Patent Express Lanes Coming To Europe, But Tolls Remain A Question

Europe is on the brink of creating a unified patent court and unitary patent, which will cut litigation and application costs, while giving a boost to legal predictability.

The establishment of a unitary patent system in the European Union now seems assured after approval by the European Parliament, but several implementation questions remain, including when the new system will start.

“The EU institutions want this to be operational by 2014, but I think this is quite optimistic,” says David Sant, senior associate in the law firm Taylor Wessing’s Intellectual Property Group and former head of the European Patent Office’s Brussels office.

It has taken more than 30 years of determined hard work to stitch together this patchwork, but the unified EU patent system will now become a reality. The unitary system should slash application and litigation costs for pharmaceutical manufacturers while also making legal outcomes more predictable. Creation of a unitary patent means a company will only have to file a single patent application to qualify for protection across the European Union, making the system faster.

The only thing that has not yet been satisfactorily sorted out is the financing of the system. “This means how much the fees will initially be, because in the end the court should be self-financing – and so should the unitary patent,” Sant said.

If the fees are too high, the unitary patent will not be attractive when compared with the present system, which will continue to operate in parallel. If they are too low, then the European Patent Office will not be able to finance its handling of the unitary patent.

Also, the new system is unlikely to quickly eliminate what is known as forum shopping. This is where a company looks for a country in which the patent court will offer the most favorable judgment. It only works at present because there is a lack of harmonization across the EU in judging patent cases. It may take a number of years after the establishment of the unified patent court for the harmonization effect to filter down to the court in individual member countries.

A Gold Standard?

Until now it was possible to obtain a European patent from European Patent Office – but this was in fact a bundle of country patents and the enforcement was left to national courts. In the future, patent applicants will have three methods of protection to choose from: the new unitary patents; "classical" EPC patents (a bundle of country patents); and national patents. The unitary patent, though, is widely expected to become the protection of choice for drug manufacturers.

Today the application has to be validated and accepted in each of the bloc’s 27 member countries where protection is sought. The new legislation will mean applications will only be accepted in German, English and French – as opposed to the current situation in which all EU languages may be used. This will significantly reduce translation costs.

The European Federation of Pharmaceutical Industries and Associations said that the pharmaceutical sector enquiry, undertaken by the European Commission and concluded in July 2009, demonstrated the patchwork of patent enforcement in the EU (Also see "Quelle Surprise! EU Investigators Raid Pharma Firms" - Pink Sheet, 16 Jan, 2008.).

“This is now being fixed. It is also a relief for producers of generic medicines that will benefit from improved predictability,” said EFPIA Director General Richard Bergström.

EFPIA says benefits of the unitary patent go beyond cost savings to industry because patients will benefit faster from ongoing research. “It will make the protection of patents more predictable, easier and at a lower cost. Particularly for smaller companies, the costs for filing and protecting patents are a significant part of the investment,” Bergström noted.

Removing Obstacles: Spain And Italy

The new patent system has been promoted as a package of legislation consisting of two regulations and Unified Patent Court Agreement. Europe’s Council of Ministers agreed on the program Dec. 10, and the legislation was approved by the European Parliament on Dec. 11. Governments will sign the agreement on the Unified Patent Court at an intergovernmental conference, which is planned for Feb. 18, after which it must be ratified by at least 13 of the signatory Member States.

The first regulation creates the unitary patent and the second provides for its language translation regime. The latter is a vital component because Italy and Spain refused to let the system go ahead unless their own languages were included as official languages for European patent applications (Also see "Unified European Patent A Step Closer, But Unified Court Has A Ways Ro Go" - Pink Sheet, 17 Dec, 2010.).

This obliged the Council of Ministers to press ahead with developing the unitary patent system using the “enhanced cooperation procedure”. That allows the EU to create legislation that is aimed at integration, provided it is supported by at least nine EU member states and it is meant as “a last resort”.

Italy and Spain took their case to the Court of Justice of the European Union (CJEU), complaining that the Council’s decision to initiate the enhanced cooperation procedure was invalid. The Court’s Advocate General has, however, shot them down on all counts. The AG noted that this was indeed a “last resort” scenario, because, after years of fruitless discussions, the Council was unable to secure a unanimous vote from the member states.

The Advocate General’s stated opinion is only advisory and carries no legal power. However, should the Court accept the advice – and it does in the vast majority of cases – the Spanish and Italian objections will be nullified.

The Court in March 2011 rejected the proposed Unified Patent Court, its main concern being that the CJEU was not definitively the superior court that would handle final appeals (Also see "European Patent Court Proposals Rejected, Threatening Viability Of Unified European Patent" - Pink Sheet, 9 Mar, 2011.).

The Council and its working group made amendments to the proposed legislation and appear confident that the Court will be satisfied their efforts. They have confirmed that referrals will go to the Court, but have also trimmed down the subjects of what can actually be referred to the Court. Among important legislation for the pharmaceutical industry that remains referable are the Enforcement Directive on Intellectual Property Rights and the Directive on the Legal Protection of Biotechnological Inventions.

The Unified Patent Court’s Central Division of the Court of First Instance and the Office of the President will be based in Paris, France, a specialist division for mechanical engineering will be sited in Munich, Germany and the chemistry and pharmaceutical division will go to London, U.K. (Also see "EU Council Breathes Life Into Unified Patent Court; Unitary Patent Now A Real Prospect" - Pink Sheet, 3 Jul, 2012.).