Patent headache for EU inventors

Date: 17/07/1997

By Tim Jones

IF LEONARDO da Vinci were alive today, he would not be living in the European Union.

Instead, he would be sitting next to his Santa Monica pool, content in the knowledge that his various flying machines were protected by patent and the money would come rolling in for the next two decades.

Europe's system for awarding patents to innovators is too expensive and too atomised. Four years into the single European market, there is still no common system for allocating patents which are valid throughout the Union.

In June, Internal Market Commissioner Mario Monti highlighted the problem in a consultative Green Paper calling on industry and national governments to submit ideas on how to overhaul a system which is failing European companies.

“It is very expensive and cumbersome getting a patent for an innovation in Europe; much worse than doing the same thing in the States,” said a patent lawyer for a leading pharmaceutical company. “It is no accident that far more patents are filed in the US.”

Another corporate lawyer, this time with a small-scale biotechnology firm, agreed. “Just look at the number of patents and where they are issued. It used to be Europe which led the field, but now we are being overtaken by the US and even Japan and they are also the countries where small companies are taking heavy inventive risks.”

In the biotechnology sector alone, the figures tell their own story.

The European Federation of Pharmaceutical Industries' Associations (EFPIA) recently revealed that only 11 patents had been awarded for health products involving genetic engineering in 1995 while, during the same period, 122 were filed in the US.

Patenting biotechnology inventions has been a struggle in itself. This week, the European Parliament looked again at a European Commission proposal to harmonise EU biotech patenting law. Two years ago, the same assembly vetoed a text which had been agreed by member states.

Whatever reforms emerge from the Green Paper exercise, the Munich-based European Patent Office (EPO) will take a major role in any future harmonised system.

Twenty-years-old in October, the EPO is an intergovernmental body independent of the Union established to implement the European Patent Convention signed in October 1973. Although its headquarters are in Munich, it has offshoot offices in The Hague, Berlin and Vienna.

The European Patent Organisation - chaired by Irishman Sean Fitzpatrick - is the overarching body which implements the convention, with the EPO acting as its executive arm. It is made up of 18 countries: all of the EU member states plus Liechtenstein, Switzerland and Monaco.

Moreover, the protective effect of patent applications and patents can be extended into central and eastern Europe at the request of the applicant.

The EPO is self-financing, with its operating and investment budgets funded wholly by procedural fees along with part of the annual renewal fees levied on patents which have already been granted.

The role of the office is to grant European patents using a unitary and centralised procedure. By filing a single patent application in any of the EPO's three official languages - English, French or German - an applicant can begin the process of winning patent protection in all the member states of the European Patent Organisation.

Once the invention has been given general clearance for its originality, the real power to grant national patents is transferred to the countries designated by the applicant.

Via this method, the same level of legal protection as a corresponding national patent can be obtained for 20 years. Extensions are allowed for patents on some pharmaceutical products.

The EPO recognises that this system is far from perfect, but it believes that it offers a high level of legal certainty even before national authorisations are granted.

“European patents are only granted following an in-depth analysis and a comprehensive novelty search based on a collection of 31 million documents,” it says.

Nevertheless, the existing process whereby applications and awards have to be translated into as many as ten languages is costly, while the possibility always hangs over the inventor that a patent may be awarded in one member state and vetoed in another.

The EPO itself admits that the cost of awarding and validating an average patent - across eight countries over ten years - can be as much as 30,000 ecu.

That is fine if you are Glaxo-Wellcome or Microsoft, but an independent inventor or the small and medium-sized enterprises which are the lifeblood of the innovative high-technology markets might choose not to bother.

In an effort to address this problem, the administrative council of the organisation cut the EPO's procedural fees by 20&percent; with effect from 1 July - the first big cut in the office's charges since it was established 20 years ago.

Since the beginning of the month, the price of getting a patent has been slashed, at a cost to the EPO of 70 million ecu per year.

The reduction in fees means that, from now on, the average European patent application - claiming protection in eight member states - will cost only 990 ecu at the beginning of the procedure, compared with 2,690 ecu previously.

Of key importance is the reduction in the so-called 'designation fee'- currently payable for each of the 18 member states to be covered by the European patent.

This fell from 178 ecu to 76 ecu at the beginning of July. In order to encourage inventors to file for as many countries as possible, the EPO has changed the rules so that the fee will not be due until the office has thoroughly researched the application and ascertained whether or not the patent has a good prospect of success.

“This is quite a significant change and we should not downplay it. But it is not everything,” said the patent lawyer.

The EPO itself realises that its reforms have only addressed some of the patenting costs facing small inventors.

In an effort to improve access to information, the administrative council agreed in Helsinki last month to change its data pricing policy to stimulate the flow of information and give all users low-cost access.

Much of this information comes from patent applicants, who must file details of their invention with the EPO in return for legal protection. The EPO is cooperating with national patent offices to try and make these “reserves of knowledge” available to interested parties.

All EPO patent data will be made available at a marginal cost. National patent offices and information centres in the organisation's member states will receive some of it free of charge and enjoy special support under a patent information cooperation programme.

Radical reforms to the system which could appear in a White Paper from the Commission next year are bound to annoy vested interests.

At the moment, it takes around three years for a patent to be researched and become valid nationally, although a 12- month 'fast-track' procedure can simply check the originality of an invention and then leave it up to the certificated firm to decide whether to take the procedure further.

Proposals for a cheaper, quicker system designed especially for SMEs, along the lines of existing practice in the US, have been blocked by the big employers' organisations.

The EPO has mooted the idea of cutting costs by requiring only basic summaries of patent applications to be translated into all the relevant languages, but several member states would be unable to recognise the legal validity of the text unless it were fully translated.

At least the Commission is now doing something to improve the patchwork system - but Leonardo should not leave his Californian poolside yet.