As part of the Single Market Act presented today, the European Commission has tabled a package of two legislative proposals, under enhanced cooperation, that will radically reduce the cost of patents in Europe by up to 80%. This will allow any company or individual to protect their inventions through a single European patent which is valid in 25 Member States. The proposed regulations lay down the terms and conditions for obtaining unitary patent protection, its legal effects and the applicable translation arrangements. The draft regulations will now pass to the Council and the European Parliament for consideration. The Commission hopes Spain and Italy, who are not yet among the participants, will join the enhanced cooperation.
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Why does Europe need unitary patent protection?
Unitary patent protection would make the existing European system much simpler, much less burdensome and expensive for inventors. It would end the complex validation requirements, and in particular limit the very expensive translation requirements in the participating Member States. Consequently, it would stimulate research, development and investment in innovation helping to boost growth in the EU.
Unitary patent protection would also protect inventions better than the current system. Due to the prohibitive costs involved in the national validation of European patents, today many inventors only patent their inventions in a handful of countries. This makes inventions less valuable as the lack of protection in other countries allows them to be copied more easily.
What is a patent?
A patent protects new inventions. It can cover how things work, what they do, what they are made of, and how they are made. It gives the owner the right to prevent others from making, using or selling the invention without permission.
An inventor – an individual or a company or an institution – can apply for a patent. To qualify as new, it is important that the invention is not already in use nor in the public domain before the date on which the patent application is filed.
Patents encourage companies to make the necessary investment for innovation. There would be little incentive otherwise for individuals and companies to devote the necessary resources to research and development.
In general, the exclusive rights of a patent owner to exploit the invention commercially last for a maximum of 20 years, subject to the payment of regular renewal fees. Anyone else wishing to use the invention while it is still patented must request authorisation from the patent holder and may have to pay a licence fee. In return for this exclusive right, the details of how it works are published. In this way, the scientific or technical know-how that made the invention possible is made public allowing others to further their own research. As a general rule the patent renewal fees increase over time. This means that only the most commercially viable patents are maintained for the full period. At the end of the 20 years, the patent lapses.
As a hypothetical example, a company may patent a new chemical that acts as better lubricant than existing products on the market. The patent could include claims about the molecule or composition of the lubricant, how it can be made, and examples of where the lubricant can be applied, for example, in the engine of a car. Anyone wanting to reproduce the chemical would have to ask the company for a licence, normally in return for payment. However, researchers in the field would benefit from the technological knowledge disclosed, for example the process involved to make the chemical in the patent. This could bring about further research leading to more advanced lubricants which themselves could be patented.
How do you currently apply for a patent in Europe?
Today, inventions can be protected in Europe either by national patents or European patents granted centrally by the European Patent Office (EPO).
Member States have their own patent offices which deal with applications for national patents. The protection conferred by a national patent is limited to the territory of the State concerned.
If the applicant chooses to apply for a European patent, the application will be dealt with by the EPO, based in Munich. The EPO provides a single procedure for granting patents in Europe. It is an intergovernmental organisation comprising 38 members (27 EU Member States + 11 other European countries). It was established in 1973 following the signature of the European Patent Convention (EPC). On the basis of one single patent application processed in one of the three official languages of the EPO (English, French and German), inventors and businesses can obtain a European patent.
If the EPO grants a European patent, the full text of the patent, known as the specification, is published in the official language of the EPO chosen by the applicant as the language of the proceedings. At this stage, the applicant must also provide a translation of the part of the patent that defines the scope of protection – the claims into the other two official EPO languages.
However, this is not enough for the European patent to take effect in most Contracting States to the EPC. The patent proprietor must choose the countries in which he/she wishes to have protection and validate the European patent in these states. A number of different validation requirements may apply. For example, the patent proprietor may have to pay a fee to the national patent office, comply with various formal requirements and provide a translation of the patent to the official language of the State.
How many patent applications are submitted annually? Which countries patent the most? How many European patents are granted a year?
In 2009, 134 542 patent applications were filed with the EPO, of which 68 597 came from EPC countries and 65 945 from other parts of the world.
Germany filed the most applications to the EPO (25 107), followed by France (8929), the Netherlands (6738), the UK (4821) and Italy (3881). For the full list, please consult the EPO’s 2009 annual report.
In 2009, 51 969 European patents were granted by the EPO.
What are the current validation costs of a European patent?
At present for a European patent to be effective in a Member State, it needs to be validated in that Member State (cf. above). These validations are expensive. The translation of patents is particularly costly, on average amounting to 75 to 85 per page. With a typical length of a patent being 20 pages, the costs for a single translation of a patent may be more than 1500. Further costs are incurred by hiring local representatives acting as intermediaries between the patent proprietor and the national patent office in order to comply with all the requirements in a specific Member State and/or to certify the translation. Various other fees must also be paid to the national patent offices. The validation costs for a European patent in 13 Member States are approximately 12 500 and reach approximately 32 000 in 27 Member States.
These costs particularly affect SMEs, young innovative companies, start-up companies and public research organisations, and they hinder access to the patent system.
Furthermore, in order to maintain the patent protection, the patent holder has to pay renewal fees each year in each country where the patent has been validated. Also, if he/she wishes to transfer the patent or to allow someone to use the patented invention through a licensing agreement, these transactions need to be registered by the national patent offices country by country. This makes the management of patents complex and costly in Europe.
What is the London Agreement?
The London Agreement is an intergovernmental and optional agreement aimed at reducing the translation costs of European patents. It entered into force on 1 May 2008. So far 151 EPC Contracting States have agreed to dispense entirely or partly with translation requirements.
There are two situations for Member States having signed up to the London Agreement: for countries which use one of the EPO languages as their own official language have completely dispensed with translation requirements. Once the EPO publishes the patent, no further validation or translation is necessary. For other countries, they either designate one of the EPO languages and require that the whole patent is translated to that language or they only use the option to require the translation of the claims to their own official language(s).
However, the London Agreement does not apply in 162 EU Member States. These countries continue to require a translation of the entire patent into their official language(s). Although the London Agreement has reduced costs, it does not always or fully address the issue of validation requirements.
What is the history of the EU patent?
Efforts to create a common patent applicable across all European countries have been made since the 1960s but for a number of reasons have never been successful.
In 2000 the European Commission made a proposal to create a Community Patent through a Regulation [now ‘EU patent’ under the Lisbon Treaty]. The aim was to provide for a single patent title applicable in all Member States. In 2003 Member States agreed a common political approach but failed to reach a final agreement, including over the details of the translation regime. Following a wide-scale consultation in 2006, the Commission produced a Communication in April 2007 which confirmed the commitment to the Community patent and re-launched negotiations in Member States.
In December 2009 Member States unanimously agreed on Conclusions for an enhanced patent system, including the main features of the EU patent, except for the translation arrangements. Instead, they affirmed the need for a new Regulation to cover the latter matter. The Commission proposed a regulation on the translation arrangements for the EU patent in July 2010. But despite all the efforts of the Belgian Presidency, the Council could not reach a unanimous agreement on the applicable translation arrangements. In December 2010 the Competitiveness Council confirmed that there were insurmountable difficulties that made the establishment of such a regime impossible to attain within a reasonable period by applying the relevant provisions of the Treaties.
What is purpose of enhanced cooperation?
Enhanced cooperation is a possibility ensured by the Treaties that can only be adopted by the Council as a last resort, when it has established the objectives of such cooperation cannot be attained within a reasonable period by the Union as a whole, and that at least nine Member States participate in it.
After the failure to find a unanimous agreement on the translation arrangements for the EU patent (cf. above), 12 Member States3 asked the Commission to propose the launch of enhanced cooperation in the area of the creation of unitary patent protection in the territories of those Member States who are willing to participate in such cooperation. On the basis of these requests, the Commission presented a proposal for the Council’s authorising decision in December 2010. Following the adoption of the Commission’s proposal, another 13 Member States4 requested to join the cooperation. Spain and Italy decided to stay outside this framework. They can, of course, join later.
On 10 March 2011, following the consent given by the European Parliament on 15 February, the Competitiveness Council adopted the authorising decision to establish unitary patent protection in the territories of the 25 participating Member States.
What is the aim of today’s proposals?
These proposals contain the provisions that are necessary to implement unitary patent protection in the 25 Member States who have decided to join the cooperation.
The first proposal prescribes how patent holders can obtain European patents with unitary effect that ensures uniform protection for their invention in the 25 participating Member State. Patent holders can request the unitary effect at the EPO once their European patent is granted. The EPO then registers the unitary effect and manages the maintenance of the patent (e.g. the payment of renewal fees) until it lapses. These patents can only be licensed, transferred, revoked, etc. together in the 25 Member States.
The second proposal contains the translation arrangements. Applicants can file their patent application in any language. They also have to provide a translation to English, French or German which are the official languages of the EPO. Applicants who are residents in the EU will get compensation for these translation costs. The European patent is then granted in one of the three languages and the applicant is required to provide a translation of the claims (which define the scope of the invention) into the other two official EPO languages.
Moreover, for a transitional period of maximum 12 years, European patents with unitary effect that were granted in French or German will need to be translated to English and the ones granted in English will need to be translated to another official language of the EU. These translations will be required until high-quality machine translations are made available to ensure the availability of patent information.
How can an applicant obtain a European patent with unitary effect?
Applicants will have to file an application for a European patent with the EPO the same way as they do today (cf. above). Once the European patent is granted, and the mention of the grant is published in the European Patent Bulletin, the patentee can request the EPO to register the unitary effect in the European Patent Register. In the case of such request, the patent will take effect retroactively (from the mention of the grant) in the 25 participating Member States without any additional validation requirement. It will provide equal protection through the territories of these countries.
How would the costs of obtaining patent protection change with today’s proposal?
As the proposals build on the existing system of granting European patents under the European Patent Convention, the procedural fees of the EPO will remain the same. The so-called post-grant costs of patent protection would, however, drop radically. In the long run, in the territories of the 25 participating Member States unitary patent protection will cost 680, i.e. the cost of the translation of the claims to the two other procedural languages of the EPO (which were not chosen as the language of the procedure).
On the basis of the discussion in the Council, however, certain transitional translation requirements are introduced in the proposal on the translation arrangements, in order to facilitate the access to patent information until high-quality machine translations become available. Accordingly, for a transitional period of maximum 12 years, European patents with unitary effect that were granted in French or German will need to be translated to English and the ones granted in English will need to be translated to another official language of the EU. These additional requirements will result in somewhat higher translation costs for a transitional period, but even under these arrangements patent protection will cost less than 2500 for 25 Member States.
Finally, if the patentee decides to extend the patent protection to the EU27, such protection will cost only 20% of the current validation costs.
How will the EU patent be enforced? What will happen to the planned European Patent Court?
Another important element in the overall reform of the patent system in Europe is the development of a unified litigation system. The current system entails multi-forum litigation since companies may have to litigate in parallel in all countries where the European patent is validated. This results in considerable costs, complexity and legal insecurity. A European Patent Court would facilitate the development of a consistent jurisprudence and increase legal certainty.
On 8 March the Court of Justice of the European Union (CJEU) delivered its opinion on the draft international agreement involving the EU, its Member States and other states of the EPC aiming to set up a European Patent Court. The CJEU considered that the draft agreement in its current form is not compatible with the EU Treaties. The Commission is in the process of analysing the opinion and considering ways to address the Court’s concerns.
What about EU companies and individuals already working in English, French or German? Won’t they have a comparative advantage?
No, the Commission has made sure that for example Austrian, French or Irish companies will not have comparative advantages over their Swedish, Dutch or Polish counterparts.
First of all, applications for a unitary patent title can be done in any language. Not only official EU languages – but any. However, these applications need to be supplemented by a translation in one of the EPO’s working languages: English, French or German. Furthermore, all companies and individuals resident in the EU that file for the unitary patent title will be compensated for these supplementary translations.
Moreover, for a transitional period of maximum 12 years, European patents with unitary effect that were granted in the EPO’s working languages will also need to be translated in another EU language. Not only will these supplementary translations facilitate access to patent information, but also help to further develop the final solution in the form of high-quality machine translations.
These measures combined will ensure there will be an equal level-playing field for all EU applicants.
What happens next?
The proposals are now transmitted to the Council and the European Parliament for adoption. In order for the proposal on unitary patent protection to be adopted, the qualified majority of the 25 Member States participating in the enhanced cooperation and the European Parliament must vote in favour (ordinary legislative procedure). For the adoption of the proposal on the translation arrangements, the 25 participating Member States in the Council must act unanimously after consulting the European Parliament (special legislative procedure).
Further details about the European Patent Office and the London Agreement
Notes
1 : Croatia, Denmark, France, Germany, Hungary, Iceland, Latvia, Lithuania, Luxembourg, Monaco, the Netherlands, Slovenia, Sweden, Switzerland, and the United Kingdom
2 : Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Estonia, Finland, Greece, Ireland, Italy, Malta, Poland, Portugal, Romania, Slovakia and Spain. Ireland and Malta accept patents in English, not requiring translations into Irish or Maltese.
3 : Denmark, Estonia, Finland, France, Germany, Lithuania, Luxembourg, the Netherlands, Poland, Slovenia, Sweden and the United Kingdom
4 : Belgium, Austria, Ireland, Portugal, Malta, Bulgaria, Romania, the Czech Republic, Slovakia Hungary, Latvia, Greece and Cyprus
Source: European Commission
