How can Europe be a key player a the global level in the patent field, and which role should the EPO play?

University College London lecture by Benoît Battistelli, President, European Patent Office
London, 8 November 2010

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I. INTRODUCTION

Ladies and Gentlemen,
Right Honourable Lord Justice Jacob,

It is a great pleasure for me to address such a distinguished audience here today. I am greatly indebted to Sir Robin Jacob for kindly inviting me to London on this occasion, and I welcome the opportunity to exchange views on the importance of the European patent system and the role of the EPO. I will try to answer to answer to a question which summarises our main challenges: How can Europe be a key player at the global level in the patent field, and which role should the EPO play?

As you know, I took up my position as President of the European Patent Office on 1 July 2010. It is a pleasure and a great honour for me to serve at the EPO, an institution which over the past three decades, has emerged not only as a success story of European integration and cooperation, enabling Europe-wide patent protection to be provided through a single, centralised patent granting procedure delivering high quality patents, but has also become a standard-setter in the field of patents.

Today, I would like to address the situation of Europe and the role of the EPO in the international field of patents.

First, I think it is necessary to take stock of the European situation. On 1 October of this year, the European Patent Organisation welcomed Serbia, its 38th Member State. In addition, Extension Agreements are in force with Bosnia Herzegovina and Montenegro.

This means that with a single European Patent application, protection can now be obtained in up to 40 countries, covering an overall market of 600 million people. This means that the European market is greater than the US, Japanese and South Korean markets combined.

Before I go on, allow me to start by giving you a few updated facts and figures regarding our performance as a patent granting authority for Europe.

II. THE EPO: A GRANTING AUTHORITY FOR EUROPE

A. WORK VOLUME AND PERFORMANCE

The patent system is not a goal in itself, it is an economic tool to promote innovation. As such, it must be efficient and fit for purpose. In this respect, the EPO as the central patent granting authority for Europe, is called upon to play an essential role. Our filing figures show that the European patent system, despite the fact that it has the reputation of having a high-end scale of fees, still presents the requisite characteristic of accessibility to the innovating community, as demonstrated by our filing figures.

In 2009, in the midst of a serious economic crisis, almost 212 000 applications were filed at the EPO, a number roughly 8 % below 2008 levels - which, it must be remembered, was a peak year.

These filings break down as follows: 55 900 were Euro-direct, a decrease of 11% compared with 2008; 155 900 were PCT applications in the international phase. Here, the Office experienced a dip of only 5%.

Recovery appears to be in sight, however. So far, between January and October 2010, preliminary figures show an increase in filings of over 4% for European applications in relation to the same period in 2009, which should allow us to return to 2008 filing levels within a short period of time.

In 2009, there were 124 300 completed procedures, up from 120 900 the year before. 52 000 patents were granted, representing a granting rate of 42%.

EPO pendency times remain within acceptable bounds. In particular, European search reports, which include a written opinion on patentability, on prioritized first filings are drawn up on average within 6 months.

This 6-month pendency for a search report on Paris route first filings compares favourably to the pendencies of first office actions of our IP5 partners, which range from 19 months to 47 months. As it happens, our pendency for search reports on second filings is at 27 months.

The average time taken to grant a patent in 2009 was 43 months, as in 2008. Thus, we are within striking reach of the Paris criteria of 36 months. This duration, however, does not appear to be a major applicant irritant, if one considers that accelerated processing under PACE is requested in only 6.3% of files (2009 - stable figures over years).

In terms of the timeliness of the delivery of our services, as matters stand, first-filing applicants at the EPO are able to elaborate appropriate international filing strategies with confidence, within the priority year, well before publication of the application.

The performance of the EPO has improved in many respects, but this should form the basis for further progress. We should not rest on our laurels, but continue to strive to serve applicants better. My objective is to improve the quality and reduce the pendency of the average file, the whole stock, not only a limited number of files through highly communicated pilots.

B. IMPROVING QUALITY

High quality patents offering maximum legal security, and protecting the interests of both innovators and the public, are the cornerstone of a patent system which is fit for purpose. If the EPO's standing as one of the best patent granting authorities in the world is to be upheld, we must focus our energies on maintaining the strength of our procedures, and if possible, improve upon the already high quality of the EPO's search and examination procedures. European patents must be granted so as to provide fair and meaningful protection for meritorious inventions falling within the ambit of the EPC's patentability requirements, in a timely manner and at reasonable cost.

This, of course, is easier said than done. An improvement of quality at the EPO constitutes one of the main benefits expected from the continued pursuit of the "Raising the Bar" initiative, which was launched three years ago.

The modalities of this essential exercise may be the subject of some argument, but in my view, there is no alternative to this endeavour.

With the support of user groups, the Raising the Bar exercise has encompassed changes to 15 Rules for which 34 paragraph amendments have been approved by the Administrative Council. These new and amended provisions aim to increase legal certainty and improve the consistent availability of clear patent application information within two years of filing.

What is the state of current work-in-progress? Changes focused on improving the procedure for applicants and third parties are under way. In particular, a team is working to make the consideration of observations presented by third parties more transparent.

However, the Office is considering ways to improve its consultation process before launching proposals which impact on the user community. The rhythm of reform also has to be addressed.

As far as the legal framework is considered, innovators and businesses need stability and predictability, so as to be able to map out their strategies and make their decisions with an acceptable degree of security.

In this respect, it is imperative to strike the proper balance between the rights of applicants and those of third parties.

No matter how high the volume of applications of even the biggest corporate giants, it is axiomatic that applicants will be third parties and competitors more often than right holders in the patent equation.

Thus, we may speak of applicants or "clients" in a positive way: our job is not to make their path difficult, but to be innovation-friendly.

On the other hand, as an office, the EPO must not lose sight of the fact that its primary responsibility is to the public interest: innovation must be promoted in such a manner as to minimise the social costs inherent in any patent system.

In this regard, I wish to thank the United Kingdom patent profession for its engagement in debating some of the elements of the "Raising the Bar" exercise.

In my capacity as President of the EPO, I consider it of prime importance to have regular, open and constructive consultations with user groups, to assist the Office in balancing competing interests. In debates with users, obviously, whilst some objections may well not be taken on board, the quality of the further development of our legal and practical framework at the EPO is dependent on European patent professionals making lucid and critical comments, and engaging in open discussion.

C. INCREASING EFFICIENCY

The granting of high quality patents must be carried out without imposing unreasonable burdens on users of the system. This entails that the granting procedure must be optimised, and costs must be carefully controlled. It is one of the primary objectives of my presidency to engage in a continuous drive to improve the EPO's efficiency.

Particularly under the present, difficult economic circumstances, innovating entities should not be made to bear additional costs. For this reason, I do not intend to either significantly increase fees at the EPO or change their structure.

One of my first actions as President of the EPO was to commission an external Financial Audit, with the aim to review the EPO's finances and budgetary situation.

This audit should provide an objective strategic analysis on mid- and long-term trends relating to EPO expenditure and income, to assist the Office in its design of optimal short and medium-term financial measures and strategies.

If the presentation of our patent activities and main trends raises hopes of further positive developments, it must be emphasised that the European system needs to be completed if we want to compete at the global level.

This is why I would like to turn now to two important European Union projects which have the potential to radically improve the European innovation landscape.

III. CREATING A UNITARY EUROPEAN PATENT SYSTEM

I mentioned earlier that with a single application, one can obtain protection for a market of up to 600 million people.

There is strength in such numbers, but, as we know, there are also weaknesses: taken individually, big competing markets such as the US, Japan and South Korea operate in a single language, under a single court jurisdiction and enjoy a unitary patent covering their territory.

If a patent holder were to choose to have Europe-wide protection post-grant, he would end up with a bundle of 40 European patents covering territories speaking 29 different languages and subject to 40 different court jurisdictions. Now how efficient and supportive to innovation is that ? Considered in these terms, it is a miracle that European industry is competitive at all, in some market segments !

For this reason, Ladies and Gentlemen, it is my profound conviction that we must finish building the European patent system, creating the structures which were envisaged and embraced over half a century ago.

I am a committed European, and fully embrace the ideal of a unified Europe. To those who are still dubious about the wisdom of moving forward on the completion of the European patent system, with a unitary EU patent and a centralised, specialised EEU Patents Court, I would answer: this is an economic imperative.

Europe's fragmented market in innovation and IP terms signifies that we are playing catch-up to the others superpowers in the world. And it is high time that we set aside our differences and set this aspect of our house in order, not through unwieldy political compromises, but by focusing on our needs as Europeans, and tailoring the European patent system accordingly.

The patent system being an economic tool of fundamental importance, it is our duty to devise it in such a manner as to best serve European collective interests in innovation and global competitiveness.

However, being a committed European does not mean being oblivious to European political realities. In my view, two levels coexist: the European and the national levels. I wish to make my position in this regard very clear: EU projects are welcome but they must add value.

A. EU PATENT

At the outset, allow me to state that I am heartened by the recent, increased pace of developments regarding the EU patent and optimistic that we may see further positive developments on this front.

Present proposals continue to envisage a central role for the EPO, which is to be entrusted with the granting of EU patents. This is an essential component of a unitary, centralised, efficient European patent system, the cornerstone of which must be a high quality EU patent offering - as does the "à-la-carte" European patent - maximum legal certainty.

This approach is a tribute to the Office's past performance, but it also brings considerable structural and operational challenges for the future.

Secondly, even if the EPO is not party to the on-going negotiations, I appreciate the fact that the most supported language solution, recently proposed by the Commission and the Belgian EU Presidency, builds upon the current language regime of the EPO. To promote innovation and economic growth in Europe, the EU patent must constitute a useful tool for industry, and it can only perform this function if its costs are reasonable.

As far as languages are concerned, Europe has to navigate a fine line between two fundamental needs: serving economic interests and preserving its cultural and linguistic heritage.

Translations are costly and they come late in the process rather than when they are needed - ie upon publication of the application, when its disclosure constitutes cutting-edge technology. Ideally, innovators and users of the patent system should all be afforded easy, early access to a significant part of patent documentation in their own languages.

As a point of information, the EPO is currently negotiating a MoU with the European Commission to launch a major project addressing this issue.

Accordingly, I am making the development of "fit-for-purpose" machine-translation technology one of my top priorities during my Presidency, and I am pleased to report that in late October, the Administrative Council of the European Patent Organisation has just agreed to vastly increase investment in the current cooperation programmes between the EPO and member state NPOs, in order to accelerate the optimisation of automated translation systems. The technology available to us today allows us to be reasonably optimistic.

Concerning the EU Patent, the EPO is fully involved as an expert organisation which will manage the whole granting proceeding and will develop new tools which will facilitate the dissemination of the patent information.

Commissioner Barnier said a few months ago that he is not the first Commissioner to address the EU Patent project but he would like to be the last. For my part, as the President of the EPO, I would like to be the first to implement it !

B. EEU PATENTS COURT

I have an equally strong opinion regarding the creation of a centralised European patent litigation system.

The EPO is very keen on the establishment of a well-functioning and harmonised litigation system relating to European and future EU patents, which would complete the European patent system.

Recently, as you know, the Opinion of the Attorneys-General with regard to the referral to the Court of Justice of the EU regarding the compatibility of the draft Agreement on the EEU Patents Court with the EU Treaty was released through informal channels.

The Opinion identifies some obstacles to the compatibility of the proposed Agreement, but potential solutions are also pointed out, so that it appears to be a balanced, constructive response finding no insuperable difficulties in aligning the draft Agreement with the requirements of the EU Treaties roles and principles, even if some adjustments may be necessary.

During the European Patent Judges Symposium organized in Lisbon in mid- September, in presence inter alia of Robin Jacob, it was obvious that a vast majority of specialists from nearly all European countries supported the project.

It is hoped that the Court of Justice of the EU will hear the voices of the stakeholders and soon deliver a positive opinion allowing this European project of utmost importance to move forward.

Beside the EU projects, there are also other initiatives aiming at developing the cooperation in Europe and which deserve to be paid full attention. I am thinking of the European Patent Network in particular.

IV. THE EUROPEAN PATENT NETWORK

I am convinced that fulfilling the EPO quality objectives will be facilitated by improved co-operation with the EPO member states within the framework of the EPN.

The EPN was launched during a difficult period for the EPO, four or five years ago, when the Organisation appeared deeply divided in two opposite camps. Hopefully, this institutional and political mid-life crisis is behind us and it is high time to put some flesh on the EPN's bones.

Within the EPN, the EPO will maintain its central role throughout the entire grant procedure as head of the network. However, national patent offices will play an important role complementing that of the EPO, particularly in developing dynamic IP and innovation policies, and jointly exploring ways to enhance synergies and efficiencies between offices, as well as the quality of the European patent system.

Within the EPN, it is my goal to develop strong co-operation between the EPO and the NPOs in Europe. We should strive to network our competences inter alia in fields like IP / IT co-operation tools or training for examiners.

In terms of synergies, allow me to mention the imminent entry into force on 1 January 2010, of amended Rule 141 EPC which will implement the EPO's permanent utilisation scheme which grew out of the European Patent Network's Utilisation Pilot Project.

Under amended Rule 141 EPC, any applicant claiming priority of a previous application will have to file a copy of the results of any novelty search carried out by or on behalf of the office of first filing, upon filing of the European application, or upon entry into the regional phase, in the case of a PCT application.

The extent of utilisation of such search results will remain at the discretion of the examiner.

Our view is that the systematic availability of first filing work results paired with the safeguard of examiner discretion is the best manner to harness efficiencies from the reduction of duplication of work, without putting the quality of European patents or the coherence of the European patent system at risk. In the interests of efficiency and in order to reduce the burden on applicants, our medium-term goal is to move from an applicant-driven submission of search result to inter-office electronic exchange.

In this regard, the UK Intellectual Property Office already makes its search results for published and unpublished applications electronically available to the EPO.

Consequently, I am very pleased to report that the UK IPO will in all likelihood be the first office whose searches are considered to be available to the EPO and automatically included in the file of the corresponding European application pursuant to Rule 142(2) EPC, thereby exempting their first filers from the obligation to file a copy of their search results at the EPO.

Now that we have reflected on the improvements of the European Patent system which would be required in order to develop its own internal market, it is time now to address the global level and our external relationships.

V. CAN EUROPEAN STANDARDS BE MADE GLOBAL?

I would like to turn my attention to the EPO and its role and activities in the international context.

A. EXPORTING THE EUROPEAN MODEL

The policy of the EPO is now firmly oriented towards exportation of the European model and in particular, EPO quality, beyond European borders, in line with the European policy on neighbouring countries.

For that reason, it is absolutely necessary that the improvement of internal quality remain the driver of our reforms, if the EPO wants to continue to set benchmarks in some areas at the global level.

The exportation of the European model will be done within a coherent, carefully defined legal framework, ensuring that users will benefit from European patent rights validated abroad, enjoying a high presumption of validity, at low cost.

It is clear that this policy can only be developed through partnerships founded on an equal footing.

In this vein, we have negotiated an Extension agreement with Morocco, involving the validation of patents granted by the EPO in Morocco, which is on the cusp of being signed, as early as this coming December.

This is a new type of agreement which is to be developed with Countries located outside the borders of Europe, which do not harbour any intentions to become members of the European Patent Organisation. The owners of European patents will be able to protect their inventions and enjoy high quality patent rights in these Countries in a very simple manner, while the partner Countries will benefit from this streamlined granting scheme, which will allow them to develop its own capacities.

I would also like to touch upon the close cooperation between the Chinese Patent Office and the EPO.

Over the last decade, China has risen to become a major global player. The EPO and some of its Member States (Germany, UK, France, ...) have heavily invested in international technical cooperation with the Chinese IP authorities over a considerable period of time, and we are now reaping the benefits of such investments.

Chinese legal concepts are largely aligned with those prevailing in Europe and their IT tools are compatible with those of the EPO - in particular, they use the EPO's research engine called EPOQUE. The result is a close partnership between our offices and considerable alignment of interests and policies which are invaluable in helping to steer the IP5.

B. ROLE OF THE EPO WITHIN THE PCT

Partly as a result of the multiplication of International Search Authorities, the overall share of PCT work at the EPO has fallen in the past decade, but nevertheless, the EPO remains the biggest PCT authority based on volume, with around 42% of global PCT work being carried out at the EPO.

The EPO has a long tradition of close cooperation with WIPO, which I intend to honour and pursue. PCT reform remains a key priority for the EPO and the EPC Contracting States. Given the philosophy behind the PCT, its clearly defined structure and time-lines for product delivery, the EPO considers that it is imperative to further develop the PCT and promote its use.

Consequently, increasing cooperation on the PCT whether at Trilateral, IP5 or multilateral WIPO level is one of the main objectives of my Presidency.

Moreover, European Industry, the EPO and WIPO all agree that it is essential to convince international authorities to focus on enhancing work quality in the international phase, so as obviate the need to re-do such work in the national phase, boost the synergies with designated offices, and particularly, give smaller offices with less resources a better work product to base their grants upon.

The EPO is firmly pursuing this policy goal.

C. IP5 / TRILATERAL COOPERATION

 wish now to say a further word about international cooperation. The IP5 is an ambitious, long-term, pioneering undertaking to create an appropriate infrastructure for a sustainable global patent system, at a practical and technical level.

The avowed goal is to eliminate unnecessary duplication of work amongst patent offices, whilst enhancing efficiency, quality and timeliness of work results.

Within this framework, the EPO is representing European interests and ensuring that greater global integration in the patent area is taking a path compatible with European policies and existing structures.

An equally important and valuable forum is the long-standing Trilateral cooperation, which is being retained as a complement to the IP5 forum.

I think that most of you must be aware that last month the EPO and the USPTO have decided to launch a major partnership in order to build a common classification for patents and patent literature, thus moving matters forward significantly in terms of a common hybrid classification.

The work will be based on the European classification - ECLA. This a major step forward and I must pay tribute to the willingness and energy of David Kappos with who I have negotiated this agreement in a very short time.

The EPO is also involved in some PPH pilots, and shall continue to explore the opportunities these afford. However, there is little applicant interest in these pilots at the EPO, as attested by very low use figures, reinforcing our conviction that the interests of Europe lie in building upon the PCT.

VI. THE WAY FORWARD

In a nutshell, I have already exposed the most fundamental objectives I have set in terms of ensuring that the EPO will be able to play its role both as a regional granting authority and as a key player pursuing European interests at the global level: increased efficiency in operational and procedural terms and a maintaining and - if possible - an improvement of the quality of European patents, through initiatives such as Raising the Bar.

As well, I have indicated my intention to further develop international cooperation, both within Europe and at the global level.

Finally, I would like to mention two further areas of particular importance in regards to my stewardship of the EPO.

A. OPTIMISING PATENT OFFICE OPERATIONS

The first refers to the further development of IT Tools. Such tools require huge investments, but in turn, they largely determine the performance level of IP offices. Mistakes are easy to make and may have devastating consequences. The importance of IT tools is further underscored by the fact that they constitute one of the driving factors in greater global integration and cooperation between patent offices.

The EPO has a very good record on IT tools - esp@cenet is one example, EPOQUE is another, a standard-setting query system used by patent offices around the globe.

Nevertheless, IT develops at a breathless pace and we need to make strategic decisions regarding the future needs of the Office, identify the activities and technologies which should be focused upon, and make the necessary infrastructural and operational adjustments.

Given the importance of this issue, I have commissioned a second external audit, focused on the EPO's IT systems. The results of both the financial and IT audits are expected in early 2011.

B. ENSURING FULL USE OF EPO EXPERTISE

As a highly specialised institution employing over 7000 staff, of whom 4000 are examiners with a science or engineering background, the EPO has an obligation to ensure that its expertise is at the service of the European public interest beyond the obvious areas of its activities already mentioned.

The EPO will continue to support the introduction of the EU patent and the creation of the European and EU Patents Court, closely cooperate with the European Commission and offer expert advice in order to ensure an optimal outcome.

Moreover, lately, there has been an increased awareness that patents as an economic tool can play a role not only in promoting innovation, but also in steering it. Part of the public opinion questions the positive benefit for the economy or the society of the IP system. IP Office have to face these debates. "green technology" or "Climate Change Mitigation Technologies", as the EPO prefers to call it, is one example.

Aware of the challenges which exist in identifying such technology, which is defined by its effects rather than by its nature, the EPO is already heavily engaged in international cooperation initiatives to promote rapid dissemination of "green" technological information, by putting data in a context which enhances transparency and renders it more easily accessible to a broader constituency.

One of the first results is the development of a new classification scheme to capture and reflect the pertinent technology sectors.

VII. CONCLUSION

Ladies and Gentlemen, I have already expressed my conviction that patents are an essential instrument for innovation and competitiveness. They create value. The duty of any IP Office is to perform in such a way that this economic tool remains efficient. And this means a good balance between rights holders and third parties as well as quality patents delivered at controlled costs and in a reasonable time.

We cannot ignore that innovation and competition are now global phenomena, and we Europeans must, more than ever, rise to the challenge and pursue our interests in a united and coherent manner.

Through its vast expertise and considerable resources, the EPO is conscious not only of its potential but also of its responsibilities in assisting the European economy.

It must do so not only as a centralised patent granting authority within the region, but as a global player representing Europe in the area of international technical cooperation, which is driving global integration in the patent area.

The EPO is well aware of the threats the present economic situation and world-wide backlogs pose to innovation. Our response to the challenge is to concentrate on long-term solutions which promote quality, efficiency and legal certainty, control costs, facilitate the diffusion of new technologies and provide a sustainable environment for innovation and economic growth for the benefit of both industry and society at large.

This task can not be performed alone. This is why we will develop cooperation at both levels: outside Europe with our partners, within Europe with our Member States to develop a real EPN. This is why we will search for ways to improve consultations with stakeholders.

I started this lecture with a question: How can Europe be a key player at the global level in the patent field, and which role should the EPO play? I hope I have convinced you that the answer is "yes". EPO is a European success story. With such an efficient tool, Europe is and can be more in the future a key player at the global level in the patent field.

Thank you for your attention.

 

 

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