New EU patent system: will it work?

Mon, Feb 18, 2013, 00:00

A new European unitary patent system gets signed into law tomorrow to make EU-wide patenting simpler and more cost-effective

In 2011, 142,810 patent applications were filed with the European Patent Office (EPO), half of which came from European countries. In 2012 that figure doubled. That’s a lot of new inventions needing protection.

Until now, the cost to implement a Europe-wide patent was so expensive it’s likely that the number of applications could have been higher.

Because of the lack of one unitary system, those seeking EU-wide protection could do so centrally through the EU but their application was then divided into 27 national patents, all of which needed individual approval from each relevant member state. Translation costs alone averaged around €36,000.

After considering translation and processing, the cost of obtaining a EPO registration is around 10 times more than that of a US patent and 13 times more than that of a Japanese one.

Those registering a patent with all 27 member states would also run the risk of having to defend their patent in 27 different jurisdictions.

This is about to change. Tomorrow EU member states will sign the international Agreement on the Unified Patent Court in Brussels during the Competitiveness Council, which was the final aspect of reform needed to implement a new EU-wide patenting system.

This means any inventor can apply to a European patent organisation for a unitary patent which is valid in 25 member states (Italy and Spain are, at this point, opting out).

Minister’s view

Ahead of the agreement Minister for Jobs, Enterprise and Innovation Richard Bruton said: “The signing of the Unified Patent Court will be a truly historic moment as it paves the way for the implementation of the patents package, which will give enterprises greater access to patent protection at European level, and make enforcement of patents more affordable.

“It will also be an important milestone in the continued development of the single market – a priority for the Irish presidency. Indeed, achieving a unified patent litigation system was a major priority of the April 2011 Single Market Act.”

The patents will be translated into three languages at no cost – English, French and German. There will, however, be a fee to translate into other languages but EU-based small and medium-sized enterprises, non-profit organisations, universities and public research organisations will be reimbursed.

Discussions of unitary patenting in Europe have been going on since the 1960s. So why has this taken so long? A spokesperson from the Department of Jobs, Enterprise and Innovation (DJEI) said: “The reasons for lack of progress can be summarised as difficulty getting agreement on the translation regime to apply to patents so that they would have validity across the EU. Given the need for unanimous agreement under the then existing EU treaty framework, the initiatives failed on each occasion. The need for unanimity has changed under the Lisbon Treaty with the ability to adopt a proposal under what is called ‘enhanced co-operation’. Under this procedure, an initiative can be considered if it is consistent with the EU Treaty and does not disadvantage any member state.”

Patent aggregation

It is also thought that a general trend of patent aggregation globally is another catalyst for the current push over the cliff. The US is traditionally seen as world leader in patents. However, in 2011 China registered 526,000 patent applications and in the US there were only 504,000. That’s the first time they have had more applications than the US.

The EU has entered the race too, albeit a bit further down the road. The number of applications doubled from the previous year to 258,000 in 2012. “It is generally accepted that there is a straight-line correlation between invention and wealth,” said Jon Legorburu, head of litigation at Byrne Wallace. “For most of the 20th century the US has led the way in patent applications. It was the most innovative nation on the planet, and the results paid dividends in wealth creation particularly in the final years of the 20th century. That has all changed. The creation of a unified patent and court enforcement system is a significant step towards ensuring that Europe is on an equal footing with the United States and China when it comes to ease, cost, and effectiveness in registering and enforcing innovative products and processes. While the benefits may not occur immediately they are surely going to be reaped in the future.”

While political, legal and social consolidation is what makes the EU what it is, there are some concerns over the implications of such a venture. “Big companies may prefer to have separate registrations across the EU so as to make it harder to knock their patents out,” says Legorburu.

Benefiting SMEs

The change in system, however, is aimed more at benefiting small and medium enterprises (SMEs). On this point, the DJEI spokesperson said: The overall objective is to facilitate innovation, particularly within the SME sector as the obtaining of patent protection with EU coverage in the first instance and, access to enforcement thereafter, for such enterprises is prohibitive and out of the reach of most.”

“The main concern I have with this system, however, is whether it will work,” says Legorburu. “My sense is that it will because it has to. Given what’s happening in the world in terms of patents, and the aggregation of registration in China and the US, in order for the EU to look like an attractive place for business, you must offer something similar: a unified system.”

Varying national interpretations of patents may become an issue. If cases are to be decided in centralised European court systems – Paris and London have been chosen – peripheral EU countries may resent their legal systems being undermined. But parts of the EU, like Britain and Ireland, would have quite developed patent legislation, while other regions, such as some central and eastern European countries, have less history in this legal area. But it is a step forward.

“The EU has grown to 27 member states with patent offices operating in some 20 languages,” said Raymond Hegarty, managing director of Intellectual Ventures. “The number of courts, legal systems, patent offices and languages has meant that it has been very complicated and expensive to file, maintain and enforce patents across the EU. This is contrary to the aims of a single market. The intention to have unitary patent and unified court was signalled by the European Commission more than 12 years ago in the Lisbon Agenda. Even though the final creation is flawed through a decade of compromise, many people are breathing a sigh of relief because at least we have something now.”

Opportunistic enforcers: Patent trolls

Patent trolls refers to any person or company which tries to enforce patents against alleged infringers in an aggressive or opportunistic way without any real desire to use the invention itself. It would be similar to “cyber squatting” – where someone registers a domain name of a well-known company and then sells it back to them.

One of the highest profile cases involved Marks Spencer plc v One in a Million cyber-squatters who had registered the domain names of well-known companies like MS and virgin.com. The verdict went Marks Spencer’s way and held that a cybersquatter is obliged to “cede domain names to the rightful owners of similar trade names”.

Jon Legorburu of Byrne Wallace Solicitors cites the dangers posed by trolls in a unified patent system.

“If I were a patent troll I might be attracted to a unified patent system,” he says.

“I could buy a portfolio of these patents and cause significant business damage to legitimate trading companies across Europe, quickly and cheaply. It has happened before.”

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