European Affairs

Winter 2003

 

Opinion
A New Court Would Help Resolve the European Patents Mess
By Stefan Luginbuehl

 

Despite substantial progress in harmonizing application processes for patent protection and patent laws throughout Europe, there are still widespread differences among European states in applying the law in litigation.

These differences have made securing and enforcing patent protection in Europe an expensive and burdensome undertaking. Many believe this has discouraged the robust development of high technology industries found in such countries as the United States and Japan, where patent litigation is more streamlined.

There have recently, however, been promising steps toward establishing a unitary patent litigation system in the form of the European Patent Litigation Agreement (EPLA), which could bring much needed efficiency and legal certainty to European patent litigation. Indeed, the EPLA may usher in a new era of patent protection in Europe, provided the European Commission does not continue to stand in its way.

Most applications for patent protection in Europe are handled by the European Patent Office (EPO), established by the European Patent Convention (EPC), which has the authority to issue European Patents for EPC contracting states.

The European Patent, however, is neither a national patent nor a unitary patent for the territories of the EPC contracting states. Instead, a European Patent is a bundle of patents with the effect of a national patent granted by each designated state and subject to the same conditions.

As a consequence, a contracting state may require a translation if the European patent is not granted in one its official languages, an option exercised by most states. This has been a burdensome aspect of the EPC and has contributed to the high cost of achieving patent protection in Europe. Translation requirements will, however, be eased in several states in the near future.

While the EPO evaluates patent applications under a fairly harmonized patent law, the enforcement of the European patent is not so well unified, as the national courts of the contracting states construe substantive legal provisions differently.

In the absence of a common European patent court, judicial decisions on identical patents may differ from state to state. A patent revoked by a court in one state may be declared valid in another. This situation not only leads to legal uncertainty, but is also unsatisfactory in view of the growing internationalization of patent law and patent litigation, which is why many experts believe that it is essential to create a specialized European Patent Court.

It was originally planned that a proposed Community Patent Convention (CPC) would complement the EPC, providing a unitary patent for the whole European Community and a common court of appeal. Following lengthy negotiations, however, the CPC has not entered into force, and probably will not do so.

Realizing that the present system obstructs the creation of a single market, the European Commission developed a proposal for a unitary EU patent that would establish a centralized Community Patent Court, consisting of a court of first instance and an appeals court.

Despite great efforts to reach agreement, the EU member states could not meet the self- imposed deadline for creating a Community patent by the end of 2001 as a result of major political problems. These included the language regime, the role of national patent offices and the proposed jurisdictional arrangements.

The European Patent Organization, however, took its own initiative.1 At the invitation of the French government, an intergovernmental conference of the EPC contracting states was held in Paris in June 1999. The conference asked a Working Party on Litigation (WPL) to "present a draft text for an optional protocol to the EPC which . . . would commit its signatory states to an integrated judicial system, including uniform rules of procedure and a common court of appeal."

The WPL delivered a paper to a second intergovernmental conference, held in London in October 2000, proposing the establishment not only of a common European court of appeal for patents but also of a common court of first instance.

The working party took the view that with both a trial level and an appeals component, patents could be enforced and contested in all contracting states through reliable, affordable and efficient proceedings resulting in quick, high-quality decisions. So-called forum shopping and its related ills, characteristic of current patent litigation in Europe, would be a thing of the past.

The London intergovernmental conference agreed to create a sub-group of the WPL, comprising all the states potentially interested in signing a litigation protocol, the task of which was to produce a draft optional agreement and submit it to the WPL for consideration.

The challenge was to devise a system that would maintain local presence, in particular for small and medium-sized businesses, and respect different legal traditions. The sub-group successfully met this challenge and submitted its final draft European Patent Litigation Agreement (EPLA) to the WPL in December 2002.

The draft EPLA calls for the creation of a new international organization, independent from the EPO, and makes clear that this new European patent judiciary will include a court of first instance and a court of appeal. The court of first instance would be comprised of a central division at the seat of the European Patent Court and several regional divisions in the contracting states.

To avoid discrimination, each contracting state would be entitled to request a regional division, if it were willing to pay for it. It would also be possible for smaller contracting states to form one regional division, or for a state to designate the central division or a regional division of another state as its responsible division.

It would also be possible to request the creation of up to three further divisions in each State, provided that each regional division dealt with more than 100 cases a year for three successive years. The seat of the European Patent Court is yet to be determined, although it has been agreed that the Court of Appeal will be centralized.

The European Patent Court would have exclusive jurisdiction over legal actions concerning actual or threatened infringements of European patents, as well as over actions and counterclaims for the revocation of European patents and for damages or compensation, provided the defendant were domiciled in a contracting state. The validity of European patents and their infringement would therefore be litigated in the same proceedings, and infringement decisions would be enforced by national authorities.

To avoid contradictions, and to create one common court for the contracting states, it is proposed that any decision to revoke a European patent would apply universally in all contracting states. The European patent would thus become a unitary patent for the contracting states.

The European Patent Court would have the authority to order provisional and protective measures. It could also order measures under the TRIPS Agreement on intellectual property in the World Trade Organization (such as forfeiture, indemnification of a party and right to information), as well as a host of measures borrowing from the legal traditions of contracting states. Examples include a French-style order for the inspection of property, Anglo-Saxon freezing orders and the Benelux practice of imposing fines for noncompliance with orders.

The European Patent Court is designed to apply generally accepted maxims of procedural law, such as public proceedings, the right to be heard, the principle of party decision and the principle of free evaluation of evidence. There are, however, a few procedural characteristics worth noting. The losing party, for instance, would have to bear the cost of litigation.

The holder of an exclusive license for a European patent could also initiate litigation in the same way as the proprietor of the patent, unless the licensing agreement provided otherwise. The Court of Appeal could only review verdicts if the facts alleged by the parties were not correctly established, or the law had not been properly applied. Only in exceptional cases could the Court of Appeal consider new facts or evidence.

The European Patent Court would include both legally and technically qualified judges. Nationals of an EPC contracting state with a good command of at least one EPO official language (English, French or German) could be appointed as judges, provided they had sufficient experience in patent law. They would also have to be, or have been, a judge in one of the EPC contracting states or a member of the EPO Boards of Appeal, or have held a position of equivalent experience, such as university professor or lawyer.

As the sub-group decided only to set minimum standards necessary to ensure a real harmonization in the interpretation of the law, the exact number of judges in each regional division might vary. All regional divisions, however, would be required to have an odd number of judges, with at least one of them technically qualified. The legally qualified judges would have to be from at least two different countries, so as to help provide a uniform interpretation of the law and claims throughout the court's jurisdiction.

As the European Patent Court would use the three EPO languages, the selection of judges for regional divisions would take language skills into account. If the parties and the court agreed, however, the European Patent Court could allow the use of a non-official language during all or part of the proceedings.

With progress on the Community Patent Regulation stalled, it is uncertain what further action will be taken in the EU institutions - given that the adoption of such a regulation would require a unanimous decision by the EU member states. Even if agreement on the regulation were to be reached soon, however, it would be at least five to ten years before the first Community patent could be granted and even longer before a Community Patent Court could be established.

It seems reasonable, therefore, that EPC states willing to take a first step should be able to do so with the EPLA. Those states unwilling to participate would not be required to do so and would have a chance to see how the EPLA system worked in practice.

Unfortunately, the European Commission has stated that, "following the adoption of the Council regulation on jurisdiction and recognition and enforcement in civil and commercial matters — the EU member states no longer have the power to conclude an agreement like the one on patent litigation." This leads to the paradoxical situation that the European Union's own rules are blocking the further development of the internal European market.

The Commission's position greatly hindered adoption of the EPLA at the last WPL meeting. It was, therefore, decided to hold one more meeting of the sub-group in early summer and a final meeting of the WPL at the end of 2003, at which time the fate of the EPLA will be decided. The documents establishing a European Patent Court will be ready for signature at that time.

If at that point the European Commission has not changed its position on the right of EU member states to sign such an agreement, the net result could be a lose-lose situation. With neither a European Patent Court nor a regulation establishing a Community Patent Court, there would be no end in sight for the current unsatisfactory situation in Europe.

Stefan Luginbuehl is Legal Advisor at the Swiss Federal Institute of Intellectual Property in Bern; and Deputy Head of the Swiss Delegation to the Working Party on Litigation of the European Patent Organization. For additional information on the European patents court see www.iipi.org/newsroom/speeches.htm .