THE EUROPEAN UNIFIED PATENT SYSTEM:

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1 THE EUROPEAN UNIFIED PATENT SYSTEM: Information Needed Today; in 2014 (or 2015) A generation from now, it may be expected that the new European unified patent system will be widely popular and provide a smooth and predictable patent grant and enforcement mechanism that will fulfill the promise of its proponents. For the moment, there are too many uncertainties that will lead to minimal initial use of the system while transitional provisions will permit continued procurement and enforcement under traditional routes for an at least seven year transitional period. This note starts with a consideration of how the system will operate at the start; see p. 2, The New European System, what it will Mean Initially. The essential knowledge about the system that overseas applicants need to know today is capsulized; see p. 3, What Overseas Applicants Need to Know Today. The effective date for the start of the unified system cannot be predicted at this time apart from the fact that the system cannot start until the beginning of See p.4, The Effective Date for the New System, 2014? 2015? When? When operational, even though 25 EU states will be covered, three of the ten most important EPC states will be outside the unified patent, Switzerland, Spain and Italy. See p. 5, The EU System will not be Operative for Three of the Key EPC States. Optimistic projects of cost savings are based upon protection in 25 countries, while most applicants really don t need all 25 countries. See p. 5, Who Needs Protection in 25 Countries? The unified system in terms of procurement will be very expensive in comparison with Japan or the United States. See p. 5, A Guaranteed to be Expensive Procurement Model for Routine Use.

2 The information in this note is provisional pending the opportunity to clarify a variety of points. See p. 6, Caveat, Provisional Guidance until February 5, More detailed guidance will be forthcoming in subsequent papers in preparation for the Naples Conference on February 5, 2013; colleagues are invited to provide their own documentation that will be considered for inclusion in the conference materials. See p. 7The Naples Conference February 5th; further Information from Colleagues. As an appendix (pp. 8-9), charts are provided to show the number of patents in force both on a global basis and also for Europe, broken down by membership in the unified system and the EPC. The New European System, what it will Mean Initially Right from the start the grant procedure will be familiar to everyone who understands the EPC system, because that system will be used for the unified patent system. Most applicants will continue to use the traditional national or EPC systems without election of a unified patent; for a transitional period of at least seven years, such applicants will be able to enforce their patents nationally as they do today without putting all their patent enforcement eggs in a unified patent basket. 2

3 What Overseas Applicants Need to Know Today When the new system comes into being applicants will continue to choose either the EPC or national filings as they have done since the European Patent Office came into effect. The patent grant procedure will be the same as it is today, while the at least seven year transitional period will mean that a national patent or an EPC application that is not part of the unified system can still be enforced in the national courts of Europe under the current system. Few, if any, applicants will have patents that are so important that they must have the 25 state protection of a unified system patent (which must be nominated as part of an EPC filing) where such 25 state protection would be enforced through the single unified court system: At this time, the compositional makeup of the court is yet to be fixed, and few, if any, major corporations would with to put all their patent eggs into a single European patent basket with no track record. The idea of a judge from an anti-patent country such as Greece or Romania coming to Munich or London to judge patent validity or infringement should be cause for reflection. 3

4 The Effective Date for the New System, 2014? 2015? When? There remain many procedural hurdles to leap before the new system comes into operation. The leading authorities take for granted German ratification of the system which is a condition precedent to the start of the unified system. (A sufficiently long transition period to permit avoidance of the new system may sufficiently mollify German industry to permit ratification, while there is also no indication that either France or the U.K. will exercise their individual veto power through denying ratification.) The remaining necessary ten votes for ratification will surely come from the smallest EU states which have little interest in the system beyond gaining a minimum portion of maintenance fees that they will help determine as part of the Administrative Council of the EPC. The earliest date of January 1, 2014, provided in the agreements is a pipe dream. A leading Scandinavian authority has predicted 2015 for a start date (allowing for the possibility of a 2014 date) while a usually highly authoritative London authority has unequivocally stated that [t]he new solution *** should be fully operational in spring

5 The EU System will not be Operative for Three of the Key EPC States: Neither Italy nor Spain is a part of the EU system (although eligible to join at a later date) while Switzerland can never be part of the EU system as it is outside the European Union. Who Needs Protection in 25 Countries? Small and medium sized organizations are touted as the great beneficiaries of the new system because they will be able to get protection in 25 countries through a single filing with a single enforcement mechanism. All but the largest organizations focus their interests in just a handful of countries. Even taking into account patent protection by all organizations including large corporations, whereas each of Germany, France and the United Kingdom has at least 440,000 patents in force, three-fourths of the 25 states each has anywhere from under 200 to less than 60,000 patents in force. A Guaranteed to be Expensive Procurement Model for Routine Use Three factors make it virtually certain that no matter how the treaty starts out in operation, it will soon be a very expensive route for patent protection: First, the EPC will continue to set fees for maintaining European patents (which is what the new patents will be); second, the Administrative Council is a one country-one vote affair for the 37 EPC states where the majority of the countries have patents in force accounting for no more than two percent of the total; and, most importantly, 5

6 third, the unified patent agreements were amended to guarantee a minimum payment to every EPC state, where the minimum is not stated in the treaty but will be ultimately fixed by the Administrative Council. The widely touted cost savings trumpeted by the European Parliament is keyed to a unified patent effective for all 25 countries, which will rarely be necessary for practical purposes. Caveat, Provisional Guidance until February 5, 2013 This writer attempts to be first with a detailed analysis of major patent developments, at least in his country. While he has had certain experience in Europe and has read the documents concerning the new unified system which are available to the public, there are many voids between the lines that have not been filled in, while there is a certain degree of conflicting information emanating from usually highly reliable sources within Europe as can be seen in part from citations in this note. Even the leading IP patent blog has not stuck its neck out to provide a detailed analysis of the new system, which should be a cautionary note for everyone. 6

7 The Naples Conference February 5th; further Information from Colleagues The first detailed analysis that this writer has scheduled is conference material for the Naples Midwinter Patent Experts Conference on February 5, 2013, that will be held in Naples (Florida). While the analysis will focus on the actual intergovernmental documents, this writer welcomes guidelines and predictions from European colleagues, with the understanding that they may be included, quoted or excerpted for the conference material. Information about the Conference is available from this writer, Regards, Hal December 20,

8 Worldwide Patents in Force (2011) * only EPC States shown for countries with under 60,000 patents in force 25 EU Unified (incl. EPC) 12 EPC (outside EU Unified) Pacific Rim Country In force Estonia 1,300 USA 2,100,000 Finland 36,000 Japan 1,500,000 Greece 32,000 China 700,000 Hungary 1,900 Korea 680,000 Iceland 1,900 Germany 530,000 Italy 39,000 United Kingdom 450,000 Latvia 6,200 France 440,000 Liechtenstein Russian Fed. 170,000 Lithuania 630 Switzerland 140,000 Luxembourg 21,000 Canada 140,000 Malta 430 Australia 110,000 Macedonia Mexico 90,000 Ireland 88,000 Sweden 80,000 less than 60,000 patents in force Albania Austria 10,000 Belgium Bulgaria 7,400 Croatia 2,800 Cyprus 170 Czech Rep. 9,000 Denmark 1,600 Monaco 51,000 Netherlands 13,000 Norway 18,000 Poland 36,000 Portugal 1,900 Romania 14,000 Slovakia 4,100 San Marino Serbia 1,400 Spain 33,000 Slovenia 1,500 Turkey 7,600 * Statistics are taken from the 2012 World Intellectual Property Indicators (WIPO 2012), Table P2: Patents granted by patent office and origin, and patents in force, 2011, pp No figure is given for this country in the WIPO report.

9 European Patents in Force (2011) * 75 % Vote to Elect EPC Administrative Council President 84 % EPC with Fewer than 60,000-Plus Patents 25 EPC with Unified Patent 12 EPC without Unified Patent Country In force Germany 530,000 United Kingdom 450,000 France 440,000 Switzerland 140,000 Ireland 88,000 Sweden 80,000 less than 60,000 patents in force Albania Austria 10,000 Belgium Bulgaria 7,400 Croatia 2,800 Cyprus 170 Czech Rep. 9,000 Denmark 1,600 Estonia 1,300 Finland 36,000 Greece 32,000 Hungary 1,900 Iceland 1,900 Italy 39,000 Latvia 6,200 Liechtenstein Lithuania 630 Luxembourg 21,000 Malta 430 Macedonia Monaco 51,000 Netherlands 13,000 Norway 18,000 Poland 36,000 Portugal 1,900 Romania 14,000 Slovakia 4,100 San Marino Serbia 1,400 Spain 33,000 Slovenia 1,500 Turkey 7,600 * Statistics are taken from the 2012 World Intellectual Property Indicators (WIPO 2012), Table P2: Patents granted by patent office and origin, and patents in force, 2011, pp No figure is given for this country in the WIPO report.

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