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Monday, 2 June 2014

Surprising growth of support for Europe's Unitary Patent Court, but ...

"But WHY?"
It's not quite a case of turkeys voting for Christmas, or even of sane and ostensibly unbribed humans voting to play the 2022 World Cup in Qatar, but here's a survey the results of which leave this Kat quite surprised. The figures come from a press release from the highly respectable magic circle law firm Allen & Overy but this press release does not indicate the methodology by which the results were compiled, the nature of the companies surveyed [it would be great to know what proportion consisted of, for example, SMEs, pharma companies, FRAND licensors or patent trolls other entities which make specific demands on the patent system] or the size of the sample surveyed. The text, in relevant part, reads as follows:
"Research reveals growing business support for UPC – crown jewel patents opted in; move to Europe for major patent disputes

LONDON – Research published by Allen & Overy today demonstrates surprising support for Europe’s hotly debated Unified Patent Court, with almost three-quarters (74%) of those responsible for overseeing preparations for the new system expecting it to be positive for their company – and only 15% expect it to have negative consequences for them.

While on the big question of whether to opt in or opt out of the new system during its seven-year transition period, the majority of respondents are undecided on the bulk of their portfolio (68% on average), close to half (49%) of those surveyed said they would definitely opt in at least some of their patents, while only 15% say they would definitely opt out some.

Crucially, where businesses have made a decision to opt in, about 24% of their portfolio on average, they are deciding to opt in their most valuable, or crown jewel, patents. This suggests that, where it matters most for business, they will opt in.

As one Dutch head of IP strategy commented: “The economics of a single enforcement action outweighs the risk of Europe-wide invalidation.” [Merpel assumes that this is an inference drawn from the figures above and not a proposition based on probabilities or game theory. It's a grand starting point for a discussion, though]

As this statement and the research suggest, despite the faltering reception the new system has received from companies across the globe, its impact is likely to be significant [this cannot be denied, but the word "significant" has a Delphic quality to it]. The UPC will offer patentees the ability to obtain broader remedies than those currently on offer in the U.S., with a larger customer base impacted and injunctions that are easier, cheaper and quicker to obtain. Costs are estimated to be at least five times lower than in the U.S [it would be good to know more about this statement too: does this estimate refer to defended or undefended actions, or both -- and does it take account of proceedings via the International Trade Commission?].

These advantages alone mean there is likely to be a shift towards Europe’s UPC as a forum of choice to rival the U.S. for major patent disputes. This is further supported by the majority of respondents indicating they will file unitary patents, as opposed to classic European or national patents, under the new system.

Despite its potential impact on business, the report also highlights an alarming lack of engagement among senior management on the UPC. Only 13% of those responsible for preparations for the new regime say their senior management are ‘fully engaged’ on the issue and appreciate the potential implications [could this be why so many of them are so positive towards it, wonders Merpel]. One consequence of which could see businesses lose exclusivity for their products, or worse still, have their business or products locked out of the entire continent. ... 
While the decision on what to do with a companies’ most valuable patents seems clear, what to do with a business’s less valuable patents is anything but. The 68%, on average, of their portfolio that business are still undecided on is largely made up of their secondary patents. Lack of clarity on costs is cited as the main barrier to being able to make decisions according to two-thirds (67%) of respondents. Only when this is clarified will businesses be able to undertake a proper cost-benefit analysis on their less valuable patents and whether it is more economically beneficial to opt them in or out. ... ”
This Kat, while uncertain as to its methodology, is fascinated by the outcome of this survey since it gives some small indication of how the various patent communities are reacting to the emerging reality of a new order. He hopes that other surveys will be commissioned that will add to it, in order to produce a more rounded impression, and that they will be repeated over time in order to monitor growth or shrinkage in confidence in the new system.  Above all, though, he hopes that more background information will accompany them: would a law practice based in, say, Greece or Portugal, or one of the Scandinavian or Baltic states, be able to replicate these percentages in a survey of its own?

UPDATE: in response to the questions raised in this blog post, Rebecca Hooper (Allen & Overy) has helpfully provided some further information, posted in today's Monday Miscellany round-up here.

5 comments:

Anonymous said...

According to the main report that A&O has published, this is the methodology:

"This survey consists of 152 interviews completed with individuals who have responsibility for, or
oversight of, their company’s European patent portfolio and decisions regarding the Unified Patent Court.
Interviews were completed by YouGov online and by telephone between 1 April 2014 and 16 May 2014.
Respondents are all drawn from the European headquarters of large and medium-sized, patent-owning
enterprises (predominantly in the UK, Germany, France and the Netherlands), of which 81%
have their global headquarters in Europe, while 19% are headquartered outside Europe. 88%
of respondents are drawn from the life sciences/pharmaceutical, telecoms, media and technology,
and industrial/manufacturing sectors."

So it looks like SMEs were not really included here.

Anonymous said...

I know that this report has probably been written for a wider than usual audience in mind but that's no excuse for not presenting the system correctly.

The summary (and full report) suggest that Applicants and patent owners will need to make a positive choice to opt-in or opt-out. However, this misrepresents the actual situation where traditional EP cases will, by default, be opted-in. The question really should be: will you leave your portfolio in the system or opt-out?

Also, applicants will not "file unitary patents", they will select a unitary validation once they've secured the grant of their EP patent application.

How can we hope that senior management will become "fully engaged" if we don't present the situation accurately?

Anonymous said...

"their company’s European patent portfolio"

Most companies do not have patents.

Anonymous said...

A&O's report is based on YouGov data. It's good to see data based on users' views. We have heard so much speculation and complaining about the UP and UPC- now we get a glimpse of what the patent owners think.

Anonymous said...

Most of those who have to respect patents do not own patents. This is a viewpoint that was deliberately and shamefully left out of what was presented as a "debate" in Denmark before a referendum could have overturned the unqualified majority decision in the Danish parliament to ratify the UPC/unitary patent. The confederation of Danish industries in accord with the Danish government painted an image of missing an opportunity if Denmark did not ratify now. It was at first presented as if non-members of UPC could not at all use it, but later it was said that Denmark should not sponge on a good arrangement.

A huge press campaign was instituted at the cost of several years of fee savings for the total patent-holding industry (less than 1% of the Danish industry), and all warnings that there will actually be a 10-fold annual increase in valid patent rights in Denmark were pooh-poohed. From the official statistics it can be foreseen that in certain technical fields we shall have 25 times as many patents per year, fields in which SMEs (and micro-Es) could have experimented locally. The official material did not present any of this, and in parliament the specialist consultants stated "there will be no influence on the population at large". Out of the many firms of patent attorneys, only two presented an honest picture, the rest welcomed the possibility "to influence the UPC" (sic!). The Danish Patent Office has been completely stumm in the whole debate, although they sit on the data that could be used to enlighten the debate.

The greatest worry was voiced by the software industry who feared that more fields within CII would become patentable. That was firmly opposed by the adherents who stated that it is the EPO that controls the fields. However, just a few days after the referendum, in which hapless citizens did not dare vote "no" to such a good opportunity, newspaper reports brought the news that in the ongoing negotations on the Transatlantic Trade and Investment Partnership TTIP the US was requesting that more fields should become patentable!

The essence is that each country's non-patent-holding SMEs have to weigh the annual number of current validations in their field against the annual number of accepted European patent applications in that very field. They will thus be able to assess the increased risk of infringing the patents of others. I have not seen any evaluations of this kind in the few blogs that I follow regularly.

Just a small national report,

George Brock-Nannestad

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