15 March 2011

Unitary Patent (25/27 EU Patent) Finally Authorised by EU Council, But Critical Issues Still Exist

[EU Commissioner Barnier and Hungarian Council Chair Cséfalvay]
After the European Parliament gave its consent on 15 February (see earlier post), the EU Council authorised the launch of enhanced cooperation for creating the Unitary Patent, covering 25 of the 27 EU Member States (see press release) on March 10.

As expected, Spain and Italy did not join the plans due to the proposed language regime based on English, French, and German, as set out by the European Patent Convention (Art. 14 EPC).

The two 'reluctant' nations argued that applying enhanced cooperation has a number of legal deficiencies and that the three-language regime is discriminative and unfair to their companies over those from Great Britain, France and Germany, who may file patent applications in their mother tongues. An indication of how serious Spain and Italy may take such issues could be the rumours on twitter saying Spain and Italy might go to court to stop the train.

For now, the 25 supportive Member States can start negotiating the merits of that agreement under enhanced cooperation. Commissioner Barnier already promised that "as of 30 March" the Commission would present draft regulations on the creation of the patent and the language regime (see here).

However, apart from the EU Commission, the Hungarian Presidency, and some EU Member States celebrating their political success, the concerns remain as they were before:
EU Single Market: For example, in an article in the January 2011 edition of AIPPI e-news, experienced litigation lawyer and EPLAW member Christian Osterrieth took the position that against the background that the principal goal of the EU is to create a unified legal framework for creating the EU single market, the November 2010 failure of the EU member states to achieve unanimity raises serious concerns: A Unitary Patent implemented by enhanced cooperation "can only be regarded as an unsatisfactory compromise, but never as a final solution", which is why continued negotiations with Italy and Spain are required. Otherwise the patent system will become "the first area where different legal regimes in IP matters are created within the EU", which would both work against creating the single market and contravene legal harmonised within the EU. 

Applicability of enhanced cooperation: In another article in that issue of AIPPIe-news, Jochen Pagenberg considers it possible that Spain and Italy will challenge the further proceeding before the European Court of Justice with the allegation that the conditions of Article 326 et seq. TFEU are not met.

In fact, when going through the wording of Article 20 TEU and Articles 326 to 334 TFEU, some essential requirements of enhanced cooperation have already been addressed if not questioned in the joint letter of 7 December 2010 to the EU Commission by Messrs José Luis Zapatero and Silvio Berlusconi reading:
[T]he language regime represents a key factor in attaining a fair and effective agreement. Only in this manner shall we respect the EU's cultural and linguistic diversity, provide maximum legal security in protecting innovation in Europe, contribute to further development of the internal market, and respect the principle of territorial cohesion set forth in the Treaty. [cf. Art 327 TFEU]

We should recall that enhanced cooperation is an exceptional mechanism [...] which, under no circumstances, should become an instrument for excluding certain Member States, when they are still committed to carrying on negotiations. [cf. Art 326 TFEU]

[W]e insist that enhanced cooperation should only be applied as a last resort mechanism, a requirement that is not met in the negotiations concerning the Patent's language regime. [cf. Art 20 (2) TEU]
So, the above-mentioned rumours on twitter may even have a legal basis.

Cost Reduction by Unitary Patent: Unitary Patent Advocates, including Commissioner Barnier, frequently argue that "the current system for obtaining patents throughout the EU is too expensive, costing ten times more than in the United States" and promise respective savings for the Unitary Patent.

That, of course, is only "political marketing" and thus highly questionable, since the figures compared appear to reflect bare filing fees, which are under the exclusive control of the EPO anyway. To draw a realistic picture, official and attorneys fees of the further pre-grant proceedings, renewals, and costs of post-grant actions would have to be considered as well.

Regarding translation fees, one has to consider 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. That is, huge cost savings thus cannot be expected due to reduced translation expenses for the Unitary Patent, especially since the two most important countries that have not entered the London Agreement, namely Italy and Spain, do not participate in the Unitary Patent anyway.

Regarding the official fees for pre-grant proceedings and renewals, EPO President Battistelli just explained in an interview (see earlier post):
Battistelli said that he does not believe there should be any change in the overall level of EPO fees. [...] If any increases were needed, he said, they should come from renewals and not from applications.
So, cost reductions as compared to the present situation can only be expected from the fact that paying parallel renewals in a number of validated countries will be replaced by paying renewals only once to the EPO. The difference, thought, will not be overwhelming.

And regarding costs for post-grant proceedings, e.g. litigation or validity actions, the "Draft Agreement on the European and Community Patents Court", which has just been burried by the CJEU (see here and here), could have had the potential to significantly reduce average costs by providing centralised litigation/validity proceedings and rendering costly parallel litigation/validity in a number of countries superfluous. But that opportunity has just been missed.