context must be adequately considered. Ignoring context can lead to unsubtle and erroneous conclusions.

Correct interpretation of indicators requires sufficient background knowledge and caution. Thus, we urge prudence when using and interpreting the proposed indicators. Especially when benchmarking and comparing positions in a ranking plays a very important role.

Recommendation 2: Make refinements to the Flemish patent data

In order to better interpret the positioning of the Flemish technological strength with regard to patents and to better assess the context at the policy level, VARIO recommends the inclusion of the following sub-indicators in the structural monitoring of the policy indicators for science, technology and innovation:

• International benchmark of the number of EPO patent applications and granted USPTO patents per million inhabitants according to geographical allocation based on one the hand the address of the applicant(s) and on the other hand the address of the inventor(s).
• International benchmark of the number of EPO patent applications and granted USPTO patents per million inhabitants by organization type.
• Monitoring the number of requested EPO patents and granted USPTO patents from Flanders per million inhabitants requested by large companies, SMEs and knowledge institutions.
• International benchmark of the number of EPO patent applications for and granted USPTO patents per million inhabitants attributed to the domain green/digital on the one hand and bio/pharma on the other.

VARIO calls for more useful disclosure of patent statistics for well-defined target groups, including the agencies responsible for setting up support measures and the federations linked to specific sectors. In doing so, it is possible to coordinate exactly what numerical information is needed, such as a breakdown by economic sector/technology class and by size of companies. The 5-yearly report 'Patents in the Netherlands' prepared by Octrooicentrum Nederland (OCNL) can serve as an example.

In addition, VARIO also insists on monitoring the use of the (federal) innovation tax box in Flanders, and per technological sector. These data are currently only available at the federal level for the whole of Belgium. Specific figures for Flanders and per technology domain could help to adjust the support instruments at the Flemish level if necessary.  

Recommendation 3: Include additional quality-oriented patent indicators in the structural monitoring of science, technology and innovation policy indicators

A patent application must be motivated by the intention to protect intellectual property and to achieve valorization of the invention to realize economic and/or social added value. Policy should never be aimed at the purely quantitative pursuit of a ranking. Incentives that only aim to increase the number of patents may result in a decline in patent quality.

A patent application does not necessarily lead to economic or technological progress. Purely quantitative patent indicators could therefore be complemented by more quality-oriented patent indicators. However, there is no single quality indicator for patents. Nevertheless, it is possible to estimate economic or technological quality to some extent:

• A proxy for technological impact is an international benchmark of the Flemish share of the top 5% of ‘highly cited’ patents taking into account the specificities of technology domains. The rationale is that citations in follow-on patents indicate technological impact.
• Economic impact is difficult to measure, especially on a recurring basis. However, an international benchmark of the number of international patent families EPO&USPTO&(JPO-or-CHIPA-or-KIPO) per million inhabitants can be a useful proxy to this end. The rationale here is that the significant costs involved in creating an international patent family are only incurred if at least equally significant returns are also expected .

Recommendation 4: The elaboration and interpretation of the indicators can be assigned to ECOOM

VARIO believes that the disclosure of the rich patent data as proposed in Recommendations 2 and 3 should be explicitly added to ECOOM's duties. They coordinate the publication of the Flemish Indicator Book of which patent indicators are already a part. The integration of STORE into ECOOM also offers additional opportunities for refinement according to company size, foreign control, age and the combination with macro-economic parameters.

VARIO does insist that the indicators be built as much as possible with the most recent figures so that they allow the policy level to closely monitor relevant developments. Especially with quality-oriented patent indicators that require a time window, it requires attention to ensure that the figures are up-to-date.

Recommendation 5: Provide a Flemish strategy and action plan on IP for SMEs

Most patents are filed by large companies and in IP-intensive sectors. The composition of the Flemish innovation/economic landscape is however a given that cannot be changed 1-2-3 and on which the government has only limited influence. However, more attention can be paid to the 'untapped potential' in order to possibly have more actors in IP in the longer term.

If we want to strengthen the IP position of our SMEs, we need a strategy and action plan. This action plan should address the following elements:

• Recommendation 5.1: Maintain and strengthen awareness actions.

The lack of basic knowledge of IP among entrepreneurs (especially in SMEs) remains a permanent concern. Awareness-raising actions must therefore be continued. This should also focus more on the role of IP within the business strategy and not only on patents and patent systems.

Moreover, also focus on better dissemination of knowledge about the Unitary Patent & Unified Patent Court (certainly among SMEs). The impact of the unified patent and patent law for SMEs is difficult to predict. But since it concerns a new patent system, strong guidance of SMEs (e.g. on the opt-out procedure) is of enormous strategic importance here.

• Recommendation 5.2: Embed entrepreneurship and IP in training courses

Monitor and improve attention to entrepreneurship and IP in the educational curricula of bachelor and master programs in all disciplines. Also provide opportunities for education on IP and IP law within 'lifelong learning'. 

• Recommendation 5.3: Streamline services

Besides sensitization, active support and services are also needed in the process preceding a patent application. Today, the range of such initiatives overlaps and is spread across different policy levels: Flemish, federal and European. Try to streamline support instruments and services in consultation with the relevant policy levels. Also ensure that IP experts and firms with the right knowledge are not prevented from offering their services through these initiatives.

• Recommendation 5.4: Provide financial support

Consider a specific grant instrument for filing and applying for a first patent (cfr. support in Wallonia).

• Recommendation 5.5: Use our excellent knowledge landscape as a lever for Flemish SMEs

The excellent technology position of both our universities and our research institutions is a strong asset in the process of knowledge diffusion to companies. VARIO believes that this can be put to  better use. Efforts can be reinforced to make that knowledge accessible (via technology transfer in the form of licence agreements or patent transfer, or via applied research), especially to SMEs.

Recommendation 6: Handle KPIs for patents at knowledge institutions with caution

At the time, the Flemish Government pioneered a system of output-driven funding for knowledge institutions, which evolved into the current system in which KPIs and output parameters play an important role. Patent data are often part of funding rules (e.g. management agreements for the SOCs) and distribution keys (e.g. for the IOF). This output-driven funding has paid off for Flanders; it has stimulated competition among knowledge institutions in Flanders and brought them to the international top. It has also helped make valorization a recognized part of the academic career path.

VARIO, on the other hand, also points out two pitfalls of this system.

• Recommendation 6.1: Make sure KPIs do not get in the way of collaboration

When funding rules and distribution keys are linearly extended to individual institutions and to lower levels within institutions¹, they encourage optimization of quantitative output at the expense of excellence (quality) and encourage competition rather than collaboration.

The created competition should not hinder cooperation (to such an extent) that it stands in the way of excellent research and (breakthrough) innovation (see also VARIO Memorandum 2019-2024 and VARIO Advice 6 'Value creation through cooperation'²).

• Recommendation 6.2: Combine KPIs for patents at knowledge institutions with a narrative on societal valorization

In the KPI’s for patents at knowledge institutes, care must be taken in interpreting this parameter as realized societal valorization. It is valuable to base the assessment of knowledge institutions not only on a KPI for patents but e.g. also of licenses, technological exploitation, start-ups.

Therefore VARIO recommends that the valuation of those patents should depend on a narrative about the accompanying societal valorization plan.

¹ https://www.vario.be/nl/publicaties/advies-7-conceptueel-kader-voor-het-opstellen-van-kpis-ifv-beleidsdoelen

² https://www.vario.be/nl/publicaties/advies-6-waardecreatie-door-samenwerking