Explanatory Memorandum to COM(2011)215 - Implementation of enhanced cooperation in the area of the creation of unitary patent protection

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dossier COM(2011)215 - Implementation of enhanced cooperation in the area of the creation of unitary patent protection.
source COM(2011)215 EN
date 13-04-2011
1. CONTEXT OF THE PROPOSAL

4.

1.1. History of the proposal


In the European Union (EU), patent protection currently can be obtained either through the national patent offices of the Member States, which grant national patents, or through the European Patent Office (EPO) in the framework of the European Patent Convention (EPC)[1]. However, once a European patent is granted by the EPO, it must be validated in each Member State where protection is sought. For a European patent to be validated in a territory of a Member State, national law may inter alia require that the patent proprietor files a translation of the European patent into the official language of that Member State[2]. Therefore, the current patent system in the EU, in particular in terms of translation requirements, involves very high costs and complexity. The overall cost of validation of an average European patent reaches 12 500 EUR if validated only in 13 Member States and over 32 000 EUR if validated in the whole EU. It is estimated that the actual validation costs are around 193 million EUR per year in the EU.

Both the Europe 2020 Strategy[3] and the Single Market Act i identified the creation of an economy based on knowledge and innovation as a priority. Both initiatives seek to improve the framework conditions for business to innovate by creating unitary patent protection in the EU Member States together with a unified European patent litigation system.

Despite of broad recognition of the competitive disadvantage European business faces in the absence of unitary patent protection, the Union has not been able to establish unitary patent protection. The Commission first proposed a Council Regulation on the Community patent in August 2000[5]. In 2002, the European Parliament adopted a Legislative Resolution[6]. In 2003, the Council adopted a common political approach[7], but a final agreement could not be reached. Discussions on the proposal were re-launched in the Council after adoption by the Commission of the Communication 'Enhancing the patent system in Europe' in April 2007[8]. The Communication confirmed the commitment to the creation of a single Community patent.

The Lisbon Treaty introduced a more specific legal basis for the creation of European intellectual property rights. According to Article 118(1) of the Treaty on the Functioning of the European Union (TFEU), measures for the creation of European intellectual property rights are to be established by the European Parliament and the Council acting under the ordinary legislative procedure. Article 118(2) TFEU, however, sets out a specific legal basis for the language arrangements for European intellectual property rights, which are to be established under a special legislative procedure by the Council acting unanimously after consulting the European Parliament. Therefore, the translation arrangements for any unitary patent system in the EU must be established by a separate regulation.

In December 2009, the Council adopted conclusions on an 'Enhanced patent system for Europe'[9] and a general approach on the proposal for a Regulation on the EU Patent[10]. Translation arrangements, however, were not covered due to the abovementioned change in the legal basis.

On 30 June 2010 the Commission adopted a proposal for a Council Regulation on the translation arrangements for the EU patent[11]. The proposal was accompanied by an Impact Assessment report[12] analysing various options for the possible translation arrangements. Regardless of the significant efforts made by the Presidency of the Council, it was recorded at the Competitiveness Council meeting of 10 November 2010 that no unanimous agreement on the translation arrangements could be reached[13]. It was confirmed at the Competitiveness Council meeting on 10 December 2010[14] that insurmountable difficulties existed, making a decision requiring unanimity impossible now and in the foreseeable future. It follows that the objectives of the proposed Regulations to establish unitary patent protection in the entire European Union can not be attained within a reasonable period by applying the relevant provisions of the Treaties.

On the basis of the request of twelve Member States (Denmark, Estonia, Finland, France, Germany, Lithuania, Luxembourg, the Netherlands, Poland, Slovenia, Sweden and the United Kingdom) the Commission submitted a proposal[15] to the Council for authorising enhanced cooperation in the area of unitary patent protection. All Member States specified in their requests that the Commission's legislative proposals within the enhanced cooperation should be based on the recent negotiations in the Council. Following the adoption of the proposal, Belgium, Austria, Ireland, Portugal, Malta, Bulgaria, Romania, the Czech Republic, Slovakia Hungary, Latvia, Greece and Cyprus also requested to join the cooperation. The proposal for the authorising decision was adopted by the Council, after obtaining the consent of the European Parliament, on 10 March 2011. The present regulation implements the enhanced cooperation in the area of the creation of unitary patent protection as authorised by Council Decision 2011/167/EU[16].

5.

1.2. Legal approach


In comparison to the Commission's proposal in 2000, this proposal builds on the existing system of European patents by providing unitary effect to European patents granted for the territories of the participating Member States. The unitary patent protection will be optional and co-exist with national and European patents. The proprietors of European patents granted by the EPO, may submit a request to the EPO within one month after the publication of the mention of the grant of the European patent, asking for the registration of the unitary effect. Once it is registered, the unitary effect will provide uniform protection and will have equal effect throughout the territories of all participating Member States. European patents with unitary effect may only be granted, transferred, revoked or may lapse in respect of those territories as a whole. The participating Member States shall give the task of the administration of European patents with unitary effect to the EPO.

Contents

1.

CONSULTATIONS WITH THE INTERESTED PARTIES



In January 2006, the Commission launched a broad consultation on the future patent policy in Europe[17]. More than 2500 replies were received from a variety of stakeholders, including businesses in all sectors of the economy, business and SME associations, patent practitioners, public authorities and academics. Respondents were asking for a European patent system that provides incentives for innovation, ensures the diffusion of scientific knowledge, facilitates technology transfer, is available to all players in the market and is legally certain. The replies clearly showed stakeholders' disappointment with the lack of progress in the Community patent project. In particular, nearly all respondents (the users of the patent system) rejected the translation arrangements included in the Council's 2003 common political approach which laid down that the patent holder would have to supply a translation of the claims (having legal effect) into all official Community languages.

Stakeholders expressed an overall support for a 'unitary, affordable and competitive' Community patent. This message was repeated at a public hearing held on 12 July 2006, where a large variety of stakeholders stated their support for the creation of a truly unitary high quality patent. They, however, underlined that political compromises should not undermine the usefulness of the project. In particular, the representatives of small and medium-sized enterprises (SMEs) highlighted the importance of moderate patenting costs.

The issue of unitary patent protection was also addressed extensively in the consultation on the Small Business Act for Europe, which consisted of a range of initiatives targeted to help European SMEs[18]. Small and medium-sized businesses identified the high level of patent fees and the legal complexity of the patent system as major obstacles[19]. In their submissions to the consultation, businesses in general and SME representatives in particular requested a significant reduction of the costs of patenting for a future unitary patent[20].

Recent position papers from various stakeholders refer to the unitary patent protection. European business associations, such as BusinessEurope[21], UEAPME[22] and Eurochambres[23] confirm that businesses, both large and small, want simplified, cost-effective and accessible patent protection. National business organisations in many Member States and across industry sectors have raises identical issues[24]. Stakeholders underlined that any solution for the unitary patent protection should build on the existing mechanisms for granting patents in Europe and necessitate no revision of the European Patent Convention.

6.

3. IMPACT ASSESSMENT


This proposal is accompanied by an impact assessment which identifies the main problems in the current European patent system: (i) high costs related to translation and publication of European patents, (ii) differences in the maintenance of patents in the Member States (annual renewal fees have to be paid each year in each country where the patent is validated); and (iii) administrative complexity of registering transfers, licences and other rights related to patents. As a consequence, access to comprehensive patent protection in Europe is so costly and complex that it is inaccessible to many inventors and companies.

The impact assessment analyses the impacts of the following options:

Option 1 (Base-line scenario) – the Commission takes no action,

Option 2 – the Commission continues to work with the other institutions towards an EU patent covering 27 Member States,

Option 3 - the Commission presents proposals for regulations implementing enhanced cooperation:

7.

Sub-option 3.1 - the Commission proposes translation arrangements applicable in the area of unitary patent protection that correspond to its proposal of 30 June 2010, or


Sub-option 3.2 – the Commission proposes translation arrangements applicable in the area of unitary patent protection based on its proposal of 30 June 2010 and incorporating elements of a compromise proposal discussed by the Council.

The analysis carried out in the impact assessment has demonstrated that option 3 with sub-option 3.2 is the preferred option.

These problems can only be addressed at EU level, as without an EU legal instrument Member States would not sufficiently be able to establish legal effects attached to patents that are uniform in several Member States.

2.

LEGAL ELEMENTS OF THE PROPOSAL



Council Decision 2011/167/EU authorised the Member States listed in its Article 1 to establish enhanced cooperation in the area of the creation of unitary patent protection.

Article 118 (1) TFEU provides for the legal basis for creating European intellectual property rights providing uniform protection throughout the Union by means of a regulation adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure.

3.

BUDGETARY IMPLICATIONS



This proposal has no impact on the Union budget.

8.

6. DETAILED DESCRIPTION


Article 1 – Subject matter

This Article defines the subject-matter of this Regulation which implements the enhanced cooperation in the area of the creation of unitary patent protection authorised by Council Decision 2011/167/EU. It is made clear that this Regulation constitutes a special agreement within the meaning of Article 142 of the EPC.

9.

Article 2 - Definitions


This Article provides for definitions of the main terms used in this Regulation.

10.

Article 3 - European patent with unitary effect


This Article provides that European patents may benefit from unitary effect in the participating Member States provided that their unitary effect has been registered in the Register for unitary patent protection. In addition, the main features of the European patent with unitary effect are laid down: unitary character, providing uniform protection and having equal effect in all participating Member States. It follows that, as a general rule, a European patent with unitary effect may only be limited, licensed, transferred, revoked or lapse in respect of all the participating Member States. Finally, the unitary effect of a European patent shall be deemed not to have arisen to the extent that the European patent has been revoked or limited.

11.

Article 4 - Date of effect


A European patent with unitary effect shall take effect in the participating Member States on the date of the publication by the EPO of the mention of the grant of the European patent. In case unitary effect has been registered, it is specified that the participating Member States shall take the necessary measures to ensure that a European patent is deemed not to have taken effect as a national patent in their territory on the date of the publication of the mention of the grant in the European Patent Bulletin.

12.

Article 5 - Prior rights


In the event of limitation or revocation on the ground of lack of novelty pursuant to Article 54(3) EPC, the limitation or revocation of a European patent with unitary effect shall take effect only in respect of the participating Member State(s) designated in the earlier European patent application as published.

13.

Article 6 - Right to prevent the direct use of the invention


This Article lays down the right of the proprietor of a European patent with unitary effect to prevent third parties not having his consent from making, offering, placing on the market or using a product which is the subject matter of the patent, or importing or storing the product for these purposes. In addition, the patent proprietor can prevent third parties from using a process which is the subject matter of the patent or, when a third party knows or should have known that the use of the process is prohibited without the consent of the proprietor, from offering the process for use within the participating Member States. Finally, the proprietor can prevent third parties from offering, placing on the market, using, importing or storing for those purposes a product obtained directly by a process which is the subject matter of the patent.

14.

Article 7 - Right to prevent the indirect use of the invention


This Article lays down the right of the proprietor of a European patent with unitary effect to prevent third parties not having his consent from supplying or offering to supply within the participating Member States any person, other than a party entitled to exploit the patented invention, with means, relating to an essential element of that invention, for putting it into effect therein, when the third party knows, or should have known, that those means are suitable and intended for putting that invention into effect. This shall not apply, however, where the means are staple commercial products, except when the third party induces the person supplied to commit acts prohibited by Article 6.

15.

Article 8 - Limitation of the effects of the European patent with unitary effect


This Article provides a number of limitations of the effects conferred by the European patent with unitary effect. In particular, such effects shall not extend to acts done privately and for non-commercial purposes, to acts done for experimental purposes relating to the subject-matter of the patented invention or to the extemporaneous preparation for individual cases in a pharmacy of a medicine in accordance with a medical prescription. Other acts allowed under Union law, in particular relating to veterinary medicinal products, to medicinal products for human use, to plant variety rights and to the legal protection of computer programs by copyright and of biotechnological inventions, are also not prohibited. Finally, the effects conferred by the European patent with unitary effect shall not extend to the use of the patented invention on board vessels, aircrafts or land vehicles of countries other than participating Member States, when such vessels, aircrafts or vehicles temporarily or accidentally enter the waters of participating Member States and to the use by a farmer of protected livestock for farming purposes, on condition that the breeding animals or other animal reproductive material was sold or otherwise commercialised to the farmer by the patent proprietor or with his consent.

16.

Article 9 - Exhaustion of the rights conferred by the European patent with unitary effect


The rights conferred by a European patent with unitary effect shall not extend to acts concerning the product covered by that patent which are carried out within the territories of the participating Member States after that product has been put on the market in the Union by the proprietor of the patent or with his consent, unless there are legitimate grounds for the proprietor to oppose further commercialisation of the product.

17.

Article 10 - Treating a European patent with unitary effect as a national patent


A European patent with unitary effect as an object of property shall be dealt with in its entirety, and in all the participating Member States, as a national patent of the participating Member State in which, according to the European Patent Register, the proprietor of the patent had his residence or principal place of business on the date of filing of the application for the patent. Where this does not apply, the European patent with unitary effect as an object of property shall be dealt with as a national patent of the participating Member State in which the proprietor had a place of business on that date. Special rules are provided for in case of joint proprietors. Where no proprietor has his residence or a place of business in a participating Member State, the European patent with unitary effect as an object of property shall be dealt with as a national patent of the State where the European Patent Organisation has its seat.

The creation of unitary patent protection has to be accompanied by appropriate jurisdictional arrangements responding to the needs of the users of the patent system. In order for the unitary patent protection to work properly in practice, appropriate jurisdictional arrangements should allow for patents to be enforced or revoked throughout the territory of the participating Member States and at the same time should ensure high quality judgements and legal security for companies. Specific jurisdictional arrangements will be proposed as soon as possible, taking also into account the recent opinion of the Court of Justice of the European Union (A-1/09) on the compatibility of the draft agreement on the European and EU Patents Court with the Treaties.

18.

Article 11 - Licenses of right


This Article enables the proprietor of a European patent with unitary effect to file a statement with the EPO that he is prepared to allow any person to use the invention as a licensee in return for appropriate compensation (contractual license).

19.

Article 12 - Implementation by the participating Member States


This Article lays down the tasks, within the meaning of Article 143 EPC, which the participating Member States entrust to the EPO. The EPO shall carry out these tasks in conformity with its internal rules. The EPO shall administer requests for unitary effect, include and administer in the European Patent Register entries relating to European patents with unitary effect, receive and register statements on licensing, ensure the publication of the translations required during the transitional period, collect and administer the renewal fees (as well as additional fees), the distribution of a part of the collected renewal fees to the participating Member States and administer a compensation scheme of translation costs for applicants filing European patent applications in one of the official languages of the Union that is not an official language of the EPO.

The participating Member States shall ensure that requests by the patent proprietor for unitary effect are submitted in the language of the proceedings as defined in Article 14(3) of the EPC no later than one month after the mention of the grant is published in the European Patent Bulletin. The participating Member States shall also ensure that the unitary effect is indicated in the Register for unitary patent protection, where the relevant conditions are fulfilled. The EPO shall be informed of limitations and revocations of European patents with unitary effect.

This Article also lays down that the participating Member States shall set up a Select Committee within the framework of the Administrative Council of the European Patent Organisation in order to ensure the governance and supervision of the tasks entrusted to the EPO. Finally, the participating Member States shall ensure effective legal protection before a national court against the administrative decisions of the EPO in carrying out the tasks entrusted to it.

Article 13 – Principle

This Article provides the principle that the expenses incurred by the EPO in carrying out the additional tasks shall be covered by the fees generated by European patents with unitary effect.

Article 14 – Renewal fees

Renewal fees in respect of European patents with unitary effect shall be paid to the European Patent Organisation. If a renewal fee is not been paid in due time, the European patent with unitary effect shall lapse.

Article 15 – Level of renewal fees

This Article sets out a number of rules and conditions to be taken into account when determining the level of renewal fees. In particular, it provides that renewal fees for European patents with unitary effect shall be progressive throughout the term of the patent and shall be sufficient not only to cover all costs associated with the grant and administration of the unitary patent protection but also, together with the fees to be paid to the European Patent Organisation during the pre-grant stage, to ensure a balanced budget of the Organisation.

Finally, the Article lays down that the Commission is empowered to adopt delegated acts concerning the fixing of the level of the renewal fees for European patents with unitary effect.

Article 16 – Distribution

The share for distributing 50 percent of the amount of the renewal fees paid for European patents with unitary effect minus the costs associated with the administration of the unitary patent protection among the participating Member States shall be set by the Commission on the basis of fair, equitable and relevant criteria listed in this Article. The participating Member States shall use the amount of the renewal fees allocated to them for patent-related purposes.

The Commission is empowered to adopt delegated acts concerning the distribution of the renewal fees between the participating Member States.

Article 17 – Exercise of the delegation

This Article provides particulars relating to the power conferred on the Commission to adopt delegated acts. The delegation is made for an indeterminate period of time and may be revoked at any time by the European Parliament (EP) or by the Council. Any delegated act must be notified to the EP and to the Council that may express their objection within a period of 2 months.

20.

Article 18 - Cooperation between the Commission and the European Patent Office


This Article provides that the Commission shall establish close cooperation with the EPO in the fields covered by this Regulation.

21.

Article 19 - Application of competition law and the law relating to unfair competition


This Article provides that the Regulation is without prejudice to the application of competition law and the law relating to unfair competition.

22.

Article 20 - Report on the operation of this Regulation


Every six years the Commission shall present to the Council a report on the operation of this Regulation and where necessary make appropriate proposals for amending it.

Article 21 – Notification by the participating Member States

The Article requires the participating Member States to inform the Commission of the measures they adopt under Articles 4(2) and 12.

23.

Article 22 - Entry into force and application


This Article provides that this Regulation shall enter into force on the twentieth day after its publication in the Official Journal of the European Union. However, since the language arrangements applicable to European patents with unitary effect would be governed Council Regulation …/… while the substantive provisions applicable to such patents are governed by this Regulation, these two Regulations should be applied jointly as of one specific date. The participating Member States shall ensure that the rules referred to in Articles 4(2) and 12 are in place prior to or on the date of application. Finally, it is laid down that unitary patent protection may be requested for any European patent granted on or after the date on which this Regulation applies.