EPLA

Commissioner McCreevy supports the European Patent Litigation Agreement (EPLA). The Commission has meanwhile already made a formal proposal on patent legislation, centered around the EPLA. The European Parliament's five largest political groups agreed in May to vote on a patent policy resolution at the September II plenary.

A non-EU project... The proposed EPLA4 is, like the European Patent Convention (EPC) of 1973, a non-EU treaty, and it would establish a new non-EU organization, the European Patent Judiciary (EPJ), which would create and run a new non-EU European Patent Court (EPCt). The EPCt would replace the national courts of countries acceding to the EPLA with respect to all litigation concerning the infringement and/or validity of patents granted by the non-EU European Patent Office (EPO). The EPCt would comprise a centralized appeals court, likely to be based in Munich (where the EPO is already headquartered), and up to three regional chambers of first instance per country.

...that will very probably require EU involvement According to the Commission's legal services, EU member states would not be free to conclude the EPLA on their own: with cross-border litigation and the enforcement of intellectual property rights already being subject to the acquis communautaire, the Community would have to be involved under a mixed agreement. Some of the driving forces behind the EPLA disagree, fearing that ratification of the EPLA under EU procedures, especially if the European Parliament were to be codecisive, would add another (and even greater) risk to the need to reach an agreement at an intergovernmental conference followed by ratification in national parliaments. At a public event in June, a DG MARKT director talked about the possibility of obtaining an opinion from the ECJ on this institutional question. Given commissioner McCreevy's pro-EPLA stance and the crucial relevance of the issue, the Commission is likely to ask for an ECJ opinion sooner rather than later.

Higher cost of litigation in most cases and lower quality of judicial decisions. At present, EPO patents, which are bundles of national patents, can only be enforced country by country. That is obviously in some ways less efficient than a centralized court system. The proponents of the EPLA, spearheaded by the EPO, base their official reasoning on the following pretexts: - "The cost of parallel litigation involving the same patent in multiple countries would be reduced." SMEs to be hit hardest by increased minimum cost of litigation. According to annex 2 to the EPO's impact assessment, even the smallest litigation in front of the EPCt will result in court costs of € 97,000 and party fees of € 62,000 each, for the first instance. Raising the minimum cost of patent litigation far above the cost of national litigation (with the exception of the UK) disadvantages SMEs. In the current (albeit fragmented) setup, an SME can choose to enforce its own patents in a cost-effective location, and if it is sued over an alleged infringement, it will only have to face risks and costs in markets in which it actually operates, as opposed to having to deal with a costly pan-European litigation and higher sums in dispute.

Allowing the enforcement of countless software patents granted by the EPO. The position of the national ministry officials in charge of patent policy on substantive rules is notorious: in the EU Council's working group on patent legislation, they worked out the proposal for a software patent directive that the European Parliament rejected in July 2005. There is also empirical evidence concerning the "quality" of the decisions taken by judges they select: through the EPOrg's Administrative Council, they appoint the members of the EPO's boards of appeal. In a particularly striking decision earlier this year, an EPO board of appeal ruled that anything stored on a computer-readable medium should be considered technical and thus patentable. While the EPO has already granted tens of thousands of software patents and continues to do so, national courts, especially in such major markets as the UK and Germany, tend to declare many software patents invalid in their countries. Several of the EPLA's proponents who spoke at the July 12 Commission hearing, including the Fraunhofer Institutes and ProTon, complained about the presently weak status of software patents in Europe. After failing to revise the EPC in 2000 and to push the software patent directive through in 2005, certain special interests support the EPLA mainly because it is a new attempt to give software patents a much stronger legal basis in Europe. The balanced approach of national courts toward patentable subject-matter and the height of the inventive step is Europe's greatest competitive advantage in patent law. But it is in jeopardy now.

Shifting the balance in favor of national ministries and the EPO vs. the EU. The EPJ/EPCt would be firmly under the control of the same group of national ministry officials who also govern the EPO through the European Patent Organisation's (EPOrg) Administrative Council. They would get to appoint, and periodically reappoint or dismiss, the judges. As a result, the new EPCt would be very likely to support the EPO's excessive granting practice and low quality standards. Judicial independence would be compromised in multiple ways, including the fact that the members of the EPO's boards of appeal (who are EPO employees) could simultaneously be EPCt judges.

Granting full legislative authority on procedural code to unelected ministerial officials The EPJ's Administrative Committee would even be entitled to ratify and amend the EPCt's Rules of Procedure, although such procedural rules should be determined by elected lawmakers. That structural issue gives cause for even greater concern than the absence of an official proposal for the EPCt's Rules of Procedure at this stage. It would be unimaginable for a democratic state based on law to allow public servants to decide on – for an example – the Code of Civil Procedure.