The EU patent…improvement or confusion?

Talks about a single Europe-wide patent have been on the agenda since more than 60 years, but political concerns have always been in the way. The proposal of the EU Council gives hope for a solution in the near future. One often quoted problem seems to be the choice of language (English, French and German) where some countries feel disadvantaged. However, some may say this argument is just an excuse, the real problem of blocking comes from all national patent offices who fear to lose they power. Following up to the IP Summit in Brussels last Friday, where the EU patent among other topics was discussed, I sum up current views and discussions among relevant stakeholders from politics, industry and academia. 

People often get confused when discussions about the EU patent arise, since the difference to the current EPO patent is not always clear. If the EPO grants a patent today, the patent must still be put in force for all desired European nations. This procedure is very expensive since costs of obtaining a patent arises for each nation. Not only the initial costs have to be taken into account, but also maintenance and management of the patent portfolio in each country, with a different language and different legal systems. IP enforcement in litigation e.g. can increase costs even more. Especially SMEs are currently disadvantaged since they are often not able to afford these cost, whereas a US based SMEs for instance face lower cost for a greater market. When comparing market size, EU based SMEs have to enforce their patents in the 6 biggest countries and thus face six times higher costs than a US equivalent. Sometimes this even leads to the development that European firms file their patents in the US and not in Europe, meaning they also postpone their markets to the US.

Some may argue however that it is less expensive to litigate in Europe than in the US. Again in view of an SME that gets 50% of fee reduction in the US, this objection is not as strong as it seems. It became clear that when discussing about patent cost (application, maintenance, renewal or enforcement/litigation) one also has to take a ratio of these cost to the respective market size of each country or region.

Another harm of the current system is a lag of quality, since the EPO runs in parallel with the national systems. Patent grant is independent from each other. Firms which fail to grant an EPO patent can still go to their national offices, or even worst file in parallel in both offices.

However, the EU-patent would introduce a third system on top of the two existing systems. The fear is that this would even decrease efficiency and transparency. The plan is to introduce a separate and centralized court, as planed in the European Patent Litigation Agreement (EPLA), that would deal with nullity suits and infringement. This would prevent forum shopping and might also solve problems of transparency, litigation costs or language.

Experts hope for a positive decision for next year, where especially strong nations such as France and Germany are in the lead to push the topic.

Among the EU patent topic other concerns were made about patent quality. Especially to solve the problem of transparency and to conduct a better search of prior art, e.g. to prevent patent trolls, experts call for language translations of patent applications. In addition manufacturers criticized lengthy patent pending that can be fostered by  e.g. overdone claims, amendments or divisional. However, manufacturing firms are often behaving the same way. For every individual there seem to be the incentive to increase the pending periods. This causes problems for the whole system . A typical dilemma!

 

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About timpohlmann

Tim Pohlmann is a post-doctoral researcher in economics at Mines ParisTech and Berlin Institute of Technology. He specializes in the economic analysis of markets for technology. He earned his doctoral degree with the highest distinctions in August 2012 from the Berlin Institute of Technology with a dissertation on patenting and coordination in ICT standardization. Tim’s research covers the empirical analysis of the trade of patents, patent trolls, standardization consortia and patent pools. He has presented his work at a large number of international conferences. Tim has been actively involved in preparing studies for the European Commission and the German Federal Government on the role of patents in technological standardization and business models in Open Source Software. Doctoral Thesis SSRN author page
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2 Responses to The EU patent…improvement or confusion?

  1. justusb says:

    Tim,
    Thanks for summarizing the debate in Brussels on the topic. I think you are right to raise the question whether a third system on top of the existing two systems is really an improvement. I actually doubt it is.

    From my point of view, what is a bit missed out in the debate is that the problem of national patents in the EU is that these national monopolies are contrary to the logic of the single market. Due to the interconnected economies in Europe, in a big majority of cases, having a patent right in Germany, France, UK and the Netherlands, is plainly sufficient for blocking de facto the implementation of the technology in the whole EU. No car manufacturer or cosmetic Blue Chip would launch the commercialization in Europe of a product it cant sell on the most important markets. From my point of view, the current system is therefore very applicant-friendly, as it allows protecting a EU-wide monopoly right with few national patents, written in the national languages, challengeable (after the opposition period) only through national jurisdictions. For an implementer, it is very hard to purge all national jurisdictions (through invalidation, licensing in, acquisition) from patents before starting the commercialization of a new product.
    Therefore the main advantage of a single Community Patent – replacing the national patent systems – would be to increase transparency and reduce costs for manufacturers rather than for patent applicants. With a one-stop procedure for invalidating doubtful patents, it would also constitute a big step forward for patent quality.

    A Community patent on top of the national and EPC patent systems does not have any of these advantages. Patent applicants still have the choice to circumvent the one-stop procedure, and they have strong incentives to do so especially for fragile patents. By adding a further layer of patent rights, the Community patent would make life of implementers even harder. My hope for the future patent system in Europe is therefore a transparent one-layer system like in any other part of the World. There are no Texan or Californian patents either. Leaving applicants with the choice is not always the best choice for the economy.

  2. Pingback: One step forward, two steps back: the dance of European Patent system on slippery ground | Innovation Tomorrow

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