QUESTIONNAIRE ON THE PATENT SYSTEM IN EUROPE

Transcription

1 QUESTIONNAIRE ON THE PATENT SYSTEM IN EUROPE March 2006 Introduction The Business Software Alliance (BSA ) welcomes the opportunity to comment on the future of the patent system in Europe. BSA and its members firmly believe that periodic review and reform are important to ensure a healthy patent system that promotes innovation and competitiveness. In the case of Europe, our review suggests: 1) Structural improvements are needed at the margins of the patent system, to enable inventors large and small to reap the system s benefits. At present, the high-cost of obtaining patent protection (especially the translation fees) in Europe makes it difficult for small innovators to participate fully in the patent system. 2) Ratification of the London Protocol and the adoption of a litigation arrangement such as the EPLA should be encouraged as priorities. The lack of a common patent court system adds costs and creates uncertainty, impeding innovation. These issues must be addressed urgently, by reducing translation requirements to three languages (or less) and by establishing a European patent litigation system. The common political approach on the Community Patent is not an acceptable solution for the ICT industry. 3) A radical overhaul or harmonization of the European patent system is unnecessary. At the moment, the European patent system works well. The rules of the European Patent Convention supplemented by those of the Strasbourg Convention provide a clear, harmonised and balanced patent framework that promotes innovation and competition. A revisiting of substantive patent law whether through a horizontal harmonisation effort or in the context of the Community patent is not now warranted, nor is it timely. The Business Software Alliance ( is the foremost organization dedicated to promoting a safe and legal digital world. BSA is the voice of the world's commercial software industry and its hardware partners before governments and in the international marketplace. Its members represent one of the fastest growing industries in the world. BSA programs foster technology innovation through education and policy initiatives that promote copyright protection, cyber security, trade and e-commerce. BSA members include: 4D, Adobe, Apple, AttachmateWRQ, Autodesk, Avanquest Software, Avid, Bentley Systems, Borland, Cadence Design Systems, Cisco Systems, CNC Software/Mastercam, Corel, Dell, Entrust, Graphisoft, HiT Internet Technologies, HP, IBM, INAZ, INSYSTEK, Intel, Intergraph, Internet Security Systems, iquate, LMS International, McAfee, Mamut, Microsoft, Microstar, Monotype, MOST Software, Nemetschek, O&O Software, OWG, Panda Software, PTC, Realviz, RSA Security, SAP, SGS, SIA, SolidWorks, SP Grupo Sage, Softline Pastel, Staff & Line, Sybase, Symantec, Synopsys, The MathWorks, UGS Corp., Visma, XQDC and Young Digital Poland.

2 Section 1 - Basic principles and features of the patent system 1. Do you agree that (1) clear substantive rules on what can and cannot be covered by patents, balancing the interests of the right holders with the overall objectives of the patent system; (2) transparent, cost effective and accessible processes for obtaining a patent; (3) predictable, rapid and inexpensive resolution of disputes between right holders and other parties; and (4) due regard for other public policy interests such as competition (anti-trust), ethics, environment, healthcare, access to information are the basic features required of the patent system? We agree that the elements identified above are fundamental. In the context of the Community s future efforts on patents, we encourage the Commission to focus on elements (2) and (3), where improvements are needed. The high cost of obtaining a patent and the inconsistency in patent litigation are undoubtedly the most significant challenges facing the European patent system today: Patent cost: Currently, the cost of obtaining patent protection in Europe can be two or three times the cost incurred in the US or Japan. These high costs are largely the result of translation expenses, which are substantial and have been estimated by some to constitute 50% of the total costs to obtain a European patent for protection in a significant number of countries. Also contributing to these costs are the fees that must be paid to multiple patent offices and to agents in multiple countries. For large companies, these costs are burdensome; for individual innovators and small firms, they can be an insurmountable obstacle when protection is desired throughout the Union. Patent litigation: Likewise, the litigation system is also in need of urgent attention. Currently, national courts are left to interpret, validate and enforce European patents. In practice, this means one member state s judiciary can invalidate a patent that a court from another member state has upheld, or find patent infringement where another court has not. This system can create extreme uncertainty uncertainty that impedes innovation and competitiveness. The current system is also extremely costly, because the need to litigate a single patent in multiple jurisdictions is often inevitable. In contrast, elements (1) and (4) a coherent substantive framework that gives due regard to the public interest are largely in place. The European Patent Convention (EPC) and Strasbourg Convention the main provisions of which have been incorporated into national patent law establish common standards for patent scope and protection in Europe. This framework effectively promotes innovation, fuels investment and generates employment and entrepreneurial activity. At the same time, this framework balances the interests of a wide range of stakeholders (discussed in more detail below, see para. 1.3). As the European patent system continues to evolve and as illustrated in current consultation launched by the UK Patent Office, the high quality standards developed for granting patents under the European Patent Convention should be preserved. 2. Are there other features that you consider important? We would add one additional element: greater public understanding of the value of patents and the workings of the patent system. Many of the concerns expressed about the patent system can be attributed to an insufficient understanding of patents and patent rules. BSA and its members invest significant resources in educating the public about the contributions that intellectual property makes to the greater good. While we understand that awareness-raising falls outside the scope of this Consultation, we nonetheless would encourage the Community (and the European Patent Office) to consider doing more in this regard. 2

3 Structural adjustment in the context of the EPO and national patent offices fees could be considered. For example a reduction of EPO and national offices fees could be considered for small entities. Similarly, the cost of opposition in the EPO could also be reduced for small entities. 3. How can the Community better take into account the broader public interest in developing its policy on patents? Europe s existing patent system is structured to achieve a careful balance amongst many competing interests. First, as a result of the European Patent Office (EPO)/EPC framework, patent quality in Europe is generally high; patents are granted under stringent conditions and only after careful examination by expert staff. In addition, and unlike in other jurisdictions, the European system includes an opposition procedure which permits to invoke prior art or to demonstrate the lack of inventiveness without having to litigate the patent before a court. These processes result in a patent system that is credible and that benefits patent-holders, patent users and would-be inventors. In addition, the EPC is drafted to ensure that due regard is given to the public interest. Among other provisions, the EPC includes an exception for inventions that would run contrary to ordre public and rules enabling revocation where a patent does not meet essential patentability criteria. The EPC provisions are supplemented by other legal instruments, including European competition law and the WTO TRIPS Agreement, which provide important safeguards against abuse of the patent system. Finally, the Community s regular and broad-based consultations on the patent system help to ensure that the interests of all stakeholders are heard and considered on an ongoing basis. Section 2 The Community patent as a priority for the EU 1. By comparison with the common political approach, are there any alternative or additional features that you believe an effective Community patent system should offer? Yes. To be effective, the common political approach should be revisited to: require fewer translations: While the common political approach on the Community patent goes some way toward reducing translation costs, it does not go far enough. To reduce costs to competitive levels, we would encourage the Community to revisit the translation issue and agree on a significantly smaller number of translations. One option would be the straightforward approach taken in the original Commission proposal of 2000, which required the initial application to be filed in one of the three official languages, with the translation of the claims into each of the other two languages. Another option could be the use of English only. Translations could be required where a patent is subject to litigation in a particular country. permit judicial proceedings in the language the patent was filed: The common political approach requires that judicial proceedings be conducted in the language of the defendant. This approach may require extensive translations, including the use of translators simply to enable the claimant and members of the court to understand the proceedings adding significant costs and a degree of complexity to what is already a complex area of litigation. A preferable option could be to use the language of the patent application (i.e. English, German or French) as the language of proceedings. This would also resolve the question of what language would apply in cases involving multiple defendants with different languages of domicile In litigation proceedings, the language of the patent as filed should be controlling any proceedings regarding the patent claims or more broadly all the litigation. Otherwise, unnecessary disagreements over translations and the potentially different shades of meaning common when translating will hamper litigation, adding cost and complexity. 3

4 Provided that a Community patent meets user needs in terms of cost and ease, it could advance the interests of European innovators especially individuals and small firms. That said, industry does not wish a Community patent at any price. We would oppose any efforts to revisit substantive patent law using the Community patent as a vehicle. Section 3 The European Patent System and in particular the European Patent Litigation Agreement 1. What advantages and disadvantages do you think that pan-european litigation arrangements as set out in the draft EPLA would have for those who use and are affected by patents? The principal advantage of the European Patent Litigation Agreement (EPLA) is that it would enable companies to resolve patent disputes in a timely and cost effective manner, while at the same time generating a coherent and harmonised body of European case law on patent infringement and patent validity. A common system, premised on specialised courts with a depth of expertise and experience, would lead to more uniform interpretation and application of patent law. Such a system would also reduce cost by eliminating the need for litigation in multiple fora Given the possible coexistence of three patent systems in Europe (the national, the Community and the European patent), what in your view would be the ideal patent litigation scheme in Europe? We believe that the Commission should have a mandate to negotiate the final form of the EPLA along with the Member States to ensure consistency between the EPLA (adjudicating European patents) and a possible Community patent system. The European Commission involvement in the EPLA process would be welcomed. Once the EPLA and the London Protocol are respectively adopted and ratified, an appropriate framework would exist on which it would be possible to build a sound Community Patent system. EPLA has the potential to significantly advance the European patent system if it implements appropriate remedies. For example, to avoid duplicating undesirable aspects of the current US patent system, injunctions should be issued only in suitable cases taking into account the actual harm to the plaintiff and the public interest in uninterrupted commerce. Section 4 Approximation and mutual recognition of national patents 1. What aspects of patent law do you feel give rise to barriers to free movement or distortion of competition because of differences in law or its application in practice between Member States? The current EPC and national patent law systems in general have not given rise to barriers to free movement or distortions of competition. To the extent that such barriers and distortions do exist, these result from the inconsistencies and uncertainties inherent in the existing patent litigation structure. Under this structure, patent owners cannot be confident that the protection 1 Of course, any new court system must include measures to ensure sufficient resources and qualified personnel are allocated to the judiciary. And language requirements must be fair to all parties, while at the same time not being unduly burdensome to litigants or court personnel. 4

5 they enjoy in one market will extend to others; competitors likewise do not know where they can market their products. 2. To what extent is your business affected by such differences? N/A - BSA is a trade association that holds no patents 3. What are your views on the value-added and feasibility of the different options (1) (3) outlined above? We question both the value-add and feasibility of options (1) - (3), and we oppose all these options. The most pressing issues with regard to Europe s patent system today are structural, relating to access, cost and litigation consistency. In contrast, there is neither the need nor the political will to revisit the substantive patent rules. Indeed, recent experience suggests further harmonisation in this area may currently be unachievable. Our specific comments on the proposed options are as follows: Option 1: The suggestion to bring the patentability criteria of the EPC into Community law to enable national courts to refer questions of interpretation to the European Court of Justice (ECJ) would seem to add a layer of cost and complexity to litigation, without producing clear benefits in terms of greater legal certainty. National judges generally retain a margin of discretion in applying the teachings of the ECJ, meaning that even with an ECJ referral system, uniform application of the law may not be achieved. Option 2: Further harmonisation of the underlying substantive rules will not resolve any existing uncertainties or bring added-value. Indeed, the recent debate over patents for computer-implemented inventions demonstrated that a vertical harmonisation is unlikely to be welcomed or achievable. Moreover, there is little need for such an effort. Currently, European patent law enjoys a high level of harmonisation. To the extent any barriers to free movement exist, these result from the legal uncertainty inherent in the current system for litigating patents, not from the law itself. Option 3: Currently, national patent offices often apply diverging approaches to patent review, with some who do not complete a substantive examination of the patent. In light of this, mutual recognition could mean that a bad patent receives broader recognition than it otherwise would. A mutual recognition system could also lead to forum-shopping, with patent applicants seeking approval in patent offices with the least stringent examination processes. While an agreed quality standards framework or validation approach, as suggested in the Consultation, might mitigate some of these concerns, this effort seems largely unnecessary in light of other options currently under consideration 4. Are there any alternative proposals that the Commission might consider? None in this regard. Section 5 General 1-4. How important is the patent system in Europe compared to other areas of legislation affecting your business? Compared to the other areas of intellectual property such as trade marks, designs, plant variety rights, copyright and related rights, how important is the patent system in Europe? How important to you is the patent system in Europe compared to the patent system worldwide? Our members rely on a range of intellectual property rights to protect their innovations including copyrights, trade secrets, trademarks and patents. Each serve important purposes. Patents are, however, becoming an increasingly utilised form of protection for ICT innovators. Indeed, today patents are a key part of virtually every ICT company s IP strategy. Patents grant inventors exclusive rights in new, useful and non-obvious advances for a limited period of time, in return for the disclosure to the public of a detailed description of their invention. They also ensure that 5

6 inventors have the incentive to invest in further innovation, while at the same time promoting public access to new inventions. In some cases, patents enable ICT innovators to obtain compensation for their contribution to advances in their field of technology. They also generate revenue to support what can be extremely costly R&D efforts. Patents provide incentives to individuals by offering them recognition for their creativity and material reward for their marketable inventions. These incentives encourage innovation, which assures that the quality of human life is continuously enhanced. 5. Are there other issues than those in this paper you feel the Commission should address in relation to the patent system? Yes. The adjustments we describe above reduced cost for patent applications and a single patent litigation system will improve access to the patent system, especially for SMEs. There are other structural improvements that would enhance access as well. For example: reduced EPO and national office fees could be considered for small entities. This would give direct, practical assistance and encouragement to SMEs to use the patent system. the cost of opposition in the EPO context could likewise be reduced for small entities. Delaying the translation costs for small entities when registering their patents. While the Community Patent Regulation is likely not the appropriate vehicle for initiatives of this sort, we encourage the Commission to bear them in mind when considering the future of Europe s patent system. Stakeholder Information With offices in Brussels, London, and Munich, BSA is active across the European Union and in more than 70 countries around the world. A list of our members is included on the first page of this response. BSA members are among the largest owners of patents, holding more than 30,000 patents and filing more than 10,000 patent applications each year. They are heavily engaged in patent licensing on a global basis, to a broad range of licensees and via a variety of mechanisms, including patent pools, cross-licensing arrangements and in standards bodies. At the same time, BSA members license in a significant number of technologies. BSA member companies are also among the principal targets of patent lawsuits; at any given time, there are over 200 suits pending against BSA members. BSA once again thanks the Commission for the opportunity to provide input. With the adjustments described above, we can ensure that Europe s patent system continues to promote technology innovation and economic growth. For questions or comments on this submission, please contact Francisco Mingorance, , franciscom@bsa.org. 6