EUROPEAN COMMISSION COMMUNITY PATENT CONSULTATION COMPTIA S RESPONSES BRUSSELS, 18 APRIL

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1 EUROPEAN COMMISSION COMMUNITY PATENT CONSULTATION COMPTIA S RESPONSES BRUSSELS, 18 APRIL The Computing Technology Industry Association, Inc.

2 The Patent System in Europe CompTIA s Response to the Commission's Consultation Technological innovation is essential for the future of the European economy, and patents clearly contribute to research and technological development. Appropriate patent protection is thus important, especially in the ICT field where developed and developing economies increasingly compete with Europe. CompTIA appreciates the opportunity offered by the Commission 1 to share its views on the future of the patent system in Europe. It is essential that the patent system works well and remains accessible in order to promote European competitiveness investment, research, skills, and employment. In this respect, CompTIA has for instance been involved in the discussions on the Proposal for a Directive on Computer-Implemented Inventions in the last few years and has supported an harmonisation of the rules for the protection of such inventions during the legislative process (see e.g. CompTIA also represents and defends the interests of SMEs active in the ICT sector and is following closely the issues relating to ICT skills capacity and workforce development (see: ). As a general comment, CompTIA considers that the Commission s next steps should focus on the practical needs of patent system users, in particular inventors and SMEs. Section 1 - Basic Principles and Features of the Patent System 1.1. Do you agree that (i) clear substantive rules on what can be covered by patents, (ii) transparent, cost effective and accessible processes for obtaining a patent, (iii) predictable, rapid and inexpensive resolution of disputes, and (iv) due regard for other public policy interests are the basic features required of the patent system? In order for the patent system to function well, clear substantive rules on patentability (patentable subject-matter) and on protection requirements (e.g., novelty, inventiveness, and industrial applications) are needed. The present rules, as set forth in the European Patent Convention (EPC) and national patent laws, are adequate in this respect. However, these rules should be consistently applied. Because consistency in the interpretation of the rules largely depends on the dispute resolution system, it is essential to have an adequate 1 European Commission, Directorat General Internal Market and Services, Questionnaire on the patent system in Europe, Brussels, 9 Januray

3 court system that will develop uniform case law. Such a system is essential and could be achieved by means of litigation arrangements creating a centralized court of appeals (see section 3 for more details). A good patent system should also be cost-effective, reliable, and fast. The current system could be improved in this respect. First, the cost of patenting remains prohibitive, especially for SMEs. For this reason, assistance for SMEs is needed so that they can better benefit from the existing patent system. One way to assist SMEs would be to help them determine whether it makes sense for them to file a patent application for their inventions. Another idea would be to give SMEs a reduction on their first patent filing or to delay the payment of the patent fees until the patent is issued. And yet another way to help SMEs would be to involve national patent offices or other advisory services benefiting from state aid in assisting SMEs find out what technology their competitors have already patented. Second, while the right legal framework is in place, existing processes should be improved in order to increase the already good quality of European patents. The timing of patent oppositions should, for instance, be accelerated as their current slowness reduces legal certainty. Timing is something that the patent offices, in particular the European Patent Office, should work on. On all those issues, the views of the users of the system should be taken into account. Although the patent rules defined in the European Patent Convention and the Strasbourg Convention are adequate, more certainty could be gained if the practice of the EPO in assessing patentability requirements, in particular the case law of the Board of Appeal, becomes a clear reference for national patent offices and courts. For this reason, CompTIA could support a further codification of the EPO practice and case law. This is also why we fully supported the draft Directive on computer-implemented inventions ( CIIs ) that intended to achieve this clarification Are there other features that you consider important? A high level of patent quality is already achieved in Europe. All stakeholders should work in close collaboration with the European Patent Office and national patent offices to make sure that patents validity is as incontestable as possible. It is not necessary to change the current laws to address this issue. The initiatives adopted by the European Patent Office in order to further improve patent quality should as well be pursued How can the Community better take into account the broader public interest in developing its policy on patents? By addressing the need for a reliable and cost-effective litigation system, the Commission will reduce the inconsistencies in patent enforcement. The public interest first requires consistency in the application of the existing patent law. 3

4 Intellectual property awareness could also further be promoted by actions initiated by the European institutions, eventually in conjunction with industry (including associations such as CompTIA) and some of the national patent offices. Section 2 - The Community patent as a priority for the EU 2.1. By comparison with the common political approach, are there any alternative or additional features that you believe an effective Community patent system should offer? The Community patent system should address both the cost and litigation consistency issues. The common political approach of 2003 is not a good basis for the Community patent for mainly two reasons: the requirement for translations makes the system too expensive and the proposed judiciary system is not ideal. Translation Issue Applicants must file their patent applications at the EPO in one of the three of the official EPO languages (English, French, and German). For the patent to be valid in all Member States, the common political approach requires that the patent applicant translate his/her patent claims into the languages of all Member States. This makes the Community patent still more expensive than a U.S. or Japanese patent. The initial Commission proposal of 2000 is preferable because it allows the patent applicant to translate the claims into only the other two EPO languages. Businesses are of the opinion that claims do not need to be translated into the other languages at the application and grant stage. It would be better if translations were required only at the moment litigation begins in a given country. Court System The structure and location of the Community patent courts is important. The draft Community Patent package proposes a Unified Court of First Instance. This would ensure consistency of the interpretation of Community patent law and consistency on issues of validity and infringement. This proposal could be implemented by having a pool of judges from different Member States who could meet virtually in Luxembourg to hear the cases but would otherwise perform their tasks (preparation of the hearing, etc.) in their home country. This would allow maximum centralization and minimum forum-shopping. A somewhat less-desirable alternative to this proposal would be to have several regional chambers of the Court of First Instance. This would also allow the courts to rely on the expertise of already specialized national courts, where most of the patent litigation takes place nowadays. The appellate level could consist of a single, unified court that would be integrated into the existing Community court system (i.e., the ECJ). In addition, it would be necessary to have sufficient resources and qualified personnel for this system to be successful. In this regard, it is important to rely on existing experience and procedural rules where they work well. With the unification of the appellate court, the issue of languages used in court should also be solved. Using the defendant s language can in some cases be very costly, namely when the 4

5 defendant s language is less commonly used in the EU. Using the defendant s language also means that all documents have to be translated into that language. For these reasons, the best option would be to use the language of the patent as the language of the proceedings e.g., English, French or German. If the issues of translations and of the court system can be solved along the lines outlined above, the 2003 common political approach could be adopted and the Community Patent would be practicable. But to rapidly improve the patent system in Europe and to pave the way for an attractive Community Patent, the Commission should first focus on designing a workable litigation arrangement for existing European patents. Indeed, even if the Community Patent system is adopted in the very near furture, existing European patents will remain subject to national courts and their diverging interpretations on core issues such as validity and infringement, which is not a satisfactory outcome. Section 3 The European Patent System and in particular the European Patent Litigation Agreement 3.1. What advantages and disadvantages do you think that pan-european litigation arrangements as set out in the draft EPLA would have for those who use and are affected by patents? 3.2. Given the possible coexistence of three patent systems in Europe (the national, the Community and the European patent), what in your view would be the ideal patent litigation scheme in Europe? The European Patent Litigation Agreement (EPLA) will certainly improve the existing patent dispute system by avoiding divergent interpretations on issues of validity or infringement, such as in the Epilady Case where German and Austrian courts have denied the existence of an infringement while the courts in London and The Hague have granted injunctions based on the same patent relating to a device to pluck hair out. Avoiding such divergence is definitely needed. Ensuring uniform case law is a prerequisite to lowering the cost of litigation because it reduces the likelihood of parallel proceedings in the various Member States. Indeed it is surprising that, while the grant phase of the European patent application process has been simplified by the unified procedure agreed to in Munich a procedure in place for more than 30 years the phase following the patent grant is still governed by national courts that have no obligation whatsoever to develop a uniform interpretation. Therefore a top priority for the future patent system should be to ensure the establishment of a harmonized body of case law on patent validity and infringement. The EPLA will provide a common procedure for litigation concerning distinct national patents that result from the common granting procedure of the European Patent Office. Once in force, the EPLA would immediately govern the disputes on more than 700,000 existing European patents which shows its practical importance. The EPLA also intends to build on existing 5

6 expertise and experience of some of the specialized courts throughout Europe, which will help to have a well-functioning system. CompTIA does not have a precise view on all the details of the model litigation system that is needed for Europe, but generally supports the work already performed by leading judges and experts in designing a workable litigation agreement. CompTIA also considers that the contribution of the Commission in fine-tuning what has already been agreed is important, and thus believes that the Commission should get a mandate to negotiate the final form of the EPLA. If the EPLA system becomes a success, it could serve as a model for the future patent courts that would be competent for disputes on Community patents, once the Community Patent regulation becomes a reality. Section 4. Approximation and mutual recognition of national patents 4.1. What aspects of patent law do you feel give rise to barriers to free movement or distortion of competition because of differences in law or its application in practice between Member States? All intellectual property rights, including patents, are subject to the territoriality principle, which means that national titles allow for, in certain circumstances, opposing imports of protected goods, in accordance with the case law of the ECJ on the conflict between the free movement of goods and the protection of intellectual property. This limitation to free movement results from the fact that the applicant might have sought patent protection in some but not all Member States; it is not a consequence of the differences between Member State laws. The signatory countries to the European Patent Convention have laws that are sufficiently harmonized regarding the building blocks of patent protection, such as patentability requirements and scope of protection. The Strasbourg Convention has also prompted Member States to adopt common rules, for instance concerning the exceptions to patent protection. Distortion of competition linked to patent protection are not common, as confirmed by the fact that none of the cases decided by the ECJ on the interface between competition and intellectual property and in particular on the refusal to supply concerns the abuse of a dominant position by a patent owner. Again, CompTIA wants to stress that the existing framework for patent protection is fine, except for the rules relating to patent litigation. New rules to increase litigation predictability and to reduce litigation costs are badly needed. Apart from that, the most important issue relates to the cost of patenting in Europe, and the requirement to file costly translations. Finally, as stated above under section 1.1, CompTIA would favour further harmonization of substantive patent rules including rules relating to computer-implemented inventions, if it contributes to clarify the legal framework and to increase the certainty in the application of the law To what extent is your business affected by such differences? 6

7 CompTIA member companies are affected by different national judicial interpretations of common rules in what should be a Single Market. That is, a patent may be recognized when challenged in one European jurisdiction, but disqualified in another. Hence, such fragmentation complicates the marketing and distribution of patented products and services throughout the Union What are your views on the value-added and feasibility of the different options (1) (3) outlined above? None of the three options is supported by CompTIA. Those options are not geared at resolving practical issues and at responding to the users needs, and should not be on the top of the agenda of the European institutions. Option 1 Bringing the Main Patentability Criteria of the European Patent Convention into Community Law. As already emphasized, there is already a high degree of harmonization on the substantive patent rules under the European Patent Convention (and the Strasbourg Convention). There is no need to redefine what already exists. The inclusion of the EPC provisions in a Community directive would not solve the practical issues. One could eventually consider to clarify some existing rules, for instance on patents for computer-implemented inventions, but it is not clear that it is for a legislative body to achieve this. What is needed is a court competent to rule on all legal and factual issues related to a particular case rather than a court that can offer only general interpretation of legal rules such as the ECJ under the procedure for preliminary ruling on issues of Community law. A court system competent for deciding all legal and factual issues on European patents could serve the harmonisation objective better than any additional laws. Option 2 More Limited Harmonization. The Commission s document is not clear about which issues should be harmonized, if this option is chosen. CompTIA believes that this option should be followed only if it implies some real harmonization of substantive patent rules including for computer-implemented inventions, and if it codifies the case law of the EPO Board of Appeal and does not introduce new rules and concepts. Preferably, designing a new litigation system allowing harmonisation through the interpretation by the courts is needed. Thus practical harmonisation should be achieved if an international instrument such as the EPLA creates the right court system that will pursue the harmonisation already seen in the EPC and the national patent law. Option 3 Mutual Recognition by Patent Offices of Patents Granted by Another EU Member State. This option focuses on national patents and their validity in other Member States. It would be strange for the EU institutions to focus on national patents, rather than tackling issues in the post-grant phase of European patents. The future does not require expanding beyond national titles, especially when the procedures for granting patents differ among Members States (how would it be possible to confer, through mutual recognition, the same validity to patents granted without prior examination and to patents granted after a careful examination, such as in Germany?). The European Patent Convention already offers a better solution by creating a uniform procedure for patent applications and a strict examination of the 7

8 patentability requirements by a well-equipped organization, the European Patent Office. Mutual recognition would lead to forum shopping as applicants would be tempted to file in a Member State that does not have a (strict) examination procedure. Ideally, there should be a baseline interpretation of the EPC which guides patent grants and greatly limits any interpretive variances. One should be able to file wherever/however the system ultimately gets re-designed in a single locus and through unified process, with the grant recognized as being valid equally across the entire EU. A disparate, hodgepodge system will not bring inventors to the table to innovate. CompTIA does not support option Are there any alternative proposals that the Commission might consider? The Commission should consider, eventually in collaboration with the EPO and national patent offices, mechanisms that reduce costs and increase certainty of the system. In particular DG Enterprise could design an initiative to assist SMEs in fully participating in, and benefiting from, the patent system in Europe. Financial support would be targeted primarily at efforts to advise SMEs on the opportunities to patent, to identify the critical technologies for future business, to select the right technologies to be patented, and to prepare and prosecute patent applications. A streamlined system, for instance a web-based tracking system, that allows the swift understanding of prior art, pending applications, grants and final orders, may be helpful as well. Section 5. General 5.1. How important is the patent system in Europe compared to other areas of legislation affecting your business? Patents play an essential role for ICT companies that have chosen a business model based on licensing and cross-licensing of technologies. Patents are also crucial for start-up companies which need to raise capital Compared to the other areas of intellectual property such as trade marks, designs, plant variety rights, copyright and related rights, how important is the patent system in Europe? In the ICT field, patents play a vital role, along with copyright protection. Patents protect innovative functionalities while copyright protects expressions of ideas. Copyright is effective to protect against piracy of works; patents prevent the cloning of products by competitors. Thus patent protection complements other forms of protection of ICT products How important to you is the patent system in Europe compared to the patent system worldwide? No company in the ICT field can ignore the European market and a well-functioning patent system is thus needed in Europe. 8

9 5.4. If you are responding as an SME, how do you make use of patents now and how do you expect to use them in future? What problems have you encountered using the existing patent system? In addition to points raised above, CompTIA s SME members have expressed a need for greater understanding and knowledge of the patent system. SMEs would file more patents if they knew more about their value and would get needed administrative support for filing procedures and licensing strategies. Again, it would be in the interest of all if the European Commission would take greater initiative to work with industry (including associations such as CompTIA) to engage in more public outreach on patent matters. Complexity, costs and time lag are the prime concerns of SMEs Are there other issues than those in this paper you feel the Commission should address in relation to the patent system? Affordability is the key word. All ways should be explored to facilitate the acquisition and use of patents as a currency that permits trade in innovative technologies. A patent fee structure tailored to SMEs would be desirable. Other tools, such as facilitators for patent licensing, should be promoted in favor of SMEs to ensure that the patents obtained can be easily licensed or assigned, ensuring more transfers of technology and the development of a sound market for ICT innovations. * * * CompTIA is a global trade association representing the business interests of the information technology industry. For more than 24 years CompTIA has provided research, networking and partnering opportunities to its 20,000 members in 102 countries. The association is involved in developing standards and best practices, and influencing the political, economic and educational arenas that impact ICT worldwide. For more information on CompTIA, see ( under construction). CompTIA Europe, Middle East and Africa, 6, Rond Point Schuman, B-1040 Brussels tel: +32-2/ or 25; hlueders@comptia.org or skoperdak@comptia.org 9

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