The Community Patent Convention

W h a t Sort ofFuture?

Jorge CRUZ*

The European Patent Convention, commonly known as the Munich Convention, was signed in Munich on 5 October 1973 by fourteen States, most of whch were not Members of the European Community and some of which are stdl not Members today. It can therefore be said that the Munich Convention is an intergovernmental treaty, the constitution, organs and functioning of which are independent of European Community legislation. Furthermore, this Convention is a private Agreement between States in accordance with Article 19 of the Paris Convention of 20 March 1883, and a regional patent Treaty, as provided for under Article 45, Q 1 of the Patent Co-operation Treaty (PcT) signed in Washington on 19 June 1970.

The Munich Convention came into force on 7 October 1977, and the current Members are all the Member States of the European Union, as well as Switzerland, Liechtenstein and the Principahty of Monaco. This means a total of eighteen countries.

How does the Munich Convention work? Munich is the home of the European Patent Office, which receives and examines applications and then grants or refuses the respective patent. When f i n g a patent application, the applicant must indicate the Member States in which he wishes to obtain protection; a tax is payable for each State-known as the designation fee. Once the patent has been granted, it comes under the adrmnistration of the authorities of the designated countries and is subject to the laws thereof. In other words, the European patent system comprises two different phases which are complementary and cannot be separated.

The first phase takes place at the European Patent Office, which receives and examines the application, and subsequently grants or refuses the respective patent. The second phase is handled by the authorities of the designated countries and initially consists of the validation of the granted patent by means of the filing of the respective translation, in accordance with the requirements of each country.

* European Patent Attorney; J. Pereira da Cruz, S.A., Lisbon, Portugal. President of the Portuguese Group of the International Association for the Protection of Industrial Property (AIPPI).

820 THE JOURNAL O F WORLD INTELLECTUAL PROPERTY

Therefore, the patent validation process does not end with the grant-decision given by the European Patent Office, since it must be completed at the authorities of the designated countries.

In short, the Munich Convention establishes a single procedure for the grant of patents, whch, once granted, are subject to the national rules of the Member States. It should be added that the Convention is open, which means that any individual person or legal entity can apply for a European patent.

The Community Patent was created by the 1975 Luxemburg Convention, which is currently an integral part of the Agreement relating to Community Patents signed on 15 December 1989, also in Luxemburg.

The Community Patent Convention-which, as is known, has not yet come into force because it has not been ratified by the then twelve signatory Member States-is intended to merge the bundle of protection rights resulting &om the grant of a European patent into a single, unitary and autonomous protection right throughout the Community of Twelve (which today would be the Community of Fifteen).

The essential feature of the Community Patent is that it confers a protection right with a unitary character whch has equal effect throughout the Community and can only be granted, assigned, annulled or extended in respect of the whole of the Community.

When the Agreement relating to Community Patents was signed in 1989, it was expected to be ratified withn a reasonable amount of time. However, it must be recognized that today, almost nine years later, this has not yet happened. It is therefore perfectly legitimate to question whether the Community Patent Convention, in its present form, still meets the objectives assigned to it at the time.

The problem of the protection of inventions in Europe is very complex and all the systems that are currently in force have advantages and dsadvantages. In order to make a more in-depth study of the various factors to be taken into consideration, in June 1997 the European Commission published a Green Paper on the Community Patent and the Patent System in Europe which, as stated in the Paper itself, has a three-way objective:

(a) to define as complete an overview as possible of the situation regarding the protection of innovation by means of the patent system within the European Community;

(b) to assess the need for new action at Community level or for the alteration of the systems that are currently in force; and

(c) to explore the possible nature and content of these new actions.

To give a better understanding of the problem, it is necessary to list the main

The advantages of the Munich Convention that are usually cited are the advantages and disadvantages of the two Conventions under discussion.

following:

THE COMMUNITY PATENT CONVENTION 821

(a) centralized grant procedure, based on a uniform right and conducted in a

(b) lower protection costs if the patent application designates various Member

(c) high quality protection right; (d) defacto harmonisation of the national patent laws regarding the provisions

single language;

States;

that govern patentabihty, validity and the scope of protection.

However, there are also various disadvantages, for example:

(a) high translation costs; (b) the progression &om the Munich Convention to the national phase, which

involves considerable costs, namely translation costs; (c) the burden created by the payment of the national fees for maintenance of

the patent; (d) the designation fee (additional protection costs for each designated country)

requires a selective designation policy on the part of companies, which is contrary to the objectives of the Single Market.

The advantages of the Community Patent are essentially the following:

(a) the management of rights would be greatly facilitated, since it would no

(b) reduced costs (national phase, professional representation, etc.); (c) simplified idiingement actions in the Member States, since it would be

possible to concentrate them in the State in whch the defendant is domiciled;

(d) greater legal certainty through the creation of a central jurisdctional court competent to give decisions on the interpretation and validity of the Community Patent.

longer be necessary to enter any national phase;

However, there are some serious disadvantages:

(a) it is less flexible than the Munich Convention; (b) there is a greater risk of the annulment of a patent in the whole of the

(c) higher translation costs, since it would be compulsory to provide a translation in all the languages of the Community, which currently number eleven. The Munich Convention only needs to be translated into the languages of the designated States.

community;

The Green Paper, mentioned earlier, has given rise to all sorts of comments fiom governmental organizations and the interested circles in general. And in the wake of these reactions, the Commission established a ht of conclusions (see the Annex to this article) whch cannot fail to cause some surprise.

822 T H E JOURNAL OF WORLD INTELLECTUAL PROPERTY

To start with, they have been greatly summarised; the numerous opinions received on the Green Paper-apparently more than one thousand-have been condensed into two and one-half pages. Furthermore, they are clearly biased, which is, moreover, demonstrated by the fact that some of the conclusions are clearly contra&ctory.

But there is one conclusion-No. 8-which is particularly satis+ng. It is adrmtted that the designation fees should be paid after the grant of the patent:

“Initial filing fees should be reduced and the due date of designation fees should be postponed to the date of patent grant ...” We have been supporting this measure for many years, as a way of achieving

Another important conclusion is No. 2, whlch everyone will no doubt be in

“A Community patent should have a unitary character, having equal effect throughout the Community. It should be granted, transferred, revoked or allowed to lapse only in respect of the whole Community.’’ However, there are other conclusions that clearly go against simple common

sense. To start with, the first conclusion:

greater acceptance of the Munich Convention-it will be discussed further below.

agreement with:

“There is a clear need for a new unitary Community Patent Convention covering the whole territory of the Community. This would reinforce the functioning of the Single Market, greatly facilitate the management of patent rights and should enhance the enforcement of these rights.” The Munich Convention was signed in Munich in 1973 and came into force in

1977, i.e. approximately four years later. The Community Patent Convention was signed in 1975-twenty-three years ago-and has s t i l l not come into force. In 1989 the Luxemburg Agreement relating to Community Patents was signed, with the aim of “kick-starting’’ the Community Patent Convention.

So what happened? Of the twelve signatory countries (which today would be fifieen), only seven

have ratified th s Agreement to date, namely:

France - on 21 February 1992 Germany - on 18 March 1992 Greece - on 1 June 1992 Denmark - on 7 May 1993 Luxemburg - on 15 November 1994 United Kingdom - on 12 May 1995 The Netherlands - on 18 November 1996.

This means that nine years after the signing of the Agreement relating to Community Patents and twenty-three years after the signing of the Community Patent Convention, only seven countries have shown an interest in t h s patent.

THE COMMUNITY PATENT CONVENTION 823

SO how can the Commission claim that “There is a clear need for a new unitary Community Patent Convention ...” ? If there really was such an urgent need, would not the Agreement relating to Community Patents already have been signed many years ago by all the Member States of the European Union?

The reply is provided by the Commission itself in point No. 3 of its Conclusions:

“A Community Patent Convention should be established, preferably in the form of a Community Regulation, in order to facilitate its adoption and implementation.” The difficulty in adopting the Community Patent Convention by following the

correct channels-a Diplomatic Conference-has been demonstrated, which leaves the possibility of forcing the hands of Member States who are not in favour of such a patent, by means of a Community Regulation. This solution would appear to be unacceptable, because the Agreement contains provisions that only a Diplomatic Conference can alter.

The first part of conclusion No. 5 is totally unacceptable: “On the language question, a large number of users’ representatives on the side of the industry support a radical solution. This consists of using only one language for the granting procedure, with no translation of the granted patent afterwards ...” How can the Commission even contemplate the use of only one language for

Community patents, without any translation? How would the authors of this proposal feel if the language used were, for example, Portuguese, Danish or Finnish?

However, a statement is made at the end of conclusion No. 8 which calls for comment:

‘‘Centralized filing of the translations at the European Patent Office should be further explored.” How would this be possible? Translations are intended for the interested circles

of each of the Member States of the European Union, so what purpose would they serve at the European Patent Office? Or does ths mean that the translations would be effected by the European Patent Office-and the Commission did not have the courage to openly suggest this? Perhaps the European Patent Office intends to carry out tasks that are presently the responsibllity of the applicants. The translation should be the responsibility of the applicant or owner of the patent and never a governmental organization, includmg the European Patent Office.

The fact is that translations are indispensable, and any solution that tries to abolish the complete translation of the patent would be unacceptable. In fact, first and foremost, it must be remembered that European patents have the same effect as national patents. It is therefore unthmkable that in respect of national patent applications the language required should not be the language of the country, which is the only language that provides industry and the interested circles in general with a complete knowledge of the invention. Therefore, translation costs are not specific to the Munich Convention since they concern all patent applications.

824 THE JOURNAL O F WORLD INTELLECTUAL PROPERTY

Furthermore, one of the fbnctions of patents is to disclose knowledge for the benefit of everyone. However, this disclosure is only possible by means of a translation of the complete specification of the patent. Otherwise, there would be no technology transfer. In fact, the signing of licence agreement contracts requires a prior assessment of the interest of the invention, and this is only possible if the respective specification is available to the interested parties. Therefore, fdure to provide a translation would create a serious obstacle to technological progress since it would not be possible to easily disclose inventions to the interested industrial circles.

It should also be noted that the choice of official languages for the Munich Convention was the result of a compromise solution, and this compromise enables the Member States to request a translation of the patent in their official language. Consequently, if the compromise were to be broken, a revision of the official languages adopted would be required.

Finally, it must be remembered that if a patent application is filed in a non- official language (i.e. other than in Enghsh, French or German), it is compulsory to file a translation in one of those languages withm a term of three months-meaning that it is also perfectly legal for the other States to request a translation in their own language.

In conclusion the Community Patent Convention would only be justified if it were to improve the existing system of protecting inventions or if it could resolve the problems and disadvantages cited in respect of the Munich Convention. This is certainly not the case. On the contrary, these problems and disadvantages would be made worse by the Community Patent.

The lack of flexibility, the cost of translations and the risk of the annulment of a patent in the whole of the Community are very serious obstacles to the Community Patent Convention. Furthermore, the national patent offices would be reduced to a completely secondary role. Thus, contrary to what is stated in the conclusions of the Commission, there seems to be no need as yet for the Community Patent Convention to come into force. The proof of this is that neither the Convention nor the Agreement relating to Community Patents has yet been ratified.

The solution whereby the Member States would be forced to accept the Community Patent by means of a Community Regulation does not seem to be admissible. In fact, this proposal is indicative of the &fficulty in having the Community Patent accepted by means of a Diplomatic Conference, and demonstrates the lack of interest aroused by such a patent. Thus, the Community Patent Convention should not be re-launched for the moment.

The solution to the problem requires the improvement of the Munich Convention. And a solution that we have been supporting for several years-which is now outhned in conclusion No. 8-is to postpone the payment of the designation fees untd after the grant of the patent. This means that an application for a European patent should automatically cover all the Member States and, once granted, it could be vahdated in a l l the Member States. And only after the grant of the patent would

THE COMMUNITY PATENT CONVENTION 825

the patentee, when filing a complete translation, pay a validation fee at the national patent offices of the Member States where valid patent protection is actually sought. In all the other countries, the patent would cease to be valid.

Translations are indispensable, and another main reason that the Community Patent is unacceptable is that translation costs would be greater, in view of the fact that the number of languages within the European Union is now eleven.

Annex

European Commission Hearing on Patents

Luxemburg, 25-26 November 1997

“(1) There is a clear need for a new unitary Community Patent Convention covering the whole territory of the Community. This would reinforce the functioning of the Single Market, greatly facilitate the management of patent rights and should enhance the enforcement of these rights.

(2) A Community patent should have a unitary character, having equal effect throughout the Community. It should be granted, transferred, revoked or allowed to lapse only in respect of the whole Community.

(3) A Community Patent Convention should be established, preferably in the form of a Community Regulation, in order to facilitate its adoption and implementation.

(4) A Community patent must be affordable, its costs being comparable with a European patent covering a small number of Member States and also be comparable to a U.S. patent.

(5) On the language question, a large number of users’ representatives on the side of the industry support a radical solution. This consists of using only one language for the granting procedure, with no translation of the granted patent afierwards. Other groups are in favour of less radical solutions. A number of interventions stressed the use of all national languages.

(6) The judicial system should provide for legal certainty. The enforcement of the patent, including considerations of validity, should be uniform and predictable throughout the Community. Decisions should be made within reasonable delays. In this context, a majority of the groups represented at the hearing favour the creation of a specialized European Patent Court. The minimum requirements recommended being the creation in each country of a specialized Patent Court with appeals being heard by a specialized European Patent Court. Infringement and validity questions should be dealt with together. Preliminary injunctions covering the whole Community should be available at a reasonable cost.

(7) The question of prior use should be harmonised at Community level.

826 T H E JOURNAL OF W O R L D INTELLECTUAL PROPERTY

(8) The European Patent Convention [Munich Convention] should coexist with the Community Patent Convention and should be further improved. Initial filing fees should be reduced and the due date of designation fees should be postponed to the date of patent grant. Translation requirements should be reduced and further reduction of fees should be contemplated. Centralized filing of the translations at the European Patent Office should be further explored.

(9) The European Patent Office must pursue its task of managing the European Patent Convention as a centralized patent-granting authority but should also run any future Community patent. Co-operation between the Commission and the European Patent Office should be reinforced.

(10) Existing national patents and national patent offices must be maintained. Their role should be tailored to local needs. The income they receive from fees of European patents should serve to reduce costs and support activities directly linked to innovation. A limited number of representations supported the idea of decentralizing activities away from the European Patent Office to the national patent offices.

(1 1) The present legal environment concerning sofiware-related inventions does not ensure sufficient transparency and should therefore be clarified. The deletion of Article 52(2)(c) of the European Patent Convention is supported, as is further action to ensure a harmonised approach throughout Europe.

(12) The question of employee’s inventions does not seem to be a first priority for action at Community level but would benefit from further study. The preparation of model clauses and arbitration procedures seems to be an appropriate way forward.

(13) Formalities, such as forms, delays, etc., should be streamlined at Community level and unnecessary administrative burdens suppressed.

(14) As regards patent agents, the principles of &ee movement of services and freedom of establishment should apply fully to this profession. Some further harmonisation might also be necessary to ensure consistency throughout the Community. Certain associations are in favour of a right of access to the courts for patent agents.

(15) Legal cost insurance is a valuable concept which should be further studied. It is potentially useful for SMES [small- and medium-sized enterprises]. The private sector could lead on this with the Community facilitating exchange of information and experience.

(16) Reduced fees for SMES is supported by a number of associations provided that the scope of the scheme is clearly defined.

(17) The particular situation of research organizations and other non-profit organizations should be considered in the context of the modernization of the patent system.”