22 June 2010

EU Patent and EU Patent Court are Not in the Best Shape

Margot Fröhlinger, Director of Knowledge-Based Economy inside the DG Internal Market of the European Commission, said yesterday at the IP Business Congress in Munich that both the EU patent and the unified patent litigation system in Europe are "not in the best shape" (see also coverage here and here).

She referred to the 35-years-old discussion on a EU-wide (Communitiy) patent as a "history of failure" that was mainly caused by massive lobbying from various sides (e.g. large corporations and patent attorneys), whereas the EU Commission still keeps trying and Europe's SMEs still keep hoping. Ms Fröhlinger considers this project ensuring innovation, growth and competitiveness especialy for SMEs, which is not provided by the current system, whose translation and transaction costs are far to high, even under the London Agreement that still requires claim translations for all member states in which a granted patent is to be validated. She especially demanded the far too expensive (mostly due to attorney's fees for "rubber stamping translations") and complex validation system to be "de-complexed".

She explained that there has been reached an agreement of principle (full document here) by the EU Council on December 4, 2009 regarding technical provissions required for the EU patent in which, however, language issues have been spared out, since the Lisbon Treaty requires unanimity (in the EU Council) for language issues but a qualified majority among EU member states for other issues, such that the language regime has to be governed by a separate legal instrument. The adoption of a proposal for a language regine is planned on June 30, 2010.

According to the proposal, EU patent applications will have to be submitted to the EPO in one of its three official languages (EN, FR, DE) and the patent proprietor would only have to provide claim translations into the two other official languages after grant, while for the remaining EU languages machine translations would be provided for purpose of disclosure and research. The owner would have to make a fully certified translation only in case of an infringement suit for the alleged infringer(s).

According to Ms Fröhlinger, however, this proposal has only very little chances to be adopted by the member states, since there is a strong (presumably southern European) group that will not accept an EU patent based only on claim versions in three predetermined languages.

As a possible way out of this situation, Ms Fröhlinger suggested an enhanced co-operation, which is a EU legislative agreement among a selected group of EU members only, whereas others may join later. Although such a mechanism has been permitted already in the Amsterdam Treaty of 1999, it has not yet been used since it is considered somewhat against the EU philosophy. In fact, the Schengen agreement and the EURO, which also are in force only in certain member states, have not been implemented by an enhaced co-operation but by other legal mechanisms. 

However, there is also an obstacle to this option. While only nine member states have to agree to take part in the enhanced co-operation, it needs to be authorised by a qualified majority of member states, whereas it is unknown if that can be achieved - in fact, Ms Fröhlinger was not overly enthusiastic about the prospect of success of this option.

As an option of "last resort" for the case that an enhanced co-operation cannot be put in place, Ms Fröhlinger considered a regular inter-governmental agreement, which, however, is also a tough way, since a parlamentary ratification is needed in each of the participating states, which may have an outcome as well, as experienced with France's long-lasting opposition against the London Agreement.

 Ms Fröhlinger further explained that the EU Patent Court is to be achieved by an international agreement principally open for third parties an independent of the European Court of Justice (ECJ) and the EPC contracting states. The court system, which would be competent for validity and infringement for both classical EP bundle patents and new EU Community patents, would comprise a Court of First Instance with local/regional and one central division and a Court of Appeal, (see Draft Agreement of March 23, 2009).

This European and European Union Patents Court (EEUPC), however, may also fail due to legal (i.e. political) concernes of some EU member states or of the European Court of Justice as has been expressed in a hearing on May 18, 2010 in Brussels by a number of EU members and ECJ Judges. If the European Court of Justice has to decide on the compatability of the EEUPC system and especially its independence of the EU legal framework, virtually any outcome between a clear yes and raise of fundamental issues due to the EU Patent Court's independence is possible. In any case, according to Ms Fröhlinger's most optimistic scenario, a unified litigation court system in Europe would not be implemented before 2015/2016.