E.U. launches patent strategy, calls for compromise

Attaining, attacking, and defending patents in E.U. countries is an expensive and often-confusing proposition, so the E.U. has put forth a simplifying compromise

The European Commission launched its long-awaited strategy to break decades of deadlock in the effort to create a European Union-wide patent Tuesday, proposing a compromise and urging national governments to overcome their divisions in the name of innovation.

The aim for the past 30 years has been to replace national patents with ones that are valid across the E.U. in the same way that patents are applicable throughout the U.S.

The fragmented European system makes it much more expensive for inventors to protect their creations. A company wishing to register a patent in 13 of the 27 countries in the E.U. has to pay 11 times more than for a patent covering the whole of the U.S., according to the Commission.

Defending or attacking a patent is also expensive. The Commission estimates that a patent litigation can cost anywhere between €50,000 ($66,740) and €1.5 million. What is more, litigation under the current system is also prone to inconsistencies: Patent courts in different countries can reach conflicting conclusions in a dispute.

Overcoming these problems is seen as vital to the E.U.'s long-stated aim to become more competitive with the U.S., Japan, and emerging economies, such as China and India.

Two years ago, European Commissioner Charlie McCreevy organized a hearing with patent attorneys, academics, and companies at which a wide range of views were expressed. Apart from a minority who oppose patents on principal, most attendees encouraged the Commission to persevere with the Community patent. They also supported the draft EPLA (European Patent Litigation Agreement) from the European Patent Office in Munich to create a single system for all patent litigation in the 32 EPO member countries, including the E.U. states.

Earlier this year, McCreevy suggested that the most pragmatic way forward would be for the E.U. to become a signatory to the EPLA, but the idea was shot down by, among others, France. Last month, opposition mounted when the legal department of the European Parliament stated that it would be unconstitutional for the E.U. to sign on to the EPLA.

McCreevy has now proposed that the E.U. create its own litigation area, based on the EPLA, with courts of first instance around the E.U. and one central court of appeal.

The Commission noted that recent discussions with member states find "polarized positions" with some supporting the draft EPLA and others wanting a specific Community jurisdiction for patent litigation in the E.U. McCreevy, who is known for pragmatism, has suggested a mix of the two. In practice, this would mean decentralized courts of first instance, using the judges and the resources of national patent courts, with a centralized appeals court connected to the ECJ (European Court of Justice), the E.U.'s ultimate legal authority.

Large companies are clamoring for a change to the status quo. EICTA, a trade group representing such technology firms as Koninklijke Philips, Siemens, Nokia, Microsoft, Toshiba, and Xerox, welcomed the Commission's suggestion of an approach "inspired" by the EPLA model, as the Commission put it, but that allows E.U. jurisdiction.

Change is needed because of the cost of patent litigation and to ensure "legal certainty," said Mark McGann, EICTA director general. "Improvements are also necessary, especially in the interest of small and medium-sized enterprises, to avoid that companies with bad intentions take advantage of the system.

"It is currently possible to start infringement proceedings against an SME in France on Monday, against the same SME in Spain on Tuesday, in Italy on Wednesday, in the U.K. on Thursday, and to force the SME into a foul compromise deal on Friday, meaning that it will have to pay royalties for an alleged patent infringement, because it would otherwise have no chances of survival due to the different lawsuits and translation costs brought against it," he said.

However, some argue that one single patent litigation system along the lines of the EPLA could be more expensive for SMEs that plan to use their patents only in their home countries. They say there is no need for an EPLA because fewer than 10 percent of patent disputes involve more than one country.

Others argue that McCreevy's proposal will fail to harmonize the European patent patchwork.

"Already it's a second-best solution," Sven Bostyn, a lecturer at Amsterdam University and a patent attorney said. In his view, the ideal answer is a single Community-wide patent. The problem with an EPLA-style system for the E.U. is that judges in different countries will still take opposing positions in a dispute because of different national interpretations of concepts involved in patent law.

"The situation would be as legally uncertain and fragmented as it is now," Bostyn said.

Then there's the question of how national patent court judges would react if they had to answer to the ECJ in Luxembourg. "I don't think judges will accept the ECJ route. I doubt patent attorneys will want much to do with it either," Bostyn said.

Other initial responses were positive to Tuesday's Commission communication regarding a patent strategy. Jonathan Zuck, president of the Association of Competitive Technologies trade group called Tuesday's move "a long-awaited step in the right direction" and he applauded the Commission for reopening the debate.

Copyright © 2007 IDG Communications, Inc.

How to choose a low-code development platform