EPLA Briefing

What is the EPLA?

The European Patent Litigation Agreement (EPLA) is a draft proposal for a new European patent litigation system that is a 'solution to the problems' of the current European patent system, which has suffered in three main areas over the last decades:

  1. The rise of the EU has created a new model for collaboration between countries, and this new model does not fit well with the old model of the European Patent Convention (EPC), an agreement between countries including non-EU states, and which spawned the European Patent Organisation (EPOrg) and European Patent Office (EPO).
  2. Under pressure from the patent industry, the patent system has lowered its standards so that more patents could be granted, especially in areas such as software which were not viewed as patentable when the EPC was signed, being already well-protected by copyright.
  3. Patents are still arbitrated in national high-courts, which have kept a view closer in line with the EPC's exclusions of patentable subject matter. This is particularly important because it means that in the field of software, national courts often reject patents which are granted by the EPO and upheld by the EPO's Technical Boards of Appeal (TBA).

These three problems have created significant stress within the patent system: the patent industry gets more powerful, but finds it harder to exercise that power than, for example, in the USA, which has allowed an inceasingly litigous and unfettered patent industry to expand, especially in biotechnology, pharmaceuticals, and information technology (software).

The EPLA proposes that:

  1. National courts lose their power to decide over patent issues.
  2. A new European patent court would be created, with judges appointed by the EPOrg and potentially coming from EPO staff. This includes current Technical Boards of Appeal (TBA) judges who have been criticised as the primary source of giving ground on patentable subject matter.
  3. To give this effect in EU member states, the EU would become a signatory to the EPC.

An Unregulated Monopoly

A key to understanding EPLA is to see that the global patent industry is a lucrative set of businesses that makes money from researching, writing, granting, licensing, and litigating patents. The patent industry in Europe consists of:

  • The national patent offices.
  • The European Patent Office.
  • Independent patent experts and attornies.
  • Patent lawyers who manage intellectual property issues for major corporations.
  • Patent-holding specialist firms (also called 'patent trolls').

Like any business, the patent industry is driven by profit and has a near-monopoly over the patent business. Today, national courts still hold some power to regulate the patent industry. EPLA proposes to remove that layer of regulation and create a self-regulating monopoly.

Judicial Independence

EPLA judges would be appointed and reappointed for fixed terms by the EPOrg. Fixed-term judges cannot be considered fully independent, which is why most countries appoint senior judges for life. Moreover, since the EPLA court judges can at the same time sit on the EPO's TBAs, the executive (EPO) will be partially in change of the judicial (EPLA court) functions, thus removing the "trias politica", the principles that would ensure separate and independent powers and areas of responsibility - in essence the normal checks and balances of modern democracy.

Effects of EPLA

  1. To make patent litigation, in both enforcement and defense, much more expensive. Source - FFII analysis.
  2. To make current TBA interpretation of the EPC the basis for all decisions. Source - Florian Mueller.
  3. To move the patent system outside of EU control, and make it hard to reverse that move. Source - FFII analysis.

Indirectly, EPLA would legalise software patents almost immediately, as these are allowed by the EPO, and mostly rejected by national courts. From the point of view of the software industry, EPLA is very clearly a tool to get software patents allowed in the EU, after these were rejected by the EU Parliament in 2005.

However, EPLA would also lower the bar on patent quality in all areas as the EPO's TBAs have systematically lowered the bar on inventive step, on prior art, on industrial application, and on subject matter.

Signing the European Patent Convention

One of the keys to allowing EPLA to move forward is for the EU to sign the EPC. This would be an easy move to make. But it would tie the EU's hands with respect to building any other kind of patent system. The patent industry is lobbying very hard for accession. The reason is that it would remove the patent system from democratic control, and make it very hard to recover control.

Summary

In short: the EPLA removes the current layer of regulation over the patent industry, and creates an unregulated monopoly that has already shown its goal of taking over the entire "IPR market" despite the negative economic knock-on effect for Europe's SME's. The patent industry is not benign and it promotes a model of "innovation" that does not fit the reality of innovation. It is a for-profit industry that lives off litigation and conflict. Europe's technology sector is badly-equipped to handle the negative economic effect of the levels of litigation seen in the USA.

What the patent industry needs is democratic oversight and proper regulation, so that it can function as a tool that serves the public interest.

Towards a New European Patent System

We do not need to look very far to see a successful model for intellectual property rights managed at an EU level. The trademark system also has two levels - a national level and a European level. In 1996, a new EU institution, the Community Trademark, was established, and the EU trademark office began granting EU trademarks, as an alternative to national trademarks.

Although the trademark system was criticised for keeping these two layers, over time the dual system has seen to work well as a harmonization solution.

The FFII is working, together with many cross-industry experts, on a proposal for a patent system that will work as well as the Community Trademark has worked. The core values of this new Community Patent (NCP) system are:

  1. Keeping the current system of national courts.
  2. Returning to the fundamental values expressed in the European Patent Convention.
  3. Bringing the patent industry under the regulation of the European Parliament.

For more details, read: