Europe’s patent regime at the crossroads

Picture courtesy inventionpatent.net

Patent protection is four times as expensive in the European Union as in the United States. The higher cost, partly due to the need to translate the patents into many languages, is seen as one of the main reasons Europe lags behind countries like the United States and Japan as a centre of innovation.

Bringing the price down is seen as one of the most important single actions Europe’s politicians can do to improve the Union’s competitiveness and a single Community-wide patent has long been seen as the best way to do this. On 12 July, the Commission conducted a public hearing on the issue.

The language problem

But a failure to solve the issue of languages has blocked any progress. And now, the possibility of an effective alternative to the Community patent could be undermined by divisions among members of the EPO.

At a meeting of the EPO’s administrative council last week involving the 31 national patent offices and the EPO directors, the Nordic countries and to a lesser extent the UK, pushed for some EPO functions such as searches for prior art, to be handed to the national offices.

“The EPO is not happy about this,” said one insider familiar with the thinking inside the organisation.

“The tendency among the national offices to take over EPO functions could result in there being effectively 31 EPOs. This would not be good for innovation in Europe,” the person said.

Consultation

The Commission hearing in Brussels on 12 July was the second step in a public consultation on EU patent policy, launched by Commissioner Charlie McCreevy in January. Over 2,000 organisations submitted their views.

The debate, and the written submissions the Commission has received in recent months will help the European Union’s executive body decide whether to propose a new law paving the way for a Community Patent, or to ditch the project and pursue a more modest and pragmatic short term solution to linguistic and jurisdictional issues. At the hearing, McCreevy indicated he's in no rush to tackle the first, harder task: "I have already said that I will go for one big, last push on the Community Patent. I still have to decide when the time is ripe," he said.

Industry has most to gain from the Community patent. But far from giving support, three of the most influential industry lobby groups have advised the Commission to drop the initiative for now, and instead improve the existing patent regime run by the EPO.

Some fear a lobbying nightmare similar to the one they experienced last year when European politicians tried to pass a law on the patentability of software-related inventions.

Legal minefield

That debate was won by anti-software patent groups, which successfully convinced the European Parliament that the proposed law would stifle innovation by creating a legal minefield for software developers.

“To start a debate about the Community Patent now would be like opening a Pandora’s box,” said Francisco Mingorance, a European policy expert with the Business Software Alliance, an industry group that represents some of the largest technology companies in the world, including Microsoft.

“Looking at the debacle over the proposed law on computer-implemented inventions, a lot of companies fear this could happen all over again but on an even broader scale in a debate about the Community patent,” Mingorance said.

Similarly, the International Chamber of Commerce, a grouping of large companies from around the world, including Air Liquide of France, General Electric of the United States and UK-based GlaxoSmithKline, has urged the commission to back off from the Community patent project.

“A revisiting of substantive patent law in the context of the Community patent is not warranted,” it said in its submission to the Commission’s consultation.

Compromise ‘bad’

Others believe any compromise that suits all 25 countries in the Union would be a bad foundation for the Community patent. An agreement requires unanimous support from all the member states.

“No Community patent would be better than a bad Community patent,” said Ilias Konteas, an advisor on intellectual property matters at UNICE, the federation of European employers, which represents most of the large companies in Europe.

In 2001 the commission proposed a text for a law that would allow for the creation of a Community Patent. It was hailed by many in industry as an enlightened piece of draft legislation, but it was changed substantially by national governments.

The commission proposed that patents should be drafted in only three languages, rather than the 20 official languages of the Union. This would slash the cost of getting patent protection across the Union. But the national governments scrapped the idea and returned to all official languages.

“The Community patent redrafted by the member states is not acceptable to us,” said Mr Konteas.

Reduced ambition

UNICE, the BSA and the International Chamber of Commerce all urge the commission to pursue two less ambitious courses of action being pushed by the European Patent Office. The first, dubbed the London Protocol, attempts to overcome the burden of translation costs.

It would excuse countries with English, German or French as their official language from having to translate patents at all. Other countries would have to issue their patents in the local language, plus either English, French or German.

So far France has failed to ratify this agreement, effectively blocking it.

A separate pact called the European Patent Litigation Agreement attempts to create one legal system for all 31countries that are members of the European Patent Office. It too has yet to be ratified.

“If we see progress on these two issues this will be a big improvement in the way the system works – a major step forward,” said Konteas.

The European commission supports the two initiatives pushed by the EPO. It views them as a useful step towards the creation of a Community patent.

At the beginning of this year McCreevy, the European commissioner in charge of the internal market, promised that he would not pass the Community patent initiative onto his successor, as so many previous internal market commissioners have done.

Pushing ahead

At a committee meeting in the European Parliament last month he admitted defeat on the software patent initiative last year, saying he would leave that dossier for his successor. But he vowed to push ahead with the Community patent project.

“Recognising the economic importance of patents, I felt it was not a good thing to leave the entire patent agenda in limbo,” he said, explaining why he embarked on his “final push” for the Community patent.

But showing the pragmatism he is renowned for, McCreevy left open the possibility of dropping the Community patent, and instead focusing on the two initiatives being pushed by the EPO.

“One thing is certain, progress in the patent field has to be made. Businessmen, faced with a 21st century global economy, scratch their heads in disbelief when they see us stuck in discussions about language regimes and regional distribution of courts,” he told members of the European Parliament.

“What they want is a cheaper and reliable patent system. That’s why I think we should look at all possible routes forward, be they Community or non-Community initiatives,” he added.

However, the London Protocol and the EPLA fail to meet some of the concerns of the biotech industry. In its written submission to the European Commission, the industry group EuropaBio called for an extension of the supplementary patent protection system which grants pharmaceuticals companies an extension on the 20 year life of their patents to cover the amount of time it takes to gain regulatory approval.

“We should have the same thing for genetically modified seeds and grains,” said Johan Vanhemelrijck, EuropaBio’s secretary general.

The group has also called for the introduction of subsidies to cover 75 percent of the cost of patent registration for young, innovative companies. “In America SMEs get subsidies to cover up to 80 percent of their patent registration. Why shouldn’t we do the same?” Vanhemelrijck said.

EuropaBio also had some advice for the EPO: set up a young innovative companies unit that would handle translations for start-ups and small firms.

“If they had that it would repair some of the damage we see in the current regime,” Vanhemelrijck said.