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Patently Obvious

During the last few decades Europe has been losing its competitive advantage vis-à-vis new and emerging global competitors. As a consequence, one of the most sensitive and long-lasting debates within the European political arena has been how to enhance the economic growth potential of innovation. The backdrop to this debate of course is the failure in achieving the innovation and smart growth objectives as identified by the European Union in the Lisbon agenda and, later on, reaffirmed in 2010 by the flagship initiatives of the Europe 2020 strategy.

Whether our governments and the European Union have proposed sufficient measures and policies which could have helped SMEs to further develop and maintain their market shares, is still an open question. It is however incontestable that more actions could have been undertaken to lift administrative and economic burdens from European SMEs, the end-users of the incubation industry.

Following the ongoing 40-year debate, on 11 December, 2012, the European Parliament adopted the so-called "EU unitary patent package" that included a regulation creating a European patent with unitary effects in 25 European Member States (the Patent did not include Italy and Spain). The regulation defined a new language regime and applicable translation arrangements for patents and an international agreement to set up the "Unified Patent Court".

This package was designed to fill the innovation gap and the lack of competitiveness for European applicants, in comparison with their counterparts in the U.S. or Japan, by lowering the huge costs of granting a patent in the EU. It is to come into effect from 1 January, 2014 and remedy a system that renders the US patent market three times more attractive than the European one.

But what will really change? Today the inventor who wants to protect his invention under a European patent, has to submit his patent application at the European Patent Office (EPO) in Munich (or at one of its branches) in one of the official languages of the EPO (French, English or German), providing a full translation of the patent application in case it has been filed in any other language.

The peculiarity of the current European patent lies in the fact that it is not a directly enforceable single patent. On the contrary, it appears to be a bundle of national patents, valid only in the countries where the patentee has decided to look for legal protection. Indeed, following the granting of the patent by the EPO, the inventor must validate the patent in the country/ies where he (or she) seeks patent protection, by translating it and paying national renewal fees in every country where protection is sought. As estimated by the European Commission, the current cost of a European patent in all 27 Member States can cost roughly €36,000, of which almost €23,000 are considered to be translation costs alone for the patent validation. While In the U.S. patent system however, an average American patent can cost around €2,000.

The new European Unitary Patent is expected to drop the cumulated patent costs by reducing them to a manageable total, that ranges from €4,725 to €6,425 - this includes a dramatic reduction in translation costs of anything between €680 and €2,380. The granting of a European Unitary Patent will also ensure that an automatic translation system will substitute human translation.

While waiting for this system to be fully operational (and in case translation of a pending patent is required) a reimbursement system has been provided for SMEs, natural persons, non-profit organisations, universities and public research organizations who are resident in, or operate a business, in a EU Member State and who do not have English, German or French as an official language.

It is fundamental to highlight that the new European unitary patent will enter into force as an additional option for applicants, besides the existing systems.

Is this the only advantage for SMEs and inventors? No. Another direct positive outcome will be a broader protection for patent owners. Currently an entrepreneur or inventor looking for investment/funding will tend to seek patent protection in the country where he or she is likely to market or produce the product - and this runs the risk of an incomplete patent granting.

Moreover the Unified Patent Court (UPC) will finally provide a specialised court with exclusive jurisdiction with regard to European patents with unitary effect infringements and litigation. The agreement on a unified patent Court will have to be ratified by at least 13 Member States and will comprise a Court of First Instance, a Court of Appeal and Registry. It will comprise a central division in Paris and two specialized divisions in London and Munich dealing with pharmaceutical and biotechnology cases and automotive and court administrative cases. The Court of Appeal is to be established in Luxembourg.

The UPC will bring to legal certainty and will stop the current forum shopping by businesses who exploit the differences among national systems by deciding where to seek legal redress, and file suits depending on the courts' interpretation, level of damages awarded and legal proceedings' length.

SMEs will certainly profit from the new system and even individuals will be able to sustain the costs of regionally protecting their innovative ideas. Practitioners in the field of incubation, acceleration and entrepreneurship should closely follow the evolution of the Unitary Patent legal framework and advise clients to patent their products wisely, and from the very beginning.

We all watch and wait...
Published on 27-02-2013 12:45 by David Tee. 614 page views

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