CIPA Annual Debate Report: European IP systems out of kilter for SMEs

Football, soccer ball,
pigs bladder...its all Greek
to the AmeriKat
By 7:30 this evening, a tumbleweed could have whistled past the AmeriKat's desk and she could not have been less surprised.  The flurry of e-mails and calls that had been dancing upon her desk came to a sudden stop when, she is lead to understand, "the football was on" - otherwise known as England's uninspiring 1-0 victory over Ukraine in Euro 2012.  But before then, the AmeriKat had predicted that the work flurry would hamper her planned evening of spectating another competitive sport - a legal debate in the form of this evening's Chartered Institute of Patent Attorneys (CIPA)'s Annual Debate.  So she turned to one of her favorite (and always reliable) IP barristers, Tom Mitcheson (3 New Square).  He kindly put on his Kat hat and reported on the event in her place.  Punctuated with some busybody comments from Merpel and the AmeriKat, Tom had this summary of this evening's event:  

Tom Mitcheson
"This evening, whilst elsewhere others were preparing to resolve their differences using a pig's bladder, in London the UCL Institute of Brand and Innovation Law was hosting the CIPA 2012 Intellectual Property Debate, chaired by the Rt Hon Professor Sir Robin Jacob, with the motion that
'This house believes that political pressure and a few loud business voices are making the IP systems in Europe less and less relevant to the needs of small enterprises.' 
The motion was proposed by Michael Wilcox, an inventor of a digital colour printing technology. He made national headlines in March when he burnt one of his patents in protest outside the Houses of Parliament, claiming that it had become worthless because it was too expensive to enforce.  Wilcox passionately explained that in his view the UK had become the free research laboratory of the world.  His view was that whilst SMEs provided 95% of the patents in the UK, the enforcement regime is biased in favour of big business -- the litigator with the deepest pocket wins. He compared the patent system unfavourably with copyright saying that copyright protection, unlike patent protection, is free and automatic, and there is the stronger disincentive in that it can be a crime to infringe. ["Ahh..", says the AmeriKat, "but patent infringement can be a crime and indeed is any many European countries like Austria, Denmark, Finland, France, Germany... just not the UK."] 
Vicki Salmon of CIPA seconded the motion by highlighting the potential damage to SMEs of the current proposals for the Unitary Patent.  Although obtaining a patent across a number of member states might be cheaper using a Unitary Patent, many SMEs are not interested in such wide geographical protection, and if SMEs cannot enforce their patents, they are worthless.  The Patents County Court works for SMEs; the Unified Court will not. She urged policiticans not to make the Unitary Patent irrelevant to SMEs. 
Sean Dennehey
Sean Dennehey, Deputy Chief Executive and Patents Directorat IPO, spoke amusingly against the motion.  Dennehey stated that political decisions are the product of democracy, and that the alternative is having decisions taken by unelected officials ["Like judges?", says Merpel].  He quoted figures suggesting that large businesses of more than 250 employees fund 96% of R&D in the UK while emphasising that maintaining the balance between big business and SMEs is important. ["How can you even go about trying to strike a balance with something that, on economics - and our IP system in the UK is an economic IP system -  is weighted so heavily in favor of big business?", asks the AmeriKat] 
James Nurton of Managing Intellectual Property seconded the oppostion. He explained that the IP system has become more accessible in Europe over recent years, with the single market allowing SMEs to obtain protection much more easily and cheaply than in the past. 
The debate was opened up to the floor and this provoked some lively contributions.  There was talk of the value of no-win, no-fee agreements, and the fact that in the US it is permissible for patent agents to take a stake in companies for whom they are acting.  The value of being able to apply a court decision obtained in one state in the US to the whole country was emphasised, as were the number of cases brought in the US by SMEs against big business. ["No mention of the costs of US patent litigation then?" asks Merpel] Criticisms were also made of the short termism of the UK legislative cycle, particularly with reference to copyright and registered designs legislation 
Vicki Salmon
Following a summing up by the protagonists, and in spite of a mischievous threat from Sean Dennehey that if the motion was carried, lawyers would be abolished and technical Judges appointed, the motion was carried by a reasonable majority.  ["A lesson for Dennehey, and us all, not to tease those whose vote you rely upon", suggests the AmeriKat].  Whether politicians will take notice of the messages summarised by tonight's event and the position of inventors like Mr. Wilcox and SMEs, is unclear.  ["What is clear", says the AmeriKat, "is that in the current financial climate, SMEs need their message and their needs to hit home with politicians, and not at a superficial level, before its too late."]"
The AmeriKat , like Ms. Salmon, has been following the unitary patent debate with some fervor.  In almost ever press statement and conference conducted in Brussels, you will see or hear a phrase explaining that the urgency to pass the current proposals is because of the need to assist SMEs and/or SME's require and are asking for the current patent package to be agreed.  Predictably, these types of statements are not supported by concrete or empirical evidence.  

The European IP system:
Elegantly balanced?
The AmeriKat is curious as to how aligned, or unaligned, the needs of SMEs are to the needs of bigger businesses and how singular and un-relatable their experience is as opposed to the rest of the business community in the IP field.  If the unitary patent saga is anything to go by, perhaps its not "big business" that is to blame for the "imbalance" in the system, but the politicians who fail to understand what any business, big or small, needs from the patent or IP system in general.  The cost and complexity of enforcement of patents under the proposed unitary patent system is not a problem that is only inflicted upon SMEs rather than big business - all will succumb to these inherent problems.  The only difference is that SMEs will feel the symptoms far worse.  If anything, from the AmeriKat's experience in relation to the unitary patent, the voices of big business are raising the concerns of SMEs with politicians but it is the politicians who are ignoring all voices - big and small.  

What do readers think?  Are politicians and big business to blame for imbalance, or is the IP legislative process the lone actor who should claim responsibility? Or, should we be more philosophical and say that, although one of the IP system's goals is to strike balance, there has never been a time that a true balance has ever been achieved amongst the various participants and it is unrealistic to think the system can do so now without impacting the IP ecosystem elsewhere?    
CIPA Annual Debate Report: European IP systems out of kilter for SMEs CIPA Annual Debate Report:  European IP systems out of kilter for SMEs Reviewed by Annsley Merelle Ward on Tuesday, June 19, 2012 Rating: 5


  1. I just find it remarkable that anyone can seriously argue against a unitary patent in the EU.

    In my view the SME argument is a red herring and used as cover by various vested interests including high billing magic circle law firms to promote their point of view.

    We have seen the harm that fragmented IP rights in the single market can do in the online music space where the impossibility of developing a music platform such as iTunes has been very well demonstrated.

    At the same time, despite transitional problems, the CTM and community design are reasonably successful and widely used by both large and small businesses.

    Nobody today could credibly argue against harmonised competition law despite increased compliance costs for business relative to purely national regimes.

    Is anyone in the USA seriously pining for the days before the CAFC and geographically distinct precedents?

    Talking about increased costs for SMEs is a simplistic argument. Particularly if the costs are not objectively quantified and the benefits are not considered.

    If as Michael Wilcox says, the costs of patent enforcement are too high even today then the issue of SME costs is not really related to the unitary patent at all but more generally to the patent system itself, the market for services and the level of competence of SMEs to use intellectual property rights effectively.

    We need to look at the benefits to an SME of receiving a right that covers almost the entire single market in relation to the alleged extra cost involved. It seems to me that if coverage is extended to a market of 400 million consumers and if costs rise by only some percent then there is a reasonable chance that the extra costs are justified on average.

    Finally in terms of the EU there must be a presumption in favour of the unitary patent. The creation of the single market has probably been one of the most significant benefits for European SMEs and has given them a geographically accessible market in which they have the platform to grow into global multinationals.

    Arguing against instruments that strengthen that market is counterproductive. On this occasion we need to trust the politicians and go for it.

  2. Nobody (almost) argues against the principle of a unitary patent. What they argue against is the one currently on offer. The value of a unitary right for the whole of Europe (again, almost) makes it correspondingly important to get the system right. SMEs are done no favours by a system that allows their business to be stopped dead by an injunction under an invalid patent.

  3. As a keynote speaker on the European Patent Office’s European Inventor Award ceremony on 14 June in Copenhagen, the Danish Minister for Business and Growth Ole Sohn said:

    “Adopting the European patent reform will be a major step forward to strengthen the competitiveness of European companies. A clear signal that we are taking concrete measures to boost growth and employment in Europe. Just to give you an example, today, it costs about €36,000 to obtain a patent in Europe whereas it only costs €2,000 in the US and €600 in China and that just goes to show the extent of the challenge we are facing and how important it is that we find a solution on the patent issue so in this way we can contribute to reinvigorating growth in Europe. The Council has done a lot of the ground work. There is one remaining issue - the location of the Central Division of the first instance court. ............ I appreciate the good arguments put forward by the countries who are putting forward their pitch, but obviously you try to get the person you love in life but sometimes you realize you got to live with the one you get.”

    Now, where have we heard this before? Yes, verbatim, on 30 May, as reported by one of the Kats. This I take to be the good news that no “progress” towards this unwieldy and competition-distorting system has been made since.

    The figures quoted are completely distorted and unrealistic, except for big pharma and agricultural businesses, and possibly in the mobile phone field. It is to their distinct advantage that smaller businesses have to shell out hundreds of thousands of Euros and live in a state of uncertainty beyond endurance – less competition by natural selection.

    Kind regards,

    George Brock-Nannestad

  4. As an attendee at the debate, I was astonished by Mr Dennehey's suggestion that "to vote in favour of the motion would be to vote against democracy"; his subsequent implication that the Unitary Patent proposals were being handled in a democratic manner; and his assertion that we in the profession were simply unhappy that "another lobby group had the stronger argument". If this is representative of the views of UK officialdom, this is truly depressing (but perhaps sheds some light on why the Unitary Patent is such a fiasco).

    I would suspect that most readers of this blog who've been following the Unitary Patent saga would seriously question whether the process has been in accordance with democratic principles, as Mr Dennehey appeared to believe.

    A key point of democracy is that governments are supposed to represent their people and act in their best interests. At present it seems that the Unitary Patent proposals are unrepresentative of the views of the people who will actually be affected by the system, and serve nobody's best interests other than those of the governments and EU officials who are desperate to be seen achieving some form of success.

    I would also question whether the evasive, outright misleading statements regarding the "last remaining issue" made by officials such as Ole Sohn, and efforts to suppress legal evidence, are truly as "democratic" as Mr Dennehey would like.

  5. Julianstown said "On this occasion we need to trust the politicians and go for it.".

    That is what was said when the euro was adopted despite the many economists, knowledgeable on currency unions, who said the proposal would not work. The politicians seem intent on closing their ears again.

    After more than thirty years fitful apathy, it now seems that we must have NOW a unitary patent, despite the lack of credible economic analysis on whether it is needed, and on the basis that financially no one will lose and everybody will win (and all pigs will be issued with personal jets).

    It seems we also need a unified patent court NOW. [Despite the Harhoff report on which it was based indicating that whether Europe gained or lost depended upon how much multi-jurisdictional litigation occurred, and then guessing a number for that key factor].

    Let us be frank. Politicians normally make decisions for political reasons: and as a politician's horizon rarely extends beyond the next election these are normally not good long-term decisions [occasionally a good idea sneaks through by mistake].

    If you think my cynicism is too extreme read:

    or if you cannot be bother I will quote:

    "On April 2014 the first European patent should be delivered. In May 2014 there will be the European
    elections and there is a need for arguments to motivate Europeans to vote. The European patent can
    be one of these arguments."

    You may say cynicism: I say realism.

    A decision should not be made on the basis that it might be good PR for Euro elections in 2014. A decision should be made on a clear analysis of what is good for Europe.

    Whether that will happen is very much open to doubt given the political track record.


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