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1998
  1. Home
  2. Legal texts
  3. Official Journal
  4. 1998
  5. 5 - May
  6. Pages 267-277
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5 - May

Overview

Pages 267-277

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Citation: OJ EPO 1998, 267
Online publication date: 31.5.1998
INFORMATION FROM THE CONTRACTING / EXTENSION STATES
DE Germany

Referral by the Bundespatentgericht (Federal Patent Court) dated 29 January 1998

(4 W (pat) 40/97)*

Headword: Translations/BASF

Article 30, 36, 177(a) ECT (EC Treaty)

Article II, Section 3(1), (2) IntPatÜG (Law on International Patent Treaties)

Article 65 EPC

Keyword: "European patent deemed void if prescribed translation not filed - compatibility with EC Treaty (ECT)" - "Referral to ECJ"

Headnote

The following question on the interpretation of the EC Treaty is referred to the Court of Justice of the European Communities for a preliminary ruling pursuant to Article 177(a) of the EC Treaty:

Is it compatible with the principles of the free movement of goods (Articles 30 and 36 of the EC Treaty) for a patent granted by the European Patent Office with effect in a Member State, which is drafted in a language other than the official language of that Member State, to be deemed void ab initio if the patent holder does not file with the patent office of the Member State in question a translation of the patent specification in the official language of that Member State within three months of the publication in the European Patent Bulletin of the mention of the grant of the patent?

I. Facts

1. The appellant is the holder of European patent No. 0 398 276 (...). The mention of the grant of the patent drafted in English and with effect inter alia in the Federal Republic of Germany was published in the European Patent Bulletin on 24 July 1996. It concerns an "automotive paint sealer composition" (...).

By decision of 5 May 1997, the German Patent Office ruled that European patent No. 0 398 276 (DE 690 27 888.8) was deemed void ab initio for the Federal Republic of Germany because the (...) holder of the patent did not file a German translation of the patent specification with the German Patent Office within three months of the publication of the mention of the grant of the European patent in the European Patent Bulletin. The decision of the Patent Office was based on subparagraphs 2 and 3 of Article II(3) of the Gesetz über internationale Patentübereinkommen (Law on International Patent Treaties, hereinafter "IntPatÜG").

(...) the (...) patent holder lodged an appeal against the decision (...), seeking the annulment of the decision of the German Patent Office of 5 May 1997.

2. It maintains that subparagraph 2 of Article II(3) IntPatÜG is not compatible with Articles 30 and 36 of the EC Treaty in so far as failure to file a translation of a European patent specification within the prescribed period carries the penalty that the European patent is deemed void in the Federal Republic of Germany ab initio. The provision is accordingly inapplicable.

The (...) patent holder argues in support of its case that the costs of translation prevent many holders of patents from making European patents granted effective in all Member States of the European Community because they do not have the funds to do so. They are therefore forced to be selective and forgo patent protection in some Member States. This happens either in that translations are not filed after European patents are granted or in that Contracting States in which patent protection might be applied for are not designated at the outset. The designation fees of only DEM 150 per State, negligible in comparison with the cost of translation, are certainly not a reason to forgo patent protection in some Member States. Patent holders only renounce protection in all Member States "involuntarily", as it were, because they are forced to do so by high translation costs. This robs the patent holder of the opportunity to tap the markets of the Member States left out. The restriction results in the division of the Community's internal market, with patent protection in some Member States (protected zone) but not in others (free zone).

This division of the market gives rise in particular to the following unlawful measures equivalent to quantitative restrictions within the meaning of Article 30 of the EC Treaty:

(a) Whilst the patent holder, its licensees and competitors from the free zone and from third countries can compete in the free zone, competitors from the protected zone cannot. They would commit an infringement of the patent in exporting the patented product from the protected zone into the free zone. Such competitors therefore suffer discrimination in comparison with the others.

(b) The patent holder may be forced to refrain from marketing in the free zone so as not to undermine the higher prices in the protected zone through re-importing. It is thereby excluded in practice from competing in the free zone.

(c) The patent holder can defend itself against imports into the protected zone of goods legitimately marketed by competitors in the free zone, as importation would constitute an infringement of patent. This means the market is divided into a free zone and a protected zone.

The penalty complained of is, moreover, out of proportion to the objective pursued. The objective of the penalty, which is to inform competitors of the patent, does not justify deeming the European patent void if the translation requirement is not met. There is little to be gained, either, from consulting translations to obtain information on existing patent rights. If there is any need for the information provided by translations of foreign-language European protected rights, it arises when the application is filed, and thus at a time when translations are not available. There are, moreover, numerous other information systems which provide information on patents not only at the stage when they are granted but also when they are applied for (eg EPIDOS, Vienna).

Less severe penalties are conceivable, such as rules to the effect that rights under the patent cannot be enforced until a translation is filed or that competitors who have used the patented invention in good faith before a translation is filed must be conceded a right of continued use.

(...)

3. The (...) patent holder suggested referring to the European Court of Justice the question whether it is compatible with Articles 30 and 36 of the EC Treaty for the national law of a Member State to prescribe the penalty that a European patent is deemed to be void in that State ab initio if the requirement to file a translation is not met (...).

4. The Chamber gave the President of the German Patent Office the opportunity to intervene in the appeal proceedings. He became a party to the proceedings on receipt of his notice of intervention (Section 77 of the Patentgesetz (Patent Law): hereinafter "PatG").

The President of the Patent Office takes the view that the rule contained in subparagraph 2 of Article II(3) IntPatÜG to the effect that where a translation of the patent specification of a European patent granted in English or French is not filed, it is deemed void in the Federal Republic of Germany ab initio, does not breach Articles 30 and 36 of the EC Treaty.

He has suggested referring the legal question to the European Court of Justice for a preliminary ruling. (...)

II. Need for a preliminary ruling

1. (...)

2. The appeal's success depends on the interpretation of European Community law. The Chamber has referred the question set out in the order to the European Court of Justice for a preliminary ruling pursuant to Article 177(a) of the EC Treaty because it considers the interpretation to be given to European Community law material to its decision on the appeal. In the light of the considerations set out below, the Chamber has doubts as to the compatibility with Community law of the penalty laid down by subparagraph 2 of Article II(3) IntPatÜG.

III. Considerations

1. European patents are granted in accordance with the European Patent Convention (EPC). All the Member States of the European Union together with Switzerland, Liechtenstein and Monaco are parties to this Convention. The EPC establishes a system of law, common to the Contracting States, for the grant of patents for invention (Article 1). The grant of a European patent may be requested for one or more of the Contracting States (Article 3). The official languages of the European Patent Office are English, French and German. European patent applications must be filed in one of these languages (the language of the proceedings) (Article 14(1)) EPC.

European patent specifications are published in the language of proceedings; they include a translation of the claims (only) in the other two official languages of the European Patent Office (Article 14(7)) EPC.

As regards further translation requirements, Article 65 EPC provides that:

(1) Any Contracting State may prescribe that if the text, in which the European Patent Office intends to grant a European patent ... is not drawn up in one of its official languages, the applicant for or proprietor of the patent shall supply to its central industrial property office a translation of this text in one of its official languages at his option or, where that State has prescribed the use of one specific official language, in that language. The period for supplying the translation shall end three months after the date on which the mention of the grant of the European patent ... is published in the European Patent Bulletin, unless the State concerned prescribes a longer period.

(2) ...

(3) Any Contracting State may prescribe that in the event of failure to observe the provisions adopted in accordance with paragraphs 1 and 2, the European patent shall be deemed to be void ab initio in that State.

The Federal Republic of Germany, like the United Kingdom, initially refrained from introducing a further translation requirement under Article 65 because it entailed costs which applicants could not be expected to pay and restricted access to the European patent system (see Grounds of draft IntPatÜG, Blatt für Patent-, Muster- und Zeichenwesen (BIPMZ) 1976, 322, 325).

The other Contracting States, apart from Luxembourg and Monaco, already required the filing of a translation of a European patent specification under Article 65. The uniform rule is that if this requirement is not observed the European patent is deemed to be void. When the United Kingdom, too, finally introduced the translation requirement in 1987 (OJ EPO 1987, 263), the Federal Republic of Germany followed suit (OJ EPO 1992, 97, 380).

A preliminary ruling on the issue is therefore of significance for all Member States except Luxembourg and Monaco.

Article II(3) IntPatÜG has been in force in the Federal Republic of Germany since 1 June 1992. Subparagraphs 1 (first sentence) and 2 thereof read as follows:

(1) If the text in which the European Patent Office intends to grant a European patent for the Federal Republic of Germany is not drawn up in German, the applicant for or proprietor of the patent shall supply to the German Patent Office within three months of the publication of the mention of the grant of the European patent in the European Patent Bulletin a German translation of the patent specification and shall pay a fee in accordance with the scale of fees.

(2) If the translation is not filed within the prescribed period or in a form suitable for publication or if the fee is not paid within the prescribed period, the European patent shall be deemed to be void ab initio in the Federal Republic of Germany.

2. The translation requirement is intended to make it possible to make use of and disseminate patent information in German and thus further the innovativeness and competitiveness of the German economy (see Grounds of 2nd Law on the Community Patent, BIPMZ 1992, 47). The filing of a German translation within three months of the publication of the mention of the grant of the European patent gives other German applicants the opportunity to lodge an opposition with the European Patent Office after consulting the patent specification within the nine-month period prescribed for lodging oppositions, which also starts to run from the date of publication of the mention of the grant of the European patent.

3. It is the generally held view that the level of translation costs operates as an obstacle to access to the European patent system (see van Benthem, Mitteilungen der deutschen Patentanwälte (Mitt.) 1993, 151, 155; Stohr, Mitt. 1993, 156, 159). A considerable proportion of small and medium-sized enterprises are no longer in a position to bear the translation costs for all Contracting States and thus for all Member States of the European Union in which the European patent granted could be effective. It is estimated that the translation costs for European industry alone amount to some DEM 430 million annually, even though in each case the application is confined to certain Member States only. An average European patent granted only for the eight most commonly designated Member States costs over DEM 20 000 merely to be translated, and thus validated (see the Green Paper on the Community patent and the patent system in Europe, "Promoting innovation through patents", drawn up by the Commission, p. 241). Nine translations are required to secure patent protection throughout the European Union, given that the patent specification is available in one of the official languages of the European Patent Office, and there are 10 different languages.

In 1996 about 18 000 European patents originating in the European Union were granted with over 140 000 designations of EU Member States (see the 1996 Annual Report of the European Patent Office, p. 74, Table 3.1). It is significant that many businesses from the Member States apply every year for a number of European patents, as is clear from the details in the 1996 Annual Report of the German Patent Office, p. 15. These figures show that the translation costs of a patent application constitute a substantial proportion of overall costs.

4. The translation requirement could constitute a measure having equivalent effect to quantitative restrictions within the meaning of Articles 30 and 36 of the EC Treaty because of its considerable cost. Through the translation requirement and the considerable attendant costs, the patent holder is asked to pay an "entrance fee" for access to the market of the Member States. The translation requirement could thus represent an unlawful barrier to trade.

All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as "measures having an effect equivalent to quantitative restrictions" (Case 120/78 of 20 February 1979 "Cassis de Dijon" [1979] ECR, 649; Case 8/74 of 11 July 1974 "Dassonville" [1974] ECR, 837). A measure having equivalent effect is one whereby imports are made impossible, or more difficult or more expensive than sales of domestic produce, without that being necessary to achieve a purpose which falls within the power to adopt rules of trade given to the Member States by the EC Treaty (see "Cassis de Dijon", supra).

The level of translation costs may prevent a patent holder from maintaining the effects of a patent for every Member State for which the European patent was granted. This could create a division of the internal market into an area in which there is patent protection (the protected zone) and an area in which the European patent is ineffective (the free zone).

The patent holder may be prevented for economic reasons from marketing the patented product in a market in which his patent is not effective. If he markets a product enjoying patent protection in other Member States in a free zone, he may suffer serious economic disadvantages in the absence of patent protection. The price for a patented product generally takes into account not only production and marketing costs, but also the research and development costs incurred in the process of invention which have to be redeemed within the foreseeable future. If the patent holder imports the product into a patent free zone, he runs the risk that it will be produced by competitors from the free zone and marketed in the free zone. This risk is particularly great in the case of products which are relatively easy to produce. The patent holder cannot enforce any of the rights deriving from his patent in such a case. The manufacturer of the product in the free zone, on the other hand, only needs to adjust his price for the same product to his production and marketing costs, as he has incurred no costs for research and development. He can thus substantially undercut the price asked by the patent holder. This price disparity is particularly wide if the cost of labour in the free zone is significantly lower than in the protected zone. As a result, the patent holder will be unable to compete. At the same time, products manufactured in the free zone will thus enjoy an advantage over those from the protected zone.

Barriers to trade resulting from translation costs affect in particular small and medium-sized enterprises holding patents, as they are not in a position to supply the whole internal market with patented products because of their limited capacity. They are therefore obliged to find in the Member States licensees willing to invest to produce the product for the specific domestic market. The patent holder may therefore encounter difficulties in finding licensees in the free zone who are prepared to manufacture the product for a licence fee, because they run the risk of having their prices undercut by competitors who produce the product without having to pay anyone a licence fee. In the absence of patent protection the patent holder cannot grant them any exclusive rights which would remove this concern.

5. There is also some doubt whether the measures having equivalent effect to quantitative restrictions must be accepted by those affected on the basis of the power of the Federal Republic of Germany to regulate its own trade. They would have to do so if the penalty provisions complained of were suitable, necessary and appropriate to do justice to mandatory requirements for which there are still no rules at Community level (see "Cassis de Dijon", supra). However, there does not seem to be any evidence of this. Even if the objective of the translation requirement, namely that of making use of and disseminating patent information in German and thereby furthering the innovativeness and competitiveness of the German economy (see BIPMZ, supra) is reasonable, it is questionable whether the penalty for failing to meet the requirement is commensurate with that objective. As was argued in the appeal, the demand for these translations is small. The view that small and medium-sized enterprises ought to be offered translations into the official language of their home country, as not all inventors speak the official languages of the European Patent Office, is evidently not shared by most of those enterprises. According to a survey of 1 504 applicants for European patents, a large majority (78%) of the 756 applicants who replied felt that a European patent once granted should not have to be translated (except for the purposes of legal proceedings). Even 80% of individual inventors and small and medium-sized enterprises were in favour of abolishing the translation requirement (see Mitt. 1997, 377).

There is, moreover, some doubt as to whether the penalty complained of is appropriate.

The grant of a patent rewards the particular intellectual achievement of the inventor by conferring on him a monopoly ritht. The content of the patented invention is determined by the official patent specification in the chosen official language and not by the unofficial translations. It could be left to the patent holder to decide whether to file a translation immediately in case a third party in a Member State unlawfully makes money out of his invention, or to wait and file a translation when the patent is actually infringed. Such balancing of interests is a typical aspect of the right of disposal of the owner of property or of a right. The manner of deciding whether, how and where the patent holder will make use of his right should not call into question the validity of the patent granted.

It might suffice for the patent holder to file with the Patent Office initially only a translation of the patent claims. Beyond this he could be made to meet his duty to provide information by the threat of less drastic penalties, viz. by making the enforcement of his rights under the patent more difficult until he files a translation. A competitor who used the patented invention in good faith before a translation was filed could be allowed a right of continued use. Another possibility would be a rule that rights under the patent are to be suspended until a translation is filed (see Green Paper, p. 8). Under Section 139(2) PatG a patent holder can claim damages for negligent infringement (intentional or reckless) of his patent. If the infringer is unaware of the patent specification because, for instance, being Dutch he does not know French, he cannot be sued for damages as the conditions for negligent infringement of a patent have not been met. If the patent holder has not complied with his obligation to file a translation, before he can sue for damages, he must therefore first inform the person infringing his patent of the content of the patent, perhaps by issuing a warning together with a translation in the official language of the State in which the infringer is resident or by filing a translation with the Patent Office of that State. The patent holder cannot thereby claim damages for activities done in the past but may, at least, for future activities if the infringer persists in his infringement with full knowledge of or in reckless ignorance of the patent, ie in a culpable manner. If the patent holder confines himself to applying for an injunction, he will in any case have to provide a translation as the language used in the national courts is the official language of the State concerned.

6. Should the requirement of a translation constitute an obstacle to the free movement of goods within the Community, such an obstacle can scarcely be justified on the basis of Article 36 of the EC Treaty. Under that article, restrictions on imports are justified only in order to protect industrial property. The translation requirement does not reinforce patent law but rather undermines it in that it systematically restricts access to patent protection in the Member States.

DE 3/98

 

* Slightly abridged version of a translation of the judgment's official text.

1 See OJ EPO 1997, 443; 1998, 82.

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