Unitary European Patent ‘A Huge Step Forward for SMEs’

On Tuesday, 11 December 2012, Members of the European Parliament (MEPs) backed plans for a 'pan-European' patent – commonly called the ‘unitary patent’ – which will cover 25 of the 27 member states of the European Union (EU). The unitary patent will be enforceable across all participating countries via a single court action.

German MEP Klaus-Heiner Lehne reportedly described the decision as ‘a huge step forward for SMEs’, on the basis that the unitary patent will make the overall process of obtaining and enforcing European patents more affordable.

Under the current system, it is possible to apply for a patent through a central examination process in the European Patent Office (EPO), however the resulting patent must be brought into force (in a process known as ‘validation’) in each individual country required by the patentee.  The European Commission has indicated that a unitary patent could cost as little as €4,725 (referring, presumably, to the official fees only, and not the attorney costs involved in obtaining a defensible patent).  Under the current system, it would cost around €36,000 in official fees to obtain patent rights validated in every member state of the European Patent Convention (EPC).

BENEFITS OF A UNITARY PATENT

The costs noted above have prompted Lehne's fellow German MEP Raffaele Baldassarre to claim: ‘At the moment it costs six times as much here [in Europe] than in the US or Japan.’  This is, however, a somewhat misleading comparison, since it is very rare for an applicant to seek patent protection across all member states.  In the course of our own practice, we have never had a client validate in more than 10 countries.

The population of Europe (i.e. the potential market for patented products and services) is around twice that of the US, and six times that of Japan.  A majority of this population resides the 'top-10' European countries. However, of these over 100 million reside in Italy and Spain – the two countries which have thus far declined to join the proposed unitary patent system.

So the typical current cost of obtaining commercially meaningful patent rights in Europe is not as high as has been suggested.  Furthermore, unless and until Italy and Spain have a change of heart, and sign on to the system, the savings for applicants requiring protection in these countries will be substantially less than is claimed.  This is particularly so given that the main stumbling block to Italian and Spanish participation has been language, with both countries wanting to retain a requirement that validated patents be available in full translation into their national languages.  Translation costs form a significant component of existing validation procedures, and are not included in the €4,725 cost estimate for the unitary patent.

The main benefit of the unitary patent is therefore likely to lie not in acquisition, but in enforcement.  An applicant currently wishing to validate their European patent in only, say, the UK, France and Germany may well find that it is more expensive to validate a unitary European patent.  The benefit of enforceability in countries of limited commercial interest may add little value.  However, the ability to take action against an infringer in a central court, rather than having to commence proceedings in three different countries (and languages) will make the unitary patent very attractive.

Furthermore, it is likely that a specialist central court will produce greater certainty and consistency in decision-making.  It is currently quite possible for infringement and/or invalidity proceedings to produce different outcomes in different countries!  The German and UK courts, in particular, are known for their historically very different approaches to the interpretation of patent claims – a situation that the Protocol on the Interpretation of Article 69 EPC is intended to address, with mixed results.

CRITICISMS

While a unitary European patent may seem preferable to the fractured situation of a single economic market covered by a patchwork of national patent rights, the proposal has not been without its critics.  Many of the arguments against the system can be found on the website www.unitary-patent.eu, which has published letters of opposition sent to MEPs, prior to the vote, by big-business representatives Ericsson, Nokia and BAE Systems.

A major fear of operating companies has been the possibility that a unitary patent with central enforcement will create an environment from which non-practising entities (NPEs), including the bad actors commonly labelled 'patent trolls', will benefit.  These concerns are exacerbated by the fact that compromises over language (proceedings may be conducted in English, French or German) and the location of the central court (it will sit in the UK, France and Germany) may provide an opportunity for 'forum shopping' by patentees to make life even more difficult for accused infringers.

Patent attorneys/lawyers and judges have also been critical of the potential for uncertainty resulting from what they see as compromises and omissions in the implementing regulations.

CONCLUSION

Any agreement reached among the member states of the European Union inevitably involves compromise. That is the nature of the beast, and imperfection is a virtual certainty. It is not by chance that it has taken multiple attempts, over a period of four decades, to reach this point.

While there are still a couple of hurdles to get over, It now seems that, for better or worse, the unitary European patent will finally happen. The EPO has welcomed the breakthrough, and expects to validate the first unitary patent in 2014.  It is likely that the worst fears of the critics will prove to be exaggerated, and even an imperfect unitary patent may be an improvement on the fragmented enforcement system which exists today.

Tags: Europe, International treaties, Legislation, Politics