Can Europe afford to patent and protect?

Two MEPs put patents under the microscope

Andrew Duff

Knowledge-based societies are unlikely to flourish where intellectual property is over-protected. Certainly, patents have their role in incentivising creative technology, but they are, on their own, a poor indicator of the inventiveness of a society and, if used to excess, they can hamper scientific effort and stymie entrepreneurship. The US experience is telling. Almost any innovation, however obvious, can be patented. Large firms, especially, are being allowed to patent unremarkable inventions as a way of protecting themselves from competition. US patents are doled out not only to rather mundane bits of machinery but also to digitalised business methods which are no doubt useful but hardly novel. Naturally, patent litigation is now a vast American industry. A key case is currently under way in the US Supreme Court against the patenting of a car accelerator that adjusts its height to suit the legs of the driver (whereas, until now, legs have proved to be sufficiently adaptable to reach pedals).

What lessons, therefore, can Europe learn from America? The existence of a single patent regime with a federal system of arbitration is surely to be envied by Europeans. Business in the EU will soon have to deal with 27 different national versions of the European Patent Convention. Years of work to resolve these problems by negotiating agreement on the Community patent directive have stumbled on the grounds of cost and, controversially, language, but also of policy. The defeat of the computer-implemented inventions directive last year turned on the question of whether it was right to encourage or discourage the growth of software patents à l'américaine.

The European Commission should now pursue the community patents directive with greater vigour. Paradoxically, Germany, when takes over the EU’s rotating presidency in the new year, might be successful in brokering agreement on the vexed question of filing for patents in the German language. Such a breakthrough would allow the EU to establish a tailor-made patents policy, protecting only exceptional inventions while encouraging creative competition, with a one-stop shop for the filing of patents. The European Court of Justice (ECJ) would set up an adjudication panel of specialist patent attorneys. A solid corpus of case-law in intellectual property rights would quickly develop.

Frustration at the impasse in the Council of Ministers over the community patents directive has led a number of lawyers to make a rival proposal. Yet the proposed European Patent Litigation Agreement (EPLA) is only a partial alternative to EU legislation. The European Patent Court would be established outside the jurisdiction of the ECJ. This could have the similar effect of reducing costs, speeding up litigation and harmonising case law, but there would be no EU policy direction and no greater accountability for the European Patent Office in Munich. In October 2006, the European Parliament expressed its concern at the lack of "democratic control and judicial independence" inherent in the inter-governmental EPLA scheme. The zealots of the Foundation for a Free Information Infrastructure (FFII) are campaigning against the proposal. But the Commission is surely right to investigate EPLA further and to weigh up the pros and cons.

In making a judgement about the best way forward for European patents, the Commission must avoid creating fresh obstacles to scientific and technological innovation. As Commission President José Manuel Barroso has frequently said, Europe is slipping behind. We need clear and concrete steps towards a streamlined and accessible patents system that avoids the worst of American practice and serves to attract the best inventors of the age to work in Europe. In the end, there will be no alternative to agreeing a suitably refurbished Community patent directive. To set up an elaborate and bureaucratic parallel litigation system in the meantime might prove to be a costly distraction from achieving the main goal.

• UK Liberal MEP Andrew Duff is a member of the Parliament’s constitutional affairs committee.

Klaus-Heiner Lehne

What is the best way forward to achieve a coherent and cost-effective patent system in Europe? The answer is very short: the way towards a European Patent Litigation Agreement (EPLA).

It is now six years since the promulgation of the Lisbon Agenda and the European Union still does not have a competitive patent system. The EU member states promised in 2000 to make the Union the most competitive and dynamic knowledge-based economy by 2010. ‘Knowledge-based’ not only means pumping huge sums of cash into research and development programmes. It also means innovation that sells. Patents protect innovation and make industrial creativity rewarding. This is all the more crucial for a continent whose main (and almost only) resource is knowledge.

But what is the current situation in the EU? The application and registration of a European patent with the European Patent Office (EPO) is easy. There is one procedure and one office. The rules are laid down in the European Patent Agreement (EPA). This is an international treaty outside Community law. All EU-member states are contracting parties of the EPA (except for Malta). Once the patent is granted, it falls into multiple national patents. Here, the difficulties begin.

Problems arise when the patent needs to be protected against infringements or when its validity is questioned. The patent-holder has to go through court litigation in each member state where the infringement occurs or the validity is questioned. This is costly and time consuming. But the problems do not stop here. If the patent holder is running litigation in several member states in parallel, the risk of getting contradicting judgments is high. This is confusing and far from legal certainty.

Originally, the Commission addressed these problems by proposing a community patent together with a corresponding judicial system in Luxembourg. The community patent would not fall apart into national patents and would not be interpreted in different ways. This proposal, however, has been stuck in the Council of Ministers since 2002 and has mutated into a costly monster. The Council is demanding a patent which has to be translated into all official EU-languages, ie, 23 languages from January next year on. No company, especially not small- and medium-sized ones (SMEs) can afford it.

Of course, we cannot expect the Commission to give up their project of a community patent. But the reactions to the Commission’s consultation and question-naire (9 January 2006) were clear: nobody - neither SMEs nor industry nor practitioners - wanted such a 23-language Community patent.

The European Parliament acted on this result and responded to it by a resolution passed on 12 October. The resolution urges the Commission to follow an alternative approach: the EPLA. The EPLA is understood as the best way towards cost-effectiveness, efficiency and legal certainty in our patent system. The EPLA is not yet ratified, but its advantages are obvious. It provides a uniform judicial system with regional branches (for the first instance). Thus, we would get a common jurisdiction instead of contradicting judgements. With the regional branches, a EPLA is local and close to the companies rather then concen-trating litigation solely in Luxembourg. The EPLA provides for one single litigation procedure instead of multiple parallel litigations in several member states. Finally, the EPLA offers a slim language regime with the three official EU-patent-languages instead of a costly babel with 23 languages.

Shortly after the Parliament vote, ideas had been spread which pretended to give EPLA a more "communitarian" structure. The aim, however, was to jeopardise the long needed breakthrough in the patent deadlock. It was suggested to engage the Community court system in the EPLA-system. The EPLA stands outside of the Community. The Council would, therefore, in disputes relating to property rights, need to confer jurisdiction to the European Court of Justice (ECJ) on the basis of Article 229a in the Nice treaty. This, however, requires unanimity in the Council. Here we are again: the usual suspects in the Council would again have an easy game to block improvements in the European patent system.

• German Christian Democrat MEP Klaus-Heiner Lehne is a member of the Parliament’s legal affairs committee.

Two MEPs put patents under the microscope