Euro patent finally gets agreement

Philip Martin, partner at Marks & Clerk, the UK’s largest firm of patent and trade mark attorneys, examines the implications of the new Community patent for engineering businesses. On 3 March, Europe’s trade ministers at long last reached agreement on the highly contentious European issue: the European Community patent. The debate over the form of the proposed Community patent has raged for nearly 30 years with the ‘pro-Europeans’ and business alike arguing that the current system in which companies have to obtain and enforce patent protection separately in different countries, is too costly and complicated. Disagreements over the location of and need for a central court, as well as language requirements, have kept the issue alive since the 1970’s. The European Commission estimates that the cost of registering a patent across the European Union today is euro 50,000 – up to five times higher than in the United States or Japan. Under the Community patent, the patent application will initially be drafted in English, French or German, with only the claims being translated into all 11 official languages of the EU once a patent is granted. This is likely to cut the costs of registering a patent, enforceable throughout the EU, by half – to around euro 25,000 – and will improve the competitiveness of many of those companies for which R&D forms a core of their business. Deciding the languages of the Community patent proved to be one of the key barriers to agreeing a compromise satisfactory to all EU countries. Unfortunately for business, the compromise undermines some of the anticipated advantage of a Community-wide patent. Many companies had hoped to avoid the cost of translating the claims into all EU languages, but this was ultimately deemed to be unfair to those countries where the patent may be enforced. Cost-conscious businesses can go some way to cutting translation costs by limiting the number of claims, but this still represents an administrative burden that was not originally envisaged. Moreover, the EU is on the cusp of a substantial expansion – if all 10 candidate countries join in 2004, the number of official languages will rise from 11 to 19. As the number of languages rises, so the cost of translating Community Patent claims will rise further. Nonetheless, the introduction of the Community patent will make it simpler to register patents to cover the whole of the EU. At the moment companies can apply to the European Patent Office (EPO) for a patent that, after being granted, will then ‘explode’ into national patents in EU member states and several others. Under this system, a patent must be enforced and challenged separately in each country, and the courts of the different countries can, and do, disagree with one another. This can give rise to considerable business uncertainty in respect of both the legal costs of defending patents in many jurisdictions, and the potential loss of market share. With the Community patent, the courts will ultimately be unified under a central Community Patent Court, mainly based in Luxembourg, and this will offer a higher level of legal and commercial certainty for patentees and their shareholders. However, separately registering patents in individual countries will still remain an attractive option for some. If the peculiarities of a particular country’s intellectual property laws invalidate a national patent, derived from a successful application to the EPO, it will continue to apply in all the other jurisdictions. Under the Community patent it is a case of all or nothing. Therefore it may be wise to consider registering certain patent applications individually, particularly if protection is only sought in a small number of EU markets. There is no doubt that there are many commercial benefits of a Community patent system and that it will aid innovation in the UK and Europe. Yet, the impact of the original proposal has been weakened by compromise, not just in terms of translation, but in the unification of the court system – which will not be established until 2010. Having waited 30 years, companies still have to wait a little longer before reaping the benefits. MF Note: Intellectual property is a core part of any successful business. Now that a European-wide patent looks likely to become a reality, the protection of IP takes on even more importance. For a head start get the Innovation Logbook, a publication developed by the DTI and The Patent Office to help those who use it officially record every detail of their developments.