On the threshold of unitary patent protection in Europe

Chairman,
Members of the European Parliament,
Ladies and gentlemen,

I am honoured to have this opportunity today to talk to your committee about the role of the European Patent Office in the unitary patent system.

This new system is indeed very important for Europe's innovation policy and its economic competitiveness generally. The idea of a patent with unitary effect in multiple member states has been on the table for nearly forty years – without success until now.

So whilst Europe has succeeded in creating a large single market facilitating the movement of people, products and services, European companies still have to go through a lot of expensive formalities to protect their inventions in different member states.

That's not so much an anomaly as an economic nonsense, and it's high time we put it right if we want to equip our firms to compete internationally.

At a time when our governments are wondering how to solve the financial crisis, I am in no doubt that Europe's innovative capacity is one of its biggest assets. Patents, as legal titles which protect R&D investment, must therefore be a priority.

In patents, Europe already boasts a highly effective institution: the European Patent Office.

Set up in 1977 with just seven founder members, it now covers 38 European countries, including all 27 EU ones plus the likes of Switzerland, Norway, Turkey and a number of the Balkan states.

The EPO has a well-earned reputation for excellence. We examine incoming applications rigorously, and the patents we grant are considered the best in the world.

The international make-up of our applicants – over 60% are not European – clearly shows that recognition of our work has spread quickly beyond Europe's borders.

The reasons for the EPO's success are well known: it has 7 000 staff – making it the second largest European public body after the European Commission – including 4 000 highly specialised engineers working in three languages across the full range of technology.

That enables us to handle more than 235 000 patent applications per year, and produce comprehensive search reports on an invention's patentability within six months of the filing date. No other patent office in the world can do that.

The databases we use for our searches are the biggest in the world, and our working tools have become global standards.

Our EPOQUE search engine, for example, is used by over 40 patent offices, including those of China, Brazil, Canada, Australia and most European countries.

And ECLA, our system for classifying patents and technical literature, has just been adopted by the US patent office, with whom we are now in constant contact to help them move over to our European system.

So when the European Union had to decide who would manage the Community (now "unitary") patent, it was only logical for it to turn to the EPO.

I can only welcome that decision; it promptly gave the EU a high-quality patent agency and at the same time saved a lot of resources. After all, the budget of the EPO – which is entirely self-financing – is over € 1.6bn a year.

Under the draft regulations you are now scrutinising, the unitary patent will be a traditional European patent, i.e. granted by the EPO under the terms of the European Patent Convention, which however, at the patentee's request, can also acquire unitary effect after grant.

That the future unitary patent will fit so neatly into the existing European framework is, I believe, a crucial factor for its success.

The unitary patent will offer inventors a new form of protection, supplementing our existing national and European patents.

As such, we think that the proposed regulations strike a good balance overall.

We realise that they mean extra work for the EPO: processing unitary patent applications, collecting renewal fees, keeping a register and managing the compensation system for translation costs.

To cope with that, we will have to invest in human and other resources, especially IT. But I can assure you that the EPO stands ready and waiting to grant the first unitary patent on the day you choose to implement it.

As an example of the steps we have already taken, look at our ambitious machine translation programme. By 2014, this will provide translations from English, French and German into 28 European languages plus Chinese, Japanese, Korean and Russian.

The first language pairs should be available, free of charge on our website, by the end of the year.

Let me now turn to a number of aspects which I consider particularly important, and – in the light of our patents expertise and experience – suggest one or two possible improvements.

1. Governance and institutional relations

For many years, the EPO and the EU have enjoyed positive and fruitful relations, exemplified by joint co operation activities such as the huge IPR2 project in China or the CARDS programmes in candidate countries.

The Commission attends all meetings of the EPO's Administrative Council, where it reports on EU projects and the latest moves on the patent front.

For the unitary patent, the countries participating in enhanced co-operation intend to use existing EPC provisions to set up a Select Committee of the Administrative Council which will be responsible for governance and supervision of the additional tasks given to the EPO. Another of this committee's main duties will be setting renewal fee levels.

The EPO is very much in favour of this institutional solution, which has the advantage of being easy to implement effectively in accordance with the EPO's governance principles; but I do feel the current proposals could be improved, to increase the involvement of the EU institutions in the process.

I have already voiced this opinion publicly, and I am pleased to see that Mr Rapkay's report proposes amending Article 12(3) and (4) of the regulation on enhanced co operation to stipulate that the Select Committee will include a Commission representative and take its decisions with due regard for the Commission's position.

I fully support this proposed amendment, which will enable the European Parliament to monitor implementation of the unitary patent under its supervisory powers over the Commission.

2. Financial provisions

Financial matters are always a sensitive issue, and that is particularly true of this project, which as things stand will affect only 25 of the EPO's 38 member states.

Given its principles of equal treatment of member states and balanced budgeting, the EPO can take on additional tasks for a group of member states only if they are budget-neutral for the Office, which means that those states will have to bear the costs of carrying out these tasks.

The Commission's original proposal, in Article 16(1), suggested a suitable approach to this issue. The formulation adopted by the Council is far more vague. It would be better to go back to the original proposal, as your rapporteur suggests.

Another essential issue is how the fees distributed among the member states are to be used. While the Commission's proposal made it very clear that the member states had to spend them on patent-related activities (Article 16(3)), this clause has been deleted from the version adopted by the Council, with no clear justification.

If Europe really wants to develop an innovation policy worthy of the name, it needs to be quite sure about where the money collected from patent system users and shared out among the member states is going to go. It could for example be used to fund awareness schemes among SMEs and universities.

3. Support for SMEs and universities

The aim of the unitary patent project is to make it easier to protect an invention on European territory by simplifying formalities and lowering costs.

As envisaged, it will benefit all economic operators alike – enterprises large and small, public and private, and so forth.

Clearly, compensation for translation costs for patents filed in languages other than the EPO's three official ones should be granted only where it is really needed, for example to SMEs, universities, public research centres or independent inventors.

We need to be aware that a significant proportion of the costs arising from the unitary patent system will be due to financial compensation for translation costs. Their level will have a big impact on the size of the fees that users will ultimately have to pay.

Granting such compensation only to SMEs, universities, public research centres and independent inventors would ease the financial burden on the system while increasing the support available for those that need it.

In my view, that would be wholly in keeping with the Small Business Act of 2008, which since then has led to a new set of measures adopted in spring 2011.

I am therefore all in favour of the proposals in Mr Baldassare's report concerning Article 5 of the regulation on the language arrangements for the unitary patent.

Finally, one last point which does not directly concern the EPO's activities but is fundamental to the equilibrium of the system as a whole: the future European Patent Court.

Contrary to popular opinion, the EPO's grant decisions, even if upheld by its boards of appeal, are still open to challenge before national courts, which can refer them to the CJEU for a preliminary ruling. That is not just a theoretical possibility, as shown by the Monsanto case concerning a European patent which had been the subject of proceedings before the Dutch courts. The Hague court also sought a preliminary ruling from the CJEU on the interpretation of the biotech directive.

Unitary patent litigation needs to be handled by a unified judicial system ensuring compliance with EU law.

I think the patent court now under discussion is a good overall balance between the principle of access and proximity to justice – especially for SMEs and research centres – and the highly technical nature of patent litigation. Obviously, improvements are always possible, and working parties are actively pursuing them, but we should not get bogged down in endless debate at the risk of further delaying the adoption of this essential corollary to the unitary patent.

Conclusion

Ladies and gentlemen, I should like to end by stressing that the unitary patent project can be a real breakthrough, and its implementation is a matter of urgency.

Other parts of the world are engaged in large-scale reforms of their patent systems. Last month the USA adopted its biggest reform for sixty years. China has brought its patent system up to world standard, and clearly aims to be number 1 within a few years.

If Europe wishes to maintain its position in the patent world, it needs to move forward. The EPO for its part will continue to support this project and make its expertise available to serve European innovation.

Thank you for your attention. I shall now be happy to answer any questions you may have.

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