Ericsson Position on Questionnaire on the Future Patent System in Europe Executive Summary Ericsson welcomes the efforts of the European Commission to survey the patent systems in Europe in order to see whether there is need for any improvements. While the current patent system based on the European Patent Convention (EPC) in many respects meets the needs of a telecommunication manufacturer, there obviously is room for improvements. Such improvements include the following issues: Patent cost: The cost for obtaining, maintaining and enforcing European patents is far too high. The London Agreement would simplify the existing language requirements for participating states and minimize the costs to the advantage for all users, including SMEs. Ericsson supports this important project that would render European patents more attractive. Ericsson hopes that all EPC states will join the London Protocol as soon as possible. The annual renewal fee should not fund the national NPO and should be payable directly to EPO The cost of enforcing European patents could be significantly lessened if a common European patent litigation is introduced, e.g. the draft European Patent Litigation Agreement (EPLA), since litigation in multiple countries would be substantially reduced. Patent litigation: Europe needs a specialized European patent court system that can adjudicate all presently granted European patents as well as all future such patents. The draft EPLA provides for such a judicial system, without forcing EU member states that do not agree to the EPLA principles to join it. Ericsson favours an early introduction of the EPLA. Patent quality: Granted patents should be as incontestable as practically possible. The existing standard as regards inventive step should be more strictly applied. This does not require a change in legislation; it requires a better quality control. Aspects that could be reconsidered include examination guidelines and the remuneration system for patent examiners. Community Patents: Ericsson is, for a number of reasons, opposed to the Council s common political approach of March 2003. Ericsson does not see any advantage in further EU harmonisation of substantive patent law. The substantive patent law has already been subject to several harmonisation measures. Thus, the remaining moderate differences in the application of the already harmonised patent law are not an issue. What is needed is a common European patent litigation system, such as provided by the draft EPLA. Such a system would remove any remaining differences without further harmonising legislation being necessary or desirable.
Section 1 Basic principles and features of the patent system The idea behind the patent system is that it should be used by businesses and research organisations to support innovation, growth and quality of life for the benefit of all in society. Essentially the temporary rights conferred by a patent allow a company a breathing-space in the market to recoup investment in the research and development which led to the patented invention. It also allows research organisations having no exploitation activities to derive benefits from the results of their R&D activities. But for the patent system to be attractive to its users and for the patent system to retain the support of all sections of society it needs to have the following features: clear substantive rules on what can and cannot be covered by patents, balancing the interests of the right holders with the overall objectives of the patent system transparent, cost effective and accessible processes for obtaining a patent predictable, rapid and inexpensive resolution of disputes between right holders and other parties due regard for other public policy interests such as competition (anti-trust), ethics, environment, healthcare, access to information, so as to be effective and credible within society. 1.1 Do you agree that these are the basic features required of the patent system? Ericsson shares the Commission s view that a well functioning patent system needs to have at least the basic features stated above. However, with regard to the four features 1 4 Ericsson has the following observations. 1 Ericsson strongly advises against any further legislative initiatives on the substantive patent law. The substantive rules on patentability have been sufficiently harmonised through the Strasbourg Agreement and the European Patent Convention (EPC) and are sufficiently clear on what can and cannot be covered by patents. There is no need for changing the present criteria for patentability or to introduce new complementary patentability criteria. All that is needed is that the present rules are strictly interpreted and applied in accordance with the legislative intent. 2 Ericsson agrees with the Commission that there is a need for transparent, cost effective and accessible processes for obtaining a patent. However, an important element should be added, namely processes for obtaining quality, i.e. search and examination procedures should lead to reliable results and produce patents which can be expected to be valid. This requires inter alia o sufficiently broad and comprehensive searches, o o qualified and consistent examination, adequate application of the criteria for patentability, most notably the inventive step requirement. One way of reducing cost for obtaining patents would be a broad acceptance of Member states to accede to the London Agreement, which would simplify the existing language requirements for participating states and minimize the costs to the advantage for all users, including SMEs. 3 Ericsson believes that the EPLA project should be completed as soon as possible. It is of great importance that users of the EPC system in the future have access to a well-functioning European patent court system for resolving
patent disputes regarding European patents, since even with a parallel Community patent system there would be a very large quantity of European patents. This is all the more important since Members States seem to be unable to agree on a Community Patent System in the near future. 4 Ericsson submits that other public policy interests are sufficiently balanced in the present patent system and that no further legislative measures on substantive patent law are needed. However, a lot can be done to assist SMEs, increase IP awareness, etc. 1.2 Are there other features that you consider important? In a world of increasing globalisation it is vital that all EU legislation on IPRs is fully compliant with the WTO TRIPs Agreement; which is already based on the appropriate balance of interests of the right holders with the overall objectives of the patent system. 1.3 How can the Community better take into account the broader public interest in developing its policy on patents? Ericsson would like to stress, despite the Commission s statement that such measures are outside the scope of this consultation, that one of the more important aspects on protection for innovations is to educate the general public as well as policymakers and media about IPR. Without such general understanding of one of the fundamental drivers for development of new technology, it will be hard to find the necessary support for needed improvements for the European industry. There is also an increasing need to promote European competitiveness both relative traditional competitors, like the USA, Japan as well as new players such as China, India and Korea. Thus, it is vital that the needs of European society as a whole are taken into account, and that small, but vocal groups advocating specific interests are not allowed to jeopardize Europe s future. Section 2 The Community Patent as a priority for the EU The Commission's proposals for a Community patent have been on the table since 2000 and reached an important milestone with the adoption of the Council's common political approach in March 2003 [http://register.consilium.eu.int/pdf/en/03/st07/st07159en03.pdf; see also http://europa.eu.int/comm/internal_market/en/indprop/patent/docs/2003-03- patentcosts_ en.pdf]. The disagreement over the precise legal effect of translations is one reason why final agreement on the Community patent regulation has not yet been achieved. The Community patent delivers value-added for European industry as part of the Lisbon agenda. It offers a unitary, affordable and competitive patent and greater legal certainty through a unified Community jurisdiction. It also contributes to a stronger EU position in external for a and would provide for Community accession to the European Patent Convention (EPC). Calculations based on the common political approach suggest a Community patent would be available for the whole of the EU at about the same cost as patent protection under the existing European Patent system for only five states.
Question 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 common political approach is not acceptable to Ericsson nor to the European Industry. Ericsson submits that the common political approach does not provide a suitable basis for a future Community Patent system for the following reasons: the requirement to translate the granted patent claims into all EU languages is not necessary and leads to too high, unnecessary costs, the proposal to allow transfer of search activities to national patent offices that do not meet the minimum requirements of Rule 36 PCT increases the risk for patents with insufficient quality, the chosen court system would exclude a common European patent jurisdiction that can deal both with Community and European patents thereby causing an undesired dual court system, the chosen procedural language does not allow for a limitation of the number of possible procedural languages in patent litigation, thereby causing unnecessary costs and risks for misunderstandings; the number of permitted procedural languages should, in principle, be reduced to English only or, at most, the three official languages of the EPO, it does not allow for technically educated persons to act as judges in panels that also include legally educated judges, thereby reducing the courts ability to assess complex technical matters, lack of procedural rules. In order to be competitive in the global economy Ericsson favours a European patent system which on a regional and national level provides flexible possibilities to obtain high-quality patents for one European country or several or all European countries at low cost and in an efficient way, according to the needs of individual companies and inventors, ensures that the requirements and legal effects of such patents are reliable and harmonized throughout Europe, offers high-quality, cost-effective and efficient means for patent litigation and enforcement, exploits and develops the skills and experience embodied in existing patent infrastructures - but never compromises quality and efficiency. From this follows that Ericsson is not opposed to the idea of a revised Community patent, should the Commission and the member States be ready for such a new initiative, but only on the condition that the result would be a patent system that fulfils the above criteria to the benefit of the users (companies and individual inventors) as well as to society at large. However, as stated above, this can not be achieved on the basis of the common political approach. A totally revised approach is necessary. And, it should be stressed that any future Community Patent system should supplement, not replace the present EPC system (including an EPLA litigation system), since it is envisaged that the Industry would continue to use the EPC
system extensively alongside a Community patent system. Accordingly, it is equally important to improve the EPC system for the future. In addition, if and when a decision is taken on a Community Patent, there will be a long period before this system is implemented and established, not the least a sufficiently body of case law giving enough legal certainty. During this transitional period, the EPC system will continue to be the principal patent system in Europe. Thus, any Community patent system must build on the litigation solution chosen for the draft EPLA, since having multiple different litigation systems in Europe would be inefficient, costly and lead to legal uncertainty. Section 3 The European Patent System and in particular the European Patent Litigation Agreement Since 1999, States party to the European Patent Convention (EPC), including States which are members of the EU, have been working on an agreement on the litigation of European patents (EPLA). The EPLA would be an optional litigation system common to those EPC States that choose to adhere to it. The EPLA would set up a European Patent Court which would have jurisdiction over the validity and infringements of European patents (including actions for a declaration of noninfringement, actions or counterclaims for revocation, and actions for damages or compensation derived from the provisional protection conferred by a published European patent application). National courts would retain jurisdiction to order provisional and protective measures, and in respect of the provisional seizure of goods as security. For more information see [http://www.european-patentoffice.org/epo/epla/pdf/agreement_draft.pdf] Some of the states party to the EPC have also been tackling the patent cost issues through the London Protocol which would simplify the existing language requirements for participating states. It is an important project that would render the European patent more attractive. The European Community is not a party to the European Patent Convention. However there is Community law which covers some of the same areas as the draft Litigation Agreement, particularly the "Brussels" Regulation on Recognition and Enforcement of Judgments (Council Regulation no 44/2001) and the Directive on enforcement of intellectual property rights through civil procedures (Directive 2004/48/EC). [http://europa.eu.int/eurlex/pri/en/oj/dat/2004/l_195/l_19520040602en00160025.pdf] It appears that there are three issues to be addressed before EU Member States may become party to the draft Litigation Agreement: (1) the text of the Agreement has to be brought into line with the Community legislation in this field (2) the relationship with the EC Court of Justice must be clarified (3) the question of the grant of a negotiating mandate to the Commission by the Council of the EU in order to take part in negotiations on the Agreement, with a view to its possible conclusion by the Community and its Member States, needs to be addressed.
Questions 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? Ericsson welcomes the clear and constructive statements from the Commission regarding the draft EPLA, noting that these issues seem to be possible to resolve within a reasonable time. Ericsson would like emphasize the following advantages with a pan-european litigation arrangement as set out in the draft EPLA. It would: reduce the need for multiple litigation in order to enforce a European patent, since a court decision will have effect in all participating States, reduce the cost for litigation by reducing the need for parallel litigation in a number of countries, reduce the risk of getting diverging decisions on the substance of the case, increase legal certainty for all, patent holders, third parties and the general public, by using one specialized court with qualified and experienced judged and by using one set of procedural law, reduce the possibility for forum shopping, thus minimizing the risk for use of blocking tactics, allow for a flexible, but limited language regime for the proceedings, thus minimizing the need for translation into languages into other than the EPC languages, allow for a flexible transition from system built on national jurisdiction to a system build on pan-european jurisdiction, allow those member states who do not want to participate from the beginning to do so at a later date, Some of the possible disadvantages of a pan-european system can be addressed by use of Regional Divisions. Such divisions would reduce the physical and/or mental distance to the court, better use of existing local resources, minimize impoverishment of local IP advisory services, reduce language problems for SME defendants. 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? As stated above Ericsson is opposed to a European patent litigation system that would include three different systems. The discussion on an ideal litigation system
should focus on the functional needs of the Industry. The legal-technical mechanisms necessary for achieving them are of secondary importance. What Industry needs is a litigation scheme characterized by practical efficiency simplicity/transparency low cost legal certainty and consistency flexibility In any future European patent system national patents should of course remain subject to the jurisdiction of national courts. But, for European patents and Community patents a common litigation scheme must be found. Europe would not be well served by having two different litigation systems covering the regional level; what is needed is a patent litigation scheme that would put Europe on the same level playing field as the other competing economies. Both European patents and Community patents will be based on the EPC and granted by the EPO, the only difference being that Community patent is granted as a unitary right covering all the territory of all member States while a European patent would cover only those states (which could be all EU Member States) designated by the applicant. Since a future system must accommodate litigation of both European patents and Community patents at regional level, the scheme chosen should be based on the draft EPLA system. Section 4 Approximation and mutual recognition of national patents The proposed regulation on the Community patent is based on Article 308 of the EC Treaty, which requires consultation of the European Parliament and unanimity in the Council. It has been suggested that the substantive patent system might be improved through an approximation (harmonisation) instrument based on Article 95, which involves the Council and the European Parliament in the co-decision procedure with the Council acting by qualified majority. One or more of the following approaches, some of them suggested by members of the European Parliament, might be considered: (1) Bringing the main patentability criteria of the European Patent Convention into Community law so that national courts can refer questions of interpretation to the European Court of Justice. This could include the general criteria of novelty, inventive step and industrial applicability, together with exceptions for particular subject matter and specific sectoral rules where these add value. (2) More limited harmonisation picking up issues which are not specifically covered by the European Patent Convention. (3) Mutual recognition by patent offices of patents granted by another EU Member State, possibly linked to an agreed quality standards framework, or "validation" by the European Patent Office, and provided the patent document is available in the original language and another language commonly used in business. To make the case for approximation and use of Article 95, there needs to be evidence of an economic impact arising from differences in national laws or practice, which
lead to barriers in the free movement of goods or services between states or distortions of competition. Questions 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? None. Substantive patent law within EU is in principle harmonized in accordance with the Strasbourg Agreement and the European Patent Convention. The fact that national courts have had different interpretations of some of these rules is mainly due to different national procedural law and to the specific facts in the particular case. These differences have, to our knowledge, not given rise to any barriers to free movement or distortion of competition that present legislation cannot handle. When a common European patent litigation system has been established, such national differences, if any, will gradually disappear. 4.2 To what extent is your business affected by such differences? Not at all. The absence of a common European patent litigation system could in certain cases lead to complications, which would be of minor importance Early introduction of common European patent litigation system such as the draft EPLA would minimize any harmful effects 4.3 What are your views on the value-added and feasibility of the different options (1) (3)? (1) Bringing the main patentability criteria of the European Patent Convention into Community law so that national courts can refer questions of interpretation to the European Court of Justice. This could include the general criteria of novelty, inventive step and industrial applicability, together with exceptions for particular subject matter and specific sectoral rules where these add value. There is no need for such measures. Industry would not be well served by referring such issues to ECJ. Such a system would make patent litigation even more complex, more expensive and more time consuming. What is needed is a system like the one suggested in draft EPLA, i.e which is based on a specialized court with competence to decide all patent matters, could provide a unified litigation system for European patents, including Community patents, and could result in European case law on all relevant patentability aspects. The draft EPLA also provides for a second-tier system for those EPC states that do not want to transfer jurisdiction to the EPLA courts but who nevertheless want to obtain advice from the EPLA appeal court. The draft EPLA is a litigation scheme set up in order to transfer jurisdiction in patent matters to a specialized court experienced in such matters. It is submitted that the ECJ does not meet these requirements.
(2) More limited harmonisation picking up issues which are not specifically covered by the European Patent Convention. Ericsson is not aware of any such issues. (3) Mutual recognition by patent offices of patents granted by another EU Member State, possibly linked to an agreed quality standards framework, or "validation" by the European Patent Office, and provided the patent document is available in the original language and another language commonly used in business. Patent quality is of the utmost importance for the patent holders, licensees, and third parties as well as for the society at large. In view thereof, it is not acceptable to transfer essential activities in the substantive examination process to national patent offices which do not meet the minimum requirements of Rule 36 Patent Cooperation Treaty. Without a good search for relevant prior art documents, it is not possible to obtain a high-quality patent. 4.4 Are there any alternative proposals that the Commission might consider? Ericsson does not have any proposals to offer. Section 5 General We would appreciate your views on the general importance of the patent system to you. On a scale of one to ten (10 is crucial, 1 is negligible): 5.1 How important is the patent system in Europe compared to other areas of legislation affecting your business? (10) There are a number of legislative areas that are of great importance for a company within the telecommunications industry. A good European patent system is one of them. Such a patent system is vital for fostering incentives for innovation and securing returns on R&D investments, but also as a basis for bringing technology forward for standardization of complex systems. 5.2 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? (10) For the telecommunication manufacturer patents are far more important that other IPR rights. Patents protect the development efforts that are prerequisites for advanced industrial activities in Europe. 5.3 How important to you is the patent system in Europe compared to the patent system worldwide? (10) Being a telecommunication manufacturer active on a world-wide market a harmonized world wide patent system of high quality is a high priority. In the absence of that, Europe urgently needs a cost efficient, high quality patent
prosecution system with a rapid, reliable and inexpensive pan-european patent litigation system. Europe s patent system must measure up to those in other important countries of the world. Furthermore: 5.4 If you are re 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? N/A 5.5 Are there other issues than those in this paper you feel the Commission should address in relation to the patent system? No (1) If you would like the Commission to be able to contact you to clarify your comments, please enter your contact details. (a) Are you replying as a citizen / individual or on behalf of an organisation? On behalf of an organisation (b) The name of your organisation/contact person: Ericsson / Gustav Brismark (c) Your email address: gustav.brismark@ericsson.com (d) Your postal address: Torshamnsgatan 23, 164 80 Stockholm, Sweden (e) Your organisation s website (if available): http://www.ericsson.com/ (2) Please help us understand the range of stakeholders by providing the following information: (a) In which Member State do you reside / are your activities principally located? Sweden (b) Are you involved in cross-border activity? Yes, globally (c) If you are a company: how many employees do you have? ~60 000 including recent acquisition of Marconi's telecommunication business
(d) What is your area of activity? Provider of telecommunication equipment and services to mobile and fixed network operators (e) Do you own any patents? If yes, how many? Are they national European patents? Ericsson owns 20 000 national patents (f) Do you license your patents? Yes (g) Are you a patent licensee? Yes (h) Have you been involved in a patent dispute? Yes, in the past and currently (i) Do you have any other experience with the patent system in Europe? We are involved in several activities relating to the patent system in Europe