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Brussels, 26 June 1997

Information memo on the patent system in Europe

How does the existing patent system operate in Europe?

Patent protection is ensured in the European Union by two systems, neither of which is based on a Community legislative instrument: the national patent systems and the European patent system. The national patent was the first to appear: to obtain protection throughout the Community, recourse to the national system involves filing 15 patent applications with 15 national patent offices. The European patent system is based on two international agreements, the 1973 Munich Convention on the European Patent, or European Patent Convention, and the 1975 Luxembourg Convention on the Community Patent, or Community Patent Convention.

The European Patent Convention does not create a uniform protection right but it does provide the applicant with protection in as many of the Signatory States as he wishes. Although this system has the advantage of being extremely flexible, it also has certain drawbacks associated with its complexity and cost. The European patent continues to be governed by the different national laws of the countries concerned. What is more, there is no provision within this system for a court with powers to settle patent disputes at European level; there is the risk here that the competent courts in the Member States will hand down contradictory judgments.

The Community patent (introduced by the Community Patent Convention) is intended to bring together the bundle of protection rights resulting from the grant of a European patent and merge them into a single, unitary and autonomous, protection right valid throughout the Community. However, this Convention has yet to take effect: although 20 years have elapsed since it was signed, it has so far been ratified by only seven Member States. The fact that the Community patent system is established by means of an international agreement also makes it extremely cumbersome and complicated from the standpoint of the accession of new Member States.

What are the problems currently facing the patent system in Europe?

The patent system in Europe has two weaknesses: complexity and cost.

The first problem stems from the complexity of the system: although the 1975 Luxembourg Convention was intended to introduce a unitary patent that would be immediately valid throughout the Community, it has never entered into force. Firms wishing to secure protection throughout the Community thus still have to go through a partial procedure managed by the European Patent Office in Munich. This system is incomplete since, once it has been granted, the European patent is not unitary but continues to be governed by the different national laws of the countries concerned. This means, in practice, that applicants have to use the services of several patent agents, that patentees have to pay renewal fees in several countries and, above all, that any legal action needed has to be brought before the national courts of several countries.

As far as costs are concerned, the European Patent Office has recently taken some major decisions designed to reduce procedural fees significantly. These will be cut by some 30% from 1 July this year, representing a total saving of some ECU 60 million per year. This will be a significant step forward, but there remains the thorny problem of translations. A patent currently has to be translated into all the languages of the Member States concerned, which generates a large volume of translation work (between 20 and 50 pages per patent), costing on average some ECU 10 000 per patent. Many firms today, and particularly SMEs, are finding it difficult to bear costs as heavy as this.

What are the advantages of the Community patent?

It is easy to imagine the advantages of a unitary patent system:

  •  protection for inventions would be obtained immediately for the whole of the Community, under a single procedure;
  •  the management of rights would be greatly facilitated, since there would no longer be any national phase, which should also have the effect of reducing costs (there would be only one renewal fee);
  •  the system would avoid the need for infringement actions to be brought in each Member State since the plaintiff could bring all the actions before a single court;
  •  it would offer greater legal certainty through the creation of a central court competent to hand down decisions on interpretation and validity of Community patents.

What can be done to reduce the costs of translating patents?

The facts are disquieting: translations of patents are costing large sums of money (some ECU 400 million a year), forcing firms to adopt a restrictive stance towards protecting their inventions. Firms are being selective in seeking protection for their inventions, thereby running the risk of letting their competitors take advantage of what is not protected; they are also limiting the number of countries for which they request patent protection, which means that some Member States are liable to be left aside by the most up-to-date technological developments. Another aspect of the problem is that the consultation rate for translations filed at the different patent offices is usually extremely low (on average, it hardly exceeds 5%).

On the basis of these findings, the European Patent Office has launched wide-ranging discussions on ways and means of reducing the volume of compulsory translation, without discriminating between languages and while ensuring that as much as possible of the useful technical information is made widely available. The Green Paper follows the same line of reasoning and proposes a series of topics for discussion and envisages a number of possible solutions. It is now up to the users of the patent system to voice their needs.

What is the importance of patents for research and innovation and for SMEs?

The importance of patents was for many years underestimated by some branches of industry, and this is unfortunately still true of some small and medium-sized enterprises. It is clearly recognized that the patent system is the best instrument for protecting investments made and time spent in researching and developing new products and new technologies. The Community's current trade surplus is due to high-tech products (pharmaceuticals, electronics, aerospace) for which patent protection is essential.

Without patents, the fruits of a firm's innovation effort can be plundered by any of its competitors. Patents enable a balance to be struck between the dissemination of information, since all patent applications are published and accessible to everyone, and the legitimate protection of inventions for a limited period.

The Green Paper also devotes special attention to the problems encountered by SMEs in connection with patents. Several of the suggestions made in the Green Paper could be particularly advantageous for SMEs: the possibility of reduced fees for SMEs, or the introduction of a system of legal costs insurance which could cover the costs of court action to enforce rights conferred by patents. This is a novel idea, the practical details of which still need to be worked out.

Should the European Patent Office be brought within the framework of the Community, along the lines of the Trademarks Office in Alicante?

In the Commission's mind, the question of technical resources is not uppermost; the first priority is to ensure that the patent system in Europe is effective and offers firms genuine legal certainty at reasonable cost. These aims can apparently be met by strengthening the links between the European Patent Office and the Community institutions, because this would bring the activities of the Office more within the ambit of the common policies, such as industrial policy or the policy to promote innovation.

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