The Unitary Patent (UP) package becoming a reality would be a great step forward for Europe. Intellectual property, and patents in particular, is a key ingredient in innovation systems. However, more political efforts will be needed to build a truly European system which supports innovation dynamics. And the European Patent Office (EPO) should probably be less independent from the European Union than it currently is. Bruno van Pottelsberghe, Professor at the Solvay Brussels School of Economics and Management (ULB) and a former chief economist of the EPO, explains in an interview with Kluwer IP Law.

Over the past ten years, van Pottelsberghe published numerous reports and scientific articles on the European and the Unitary Patent system. He provides strong evidence that the UP will benefit the business community in Europe, which currently has to cope with a fragmented and complex system, in which patents have to be validated and renewed in the desired states for protection. According to his scientific articles with Malwina Mejer (2009, 2010, 2011) taking into account procedural, translation and renewal costs, applicants in Europe pay 5 to 10 times more than in any other country for ten years of protection in ‘only’ six EU countries. Being protected in the whole EU area would raise the cost to more than 20 times the cost of protection in Japan or the US. And the consequences of the currently fragmented system concern much more than cost of patenting, with many incongruities and a high level of uncertainty (2012).

National patent offices (NPOs) will benefit as well, although they have often been hesitant about that. ‘It is a bit surrealistic that the main advisors in the creation of the UP system were the head of national patent offices, which feared to lose both power and financial resources due to the new system. Indeed, with the current system, yearly renewal fees are paid to national patent offices in order to maintain in force a European patent granted by the EPO. These renewal fees income are then split 50/50 between national patent offices and the EPO. With the UP package, renewal fees will be paid to the EPO. This income will then be split 50/50 between the EPO and the NPOs. How much each NPO will receive is a legitimate question, but should not be an influencing factor.’

NPO’s concerns are partly groundless, according to van Pottelsberghe, at least if a sufficient number of countries join the UP package in order to make it attractive.  ‘If traditional national and European patents remain popular, and the UP system has a small to medium use only, some national offices may indeed lose some renewal fees income. In case of a strong use of the UP system, however, our research (jointly with Jérôme Danguy, 2011) revealed that patent offices of every UP member state will benefit financially. Only Germany, which currently benefits heavily from the European system, as it enjoys the status of being the largest economy (ie, where patents are renewed for the longest duration) and has benefitted most from the traditional system, could lose some of its resources.’

The more members in the Unitary Patent package the better, according to van Pottelsberghe, who thinks it is unfortunate and a weakness of the UP system that several European countries will not join, particularly important economies such as Spain or Poland. The Czech Republic, Hungary and Greece have no plans to ratify any time soon either, it seems. ‘Some of these states rely on language arguments, the small size of their innovation sector (preferring to facilitate an imitation policy) or the fear of loss in income. It means the system will launch with no more than about 18 member states at best, instead of 28.’

If the system launches at all. Since the ratification of the UK last month, all eyes are now on Germany. Bruno van Pottelsberghe thinks it would be ‘catastrophic’ if the German Federal Constitutional Court decides the complaint against ratification of the Unified Patent Court Agreement is justified and Germany doesn’t join. ‘The UP system will lose much of its attractiveness and become useless if the largest economic area isn’t included.’

Still, even if the German complaint is rejected and the Unitary Patent system enters into force at the end of 2018 or in 2019, van Pottelsberghe doesn’t expect too much of an impact on innovation – which is in principle what patents are all about. ‘One reason is, as I mentioned before, the relatively low number of participating European states; another important reason is that the UP will only create an extra layer of protection on top of the existing European and national patents. So it will make the patent system in Europe quite complex. As a next step a phasing-out project is indispensable: the multi-layer system should evolve toward one single layer of protection, like in China, the U.S. or Japan.’

Moreover, this single layered system should be much more an EU endeavour and not in the hands of a ‘dreadfully independent institution composed of 38 stakeholders of member states’, according to van Pottelsberghe. ‘In any important economy, patent offices are part of the political agenda. The President of the United States appoints the head of the USPTO, in Japan the JPO is part of the Ministry of External Trade and Industry, the SIPO promotes the Chinese goal of having as many patents filed as possible. The EPO, however, is an independent organisation, based on the European Patent Convention with its 38 member states. In that respect it is disconnected to any European agenda for innovation and entrepreneurship.

‘EU national governments and especially the European Commission should find a way to bring the EPO more under its control. Then it could serve and be part of the EU’s industrial policy, for the sake of European consumers, universities and entrepreneurs. The EPO delivers high-quality patent examination services, probably the best in the world, thanks to highly qualified examiners. This strength should be better connected to European ambitions.’

For regular updates on the Unitary Patent and the Unified Patent Court, subscribe to this blog and the free Kluwer IP Law Newsletter.

 

References

Danguy, J., & Van Pottelsberghe de la Potterie, B. (2011). Cost-Benefit Analysis of the Community Patent. Journal of Benefit-Cost Analysis, 2(2), 1-43. https://doi.org/10.2202/2152-2812.1030

van Pottelsberghe de la Potterie, B. Europe should stop taxing innovation World Patent Information (2011) 33: 11. https://doi.org/10.1016/j.wpi.2010.09.003

Mejer, M. & van Pottelsberghe de la Potterie, B. Economic incongruities in the European patent system. Eur J Law Econ (2012) 34: 215. https://doi.org/10.1007/s10657-011-9221-3

van Pottelsberghe de la Potterie, B. & Mejer, M. The London Agreement and the cost of patenting in Europe, Eur J Law Econ (2010) 29: 211. https://doi.org/10.1007/s10657-009-9118-6

van Pottelsberghe de la Potterie, B. & François, D. The cost factor in patent systems.  J Ind Compet Trade (2009) 9: 329. https://doi.org/10.1007/s10842-008-0033-2

 


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10 comments

  1. I can agree that the advent of the UP system would “make the patent system in Europe quite complex”. I can also agree that “the European Commission should find a way to bring the EPO more under its control”. However, I believe that Mr van Pottelsberghe has seriously underestimated the complexities on both of these points.

    For example, the “international” status of the EPO has so far enabled the management of the organisation to effectively ignore even basic principles under human rights laws (such as the right to a fair trial or to COLLECTIVE bargaining). Under these circumstances, and given the principle of supremacy of EU law (INCLUDING the Charter of Fundamental Rights), how could it be possible for the Commission to “control” the EPO in any way?

    On the other hand, the advent of the UP system promises to bring into effect a system in which post-grant “game-playing” by patentees can not only change the forum in which a patent is litigated but can also change the law of infringement that is applied (and hence change the outcome of the litigation). Such a system is not just “complex”, it is absurd. It also dispatches the concept of legal certainty to the dustbin of history.

    I have never seen any such complexities even acknowledged (let alone taken into account) in connection with a “study” on the possible benefits of the UP system. So you will have to forgive me if I am more than a little cynical about the chances of that system doing anything other than providing an additional advantage to those patentees having the deepest pockets (who will be best placed to take maximum advantage of the insane levels of complexity and uncertainty that are inherent in the system).

  2. Thank you for collecting this interesting opinion. My only comment is that I found the headline slightly confusing. What I understood Prof. van Pottelsberghe to suggest is not so much that the EU should bring the Unitary Patent system under its control – he argues rather, and rightly in my view, that the EU should bring the EPO (European Patent Office) more under its control. That, he argues, would enable the EPO to serve and be part of the EU’s industrial policy, for the sake of European consumers, universities and entrepreneurs.

    I agree with him now, but must admit that there were times in the past when I was of a different opinion and thought it is actually a good idea to have a Patent Office that is outside the EU and not committed to serve its industrial policy or other political agendas of the day. I saw it as a great chance to achieve European unification and harmonisation beyond political borders and even including countries having quite different political systems. Which it has been and still is. Clearly, if the EU brings the EPO more under its control, this may serve to exclude non-EU countries, at least in the long run.

    However, the current status of the EPO as an international organisation that enjoys immunity, but is not supervised effectively and lacks any effective integration in a judicial system that safeguards elementary human rights and the rule of law is highly problematic and probably not sustainable in the long term future. Were the EPO to become an organ of the EU, this would definitely change for the better.

    In any case, it is time to re-think the entire European Patent Organization, in my view.

  3. Another ode to the UP/UPC! Nice but not convincing.

    As such, the idea behind the UP is certainly an aim to pursue, but the question is whether the present form of the UPC is an aim to pursue. I have strong doubts about this, especially seen the way the RoP of the UPC have been decided by a very small select committee.

    May be the EPO did “deliver[s] high-quality patent examination services, probably the best in the world, thanks to highly qualified examiners.” when Mr van Pottelsberghe was working at the EPO, but in view of numerous contributions on this blog, for example those of Mr Bausch, reasonable doubts are justified. What good are UPs of a quality which leaves a lot to be desired?

    There is also a political problem: how is it possible to bring the EPO, an independent organisation, more under the control of the EU, when there are some countries member of the EPC which will never want to join the EU, or even will never be admitted in it? On top of it, another member state of the EPC will soon leave the EU. Those are facts which cannot be ignored but seemed to have played no role in Mr van Pottelsberghe’s considerations. I am not certain that those countries want to be told by the EU what they have to do in matters of innovation.

    It is nice for the UK to have ratified the UPC, however nothing is more certain than its post-Brexit stay in the system, in spite of some flabbergasting proposals of Mr A. Johnson, one well known author of this blog: UK should participate in the UPC, but not in the UP!

    For the latter just look at:
    http://www.iam-media.com/blog/Detail.aspx?g=ff1a1e48-63cf-4424-a4b7-d1de442d50a9

    There seems to be as well a legal problem. The UP is an EP granted by examining divisions of the EPO, and may be revoked or maintained by opposition divisions of the EPO. Examining and opposition divisions of the EPO are bound by decisions of the Boards of Appeal of the EPO, and not by decisions on validity taken by a court in a national court or possibly by a court common to EU member states. In presence of divergent case law, how would it be possible to reconcile both points of view? This problem also makes the UP/UPC system less attractive. Just a few examples: added subject-matter, disclaimers, partial priority.

    One possibility to avoid the problem would have been to keep validity at the EPO and infringement at the UPC, i.e. a clear cut bifurcation. But this would not have been to the liking of the legal profession, so this possibility was probably never envisaged. Unification would have been achieved but without any contradictory case law. And there would have been no need for technical judges at the UPC. Have the corresponding savings ever be quantified?

    It would also have been a good opportunity to make the BA truly independent of the President of the EPO, and to insure a staffing level and actual location not subject to the whim of the head of the office. When looking at Art 149a (2, a)EPC this idea does not appear as ludicrous as it sound a priori. To paraphrase an author in this blog, if there would have been a will, there would have been a way.

    That some EU countries are not keen to ratify the UPC, is a fact which can be ignored, and which surfaced before some governments took a clear anti EU stance. The economic reasons brought forward for instance by Poland are not to be belittled as is done. What is valid for Poland, is valid for other countries. To be honest, some countries have a duty to ratify, as for instance, an arbitration centre will be located in them.

    As far as Germany is concerned, it is to be hoped, that it accepts the complaint and puts some questions to the CJEU in order to clarify matters. It has always been heralded that the UPC is in conformity with Union law, but the proof has never been given. If it is so manifest that the UPC is in conformity with Union law, why not ask the CJEU to confirm this. We all know what happened with EPLA, when the CJEU was consulted.

    Phasing out is a great idea, but here history shows us that the EPC has not brought about any phasing out of national patent offices (NPO), but in one case: the Netherlands. All the rest of the NPOs are still striving and there is no sign that, even in the slightest, they intend to do hara-kiri for the sake of the UP/UPC. They did not for the EP, why should they do for the UP? Even in FR it is thought to introduce a kind of opposition examination!

    All what might be desirable from an economic point of view, might not be desirable from a political or societal point of view.

    Nothing again harmonisation in IP matters, and especially not in patents, but not in the present way it is forced upon us.

    Techrigts: FINGERS OFF!!! I do not want to see my contribution misused!

  4. Ah, the European patent “system”! A bit like the famous old Punch curate’s egg, eh? “Good in parts”.

    Which part is good? Why the EPC and the Established Caselaw of the Boards of Appeal of the EPO, of course. This is a roadmap for everything to do with eligibility, patentability and validity of patents, and it provides hugely more legal certainty on all of these matters than anywhere else in the world. It is a benchmark for national Supreme Courts all over the world, something Europe should be very proud of and something industry in Europe should be very grateful for.

    How did this come about? Some might suggest that it is precisely because the EPC and the EPO’s established caselaw has been conceived, written and implemented free from political influence and control. rather, the EPC and the EPO simply strive to dispense justice and fairness between i) patent-owners and ii) their competitors constrained by the patents the EPO issues. Reasonable certainty for the public, yet a fair scope of protection for inventors. Good patents enforceable, bad patents struck down.

    So I’m not convinced that putting the EPO under more political control is in every respect a good thing.

    But I’m with Thorsten and others that it would be a good thing for the basic rights of employees at the EPO.

    In the end, these two issues are, for me, very important, but I’m doubtful how much they matter, for Professor Bruno van Pottelsberghe.

  5. It is the failure of the Administrative Council of the EPO to play the role for which it has been conceived, i.e. to control the EPO and its President which led the situation become as it is now. It was the tail wagging the dog, and not the contrary.

    Here the political control has dramatically failed, and I can only agree with Max Drei that further political control is not what is needed at present.

    First the political control in place at the EPO should be re-established. The best way to realise this aim is first to insure that basic rights of employees have a proper legal base and are not left at the whim of the head of the EPO, which can ignore results from the joint internal conflict resolutions system in place, and of a Tribunal, the ILO-AT, which only checks that the texts in place have been correctly applied and not much more.

    The ILO-AT is not a conflict-resolution mechanism, as it is only when there a gross mistakes done, that it will react. To my knowledge, it has no power even to insure that its decisions are followed, and certainly not that there are applied in a fair and balanced spirit.

    There are serious problems at the EPO in particular, and at intergovernmental organisations in general. The immunity of function is misused by the persons heading those organisations who consider that they are immune to anything and that they can do what pleases them. The Napoleon of the 10th floor had announced this loud and clear in a famous interview before taking up his function. What is happening is thus no surprise.

    As far as the EPO is concerned, I will believe that there is a genuine will to change matters if at least the conference of ministers provided in Art 4a will be called soon, and not only have for object a nice gathering with lots of non-committal statements!

    This could be the start of “re-think[ing] the entire European Patent Organization” as suggested by Thorsten Bausch.

    As employer, the EPO is not any longer competitive. What is the interest to be hired in an organisation which offer only temporary jobs, especially for examiners? This is the more so, since patents are not comparable with projects like the Tornado or Eurofighter which can justify timely limited jobs. It is a long term commitment if quality of the granted patents should be the result of the job done.

    It is particularly hypocritical to give 5 years contracts, even to examiners, but at the same time claim that it is possible to “build long-term careers”. Theoretically yes, practically no. See the recruitment page of the EPO:

    https://jobs.epo.org/content/WhyEPO/?locale=en_GB

    Knowing how the employment conditions have degraded in the last years, it is just cynical to claim: “We offer one of the most comprehensive and family-friendly benefits packages in Europe.” In past yes, presently no. The pension conditions have already degraded from 2009 onwards, the salary conditions later!

    Techrights: Fingers OFF!!

  6. @ Attentive Observer

    “The ILO-AT is not a conflict-resolution mechanism, as it is only when there a gross mistakes done, that it will react.”

    That may be true for the Tribunal itself. However – as reported on TechRights of whom you so strongly disapprove – the Director-General of the ILO (of which the Tribunal is a judicial organ) offered ILO expertise on social dialogue to assist the EPO in the dialogue between the administration and staff union.

    This offer was not taken up by the EPO.

  7. @DW Cat

    Yes, the EPO President must be shaking in his boots with such strong statements from the ILO as “Should there be no significant change for the better within a reasonable time frame, and if, for example, final decisions in all of the EPO cases currently subject to its internal procedures result in a large number of complaints to the Tribunal, other, more fundamental, measures would need to be foreseen”.

    What kind of “more fundamental measures” do you believe the ILO could possibly implement to deal with the backlog of cases from the EPO? Would any of those measures impinge upon the EPO President, in the sense of pressuring him to earnestly address the social problems at the EPO? Or would it be more likely that those measures would still further reduce access to justice for EPO employees?

    If you have any doubt that it would be the latter outcome, then just consider the offhand manner in which the ILO reports recent reforms of the EPO’s internal appeals system:
    “in particular, the reform provides for the appointment of an external Chair and Vice-Chairs to the Appeals Committee and to the Disciplinary Committee respectively, which is intended to increase the perception of independence and professionalism of these committees. The three appointees to the Appeals Committee, whose role and procedural prerogatives as Chair and Vice-Chairs of the Appeals Committee were strengthened, started their three-year mandate in October 2017. Other measures introduced with a view to enhancing the effectiveness of the internal appeals system include: a guided amicable settlement procedure, a “test-case” procedure aimed at setting a precedent for similar appeals; the consolidation of internal appeals; the possibility for the Appeals Committee to sit in parallel chambers in reduced composition to accelerate the treatment of internal appeals; the introduction of a registration fee for internal appeals, which may be reimbursed if the appeal is successful; and the possibility to award procedural costs and damages”.

    If the ILO-AT were seriously concerned for the proper functioning of the EPO’s internal appeal system, then one might have expected at least some kind of comment upon the fact that the most likely, practical effect of these “reforms” is that EPO employees will be dissuaded from filing appeals (ie they will REDUCE the chances of EPO employees being provided with access to justice).

    For example, if one considers past performance of the Appeals Committee – and the vanishingly small chances of that Committee ruling in favour of an appellant – then it is clear that the introduction of an appeal fee (that will only be reimbursed if the appeal is successful) will have a dissuasive effect upon even those appellants having strong grounds to challenge a first instance decision.

    Also, given the fact that all members of the Appeals Committee are now appointed by management, and that all members of that Committee need not be present for cases held in “reduced composition”, for whom will the appointment of an external Chair provide an increased PERCEPTION of independence? Certainly not EPO employees who have paid any attention to how the Committee has operated in practice!

    To be fair, the ILO did acknowledge that it is committed to examining “several new complaints challenge the legality of the new composition of the Appeals Committee with respect to the members appointed by the staff”. But what reassurance can EPO employees take from this knowledge? The ILO has already established a precedent for simply kicking complaints to the back of the queue when it has been found that the contested decision was made by an Appeals Committee that was “improperly composed”. The ILO’s refusal to rule on the merits of the case in such circumstances – or to at least make an award to the complainant – amounts to nothing more than justice delayed … which can be the same as justice denied.

    So, there are two possible outcomes to the new complaints: either complaints dismissed or complaints referred back to the EPO (to be decided again by a “properly composed” Appeals Committee). The effects for the complainants: justice denied. The effects for the EPO: at worst, an administrative headache. These are not the kind of outcomes that are capable of encouraging the EPO to provide proper access to justice. Indeed, there is a strong chance that EPO management might view the outcome as meaning that an “improperly composed” Appeals Committee is an excellent way to dissuade employees from filing appeals – and to add years to the time that it will take for a final ILO-AT decision on the merits to be issued in pending cases.

    Of course, there is an alternative solution that would prove highly effective in bringing the EPO management to heel: threaten to kick them out of the ILO-AT system. That would remove the “fig leaf” of access to justice / human rights that the ILO-AT provides the EPO, and so enable the ECHR to step in. Worth thinking about …

  8. @ Dick Whittington’s Cat

    I do really think you miss the right addressee. What does it bring to the disastrous situation at the EPO when you start haggling about what was said or not in Techrights? Sorry to be brutal: nothing.

    Were you so naive as to think that the EPO head would ever take an offer from the ILO-AT? This was a result to be expected, and it is irrelevant whether Techrights or any other platform has made it public. I cannot see any special merit in this to be given to Techrights.

    I regularly read Techrights and I maintain my point of view with respect to it.

    Techrights sometimes publishes good information, but too often it is drowned in a hodgepodge of unproven claims and conspiracy theories.

    I do not support such statements and do not wish to see my comments misused by this platform. The way in which these have been used in the past by this platform makes me complicit in attacks that have no place and that I repeat do not serve the cause that is allegedly supported.

    It is not because comments are published anonymously, for more than obvious reasons, that this gentleman has the right to use them! He even used them despite my express reservations.

    I have never noticed that comments published under the full name of their author have been taken over in Techrights with the express permission of the author. Copyright is there to be respected, and what comes up on Techrights has nothing to do with a scientific work in which proper quoting is allowable. For someone who remands a certain ethics from others, the opposite is true.

    In future I invite contributors to stick to the real problem, the disastrous situation at the EPO, and not to open futile discussions.

    My aim has always been to show that what is happening at the EPO has implications far outside it, and is highly disturbing. A good working international organisation has been driven in the wall by pseudo managers and pseudo HR experts. I will not be disturbed in this endeavour by comments like those of Dick Whittington’s Cat!

    Any future comment of this kind on the present or on another platform will be ignored.

    Techrights: FINGERS OFF!!

Comments are closed.