The Return of European Patent Law in the European Union.

In celebration of Dr. Kurt Haertel's 85th birthday.

Otto Bossung

                       Docteur ès sciences politiques (Lausanne); Vormals Vorsitzender der Juristischen Beschwerdekammer des EPA und Richter am Bundespatentgericht Der Inhalt gibt nur persönliche Auffassungen wieder. - Eine Absprache mit irgendwelchen europäischen oder nationalen Stellen, Verbänden oder Instituten hat nicht stattgefunden.

On September 26, 1995, Kurt Haertel celebrated his 85th birthday in full physical and mental health. Only a few weeks previously, he had ceased his considerable activities at the Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, where he had most recently been involved in the projects concerning a European design patent and a European utility model.

Tribute was paid to the life and work of Kurt Haertel on the occasion of his 75 birthday by Friedrich-Karl Beier, and by Albrecht Krieger on his 80th. The intention of the present author, who was privileged to work with Kurt Haertel for many years, is to present his own version of the ideas that have developed over the last two years in discussions with Dr. Haertel. For the latter indeed has always kept a watchful eye on the European patent system in practice, and reflected on its future development. He has been considering writing an article under the title "The Development of the European Patent System - Vision and Reality". Many of the ideas for the latter have found their way into this present article, and Kurt Haertel has confirmed that it largely corresponds with his own ideas. No doubt he would have chosen a more balanced wording, but the present author has permitted himself to be occasionally provocative, for at issue is a new initiative aimed at achieving a long standing objective, an objective to which the present author finds no alternative and which causes him to press on impatiently.

"European Patent or EC Patent?"

I. Withdrawal of European Patent Law from the European Economic Community.

1. Objectives of a European Patent System

2. "Relationship" of a European Patent System to the Structures and Organs of Political Europe.

II. Necessity of a return to the European Union.

1. Difficulties in Developing the Law within the EPC system

2. The European Patent Office Facing Stagnation and Decline

3. Lack of Political Leadership

4. Fragmentation of All legislative Powers for Patent Law Within the Internal Market of the European Union.

III. Obstacles to a fresh start

1. The situation of Switzerland

2. Waiting for Eastern Europe?

3. Community Patent Convention - A Barrier Against the Future

4. Strangulation of the European Patent by Compulsory Translation into all Languages

a) The Invention as an Intangible Asset Defined Through the Medium of Language.

b) Possible Solution for Translations: Central Collection and thus Reduction to Real Needs. aa) Central collection bb) Restriction to real needs.

IV. The Way Back

1. Questioning the Current Situation

a) Questioning National Law on Article 65.

b) Questioning the Current System of Designation of Contracting States under Article 79 EPC.

2. Obtaining a Political Decision

3. Possible Legislative Instruments for Creating an EU Patent Law

4. From the EPC to the New EU Patent Law- Years of Transition

Back to the fold

"European Patent or EC Patent?"

This was the headline over a report on a lecture by Kurt Haertel in the Neue Züricher Zeitung dated October 16, 1963. Work on a European patent law aimed at a "European patent" had begun in Strasbourg in 1949 with the Longchambon plan. In a speech in 1959, Hans von der Groeben demonstrated the necessity of creating an EC patent alongside the harmonisation of national patent laws, i.e. of establishing a new patent for the whole of the Common Market. This move directed the European patent towards the concept of an EC Patent. As early as 1962, the EC Commission was able to publish a Draft Agreement on a European Patent prepared by a committee of experts from the six EC countries under the chairmanship of Kurt Haertel. In the same year, the United Kingdom officially announced its interest in participating for the first time; however, the negotiations on its EC membership broke down - at least for the time being - definitively at the end of January 1963. Thus the choice between a European patent or an EC patent became a major issue.

I. Withdrawal of European Patent Law from the European Economic Community.

Before the work on the EC patent was finally broken off in July 1965 owing to the lack of agreement on the UK's participation as a non-EC member, intensive discussions were held on the "objectives" of the planned agreement, as well as its political and organisational relationship (or lack of relationship) to the structures and organs of the EC. One year after his lecture in Zurich, Kurt Haertel, speaking in Munich, discussed in detail the "objectives" to be aimed at. At the time, the problem of "relationship" was discussed, with vehemence, more within closed government circles under the French term "articulation". Of this Haertel disclosed almost nothing. However, he did speak of "supervisory control of the European Patent Office by the EC" and of a European Patent Court to be attached to the European Court of Justice in Luxembourg. Nowadays, this no longer seems so strange, particularly if one considers the still little-known European Trademark Office in Alicante in Spain, the official name of which is the Harmonisation Office for the Internal Market (Trademarks, Models and Designs)

1. Objectives of a European Patent System

In the Council of Europe's early work, initiated in Strasbourg in 1949, it had not been possible to define the objectives of a European patent system as roughly the "realisation of a common market", particularly since the belief continued for a long time afterwards that Art. 36 of the former EEC Treaty (now EC Treaty) would in no way affect "industrial and commercial property". The objectives of the Strasbourg discussions were primarily in the field of administrative cooperation. The idea of a uniform patent was only a dream, which, however, would become a "bundle" of national patents, which would be subject to the principle of territoriality once granted.

The 1962 EC draft European patent law, on which work continued until 1965, had, as Haertel explained, two objectives:

a) on the one hand to create a patent designed to meet the requirements of the Common Market, but including the possibility of association on the part of non-members, and

b) on the other hand to create an international patent for an unspecified number of countries, possibly involving an additional agreement for the EC member States with specific regulations for the Common market.

Haertel's argument was that these two objectives were mutually exclusive, pointing out:

"Experience shows that every law, no matter how modern and progressive it may seem at the time of its entry into force, must be amended in the course of time. The EC Member States would no longer be free to adopt such amendments for the purposes of the Common Market, but would be subject to the consent of third countries which might be indifferent or even opposed to such purposes."

The problem of the two incompatible objectives resulted in the division of European patent law into the European Patent Convention (EPC) and the Community Patent Convention (CPC), which has still not entered into force. The main difference between these two agreements is that the EPC formally lacks an obligation with respect to the EU internal market, while this is the principal aim of the CPC.

When the EC countries, essentially only in order to take into account the UK's continued status as a non-member, decided to split European patent law into two agreements with overlapping membership, it was not their intention to abandon the internal-market orientation of European patent law as contained in both agreements taken together as a whole. It was not their desire to set up an EPC without the CPC, for otherwise there would not have been any need to "move from Strasbourg to Brussels" as it were.

2. "Relationship" of a European Patent System to the Structures and Organs of Political Europe.

The earlier projects for a uniform patent law system had essentially been concentrated on a uniform patent granting system. The aim now extended beyond this to facilitating the free movement of goods within the Common Market using rules on the uniform validity and uniform exercise of patent rights to eliminate the internal borders created by patent law - "the bailiff's borders".

This in turn gave rise to the question of the kind of "relationship" to apply between the European patent law to be created and the Common Market. True, EC directives on the basis of Articles 100 or 235 of the EC Treaty had been possible since 1959, but it was still felt at that time that, given the proviso for industrial property in Article 36 of the EC Treaty, it was necessary to proceed by means of separate agreements between the EC States concerning patents, trademarks and designs, respectively. However, it was not possible to achieve any clarity, let alone agreement, on the "relationship" of the proposed agreements and their organs to the structures of the EEC -the "articulation". This may explain why the work on a "Convention Générale" to cover all areas, although well-advanced, remained confidential and is thus forgotten today. This umbrella agreement was intended to establish a "relationship" between the offices to be set up for patents, trade-marks and designs and the Community organs i.e. the Council and the Commission, as well as a specialised court (The European Court for Industrial Property) with its own relationship to the European Court of Justice in Luxembourg. However, it was not clear what could and should be done. The main problem was that the proposed separate agreements and the umbrella agreement were not to be regulations within the meaning of Article 235 of the EC Treaty. Instead, the aim was to establish international agreements restricted to EC Member States. At the same time, however, the organisation thus created was not to amount to a "fourth" community alongside the three existing European Communities.

II. Necessity of a return to the European Union.

Whether a legal system has any future at all depends on who is responsible for its survival by a continuing development of its legislation. This is the question of the power to amend, and thus to determine, the law, and immediately gives rise to the question of what can be expected of the organs that enjoy these powers and of the procedures required to make such amendments. A further factor is the position of the executive within the political structure of Europe, for after all, the executive is responsible for political leadership, which primarily involves the power to initiate the development of the law that is so necessary to keep it alive.

1. Difficulties in Developing the Law within the EPC system

Article 172 of the EPC contains a revision clause that amounts to a major obstacle to amendment and which can only be explained in the light of historical developments. The effect of this clause is to impose a choice between waiting for the deposit of the ratification documents from all (currently 18) contracting states, or accepting the loss of individual members. The effect of this clause will shortly be apparent, since a first revision of the Convention has already taken place. This concerns the substantively uncontroversial amendment of Art. 63(2), allowing, but not obliging, contracting states to grant protection certificates to supplement European patents for pharmaceuticals. The nine deposited ratifications necessary for the entry into force of the revised version were reached on July 4, 1995. This first revision of the EPC in accordance with Article 172 of the Convention will consequently enter into force two years after this date, with the result that by virtue of Article 172 (4) those countries that have not by then deposited their ratifications will no longer be members of the Convention. Thus we are at the start of what is hoped will be a harmless final run-in. However, no government can ultimately totally determine the working procedures in parliament, and there may well be a certain amount of tension, which will confirm the view that Article 172 of the EPC is unsuitable as the instrument for making more fundamental and controversial revisions. It is no exaggeration to claim that the EPC cannot be amended. It will not be capable of meeting the demands of the future that will result from both the EU internal market and the World Trade Organisation (i.e. the TRIPS Agreement)

This fact has hitherto been massively suppressed. Thus the news that the WIPO Patent Law Treaty project has been postponed indefinitely, and consequently that the EPC will be in no urgent need of amendment as a result, was received almost with relief. Instead, attention is now focused on TRIPs, which, it has been reassuringly noted, only imposes the same minimum patent law standards on developing countries as have been in effect for a long time in the EPC. However, what is still largely ignored is that the complexity, the procedures and above all the costs of protection of inventions in Europe in fact make it insupportable as a system for the global community. As far as substantive patent law is concerned, particularly in the field of new technologies, it is reassuring to note that the decisions of the European Patent Office (EPO) boards of appeal in the field of computer patent law have largely overcome the problems satisfactorily. Consequently attention is also focused on these boards as regards the problematic issue of genetic engineering, particularly since greater progress in this field is to be expected from courts than from parliaments.

The German Federal Government is more sceptical on this matter, as expressed in the explanatory memorandum presented to the Federal Parliament on the European Union's genetic engineering Directive:

"Of course, the legislative amendment desirable to Art. 53b of the EPC could also be achieved by revising the EPC. However, given the difficulties that result from the revision mechanism laid down in Article 172 of the Convention, it can hardly be assumed that the EPC contracting states would at present consider any such revision."

Later in this explanatory memorandum on the Directive (assumed here to be future law), the government states that the "Directive shall have no direct legal effect on the EPC or on legal practice under the EPC, but its indirect effects will, on the other hand, be very significant." This is expected to result from "a certain interaction with the current patent granting practice on the basis of the EPC examination guidelines", combined with a "greater degree of harmonisation in the interpretation of European and national patents". However, a recent decision by an EPO appeal board does not quite confirm such hopes. The EPO appeal boards are, after all, only subject to the Convention (Art 23(3) EPC). Nevertheless, a new phenomenon is becoming apparent: a legal act of the EU, indeed a legal act of law-making nature, "affects" the decisions of the EPO's appeal boards. Since EU regulations and directives are binding, or at least exert an influence on the courts of the EU Member States, it must be noted that the revocation of a European patent lies in the hands of the national courts. Of course, these courts cannot confirm a patent that an EPO appeal board has held to be unpatentable, or has revoked on opposition. If a significant difference should develop between the national courts and the EPO's appeal boards on the patentability of certain inventions, the question would then arise whether, in the event of a negative decision on the part of the appeal boards in accordance with Article 135(1)(b) of the EPC, it would be necessary to permit the abandonment of the EPC sector and recourse to the field of national law. This would therefore result in the "conversion" (of the European application) into a national patent application, since the development of EPC law lags behind the national patent laws, which have been advanced as a result of an EU directive. Even the EPO's appeal boards would not be able to resist such a suppression of European law by a more modern national patent law, although their decisions are indeed capable of developing the EPC to a certain extent; nevertheless, they cannot, with legal-policy aims in mind, depart from the wording of the Convention, thereby assuming the role of the legislature.

From the realms of the EPO's Enlarged Board of Appeal, too, voices can be heard that would indicate a need to revise the Convention. Initially, this applies to the possibility available to the Enlarged Board of Appeal of publishing a dissenting opinion from within its ranks. Since according to Art. 112 of the EPC, such publication must always be in connection with an "important point of law", an open conflict among the 7 members (5 legal and 2 technical members) would amount to a demand for action on the part of the legislature. The Enlarged Board of Appeal, at the time of a change in its case law, has already had occasion itself to call for such action.

Finally, the need for a revision of the EPC is gradually becoming apparent in the substantive law concerning the criteria for patentability. This law, at present Articles 54 to 57 of the EPC, is not the best possible law imaginable, but merely the highest common denominator on which agreement could be found at the time in Strasbourg in 1963. The then abandonment of the grace period (Art. 55 EPC), for instance, and the so-called whole contents approach (Art. 54(3)) are not felicitous solutions, nor indeed necessary ones, a fact that was not, however, apparent at the time. It is also questionable whether patent law permits oral disclosures, or a prior use that can hardly be ascertained, to determine the state of the art relevant not only for novelty but also for inventive step. The problems caused by such regulations become obvious when they are not adopted by legislatures that have a subsequent and better understanding of the matter. This is true of the Patent Law Treaty, as well as of the new national utility model law, and finally of the draft European utility model law put forward for discussion and published by the Max Planck Institute. There is thus an "alternative" subculture to European patent law as set out in Arts. 54 to 57 of the EPC. The uneasy feeling that can only be suppressed by the fact that the PLT is no longer a current issue, while the European utility model law is not one yet.

2. The European Patent Office Facing Stagnation and Decline

The EPO has carried out the function allocated to it, namely "to grant European patents on the basis of a system of law, common to the Contracting States" (Arts. 1 and 4 EPC), quickly and efficiently. However, its share of the European market for the protection of inventions has been largely exhausted, since alternative national protection is available for patents and utility models at less expense. It can be cheaper to acquire national patent protection in a few selected partial markets in Europe, and may even offer a number of tactical advantages to the patent holder (deferment of examination, variability of patent claims for registration patents, or incontestability by means of opposition). This national protection can be obtained in many EPC contracting states via the PCT, using the EPO as a search and even examining body. Thus it is sufficient for the patent holder to select a number of national patents to be acquired in part via the PCT and in part directly, to which can be attached a PCT search or PCT examination report issued by the EPO as a sign of quality. The applicant can waive the EPO patent examination, and even more so its opposition procedure. Furthermore, nullity actions are more easily dealt with by national patents than by a bundle of identical European patents.

The number of oppositions filed at the EPO has been in decline for several years. The main reason for this is no doubt that, in comparison with previous attitudes in continental Europe, competitors no longer consider the post-grant opposition as a "participation" in the examination proceedings, the aim of which was to take pre-emptive steps to prevent undesired patent protection for third parties. The increasing importance of Art. 105 intervention to pending oppositions is an indication that competitors are now waiting until the threat becomes acute.

The alternatives of a transformation into a PCT authority, or stagnation, or even decline, represent a valid characterisation of the EPO's current situation, which is exacerbated by the fact that special new forms of invention protection are being established outside the EPO, such as for semiconductor topographies, computer programs or supplemental protection certificates for pharmaceuticals. On the other hand, the discussion draft by the Max Planck Institute concerning the European utility model proposes the EPO as the competent "office". It would however be a curious situation for the EPO to use its own law in the patent sector and EU law in the utility model sector. In contrast, trademarks, designs and models have all been allocated to the Harmonisation Office for the Internal Market (Trademarks, Models and Designs) in Alicante.

The same applies to the commercial law surrounding patent law, such as patent licence agreements, know-how agreements, product piracy, and the jurisdictional basis in procedural and substantive law related to patent infringement (jurisdiction and law on conflict of laws). These fields of law are related more to the Community patent than to the European patent, although not unrelated to EPC law - or, vice versa, the latter is not unrelated to the former. The law concerning patent infringement is rooted in Articles 64 and 69 of the EPC and has a retroactive effect. So-called absolute product protection, i.e. the protection of pharmaceuticals and, at least of equal importance, of inventions in the field of genetic engineering, is not unrelated to licensing law, in particular to any dependent statutory licence. The question of what the purpose of granting patents is, is not entirely divorced from the question of why such patents are granted.

Finally, the question of international technical cooperation in the patent sector has been exhaustively covered by WIPO through the PCT and the PLT, which has surely not been abandoned forever. Thus there remains no place for a European Patent Organisation located somewhere between WIPO and the EU.

3. Lack of Political Leadership

According to the Preamble and Articles 1 and 4 of the EPC, the objective of the EPO is to grant patents on the basis of a law common to all contracting states. This objective was reached with the creation of the EPO. The contracting states are at liberty to grant patents or other industrial property rights outside the scope of the EPC for technical subject matter that is not included in the areas specified in Articles 52 and 53 of the EPC - such as computer programs, semi-conductor topographies or inventions in the field of genetic engineering. It may also be deduced from Article 140 of the Convention that utility model law is also excluded from the tasks of the European Patent Organisation and hence its field of activities. Serving the free movement of goods within the EEC, or - in more modern terms - the implementation of the EU internal market, is not among the objectives mentioned by the EPC. It would also be difficult to maintain that the EPC's raison d' tre is to act as the precondition and basis for the Community patent. Such a conclusion cannot be deduced in law either from the Preamble or from Articles 142 to 149 of the EPC. And although the revision clause in Article 172 permits repair work to what has already been achieved, it does not represent an instruction to develop the EPC beyond such repairs to achieve a specific objective. The Community Patent Convention, on the other hand, was, as can be seen in the Preamble and the attached Memoranda, established with the primary objective of serving the implementation of the internal market by means of a uniform patent law. However, the EPC, which provides the basis for the CPC, contains no mention of any objectives over and above the grant of uniform patents. The invitation to participate in the work on European patent law issued by the EC countries in 1968 to non-EEC members was not intended to result in relinquishing control over a major aspect of patent law, preventing themselves from employing this part of patent law for the purposes of the internal market (Art 7a and 100a EC Treaty) and the technological development of the Community (Art. 130 f EC Treaty)

Without an agreed objective there can be no political mandate. Consequently the executive organs of the EPO, i.e. the President of the EPO (Art. 10 in conjunction with Art 4(2) EPC) and the Administrative Council (Art. 4 and 26 et seq.) are focussed "inwards", on the functioning of the Office. The Administrative Council is pre-eminent priority in the management of the Office, as can be seen inter alia from its budgeting powers, its power to determine derivative law and the powers of revision provided by Article 172 of the EPC. The President of the EPO does not even enjoy a monopoly in the submission of proposals. Thus his position is incomparably weaker than that of the President of the EU trade mark Office, whose power emanates from the EU Commission. As a result, the EU Community trademark enjoys a totally different relationship (or "articulation") to the political organisations of the EU.

Thus the management of the EPO is dominated by the delegates of the contracting States in the Administrative Council. It is entirely natural that their thoughts and actions are primarily guided by their responsibilities in the national sector. Hence it is national interests, the interests of the national patent offices, national patent attorneys, national lobbies, national business sectors and other national interests, that are the decisive forces within the Administrative Council of the EPO. It follows that this body's efforts can only be of limited success, and only within the narrower field of the EPO's function, namely "to grant European patents" (Art. 4(3) EPC). It is hardly surprising that the long "strategy" debate in the Administrative Council has not led to a new orientation.

4. Fragmentation of All Legislative Powers for Patent Law Within the Internal Market of the European Union.

The law on protection of inventions, i.e. patent and utility model law, first appeared on the international stage through the 1883 Paris Union. Since 1963, the Strasbourg Convention on the Unification of Certain Points of the Substantive Law on Patents for Inventions has played a role worldwide, influencing not only the EPC and national patent laws in Europe, but also the WIPO Model Laws for developing countries, the PCT, the PLT and TRIPS. In addition, the major patent law agreements of the 20th century, i.e. the PCT, the EPC and the pending CPC, have had an influence on the relevant laws extending well beyond their own limits. An added factor since about 1970 has been the case law of the European Court of Justice on the free movement of goods, with EU law in the form of directives and regulations related to patent law making its first appearance in about 1980. The direct and indirect interrelationships are manifold, and restrict the scope available to national parliaments, which still largely enjoy sole legislative competence. The problems that derive from the resulting system lie less in the governments' inability to reach agreement than in the involvement of a large number of national parliaments with but little interest in patent law, particularly since they are scarcely able to participate in the decision-making process.

The following outline (with classification numbers) demonstrates the entanglement of legislative powers for patent and utility model law, as well as for related commercial law:

(100) National patent law continues, at least formally, to dominate the field. A further factor is that any major development of international (or European) law must be ratified by the national parliaments.

(200) Universal international patent law, in the PC, PCT, TRIPs and perhaps the PLT one day, is of considerable significance but hardly a restriction on development, since these agreements mainly lay down minimum standards.

(210) National patent law to implement such law, e.g. the application of Paris Convention law or PCT law, such as the "entry into the national stage".

(300) European international law: primarily the EPC, but also includes the Strasbourg Patent Convention.

(310) National law as amended by the harmonisation process (indirectly via the EPC, in particular Art. 138; directly via the Strasbourg Convention)

(320) National law relating to the EPC, i.e. national law implementing the EPC, above all the regulations concerning the so-called "nationalisation" of the European patent, i.e. the submission of translations.

(400) Patent law of the European Union

(410) Case law of the European Court of Justice (included here as law, since it precedes national legislation)

(420) Enacted EU law, through regulations pursuant to Art. 235 of the EC Treaty (the Community trade mark, but not - yet - in patent law), Article 100a (such as the supplemental protection certificate for pharmaceuticals) or through directives pursuant to Art. 100a (e.g. the protection of genetic engineering inventions).

(421) National law implementing EU directives (such as, in the field of trademark law, the German Trademark Law Reform Act.)

(500) Supplementary EU law, of which the only example is the Community Patent Convention, which of itself is a European international agreement, i.e. a classical international agreement. However, since its sole intention is to serve the EU internal market, membership, as a matter of principle, is only open to EU countries. It is only for historical reasons that this agreement does not have the same legal form as the EU Regulation on the Community Trademark.

European trademark law took much longer to develop, but produced much simpler structures, namely the Community Trademark based on an EU regulation and an EU directive harmonising the national laws.

Additional EU law has developed in proximity to patent law, namely in the field of computer programs, semi-conductor topographies, supplemental protection certificates for pharmaceuticals and genetic engineering inventions. In addition there are projects concerning designs and utility models. All of these will be stimulated by the EU's share in responsibility for TRIPs.

It is outside this increasingly dense network of EU legislation in the field of industrial property that both the European patent and the Community patent are to be found. It may be predicted that the legislative powers set out in the outline above will have to be focussed towards the EU. Starting backwards from the end of this outline - i.e. from classification number 500 downward - the result would be as follows:

(500) The CPC and its contents will return to their origins, namely to "(400) Patent law of the European Union".

(300) The EPC will be transformed into an EU regulation pursuant to Art. 235 of the EC Treaty, with a revision of important elements of the contents, thus providing the basis for "(400) Patent law of the European Union". The latter could gradually be expanded by the addition of the contents of the CPC and of an EU utility model.

(200) This is also partly absorbed by "(400) Patent law of the European Union", thanks to the EU's involvement in responsibility for TRIPs and because the EPC is a "regional patent law treaty" within the meaning of the PCT, with the EPO acting as an office with PCT functions.

(100) Naturally, national patent law remains, but with its substantive elements harmonised (directly or indirectly) with "(400) Patent law of the European Union".

The stimulus for such a restructuring will be the realisation that the CPC has been overtaken by events, in particular by the fact that the EU has been given responsibility at world level for industrial property in Europe. This development imposes the fusion of the present contents of the EPC and the CPC in revised form to form a single patent law for the EU, to which a possible European utility model could then be added.

The new structure of enacted legislation in the field of patent law within the EU as described briefly above complies with the subsidiarity principle of Art. 3b of the EC Treaty, since "the objectives of the proposed action cannot be satisfactorily achieved at Member State level" (the efficiency test), and "by reason of the scale or effects of the proposed action be better achieved by the Community" (the "value-added test").

The national patent offices will continue to be of importance for the protection of inventions. In the long term, this will be their main or complementary function. The national offices will remain indispensable as regional intermediaries for the provision of patent information and of European invention protection.

III. Obstacles to a Fresh Start

1. The Situation of Switzerland

Switzerland is the "flag" at the EPC that makes it doubtful whether the EPO can simply be done away with by rewriting the EPC as an EU regulation. However, in this respect there has long existed the possibility of "participation of third states". On closer inspection, the latter even amounts to "privileged membership on the country's own special terms". A participation model prepared in collaboration with Switzerland will first of all apply to Liechtenstein and Norway, and is then to be extended to other countries of western or eastern Europe with close commercial connections with the EU.

2. Waiting for Eastern Europe?

Between the EU and the EPO in the west, and the CIS and its project for a Eurasian Patent Office in the east, there lie a wide range of very varied countries that are inclined towards the west. Anyone with detailed knowledge of our various eastern neighbours must realise that EU accession, after a necessary period of convergence, is unavoidable. This will also mean full integration within EU patent law. The situation is not like that between 1963 and 1968, when the European patent project was seen as the waiting room to the EEC. For the countries of eastern Europe, there is a graduated range of possibilities of convergence towards the European patent system: harmonisation of laws, use of the EPO as PCT authority, use of the EPO as granting authority with extension of patent. It would not be beneficial for the national economies of eastern Europe currently in the process of transformation to adopt western European patent law in its entirety immediately and unquestioningly. A cautious convergence combined with the critical adoption of individual elements of the EPC and the CPC would be a sensible means of bridging the gap until EU accession. Moreover, it would be possible for these countries to participate in the European patent system before joining the EU. Viewed historically, such participation was created precisely to permit membership of the European patent system independently of EU membership. It thus follows that the EPC as such has been overtaken by events also because EU patent law permits the participation of non-EU states in a variety of different ways. The return of European patent law to the EU would enable it to be amended and furthered; and it is precisely in the interest of the expanded Union that this return should not be postponed until the eastern European countries have already joined the EU.

3. Community Patent Convention - A Barrier Against the Future

The objectives and driving forces behind the efforts towards a European patent started in 1959 were to create "a patent for the common market", thus helping "the free movement of goods" to cross the "bailiffs' borders". These objectives remained for the Community Patent Convention, for a long time a matter close to the heart of the German delegation. However, it received the kiss of death as a result of the obligation to translate the Community patent into all ten official languages of the now 15 Member States. As Van Benthem says, "this corpse should not be allowed to accede to the throne."

There is also a major legal reason why the Community Patent Convention, but not the Community patent, must be abandoned. The CPC is a classical international agreement and not a legal act of the EU. For purely historical reasons, the Community patent was not given the same legal form as the Community trademark, namely an EU regulation pursuant to Art. 235 of the EC Treaty. In the meantime, the European Court of Justice has also approved this legal form as the basis for "protective rights extending beyond the EU Member States". The decisive difference in practice from a classical international agreement is in the manner in which it is revised. Similarly, a regulation pursuant to Art. 235 is also difficult to introduce and revise, given the requirement for unanimity in the Council. The position is different for the EPC and the CPC, which are international agreements outside the legal system of the internal market. Article 172 makes the EPC practically impossible to revise, although those wishing to maintain the Convention refuse to admit this fact. The CPC, on the other hand, cannot be revised at all now that the EU comprises 15 Member States, ratification by all of which would be required for any revision. It is also true that a regulation pursuant to Art. 235 of the EC Treaty requires the unanimous consent of the Council. However, this consent is merely a single process, in which consent can be achieved through diplomatic negotiations. In addition, special conditions for individual countries included within a regulation pursuant to Art. 235, such as reservations like those contained in Art. 167 of the EPC, are less easy to enforce, a factor that is of particular importance for new technologies.

On the other hand, it is possible to imagine that the CPC - as a means of securing its laboriously-won contents - could initially enter into force and then be transformed into an Art. 235 regulation on the occasion of its first revision. However, in the long term, the result would be the same. The EPC would remain an "international" agreement and the CPC would become an EU "Community Patent" regulation. This, however, is not how the EPC and CPC are at present designed, and they do not interact in this manner. The "special agreement" pursuant to Arts 142 to 149 of the EPC would need to be replaced by an agreement between the EPO and the EU to deal with the difficult institutional "relationship" of the EPO to the EU. The EPO was not created to act simultaneously as a patent granting authority within a classical international agreement and as the "Community Patent Office", and perhaps even as the "Community Utility Model Office" within the framework of EU regulations. In other words, the EU should take over the institutional responsibility for the EPO.

4. Strangulation of the European Patent by Compulsory Translation into all Languages

a) The Invention as an Intangible Asset Defined Through the Medium of Language.

Inventions as an intangible asset requiring protection are defined through the medium of language. The binding language is the EPO official language in which the patent is examined and granted, and there is no legal or administrative need for translations after grant of the patent, i.e. after binding definition of the protected subject matter. However, such translations are often useful for the exploitation of the patent or the exercise of rights, and in such cases, a competitor may even enjoy a right to receive a translation in a language he understands at a very early stage. The same applies to the public interested in commerce or technology. Nevertheless, translations serving the purpose of information can be supplied if and when required, in sofar as they are not, of course, already available from the international patent family.

The overwhelming majority of translations prepared under the threat of retrospective loss of protection are worthless. The fact is that no-one reads them, not even the patent attorney who certifies them for submission to a national patent office. The translation costs are a pointless charge. Translations, as merely so-called "B" documents, cannot be used to establish a patent documentation in the national language. There are also better ways of promoting the European profession of authorised representative outside the major centres. Translation costs tend to have the opposite effect, obliging the patent holder to waive patent protection for a wide geographic area, concentrating instead on selected sub-markets within the internal market. As a result, the European internal market will be divided into an area under patent protection and an area free of such protection. At the very least, this will impair market transparency, and in many cases the consequence will be an effective division of the market with varying competitive conditions.

Van Benthem was no doubt the first to calculate the total costs of translation, coming to a figure of over DM 1000 million. This was followed by other, even higher calculations. Since these calculations generally assume a series of seven designations, resulting in costs of roughly DM 25 000 per patent, the chemical and pharmaceutical industry, which regularly designates all the countries, has to pay almost DM 40 000 per patent. Hence more costs are incurred within the first three months after grant of the patent than the total amount of fees payable to the EPO before grant.

In the meantime there have been a number of articles on the topic of translations, some attempting to justify them and others expressing serious criticism. The justifications also point to the "other DM 1000 million" spent in particular by the EPO on personnel, as well as the fees charged by patent attorneys and finally the high annual renewal fees charged by the national patent offices without actually providing any services. It goes without saying that cost-cutting and the transfer of renewal fees to the EPO are necessary. However, the expenditure on such matters is but a fraction of translation costs, and, in particular, such costs do not have a prohibitive effect the consequence of which is the enforced waiving of patent protection for a number of the contracting states, and hence the division of the internal market.

Now that every European patent in English or French must be translated into German, massive criticism of the costs of translation is heard, particularly from the USA. However, applicants from all GATT countries are affected. The prohibitive costs of patent protection in Europe caused by translations is reaching TRIPs proportions ("shall not be unnecessarily ... costly"), and thus a matter for the European Commission.

b) Possible Solutions for Translations: Central Collection and thus Reduction to Real needs.

aa) Central collection

This author, too, has published a study of the "costs of nationalising the European patent", demonstrating that the actual translation costs amount to only 50% of the total. Of the other half, roughly 12% is accounted for by national patent office fees, 20% by patent attorneys' costs (provision of a service address and submission to the national office, plus any certification of the translation), and finally 18% by the applicant's own costs. The administration of the translation system involves a number of absurdities and illegalities: translations into German are printed twice (Munich and Vienna) and filed once (Berne); those into English are printed twice (London and Dublin), while those into French are submitted, registered and filed up to three times (Paris, Brussels and Berne). Alongside a publication in Swedish costing approximately DM 300, there is one in Danish costing twice as much. The compulsory use of a national patent attorney in a number of countries is an infringement of the EPC itself, as well as of the free availability of services in the internal market.

The costs of administering the translation system could be cut significantly by replacing it with a central collection at the EPO's EPIDOS documentation centre, where similar services (patent families, documents, information) are provided using the latest telecommunications systems and CD-ROM storage. In this respect, the CPC, with its central administration of translations in which everything can be handled by the patent attorney who has been responsible for the proceedings at the EPO, is an improvement on the EPC. Van Benthem may be right when he argues that the Community patent could become a dead letter as a result of the translation problem. Curiously, the Community patent, thanks to its centralised administration, would be cheaper than a group patent for the same countries. This is the result of the development of the requirements under national law for local translations pursuant to Art. 65 of the EPC. Even the originally liberal countries have fallen like dominos. This process is irreversible, since dominos tend to fall one after the other, but do not tend to get up again.

Consequently, the centralisation of the administration of translations at the EPO must come from elsewhere and not as a result of long, drawn out amendments to all the national laws. One solution would be a regulation pursuant to Art. 100a of the EC Treaty, which would permit patent holders to choose between compliance with national regulations and a centralised submission. At the moment, the membership of the EU is almost identical with that of the EPO. The case law on Art. 65 of the EPC is not international law, but rather the national law of the EU states, and is extremely relevant to the internal market. The only unusual feature of this solution would be that an EU regulation pursuant to Art. 100a of the EC Treaty would create rules that would apply alongside existing national laws. The effect would be, however, that they would replace the national regulations, of which the only residue would be (initially) the translation requirement as such. This requirement could be complied with more easily and, for several countries at the same time, e.g. one translation into German would be sufficient for Germany, Austria and Switzerland (to the extent that the latter applies the regulation). Moreover, it would be shown that, at least where the translation merely serves as an aid to understanding, translation into all the languages is pointless, such as translation into all Scandinavian or all Romance languages.

The current administration costs of over DM 500 million (50% of total costs) would be reduced to a fraction. All translations would be submitted directly to the EPO and the multiple printing and multiple administration would be replaced by CD-ROM storage accessible on-line by anyone interested.

bb) Restriction to real needs.

The penalty used to enforce the provision of translations within three months after grant of patent, namely the retrospective loss of patent protection in the country concerned as provided by Art. 65(3) of the EPC, is out of all proportion. The development of this regulation has taken a completely wrong direction. Article 65 of the EPC was originally intended only for non-EC members with an official language that was not an EPO official language. The EC countries had interpreted and intended the EPC and the CPC to be a single unit, and consequently only the CPC law was to apply for the territory of the EC. The 1975 CPC only provided for translation of the patent claims into those languages that were not contained in the European patent already granted. Today, however, Article 65 of the EPC has imposed itself on the EU internal market, dividing it by driving patent holders to waive protection in a part of the internal market in order to avoid completely unnecessary translations, which thus amounts to nothing less than a prohibition. As a result, on closer inspection it is apparent that only Switzerland is entitled to apply the penalties provided for in Art. 65(3) EPC.

Within the EU, this penalty amounts to a violation of Community law and is hence invalid. Other kinds of penalties that result from the fact that the prosecution of an action deriving from a patent largely depends on timely submission of a translation remain valid. The offence of patent infringement also involves the appropriate tort, namely intention or negligence, and this is probably dependent everywhere on the timely availability of a translation. This even applies to the pre-trial stage, i.e. before a translation into the language of the court is required for the court proceedings. In the opinion of this author, national law that imposes retrospective loss of protection in the absence of a translation pursuant to Art. 65(3) of the EPC violates Community law. Other penalties would appear permissible, namely such as to subject the enforcement of patent rights to the availability of a translation, or even to create user rights, or, finally, to provide that the need for information on the part of the competition must be satisfied in an appropriate manner. Since such penalties are not at present contained in any of the national laws of the EU member States, unless derived from general legal principles, such penalties could also be created uniformly in an EU regulation pursuant to Art. 100a of the EC Treaty. The submission of translations would then only be necessary to prevent the creation of user rights, to enable the enforcement of rights or to satisfy the competitor's need for information to the extent that this is not already satisfied by the patent family.

IV. The Way Back

1. Questioning the Current Situation

Any reversal must no doubt call the existing situation into question in order to be able to come to a decision. The re-discovered objectives will then show the way back and also indicate solutions to the current problems.

a) Questioning National law on Article 65.

The EPC Contracting States have, in various ways, exceeded their powers under Art. 65 of the Convention in a manner firstly in violation of the Convention itself and secondly in violation of Community law.

The most serious charge is addressed at those countries that require a translation of the full text of the European Patent specifications even though the patent claims are available in one of their official languages. A country whose needs have already been satisfied by Art. 97 of the EPC should not be entitled to require satisfaction via Art. 65 of the Convention. There is no point whatsoever in such duplication, which was never intended and which contradicts the previous implied understanding. Today, the delegations are implicitly tolerant of each others overstepping the powers granted to the Contracting States by Art. 65.

As far as concerns the individual regulations in national laws, the above applies in particular to the national obligation to use an attorney, either a direct requirement or the indirect consequence of the requirement for a service address or even an unjustifiable obligation to submit certified documents. There can be no reason for requiring the certification of translations once the claims for a European patent have been examined and the patent granted. Any translation errors will be to the detriment of the patent holder in the event of subsequent legal proceedings.

The limits of what is permissible are also probably exceeded by the fees charged by the national patent offices in accordance with Art. 65(2) of the EPC. The Countries that publish the translation in the form of a printed publication are entitled to charge for the cost of this publication. The costs required by Denmark and Austria appear suspicious when compared with those of neighbouring countries (Denmark: DM 695 compared with Sweden: DM 287; or Austria: DM 965 compared with Germany: DM 250). The fees charged by countries without printed publications also raise doubt as to their legality, such as the DM 540 charged by Greece or the DM 352 charged by Spain, while other countries charge far less, with Belgium and Switzerland waving charges altogether.

Consequently, consideration should be given to the initiation of test cases questioning, for the territory of the EU, the legality of the penalties under Art. 65(3), and of the mandatory representation by a national attorney and the unjustified charges, neither of which are covered by Art. 65(1) and (2) of the EPC. Such protest actions, like any protest, will appear ridiculous but will prove to be justifiable and effective in the course of the discussion. Change can ultimately only be achieved by pressure.

b) Questioning the Current System of Designation of Contracting States Under Article 79 EPC.

This system, too, has developed in the wrong direction and needs to be called into question. Irrespective of a country's commercial importance, the same designation fee of currently DM 350 is imposed for each one. For all contracting states, 16 designation fees are levied, making a total of DM 5600. The figure is DM 5250 for the territory of the internal market, with a registration fee of DM 600 and a fee for grant of DM 1400. In the first place, this means the abandonment of the principle that the fees should cover costs, while at the same time the result is a division of the internal market. Since the current membership of the EU corresponds almost completely with that of the EPC, there is some justification for considering the EPC as an agreement serving the internal market. Such a purpose is not compatible with the development of the designation fee system; the latter is ultimately due to the fact that the contracting states retain an excessive amount of the income deriving from the annual renewal fees for European patents. That change is necessary here is also shown by comparison with the PCT, where the designation fee is currently DM 214, and where ten fees will cover all PCT countries, i.e, the whole world, including the EPO as designated office.

A test case should also be considered on the matter of designation fees; the designation fee of DM 350 could be paid under protest for Luxembourg, the smallest EU country, and then contested as being excessive in both relative and absolute terms. The action would come before the Enlarged Board of Appeal of the EPO if the issue merely concerned whether and to what extent the designation fees are permitted to be used to cover financial deficits actually resulting from inadequate procedural fees or from the retention by the contracting States of an excessive share of the annual fees. It could be argued that not only the national laws of the EU Member States must comply with Community law, but also that of the EPC. For, ultimately, the EPC's function is to serve the internal market, as is shown by the overwhelming identity between EU and EPO membership. It can indeed be asked whether EPC law is in any relationship whatsoever to the EU legal system. The EU Member States violate Community law by financing the EPO in such a manner as to impose upon patent applicants a form of behaviour that leads to a division of the internal market.

2. Obtaining a Political Decision

The EPC and the CPC tandem has outlived its usefulness within the wider stage of international and European patent law. For this reason, a decision is necessary that will replace the EPC by an EU Regulation to include parts of the CPC while at the same time amending the EPC itself. It goes without saying that in the process the problem of translations will have to be overcome, and the above suggestions are offered as a possible solution.

The basic political decision to "return European patent law to the European Union" can only be made by the EU Member States. For both legal and political reasons, unanimity will be required. Switzerland, too, as a party concerned, can and ought to participate.

The initiative would have to come from the governments of as many EU States as possible as well as from the European Commission. The impetus can only come from European industry. It should not be waited until the World Trade Organisation warns the governments and the Commission that the patent law chaos in Europe is inconsistent with TRIPs requirements.

Moreover, participation will be expected from many sides: ministries and patent offices of the contracting States, the EPO and its staff, the professional representatives before the EPO, the academic institutions, and the associations for industrial property protection. Perhaps this new start will give rise to a European association corresponding to the German Association for Industrial Property Rights and Copyright. The essential features of the latter are that it does not serve any specific group interests, that it gives emphasis to its members as individuals committed to the protection of industrial property, while their professional involvement is of secondary importance. As a result, these members are able to develop their own specialist knowledge and commitment to the cause. The group interests that also exist here are largely neutralised within the association. Put humorously: industry and patent attorneys hold each other in check, thus letting others also make moves.

3. Possible Legislative Instruments for Creating an EU Patent Law

The European trademark law problem of the "relationship" of this law to the structures of political Europe, which appeared insurmountable in the 1960s has been solved, and European trademark law, on the back of a regulation pursuant to Article 235 of the EC Treaty, has overtaken European patent law. In the meantime, the Community's legal system has been strengthened by the Single European Act (1986) so that a new form of European legislative instrument, namely a regulation pursuant to Art. 100a of the EC Treaty, is now possible by a majority decision. Maastricht (1992) also produced an important development, in particular with respect to the involvement of the European Parliament; its revision in 1996 at least promises to achieve a simplification and greater transparency in the legislative proceedings of the EU. To this must be added decisions of the European Court of Justice on TRIPs jurisdiction and on supplemental protection certificates.

This automatically raises the question whether the European trademark law could be overtaken by the more modern procedure of an Art. 100a regulation for European patent law. However, this is premature for both legal and political reasons. After all, the ultimate objective is to replace the EPC and the CPC, both inter-governmental agreements by EU law.

It is only in our imagination that we can consider the distant future of a European federal development. The EU may not be a federal state, but nevertheless it is an association of states with its own legislative powers. A similar phase was also experienced by the so-called classic federal states (USA, Germany and Switzerland). If the EU is able to overcome its current weakness and does not collapse like the Attic Alliance of antiquity, the question of a greater democratic legitimation of its legislative powers will arise. This means that the European Parliament's right of involvement in Council legislation will be reversed to create a power of legislation for the European Parliament with the Council participating as a "second chamber". A glance into history reveals the following in the constitutions of the classic federal states:

- Constitution of the United States of America, dated September 17, 1787: Art. I. Sec. 8: "The Congress shall have Power....To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

- Constitution of the German Empire, dated March 28, 1849: Chapter II, Art. I, Sec. 40: "Invention patents shall be granted exclusively by the Empire on the basis of an imperial law; the imperial authorities shall also be exclusively entitled to legislate against the reproduction of books, unauthorised copies of works of art, factory marks, designs and utility designs and against any other impairment of intellectual property."

- Constitution of the German Empire, dated April 16, 1871: Chapter II, Imperial Legislation, Art 4: "The following matters shall be subject to regulation and legislation by the Empire: ...5. Invention patents; 6. Protection of intellectual property..."

- Constitution of the Swiss Confederacy, dated May 29, 1874: Chapter I. Art. 64: " The Confederation shall enjoy legislative power for: ... Copyright in works of literature and art; the protection of industrially applicable inventions including models and designs."

It is out of these legislative powers that the essential elements of patent law emerged as were needed for the development of these countries' internal markets and technologies.

It is certainly too early for the transfer of similar powers to the European Parliament. The first requirement would be a definition of such powers within Article 100a of the EC Treaty so as to supplement the general clause contained in the latter with a number of express powers. This is what Von der Groeben finds lacking in the EC Treaty and which led the European Court of Justice, in its most recent decision, to reject an interpretation of Art. 100a of the EC Treaty preferred by the Commission. However, the European Court of Justice largely includes industrial property protection within the EU legislative powers, at least within the powers pursuant to Art. 235 and also to a considerable extent within those pursuant to Art. 100a of the EC Treaty. Further improvements could also be achieved by the 1996 Maastricht revision by permitting legislation in accordance with Art. 100a of the EC Treaty by means of an addition to the general clause granting express authority for industrial property protection.

4. From the EPC to the New EU Patent Law- Years of Transition

The legal measure creating the new EU Patent law will thus be an EU regulation revising and unifying the contents of the EPC and the CPC. This will need time, during which, however, the EPC can already commence its development towards the new future.

Above all the Administrative Council as legislative organ for statutory instruments can contribute to this process. Of course, the latter is not the place for an anticipatory revision of the EPC, but it does enjoy a certain scope of action particularly in procedural law. Here, the first consideration is the long overdue introduction of a joint designation of all EU Member States. Another example could be an anticipation of the CPC proceedings for the limitation of patents. In such a case, the patent holder, faced with a pending opposition, may expressly be given the opportunity to limit his patent irrespective of the state of the art and of the actions of the opponent, even at the appeal stage.

At the request of the applicant, the EPO administration could postpone the grant of a patent already at granting stage. An early grant of patent is notoriously a penalty on anyone who has not yet reached an exploitation for his patent, since the costs of so-called nationalisation, including translations, arise prematurely. A "postponement on request", or a "deferred grant of patent" - after conclusion of the examination - for up to seven years after the application date could act as a reward to those applicants who contribute to an acceleration of the examination process by waiving the many possibilities of delaying the process (so-called "going slow"). Of course, account must be taken of the interests of a competitor in the activation of the deferred grant of patent in order to permit him to file an opposition.

The European Commission could initiate an EU regulation providing an alternative system to the still valid national laws under Art. 65 of the EPC (submission of translation). This might include the centralisation of the administration of the translation system, using an EU regulation pursuant to Art 100a of the EC Treaty.

The European Commission will also have a very important role to play namely to hold discussions with the USA on the expectations that both parties might have of GATT and TRIPs. The European Court of Justice has already granted the Commission the power to conduct negotiations. Old and well-known topics remain on the agenda, in particular those dealt with by the WIPO draft of a Patent Law Treaty. A new era in Europe's foreign relationship in the field of industrial property protection is about to begin and the EPC sector can hardly be excluded.

Back to the fold

As at the time of the first steps taken towards European patent law in Strasbourg in 1949, or the second in Brussels in 1959, and the third in Luxembourg in 1969, 1996, too, - carried along by Maastricht II - could be on the verge of a new start: back to the fold. The objectives of European patent law would once again have to be directed towards "establishing the internal market" (Art. 7a and 100a of the EC Treaty) and towards "strengthening the technological basis of the Community's industry" (Art. 130 et seq. of the EC Treaty). The younger ones amongst us would be able to find their way out of the present state of confusion and commit themselves to the reconstruction of the house of European patent law. The older ones amongst us, above all Kurt Haertel, would then have the pleasure of seeing the question of "European patent or EC patent" solved in a future patent law of the European Union.

Source: IIC, Volume 27 No. 3/1996

International Review of Industrial Property and Copyright Law.

Published by the Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, Munich.