Unified Patent Court "unfit for SMEs", say Parliamentarians

Being suspicious of anything that comes from Europe is an English Parliamentary  tradition of long standing ...
The IPKat has long expressed his concern about both the substance of the proposals for the European Union's Unified Patent Court and for the manner in which the European Commission set about flattening all opposition -- particularly from experts in the shape of judges and practitioners -- who knew enough to explain to the Commission why it was that, even if the idea of such a court is good in theory (which most of us are happy to concede that it is), it has got to work in practice too if it's going to bring about the desired benefits [for an idea of some of the IPKat's earlier roaring on this topic, check out this December 2011 list of earlier posts together with more recent posts here, here, here, herehere and here].

At this very minute, the embargo is being lifted on a remarkable and fascinating document, The Unified Patent Court: help or hindrance?, which incorporates the thinking of the British Parliament's House of Commons European Scrutiny Committee -- a cross-party body of elected Members of Parliament which examines European legislative proposals and advises Parliament as how to respond to them. The press release which accompanies it reads as follows:
The draft agreement on the Unified Patent Court (UPC) is likely to hinder, rather than help, the enforcement of patents within the European Union, says the European Scrutiny Committee in its report, published today.

The Committee has held the draft agreement on the UPC under scrutiny since September last year. There has been vehement opposition to the draft agreement from national and European patent professions.

The Committee is particularly concerned about the effect the agreement would have on small and medium sized businesses (SMEs) who are supposedly the main intended beneficiaries. The patent profession was overwhelmingly of the opinion that the current draft of the UPC Agreement would actually increase litigation costs for SMEs and be far more burdensome than the existing system in the UK.

The overall aim of the UPC was to allow SMEs in particular to be able to obtain a single patent covering 25 countries at an affordable cost. However, the Committee heard that very few SMEs actually require protection in all 25 States and so cost savings would not be as great as was expected, and that litigation before the UPC was likely to be convoluted, expensive and protracted.

The Committee says that it is vital that the UK Government adopts a strong position reflecting the concerns of practitioners in the final negotiations of the agreement, as well as calling for the Central Division of the UPC to be in London in order to mitigate the most damaging effects of a unitary EU-wide patent.

Chairman of the European Scrutiny Committee, Bill Cash, says
“Although the theory of a single EU-wide patent - with a single court to administer it - has long been thought desirable, the practice has long been elusive. These latest proposals appear, regrettably, to be a further example of this. They would increase costs for SMEs and hinder the enforcement of patents within the EU, particularly by giving additional jurisdiction to the Court of Justice of the EU and not allowing the invalidity of a patent to be a defence to infringement proceedings. The negotiations have been rushed and effectively excluded the views of European patent professions.

“We found the responses of the Minister, Baroness Wilcox, oddly detached from the evidence we heard on these important points. This appears now to be a damage-limitation exercise but the UK Government must bring the practical concerns we heard to the table as negotiations conclude, and in particular ensure that the Central Division of the UPC sits in London.”
You can read the full report here.  It is 103 pages in length and consists of one of the most detailed and pertinent reviews of the unified patent court system that this blogger has yet seen. It's not just the Unified Patent Court proposals that don't emerge from this with much credit: the Minister, Baroness Wilcox, has fared poorly too.  It must be recorded with great sadness that, for whatever reason, her time as Minister responsible for intellectual property has been a torrid one.  It would be an act of kindness to the Minister, and indeed to all of us, if she were to be given another position of responsibility in which she had a better opportunity to deploy her many undoubted talents than to be left in a role in which she inspires no confidence and earns no admiration among so many members of the IP community.

This member of the IPKat team would like to make special mention of the efforts of his Kat-colleague, patent litigator Annsley Merelle Ward, whose detailed accounts of the various stages of the proposals and what passed for a debate on them have served as an effective briefing document for many of those whose submissions have helped persuade the Scrutiny Committee of its position.
Unified Patent Court "unfit for SMEs", say Parliamentarians Unified Patent Court "unfit for SMEs", say Parliamentarians Reviewed by Jeremy on Thursday, May 03, 2012 Rating: 5


  1. Let's finally ditch this sad attempt at creating a Unified European Patents Court and start again. Is it not said that a horrible end is preferable to unending horror?

  2. From the Press Release I'm not sure which is more important to the Cttee, that the single patent works, or that the Central Division be sited in London. I suspect the demand for the CD to be in London will extinguish any interest that politicians on the mainland might otherwise have had in this Report. What sort of service to UK SME's is that then?

  3. I have read through to page 42. I see that Germany has 150 patent judges and that the EPO has been a great success. I am aware that only 50% of patent applications at the EPO are filed by EU nationals, but now I read in the Report that 35% of patents issued by the EPO are in the German language. This is then 70% of what EU domestics file there. Unitary patents are to be litigated in whichever one of English, French and German they are written in. On the mainland, every patent practitioner is necessarily fluent in at least two languages, his or her first.....and English.

    After that, the cttee's assertions that the Central Division must be in London because that is where the patent litigation expertise lies and where British inventors are will, I think, be less than wholly convincing to those on the mainland and in Brussels, who might be more inclined to site the Central Division where it provides the best comparative advantage for EU inventors, patent owners and litigants over non-EU litigators.

  4. Trust a parliamentary committee to get it sooo wrong.

    Why oh why did they have to combine their objections? There are exceedingly valid general and fundamental objections against a system which, among other things, would allow injunctions to be granted before anyone had a look at whether the patent concerned was even valid; and there is the small minded, factional, chauvinistic objection against the central court being situated anwhere other than in London.

    Once the system has been brought down (with the support of many if the great majority IP experts from all over Europe) experts, the question of where the court should be situated would have solved itself. And having the court in London won't make a bad system any better.

    So, instead of being able to bask in the glow of having rescued Europe from a bad system, the European Scrutiny Committee now looks like a bunch of spotty teenagers who are upset because dsomeone might not let them have their favourite video game.

    Sad, really!

  5. I do not know how many patent applications are filed in German by the EPO,
    but I know the quote of applications filed - last year - by applicants with residence in Germany: 13,6 %.
    It is likely that with the growing number of patent applications filed by asian companies, considered that the latter are filed as PCT application and usually drafted in english, the quote of application presented to the epo drafted in german will decrease in the next years. The same is true for applications drated in french. So it is not understandable why the commission has refused an european solution (only english), which would have allowed Italy and Spain to join the schema, to privilege german and french companies.
    That the mentioned trilingual regime is laid down in the epc does not matter, since this agreement is not part of thr EU-legal order.

  6. The UK experience of having a Minister for IP has not been a happy one. It is not a politically important role, so it gets delegated to a junior minister. Baroness Wilcox is no worse than Lord Triesman or Baroness Williams - they all seem like round pegs in square holes.

    It seems to me there are two alternatives:

    1. Encourage the cabinet minister in the relevant department to take a more active interest in IP. An hour of quality time from Vince Cable may be worth a week of a junior minister's time, because (a) he is brighter and more talented than the junior ministers, and (b) he has much more political influence.
    2. Appoint someone really bright from outside the Government machine who is either experienced in IP or prepared to put the investment of time in to understand the subject.

  7. Not understandable? Really?

    Given that politics has nothing to do with logic but is, instead, the art of the possible, which politician in 27 nation Brussels is going to invest any capital in an "English only" solution?

    Of course, with a soupcon of logik, English only is perfectly fine. What is the language of the proceedings in Brussels? What do you suppose German patent attorneys and litigators tell all their many Asian clients, about their fluency in English?

  8. A London-based court would favour British companies. Last time I looked, the primary job of the UK parliament is to further Britain's interests. This is not chauvinism, it's what it means to be a nation state. I'm sure a French-based court would be perfectly competent, but it would not be in Britain's self interest. Any non-Brit will simply gloss over this part of the report, thinking "well, they would say that, wouldn't they". But only a very thin-skinned European federalist would dismiss the whole report because of this one, entirely-predictable element.

  9. 90% of all statistics are made up on the spot, and the other 10% are quoted out of context. The following does not differ much, but has some grounding in reality.

    The "35% German" number refers not to the number of patents issued by the EPO but to the "specifications filed at the E.P.O." [paragraph bridging pages 34 and 35 of the report]. It is not clear where that number originates, but it is vaguely plausible provided that the context is clarified further.

    35% overstates the relevance of the filings in German, since most European patent applications are not filed at the EPO but somewhere else via the PCT.

    Looking to applications filed having European effect the proportion in German is less than 20%, although, as many PCT applications do not enter the regional phase, the proportion granted in German is higher at 20-25%.

    Similarly, the proportion filed in French is below 5% with the proportion granted in French being above 5%.

    This leaves around 75% of granted patents being in English. The proportion is bound to increase if the rest of the world [China, India etcetera] increases the low proportion of their PCT applications currently validated in Europe. [Of course for some technologies they may just consider Europe a commercial backwater].

    A statistic that is, to me, very frightening is the number of German patent judges. This reflects German litigation volumes. This volume reflects the bifurcated German litigation system that amplifies conflict and minimises settlement. The key good point to the Scrutiny report is that it appreciates (but to some extent understates) how much pointless litigation and opposition is caused by the bifurcated system.

    Over 70% of oppositions are filed by German opponents because of the bifurcated system; a very high proportion of those are German opponents to German owned patents.

    In essence, bifurcation is good for the legal business, but not necessarily good for industry - even in Germany.

    FOOTNOTE - The EPO do not publish statistics on the nationality of opponents- it would be instructive if they did - my numbers come from looking at the European Patent Register with its somewhat clunky research tools.

  10. The location issue is simply relevant to the chosen country - i.e. the 'mitigation of economic damage' point. The wider issue of whether Europe and the world will benefit from the current plans is more important. This report highlights the significant dangers that all industries will face at the prospect of practically irrevocable unitary rights. For patent holders read: 20 year (at least) impregnable monopoly if the bifurcation system is extended to the whole of the EU. To counter this EPO opposition practice will explode, virtually every granted European patent application of any perceived threat/value will need to be opposed. Hence, the cost of obtaining patents will increase, the cost of litigating will increase and patent attorneys across the EU will laugh themselves all the way to the European Central Bank.

    Daft daft daft!

  11. There are some people in life (I know one or two personally) that need demonstrate their superiority and righteousness over others by putting down those who they see as competition. The European Union has 2 large member states who do that most of the time and will even put aside major national differences in order to join forces against a particular 3rd party.

    European federalism is not about a united Europe, but a Europe dominated by the views of Germany with France as its lap dog. Germany is powerful, but over-dominant (the death of Greece being a good example) and France is a power of historical importance but nothing more. England is more like an IBM (the company, not the missile) that is not what it once was but is still a powerful force.

    A European Union of independent nations that contribute positively rather than simply side with whoever they believe will 'win the battle' would be much more productive.

    The unitary patent is nothing but a complete farce. Good riddance to bad rubbish.

    "Of course, with a soupcon of logik, English only is perfectly fine"

    Exactly, it only requires the tiniest amount of logic to realise this.

  12. The German split jurisdiction system would appear logical if the examining process is a thorough one. As the EPC includes the provision for opposing patents which competitors consider to be unduly broad in scope, for the sake of argument any patents surviving should, at least initially be considered valid unless demonstrably shown otherwise. A court hearing an action for infringement of a patent should be entitled in such a system to proceed to consider only the case of infringement unless the defendant can provide sufficient convincing arguments to demonstrate that the patent is clearly invalid such that the infrignement action should be stayed.

    Of course, in the UK we expect, due to the less than thorough examination at the IPO, a granted patent to have a significant probability of invalidity so here a dual system would not work.

  13. Meldrew is right, that bifurcation causes unnecessary litigation. In the early years, the EPO Annual Reporet did publish the nationality of the Opponent, and indeed 70% of all opositions were filed by Germans, right from the get go and indeed exactly because of the bifurcated system of patent litigation at home in Germany. And indeed, as Meldrew observes, many of these oppositions are German on German because they are obliged under bifurcation, to get their retaliation in first, within a few months of issue.

    European Commission, is this really the future you are aiming for, hundreds and hundreds of patent judges, all over Europe? Good for patent lawyers. But good for European industry? I doubt it.

  14. "The German split jurisdiction system would appear logical if the examining process is a thorough one"

    I accept the UKIPO couldn't thoroughly examine a claim to 'a wheel', but that is not to agree with your general point. Such a split would only be logical if the patent application had been truly tested before grant. The simple fact is, the examination process is severely limited and rightly so. I appreciate that Germans believe their examination processes are beyond reproach, but then I think I am good enough play professional football at the highest level and can't understand why I wasn't given the position of player-manager for England for the European Championship.

    Opposition is a means available to those who wish to challenge a patent within a specific time period IF they are aware of it AND believe they may be infringing it, AND they have the resources to do do so AND believe it is in their interests to do so. It is NOT and SHOULD NOT be considered compulsory for businesses to make themselves aware in this way NOR should it be compulsory to oppose at the EPO.

  15. The recently-published IPO Corporate Plan suggests arguably misplaced enthusiasm for the unitary patent: quoting from Page 18

    "2011 saw significant progress in negotiations on the creation of a European Unitary Patent. ... We will continue to push hard for a Unitary Patent and Unified Patent Court that delivers real benefits for business, consumers and the economy."

    I just hope that they don't overlook the need for there to be "real benefits for business, consumers and the economy" while they are "push[ing] hard for a Unitary Patent and Unified Patent Court" and do take on board the comments and concerns of the end users.

  16. "It is NOT and SHOULD NOT be considered compulsory for businesses to make themselves aware in this way NOR should it be compulsory to oppose at the EPO."

    Agreed, and in a world that makes sense this would and should be the case. However, Article 105 EPC allows for intervention of an assumed infringer where an opposition is ongoing. Oppositions essentially hamstring the patentee and prevent enforcement until the proceedings (including appeal) are concluded. Hence, if there is an EU-wide bifurcated system then there is a lucrative trade to be had in filing pre-emptive oppositions. And if anyone says you can't 'sell' oppositions then they're wrong. There are ways and means of circumventing the rules, just ask Straw Man Limited.

    In-house IP departments need to be increasing their IP budgets significantly for the new European order. It is going to be an IP bloodbath!

  17. I have just received a request to complete a questionnaire on the subject organised by a variety of French institutions


    Q1. Months when the court should not sit, except in cases of urgency. Jun, July, Aug?

    Q2. Holidays when the court should not sit...
    Q3. Days of the week when the court should not sit...
    Q4. Time of the beginning of the hearings... (includes 2pm as a suggestion)

    Needless to say, I didn't get much further. Can't accuse the French of focussing on the important issues!


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