Ireland: One Step Closer (Two Steps Back) To An EU Unitary Patent

The route to a unitary patent right in the EU has been somewhat contrived to date. Nonetheless, the envisaged Regulation of the European Parliament and of the Council implementing enhanced cooperation in the area of the creation of unitary patent protection reached another milestone, when the outgoing Danish Presidency managed to establish the location of the Unified Patent Court (UPC). However, Denmark still fell short of delivering a final decision on the EU Unitary Patent; and we now wait to see whether Cyprus, during their July – December 2012 Presidency, can overcome the outstanding issues hampering the establishment of a unitary patent right. The locating of the UPC suggests that the political hurdles associated with the Regulation have now been largely circumvented, and there appears to be some certitude toward the establishment of a unitary patent right in the EU.

Ireland had first hand in the genesis of a unitary patent right in the EU, when the Community Patent was conceived in 1975. The Convention for the European Patent for the common market – the so-called "Community Patent Convention (CPC)" - was signed at Luxembourg by France, West Germany, Italy, Belgium, the Netherlands, Luxembourg, Denmark, Ireland, and the United Kingdom (the nine Member States of the European Economic Community). The CPC provided for a unitary Community Patent and the establishment of centralised Nullity Boards. Appeals to the decisions of a Nullity Board were to be filed at the European Court of Justice (ECJ). The CPC defined the substantive law concerning the legal effects of a Community Patent; but procedural law was to be the subject of the national courts, who were to be responsible for hearing infringement actions.

However, despite two further Diplomatic Conferences on the Community Patent (in 1985 and 1989), the CPC never entered into force because the quorum of ratifications by Member States was not met (including not being ratified by Ireland). The failure of CPC was generally attributed to the costs of translation, whereby a Community Patent was to be translated into every Community language. There were also concerns relating to the underlying CPC judicial system, in which national judges had the power to invalidate a Community Patent with effect for the entire Community. And so, the Community Patent became a casualty at the hands of the issues of translation and legal certainty – concerns, which are still prevalent in relation to a unitary patent right in the EU.

But why was there a need for a Community Patent? Originally, in 1969, the Council of Ministers of the European Communities decided that two separate conventions should be drafted. The first convention was to establish a European Patent grant procedure, which was to be open to any European countries; and the second convention was to establish the Community Patent for the Common Market, which was to be confined to the Member States of the European Communities. The fate of the Community Patent is acknowledged, but the convention establishing a European Patent grant procedure formed the basis for the Munich Diplomatic Conference, which resulted in the signing of the European Patent Convention (EPC). The EPC is the autonomous legislative framework underlying the present-day, centralised patent system for the prosecution of European Patents. The entry into force of the EPC on 07 October 1977 established a European Patent Office (EPO) responsible for the central administration of the harmonised legal and procedural system leading to the grant of European Patents.

The EPC is currently in force in 38 countries, with Serbia becoming the 38th EPC Contracting state on 1 October 2010. Together with the EU27, the EPC also extends outside the EU to Switzerland, Liechtenstein, Turkey, Monaco, Iceland, Norway, Croatia, the Republic of Macedonia, San Marino, Albania, and Serbia. The Preamble of the EPC states that the EPC Contracting States desire to strengthen co-operation between the States of Europe in respect of the protection of inventions, and that such protection may be obtained in those States by a single procedure for the grant of patents. Accordingly, the EPC Contracting States have agreed to de facto harmonization of patent law thereby unifying the grant procedure. The result? A single Patent Application, filed and prosecuted centrally in a single language, which is granted as a European Patent. The European Patent Application can be filed in any of the languages of the EPC Contracting States, but must be translated into one of the official languages of the EPO (English, French, and German) for prosecution before the EPO. To effect the grant of a European Patent by the EPO, the Applicant must translate the claims (the statements defining the protection afforded by the European Patent) from the official language of the proceedings into the two other official languages of the EPO.

However, it is at the time of grant that the proprietor of a European Patent is faced with the somewhat fragmented nature of the EPC grant system. The European Patent is only transient in nature, existing for only a limited period following grant by the EPO, and before being brought into force as a collection of national patent rights. Furthermore, the EPC relinquishes the EPO of the responsibility of some post-grant procedures (such as infringement), which are dealt with by national law.

If the European Patent is to be enforceable, the proprietor must attend to the national requirements for bringing the European Patent into force in each of the countries in which patent protection is desired. For most Contracting States, a fee must be paid, and a translation of at least some part of the patent must be submitted. The burden of translating the European Patent has been alleviated with the coming into force of the Agreement on the application of Article 65 of the Convention on the Grant of European Patents – the London Agreement – which entered into force on 1 May 2008, and significantly reduced translation requirements, by having each State sharing an official language of the EPO dispense with translation requirements; and those States not sharing an official EPO language have selected an official EPO language into which the description need by translated (given the claims have already been translated into the three official languages of the EPO). However, eleven States still require translation of the claims into a national language, and nineteen of the EPC Contracting States have still not ratified or acceded to the London Agreement; meaning that translation tasks, although somewhat economized, still remain a substantial statutory and financial obligation facing the proprietor of a European Patent.

The EPO, although responsible for the grant of European Patents, also provides for certain post-grant procedures. Accordingly, even following the entry into force of a European Patent in different Contracting States, the collection of national patents still retain some unitary effect. Specifically, the EPO maintains a central opposition procedure up to nine months after the grant of the European Patent, and affords proprietors with the possibility of centrally limiting or revoking their European Patent after grant, which will take effect in all Contracting States in which the European Patent was brought into force. These quasi-judicial proceedings reduce the encumbrance of pursuing these actions simultaneously in each Contracting State. However, the EPC remits the enforcement of patents to the national courts. Specifically, the questions of validity, infringement, and ownership are resolved according to the law of each Contracting State; meaning that the proprietor of a European Patent must bear the expense of multiple simultaneous actions in different Contracting States.

Despite the advantages of the European Patent grant procedure, the European Patent proprietor is still faced with the independent national requirements of translation and legal certainty, and there have been calls for the Unitary Patent to be resurrected from the ashes of the CPC. With neither the EPC nor any of the national/regional patent systems in Europe based on an EU legal instrument, a Unitary Patent would have to be restituted using the EU legal order.

To this end, the Lisbon European Council concluded that innovation and ideas must be adequately rewarded within the new knowledge-based economy, particularly through patent protection; and asked the EU Council and the EU Commission to take the necessary steps as part of the establishment of a European Research Area to ensure that a Unitary Patent is available by the end of 2001, including the utility model, so that EU-wide patent protection is simple and inexpensive to obtain. Resultantly, the Commission issued a proposal for a Council Regulation on the Unitary Patent on 01 August 2000, which was based on the same legal basis that established the Community Trade Mark and Community Design and led to the creation of the Office for the Harmonisation in the Internal Market (OHIM). However, the EPO, unlike OHIM, is not an EU organisation, and so an intersection between the EPO and the proposed Regulation is required to marry the grant procedure with the territorial effect of the Unitary Patent. The Commission proposed that the established procedure for the grant of European Patents was to be maintained by the EPO. The purpose of the proposed system was not to replace the existing national and European systems but to supplement extant systems, thereby allowing proprietors of European Patents to choose the type of patent protection best suited to their needs. The Commission envisaged a "symbiosis" between the Regulation and the EPC, and practically speaking the day-to-day search, examination, and granting work of the EPO was to remain unaffected, because the Unitary Patent would simply be a European Patent granted by the EPO under the EPC to which unitary effect can be given after grant at the request of the proprietor.

Although the grant procedure has been linked to the EPO, another important, but undefined, aspect of the Unitary Patent was the patent litigation system. The Commission made a clear political link between the introduction of the Unitary Patent and the creation of a unified patent litigation system. Internal Market Commissioner Frits Bolkestein said: "To maximise the benefits of the Community Patent, we need a single Community Patent Court, under the ultimate jurisdiction of the European Court of Justice, so that disputes are judged with EU-wide effect. I am confident the Council will adopt the necessary decisions quickly, as broad agreement in principle was already reached at the March Competitiveness Council. But of course, setting up the jurisdictional arrangements without finalising adoption of the Community Patent Regulation itself is about as useful as a new pair of skis in the desert. So above all I hope the Council will agree on the final points of detail on the Community Patent still at issue and adopt the Regulation. Europe's companies have been crying out for too long for access to pan-European patent protection at reasonable cost with minimum red-tape and maximum legal certainty." The Commission presented proposals for two Council Decisions establishing a Community Patent jurisdiction, under the aegis of the European Court of Justice, to allow the resolution of disputes, particularly in matters of validity and infringement, relating to the Unitary Patent. A European Community Patent Court (ECPC) was drafted to have exclusive jurisdiction in respect of matters of infringement and validity of Community Patents and European Patents; the Court comprising a Court of First Instance, a Court of Appeal, and a Registry.

However, just one year later in March 2004 under the Irish Presidency, the Competitiveness Council failed to agree on the details of the Regulation and, on 18 May 2004, the EU Council failed to adopt the proposal.

The Unitary Patent continued to be plagued by impediments, despite certain solutions being proposed, such as an automated translation system and the creation of databases of electronic dictionaries of technical terms directly linked to the International Patent Classification system to ensure a highly precise translation; and a proposed EU patent jurisdiction having court of first instance and of appeal in each Member State for defending Unitary Patents. Moreover, at a meeting of EU industry and enterprise ministers in Brussels, the creation of a common appeal court was agreed.

Finally, in December 2009, the Council adopted conclusions on an enhanced patent system for Europe and, in June 2010, the Commission adopted a proposal for a Council Regulation on the translation arrangements for the Unitary Patent. Despite the significant efforts made by the Presidency, it was recorded at the Competitiveness Council meeting of 10 November 2010 that no unanimous agreement on the translation arrangements could be reached, and it was confirmed at the Competitiveness Council meeting on 10 December 2010 that insurmountable difficulties existed, making a decision requiring unanimity impossible, now and in the foreseeable future. It followed that the aim of the proposed Regulations to establish a unitary patent right in the EU was unattainable.

Accordingly, a strategic move toward a Unitary Patent was made when 25 Member States of the EU27 utilised the enhanced cooperation procedure, whereby a minimum of nine EU Member States are permitted to move forward on a particular area, if no agreement can be reached by the EU as a whole within a reasonable period. Enhanced cooperation was introduced by the Amsterdam Treaty, which entered into force on 1 May 1999, and has been approved by the Commission on only one previous occasion, in the area of divorce. In the present case, twelve EU Member States (Denmark, Estonia, Finland, France, Germany, Lithuania, Luxembourg, the Netherlands, Poland, Slovenia, Sweden and the United Kingdom) requested the authorisation to establish a patent, valid in all participating countries, and that could be obtained with a single application. The European Parliament gave its consent for using the enhanced co-operation on 15 February 2011. Another 13 EU Member States (including Ireland) declared their intention to join the enhanced co-operation; with Italy and Spain abstaining. The proposal for authorising the decision was adopted by the Council, after obtaining the consent of the European Parliament on 10 March 2011.

The draft Regulation states that proprietors of European Patents granted by the EPO, may submit a request to the EPO within one month of the publication of the mention of the grant of the European Patent, asking for the registration of the European Patent as a Unitary Patent having unitary effect. Once registered as a Unitary Patent, the unitary effect will provide uniform protection and will have equal effect throughout the territories of all (25) participating Member States, and a Unitary Patent can only be transferred, revoked, or may lapse in respect of those territories as a whole. The EPO would also be responsible for collecting, administering and remitting renewal fees for Unitary Patents and for keeping a register of unitary patents, which would include legal-status information, such as licences, transfers, limitation, revocation, or lapse. Irish Applicants could therefore request that their European Patent, designating the participating Member States, be given unitary effect. However, given that most European Patents are validated only in Germany, the UK, and France; the question is whether there is benefit to Irish proprietors to have rights in, for example, Estonia through unitary effect? Moreover, although cumbersome, owning a collection of national patents allows for independent maintenance of the individual patents, whereby certain patents can be allowed to lapse independently of others, allowing Irish proprietors to respond to market adjustments, without affecting the entire patent right.

As regards the translation arrangements for the Unitary Patent, it is suggested that, where the specification of a European Patent is published in the language of the proceedings before the EPO and includes a translation of the claims into the other two official languages of the EPO, no further translations are required. The necessary translations are to be subjected to machine translations. However, until such time that a system of high quality machine translations into all official languages of the EU becomes available, a full translation of the specification into English is proposed, where the language of the proceedings before the EPO is French or German; and, where the language of the proceedings before the EPO is English, a full translation of the specification into any official language of the participating Member States is proposed. The translation must be submitted by the proprietor, together with the request for unitary effect. The draft Regulation also suggests that, in the case of a dispute concerning a Unitary Patent, the proprietor must provide a full translation of the patent into an official language of the participating Member State in which either the alleged infringement occurs or in which the alleged infringer is domiciled. The patent proprietor would also be required to provide a full translation of the patent into the language of proceedings of that Court. Such translations would also be provided at the expense of the proprietor; and so, translations, although reduced, remain a necessary inconvenience to the proprietor. For most Irish proprietors, who will likely use English language proceedings before the EPO, a full translation of the specification into an official language of a participating Member State appears necessary, although it is not clear into which official language the patent is to be translated in order to effect a unitary patent right.

Are there any consequences of a Unitary Patent to the Irish State? In a Presidency working document on translation arrangements and distribution of fees relating to the Unitary Patent, it was agreed that the distribution of renewal fees should be based on a basket of fair, equitable and relevant criteria, which should reflect patent activities and the size of the market. According to the document, Ireland had a market size of 1.4% and ranks 11/27 of Member States for filing patent applications. According to the EPO, 150 European Patents were granted to Irish Applicants in 2010, which equates to 22% of the European Patent Applications filed by Irish Applicants. Taken together, Ireland would ultimately receive 1.4% of the renewal fee paid to the EPO in respect of a Unitary Patent, so it is questionable whether the renewal fees received from the Unitary Patent would be of any significance to the Irish state coffers. Furthermore, less than 20% of European Patents granted by the EPO in 2003 were brought into force in Ireland, and we will have to wait to see if the Unitary Patent would result in more patent rights being brought into force in Ireland (as part of unitary right). If this were the case, Irish enterprises might need to become more diligent in assessing the risk of infringing European Patents that previously might not have been validated in Ireland under the EPC grant system, but will now take effect in Ireland under a unitary right.

The text of the draft Regulation also looked to improve the enforcement of patents and to enhance legal certainty by setting up a central European Patent Court (EEUPC) for litigation related to the infringement and validity of Unitary Patents. The EEUPC was designed to ensure expeditious and high quality decisions, as a court common to the Contracting Member States and thus part of their judicial systems, with exclusive competence in respect of Unitary Patents and European Patents granted under the EPC. Just two days prior to the Council obtaining the consent of the European Parliament for enhanced co-operation, the Court of Justice of the EU (CJEU) issued an opinion on the compatibility of the EEUPC with EU Treaties, wherein it held that the proposed agreement was not compatible with EU law. The Hungarian Presidency of the Council published a revised version of the agreement on what is now known as the "Unified Patent Court (UPC)", which will be open only to EU Member States. The debate on the UPC Agreement took place on the basis of a compromise package, which placed the seat of the Central Division of the UPC in Paris, with specialised clusters of the Central Division being set up in London and Munich. The London division of the court will be dealing with life science and pharmaceutical cases, with the Munich based court handling mechanical engineering. The question still remains whether the UPC should have exclusive jurisdiction, or allow Irish proprietors the right to litigate EPO-granted patents in the existing court framework of the Commercial Division of the High Court? For Irish proprietors, a local divisional would be essential to allow SMEs access to the litigation fora.

Just when the European Parliament and the Council of Ministers appeared to agree on the content of a legislative package, the European Council (which is composed by Heads of State and government of EU Member States) has required some substantial changes to the Regulation, starting with François Hollande (FR) and Angela Merkel (DE) conceding to David Cameron (GB) to remove the provisions empowering the Court of Justice of the European Union (CJEU) in Unitary Patent litigations. These substantial changes manifested as yet another stumbling block on the route to a unitary patent right in the EU when the European Parliament unanimously postponed the plenary vote of the Regulation and sent the text back for reconsideration by the Affairs Committee (JURI) of the European Parliament.

And so we wait to see if resolution of these matters will be forthcoming with Cyprus taking over the Presidency of the EU Council from Denmark, while ensuring that the EU Patent Package is to be a key issue of debate in the remainder of 2012.

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