The design and functioning of patent systems have been evaluated empirically for a long timeFootnote 1 thanks to increasingly accessible patent data and statistics,Footnote 2 but much less is known about the functioning of utility model systems (or more generally second-tier patent systems)Footnote 3 and their interaction with patent systems. Both patents and utility models are protection methods for technical inventions, but the latter is often considered to be a flexible complement to the patent system that offers protection particularly for small and incremental inventions that have shorter lifecycles and for small and medium sized enterprises (SMEs) that have fewer resources to invest in patent protection.Footnote 4 Generally, there exists very little systematic empirical evidence on the benefits and positive impacts of national utility model systems, particularly in advanced economies.Footnote 5 Hence, the fundamental question remains whether societies are better off with or without utility model systems that bring flexibilities to the more harmonized patent systems.
The contribution of this chapter to the existing empirical literature utilizing utility model statistics,Footnote 6 is to apply the framework introduced by Heikkilä (Reference Heikkilä2023a) to the analysis of the functioning of the Finnish utility model system. The focus is not solely on economic impacts (e.g., innovation incentives and diffusion of innovations), but rather the aim is to provide a more holistic and comprehensive assessment which comprises dimensions such as the extent to which utility models bring flexibility and inclusiveness to the patent system and how the quality of utility models coevolves with that of patents. Finland is a European export-driven small open economy, so the external validity of the observations is limited but the findings are particularly interesting for countries with similar characteristics. It should be emphasized that the analysis is purely based on utility model and patent statistics and legal analyses of the evolution of the Finnish utility model system are beyond the scope.
The chapter is structured as follows. Section 9.1 describes the evaluation framework for the functioning of utility model systems. Section 9.2 describes the Finnish institutional context briefly and presents the empirical analysis and findings. Section 9.3 concludes.
9.1 Key Performance Indicators for Utility Model Systems
The World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) sets the minimum standards for patent systems but not for utility model systems, which countries can design as they see fit.Footnote 7 Common rationales for a utility model system include ameliorating the defects of the national patent and design right systems and promotion of SMEs’ innovation activity.Footnote 8 Thus, utility model systems cannot be evaluated without considering their interaction with the patent system. In principle, when an intellectual property (IP) office offers for applicants both patent and utility model protection, it provides a menu of options and applicants self-select – that is, make strategic choices between patents and utility models given their preferences. Therefore, there is sorting between patents and utility models (or other type of second-tier patents) by applicant and invention type.Footnote 9 It should be emphasized that in the European context one cannot ignore the interaction of utility model and other national IPR systems with the evolving European IPR institutions,Footnote 10 particularly European patents and registered Community designs (RCD).
As the chapters in this volume demonstrate, there are significant differences across utility model systems (and each country has its own mix of innovation policy instruments that interacts more or less with its national utility model system). Hence, there is a need to conduct country-specific case studies that focus on specific institutional settings. Among others, Suthersanen (Reference Suthersanen2006, Reference Suthersanen, Drexl and Sanders2019), Björkwall (Reference Björkwall2009), Prud’homme (Reference Prud’homme2014, 2017a), Radauer et al. (Reference Radauer, Rosemberg, Cassagneau-Francis and Goddar2015, Reference Radauer, Rosemberg Montes, Cassagneau-Francis, Goddar and Haarmann2019) and Heikkilä and Verba (Reference Heikkilä and Verba2018) have provided comparative analyses of selected national utility model systems. In addition, there are increasingly country-level statistical analyses of utility model and two-tiered patent systems.Footnote 11 To our knowledge, there are no studies that quantitatively analyze the interaction between the European Patent system (and registered Community designs) and European national utility model systems.
Recently, Heikkilä (Reference Heikkilä2023a) reviewed the existing utility model literature and the information that 64 national IP offices provide about their national utility model systems on their websites and reported that shorter protection period is emphasized by approximately 60 percent of IP offices, the lower inventive step requirement by more than one third (approx. 38 percent) and the quicker and simpler process to obtain protection compared to patents by approximately 30 percent of IP offices. As there are no established performance measures for utility model systems, Heikkilä (Reference Heikkilä2023a) suggested a systematic framework and “key performance indicators” (KPIs) for the holistic analysis of utility model systems. These are illustrated in Figure 9.1 and Table 9.1. Figure 9.1 distinguishes between intermediate effects and economic impacts. In the next section, we apply this framework to the Finnish utility model system and focus particularly on intermediate impacts and its coevolution with the Finnish patent system.
Framework for multidimensional analysis of utility model systems’ performance.
9.2 Empirical Analysis of the Finnish Utility Model System
9.2.1 Institutional Setting in Finland
Finland is a developed small open economy and has been a member of the European Union (EU) since 1995. In 2022, Finland had a population of approximately 5.5 million and a gross domestic product of about 270 billion euros. Finland has been ranked among the most innovative countries in EuropeFootnote 12 and the worldFootnote 13 and Park’s (Reference Park2008) IPR index assigns a high score to Finland.
The Finnish utility model (“hyödyllisyysmalli”) system is one of the “utility model-intensive” ones in which there are more than 100 utility model filings per year.Footnote 14 The system was established in 1992 shortly before Finland joined the EU in 1995 and the European Patent Convention (EPC) in 1996. The decision of Finland and Denmark (see Chapter 4) to establish national utility model systems in 1992 while other Nordic countries Sweden, Norway and Iceland chose not to, marked a divergence from the collaborative development of Nordic IPR institutions.Footnote 15
In total there have been slightly more than 15,000 utility model applications in Finland by the end of 2022 and in 2023 there were slightly more than 2,000 utility models in force or pending in Finland.Footnote 16 Figure 9.2 shows the trends in utility model, patent and design right filings using data from the Finnish Patent and Registration Office (Patentti- ja rekisterihallitus, hereafter PRH), WIPO and EUIPO. The declining trend in utility model filings since the adoption of the system coincides with the decreasing utility model application trends in Germany and DenmarkFootnote 17 as well as the declining trend in national design right filings. There is a negative correlation (−0.63) between the trend-like decline of utility model filings and increasing aggregate business sector R&D expenditure. The most visible impact in Finnish patent statistics is the drop related to the accession of Finland to the EPC in 1996 after which applicants could validate granted European patents in Finland instead of filing national patent applications at the PRH. Later, the introduction of the RCDs by EUIPO (OHIM at the time) in 2003 led to the collapse of Finnish design right filings.Footnote 18 However, it seems that these significant institutional changes had no radical immediate impact on the demand for Finnish utility models.
Evolution of utility model, patent and design right filings in Finland.
Important motivations for establishing the Finnish utility model system were that it would provide protection for inventions that do not satisfy patentability criteria and that cannot be protected with design rights as well as quick protection.Footnote 19 Furthermore, Radauer et al. report that “According to the Finnish Patent and Registration Office (PRH), the intention was to create a system for small innovations, i.e. one that would provide cheaper and faster protection than patents for simple objects.”Footnote 20 Björkwall (Reference Björkwall2009) reports, based on a survey, that the Finnish respondents’ most important reasons to apply for utility models were that its cheaper and quicker than the patent option. As of December 2023, PRH describes Finnish utility models on its website as follows: “Similar to a patent, a utility model is a way to obtain an exclusive right to an invention and prohibit others from exploiting the invention commercially. Utility models are quicker and cheaper to get than patents.”Footnote 21
Finland joined the European Patent Organisation (EPO) in 1996 after which patents in force have been increasingly those granted by the EPO instead of PRH. In 1997, the European Commission proposed a European community utility model (see discussion in Chapter 20). At the time, the EU had 15 member states of which 12 had some sort of utility model system and the proposal would have meant that Luxembourg, Sweden and the United Kingdom, which at the time did not have utility model systems, would have needed to introduce one into their domestic law. The proposal was abandoned in early 2000s and the EU has since expanded to 27 member states (after Brexit). Hence, as discussed in Chapter 20, the landscape of European utility model systems has remained unharmonized to date. Recently, Finland joined the Unitary Patent System and Unified Patent Court that began their operations in June 2023. Heikkilä and Peltoniemi (Reference Heikkilä and Peltoniemi2023) provide a description of how the Finnish IPR service sector has evolved over the same period and particularly how this has impacted the business of Finnish patent attorneys. The key developments since 1980s include among others the following events:Footnote 22
1983 The Association of Finnish Patent Attorneys expressed a wish to the Ministry of Trade and Industry to evaluate the need for the Finnish utility model system
1985 Utility model committee set up by the Ministry of Trade and Industry
1986 Utility model committee recommends establishing the Finnish utility model system
1991 Act on utility model rights 800/1991 and Decree on utility model rights 1419/1991
1992 Introduction of the Finnish utility model system
1994 The European Union Intellectual Property Office founded (formerly known as the Office for Harmonization in the Internal Market, OHIM, until 2016), WTO’s TRIPS agreement signed
1995 Finland joins the EU
1996 Finland joins the EPC, European trademark system introduced
1997 European Commission proposes Community utility model
2003 European registered Community design system introduced
2006 Commission decides to halt the development of the community utility model
2011 The London agreementFootnote 23 enters into force in Finland
2023 Launch of the Unitary Patent System and Unified Patent CourtFootnote 24
Table 9.2 provides a comparison of selected key dimensions of the Finnish utility model systems and selected other interacting IPR institutions. It is important to highlight some peculiarities of the Finnish utility model system. There is no substantive examination of utility models at PRH but rather they are simply registered after formal examination (grant rate is close to 100 percent for those that are not withdrawn). Utility models are not granted for process inventions. There is inventive step requirement for Finnish patents but for utility models the requirement is lower: inventions must “differ distinctly from the prior art” to be eligible for utility model protection.Footnote 25 Utility models are granted for four years and can be renewed for an additional four years and two years so that the maximum term of protection is ten years (4 + 4 + 2). Since November 2011, as a consequence of the London agreement, there is no longer a need to translate Finnish patent applications filed in English to the Finnish language, but this does not apply to utility models, which still need to be filed in either Finnish or Swedish.
Information source is WIPO Lex (see also Björkwall Reference Björkwall2009; Prud’homme Reference Prud’homme2014; Radauer et al. Reference Radauer, Rosemberg, Cassagneau-Francis and Goddar2015); *Patents: PRH, 2022 information, www.prh.fi/en/patentit/Tilastoja/patentit.html; utility models: https://patenttitietopalvelu.prh.fi/fi/, Accessed 31 December 2023; Design rights: https://mallioikeustietopalvelu.prh.fi/, Accessed 31 December 2023; **www.epo.org/en/about-us/statistics/statistics-centre#/unitary-patent, Accessed 31 December 2023; ***WIPO IP Statistics Data Center, 2022 information.
The most important trading partners of Finland include Sweden, Germany, the US, the Netherlands and China.Footnote 26 Historically, Russia has also been a significant import and export country for Finland. Of these countries, Sweden, Germany and the Netherlands are EU members states and Germany, China and Russia have utility model systems in place as of 2022. Particularly, the Finnish companies that have exported to these countries must have been at least to some extent aware of the functioning of the local utility model systems. Regarding the “stepping stone” hypothesis (companies using utility models learn and shift to use patents increasingly)Footnote 27 and from the perspective of IPR-related learning, it is interesting to analyze in which countries Finnish applicants apply for utility models beyond Finnish borders. According to the WIPO IP Statistics Data Center, the top foreign countries where Finnish applicants registered utility model applications from 1992 to 2021 were Germany (1,892), China (756), Austria (187), Russia (145) and Denmark (108).Footnote 28
9.2.2 Patent and Utility Model Statistics
Since there are no explicit objectives set for the Finnish utility model system it has no specific KPIs. Therefore, the framework illustrated in Section 9.1 is applied to conduct a holistic analysis of the functioning of the Finnish utility model system. The interaction between the patent and utility model systems is analyzed using patent and utility model statistics. In particular, the coevolution of patent and utility model characteristics are compared, including the number of inventors, assigned IPC (International Patent Classification) classes, received citations, share of priority filings, patent and utility model family size (international filings) and structure, the use of utility models by industries and technology fields and grant/registration lags. The role of design rights (both national and RCDs) as complements and/or substitutes for utility models is left for future research.
The nature of this empirical analysis is purely descriptive. The statistical utility model and patent data comes from PRH, EPO (PATSTAT, Autumn 2023 version) and WIPO (IP Statistics Data Center).Footnote 29 PRH kindly provided information on the whole population of Finnish utility models and patent filings for the period 1992–2021. This includes information, among other things, about the use of professional representatives (patent attorneys).Footnote 30 There are slight differences between the data sources, but the presented trends are robust regardless of the chosen source.
9.2.3 Findings
9.2.3.1 Intermediate Impacts
9.2.3.1.1 Quantity and Quality of Utility Models and Patents
Figure 9.2 shows how the quantities of Finnish utility models and patents have evolved over time. Finland’s accession to the EPC led to a sharp decrease in patent filings, but there was no similar drop in the case of utility models. Figure 9.3 distinguishes between resident and non-resident applicants. It illustrates how the utility model system increases particularly the filings by resident applicants whereas there were only a very small number of filings by non-residents. According to PRH, 675 (4.4 percent) utility model applications were filed by foreign applicants and the rest 14,509 (95.6 percent) were filed by Finnish applicants between 1992 and 2022. Figure 9.3 demonstrates how Finland’s accession to the EPC led to collapse in Finnish patent filings by non-resident applicants at the PRH as they began to validate EPO patents in Finland instead. It seems that Finland’s accession to the EPC did not have visible negative nor positive impacts on the utility model filings.
Patent and utility model applications by applicant origin at the Finnish patent office.
Diminishing demand for utility models may be a result of various factors. It may reflect a declining number of incremental inventions or the gradual learning process regarding the usefulness of utility models in innovation activity:Footnote 31 utility model holders and industries learn only gradually over time how effective utility models are in promoting their businesses and competitiveness and, for instance, excluding imitators from copying utility model-protected technical solutions. It may also reflect the recommendations by patent attorneys between patents and utility models. Heikkilä (Reference Heikkilä2021) documented using PRH register data that a smaller share of utility model filings has a named professional representative (53.6 percent) compared to patents (69.9 percent) and that firms are more likely to have named representatives than individual applicants both for patents and utility models.
A patent family refers to all the patents and utility models that protect the same invention across countries and it consists of one or multiple priority filings and no or multiple subsequent filings.Footnote 32 Utility model protection is often sought for inventions where the idea is to obtain purely national protection.Footnote 33 Figure 9.4 illustrates how the share of priority filings has developed in patent and utility model filings over time. When Finland joined the EPO, the share of priority filings in the case of patents increased from some one-fourth to more than four-fifths. Concurrently, the number of national patent filings collapsed when particularly foreign firms quit filing national Finnish patents and instead used the EPO channel to obtain protection in Finland by validating EPO patents in Finland. This is consistent with the observations of Hall and Helmers (Reference Hall and Helmers2019). Clearly, Finland’s accession to the EPC had a major impact on patenting strategies of foreign applicants in Finland, whereas there seems to be no comparable impact on the utilization of utility models. Foreign applicants’ demand for Finnish utility models has remained at a low level over the whole period.
Patent families – share of priority filings.
The use of utility models as part of international patent filing strategies may reveal interesting patterns.Footnote 34 Figure 9.5 illustrates the evolution of patent family size (DOCDB) for both Finnish utility models and patents. Consistent with observations by Radauer et al. (Reference Radauer, Rosemberg, Cassagneau-Francis and Goddar2015), Heikkilä (Reference Heikkilä2017), Heikkilä and Verba (Reference Heikkilä and Verba2018), the patent family size of utility models is systematically and significantly smaller compared to patents. As patent family size correlates with the value of the invention,Footnote 35 this can be interpreted as evidence that Finnish utility models are applied to protect less valuable inventions than Finnish patents, on average.
Patent families – average patent family size by filing year cohorts.
A singleton patent family is a peculiar patent family that has only one member – a single priority filing, be it eventually granted or not – and no subsequent related filings.Footnote 36 Hence, the number of utility models and patents that are singleton families reflects the number of inventions that would not otherwise be published in patent registers. Singleton patents and utility models have the minimum patent family size of 1 and, given that patent family size and value of the invention correlate, they presumably relate to the least valuable inventions for which the applicant has no value in extending the protection. In the absence of these singleton filings in patent registers there might be duplicative R&D (re-inventing the wheel) of these inventions.
Moreover, singleton patent families may also indicate a defensive publication strategy and production of registered and novelty-destroying prior art that prevents others from patenting the same technical invention (“pre-emptive patenting”). There were 14,626 utility models in the PATSTAT Online database (Autumn 2023 version), of which 83.5 percent (12,212) were singletons and approximately 16.5 percent (2,414) were members of patent families with at least two members. This indicates that Finnish utility models are indeed in the majority of cases related to less valuable inventions for which protection is sought solely in Finland and not in other countries. Of the non-singleton utility models there were 367 utility models (approximately 2 percent of all utility models) that are members of patent familiesFootnote 37 where there is also a Finnish patent filing. Of these 26 were filed on the same date, in 279 cases the patent application was filed before the utility model (the mean lag between patent and utility model filings was 617 days, with a median of 364) and in 62 cases a utility model was filed before a patent application (mean lag between utility model and patent filings was 354 days, with a median of 338.5 days). More detailed analysis of the patent families could reveal whether the cases correspond to using utility models for double-protection, as “fallback” options or as quick protection during the time when the patent is still pending.
Figure 9.6 shows that the average number of inventors (inventor team size) is systematically smaller in the case of utility models compared to patents. This is in line with earlier observations.Footnote 38 In approximately 75 percent of utility models there is only a single inventor while only approximately 40 percent of patents have only one named inventor.Footnote 39 The large number of sole inventors in utility models contrasts the more general trend that developing patentable inventions is increasingly international teamwork.Footnote 40 Nevertheless, the larger number of “lone inventors” in utility models compared to patents is consistent with the motivation of utility model systems as a particularly appropriate protection method for small inventors and for incremental inventions.Footnote 41
Quality of inventions – average inventor team sizes.
Patent citations are the most common quality measure for patented inventions.Footnote 42 Figure 9.7 shows the evolution of average received citations for Finnish utility models and patents. Clearly, utility models have received only a limited number of citations: the average number of citations received by patent families (DOCDB) where Finnish utility models are members has hovered around 0.5 for most of the cohorts between 1992 and 2019. This illustrates that utility models seem to play only a minor role in cumulative innovation activity – very few inventions seem to be impacted by the technical content of Finnish utility models documents based on the “paper trail” of patent citations. Presumably, the fact that Finnish utility models are written in the Finnish or Swedish language further reduces the number of citations.
Quality of inventions – average received citations.
9.2.3.1.2 Flexibility and Inclusiveness
Quick protection is an important reason for the existence of the Finnish utility model systemFootnote 43 and Figure 9.8 illustrates the evolution of grant lags (time between filing and registration) for Finnish utility models and compares that to patents. Indeed, as also noted by the PRH, utility models provide quicker protection: The registration lag from filing to grant is several years in the case of Finnish patents but measured in months for utility models. For registered utility models the average grant lag between 1992 and 2021 was about five months (ca. 150 days) and Prud’homme (Reference Prud’homme2014) reported that it was three months as of 2014.
Grant lags of patents and registration lags of utility models.
The overlap between patent and utility model applicants and inventors sheds light on the extent to which a utility model system stimulates innovation activity by those applicants and inventors that do not file patent applications – that is, how inclusive the utility model system is. Heikkilä (Reference Heikkilä2023b) made some back-of-the-envelope calculations using uncleaned Finnish patent and utility model applicant and inventor data from PATSTAT and reported that the patent registers have at maximum 40 percent (approx. 6,000) more unique applicants and 20 percent (approx. 6,500) more Finnish inventors than in the case if there was no utility model system. These rough estimates make the crucial simplifying assumption that there would be no substitution to patent filings in the absence of utility models and, thus, should be regarded as potential maxima. Another limitation is that the applicant and inventor data is not cleaned which leads to falsely distinguishing those applicants and inventors as “unique” where there is just some different format for the name or misspelling. Nonetheless, it seems that the utility model system has acted as an inclusive institution, and we observe more inventors and applicants in patent registers than we would in the absence of the utility model system. However, Heikkilä (2019) documented that the gender gap is larger and not decreasing in the context of the Finnish utility models compared to patents: over the period 1992–2013 the share of women among utility model inventors remained steadily at approximately 5 percent.
With the PRH and PATSTAT data, we cannot distinguish SMEs from large corporations. However, the Community Innovation Survey (CIS) contains questions regarding the use of IPR protection among Finnish companies. Figure 9.9 shows that the use of utility models as well as patents and design rights is positively correlated with firm size so that the larger a firm is the more likely it is to use IPR protection. Generally, the use of utility models is relatively rare as only approximately 2 percent of sampled respondent firms use them. The use of utility models is significantly less common compared to patents (approx. 8 percent) and approximately as common as the use of design rights. It should be noted, however, that the CIS questionnaire does not clarify in which countries companies have used patents, design rights and utility models so it is not entirely clear whether companies refer to Finnish utility models (patents, design rights) or utility models in other countries such as Germany or China.
Share of firms using IPR protection by firm size.
9.2.3.2 Economic Impacts: Rate and Direction of Innovation
The contribution of utility models to innovation incentives and R&D investments is challenging to investigate directly as we lack firm-level data. Like the patent system, the utility model system impacts industries and technology fields at different intensity. In other words, the utility model system may direct the rate and direction of technological progress towards those fields where it increases innovation incentives and promotes diffusion of innovations the most. Regarding the latter aspect, Figure 9.7 indicates that Finnish utility models are cited very seldom, so using this traditional metric we do not find significant impact (“a paper trail”) on cumulative innovation and innovation diffusion. The language barriers are a potential reason for this as descriptions of utility models are written in Finnish or Swedish and the claims are available in Finnish and Swedish in public patent registers.
Table 9.3 shows the shares of Finnish innovative companies that have filed utility model or patent applications or registered design rights by industries with the highest utility-model-user intensity. Paper and machinery industries are clearly the most active users of utility models and, interestingly, in the furniture industry a larger share of firms uses utility models than patents and design rights. The Green Paper by the European Commission mentions that, “An industry-by-industry breakdown of utility model applications in the European Union shows that the industries most often concerned are mechanical engineering, electrical engineering, and precision instruments and optics.”Footnote 44 We observe from the Finnish patent and utility model register data that, indeed, there is different type of concentration between specific industries in the number of patent and utility model applications. It should be kept in mind that with utility models (in Finland) one cannot protect process inventions.Footnote 45
With information about the international patent classes in which utility models are classified, it is possible to move from industry level to invention level in analyzing the use of utility models. Figure 9.10 shows the evolution of the average number of IPC classes for both patents and utility models. If the number of IPC classes is considered to be a proxy for the complexity of the invention so that more complex inventions are classified in more IPC classes, then Finnish utility models are clearly systematically “simpler” according to this measure compared to patents.
Number of IPC classes in Finnish patent and utility model applications.
Due to field restrictions, utility models “direct” the technological change differently compared to patents if we judge on the basis of IPC classification of patent and utility model documents. In other words, they provide innovation incentives and promote the documentation of technical knowledge with different emphases across technology fields. As illustrated in Figure 9.10, the number of IPC classes in which patents and utility models are classified has increased over time: in 1992, patents were classified on average in 2 IPC classes and utility models in 1 whereas in 2020 utility models were classified on average in 3 while patents in 3.5 IPC classes. From 1992 (the introduction of the utility model system) until the end of 2021, the data indicates that patents were classified in 2.4 IPC classes on average whereas utility models had on average 1.8 IPC classes. The difference has remained roughly the same in absolute terms so that patents are classified on average in 0.5 more IPC classes. Also, utility models are more often classified in only one IPC class (slightly more than 50 percent of utility models) compared to patents (approx. one-third of patents).
The top 10 (first) 4-digit IPC classes with the highest number of utility models and patents are shown in Table 9.4.Footnote 46 In both cases these top 10 IPC classes account for approximately one-fourth of all first IPC classes. The fact that there is no overlap among top 10 IPC classes suggests that utility models promote innovation activity in other technology fields compared to patents. Moreover, among the top 10 IPC classes for patents there are very few utility model applications. While Finnish patents have been particularly utilized to protect inventions in chemical, medical, telecommunication and paper technology fields, the top IPC classes for utility models include inventions, for instance, in building and furniture technology fields.
9.2.4 Limitations
This analysis is mainly based on quantitative patent and utility model register data. Hence, there are several important limitations. First, the evolving motives of companies to use Finnish utility models have not been analyzed. For instance, without information on actual motives we cannot estimate the extent to which companies utilize the utility model system for defensive purposes (e.g., pre-emptive patenting and defensive publishing) or to what extent Finnish utility models owned by competitors limit their freedom to operate. Utility models and other second-tier patents in some countries have been criticized for the potential uncertainty that they create as rights that are granted without substantive examination at the patent office.Footnote 47 Replication of the survey by Björkwall (Reference Björkwall2009) could reveal interesting developments.
Second, there is no systematic evidence of the successful and unsuccessful commercialization of inventions protected by utility models, on the role of utility models in securing financing and we lack information on the licensing of utility models – although, anecdotal evidence and discussions with practitioners suggest that utility model licensing is rare.Footnote 48
Third, this chapter does not analyze the impact of utility models on industry dynamics – that is, the level and interplay of innovation and competition across industries and technology fields. We lack data on the return on investments in utility model protection as well as whether the use of utility models is related to productivity development.Footnote 49 Also, analysis of utility model-related litigation and its impact on innovation activity was excluded from the analysis.Footnote 50
Fourth, we lack data on renewal fee payments which could be used as an additional indicator for the value of utility models and the quality of the protected inventions. The more valuable invention and utility model protection are for a particular protected article, the longer the holder will pay renewal fees. In 2023, the registration fee was 250 euros (50 euro discount if filed online) for the first four years, 250 euros for the next four years and 200 euros for the last two years.Footnote 51 Registration costs are only a fraction of the professional patent attorney fees for drafting a utility model application which large Finnish patent attorney firms estimate on their websites to be approximately 5,000 euros – close to the fees related to drafting a patent application.
9.2.5 Discussion
In the Finnish context, it is remarkable that the demand for utility models has been steadily declining since the system was established in 1992. Finland became a member of the EU in 1995 and EPO in 1996 only a few years after the utility model system was introduced. The accession to the EPC led to immediate drop in national patent filings by foreign applicants,Footnote 52 as demonstrated more generally by Hall and Helmers (Reference Hall and Helmers2019) when they substituted from national filings to EPO filings and national validations of granted European patents. This makes it challenging to identify and distinguish the impacts of the utility model system. Clearly, the average differences (e.g., grant lags, patent family size) between Finnish patents and utility models were much larger before Finland joined the EPO.
The declining trend in utility model filings follows the more general trend of the decreasing importance of national filings channels and shift to European filings channels in the European context (Hall and Helmers Reference Hall and Helmers2019; Heikkilä and Peltoniemi Reference Heikkilä and Peltoniemi2023). Generally, the decreasing demand for utility model protections may indicate that the users of the utility model system have learned that the returns on registering utility models are relatively low and therefore not worth investing in. This pattern is similar to that of national design rights (cf. Figure 9.2). Alternatively, there might be lack of awareness of the possibilities and benefits of utility model protection. Here, the role of patent and IPR attorneys is crucial:Footnote 53 if they do not recommend filing utility models when applicants consult them regarding optimal IPR strategies, then naturally that has a negative impact on the demand for utility models, utility model awareness and accumulating experience of applicants regarding the effective use of utility models.
Table 9.5 summarizes observations applying and extending the KPI table introduced by Heikkilä (Reference Heikkilä2023a, see Table 9.1). Clearly, a utility model system may provide flexibility and have multidimensional impacts on the functioning of the national patent system. Given the long-continued declining trends in utility model filings in Finland and in other advanced economies, it seems that the positive scenario of increasing utility model filings in the future is less probable than the negative scenario that the filings of Finnish utility models keep on declining – unless there are significant reforms. There are multiple factors that will impact the future of the Finnish utility model system. First, the role of professional patent attorneys is crucial as they are the ones that recommend – or don’t – utility model filings for their clients and whether patents or utility models meet their needs better.Footnote 54 Second, harmonization of European utility model systems is an open question and seems not to be a priority as even the EU’s IP action plan (European Commission 2020) does not mention utility models.Footnote 55 Third, a lot has changed since the Finnish utility model system was introduced in 1992 when also the commercial Internet was at its early stage. Digitalization has meant that the access to patent registers, including utility models, has democratized, and the related search costs of technical solutions have diminished significantly. In the era of artificial intelligence, what kind of exploration could the flexibility of utility model systems offer? Will we see more registered utility models where AI is a co-inventor?
Notes: utility model KPIs applied and extended from Heikkilä (Reference Heikkilä2023a). *This refers to those utility model applications that are not withdrawn.
9.3 Conclusions
This chapter provides a quantitative evaluation of the Finnish utility model system from its introduction in 1992 to early 2020s by applying the framework of Heikkilä (Reference Heikkilä2023a) and relying on patent and utility model statistics from various sources. Its findings suggest that the Finnish utility model system has been used mainly by local applicants and there is evidence that it has promoted flexibility and inclusiveness of the Finnish patent system. There are systematic differences between Finnish utility models and patents: (1) utility models are members of smaller patent families, (2) utility models have smaller inventor teams, (3) grant lags for utility models are significantly shorter than for patents and (4) both Finnish patents and utility models receive few citations, but utility models systematically receive less. Patent and utility model statistics indicate that Finland’s accession to the EPC had much more significant impact on the patenting activity in Finland compared to the utility model system. The aforementioned average differences between Finnish patents and utility models were larger before Finland joined the EPC in 1996, which emphasizes the need to consider European integration and the evolution of European IPR institutions when evaluating utility model systems. Since, at the economy level, there is no positive association between Finnish utility model filings and R&D investments, more fine-grained industry or technology field-level analyses are needed to analyze the impact of the utility model system on innovation-based competition and industry dynamics. The role of professional patent attorneys in the demand for utility models as well as applicants’ choices between utility models and patents is an interesting topic for future research.
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