Where the European Union patent with unitary effect might lead us?

Author: Dr. Jacekas Antulis, an Associated Partner in METIDA, the Head of Patent Division

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In 2011, the European Parliament agreed on regulations related to the protection of the European Union patent. In addition, in 2012 the agreement on the preliminary strategy how to implement the system was settled up. This resulted in numerous debates in the Internet media. The discussions are normally related to the analysis of the aforementioned regulations, unravelling different legal puzzles, quotations, imitations and exaggeration of legal issues. In other words, the cogs of a huge mechanism of law and cake-cutting problems that have been unsolved for decades due to the selfishness and ambitions of some countries are being examined.

Yet, it is recommendable to discuss what kind of impact the European Union patent with unitary effect (module V) may have on applicants, patent attorneys and commercial market players in terms of economical aspects, since legal acts often unexpectedly affect the welfare of the commercial market players, such as entrepreneurs or consumers. On the other hand, it is also often the case, when carefully thought and studied solutions in one country are parroted and automatically implemented in the other without having deeply reflected on possible consequences.

It is important to note, that the concept of the European Union patent came to a light due to the uproar in the Internet and tons of articles plagiarized by each other. The concept is probably a result of misinterpretation of the regulations or a rush by one of such writers. It has been used and copied as much as possible ever since. In fact, European Union patent does not exist and there is only an additional integrated module in the current European patent that functions separately. Thus, this article will report on the additional integrated module into a present European patent system.

Yet, in order to discover, how module V can change the situation of business in a small country, we first have to look at the module from different business perspectives and from various procedural positions.

The view on module V of a simple applicant

From ordinary person’s point of view, for example, the one of the businessman’s, the system of patents in Europe is likely to remain the same. In precision, after finally having integrated module V into the system, this module, which is expected to bring more opportunities, will be the only new development in this system.

To avoid the rejection which could be possible from the inner players of the system or the consumers the dominion was split up between France, Germany, the UK and Luxembourg. Also, the applicants were promised with cheaper legal procedures to protect a patent in 5 or 6 member states. Although everything that was mentioned seems nice and harmonious, module V is likely to affect the mechanism of patentability, the commercial world and separate countries. Today’s trade world seems to resemble an organic matter where evil law rules. Therefore, any micro-level decisions related to juridical changes may lead to culminations of some transformations in a commercial world. In other words, the world with these changes could be understood as a reflection of a surface that could not be perceived according to traditional optic laws,but that is vague and obscure, and yet can become meaningful and important in the future.

Therefore, module V gives a simple applicant a new opportunity to get a protection of a patent in European Union (excluding Italy and Spain that have not signed the Agreement on European Unified Patent System and that, according to local businessmen, have a monotonous market). However, it is not entirely clear if this opportunity should be taken since there is not enough information about annual fees.

The problems with annual fees

According to Regulations, should the protection of a patent be gained under the module V procedures, the fees must be paid to the European Patent Office. Yet, it has not been clear so far what size of an amount must be paid. At the moment, the fees are said to become high but these implications are very vague. Probably the sum is inexact because the fees should win the bread for the EPO and also for all the 25 national patent offices. In addition, the needs of the major companies who often apply for the protection of a patent should be satisfied, otherwise module V could become positioned at the margins of acceptability rather than mainstreamed into life. From the financial point of view, the fees are likely to be fixed by fulfilling the needs of pharmaceutical or chemical companies. Unless the EU flips a coin, a compromise will be difficult to find as the conditions do not go with each other mathematically. In our opinion, the European Union should be specific in defining the amount of annual fees, which could proportionally inflect depending on the size or the turnover of a company.

The opinion of small companies

Only Germany and the UK and in some aspects Scandinavia and France could be attractive for small and medium-sized companies in Lithuania in terms of trade market. Therefore, module V does not sound reasonable for these companies, as it would oblige them to take care of 25 national patent offices and that is obviously not the aim of such companies. Also, small and medium-sized organisations do not need to deal with expenses caused by translation problems as all of the three major countries such as the UK, France and Germany use official EPO languages. Expense related problems due to the translation procedures are most urgent for the pharmaceutical companies. As a matter of fact, these corporations might be the main reason why module V is being developed and created.

Thus, unless small companies gain some privileges and are encouraged, they are not likely to stick to a new module when protecting their products.

The opinion of commercial market players in Lithuania

Companies in such countries as Lithuania are expected to struggle rather than benefit from the integration of module V. Each year Lithuania receives about 1300 European patents that are mainly granted with the protection for pharmaceutical, chemical and biotechnological products (70%). In the EPO, 60 thousand patents are granted each year. This means, that only every sixtieth patent is extended to Lithuania. If pharmaceutical corporations take the advantage of module V, the number of extended patents to Lithuania will definitely increase. Local business companies will be forced to quit their enterprise if they use technologies that were not patented in Lithuania. In addition, there can be a remarkably high possibility that the products that are put into service in Lithuania have already been patented in Europe with extension to Lithuania via module V protection system (at the moment such possibility is very low). Such problem is not a unique characteristic of Lithuania, as other similar member states may also face such difficulties. Unfortunately, such situation could dramatically affect local business and result in monopolization of a commercial market.

The income of patent attorneys

Although discussing the income of patent attorneys is not a very decent thing to do, it is important to note that patent attorneys have profited a lot from the extension of patent protection or the translation of documents related to patents. If the new regulations were to be implemented, their financial gains will gradually decrease. Also, patent attorneys will not be able to profit from the annual fees paid to national patent offices. In addition to this, a lot of disagreements over the payments to the EPO might occur as the payment will be able to be proceeded by all representatives of an applicant not only by the primary one.

The market of such payments will be decreased by a factor of 20 due to the establishment of a single fee. This would of course ease the burden of many applicants as not the fees for the patents but the costs of the services provided by their patent attorneys worry them most. In particular, France, Germany, Italy and the UK are famous for the enormously high costs of the patent attorney services that are 2 or 3 times more expensive than the ones that are in small member states.

In conclusion, the formation of the European Union patent with unitary effect may bring some changes into life. Yet, the new system has a lot of ‘side effects’, too. Therefore, applicants and patent attorneys should be aware of such consequences and the economy of the country should be adjusted to those changes as only 6-7 percent of the marketing and the use of technologies are spent on the costs of licensing patents to created products. Thus, even minor changes in the patent world might have a butterfly effect on the world’s macroeconomy.

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