For all types of intellectual property, international protection is often essential in the global economy. For patents, this is particularly true: trade marks are usually most effective in the country where goods are marketed, but a patent gives you a chance to stop manufacturing at source rinstead of waiting for goods to appear on the market.
A patent must be applied for in each country in which the inventor needs protection, otherwise they will have no control over people exploiting the invention in that country. Since a UK patent gives the inventor the right to stop people importing the invention (if it is a product), a UK patent alone may sometimes suffice.
However, the rules on free movement of goods within the European Community mean that it is often inadvisable to reply on a patent in one Member State only. In any case, it is rare to find an invention that has no export potential. Even so, effective Europe-wide protection can usually be achieved if patents are obtained in a few key markets, as it would not be worth an infringer’s while exploiting only the smaller national markets in which protection had not been obtained. So if a patentee secures protection in the UK, France, Germany, and Italy, it has probably sewn things up well enough. Add Spain and Poland and the matter is probably beyond doubt. Looking further afield, if you have a patent in the United States you have probably foreclosed most of the global market to competitors: and Russia, China, India and Brazil and you might well have covered the whole world.
The important thing for a patentee looking for protection internationally is therefore how a UK patent can be used to build an international portfolio at least cost. There are two ways in which a UK application can be used as the basis for obtaining protection in other countries, the European Patent Convention and the Patent Co-operation Treaty: and in the near future there will also be the possibility of obtaining a patent for the whole European Union. Exciting developments are taking place, but there have been equally exciting developments in the past, and the new ones build on the old.
The effect of these international instruments on the Patents Act was described above, in paragraph 6.1.
Most European countries (including the UK, all the other members of the EC, Turkey and others) are parties to the European Patent Convention. It is not a European Union measure: it was created under the auspices of the Council of Europe, out of the remains of the proposal for a Community patent, on which see below. The original convention (the Munich Convention) dates from 1973, but it was heavily amended by the EPC2000 (reflected in the Patents Act 2004 in the UK).
The EPC creates a centralised search, examination and grant procedure, replacing the need to file multiple applications to secure protection across a large part of Europe. An applicant who files under the EPC will (if successful) be granted a patent in each of the countries designated in the application. So a patent giving protection in the United Kingdom (a European Patent (UK)) can be obtained by filing a European Application designating the UK; and this process can also secure protection in up to 37 other countries (and two more so-called ‘extension states’, Bosnia and Herzegovina, and Macedonia, where European patent may be recognised on request). Making a single European Patent application may be much cheaper than making separate national patent applications in each country in which protection is required.
The applicant must designate the countries in which the patent is wanted and pay a fee for each. The application may be filed and the patent office in London (or any other national patent office in a EPC country) or at the European Patent Office at Munich or The Hague.
Because the Patents Act 1977 is based closely on the European Patent Convention the procedure for the grant of a patent is very similar. The effect of the EPC on the Patents Act is discussed above, but a few words on how the two instruments relate to each other will be appropriate here too.
The 1977 Act was a radical departure from previous Patents Acts. It contained substantive law which had previously been lacking, and it imported a lot of that from the EPC. (Other material was imported from the Patent Co-operation Treaty and the Community Patent Convention, on which see the remainder of this chapter.).
The result of a successful European Patent application is the grant of a bundle of separate national patents, one for each designated country (a European Patent (GB), a European Patent (DE, etc.). These national patents will then be subject to the patent legislation of the country in which they are granted. Many of the English court cases which you have studied involve European Patents.
A very similar arrangements exists among twelve of the former Soviet countries, and is known as the Eurasian patent system. The Baltic states, all members of the EU and contracting parties to the EPC, are not involved: three countries have signed but not ratified the Eurasian Patent Convention. It is little surprise that they include the two which have in recent years had territory taken from them by the dominant country in the system, the Russian Federation, although those events came long after the Convention. As for the third (Uzbekistan), its relations with Russia are cool in part because it allowed the United States to use military facilities on its territory during the war in Afghanistan.
The Patent Co-operation Treaty, to which 141 countries including the UK are signatories, is purely procedural. It simplifies filing on a world-wide scale. So a UK patent could be obtained by filing an international application under the PCT, though not for a UK applicant.
In countries which are members of neither the EPC or the PCT systems separate national applications will have to be made.
The PCT complements the Paris Convention system, which is concerned with access to the patent systems of member states but does little about standardising or simplifying the process of obtaining a patent. It proceeds from the assumption that there is a need at the international level for examination before the grant of a patent, since unexamined patents (the validity of which will be doubtful) are a nuisance. But pre-grant examinations are not cheap, and to have to repeat them many times in different national offices would be extortionately expensive. Efficiency could be increased and costs reduced by internationalising the system. It therefore provides for a single application, search and preliminary examination (the so-called ‘International Phase’), after which applications are dealt with according to their own rules by the national offices of the countries where the applicant has chosen to pursue patent protection – the so-called ‘national phase’.
The Patent Co-operation Treaty was signed in 1970 (and came into operation in 1978) to remedy these problems. It is administered by the World Intellectual Property Organisation (WIPO) in Geneva.
The PCT permits a single international application, in one language and in accordance with one set of rules concerning formal requirements and content, to be filed at a single Receiving Office. For UK residents this will generally be the Patent Office in London.
The applicant designates in the international application those countries in which a patent is wanted. The single application is sent to an international searching authority (of which the EPO at The Hague is one) where a search is carried out. The PCT also provides for a single preliminary examination.
As soon as possible after 18 months from the priority date the application and search report are published by WIPO’s International Bureau in Geneva. Copies of the search report will be sent to the applicant and (with the application) to each of the patent offices of the designated countries.
Each designated country then processes the application as a national one. However, the national fees charged by that office will have to be paid, and in many cases national rules will require a translation to be supplied.
It is also possible to apply for a European patent using the PCT route. If the European patent has been designated that part of the application will be processed according to the EPC’s rules.
The PCT offers a much simpler way of filing the applications, but it is not necessarily cheaper. Its main effect from the cost point of view is that it defers the payment of the fees charged by the national offices, and the decisions on validity taken by those offices can be delayed for 20 months (25 where there is an international preliminary examination). It says nothing about the grounds for validity of the patent application, which are left to national laws. The preliminary examination (which the applicant does not have to have) leads to a report couched in very general terms since validity is not a PCT issue, but it provides a basis on which national offices which lack examination facilities can decide whether to grant a patent or not.
Harmonisation of patent law within the European Union has been brought about to a considerable extent already by the EPC. However, despite the fact that a Community Patent Convention was written back in 1975, designed to use the existing mechanism of the European Patent Convention to create a new species of Community patent, the last few pieces of the jigsaw has not yet been put in place. At present it costs three to five times as much to obtain a patent in Europe compared with the U.S. or Japan, and translation costs account for a large part of this.
The CPC, though it was important enough that several of its provisions were imported into the 1977 Act, never came into operation. In 2000 the Commission decided that it should be resurrected as a regulation, which would be easier to push through (and anyway, the peculiar form of the CPC had been chosen because the Community lacked powers in the intellectual property area, which was no longer the case). Still there was only glacial progress, until after the Lisbon Treaty was ratified in December 2009, and new Article 118 of the Treaty on the Functioning of the European Union (TFEU) came into force, allowing the proposed Regulation to make progress under the ordinary legislative procedure (previously the co-decision procedure) which now applies to EU intellectual property rights.
The way that the two systems will be brought together will be for the European Union to become a member of the EPC in its own right. The draft Regulation sets out the rights that it will confer on the owner of an EU patent, rules for dealing in EU patents, and provisions about legal proceedings concerning EU patents: the substantive law is already mostly in the European Patent Convention, so that does not require repeating, and the administration of the new patents (including renewals) will be in the hands of the granting body, the European Patent Office.
At the same time, patent litigation within the European Union – at least when it involves European patents, including the new EU patent having unitary effect – will be placed in the hands of a new court, which will have two instances (with the Court of Justice playing its usual interpretative role too) and divisions throughout the EU.
As far as the unitary patent goes, the result is a simple-looking piece of legislation that will have a profound effect on the way patents are granted within the European Community. The novelty of the Community system lies not in its substantive rules but in the way the patents will be granted, and the way in which they will be enforced. Given the expense of obtaining patent protection, which is traditionally national in scope (so the cost of getting wide protection is many times that of a single application) anything that gives inventors, who are often individuals, access to the essential legal protection at a lower cost is going to find a lot of takers. Amendments to the EPC will be needed to give effect to the unitary EU patent.
Although the EPC has proved successful, its value is limited by the need to take proceedings in many different countries to enforce it throughout the EC, with no guarantee that the same result will be obtained in each. Procedural rules also differ, and translation costs make it much more expensive to get protection in the EC than in the U.S. or Japan.
In 1999, work started on an alternative to the solution to cross-border patent disputes in the Community. In fact, the European Patent Litigation Agreement is a wider project. It will, if adopted, take the form of an optional protocol to the European Patent Convention. It envisages an integrated judicial system, including uniform rules of procedure and a common appeal court.
Problems arise because infringements of European patents are dealt with under national law, and by national courts. There is no centralised way to deal with validity, either, not after the 9-month opposition period has expired. Council Regulation (EC) No 44/2001 – the Brussels Regulation – though it is under review at the time of writing, is not suited to the sort of patent disputes that can arise within the Community, involving a collection of national rights. There are many instances of patents being litigated in different countries and contradictory outcomes arising, complicated by the fact that Germany splits infringement and validity proceedings (meaning that a patent can be found to be infringed, but later invalidated).
The creation of the Unified Patent Court will simplify the process of enforcing patents within the EU and to remove the possibility of inconsistent decisions of different national courts (as exemplified in the Improver litigation, in which the Dutch and German courts and the English courts came to different conclusions on infringement, the English court holding that the patent was not infringed).These developments are described in an official publication, An Enhanced European Patent System. Domestically, the Intellectual Property Act 2014 paves the way for the introduction of these changes.
Referring to these as EU developments is, however, not completely accurate. Because of problems relating to the languages in which the EU patent system will operate, Spain and Italy are not taking part, and Croatia joined the EU too late to participate at this stage. The two regulations mentioned below which form the foundation of the EU patent have been adopted under a so-called ‘enhanced co-operation’ procedure, which is a form of Doublespeak concealing the fact that the co-operation is in fact incomplete. As for the UPC agreement, Spain and Croatia have not yet signed the agreement.
The proposed EU patent is based on two instruments:
It will remain possible to obtain national patents in Member States and to validate a European Patent in one or several Member States, but the EU patent will be an option for patent owners who need protection throughout all 25 countries.
The pre-grant phase will be exactly the same as in what is now being referred to as the classical European patent system. After that, the proprietor of a European patent will be able to file a request for unitary effect. If the formal requirements are met the European patent shall then benefit from unitary effect – uniform protection and equal effect – in all the participating Member States. At present, the holder of a European patent has to have it validated in each state where protection is required, and validation requirements vary – but often include a translation into the official language of the state where protection is requested, payment of a publication fee to the national patent office and compliance with various formal requirements relating in particular to the number of copies to be filed and the use of specific forms. Once the patent is validated the patent holder must pay renewal fees in every Member State where the patent is valid. There will be one renewal fee for a EU patent.
The European patent must have been granted with the same set of claims for all the participating Member States, all 25 of which must be designated. The applicant will not be able to withdraw designations or limit claims for certain participating Member States, as to do so would prevent unitary effect. The request for unitary effect must be filed at the EPO in the language of proceedings within one month from the publication of the mention of the grant in the European Patent Bulletin.
There will be a transitional period of six to a maximum of twelve years during which the patent holder will have to file a translation of the patent specification into one additional language. If the patent is granted in German or French the translation must be into English; if in English, the translation must be into any other official language of the EU at the choice of the patent holder. These translations are for information purposes only and do not have any legal effect. After the transitional period no translations will be required.
11.4.3.1The geographical extent of the UPP
Unitary patent protection will eventually embrace all the EU Member States that are contracting parties to the EPC and have joined the enhanced cooperation in the area of the creation of unitary patent protection. It will cover the territories of those Contracting Member States that have ratified the UPC Agreement at the date of the registration of the unitary effect of the individual patent. This geographical extension will remain fixed for the individual patent, and will not be extended to those Contracting Member States that ratify the Agreement after the registration. European patents registered after all the Contracting Member States have ratified the UPC Agreement will enjoy unitary effect in all participating Member States (which does not include Spain and Croatia: Poland is participating in the UPP but has not signed the UPC Agreement).
The proprietor of an EU patent can choose to validate the patent as a classical European patent in Spain, Italy and Croatia and in those Contracting Member States that have not yet acceded to the UPC Agreement, so patent protection throughout the EU will be available with one request and a maximum of two additional national validations. It will remain possible to validate the same patent in the ten non-EU Contracting States of the European Patent Organisation. In the current European system the patent would have to go through individual validation processes in 38 Member States to gain the same level of protection, with the need to provide translations, pay publication fees and comply with various formal requirements.
11.4.3.2Compensation for translation costs
Regulation (EU) No 1260/2012 provides for a compensation scheme to reimburse translation costs up to a ceiling for patent applications filed at the EPO in one of the official languages of the Union that is not an official language of the EPO. Compensation will be available only for SMEs, natural persons, non-profit organisations, universities and public research organisations which have their residence or principal place of business within a Member State.
11.4.3.3Renewal fees
The big attraction of the EU patent is that only one annual renewal fee will have to be paid for it, to the European Patent Office. The level of the renewal fees will be decided according to the principles contained in the regulation (EU) 1257/2012 by the Select Committee established under the European Patent Convention by the participating Member States.
The renewal fees will be sufficient to cover all costs associated with the grant of the European patent and the administration of the unitary patent protection and ensure a balanced budget of the EPO. The level of the renewal fees will be set with the aim of facilitating innovation and fostering the competitiveness of European businesses. It will take into account the situation of specific entities such as small and medium-sized enterprises. The level of the renewal fees must also reflect the size of the market covered by the patent, the renewal rate of current European patents and the number of requests for unitary effect. The fee level shall be similar to the level of the national renewal fees for an average European patent taking effect in the participating Member States at the time the level of the renewal fees is first set.
The Unified Patent Court Agreement was made in February 2013, shortly after the regulations relating to the EU patent were adopted. It commits the Contracting Member States to establishing a common Court with exclusive jurisdiction over future EU patents as well as for European patents validated in one or several of the EPC contracting states.
The Agreement will establish a unified patent jurisdiction covering all the Contracting Member States that have ratified the Agreement. The court will be common to the Contracting Member States and thus be part of their judicial system. The UPC will consist of a Court of First Instance, a Court of Appeal and a Registry.
The Agreement is open to any Member State of the European Union. So far, all European Union Member States except Spain, Poland and Croatia have signed it.
The UPC will, as a general rule, have exclusive competence over matters relating to ‘classical’ European patents, EU patents, SPCs relating to either of those flavours of European patent, and European patent applications (but not national patents and SPCs). It will also have competence over decisions of the EPO relating to the EU patent. Its rulings will have effect in all the Member States that have ratified the Agreement.
The Agreement envisages a court of first instance with several divisions, and a court of appeal. The EU’s Court of Justice will give preliminary rulings under Article 267 as it would for a national court.
11.4.4.1The UPC Court of First Instance (UPC-CFI)
The UPC-CFI will be a single court but will have several divisions. The Rules of Procedure will be common to all divisions. The panels will comprise judges from a variety of Member States. Appeals will lie from decisions of the UPC-CFI to the UPC Court of Appeal.
11.4.4.1.1The divisions
The UPC-CFI will have a central division as well as local and regional divisions. The central division will be in Paris, with sections in London and Munich dealing with cases concerning specific classifications of patent: London will deal with human necessities, chemistry and metallurgy, and Munich with mechanical engineering, lighting, heating, weapons and blasting. This arrangement respects the need to spread EU institutions among the Member States, but does entrench the existing EPC language régime which has already proved contentious enough.
In a further concession to the need to keep all Member States happy, the Agreement provides that every Contracting Member State may request the UPC to establish up to four local divisions or (together with one or more other Contracting Member States) a regional division. Local divisions will therefore be likely to appear in what are referred to in the context of the UPC as ‘Big Countries’, while ‘Small Countries’ will have to get together to request regional divisions.
The proposed rules say that actions must be brought before the local or regional division where the infringement has occurred; or where the defendant has residence or place of business. The claimant may choose between the division of the place of infringement and the division of the residence or place of business of the infringer. If the alleged infringement has occurred in more than one, the choice is even wider, but if infringement proceedings are pending in a regional division and infringements have occurred in three or more regional divisions’ territories the defendant can insist that the case be referred to the central division. (The drafting of the rules seems to mean that this does not apply in the case of local divisions, and because it omits any qualifying adjective like ‘alleged’ that it requires the defendant to admit the infringements., which makes it pointless to take the matter to any court!)
If the defendant has no residence or place of business in a Contracting Member State, the action may be brought in the division where the infringement took place or in the central division, which is also the place to go if the Contacting Member State in question has no division (local or regional) of its own.
The central division is also the forum for actions for revocation and declarations of non-infringement, and for actions concerning decisions of the EPO.
If an infringement action is started in a local or regional division, and there is a counterclaim for revocation, the division concerned may decide to hear it too, or it may hand the revocation action to the central division (bifurcation), or it may hand the whole case to the central division.
In the central division, the language of the proceedings will be that of the patent, while in local divisions it will be the official language of the host country and in regional divisions, the language chosen by the host countries. Contracting Member Sates may also permit one or more of the EPO languages instead of or as well as their own language in local or regional divisions, and there will also be circumstances in which the language of the patent can be used.
11.4.4.2 The Court of Appeal
The Court of Appeal will be situated in Luxembourg, as will the Registry. Its panels will be multinational, and it will conduct its cases in the language of the first instance proceedings.
Parties to litigation before the UPC ‘shall’ be represented by lawyers authorised to practice before a court of a Contracting Member State. Alternatively they may be represented by a European Patent Attorney who is entitled to practice before the EPO and who has appropriate qualifications such as a European Patent Litigation Certificate. The Agreement says that representation is not required in proceedings under Article 32(1)(i) (actions concerning decisions of the EPO), which indicates that litigants in person will not be at all welcome in the UPC.
11.4.4.3Transitional provisions
For classical but not unitary European Patents, there will be a transition period period of seven years – which may be increased, by as much as another seven years. Unless an action has already been brought before the UPC, during this period:
11.4.4.4Judges
There will be legally qualified judges and technically qualified judges, who will be nationals of a Contracting Member State. They must have the highest standards of competence, proven experience in the field of patent litigation and good command of at least one official language of the EPO.
Legally qualified judges must be qualified for appointment to judicial office in their respective Contracting Member State. Technically qualified judges must have a university degree and proven expertise in a field of technology, and must also know civil law and procedure relevant to patent litigation.
11.4.4.5Mediation, arbitration and training
A patent mediation and arbitration centre is to be set up with seats in Ljubljana and Lisbon. There will also be a training framework for judges, with facilities in Budapest.
11.4.4.6Court fees
There will be a fixed fee, plus a value-based fee above a predetermined ceiling. The amounts will be set by the Contracting Member States in the Administrative Committee of the UPC.
11.4.4.7Choices
Holders of EU patents will have no choice about whether to use the UPC, although they will still have plenty of choice between divisions. Holders of classical EPs will be able to make choices during the transitional period: so why should they go for the UPC, and why might they go to their national courts?
In many countries, the possibility of taking the case to a specialist patent court will be a novelty which they might well accept readily. In England, and other countries with well-established patent litigation systems, more thought will be necessary. Going to the UPC will reduce if not eliminate the possibility of parallel litigation, and will secure remedies that carry weight in 25 countries. Whether it will be cheaper and faster remains to be seen.
All the divisions will operate under the same rules of procedure, so the choice should be based on convenience and language. The Preparatory Committee and the Select Committee say in their booklet: ‘In terms of efficiency, speed, quality of judgements and interpretation of law, no major differences are expected.’ They would say that, wouldn’t they?
The system will not start operating until four months after the 13th Member State (which must include France, Germany and the UK) has ratified: at the time of writing only two countries have ratified (but happily one of them is France). The Preparatory Committee for the Unified Patent Court expects that the new system will go live in early 2015.
This is a project based on closer co-operation between the European Patent Office and national patent offices in Member States, explained briefly on the EPO website. It comprises four pillars:
It is not subject to the same requirements for transparency as EC proposals, so there is relatively little to say about it. More information can be gleaned here.
In recent years, a number of arrangements – some bilateral, some multilateral – have been put in place to improve co-operation between national patent offices. The intention is to avoid repetitive searches, saving time and money. The detail of these arrangements is beyond the (author-defined) scope of this work.
The Commission has produced a proposal for a directive to approximate the legal arrangements for protecting inventions by utility models, including the introduction of this form of protection in those Member States (such as the UK) where it does not already exist. It has made little progress.
The benefit of utility models is seen as their flexibility and relative cheapness and lack of formality. The Commission believes that they are therefore suitable for inventions with limited inventiveness and a short life expectancy. The patent profession disagrees.
Most of the proposals put forward by the European Parliament are incorporated in the revised proposal, which was published on 30 June 1999. The main features of the initial proposal – a lower level of inventiveness than that required for a patent, the absence of a prior examination, and a limited period of protection not exceeding ten years – are unchanged. The term of protection will comprise an initial 6 years followed by two periods of two years each.
As with patents, products and processes would be protectable but biological material and chemical and pharmaceutical products and processes would be excluded, Inventions would still have to be new and involve an inventive activity, and would have to be capable of industrial application. The main difference in qualification lies in the degree of inventiveness required.
Inventions would be considered to involve inventive activity if they represented an advantage and were not derived in an obvious way from the prior art. The definition of an inventive activity is a key element in the directive, as it is the defining feature that distinguishes a utility model from a patent.
No formal verification would be required before utility model protection is given. There will be no prior examination of the basic conditions relating to novelty and inventive activity. This would mean protection could be obtained cheaply and quickly, though the trade-off would be that many utility models would be found to be invalid later.
The European Parliament has addressed some of the shortcomings of the original proposal, providing a better definition of inventive activity and extending the right to request a search report on the state of the art to third parties as well as the applicant. The search report would be attached to the file, and would be a mandatory requirement in legal proceedings or for extensions of protection beyond the initial six years.