One step forward, two steps back: the dance of European Patent system on slippery ground

Two major decisions have been taken last week on the future of the European Patent System. The decision of the European Council to allow the Member States of the EU to go further with an enhanced cooperation on unitary patent protection may be seen as a decisive step forward on the long way to unitary patent protection in the European Union. Nevertheless, two factors may significantly hamper the potential of this project to fulfill its ambitions: first, the mechanism of enhanced cooperation implies that some Member States are allowed (and expected) to opt out of the common scheme. Second, an opinion made public by the European Court of Justice holds that the establishment of a European and Community Patent Court in its current design is incompatible with European Law. While the defendants of the European Union patent view unitary patent protection and the establishment of a common litigation system as two distinct things, I argue that without a common patent court, the unitary patent protection as planned now would not be the major innovation that the patent system in Europe needs and deserves.

To start with the “good news”: on March 10, the European Council has given its green light to the enhanced cooperation in the area of unitary patent protection. This means that those EU Member States wishing to carry further their coopearation on patent protection are allowed to do so, thereby circumventing the opposition of more reluctant Member States, for instance Italy and Spain. The EPO and other actors of the European patent system welcomed this expected compromise as a “major breakthrough”. This is indeed good news insofar as it brings us just another step closer to the introduction of something that finally could look like the little brother of the once promised EU patent.  With a noticeable delay of more or less 40 years, unitary patent protection in Europe might well soon see the light.

Nevertheless, and this is the first important regret, not all countries will be part of the deal. While unitary patent protection may become available for most European countries, inventors still need to rely upon the national patent systems in order to protect their inventions in Italy or Spain. This shortcoming immediately raises two questions: first, how attractive will such a unitary system be for innovators, when it cannot provide protection in some of the most important national economies of the Single Market? And second, and perhaps most importantly, how is such a system supposed to eliminate the loopholes and biases that characterize the current situation? Indeed, one of the major reasons to go down the long road towards unitary patent protection in the first place was to level the playing field in the European manufacturing industry. Manufacturers in certain industries relying upon licensing complain about unloyal competition from firms operating in countries where the same technologies are not protected. Furthermore, successful manufacturers of technology intensive products regularly face requests for licensing fees on dubious patents. Establishing the irrelevance of the patent for the product or even its invalidity implies risky and costly litigation, even more so when 27 national patents need to be invalidated separately for one product to be sold all over the single market. Therefore leaving some countries out of the unitary patent protection amputates the project of much of its attractiveness. On the confusion created by multiple coexisting systems of patent systems, see also my previous post on this subject.

The second news is that the European Court of Justice has rendered an opinion on the conformity of the creation of a European and Community Patent Court with European Law. The Court has concluded that the draft agreement in its present form violates European Law, chiefly because it limits the role of the ECJ as last instance in the interpretation of European Law. It goes far beyond my competences regarding European Law to comment upon this decision. Nevertheless, from an economic point of view, it is clear that unitary patent protection without a unitary framework of patent litigation is not a big deal of an advance. Indeed, patents are meaningful property rights only insofar as they are enforceable. This criterion is and remains out of reach for many inventors, and especially for start-ups, individual inventors and academics. Furthermore, renouncing on a common patent jurisprudence in Europe is a windfall profit for patent trolls and other firms pursuing litigation-intensive strategies. Indeed, these companies make money where other inventors fail to effectively enforce their rights on Intellectual Property, and where manufacturers and other technology users are forced into licensing of technology they do not use or do not need.

In the light of these arguments, the recent news on unitary patent protection in Europe are rather disappointing than encouraging. The innovation system in Europe would be better served if all Member States and actors in the European institutions had a bit more courage and ambition in taking the 40 years old project of unitary patent protection to a long-expected successful end.

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About justusb

I'm a PhD Student in Economics at Cerna, Mines ParisTech. I'm interested in patents, standards, and firm cooperations on innovation.
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