22 December 2010

Some End-of-Year Observations on the EU Patent and the EU Patent Court

After the EU Competitiveness Council Meeting of December 2010 (see video of debate), which was celebrated as "the breakthrough after 40 years" (see earlier posting), the EU Commission now tabled its legislative proposal for enhanced cooperation to create EU-wide patent protection (press release), which is supported by at least 12 EU member states - the 11 undersigners of the two supporting letters (here and there) to the Commission shortly before the latest Competitive Council meeting, plus Poland. This proposal needs to be approved by the EU's Council of Ministers by qualified majority, after the consent of the European Parliament.

The proposal promotes to use enhanced cooperation to adopt the language regime of the EPO (Art. 14 EPC), according to which the EU patent would be examined and granted (by the EPO) in English, French or German. EU applicants whose language was not English, French or German would have the option to file applications in any other EU official language, whereas the costs for translation into one of the official languages would be eligible for compensation. Particularly, participating EU Member states would enjoy the following arrangements as to the patent procedure and effect:
  • the EU patent should co-exist with national and European patents as a specific category of the known EP patent, granted by the EPO, designating the EU Member States participating in enhanced cooperation on unitary basis.
  • until the moment of grant, applicants would have the choice between 
    • an EU patent valid in the territories of the participating EU Member States; 
    • an EP patent designating selected EPC Contracting States;
    • an EU patent and an EP patent designating other EPC Contracting States;
  • the EU patent should be of autonomous nature, provide equal protection throughout the participating EU Member States and may only be granted, transferred, revoked or lapse in those EU Member States as a whole.
And as to the language regime:
  • the EU patent should be published by the EPO in Eglisch, French or German (Art. 14(6) EPC). Any additional translation requirements would terminate when high quality machine translations are made available;
  • translations should not have legal value thus ensuring legal certainty for the users;
  • in case of dispute, a full manual translation would have to be provided by the patent proprietor at his expense;
    • into an official language of the EU Member State in which either the alleged infringement took place or in which the alleged infringer is domiciled; and 
    • into the language of proceedings of the court hearing the dispute;
  • a scheme for compensating the costs of translating a patent applications filed in an EU official language into an EPO official language should be set up, including financial and technical assistance for preparing those translations.
After the December 10 meeting, EurActive reported that 23 EU Member States will join the enhanced cooperation movement - another dozen supporters were counted in the public debate, leaving only Italy, Spain, the Czech Republic, and Cyprus on the opposing side, the latter two states asking for an initial impact assessment of enhanced cooperation or still hoping for a unanimous decision. However, some of the 12 member states that were counted as supporters did not appear to be exceedingly enthusiastic about the situation, for example:

Latvia: "We would definitely prefer a solution that is effective across the 27 member states as only this would bring us to the objective we established a while ago [...], but Latvia is open to further discussion on a different solution provided a compromise in the near future is impossible."

Slovakia: "Key outstanding issues need to be resolved, namely [...] the relationship between the enhanced cooperation system and the proposed European and EU Patent Court as well as with the European Patent Convention. In addition, [...] we don't know what are the costs related to enhanced cooperation. This may impact functioning of smaller national patent offices and therefore the issue of funding and financing needs to be discussed."

Bulgaria: "We do understand Italy's and Spain's concerns [...] From our point of view the language has an important role to play. Therefore we would like to achieve consensus which [...] would not be a barrier to our integrity and be a source of discrimination. [...] But to this end we need a specific proposal that very clearly defines the scope and objectives of enhanced cooperation. Bulgaria would accept enhanced cooperation only as a last resort only if it takes account of the process of integration in the internal market and does not create barriers and distortions to the rules of competition."

So the anxious question "will some opt out?", as posed in the above-referenced EurActive article, appears quite legitimate, since things may look different at the very moment when the votes are finally collected, even though many think that once enhanced cooperation is in place, the remaining member states may feel forced to join by economical necessities.

Regardless of whether or not enhanced cooperation can really be implemented in the end, a number of important issues remain to be clarified with respect to the effects and perspectives of a small EU patent:

1. Cost savings: Advocates of the EU patent frequently argue that the average costs for an European (i.e. EP) patent would be ten time higher that of a US patent, the latter only costing about 2.000 to 2.500 EURO in average, and that the EU patent will be much cheaper due to reduced translation and validation costs.

These figures, however, appear to be somewhat political at least to me, since from my personal practice I can tell that hardly any US grant is as cheap as roughly 2.000 US$ - considering the USPTO's quality of examination requiring regularly prolonged proceeding by costly "Requests for Continued Examination" (800 US$ each). Further, attorneys fees, which usually are much higher in the US than in Europe, should be considered as well in order to have meaningful figures.  

Secondly, considering the fact that the London Agreement has already abolished translation requirements for most of the more important EPC/EU economies like UK, FR, DE, NL, SE, DK - but not, however, for IT and ES - I would not expect huge cost savings due to reduced translation expenses for the EU patent, especially since the two most important countries that have not entered the London Agreement, namely Italy and Spain, will also not participate in the EU patent anyway.  

So I fear that some European politicians (and SMEs) will be quite surprised that the political promises do not come true to the desired extent, once the EU patent is implemented.

2. EU Patent Court: In my understanding, a unified patent for (parts of) the EU does not make much sense without a unified EU Patent Court system that allows centralised handling and EU-wide effective infringement and nullity actions. Consequently, as already expressed by the Competitive Council in the meeting of 4 December 2009 (EU doc 111744 "Conclusions on an enhanced patent system in Europe"), "the European and EU Patents Court could form the basis of [...] an EU patent" and "the EEUPC should have exclusive jurisdiction in respect of civil litigation related to the infringement and validity of EU patents and European patents".

However, at least the proposals that are on the table now do not appear to comment on this essential issue. As far as I have followed the public debate on 10 December 2010, only Slovakia very briefly addressed this central issue. In my eyes, the suggestion of Messrs José Luis Zapatero and Silvio Berlusconi to at least wait until the opinion of the Court of Justice of the European Union (CJEU) on the Unified Patent Litigation System (EEUPC) is issued (see their letter of 7 December 2010 to the EU Commission) is more a necessity than a red herring from Italy and Spain, since without a signal that the EEUPC will come, the legitimate questions of applicants as to where and how a granted EU patent can be efficiently enforced or attacked, cannot be answered satisfactorily.  

3. Compatibility with EU law: The above-referenced EU doc 111744 on "Conclusions on an enhanced patent system in Europe" also states that the Court of Justice of the European Union (CJEU) shall ensure the principle of primacy of EU law and its uniform interpretation. As reported here, the Advocates General's preparatory (and non-binding) Statement of Position regarding the request of the EU Council for such an opinion of the CJEU on the EU Patent and the EEUPC raised the following essential objections on the European Council’s Draft Agreement of 23 March 2009:
  1. The guarantees to ensuring full application and observance of the pre-eminence of EU law by the EEUPC are insufficient (see §§ 78 to 93 of the Statement).
  2. The remedies available in the event of the EEUPC’s infringement of EU law and in the event of non-observance of its obligation to effect a preliminary reference are insufficient (see §§ 104 to 115 of the Statement).
  3. The linguistic system faced by the central division of the EEUPC may affect the rights of defence (see §§ 121 and 122 of the Statement).
  4. The draft agreement […] does not satisfy the requirement of ensuring effective judicial control and a correct and uniform application of EU law in administrative proceedings concerning the granting of Community patents (see §§ 68 to 75 of the Statement).
Regarding the above-identified weakness of the linguistic system, which is essentially similar to that of the Commission's legislative proposal for enhanced cooperation, the Advocate General's Statement explained under § 121, that "a company may be summoned in law in a language in whose choice neither its country of origin nor the country where it carries out its commercial activities has participated. [...] [T]his linguistic system appears to be unacceptable with regard to observance of the rights of defence."

Consequently, a negative opinion of the CJEU on the EEUPC would also severely affect the efforts to implement the EU patent by enhanced cooperation.

As certainly realised by the EU Commission, the EPO, and other stakeholders, a potential solution of this situation may lie in the intensified efforts of the EPO to provide machine translations of patents of reasonable quality. As expressed in a press release announcing the EPO's collaboration with Google, that collaboration "also aims to facilitate the decision process of the EU states in their attempt to simplify the introduction of a single pan-European patent".

In any case, the intensity and controversy of the political debate on the unified EU patent system in 2011 will certainly not stand behind that of 2010.