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Utility Models And Petty Patents: Conceptual Analysis And The Benefits For Economic Development In Nigeria

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Oluchi Jacquelyn Ironkwe

ABSTRACT

The 21st Century is characterized by the knowledge economy in which wealth creation emanates from information, knowledge and intangible assets. The object of patent law is the encouragement of scientific research, new technology, and industrial progress. There has been a growing demand for lesser forms of protection for innovations in the field of technology in the face of high thresholds of inventiveness demanded in many jurisdictions for the grant of patent. The utility patent comes out of the shadow of patent – to do away with some of the inherent difficulties of the patent system. In this paper, an examination of the notion of utility models and petty patents and its benefits for economic development in developing and developed economies will be our core objective. First, we shall look at the background into this genre of Intellectual Property Law and define key terms thereof. We shall also examine briefly the attributes, use, similarities and differences of this concept with other patent types and it’s legal. We shall equally chew over the issues associated with utility models/petty patents and the benefits for Nigeria’s economic development. We shall then conclude with a few thoughts on making it work in Nigeria. In Nigeria, where a stringent patent system exists, is there any beneficial justification to introduce a utility model//patent system? Is the current formal IP system in Nigeria appropriate for measuring progress in economic development and innovation activity? This research found that there is some evidence that introducing utility model system of protection for patents will benefit the business environment in Nigeria where SMEs, start-ups and Traditional cultural expressions thrive. It recommends that in order for Nigeria to develop it small and medium scale markets, a Utility system that incorporates measures to boost innovation, employment, industrialization and the economy be set up with safeguards to protect the players and curb actions of inventors who would want to take undue advantage of the system.

INTRODUCTION

The patent system is arguably one of the most important innovation policy instruments, but its effect on the rate and direction of technological change, productivity growth, citizens’ welfare and economic development remains disputable. Over the years, there has been a growing belief within the Intellectual Property (IP) fraternity as to the desirability for and the relevance of a further tier of patent-like protection or lesser forms of protection for innovations in the field of technology in the face of high thresholds of inventiveness. These include utility patents, which comes out of the shadow of patent to do away with some of the inherent difficulties of the patent system. Firstly, within established, developed economies, alternative sui generis regimes are viewed as a means of ameliorating the shortcomings of patent law, especially in relation to small and medium-sized enterprises. Secondly, legal and economic scholars have praised the utility model regime as a necessary facet in promoting a sustainable development space to help struggling economies promote indigenous innovation.

What kind of patent systems should be adopted in order to optimize the rate and direction of technological change, economic growth and innovation in Nigeria? Would it be designing a utility model system tailored to domestic needs to encourage small scale and medium sized innovators or will it be a more stringent formal patent regime?[4] Some scholars have opined that they need to re- orient the system to take advantage of its incentive philosophy by allowing the protection of limited but useful innovations through a utility model or petty patent system by developing less stringent standards for the protection of less advanced innovations will work better. For a relatively small to medium sized enterprises (SMEs), the formal patent protection can be complex and costly in spite of the need for them to maintain their competitive edge. In the quest to promote and encourage innovation which invariably spurs economic growth, a fast and cheap option for protecting mechanical inventions, products and compositions countries adopt the use of utility models, often called “petty patents” or “innovation patents.”

A patent is an exclusive right granted for a product or a process that provides a new way of doing something or offers a new technical solution to a problem. It is a sole right given to an inventor to make, use, or sell his/her invention for a limited period in exclusion of unauthorized competitors. The “TRIPS Agreement” in Art. 27 (1) provides thus “…patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application…” The TRIPS defines the minimum standards of patent systems and leaves further room for discretion in designing national patent systems.[9] Article 1(2) Paris Convention[10] merely states: ‘The protection of industrial property has as its object patents, utility models, industrial designs, trademarks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition.’ Thus, countries are free to formulate or reject utility model protection as they see fit. In Nigeria, an invention is patentable if satisfies the criteria set out under the Patent and Design Act Cap P2 LFN 2004. Section 1 of the Act provides that an invention is patentable: If it is new, results from inventive activity and capable of industrial application. Patents are territorial rights as the exclusive rights are generally only applicable in the country or region in which a patent has been filed and granted, in accordance with the law of that country or region. Patents provide incentives to individuals by offering them recognition for their creativity, financial investment in research & development (R&D) and material reward for their marketable inventions. Examples of patents range from electric lighting, plastic to ballpoint pens (patents held by Biro), microprocessors (patents held by Intel, telephones and CDs. Patents protect inventions and new discoveries that are new and non-obvious. There are three types of patents namely utility patents, design patents, and plant patents.

2.  PETTY PATENTS/UTILITY MODELS

The term “Petty” is derived from the French word “petit” meaning small and indicates the rationale behind the adoption of the petty patent (utility model) laws as a lesser variation of the patent. Utility models are sometimes referred to as ‘small inventions’ because they involve a comparatively lower level of inventive step and are less costly than inventions as well as “petty patents” or “innovation patents. There is no universal acceptance of the word “Utility model” as different countries have different terminology, such as “Innovation Patent”, “Utility Certificate”, and “Short term Patent”. In general terms, a utility patent protects the way an invention functions, and how it is used, it protects the structure, composition, or function of an invention. Utility patents, generally, are short- term registered rights granted to inventions that might lack the requisite degree of inventive step, or non-obviousness, that is required under patent law. As an alternative, it is a form of second-tier protection – easier to attain than the more stringent patent. Usually, the same relief available for infringement of a patent is available for infringement of a utility model. A utility patent can also be obtained for new and useful improvements to existing processes, compositions of matter, machines, and manufactures. A country can introduce a utility model regime. However the national treatment obligation under Paris Union countries does not create an obligation to introduce utility model protection in member countries national laws, nor does it require any specific minimum scope or substance of protection.

3. THE NEED  FOR UTILITY PATENT IN NIGERIA

In a rapidly growing country like Nigeria, with a large number of start-up companies getting registered every day, a vast majority of them provide regular services in an out- of-the box way. These may be innovative but lack inventive-step criteria for patentability thus, the utility model concept may be most appropriate patent right for Nigeria as the lack of the utility model system implies that majority of our companies and Startups with innovative working models cannot opt for patent protection. Such companies often face a rise in competition with copied ideas, unfair market practices, market loss etc. This quagmire may lead to innovation flight from Nigeria to countries with extended type patent protection if something is not done fast. It is not deniable that the Small and Medium Enterprises (SMEs) and MSMEs have acquired a prominent position in a developing country like ours as they usually suffer from shortage of funds for conducting tests and trials and paying hefty patent fees. To understand the real advantage of utility model and economic relevance in a country it will be recommended that it be compared against the behavior of the firms in an innovative environment. Opponents of utility model have argued that there is little or no need both from a legal and economic perspective to establish a utility model system as the concerns can be resolved by reviewing and restructuring the existing system. Proponents of this system have argued in the lines of the high cost, lengthy timeline and complex structure associated with getting an IP protection thus the need for a utility model system.

The Nigerian legal system does not, have a separate Act for utility model neither does the Patent and Design Act expressly describe or make provisions for utility models. It would prima facie appear that Nigeria needs a law along the lines of utility model. If appropriately drafted and enforced, it could do a great service, inter alia, to SMEs, to micro, small and medium enterprises (MSMEs), and to individual inventors as she can still broadly be categorised as a patent granting rather than patent producing nation and unable to produce as many cutting edge technological, mechanical and electrical innovations, that satisfy the criteria for registration. Perhaps, utility model is a requisite at this stage for a constantly developing and investment-centric country like ours and may act as an impetus to various petty innovators and inventors whose inventions could not qualify as patent.

4.  THE BENEFITS OF UTILITY MODELS AND PETTY PATENTS FOR NIGERIA’S ECONOMIC DEVELOPMENT

For many years, economists have tried to provide an explanation on why some economies grow fast while others do not. It is generally agreed that knowledge and innovation have played an important role in recent economic activity and the fast growth of economies. The renowned economist Paul Romer theorized that the accumulation of knowledge is the driving force behind economic growth. For countries to promote growth, their economic policies should encourage R&D investments, subsidize programs that develop human capital and pursue policy changes regarding IP and the adoption of new knowledge asset management practices. Economic growth theories related to IP may be grouped into two models known as endogenous and exogenous growth theories, which agree that technology is a key to growth. There is therefore no doubt that utility models are a key catalyst to economic growth because they encourage less advanced but locally useful innovations. The system also creates a favorable environment for the transfer of technology through the security it provides for the patentee, licensee and licensor.

The fact that patents are necessary tools that confer a protective buffer on inventors against other competitors. The consequent societal welfare is assured: labor is rewarded, the invention is divulged to the public, further technological innovation is stimulated, and a public knowledge base is incrementally strengthened, upon which a society’s future technological progress will be built. Nevertheless, this utopian vision only materializes within certain political, economic and social environments, where intellectual property rights are allowed to act as competitive boosts to innovation and growth.

Utility models create and foster domestic technology base and familiarize the local industry with intellectual property rights. It supports policies intended to strengthen the position of Small and Medium- sized Enterprises (SMEs) and expands the archive of knowledge to potential innovators through disclosure and enhances the diffusion of such legally protected innovations. They may be quite well-suited to protect innovations especially in the biotechnology and pharmaceutical industry. The system eases the burden on the patent authorities that conduct the examination procedure and enable applicants save money and time and focuses on projects that address neglected needs that may have less advanced inventiveness. It creates conditions for low-cost research activities and the stimulation of knowledge in developing and least developed and is particularly suited for SMEs, who make “minor” improvements and adaptations of existing products and a first level incentive to small innovators and not be in a position to take the next big step to commercialize their possibly very useful incremental innovation otherwise. Utility model system can be advantageous to a country that is a net importer of intellectual property goods as its protection may encourage local businesses to be more creative and produce more goods which in turn will reduce the overall import. They act as a spur to enhance levels of innovation enabling artisans and inventors secure protection for those innovations which do not meet stricter standards of inventiveness.

Possession of legal protection for Utility model facilitates actual commercialization of the incremental inventions as larger companies/corporations are more amenable to dealing with a legally entitled/authorized right holder of an invention be it in terms of licensing, assignments etc. and may lead to an overall increase in royalty and licensing fees to companies and revenue generation for the government through registration. One can file a patent application and a utility model patent application simultaneously for the same subject matter. The utility model patent will normally be granted quickly. If the patent is subsequently granted for the same subject matter, the applicant will then have to abandon the utility model patent for obtaining grant of the patent. The utility model will provide the required legal environment for SMEs to thrive, in terms of having the confidence to embark on incremental innovation knowing that their inventions will be adequately protected. It should be remembered that the famous Chint v Schneider case, which was widely reported because the Chinese plaintiff was awarded around US$45 million damages for patent infringement against the French defendant, was based on a utility model patent. Owing to the fact that utility patents can be granted quickly, they provide a powerful mechanism to block the influx of infringing products into the market. Thus, they can also be useful for products pending a parallel patent.

5. RECCOMMENDATIONS

In spite of the cons associated with the utility model system and the overwhelming pros therein, as it relates to boosting startups and small scale innovators in Nigeria, a separate legislation or regulation with respect to utility model protection should be established. The body(ies) saddled with the power to enforce the legislation may be chosen from a plethora of government establishments such as SMEDAN, NASENI, NABDA, NBTI, NACETEM, NOTAP. The reason is that SMEs are increasingly seen as vehicles for economic growth particularly in a developing economy like ours and account for over 80 percent of businesses, over 60 percent of production of goods and services worldwide, over 44 % of the gross value of industrial production and provide employment for around 60 million people. Thus, SMEs and MSMEs would also be encouraged to undertake research on incremental innovations which is less capital-intensive because of the lower standards of novelty and inventiveness, leading to industrial progress. The patent system should be such that is in consonance with the needs of SMEs in terms of the type of innovations been churned out by SMEs. The recommended legislation should also incorporate certain safeguards, restrictions and stringent measures to circumvent any foreseen challenge or dilemma discussed earlier.

The government should provide adequate funding and grants, set 21st Century globally laid down standards and monitor Innovation Enterprise Institutions in Nigeria such that a credible, attractive and respected alternative to University Education where acquisition of the right mix of creative, knowledge, job, commercial and life skills vital in influencing and developing tomorrows talent to enhance global competition.[43] There should be strong linkages between research institutes including universities and industry to ensure that research institutes embark on research projects that are commercially, economically and socially viable. It is further recommend that an international legislation to harmonize this utility patent system with small scale innovators in mind should be advocated for, so as to have some form of uniform system. In addition to a deepening harmonization across the world, policy could focus on increasing awareness of utility models as alternative protection methods and concurrently avoid a patent environment that is excessively complex for SMEs and individual inventors.

6. CONCLUSION

Innovation is a process that begins with an invention and the eventual transformation of the invention into a new and commercially viable product, process or service. For firms to commercialize their inventions effectively, an innovative market environment is key. In order to encourage technological development, an inventor no matter how small should be assured of a monopoly right to exploit his or her invention for a period of time to derive maximum financial benefit from the exploitation of the invention. Innovations are growing rapidly but in terms of filling them, Nigeria is lacking behind. The experience of most Utility Model Patent seems very promising and beneficial to the Start-ups and SMEs. If Nigeria embraces this model, then she will be able to fill the gap between the patentable inventions and non-patentable inventions, boost innovations, employment, industrialization and its economy.

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Oluchi Jacquelyn Ironkwe (LL.B, B.L, ACIS, LL.M)
She is the Principal Partner of Fontini Juris Solicitors with interests and over 16 years experience in company law/secretarial services, advising on doing business in Nigeria and Overseas, corporate governace/human rights and business, facilitating small businesses and advising on FDI import into emerging African economies, dispute resolution, international business law, anti-corruption measures and contemporary intellectual property law, sustainable economic deveopment and investment, due diligence and corporate investigations, corporate administration/ financial managememnt, consumer protection enforcement, brand enforcememnt, policy research/ recommendation and legal research/writing.
She obtained her LL.B from the University of Nigeria and is called to the Nigerian Bar. She also holds an LL.M in International Commercial Law from the School of Law,  Aberdeen Business School, RGU, Scotland, UK. Oluchi an associate of the Institute of Chartered Secretaries and Administrators UK, a member of the Nigerian Institute Management, Nigerian Bar Association, International Bar Association and AWLAN. She is currently a PhD Research student at the University of Abuja.
Her work experience and expertise has spanned through law firms, charities, banks and other financial institutions, government and private establishments. She is passionate about promoting sustainable law and economic development in African economies as her desire is to advance her knowledge and expertise in Business Law to enable her strategically provide knowledge to students, advice to businesses, guidance to governments in policies for sustainable economic development and advocacy for the benefit of the citizens.
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