Community Patent: The EU Stuck Again?

The European Union (“EU”) has once again failed to come to an agreement regarding a single unitary Community patent. At the May 18, 2004 Competitiveness Council meeting, the Council of the European Union (“Council”) could not reach a unanimous agreement on the proposal for a Council Regulation on the Community patent. The only outstanding issue that has been a stumbling block all along, ie, languages and translation costs of the patent claims, remained unresolved. The EU's main decision-making body concluded that all conceivable compromise solutions had been tried. Accordingly, it stated its intent to refer the matter to the Presidency of the European Council.

This article will provide some background and history regarding the current European patent system and the concept of a Community patent system. Further, the main reasons for the failure of achieving a Community patent will be examined. Additionally, the latest initiatives relating to European patents will be discussed.

Background

The first developments regarding a European patent system took place in the 1960s. Initially, the plan was to create one supranational patent system that provided a unitary patent for the whole European Economic Community (EEC), which could be enforced through a common centralized judicial system. However, the initiatives ultimately led to two Conventions: the Convention on the Grant of European Patents (EPC), which entered into force in 1977, and the Community Patent Convention (CPC), which has never entered into force. See J.B. van Benthem, The European Patent System and European Integration,” International Review of Industrial Property and Copyright Law (“IIC”) Vol. 24 No. 4, 435-445 (1993). Because of this separation, two concepts of supranational patent systems were created: a European patent granted through the EPC route, and a Community patent valid in the EU Member States.

At present, patent protection in Europe is provided by two systems: the national patent systems, which are not (yet) harmonized, and the European patent system. There is no Community patent system in force.

The EPC system is established outside the legal framework of the European Community Treaty. Therefore, European countries that are not EU Members can join the EPC. Presently, the EPC has 28 Members. The EPC created one centralized granting procedure. However, after a European patent is granted, it breaks down into a bundle of national patents, which are enforceable through national patent laws at the national courts of the assigned Member States. Thus, the EPC does not provide any centralized judicial system.

While the EPC has been very successful, the CPC is a different story. The CPC was signed in 1975 and adopted in its definitive form in 1989. However, the 1989 Agreement was not ratified by the then 12 Member States by the deadline of Dec. 31, 1991, as the Convention's potential signatories were unable to resolve key issues, such as translation, costs and the form of a supporting litigation system. To date, the CPC has not been ratified by some of the Member States and subsequently has not entered into force.

Efforts to Establish a Community Patent System

Despite the success of the EPC, Europe is behind its main competitors, the United States and Japan, which have one single granting and enforcement system for patents. As patents in Europe are only enforced by national courts, different interpretations and outcomes in European countries cannot be prevented. A well-known example is the Epilady litigation, which concerned national patents that originated from the same European patent. National courts in several European countries came to different interpretations of the scope of protection of the patents, thereby resulting in different outcomes in the infringement proceedings. (For an overview of the Epilady litigation in several countries, see IIC Vol. 21 No. 4, 561-591 (1990).) Further, initiating infringement proceedings in several different European countries can be very expensive and cumbersome.

Unlike the EU, the United States and Japan are not affected by fragmentation of the patent enforcement system. In order to compete with these nations, the EU needs to establish a supranational patent system that enables patentees to apply for an affordable single unitary patent that is valid throughout the EU. However, unlike the United States and Japan, the EU currently deals with 25 different countries and, consequently, with many different languages. This has created severe stumbling blocks with respect to translations and the concomitant costs.

After the failure of the CPC, the European Commission put the Community patent system back on the agenda in 1997 by issuing a Green Paper, which reintroduced negotiations. The Commission also published a Proposal for a Council Regulation on the Community patent in 2000. On March 3, 2003, an agreement was reached on the main principles and features of a Community patent system. A unitary Community patent system seemed closer than ever. Until then, several political issues, mainly regarding languages, costs and the judicial system, had thwarted progress toward the establishment of a Community patent system. The Council's agreement of March 3, 2003 seemed to be a breakthrough concerning the main stumbling blocks. The Council determined that the language regime should “meet the objectives of affordability, cost-efficiency, legal certainty and non-discrimination.”

However, despite these promising efforts, an affordable and cost-efficient Community patent system does not seem to be in the offing.

The EU's Main Hurdle: Language and Translations

The Commission's initial proposal of 2000 was that once a patent is granted, the patent claims should be translated into three official languages, ie, English, French and German. This concept was strongly supported by the European industry. However, for many European countries, the proposal was politically unacceptable. Therefore, the amended Proposal for a Regulation on the Community patent of 2003 included a compromise, which is maintained in the latest Proposal of March 2004. It stated that up to the grant of the Community patent, the language regime should be the same as required by the EPC: The applicant shall present the complete application in one of the EPO official working languages, ie, English, French and German. If the application is made in another language, the cost of translating the application into one of the EPO official languages shall be borne by the system. However, when the patent is granted, the applicant must file a translation of all claims into all the 21 official languages of the EU. The costs of these translations shall be borne by the applicant.

This concept did not have industry support, as it would not come close to a cost-effective system. Its opposition grew even stronger when countries proposed that the claim translation in all the EU languages would have legal effect. It was considered that inventors should be able to rely on the claim translations of a Community patent in their national language. Even a limited legal effect of the claim translations as envisaged in the most recent proposals may lead to differences in the scope of claims in different countries, thereby affecting the unitary character of the Community patent and creating legal uncertainty in the EU. Moreover, if translations will have legal effect, the costs of these translations are expected to be considerably higher than of conventional translations. In the end, this was expected to lead to an excessively costly Community patent. While the EU still predicts that an average Community patent would cost about EUR 23,000, the Union of Industrial and Employers Confederation of Europe has estimated average costs of up to approximately EUR 79,000.

At its last meeting, the Council was unable to come to a required unanimity because of the language issue: Germany, France, Spain, and Portugal voted against the compromise proposal for a Council Regulation on the Community patent, while Italy abstained.

The Future of the Enforcement of European Patents

Although the EPC led to harmonization in Europe on the granting of patents, the absence of harmonization regarding the enforcement of patents created considerable debate. In addition, the future Community patent system is intended to co-exist with the current EPC system. Therefore, it was acknowledged that, even though a Community patent system would include a common judicial system in the EU, a litigation system for European patents is “badly needed,” since the Community patent should not result in inactivity of the European patent system. See www.european-patent-office.org/epo/epla/pdf/intro.pdf. Consequently, a new proposed agreement, the European Patent Litigation Agreement (EPLA), was drafted.

In order to improve the enforcement of European patents, enhance legal certainty, promote the uniform application and interpretation of European patent law and thus avoid scenarios such as the Epilady litigation, the EPLA would create a judicial system for European patents.

The draft EPLA comprises, inter alia, provisions on substantive patent law, jurisdiction, the effect of decisions, remedies, and procedural matters. The Agreement intends to establish a European Patent Court that would consist of a Court of First Instance and Court of Appeals.

The EPLA is supported and encouraged by many judges, the European industry and a number of countries. Since the EPLA would be an additional agreement, EPC Contracting States would have the choice of signing it. It is unlikely that every EPC Contracting State would join the judicial patent system of the EPLA. The countries that have been actively involved in developing the present proposals for this judicial system are Denmark, Finland, France, Germany, Luxembourg, Monaco, the Netherlands, Sweden, Switzerland and the United Kingdom. States that are not in favor of the EPLA could continue using the system in its current form.

The European Commission has also raised some objections. It contends that the EU countries that wish to participate in the EPLA are not competent to sign an agreement that submits them to the jurisdiction of a European Patent Court.

Currently, the draft EPLA is practically ready to enter into force. However, the parties have decided to pause this project and await the introduction of the EU's Community patent with its judicial system and resolve any potential conflicts between EU law and the EPLA. The Working Party that has created and adopted the EPLA will meet on Dec. 8, 2004 to make further recommendations.

What Next?

As illustrated above, the EU has struggled for decades to create a single unitary Community patent. After last year's Common Political Approach of the Council, it finally seemed that this project would become a reality. However, after the May meeting, the Community patent has been put on hold. It has even been said that the plan might be abandoned and the proposal withdrawn. It seems unlikely that a Community patent will become reality any time soon. The Dutch minister of economic affairs, Laurens Jan Brinkhorst, stated that he would not put this controversial topic on the agenda during the Dutch EU Presidency that began in July.

Thus, despite the fact that the concept of a Community patent dates back to the 1960s, a Community-wide unitary granting and enforcement patent system does not exist yet.

Many have expressed their disappointment with respect to the current situation: ie, the political dispute preventing the EU from creating an affordable, efficient and high-quality single unitary patent system for the whole that can compete with the U.S. and Japanese patent system. It remains to be seen if and how the initiatives of establishing a Community patent system will be resumed. The next Council meeting scheduled for Sept. 24, 2004 might provide more clarity in the EU's current intentions regarding the Community patent. The EPO Contracting States that have been developing a European patent litigation system also need to decide on their next step regarding the EPLA.

The European Union (“EU”) has once again failed to come to an agreement regarding a single unitary Community patent. At the May 18, 2004 Competitiveness Council meeting, the Council of the European Union (“Council”) could not reach a unanimous agreement on the proposal for a Council Regulation on the Community patent. The only outstanding issue that has been a stumbling block all along, ie, languages and translation costs of the patent claims, remained unresolved. The EU's main decision-making body concluded that all conceivable compromise solutions had been tried. Accordingly, it stated its intent to refer the matter to the Presidency of the European Council.

This article will provide some background and history regarding the current European patent system and the concept of a Community patent system. Further, the main reasons for the failure of achieving a Community patent will be examined. Additionally, the latest initiatives relating to European patents will be discussed.

Background

The first developments regarding a European patent system took place in the 1960s. Initially, the plan was to create one supranational patent system that provided a unitary patent for the whole European Economic Community (EEC), which could be enforced through a common centralized judicial system. However, the initiatives ultimately led to two Conventions: the Convention on the Grant of European Patents (EPC), which entered into force in 1977, and the Community Patent Convention (CPC), which has never entered into force. See J.B. van Benthem, The European Patent System and European Integration,” International Review of Industrial Property and Copyright Law (“IIC”) Vol. 24 No. 4, 435-445 (1993). Because of this separation, two concepts of supranational patent systems were created: a European patent granted through the EPC route, and a Community patent valid in the EU Member States.

At present, patent protection in Europe is provided by two systems: the national patent systems, which are not (yet) harmonized, and the European patent system. There is no Community patent system in force.

The EPC system is established outside the legal framework of the European Community Treaty. Therefore, European countries that are not EU Members can join the EPC. Presently, the EPC has 28 Members. The EPC created one centralized granting procedure. However, after a European patent is granted, it breaks down into a bundle of national patents, which are enforceable through national patent laws at the national courts of the assigned Member States. Thus, the EPC does not provide any centralized judicial system.

While the EPC has been very successful, the CPC is a different story. The CPC was signed in 1975 and adopted in its definitive form in 1989. However, the 1989 Agreement was not ratified by the then 12 Member States by the deadline of Dec. 31, 1991, as the Convention's potential signatories were unable to resolve key issues, such as translation, costs and the form of a supporting litigation system. To date, the CPC has not been ratified by some of the Member States and subsequently has not entered into force.

Efforts to Establish a Community Patent System

Despite the success of the EPC, Europe is behind its main competitors, the United States and Japan, which have one single granting and enforcement system for patents. As patents in Europe are only enforced by national courts, different interpretations and outcomes in European countries cannot be prevented. A well-known example is the Epilady litigation, which concerned national patents that originated from the same European patent. National courts in several European countries came to different interpretations of the scope of protection of the patents, thereby resulting in different outcomes in the infringement proceedings. (For an overview of the Epilady litigation in several countries, see IIC Vol. 21 No. 4, 561-591 (1990).) Further, initiating infringement proceedings in several different European countries can be very expensive and cumbersome.

Unlike the EU, the United States and Japan are not affected by fragmentation of the patent enforcement system. In order to compete with these nations, the EU needs to establish a supranational patent system that enables patentees to apply for an affordable single unitary patent that is valid throughout the EU. However, unlike the United States and Japan, the EU currently deals with 25 different countries and, consequently, with many different languages. This has created severe stumbling blocks with respect to translations and the concomitant costs.

After the failure of the CPC, the European Commission put the Community patent system back on the agenda in 1997 by issuing a Green Paper, which reintroduced negotiations. The Commission also published a Proposal for a Council Regulation on the Community patent in 2000. On March 3, 2003, an agreement was reached on the main principles and features of a Community patent system. A unitary Community patent system seemed closer than ever. Until then, several political issues, mainly regarding languages, costs and the judicial system, had thwarted progress toward the establishment of a Community patent system. The Council's agreement of March 3, 2003 seemed to be a breakthrough concerning the main stumbling blocks. The Council determined that the language regime should “meet the objectives of affordability, cost-efficiency, legal certainty and non-discrimination.”

However, despite these promising efforts, an affordable and cost-efficient Community patent system does not seem to be in the offing.

The EU's Main Hurdle: Language and Translations

The Commission's initial proposal of 2000 was that once a patent is granted, the patent claims should be translated into three official languages, ie, English, French and German. This concept was strongly supported by the European industry. However, for many European countries, the proposal was politically unacceptable. Therefore, the amended Proposal for a Regulation on the Community patent of 2003 included a compromise, which is maintained in the latest Proposal of March 2004. It stated that up to the grant of the Community patent, the language regime should be the same as required by the EPC: The applicant shall present the complete application in one of the EPO official working languages, ie, English, French and German. If the application is made in another language, the cost of translating the application into one of the EPO official languages shall be borne by the system. However, when the patent is granted, the applicant must file a translation of all claims into all the 21 official languages of the EU. The costs of these translations shall be borne by the applicant.

This concept did not have industry support, as it would not come close to a cost-effective system. Its opposition grew even stronger when countries proposed that the claim translation in all the EU languages would have legal effect. It was considered that inventors should be able to rely on the claim translations of a Community patent in their national language. Even a limited legal effect of the claim translations as envisaged in the most recent proposals may lead to differences in the scope of claims in different countries, thereby affecting the unitary character of the Community patent and creating legal uncertainty in the EU. Moreover, if translations will have legal effect, the costs of these translations are expected to be considerably higher than of conventional translations. In the end, this was expected to lead to an excessively costly Community patent. While the EU still predicts that an average Community patent would cost about EUR 23,000, the Union of Industrial and Employers Confederation of Europe has estimated average costs of up to approximately EUR 79,000.

At its last meeting, the Council was unable to come to a required unanimity because of the language issue: Germany, France, Spain, and Portugal voted against the compromise proposal for a Council Regulation on the Community patent, while Italy abstained.

The Future of the Enforcement of European Patents

Although the EPC led to harmonization in Europe on the granting of patents, the absence of harmonization regarding the enforcement of patents created considerable debate. In addition, the future Community patent system is intended to co-exist with the current EPC system. Therefore, it was acknowledged that, even though a Community patent system would include a common judicial system in the EU, a litigation system for European patents is “badly needed,” since the Community patent should not result in inactivity of the European patent system. See www.european-patent-office.org/epo/epla/pdf/intro.pdf. Consequently, a new proposed agreement, the European Patent Litigation Agreement (EPLA), was drafted.

In order to improve the enforcement of European patents, enhance legal certainty, promote the uniform application and interpretation of European patent law and thus avoid scenarios such as the Epilady litigation, the EPLA would create a judicial system for European patents.

The draft EPLA comprises, inter alia, provisions on substantive patent law, jurisdiction, the effect of decisions, remedies, and procedural matters. The Agreement intends to establish a European Patent Court that would consist of a Court of First Instance and Court of Appeals.

The EPLA is supported and encouraged by many judges, the European industry and a number of countries. Since the EPLA would be an additional agreement, EPC Contracting States would have the choice of signing it. It is unlikely that every EPC Contracting State would join the judicial patent system of the EPLA. The countries that have been actively involved in developing the present proposals for this judicial system are Denmark, Finland, France, Germany, Luxembourg, Monaco, the Netherlands, Sweden, Switzerland and the United Kingdom. States that are not in favor of the EPLA could continue using the system in its current form.

The European Commission has also raised some objections. It contends that the EU countries that wish to participate in the EPLA are not competent to sign an agreement that submits them to the jurisdiction of a European Patent Court.

Currently, the draft EPLA is practically ready to enter into force. However, the parties have decided to pause this project and await the introduction of the EU's Community patent with its judicial system and resolve any potential conflicts between EU law and the EPLA. The Working Party that has created and adopted the EPLA will meet on Dec. 8, 2004 to make further recommendations.

What Next?

As illustrated above, the EU has struggled for decades to create a single unitary Community patent. After last year's Common Political Approach of the Council, it finally seemed that this project would become a reality. However, after the May meeting, the Community patent has been put on hold. It has even been said that the plan might be abandoned and the proposal withdrawn. It seems unlikely that a Community patent will become reality any time soon. The Dutch minister of economic affairs, Laurens Jan Brinkhorst, stated that he would not put this controversial topic on the agenda during the Dutch EU Presidency that began in July.

Thus, despite the fact that the concept of a Community patent dates back to the 1960s, a Community-wide unitary granting and enforcement patent system does not exist yet.

Many have expressed their disappointment with respect to the current situation: ie, the political dispute preventing the EU from creating an affordable, efficient and high-quality single unitary patent system for the whole that can compete with the U.S. and Japanese patent system. It remains to be seen if and how the initiatives of establishing a Community patent system will be resumed. The next Council meeting scheduled for Sept. 24, 2004 might provide more clarity in the EU's current intentions regarding the Community patent. The EPO Contracting States that have been developing a European patent litigation system also need to decide on their next step regarding the EPLA.