Struggle continues to get Europe’s new patent regime over the line

Europe’s new intellectual property protection regime was due to take effect across the European Union, except in Spain, Italy and Croatia, at the start of 2015, but after more than four decades of effort and two years since the legislation was voted through in December 2012, there  is much still to be done before the package will fly.

Several factors are still up in the air. For businesses, there is  still no certainty over what it will cost to register and renew a patent, and for the major players, like pharmaceutical companies, there are questions over the strength of the unified patent court (UPC), which will be set up to create a single forum to enforce all European patents.

Whilst acknowledging these concerns, Benoît Battistelli, head of the European Patent Office (EPO) told Science|Business it is too soon to make any judgements.

Unitary patent future

Certainly, as it looks on paper, the unitary patent should make patenting simpler and cheaper. Currently patents granted by the European Patent Office (EPO) must be registered and enforced at a national level. In future there will be a choice: either register the patent country- by-country as now, or register it as a unitary patent, providing protection across the 25 countries signed up to take part.

Costs will be cut by ending the requirement to translate a patent into the language of every country in which it is to have effect.

There will also be a central court for enforcing patents. The new court, now likely to go be up and running in 2016, will have a central division in Paris, a branch in London dealing with biotechnology and pharmaceutical patents, and a branch in Munich dealing with engineering patents.

A single jurisdiction looks attractive for small companies that cannot afford to defend their patents in different national courts. But for holders of high value patents who can afford to litigate, the attractions of a single court will have to be weighed against the fact that patent protection, or the ability to mount a challenge to a patent, will be wiped out in 25 countries if a case is lost.

Battistelli, whose office will be responsible for granting and managing the unitary patent, keeping a central register of granted patents, recognises that the new court creates, “fears and preoccupations” for multinationals.

“Of course, people will look at the first decisions [of the court],” he said. “In the beginning, [companies] will be a bit prudent. But in five or 10 years, that will all be forgotten.

“The same thing happened when the EPO was created, almost 40 years ago [1978]. Within two to five years these preoccupations disappeared,” Battistelli said. “I’m convinced this court will be a high quality court that will take decisions that are solid and understood.”

The UK’s involvement in the UPC is guaranteed for now. But is there a contingency plan were Britain to have an ‘in-out’ referendum on membership of the EU, as promised by the Prime Minister David Cameron, if his Conservative party wins the 2015 UK election? There is not, said Battistelli. “Many people were asking us what would happen if Scotland would leave the UK. It has not happened,” he said.

Summer 2015 deadline for fees

It is promised that the unitary patent will drastically cut the cost of patent protection in the EU. Under Europe’s existing patent regime, the EPO examines and grants the patent, but patent holders must pay an initial registration fee in each country where they want it to be valid, requiring multiple translations and local lawyers.

Since on average companies currently register patents in four of the 25 countries that are part of the new system, there will be little incentive to take out a unitary patent if the renewal fees cost much more than maintaining four national patents. Having the fourth and fifth largest European markets of Italy and Spain on the outside compounds the difficulty of coming up with an attractive fees structure.

As yet, fees for the new regime have not been settled, however, Battistelli said they will be, “less than you feared, more than you hoped”.

The oft-quoted European Commission figures say that the cost of having a patent recognised in every EU country today is €36,000, of which €23,000 is accounted for by translations. Battistelli expects the total administrative cost of filing and maintaining an average unitary patent, including patent office, translation and legal fees to come down by roughly 70 per cent.

Setting the new fees has been a tricky and long-drawn out task. Renewal fees are important sources of income for national patent offices, which currently fix fees unilaterally.

Under unitary patent, EPO will be responsible for collecting the renewal fees, keeping half for itself and handing the remainder to national patent offices.

“The fees are determined by different elements,” said Battistelli. “They must be attractive to business. They need to be neutral in budgetary terms – because the EPO is self-financing – and, thirdly, some member states are pre-occupied that the new system will not reduce their share in renewal fees.”

“A balanced compromise can be found and a decision should be taken at the latest by June 2015,” Battistelli promised.

When the deal on a European patent was struck in 2012, it was hailed as bringing to an official end four decades of haggling between member states over how to unite Europe’s fragmented patent systems. However, companies are wary of national offices’ vested interest in setting unitary patent fees to a certain level and have warned them not to price companies out.

Patenting in Europe is seen as prohibitively expensive, particularly for small and medium-sized companies (SMEs). Battistelli said it makes sense to consider lower fees for SMEs as part of the new regime, but admits this was still being talked over.

Reduced-fees for SMEs exist in the US and several European countries. As former head of the French patent office, Battistelli introduced a lighter fees regime for SMEs in 2006, reducing the pre-granting fees by 25 per cent initially and subsequently by 50 per cent. Renewal fees for French SMEs are lower for the first 10 years of the patent.