1. Patent Backlog & Mutual Recognition. London, 10 March 2010 1 Impact on business A n ICT perspective Tim Frain Director, IPR Regulatory Affairs Nokia Corporation Patent Backlogs & Mutual Recognition London, 10 March 2010

2. Patent Backlog & Mutual Recognition. London, 10 March 2010 2 2.44 4.5 3.98 7.1 7.3 5.93 7.9 6.8 Do we see the backlog..…… ? 1991 2001 2009

3. Patent Backlog & Mutual Recognition. London, 10 March 2010 3 We are a contributing factor….. 0 2 000 4 000 6 000 8 000 10 000 12 000 1991199219931994199519961997199819992000200120022003200420052006200720082009 IPR Portfolio 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 Cumulative R&D (MEUR) # of patent familiesCumulative R&D

4. Patent Backlog & Mutual Recognition. London, 10 March 2010 4 Will the trend continue..? 3. First filing focus 2. Careful management of second filings 1. Portfolio Trimming Year + 10 years Today 1 2 3 investment

5. Patent Backlog & Mutual Recognition. London, 10 March 2010 5 Time scales are significant….. 1 2 3 4 5 6 years 2010 Patent pendency Development cycle Product life Development + product life Year Life cycle for ICT products

6. Patent Backlog & Mutual Recognition. London, 10 March 2010 6 Backlog: impact on ROI Patents as enablers of technology transfer not merely incentive to innovate Return on R&D investment Pending applications are not always as valuable as the Report suggests May be difficult to recoup value until patent is granted Pendency can be longer than product development & life-cycle (ICT) Illustration (hypothetical): Assume each patent filing represents an investment decision of e.g. 100k modest ICT filing programme Assume 1,000 patent filings per annum Each additional pendency year delays return on 100M p.a. for one company!!! N.B. this reflects patent costs only – excludes associated R&D

7. Patent Backlog & Mutual Recognition. London, 10 March 2010 7 Backlog: impedes competitive innovation? May deter risk taking in competitive innovation But: ICT products typically include hundreds/thousands patented inventions Challenge for patent clearance searches in ICT sector Even for most IP-savvy companies Growing patent activity exacerbates the challenge More important than ever that POs grant only deserving patents Bad patents are a menace to innovation and competition Quality of examination is paramount – even over speed & backlog

8. Patent Backlog & Mutual Recognition. London, 10 March 2010 8 The Examination process…. Look more carefully at the nuts & bolts of the examination process Examination is a re-iterative, not a one-time only, process It is not a one-off analysis of the search report as the study might imply It is a dialogue with applicant May be technically and legally complex Typically involves several exchanges many months (possibly years) apart Can we make the entirety of the examination process more compact & efficient? Time savings from keeping momentum going when examination under way Applicants have strict time periods to reply – but examiners generally dont Much easier to re-familiarise with a complex file if it is current

9. Patent Backlog & Mutual Recognition. London, 10 March 2010 9 Conclusions - ICT perspective Backlog has an impact on business Can delay ROI Arguably less harmful to competitive innovation than Report may imply Patent owner stands to lose out more than third parties? Priority must be Quality - over speed (even cost) Emphasis on granting deserving patents only Bad patents are a curse for innovation & competition Bring the whole patent system into disrepute We can live with the backlog, bad patents are a different matter