Serious Doubts on the Utility Model System

(IPRinfo 4/2009)

Bengt Domeij
Associate professor, Royal Institute of Technology, Stockholm.

Book review. Pia Björkwall: Nyttighetsmodeller: Ett ändamålsenligt innovationsskydd?
Svenska handelshögskolan, Economics and Society N:o 196, Helsinki 2009, 309 p. ISBN 978-952-232-029-2

Pia Björkwall defended her doctoral thesis Nyttighetsmodeller: Ett ändamålsenligt innovationsskydd? on 12 June 2009 at Hanken School of Economics. The study evaluates utility model protection, i.e. the intellectual property also known as ”petty patent” or ”Gebrauchmuster”.

Governments need to decide whether to introduce, or maintain, such a special regime for minor technical advances, giving a shorter period of protection (usually 10 years) without preliminary examination.

A number of countries have taken this road, most notably Germany but in Scandinavia so far only Finland and Denmark. The EC proposed a common system of utility models, but faced vocal opposition and shelved the project in 2005.

The rational behind utility models is that patents are not ideal in situations where the innovation is mostly based on craftsmanship performed in response to a real but limited need. When Finland introduced utility models in 1992, they were intended for small and medium sized enterprises allowing for a speedy and cost-effective protection without having to reach the inventive step required in patent law.

In 2006, approximately 500 utility model applications were filed in Finland. Björkwall notes (p. 9) that this new IP has not been the success that was expected. The situation is similar in other countries.

Utility models struggle to compete with other IPRs. Based on this observation, Björkwall aims to evaluate whether there is a need for utility models at all. The topic is a good choice. Literature on utility models is almost non-existent and the kind of evaluation Björkwall performs has clearly not been attempted before.

In an interesting part of the thesis, holders of two or more Finnish utility models were contacted(1). Of the respondents, private individuals constituted 19,5 %, companies having only one employee were 20,7 %, and small companies with 2 to 49 employees held 40,2 % of these registrations.

Only 3,5 % of respondents often or regularly applied for a corresponding protection abroad. 77,1 % said that the cost savings in comparison to patents were an important reason for using utility models. 71 % stated that the simple and fast registration procedure was important for choosing utility models over patents.

In the concluding chapters Björkwall puts forth a number of suggestions. She advocates that the bar for protection be raised to that of inventive step (”väsentlig skillnad”), from the present more modest requirement of a clear difference (”tydlig skillnad”).

In the preparatory works to the Finnish Act, it was held that the chosen requirement of a ”clear difference”, was meant to signal that the invention must not be fully apparent from the state of the art (thesis p. 96).Björkwall holds that there is no theoretical justification for such a lower bar, that it creates a situation in which judgements become arbitrary and, finally, that the German Federal Supreme Court recently raised the required degree to that of inventive step.

I have, however, not been fully convinced by these arguments. I believe utility models should be seen as a complement to the patent system, which presently suffers from being a costly and cumbersome alternative.

A registration is essential for many kleine Münze of innovation, in order for them to be commercialized, The patent system is not really geared to these needs. This leaves, in my view, room for an alternative system targeting innovations with a limited market.

Importantly, Björkwall concludes (p. 295) that it is possible to view utility models as a tool primarily for local businesses competing with other local businesses, and in these circumstances utility models may be socially useful.

To summarize, Björkwall has done a comprehensive evaluation of the Finnish utility model protection, dealing with such diverse aspects as the pure legal questions surrounding utility models, but also making comparisons with the patent system.
She also uses empirical studies (questionnaires) and an economic evaluation of utility models from both a social and an enterprise perspective. This is all performed with a critical mindset and the conclusions warrant serious consideration.

Docent Bengt Domeij was the opponent at Pia Börkwall’s dissertation defence at Hanken on 12 June 2009.

(1)There were 87 replies. For the questionnaire, a third of the round 1000 holders of two utility modesl was selected (in random), but due to mergers, bankrupcies etc the number decreased to 254.