Unitary Patent "Déjà vu": Council debate tomorrow, Parliament vote Tuesday and Dr. Pagenberg speaks out

The AmeriKat anticipating the end
of the unitary patent saga so she can take a nap

A year ago the AmeriKat was sat in her bed fighting her first ever round of post-trial tonsillitis.  Although the tonsillitis was horrifying, it permitted her to spend some uninterrupted time battling the tangled web of European legislative non-transparency during last December's scheduled votes on the unitary patent.  She can hardly believe that as she, again, sits in her bed this evening it has been a whole year.  From those dark December days to these darker and chillier December days, we have see the rumored (albeit confirmed) deletion of Articles 6 to 8 of the Draft Regulation, the inclusion of a new Article 5 and the inclusion in the consolidated Draft Agreement of the location of the Central Division to be in Paris, Munich and London.  To keep up the enthusiasm and momentum for the past year has been a feat, but on the eve of the Competitiveness Council meeting and with two days to go before the European Parliament's plenary vote on the package, now is not the time to roll over and take a nap -- unless, of course, are Merpel.

Tomorrow the Competitiveness Council will meet to discuss issues of European industrial and economic policy.  The afternoon will be devoted to policy debates and reports regarding pending legislation included in the Single Market Act I.  Managing our expectations, the published summary of tomorrow's agenda state that "the issues to be dealt with might include the unitary patent protection package", although it is understood that the Council will deal with the unitary patent package tomorrow and will endorse the final package before Tuesday's European Parliament vote (see below).  For those without recourse to spies in Brussels to inform them of the goings-on in Council, the AmeriKat was prepared to tell you that there would be no way that the Council meeting would be televised after last year's nonsense (see posts here).  However, the AmeriKat nearly passed out when she found this document that informs us that from around 15:00 CET tomorrow a public Council debate entitled "Unitary Patent and International Agreement on the Unified Patent Court - Presidency report on state of play and endorsement of the final package" will be televised (watch it here).  To further add to the Twilight Zone moment, the document states:

Holiday Gift Idea #1:
Transparent holiday ornaments for
when you want to give that certain EU
institution a cheerful holiday hint

"All Council deliberations on draft legislative acts are open to the public. The Council's first deliberation on important non-legislative acts relating to the adoption of legally binding rules is also open to the public. The Council regularly holds public debates on  important issues affecting the interests of the Union and its citizens, as well as policy debates on the Council's programmes."

Where was this document last year, the Amerikat wonders, and why does the EU play Hot N Cold with its legislative transparency?

On Tuesday morning from 9:00 - 11:50 CET, Parliament will hold a joint debate on the unitary patent proposals and from 12:00 - 14:00 CET the European Parliament is expected to vote on the proposals (agenda here).  Curiously enough, on the same day, the Advocate-General is expected to issue its opinion in the combined cases brought by Spain (C-274/11) and Italy (C-295/11) as to the legality of the use of the enhanced cooperation procedure which introduced and is the procedural basis for these proposals.  The Court of Justice of the European Union (CJEU)'s decision on the Spanish and Italian references is not expected until next year, likely well after all the proposals have been subject to the necessary rounds of voting.  In any event, the AmeriKat would find it highly surprising that the A-G or the CJEU would hold that the use of the enhanced cooperation procedure was illegal.

In the run-up to the big vote, various opponents and proponents have begun their media assault   On Thursday, while the President of the Republic of Cyprus, Mr. Demetris Chistofias, met with BUSINESSEUROPE at their bi-annual meeting where the Presidency was congratulated, if not merely noted, for achieving the unachievable -- a political agreement on the unitary patent proposals -- the European Parliament published a "helpful" Q&A piece on the unitary patent.

Holiday Gift Idea #2:  Make learning
how to count the cost of patent litigation
 fun for the European Parliament (and the
whole family!) with this brightly colored cash
register.   Euros not included...

One of the AmeriKat's favorite entries was regarding cost.  First the question was curious.  Instead of asking  "How much does the unitary patent cost?" the question was phrased "How much should the unitary patent cost?" leaving one to surmise that Brussels has really no idea how much this is going to cost.  In any event, the answer stated:

"Today a European patent issued by EPO providing protection in the 27 EU Member States can cost up to €36,000, including up to €23,000 in translation fees alone. According to the European Commission, the new unitary patent would cost a minimum of €980, when the new rules are fully implemented, up to a maximum of €2,380, during the transition period. The average cost of a US patent is €1,850.  

How Parliament helped to reduce costs
Parliament amended the proposal to include a compensation scheme for translation costs so that translation costs could be reimbursed to SMEs, non-profit organisations and universities which file a patent application in a language other than the three official ones."  ["Who is paying for this one?", asks Merpel] 

Ah, but what about litigation and those costs?  Well, the European Parliament's Q&A has an answer for you on litigation, but of course, not about the costs of litigation:

Holiday Gift Idea #4:  For those who
fear being forgotten this ornate picture
 frame will act as a constant reminder
to those not to forget you.  Picture of
worried SME facing costly patent
litigation not included.  

"To enforce or to revoke today's European Patent may entail multiple legal proceedings in various countries. The decisions of the new patent court, by contrast, will apply in all participating EU member states.  To ensure that the unitary patent litigation system is efficient, Parliament backed the idea of a decentralised structure, clear procedural rules and judges selected for their competence in patent law.   The new unified patent court, to be set up through an international agreement by participating EU member sates, would cut costs and reduce uncertainty as to the law created by differing national judgments."

If those responses have not abated your fear that this package is likely to be more expensive and complicated for users, especially SMEs, you are not alone.  IPKat friend and long-standing critic of the current proposals, Dr. Jochen Pagenberg, has today written to MEPs in advance of Tuesday's vote blasting the proposals for, yet again, failing to really take into account the reality that SMEs will face under these proposals.  He writes:

"I am writing to you in this late phase of the discussions on the “Patent Package” since I have been approached by industry, practitioners and the press and am seriously concerned myself that the text of the draft Agreement (st16222/12 of 14 Nov. 2012)which you are being asked to approve as part of the package will be severely unbalanced to the detriment of small companies and individual inventors. “SMEs” have always been mentioned as a target group for which this patent package was also intended, but what is being proposed has nothing to do with SMEs.

I gave a speech on this topic 10 days ago at a conference organized by ERA and Queen Mary in Paris which has been published on the EPLAW Blog and of which I attach a copy for your convenience. I will summarize the main points hereafter.

1. SMEs are the largest group of patent applicants in the EPO

SMEs stand for innovation and apply for over 60% of European patents which they must be able to defend against less innovative competitors, in particular from outside the EU. They have therefore always been the largest group of patent litigants with more than 70% in national courts. SMEs, because of their superior technology, have been the strongest force and the most flexible one to find a way out of the crisis, since they employ nearly 80% of the work force in European industry. Those countries with high numbers of innovative SMEs still do better than those without. So they would deserve more attention than what is waiting for them. 

2. SMEs need flexibility and freedom to operate

I am not a lobbyist for SMEs or for big industry. The time and money I have spent in the last 12 years as an advisor in international working parties were my time and my money and my interest in improving the patent system. I have litigated the great majority of my cases - by far - for international patent owners - plaintiffs and defendants. But I have also been representing in court small companies and individual inventors. And the concerns which I am expressing here are their concerns. It is the fear that Europe will probably succeed in creating a cheaper patent filing system, but it is preparing a one-way street for patent enforcement which will be a dead end for SMEs, in its proper sense. 

The proposal which I make is very simple and not comparable to what was discussed and concluded as a result of the last summit in June. I am proposing that patentees who do not need or cannot afford patent protection in 25 countries, and therefore only use the present system of bundle patents (“EP patents”)should have the option to either use the existing national courts or – if they are confronted with infringers in several countries and can afford it – the Unified Patent Court (UPC). In other words, national patent courts should not lose jurisdiction as it is proposed in the draft Agreement. Also non-lawyers can easily understand the following amendment of Art. 15 of the text of draft Agreement st16222/12 of 14 Nov. 2012) on the Court:

Art. 15(1) Competence of the Court (1)The Court shall have exclusive competence for unitary patents in respect of: …….. (2) The national courts of the Contracting Member States shall remain competent for actions relating to patents which do not come within the exclusive competence of the Court. The patentee may bring actions mentioned in (1) concerning European patents before the Unified Patent Court or the competent national courts.

3. Parties need simple and predictable rules

I have explained in my attached paper why a seven year transitional period is not a way out; to the contrary. This patent package will only have a chance of being accepted by industry if it brings more flexibility, not less. And the system would be entirely unbalanced, if SMEs are left out, but most multinational corporations will benefit.

Dr. Pagenberg

One should not believe that legal aid or the fixing of arbitrarily low litigation values will help here. This would create a bombastic bureaucratic system on top of an already complicated international procedure. Preferential rules within a court system may help for an individual inventor who has no funds. But owners or shareholders of SMEs are not poor; they just cannot afford to risk millions if they lose a case. They must be able to calculate their risk before they file suit, not when they first invest in the preparation of a law suit and then are told by the judge that they do not benefit of any preferential treatment with respect to cost.

At any rate, companies cannot be expected to start every law suit with a disclosure of their financial situation in front of a competitor, before the real litigation starts. A court for SMEs must be efficient and affordable by itself, not as an exceptional act of grace or mercy in individual cases. 

4. Europe does not need a US style litigation system which is no longer affordable

A patent system is not only judged by the quality and cost of the granting institution (patent office) but also as to the quality useless without an efficient and affordable court system. The cost for obtaining patents in the US has been used as an incentive for reducing cost in Europe in the EPO. But nobody is mentioning that litigating patents in the US leaves both sides with expenses of several millions of dollars per case. The highest patent judge in the US, Chief Judge Rader of the CAFC, has regretted repeatedly in public, that patent litigation is no longer affordable in the US for small and medium companies. We should not sacrifice our affordable courts and replace them by a single and in addition inexperienced court.

Nobody has told the stakeholders why the requests for competing courts have not even been put to vote in the Council. A project against the will of the users already failed in 2003, one should take care."

The AmeriKat considers that Dr. Pagenberg's proposals have merit and agrees with many of  his comments, especially regarding the comparability with the US system.  However, despite the unitary patent proposals becoming arguably more complicated over the past year, the AmeriKat questions whether on the eve of the Council and Parliament approving and voting on the package, MEPs will be brave enough to stand in front of the runaway unitary patent train in an attempt to stop the proposals once and for all.  "But you never know", says Merpel, "miracles are known to happen this time of year..."

Whether you agree or disagree with Dr. Pagenberg or just feel like writing an e-mail on the unitary patent proposals, the AmeriKat urges that you shoot one off to your MEP before Tuesday.  'Tis the season to start contacting your MEPs.