In a time of recession, innovation is crucial to increasing margins and maintaining market presence. It is understandable that innovation and invention would be rare during an economic crisis, as companies are loath to spend money on research and development (R&D) when they are in survival mode. Intellectual property is undervalued in a time of recession, but it should be used as a tool to aid the development of an economy.

This, according to South African corporate law firm Bowman Gilfillan director Johnny Fiandeiro, who says that without innovation, companies will have decreased sustainability and may be susceptible to competitors undercutting them on costs and beating them on functionality.

Intellectual property, particularly patents, ties in with innovation. The Bowman Gilfillan website reports that patents are monopoly rights granted for an invention. A patent is a valuable tool as it allows the inventor to prevent any other person from exploiting or benefiting from the invention.

A patent is therefore an asset and, Fiandeiro explains, should be seen as an opportunity in a time of economic crisis.

He recommends that companies should have an intellectual property policy in place for the long term. This involves research into the importance of protecting a company's ideas, as well as an investigation of trends in its area of expertise, to identify others actively innovating and whether there are any new patents arising. It is important for companies to implement such a policy to protect their own technologies, he adds.

If patents can be used to increase, as well as safeguard one's body of work, then innovation during an economic downturn is critical.

Patent Filing Trends in a Time of Crisis

Fiandeiro says that patent filings have dropped significantly since the start of the recession in the third quarter of 2008. From January 2009, to the end of July 2009, 5 356 patent applications have been filed in South Africa, compared with 6 632 patent applications for the corresponding period in 2008. Of these filings, about 33% are South African in origin. However, not all these filings are accepted, so that from only 8% to 10% of South African-granted patents originate locally.

He explains that these figures are relatively normal for South African patent filings, as R&D has not been drastically affected by the economic crisis. The major drop occurred in the number of incoming foreign patent applications. This decrease in patent filings has been confirmed internationally and can be attributed to a lack of funds for the development of new products.

In these difficult economic times, Fiandeiro notes an increased trend in patent litigation. He explains that if there are no funds to innovate, then the natural step is to consolidate. Companies are looking more closely at the products of their competitors to see if they can enforce the patents that they already hold. Now is the time to extract value from one's patents, he says.

In South Africa, however, patent litigation is not common. Disputes seldom go to court and are, rather, settled out of court, says Fiandeiro, with the result that patent law is stifled, with few new developments that would come with judicial interpretation of the law.

A sample of patent journals, which are published monthly and provide abstracts of recently granted South African patents, indicates that South African-originating patents primarily cover what is called hard-core civil engineering inventions. This includes structural devices and mining applications. Next on the list of South African-originating granted patents, are electrical machinery and apparatus, followed by environmental technology, known as green patents, dealing with alternative energy resources. The latter is a noticeable trend worldwide, says Fiandeiro.

Patents played a vital role in the recent contract negotiated between the University of the Witwatersrand's (Wits') Centre for Material and Process Synthesis (Comps) and the Chinese construction-oriented Golden Nest Technology Group. Comps was contracted to develop the conceptual foundation of a coal-to-liquids plant in the Shaanxi province. It was by virtue of a patent that Wits was able to protect its rights in this project.

Fiandeiro cites pharmaceuticals as another trend in patent filing, especially in products coming in to Africa. He says that the majority of South African-granted patents are in the pharmaceuticals field, because of the market for new medicines in Africa. This goes against the international trend in patent filing, where electrical engineering components, digital communications and computer technology dominate.