Abstract
This article suggests that the consequences of the ‘fragmentation’ of the European patent system are more dramatic than the mere prohibitive costs of maintaining a patent in force in many jurisdictions. The prevalence of national jurisdictions, which are highly heterogeneous in their costs and practices, over the validity and enforcement of European patents, induces a high level of uncertainty and an intense managerial complexity which reduce both the effectiveness and the attractiveness of the European patent system in its mission to stimulate innovation.
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Notes
Convention on the Grant of European Patents (EPC), done in Munich, 5 October 1973, revised version that entered into force on 13 December 2007.
cf. van Pottelsberghe de la Potterie (2009) for recent data on this issue.
Agreement on the Application of Article 65 EPC (London Agreement), done in London, 17 October 2000, OJ EPO 2001, 549.
According to Art. 138 of the EPC there are three possible grounds of opposition: the claimed invention is not patentable (either because the subject matter is excluded from patentability or because it lacks novelty or an inventive step); the specification of the patent does not reveal the invention sufficiently clearly and completely for it to be carried out by a person skilled in the art; or the subject matter of the European patent extends beyond the content of the European application as originally filed.
EPC, Article 105(b) (3) Limitation or revocation of the European patent.
EPC, Article 137(2) Formal requirements for conversion.
Until recently, companies tried to apply to patent cases the possibility of cross-border injunction granted under Article VI of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels Convention). This provision allows a party to sue several defendants domiciled in different countries for a given proceeding. European Court of Justice in Roche v. Rimus (C-539/03) and GAT v Luk (C-4/03) ruled that national courts have exclusive jurisdiction over patent law, thus closing the way for cross-border injunctions. However, as discussed by Mes and van der Groeben (2007) it remains to be seen whether this limitation will be strictly applied by courts in all cases.
Mewburn Ellis LPP suggests that the cost of an opposition procedure at the EPO ranges between €6,000 and €50,000. This estimate is based on a case involving up to two rounds of correspondence between the parties during the opposition procedure and preparing for and taking oral proceedings. Similar costs are likely to be incurred for an appeal (www.mewburn.com/Patents/European_Patents/European__Patents:_Oppositions.htm Accessed 1 September 2008). Similar cost approximation are provided by Harhoff (2006) who estimates that the cost of opposition ranges between € 15,000 and €25,0000 for each party.
In extreme cases, the lawyers cost can be as high as tens of millions of US dollars. For example, in Bristol Myers Squibb v. Rhone-Poulenc Rorer, the accused infringer, Bristol Myers, was awarded over US$25 million in legal fees from Rhone-Poulenc Rorer.
Technical expert's function is to explain the relevant technology to the judge or jury.
Damages calculated as ‘loss profits’ refer to losses incurred by the patent owner compared to the hypothetical situation in which he would have produced and sold the patented technology without being infringed. Licensing fee is calculated on the assumption that the patent holder and the infringer had entered into a licensing agreement before the unlawful use of protected technology took place. Infringer’s profits are the net profits of the third party earned through the unlawful use of the patented technology.
Guellec and van Pottelsberghe de la Potterie (2007) show that the design of patent systems matters, including fees, inventive step, duration, subject matter etc. This chapter provides evidence that the design of post-grant enforcement conditions and legal practice also exhibit specific designs. Cf. Mejer and van Pottelsberghe de la Potterie (2009) for further details on institutional differences between the four European countries.
Council Directive 2004/48/EC, OJ L 157, 30.4.2004.
Forum shopping prospects despite Enforcement Directive, 2008, Managing Intellectual Property, http://www.managingip.com/Article/1968542/Forum-shopping-prospers-despite-Enforcement-Directive.html, Accessed 1 July 2008.
A small fraction of patents are currently validated in the 34 countries. This occurs more frequently with patents filed in the pharmaceutical industry and in the biotech sector.
Kyle (2007) discusses different not-price responses to parallel trade in Europe such as rationalization of supply or product offerings adjustments.
There is an obvious conflict between an intellectual property rights policy, whose scope is limited to national markets, and the principle of free movement of goods. Art. 28 Treaty of the European Union (TUE) prohibits quantitative restrictions on imports and all measures having an equivalent effect between member states. Cf Keeling (2003, p. 22–30) for further discussion.
However, in Germany national nullity proceedings cannot be started before the Federal Patent Court until the EPO opposition proceedings have been concluded or the opposition period has expired.
Cf. Vandermeulen B. (2008). Pan-European litigation checklist. http://recht.nl/21867. Accessed 1 July 2008.
It was only in the fall of 2009 that European Commission established European Observatory on Counterfeiting and Piracy in order to improve the quality of information and statistics related to counterfeiting and piracy on the Single Market.
Crampes and Langinier (2002) assess in a game theory framework the reactions of the patent holder to infringement cases. Conditional on the cost of trail and bargaining position three scenarios are assessed: go to court, settle or accept entry. They show that even if the penalty paid by infringer in the case of a funding of liability is high, the patent holder may prefer a settlement to a trail. This suggests a strong bias towards out-of-the court settlements.
The first opposition against the Epilady patent was filed at the EPO in 1987 by Beasille Marketing Limited.
Art 69(1) of the EPC reads as follows: The extent of the protection conferred by a European patent or a European patent application shall be determined by the terms of the claims. Nevertheless, the description and drawings shall be used to interpret the claims. During the discussions at the diplomatic conference on the final version of the EPC this simple rule was interpreted in a completely different way by the UK and German courts. Instead of rewording the Article, a protocol on the interpretation of this Article was agreed upon and incorporated into the draft of the EPC (Straus 2000; Connor 2008).
Before 2001 DSS was called New Sky Communications, Inc. and was specialized in the development and production of theatrical motion pictures and home video cassettes. In 2002 it acquired four companies: Lester Levin, Inc. d/b/a Patrick Printing; Document Security Consultants, Inc. and Imperial Encryption, Inc., Thomas M. Wicker Enterprises, Inc., and changed its name to DSS. With those acquisitions the company came into the possession of intangible assets, including the European Patent EP0455750 B1.
Under Art 235 of the European Community Treaty (ECT), with further reference to Art 288, a person claiming compensation from one of the European institutions can bring his action before the Court of First Instance of the European Union.
In June 2005, shortly before filing the opposition, the official name of the patent-holder was changed from Wicker Ralph to Document Security System, Inc.
Mr. Patrick White, the CEO of the DSS, made the following comment on the CFI ruling: ‘At long last, we have an answer as to jurisdiction (…) we now have a specific road map with the appropriate venues for further (infringement) actions’. Business Wire, 11 September 2007.
www.reuters.com/article/pressRelease/idUS162584+12-Mar-2008+BW20080312 Accessed 12 March 2008.
Stents are mesh tubes that hold coronary arteries open and improve blood flow to the heart muscle. Originally, stents were made of bare metal that very often caused proliferation of tissue which results in restenosis, arterial blockage caused by scar tissue. Nowadays, stents are often coated with products whose purpose is to restrain the proliferation of tissue such as paclitaxel.
In January 2005, the European Patent Office Opposition Division maintained the validity of Angiotech Patent No. EP0706376 including claims to stents coated with a composition of paclitaxel and a polymeric carrier. Appeal to this decision was filled by Conor Medsystems Inc. and Sahajanand Medical Technologies Pvt. Ltd. The decision on the Appeal was delivered 2 years later in 2007.
In the UK, in the case Unilin Beheer vs Berry Floor (Case No: A3/2006/1331, 1357 and 1358), the dispute concerned the validity and infringement of Unilin’s European patent for hardwood floor coverings. In the UK the patent had been held valid and infringed, while it was still in opposition at the EPO, an opposition that would presumably last for two more years. Even if the EPO proceedings did result in the patent being revoked, this would not affect Berry’s liability to pay damages, because the validity and infringement of the patent had already been subject to a final determination by the UK courts.
Ibid. Judgement of the Royal Courts of Justice Strand, London, WC2A 2LL, 25 April 2007, para 42.
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Acknowledgments
The authors are grateful to Marco Connor, Francesco Lissoni and anonymous referees for their useful comments.
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Mejer, M., van Pottelsberghe de la Potterie, B. Economic incongruities in the European patent system. Eur J Law Econ 34, 215–234 (2012). https://doi.org/10.1007/s10657-011-9221-3
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DOI: https://doi.org/10.1007/s10657-011-9221-3