Single patent gets political nod

The long-awaited single European patent will become a reality on 1 January 2014, after the Council and the European Parliament endorsed a compromise deal on Tuesday (11 December).

The promise is that the new patent will be cheaper and more effective in protecting inventions, with one patent grant providing protection in 25 member states, patent languages limited to English, French and German (in line with the European Patent Office system), and a single court to deal with disputes.

There is a long bedding-down process, with a transition period of 12 years to move from the existing system, in which a patent granted by the European Patent Office in Munich must then be translated into the language of any country in which it is to have effect, to the new three language system. When it is up to speed the estimate is that a patent granted under the unitary scheme will cost €4,725, compared to the European Commission’s current estimate of the average cost, which stands at €36,000.

In the heady euphoria of agreement there was no mention that a terminal row about the rules on language translation means that as things stand, two of the EU’s biggest countries, Spain and Italy, will not be part of the unitary system. As a result, the unitary patent is not a European Union system. Instead it has been set up under ‘Enhanced Co-operation’ a legislative pathway used when unanimity cannot be reached.

In a related development on Tuesday, the Advocate General of the Court of Justice of the European Union, Yves Bot issued his opinion on the legal challenge by Italy and Spain, concluding that their objections have no basis, and that the use of the Enhanced Cooperation process in this area is legal.

Shifts in the geography of innovation

MEPs from all political groupings lauded the agreement, stressing the contribution they hope it will make to increasing the competitiveness of Europe’s high-tech SMEs. By coincidence - and in a stark indicator of what is at stake - the World Intellectual Property Organisation announced on Tuesday that last year China’s patent office became the largest in the world, as measured by the number of patent applications received.

China’s State Intellectual Property Office overtook the US Patent and Trademark Office in 2011, having surpassed the Japan Patent Office in 2010. In the century leading up to 2011, only one other patent office – Germany’s – has ranked as the largest office. As WIPO Director General Francis Gurry noted, “Even though caution is required in directly comparing intellectual property filings across countries, these trends nevertheless reflect how the geography of innovation has shifted.”

The pressure on Europe is further highlighted by the fact that while the global economy continues to underperform, patent applications filed worldwide exceeded two million for the first time in 2011. Of this total, 526,412 were filed in China, 503,582 in the U.S. and 342,610 in Japan. WIPO said most of the increase in China was due to filings by Chinese firms.

A single market requires a unitary patent

Given the news of China’s advance in global intellectual property, it was interesting to hear the views of Klaus-Heiner Lehne, (EPP) Chair of the Legal Affairs Committee of the European, who led on the discussions on setting up the court system to rule on disputes. Lehne said he had talked to people in China about the need to improve intellectual property rights in that country, only to have them say, “in the EU protecting IP is backward too.”

In future that will not be the case, Lehne said. The system of jurisdiction will see the court of first instance set up in Paris and headed by a French judge. Two other courts, to be set up in London and Munich will specialise cases relating to specific technologies, while the Court of Justice of the European Union will act as the court of appeal.

This means existing local expertise will not be lost to a centralised system, Lehne said. There will also be supervision to ensure companies cannot go forum shopping – that is picking and choosing to which court they apply – and to build uniform case law.

Currently, SMEs find it difficult to defend patents because they must do so country by country, giving big companies, “a free run” to ignore their IP rights. “That expensive litigation system is now ended,” Lehne said. Voting for the unitary patent “has closed a big hole in the single market.” Lehne’s report was approved by 483 votes to 161 with 38 abstentions.

Patent language     

Language Translation is the other big overhead for SMEs in the current system. Now applications will have to be made in English, German or French. If made in another language they will have to be accompanied by a translation into one of these three. Translation costs will be fully reimbursed for EU-based SMEs, non-profit organisations, universities and public research bodies. In addition, patent renewal costs will be set at a lower level for these entities.

Ironically, the rapporteur for the agreement on the three language system - the point of difference which led Spain and Italy to stay outside the unitary patent – was Italian MEP Raffaele Baldassarre. He said the key requirement was to reduce costs for SMEs and the three language system, mirroring that of the European Patent Office, will do this.

Baldassarre noted that as things stand, 75 per cent of patents registered in Italy are in English. “The world of business has moved on and we have to accept this,” he said. The agreement on languages was approved by 481 votes to 152 with 49 abstentions.

Making a case for the agreement

The lead MEP on the overall package, Bernhard Rapkay (S&D), could not resist reprising the tussle that has gone on between the Council of Ministers and the European Parliament over the past year. In particular, he was incensed by an attempt by the Council to keep the Court of Justice of the European Union out of the picture.

The final agreement, “is not as good as we had [a year ago], none the less we can make a case for it,” Rapkay said. “The rights of the European Parliament and European institutions as a whole are not undermined.” Rapkay’s report was approved by 484 votes to 164 with 35 abstentions.

An historic day

After, “many attempts, many failures, many steps forward, much waiting” the deal on the unitary patent has gained a large cross-party majority, noted Michel Barnier, the Commissioner for the Single Market and Services, who has steered the agreement on behalf of the European Commission over the past two years. “This is something of an historic day,” Barnier said. The unitary patent is one of the key elements of the new single market act. “This shows we are doing things to reignite hope and stimulate growth, said Barnier.

Warm reception

The unitary patent system will not cover software. However, Jonathan Zuck, president of the Association for Competitive Technology, a body representing 5,000 information technology SMEs said the unitary system removes a major hurdle to innovation and economic growth. “SMEs will have a simpler system to register their innovations at significantly lower costs,” Zuck said. Now there is a need to remain vigilant and ensure that Member States encourage adoption and provide on-going support for the new system.