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Europäisches Übereinkommen über Patentstreitigkeiten (EPLA)
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Current law requires patent holders and their competitors to debate patent rights in front of national courts in all countries in which a patent has been violated - a very complicated state of affairs. The solution lies in a European Patent Court. And that, precisely, is the aim of the European Patent Litigation Agreement (EPLA), a voluntary agreement remaining to be ratified by member states of the European Patent Organisation.
Why does Europe need a pan-European patent court?
In the past decades, the European market has become increasingly integrated thanks to the elimination of trade barriers and restrictions. At the same time, Europe has emerged as a strong player in the world market, especially as a provider of intellectual property such as inventions and patents. Next to a strong trade economy, Europe is now a resourceful knowledge economy. This calls for tighter structures to protect intellectual property.
However, today we are still far removed from a European patent litigation system . While the European Patent Office (EPO) as a centralized organisation can grant patents on a European level, there is no possibility of enforcing patent rights in a centralized manner throughout Europe. There simply is no centralized patent court. Which leaves the current system incomplete from a political and practical standpoint.
And at the same time, inventors remain without the protection of a connected structure for securing their inventions. In cases where patent rights are violated, enforcing a rightful claim to an invention can become an arduous and time-consuming effort. Without a unified system valid across Europe, the European patent system, as it stands today, remains incomplete.
In the current state of affairs, infringement of patent rights can set in motion a lengthy legal process. If a patent holder finds the rights to a patent violated, court action may be necessary not in a single country, but separately in all countries in which violations occurred. The same goes for competitors or other interested parties who want to contest a certain invention and aim to have a European patent revoked.
Why is the current situation so complicated?
The heart of the problem is that current law treats a European patent granted by the EPO as a collection of national patents all over Europe. A European Patent is therefore often called a "bundle patent," consisting of separate patents valid on a national level. Therefore, legal action in every single country becomes necessary when the status of a patent is under legal debate. This can lead to a considerable legal uncertainty in the market, which affects both the parties concerned and the public at large.
In practice, this generates several problems:
- Legal action is always cost intensive. And going to court for the same invention in multiple countries raises these costs exponentially. As it is, first instance litigation in three countries can cost over €700,000.
- No unified legal practice and patent laws. Different national courts may reach different outcomes regarding the same patent. As procedural law differs dramatically from country to country, patent holders can end up finding their claims measured by shifting paradigms. Legal uncertainty is an overall result of this state of affairs.
- Cases are processed at different speeds. Depending on which country is running the trial, processing times can vary enormously. Courts in some countries may take only months to settle a case, while others can take years - increasing legal costs on top of the huge losses already resulting from the patent holder's inability to exercise their patent rights.
- Damages and fees can differ significantly. Because of varying economic backgrounds and patent laws, courts in different countries will reach widely divergent estimates of damages incurred by patent violations.
- Competence of judges can be problematic when it comes to patent rights. The litigation of patent rights is a complicated business. In order to make fair and grounded decisions, judges need both legal and technical training in the patent sector. While most court systems emphasise legal competence, the technical side of a patent requires the kind of background knowledge that only somebody versed in patent procedure can posses.
The consequences are substantial, and require immediate attention:
- Interested parties have taken to "forum shopping" in favourable countries. Some countries are known to favour inventors, others lean towards the parties contesting an invention. With these stark national differences, parties have started shopping around to find a country that may be more likely to grant them a favourable outcome in their patent trial.
- Patent litigation costs exceed the capacities of small businesses and research institutions. Because legal action is sometimes required in many countries, the pursuit of patent rights simply costs too much for small businesses, public research institutions and universities. This shifts the scales in favour of large corporations.
- Fragmentation of the European market. The legal uncertainty for patent holders resulting from the current situation can sometimes produce devastating effects in the marketplace. Some smaller players (start-up businesses and institutions) are not always able to pursue their patent rights. Their biggest fear: falling into a "litigation trap" that will bring financial ruin.
- Disadvantages on the international market. Due to the current practice, European patent holders enjoy far less legal protection than patent holders in Japan and the USA.
The valid solution is a European Patent Court
The European Patent Litigation Agreement (EPLA) has been discussed for several years now as a practical alternative to the current situation. What it still needs, however, is implementation by interested member states of the European Patent Organisation.
Work on the EPLA started at an Intergovernmental Conference held in Paris in June 1999. A number of contracting states to the EPC decided to prepare plans to set up an independent judiciary body for European patent matters.
This legal body is to consist of an Administrative Committee and a European Patent Court, to which questions of enforcement and validity of European patents will be presented.
In order to make the court effective for handling cases across the continent, it will consist of regional first instance divisions in all contracting states to the EPLA, who wish to host such an institution. These regional divisions will be the first point of contact for patent holders wanting to present their claims.
From there, cases may go to the central European Patent Court for second instance procedures. In short, this legal body will be equipped to settle all disputes related to infringement and revocation of European patents in a direct manner, based on the same legal standards.
The advantages are numerous:
- Harmonised approach. With a shared patent law as the basis of ALL patent decisions, there will no longer be a divergence in outcomes of disputes.
- Significantly reduced costs. Since litigation will only be necessary before one legal body, the costs for multiple cases will be eliminated together with the need for parallel trials in several countries.
- Competent judges. With the creation of first instance courts in all member states - and the central European Patent Court as THE ruling body for patent matters - comes the need for specially trained patent judges. These judges will be versed in both technical and legal matters.
- Language regime reduces translation costs. All procedures before the European Patent Court will be conducted in the official EPO languages: English, French and German. This dramatically reduces translation costs, which are currently necessary in many countries as part of national procedure.
- Accessibility on all levels. With first instance divisions in participating states, the European Patent Court will be accessible to interested parties on all levels.
Who would benefit from a European patent court?
In a clear and direct way, ALL patent holders in Europe would benefit from the EPLA , as well as competitors seeking to challenge patents and also the general public at large.
Small businesses (SMBs) could pursue their patent rights without facing the current obstacles , such as litigation costs in several countries. In fact, SMBs currently account for 80% of all companies filing patent applications with the EPO.
The savings in litigation costs would benefit all patent holders across Europe, whether they are private individuals, research institutions or businesses of any size. According to a recent EPO study, the European Patent Court would generate 10-40% cost savings for the patent litigation process.
As for financing the European Patent Court, the current EPLA proposal does not foresee that costs would be carried by the membership countries. The entire court - both regional and central litigation bodies - would be financed entirely through court fees paid by the parties. This could prove an important argument in favour of the court, since none of the states that have indicated an interest in setting up a European court system signalled any intent to carry the costs.
Ready to go - but the debate remains
In its current form, the EPLA stands ready for implementation by the EPC contracting states. This would take place in the framework of an intergovernmental conference for the sole purpose of setting up the EPLA court. Theoretically, this could happen at any time. Most importantly, the EPLA is an optional agreement to which the states can sign at their own free will.
So why has it been seven years since the first draft? The most important point of discussion remains how to connect the European Patent Court to the European Union's legal order. Recently, the debate has gained intensity, even among countries that had initially been in favour of the EPLA.
In its current form, the EPLA aims to set up the European Patent Court as an independent body outside of European Union framework. The court will be accessible to all EPC contracting states, some of which are not EU members: Switzerland, for example, is a known hotbed of research and development. Meanwhile, the European Commission wants the patent court's statutes to closely mirror the European Union's legal framework.
The question remains, whether the EPLA should be:
- Realised according to its current draft form and merely amended to the extent to which the European Community can accede to it.
- Implemented by turning it into an official legal instrument of the European Community, although it had been intended as an independent international agreement.
The EPO's position on the matter:
In the ongoing process, the EPO acts as the secretariat of the EPLA Task Force. Ultimately, the decision to implement the agreement lies with the member states. The EPO does not participate in said process directly, although it is convinced that the implementation of the London Agreement and the EPLA would decisively improve the European patent system in terms of accessibility, cost-efficiency and legal safety.
Together with the London Agreement for reducing translation costs, the EPLA would pave the way towards a more integrated, unified European patenting process and could be an important stepping stone for the creation of the Community patent system of the EU. This would bring all patent holders in Europe closer to the EPO's mission to ensure quality patents that are more affordable and legally safe.