The UK’s Supreme Court will consider the appeal of Stephen Thaler in the case of ‘Thaler -v- Comptroller-General of Patents, Designs and Trade Marks’.

The case centres on the question of whether a non-human can own IP. It is a question that has been asked before: between 2011 and 2018 a series of (frankly humorous) disputes took place to determine if a monkey owned the copyright on an image it took of itself.

Thaler -v- Comptroller is more serious. In 2018, Dr. Steven Thaler made two patent applications which named an AI of his creation, ‘Device for the Autonomous Bootstrapping or Unified Sequence’ (DABUS), as the inventor. Following rejection of these patents by the Comptroller, the case was taken to the Court of Appeal. The appellate court upheld the Comptroller’s decision by determining AI is not a person and Thaler failed to comply with his obligations to identify a person as the inventor. The Supreme Court will now consider the case.

Thaler has, however, already had success elsewhere. In August 2021 South Africa issued a patent listing DABUS as the inventor, and two days later Justice Beach of Australia’s Federal Court ruled in favour of the AI, finding a non-human can be named as the inventor of a patent there. At the same time as the UK Court of Appeal judgement was delivered, the UK Government published its National AI Strategy. It promised to make a formal consultation about potential changes in UK patent law in relation to AI, acknowledging the emerging presence of AI within potentially patentable inventions. For the time being, then, the law is clear; “Machines are not persons … [DABUS] has no right to be mentioned as the inventor”. That may be soon to change as the case is heard once more, and as the Government considers whether current legislation is adequate for a new AI age.

Should AI be determined to be a valid inventor, what are the implications for patent valuation?

Establishing adequate licensing rates will be an important consideration. One would assume that valuations for patents generated by AI would be equivalent to those created by a human, at least initially. There is no reason to suspect that a patent generated as a result of an AI invention would be in some way less valuable than a human equivalent; it would impart the same exclusivity and be subject to the same quality criteria within the patent offices.

Moreover, the criteria for making a valuation assessment will likely remain the same. The potential market impact of a patent, its implications for firm revenue and growth production, and the nature of comparable deals – all features of current valuation practice – would surely apply to those patents generated by AI.

What may see real change, is the sheer volume of valuations that need to be made. It is entirely plausible that ‘invention factories’ could emerge as patent producing AI is put to work. This might see a growth in the conception of patents as articles of trade, not simple exclusionary rights, but we would undoubtedly expect an increase in the requirements for licensing agreements and other arrangements which permit value to be extracted from patents by those who could not otherwise effectively commercialise them.

Thaler’s patents, for example, relate to an emergency warning light and a food container, hardly related areas of production. To what extent these patents have commercial value remains to be seen.

Under these circumstances, the importance of good patent valuations only grows. So too does the requirement for valuation experts who understand the market outlooks, growth implications and comparative deal landscape to make accurate, well-founded judgements on the potential value of these patent portfolios. In a world where AI increases inventive output and patent-related dealmaking rises to meet it, patent valuations really matter. OxFirst remains a leader in this specialised field.

Court of Appeal judgement: https://www.judiciary.uk/wp-content/uploads/2021/10/Thaler-v-Comptroller-judgment.pdf

UK National AI Strategy: https://www.gov.uk/government/publications/national-ai-strategy

Portrait of a female Macaca nigra (Celebes crested macaque) in North Sulawesi, Indonesia, who triggered photographer David Slater’s camera: https://upload.wikimedia.org/wikipedia/commons/4/4e/Macaca_nigra_self-portrait_large.jpg