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Thursday, 11 November 2010

Spanish fly in the ointment spoils EU patent dreams

Via a number of sources, including the IPKat's friend Stephanie Bodoni (Bloomberg) comes news that the European Union has [predictably, say some people] failed to find a compromise on a system to make it easier to obtain region-wide patent protection [click here for recent background information], to the great disappointment of  internal-market commissioner Michel Barnier.

Some folk say that the non-existence of an appropriate protection that's also acceptable in terms of costs puts Europe's businesses at a great disadvantage against the US, Japan and China -- but the Kat, without expressing a formal opinion at this point, would like to know precisely why this is so, since the European, US, Japanese and Chinese patent systems are level playing fields that operate the same way for patent applicants (and opponents) of all nationalities. At present the 27 EU nations currently share 23 official languages; numerous proposals and compromises have either failed to satisfy political demands or have risked increasing translation costs for businesses.  Spain is said to be the main culprit but this Kat feels sure that, if Spain had not gone to great lengths to fight for a more elastic language regime, one or two other countries would not have had the luxury of hiding behind their Iberian brethren and would have had to attract the opprobrium themselves.

Fly in the ointment here
Spanish fly here


TJ said...

If the cost of transacting business in a foreign country is higher than in your own, then it must be to your advantage to be able to afford to secure a local monopoly, and not just foreign ones.

Jeremy said...

@TJ: so if the cost of transacting business in Switzerland is higher than that of the applicant's own country (say, Serbia), it must be to the applicant's advantage to secure a Serbian monopoly and not just foreign ones?

There are a lot of unexpressed assumptions in your statement, I think.

Anonymous said...

It's only a matter of time.

Anonymous said...

1) I wonder whether the other 26 countries could activate Art. 142 EPC to create a unitary patent for themselves - disregarding spain.
2) Why not use the OHIM model with its language regime and the judicial way up the ECJ mutatis mutandis?

Anonymous said...

2) Because the OHIM model would mean fitting up the EPO to examine patents in two extra languages. Since the EPO can hardly cope with its backlog now, imagine the result. In any case, Poland would object to a pentalingual regime at least as much as Spain and Italy object to a trilingual regime now.

Anonymous said...

The ECHR forbids language discrimination.

Same for the Charter of Fundamental Rights.

The Lisbon treaty article on which this reduction of languages for the EU patent is based is probably breaking those.

TJ said...

@Jeremy: the question raised in your post was EP vs US, Japan and China. A European patent is likely to be more valuable to a European company than a European patent is to an equivalent US company.

Lots of unstated assumptions as you say, but then I don't have all day.

Ian Harvey, Chairman Intellectual Property Institute said...

Dear Jeremy

“…. the non-existence of an appropriate protection that's also acceptable in terms of costs puts Europe's businesses at a great disadvantage against the US, Japan and China …..the Kat, without expressing a formal opinion at this point, would like to know precisely why this is so, since the European, US, Japanese and Chinese patent systems are level playing fields that operate the same way for patent applicants (and opponents) of all nationalities”. As you asked…..

Individual inventors, small and medium companies often do not have the understanding, the skills or the resources to undertake complex international filing programmes. Those in the US, Japan, China have large “domestic” markets protected by a single filing. As companies develop based on this specific but large market they typically become more sophisticated as they grow and have the resources and skills to protect in, and enter, foreign markets. You can see this frequently in the US where smaller firms often patent only in the US (and sometimes can only patent in the US because of prior disclosure and their grace period). Yet these companies can address a large market on which to build their initial business.

The fragmented patent system in Europe is more complicated and much more expensive. Much as we would like our SMEs to be sophisticated IP players, the reality is that most are not. Yet economic history shows that it is the small companies that generates much of economic growth.

The larger companies are well able to take care of themselves on that otherwise level playing field.

Also relevant is the recent excellent book “The Most Powerful Idea in the World – A story of steam, Industry and Invention” - . In it, the author William Rosen argues persuasively that it is the patent system that was at the heart of the Industrial Revolution taking place when it did. He also argues (Chapter 11) that it was the large size of the UK market covered by a single enforceable patent that created the right environment for the Industrial Revolution to take place where it did – in the UK.

Best regards


Ian Harvey
Intellectual Property Institute

Jeremy said...

I'm still not convinced that size of the domestic market is a seriously important factor. Of the 15 leading patent-filing nations, six -- Australia, Finland, Sweden, Switzerland, the Netherlands and Israel -- do not have "a large market on which to build their initial business". In the case of another two -- China and Korea -- I would take some persuasion that it was the domestic market rather than the impetus of foreign trade -- that has provided the encouragement to innovate.

William Rosen was entirely right in his analysis. However, this is an analysis of a distant past which has scarcely any more relevance to our age than does that of the ancient Egyptians or Chaldaeans. We've now had railways to shift manufactured goods for the best part of 200 years, and the wealth/innovation equations of the information age are not bound by the past.

Anonymous said...

I am aware of at least one large UK company that adopted a "file in US only" strategy because the set-up costs of manufacture of its product were such that, if you couldn't sell in the US, then you would never cover your outlay from sales in the rest of the world. That was some years ago, well before the Chinese market opened up.

MaxDrei said...

To Ian Harvey: Have you read Matt Ridley's The Rational Optimist? He thinks there is something more important for innovation than patents, namely, exchange of ideas. Looking at the USA, Japan and China, we see big economies linked by a common single language. This assists exchange and nurtures innovation.

In its own interests, Europe should be doing all it can to foster exchange of ideas across Europe, like doctors and natural philosophers used to do, in Latin.

Perhaps not Latin these days. I wonder, though, is there another language Europe should be nurturing?

MaxDrei said...

Another thought: there was a time when everybody had their own units of measurement. Britain had its empire and its imperial units, and Spain had its empire.

But then the EPO, in the interests of exchange of ideas and innovation, forced every applicant to adopt metric units, so its Examiners could quickly move between different documents emanating from different countries.

The other day I had to reply to an EPO exam report on a case written in the USA. All the Examples set out the volumes of liquids in "quarts". In the nick of time I remembered that I was dealing here with US gallons and not imperial gallons. If it is a good idea to standardise on metric units, might it bring benefits to European innovation to standardise on one language for patent publications?

Ian Harvey said...

Jeremy - the technologies may have changed but the need to invest to bring inventions to market has not. Watt and Westinghouse (see "Empires of Light" - another good book) may be history, but Dyson is not.

Remember that the EU's free trade rules mean that otherwise infringing products may freely enter your ("patent-protected") domestic market if that is the only country in which you patented. Australia and Israel do not have that problem. Finland, Sweden, Korea are dominated by a small number of large firms. China shows that their domestic market is the dominant effect, because fewer than 10% of domestic invention patents proceed to Triadic patents and there is intense domestic competition with 98% of patent litigation being between Chinese firms.

MaxDrei - the exchange of ideas is certainly important and Open Innovation is one current name for that. Read Marshall Phelps' "Burning the Ships" which describes well how patents (on software in this case) created the legal framework for previously impossible collaborations between proprietary and open source software developers.

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