The European Commission has recommended that the future European patent system should comprise a patent judiciary which is competent to deal in both European patents and future Community patents. In the Commission’s view, such a change would whittle enforcement costs down to approximately € 97,000 to € 415,000 per case across the EU and EPC states.

Background

It is no wonder that patent activities in Europe are significantly behind US and Japan. Procedural costs for filing a European patent in the13 most designated European Patent Convention (EPC) countries is estimated to be around € 20,175 whilst the estimate for the same in both the US and Japan is comfortably under € 2,000. The main reason for this discrepancy is translation costs. Further, the European patent, once granted, is converted to a bundle of national patents in the designated states. This means that enforcement is costly often involving patentees having to cross swords with defendants in multiple jurisdictions, each having different procedural rules, judges with different qualifications and experience and different interpretation of substantive patent law. The costs of parallel litigation in the 4 most litigated Member States (UK, Germany, France and the Netherlands) are estimated to be somewhere between € 310,000 to € 1,950,000, depending on the complexity of the case. It is against this backdrop that the Commission has, in this Communication, emphasised the urgent need for a simple, cost-effective European patent system with a maximum of legal certainty in litigation over the validity and infringement, if Europe is to remain a serious economic contender in the future.

To this end most Member States agree. However, Member States have divergent views on how the European patent system should be framed. There are 2 main proponents, EPLA and the Community patent system.

EPLA

The draft European Patent Litigation Agreement (EPLA) aims to establish a uniform jurisdiction for European patents for EPC contracting parties. Under EPLA, the European Patent Court would have jurisdiction for infringement and validity of a European patent, with a patent judiciary comprising both legally and technically qualified judges. However the European Patent Court would not have power to hear litigation relating to any future Community patents.

Community jurisdiction for European and Community patents
This is a unified court structure which could deal with litigation on both European and any future Community patents. It would involve technically qualified judges (who may not be legally qualified) applying uniform rules of procedure, and both Community law and rules of the EPC.

The Commission’s Recommendations

The Commission has recommended a hybrid between the two proposed systems which would entail a single court system, with a patent judiciary which is competent to deal in both European patents and future Community patents. In order to ensure a degree of proximity to the parties and relevant circumstances of the case, such future European patent system would have a limited number of first instance courts, which could be the existing national courts and a fully centralised appeal court to promote consistent interpretation of patent law. These first instance and appeal courts would apply common rules of procedure based on best practices in the Member States. The European Court of Justice would serve as the highest court pertaining to EU law.

The Commission believes that a unified Community patent system would remedy the problem of cross-border disputes involving multiple, varied procedures in individual jurisdictions, which inevitably results in racking up costs. The Commission estimates that the overall cost for litigation before one European Patent Court would be around € 97,000 to € 415,000. However, the Commission recognises that this is not enough. There are other issues that need to be addressed, in particular creating a commercial environment in which SMEs could thrive. One example raised by the Commission was the issue of patent thickets and patent trolls hoarding low quality patents and unjustifiably impeding the promotion of innovation, in particular of SMEs. In an era with increasing patent applications and demands for speedy granting of patents, this is not easy. The Commission stressed that patent offices in Europe work together, for example by sharing examination results.

Comment

It is encouraging that the Commission acknowledges patent policies as key to Europe's future economic success. However the concept of unified European patent system was floated seven years ago. The Member States have still to agree on how this could be achieved. Further the Commission fails to address more concrete ideas on how improvements could be made. For example, it would have been more help to outline exactly how costs of patent applications could be reduced - it suggests "fee reductions for SMEs"- without explaining how translation costs for SMEs could be subsidised, or who would qualify as an SME. It seems that the realisation of a unified European patent system is still many years away.