Commission sets out to harmonise EU patent rules

The European Commission today proposed new rules to improve the protection of intellectual property (IP) in Europe, covering patents relating to industry standards, compulsory licensing of patents in crisis situations, and the revision of the legislation on supplementary protection certificates.

These will work hand-in-hand with the unitary patent system that 17 EU countries are to introduce in June, after 50 years in the making.

Thus far, patents have been “an expensive business,” said Thierry Breton, EU commissioner for the internal market, presenting the proposal. The unitary patent system will cut costs from an average of €36,000 to €5,000. “We’re going to have a true single market for patents,” said Breton.

The proposed new rules will take this even further, tidying up aspects of patent legislation that up to this point have varied country by country.

IP is more important than ever as a key driver of economic growth. According to the Commission, IP-intensive industries account for almost half of GDP and over 90% of all EU exports.

The proposed new rules will now be reviewed and amended by the European Parliament and the member states, which will have to rubberstamp the final agreement before it enters into force.

What’s in the package?

Standard Essential Patents (SEPs): These concern technologies that are essential in making a product standards-compliant. They include various connectivity technologies, such as 5G, Wi-Fi, Bluetooth, and audio/video compression and decompression standards. The holders of these patents essentially get a monopoly on their technologies and are obliged to license them on fair, reasonable and non-discriminatory (FRAND) terms.

But the current system isn’t very transparent, causing constant lengthy disputes and litigation. The Commission hopes the new rules will fix this by providing additional transparency regarding SEP portfolios; aggregating royalty when patents of several holders are involved; and allowing for more efficient means for parties to agree on FRAND terms.

Compulsory Licensing: Sometimes, in last-resort crisis situations, governments can allow the use of a patented invention without the consent of the patent holder. For example, if there’s a vaccine shortage, governments can ramp up production without explicit permission from the company that holds the patent.

While many value chains across the bloc span multiple countries, each member stat has its own rules on this, resulting in a very patchy legal framework. The Commission proposes to create an EU-wide compulsory licensing instrument.

Supplementary Protection Certificates (SPC): These certificates extend the term of a patent by up to five years, to encourage innovation and growth in certain sectors. It’s a special right awarded only to human or veterinary pharmaceutical product and plant protection product patent holders, and only at national level. Once again, it’s a fragmented and costly system.

The Commission wants to introduce a unitary SPC. An application would be subjected to a single examination, which would allow the granting of a unitary SPC or national SPCs in each selected member states.