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News : Innovation Last Updated: Mar 9, 2011 - 3:44 PM

European Court of Justice opinion deals blow to planned pan-European court for patent cases; Plans for common patent proceed
By Finfacts Team
Mar 9, 2011 - 3:10 PM

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EPO- European Patent Office:“Economic Cost-Benefit Analysis of a Unified and Integrated European Patent Litigation System” (pdf), by Prof. Dietmar Harhoff, Ph.D., Ludwig-Maximilians-University, Munich.

Europe's Court of Justice (CJEU), the EU's highest court, has dealt a blow to attempts to create a pan-European court to handle patent litigation, saying it would break EU law.

The justices said in the legal opinion issued Tuesday, which is not binding but followed in most cases, "would alter the essential character of the powers conferred on the institutions of the European Union and on the member states."

At present, alleged infringements of patents have to be challenged in national courts, creating huge costs that smaller companies have trouble covering.

The European patent court was to handle cases for 38 states, including all EU countries but also states like Turkey and Switzerland.

There have been objections to countries such as Spain and Italy to a Union-wide patent because their languages are not qualified filing languages and 12 countries are supporting a move to progress the issue despite their objections: the countries are Denmark, Estonia, Finland, France, Germany, Lithuania, Luxembourg, the Netherlands, Poland, Slovenia, Sweden and the UK.

A European Patent validated in only 13 member states can cost up to €18,000, of which nearly €10,000 arises from translation fees alone. This has created a situation in which the cost of a European Patent is ten times greater than a US patent, which costs on average €1,850. Because of the costs involved, most inventors only patent their invention in a very limited number of member states.

SEE: China promotes flood of patents while Europe tries to break patent logjam

The European Commission (EC) has welcomed the opinion of the Court of Justice. Now that the opinion is available, the Commission said it will analyse it very carefully with a view to identifying appropriate solutions.

The EC said the opinion should have no impact on the decision to be taken by member states on Thursday March 10th at the Competitiveness Council following the consent of the European Parliament authorising a move to enhanced cooperation in the area of unitary patent protection.

The EC said the creation of unitary patent protection is legally distinct from the creation of the European Patent Court. It is important to maintain the momentum to bring decades of discussion on the EU patent to a quick and successful solution through enhanced cooperation.

In parallel, the Commission said it will work equally quickly to find an appropriate way forward for the patent litigation system following the Court's opinion.

The CJEU was asked to deliver its opinion in June 2009. It found that the envisaged agreement on the European Patent Court in its current state is incompatible with the EU treaties.

The Commission said it will analyse the concerns raised by the CJEU very carefully and will work with the Presidency of the Council and the member states to find as quickly as possible the best solutions in the interest of the patent system and its users.

The agreement on the European Patent Court and the creation of the unitary patent protection through enhanced cooperation are two distinct projects. The EC said there is no legal reason for member states not to adopt the decision authorising enhanced cooperation creating unitary patent protection on this Thursday.

The envisaged creation of the European Patent Court

The objective of the envisaged agreement, as it was submitted to the CJEU, is to set up a unified Patent Litigation System with a view to reducing the existing cost and complexity resulting from parallel litigation in several member states and providing legal certainty by avoiding conflicting judgments.

The European Patent Court as envisaged by the draft agreement would consist of a Court of first instance (with a central division and local and regional divisions in the different member states) and an Appeal Court. It would have exclusive competence for proceedings relating to European patents granted by the EPO and for the unitary patent protection. The European Patent Court would be obliged to make a preliminary reference to the CJEU in case of doubts about the interpretation of EU law.

The European Patent Court would be set up through a "mixed agreement" between the EU, its member states and third countries who are Contracting States of the European Patent Convention.

EU Patents Single Market

US Reform

The US Senate on Tuesday passed a bill that would overhaul the nation’s patent system, giving the Patent and Trademark Office
(USPTO) more flexibility to control its own financing and changing the system to one that rewards the first inventor to file a valid application.

The New York Times said the House is unlikely to take up a patent bill anytime soon, and people with an interest in the patent system say they expect its bill to be significantly different.

The White House said that by moving the United States to a first-to-file system, the bill simplifies the process of acquiring rights. This essential provision will reduce legal costs, improve fairness, and support US innovators seeking to market their products and services in a global marketplace. Further, by providing authority for the USPTO to establish and adjust its fees to reflect changes in costs, demand, and workload, the bill would enhance productivity – reducing delay in the patent application process - -  and ensure full cost recovery at no taxpayer expense. The Administration said Senate passage of this bill is consistent with the Administration’s commitment to support and encourage innovation that leads to improved competitiveness, economic prosperity, and job growth - -  without adding a penny to the deficit.

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