Major change ahead at European Patent Office

Ever wondered what Chinese prior art there might be out there that could sink your best laid patent plans? At the moment it’s pure guesswork, and when you consider that more new patent applications are being filed in China than in Europe now, it’s a scary thought.

The European Patent Office has signed an agreement with its Chinese equivalent jointly to develop an on-line automated translation system converting patents and utility models (mini patents) filed in Mandarin into English. A similar system already exists for Japanese and Korean patents.

The move has been spearheaded by the EPO’s recently installed president, Alison Brimelow, a sharp-witted, frank-talking British woman, whose task it is to prepare the organisation for major change. She referred to the Chinese translation system during an interview with Science|Business last week in which she gave an unusually bleak assessment of the world of patents, for someone in her position.

“Throughout its history the patent system has been hotly contested, even resulting in violence, and consensus was remarkably rare,” she said referring to the period before 1973, when European countries signed the European Patent Convention which in turn created the EPO.

The past three decades have seen consensus, at least in Europe, but Brimelow said this period of relative calm is coming to an end. “Thirty years ago it was possible to find consensus. Now there are more doubts about patents,” she said.

She shared this pessimistic view with her colleagues in a New Year’s blog she sent to EPO staff a week before the interview. During the 35 years of its existence the EPO has often been criticised for being an ivory tower dismissive of any criticism it draws, particularly from the fields of biotech and computing.

Time to take the critics seriously

Her blog reads like a warning against taking too lofty and indifferent a view of the EPO’s critics. “The EPO came to birth in what was probably the only relatively upbeat period in patent history. So we have been perhaps conditioned by those circumstances to assume that challenge to the effectiveness and usefulness of the system is new and unreasonable,” she wrote.

Brimelow sees four threats to this 30-year detente. First, there are new strains on the global patent system, partly owing to the rapid advances made in China and other developing countries, which are beginning to assert their influence over the global patent system.

There is also what Brimelow calls the Development Agenda debate about the patenting of life-saving drugs in the world’s poorest countries. “There are lots of voices, not just here in Europe, asking where next?” she said.

Second, as patent authorities around the world are forced to work closer together, the cultural differences between them become more noticeable, even between two developed, western patent regimes in Europe and the US.

Brimelow is scathing about the US patent system. “They have a liberal view about what can be patented: anything under the sun,” she quipped. She doesn’t expect much convergence between the European and American approaches any time soon.

Divisions at the core

Third, and closer to home, there are fundamental divisions between two of the core member countries, Germany and the UK, over patentability.

“You see it in biotechnology, where we have a directive which has been implemented across the European Union. Put simply, you can get a patent in the UK which you cannot get in Germany. That leaves the EPO with an interesting problem which has yet to be resolved – where we’re going to draw our line,” Brimelow said.

There are equally stark and equally deep-rooted differences of opinion in the software industry, she added. She is dismissive of some of the criticism leveled at the patent system and specifically at the EPO from parts of the open source and free software movements.

“There’s a high degree of emotion but a low degree of light,” she said, later clarifying that she was referring to both sides in the intense lobbying that reached a peak when the European Union was debating a law on software patentability. The proposed law was scrapped in 2005.

She hinted that she may request an enlarged board of appeal to draw a clearer line between what software-related inventions are and aren’t patentable, in connection with two related patent disputes in the UK that straddled that line, and ended differently.

In November 2006 Neal Macrossan, an Australian entrepreneur software developer, lost an appeal against the UK Patent Office’s rejection of his patent application. He wanted patent protection for a method for producing documents “for use in the formation of a corporate entity using a data processing system”.

On the same day the UK Court of Appeal threw out a challenge against a patent owned by IT company Aerotel: a computer program that created a new network infrastructure for a group of computers.

The three judges presiding over the cases considered the first a business method, and therefore unpatentable, while the second was seen as a patentable hardware change. Another UK judge called for a referral to the EPO’s top appeals body to clarify the law concerning software patentability.

To refer, or not to refer

Brimelow’s predecessor, Alain Pompidou, turned down requests for a referral to the enlarged board last year. She appears more willing to address the issue of software patentability. While there are no concrete plans for a referral at present, Brimelow said she would not rule one out one in future.

Rainer Osterwalder, the EPO’s director of communications, said after the interview that there could be a referral in the coming weeks or months but that nothing has yet been decided.

Brimelow is bothered by the way the EPO has been portrayed as partisan on the side of patent owners in the debate over software patentability. It’s “unhelpful”, she said, and went on to demonstrate that she does see where many of the EPO’s critics are coming from.

She admits there are ways to improve the system to suit the fast-paced IT industry. “Is the 20-year lock-up period always optimal?” she asked, referring to the 20-year life of a typical patent in Europe.

She also understands the logic of collaborative software development that avoids using patents. “Open source works,” she said.

She seems more prepared to listen to critics of the patent system than her predecessors, and more willing to adapt EPO working practices where necessary. “There have always been arguments whether patents work. There is a need to ensure that the system is as helpful to innovation as possible, and we need to keep an eye on that,” she said.

Looming financial dangers

The fourth threat to the cosy consensus of the past 30 years is less philosophical. There are serious logistical and financial problems facing the EPO. There’s a year-long backlog of patents (roughly 200,000) waiting to be examined by the EPO and new filings continue to outpace the patent examiners.

Brimelow has been open about the financial problem. Last November she told the Financial Times that the EPO’s pension and sickness insurance commitments could undermine its business model.

“I have got to take active steps – 2020 is when it’s really going to start to bite – and it constitutes a major challenge,” she told the newspaper.

Brimelow's interview with Science|Business took place in Brussels between meetings at the European Commission and the European Parliament. She said she welcomed the recent surge in efforts among European Union lawmakers to create a Community Patent.

France’s ratification of the London Protocol last autumn “will make patenting cheaper,” she said. The Protocol reduces the number of languages a patent has to be translated into in order to have Europe-wide effect. It is due to come into effect in March.

But she is more circumspect than others, including her predecessor, Alain Pompidou. “Alain said the London Protocol would reduce costs by reducing translation costs and was a major unblocking [of the path towards a Community Patent]. I hope that's the case,” she said, but she pointed out that over the past three decades there have been many “false dawns”.

A single patent, valid right across Europe would replace the patchwork of national patent jurisdictions that exist at present. It would slash the cost of patenting and give patent holders greater legal certainty.

Usually, when China is mentioned in connection with intellectual property, it is because a Chinese firm has copied an idea patented in Europe or elsewhere. That gives a false impression for two reasons, Brimelow said. First, counterfeiting happens all over the world, even in Europe.

“Counterfeiting is a global problem; it doesn’t help to pretend that it's a problem just in one or two places,” she said.

But more important, since Chinese inventors are now more prolific than their European counterparts, their products are as likely to be counterfeited as counterfeit.

Chinese firms are already starting to prosecute infringements of their intellectual property from abroad. The first notable case involved France’s Schneider Electric. Last September a Chinese court fined Schneider €30 million and ordered it to stop manufacturing five types of miniature circuit-breakers, which it ruled were based on utility models held by low-voltage equipment maker Chint Group based in the eastern province of Zhejiang.

“The Schneider case illustrates the danger of not being able to understand Chinese prior art,” Brimelow said.

Half a year into the job, the new EPO president clearly recognises the challenges ahead. Her main task will be to change EPO culture enough to allow it to adapt to the changes in store for the patent system. On her way out of the interview she cites Darwin: “It’s not the most intelligent or strongest, it’s the most adaptable that survive,” she said.