Saturday, 30 January 2016


The following rant is a result of sheer frustration about the UK approach to implementing the UPC and UP..

What does the EPC say about patent scope and infringement?

The EPC states that infringement is determined under national law, and that (subject to specific exceptions) national and European patents shall have the same extent.

Article 2(2) EPC
(2) The European patent shall, in each of the Contracting States for which it is granted,  have the effect of and  be subject to the same conditions as a national patent granted  by  that  State, unless this Convention provides otherwise.

Article 64 EPC
1)      A European patent shall, subject to the provisions of paragraph  2, confer  on its proprietor from the date on which the mention of its grant is published in the European Patent Bulletin, in each Contracting State  in respect o f which it is granted, the same rights as would be conferred by  a  national patent  granted in that State.
2)      If the subject-matter of the European patent is a process, the protection conferred by the patent shall extend to the products directly obtained by  such  process.
3)      Any infringement of a European patent shall be dealt with by national law.

So the scheme of the EPC is that European patents shall have the same effect as national patents except that where national law does not provide for the direct product of a process to be infringing, an EP patent shall cover such product.

The only other discussion of infringement in the EPC appears to be Article 70(4)(b) EPC concerning what happens if there is a defective translation:-

Article 70(4) EPC
4) Any  Contracting  State  which adopts a provision under paragraph 3:
 (b) may  prescribe that any  person  who, in that State, in good faith has used or has made effective and serious preparations  for using an invention the use of  which  would  not constitute infringement of the application or  patent in the original translation, may,  after  the corrected translation takes effect, continue  such use in the course of  his business or for the  needs thereof without  payment.

Although Article 167 EPC1973 provided for reservations in certain areas, these provisions are long time-expired and were removed with EPC 2000. EPC 2000 has no provision for reservations.

How does this affect the UK?

The UK:-
·         provides that the direct product of a process infringes national law;
·         is a London Agreement country, not requiring the provision of any translation; and
·         has never declared any reservations in relation to the EPC (when such was possible);

and so there is no scope under the EPC for UK national patents and European patents to have any different effect if the UK is be compliant with the EPC. (See at the end for an alleged argument to the contrary – it deserves its place as a footnote).

Do the Unified Patent Court Agreement (UPCA) and Regulation on the unitary patent (UPR) affect this?

The unitary patent is product of a regulation that is declared to be a special agreement under the EPC

Article 1(2) UPR
2. This  Regulation  constitutes  a  special  agreement  within  the meaning of Article  142  of the Convention  on the Grant of European Patents  of  5  October  1973,  as  revised on 17 December  1991 and  on  29 November  2000 (hereinafter ‘EPC’).
and the regulation recognises that the Contracting States have obligations under the EPC
Article 9(2) UPR
2. The participating Member States shall ensure compliance with this Regulation in fulfilling their international obligations undertaken in the EPC and shall cooperate to that end.

The UPR thus imposes additional obligations on the Contracting States (to comply with the Regulation) while not relieving them of the burden of fulfilling their obligations under the EPC.

The UPCA takes as a basis that all Contracting States have ratified the EPC (3rd recital) and includes the EPC and national law as sources of law. The UPC contains a comprehensive code for infringement of both European patents and European patents with unitary effect.

Neither the UPCA nor UPR provide any indication that a national right shall have any different scope from a European patent (unitary or otherwise).

Neither the UPCA nor UPR provide any indication that a European patent with unitary effect shall have any different scope from a "bundle" European patent.

Article 30(2) Vienna Convention on the law of treaties states:-

2. When a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail.

Which, given the acknowledgement of the EPC in both the UPCA and UPR, indicates that the terms of the EPC are not overruled by the UPCA or UPR.

Thus, where there is an interpretation available that is in accordance with the EPC, UPCA, and UPR it is to be preferred to one which ignores fundamental principles of the EPC.

Further, it could be argued that compliance with obligations under the EPC (where not repugnant to the UPR) will become part of EU law once the UPR is ratified.

What does the draft statutory instrument (SI) on implementing the UPCA and UPR say?

The SI does not take the approach of adopting the infringement provisions of the UPCA wholesale but instead seeks to modify (with little success) the wording of section 60 of the UK Patents Act to various extent.

·         s.2 (3) of the SI amends section 60 to add in exceptions to infringement of Articles 27(c) and 27(k) UPCA;
·         s.2 (4) says the Article 27(k) UPCA exception does not apply to national patents.

In Schedule A3 of the SI
·         s.1 and s.2 says section 60 is a “relevant statutory provision”
·         s.3 says the relevant statutory provisions apply in relation to a European patent with unitary effect in the same way as they apply in relation to a European patent (UK); but
·         s.4(10) says that for the unitary patent only, in s. 60  “references to the United Kingdom are references to the territory of a Contracting Member State in which the European patent with unitary effect has effect;”

So we have three laws of infringement (at least – see below):-

  1.        National law [S.60 as amended absent the Article 27k UPC exception]
  2.        European patent (UK) law [S.60 as amended, with Article 27k UPC exception, and with contributory infringement assessed on the “old” basis of both supply and use being required to be in the UK
  3.        European patent with unitary effect law [S.60 as amended, with the Article 27k UPC exception, and with contributory infringement assessed on Article 26 UPCA criteria of supply and use “within the territory of the Contracting Member States in which that patent has effect” being required]

Article 27k UPCA exception applies?

Expanded territorial scope for contributory infringement?
European patent with unitary effect

European patent (UK)
UK National patent

Effect of the SI

If the SI is accepted as is, the consequences are significant.

Legal advice

In assessing the legal position in the UK, three different laws of infringement will need to be considered whereas at present there is only one. Giving advice on a pending application will require two opinions, one on the basis that any patent granted goes ahead as a unitary patent, and another on the basis that it proceeds as a “bundle” patent.


Many are trying to harmonise IP provisions on a wider than European front. If the UK falls back from harmony within Europe then the scope for harmonisation and the prospect of lower costs recede into the far distance.


If the UK cannot follow a treaty it has held to for around 40 years, how can it be trusted in anything else?

Legal action

The proposed SI introduces a law contrary to the EPC, so opening up the dispute procedure of Article 173 EPC. It is a reasonable bet that any such dispute would result in judgment against the UK.
Failure to comply with the EPC may also be failure to comply with the UPR.

Inconsistent legal decisions

It is open to question whether the UPC would decide a question of contributory infringement by a UK company of a “bundle” patent in the same way as a UK court would. The risk of different legal outcomes depending on which court was seized with a particular case would be both legally uncertain and provide scope for forum shopping.

Arguments as to why the SI is permissible

An alleged argument is that:-

Article 142 EPC states that:
(1)  Any  group of Contracting States, which has provided by  a special agreement that a European patent  granted for those States has a unitary  character throughout  their territories, may  provide that a European patent may  only be granted  jointly in respect of all those States.
(2) Where any group of Contracting States has availed itself of the authorisation given in paragraph  1, the  provisions of this Part shall apply.
“This part” being part IX of the EPC, which comprises Articles 142-149a.

Article 149a EPC states that:-
      Nothing in this Convention shall be construed  as limiting  the right of some or all of the Contracting States to conclude special agreements on any  matters concerning European patent applications or European  patents  which under this Convention are subject to and governed by  national  law…

and lists a number of administrative examples.

Infringement is a matter for national law (Article 64(3).

And so arguably it should be considered that in amending the provisions applicable before the UPCA (under Article 149a) there is no requirement to amend national provisions. As for the different territorial scope of contributory infringement for European patents and unitary patents, that reflects the difference in nature between a unitary right and a non-unitary right.

This argument:-
·         ignores the specific wording of the EPC in Articles 2 and 64 EPC;
·         interprets Article 64(3) EPC as permitting something directly inconsistent with Article 2 EPC;
·         expands Article 149a to permit changes in national law to overrule the EPC.

In short, it is nonsense. 

What can be done?

Hope that someone in the UK is listening and hope that someone sees sense. 

Otherwise, a messy situation will follow.

Thursday, 21 January 2016

A dog's breakfast

In 2013 I posted a comment on the contributory infringement provisions in the UPC. 

The draft SI makes explicit the problems I saw as implicit.

Under s.60(2) Patents Act 1977, contributory infringement requires provision in the UK of means essential to exercise of the invention in the UK.

Article 26 of the UPC Agreement defines contributory infringement as:-

A patent shall confer on its proprietor the right to prevent any third party not having the
proprietor's consent from supplying or offering to supply, within the territory of the Contracting Member States in which that patent has effect, any person other than a party entitled to exploit the patented invention, with means, relating to an essential element of that invention, for putting it into effect therein, when the third party knows, or should have known, that those means are suitable and intended for putting that invention into effect.

This, on its face, is reasonably clear as applying both to unitary and bundle patents, and meaning that supply from one country into any contracting members state where the patent has effect infringes.  

So let us imagine a case of contributory infringement where a UK company has supplied in the UK “essential means” to a German company for making a product in Germany that is covered by a non-opted out bundle patent designating at least UK and Germany.

The proprietor sues before the UK Court. The UK Court looks to section 60(2) PA and sees that so far as bundle patents are concerned, nothing has changed in s.60(2) [Schedule A3 3 makes it clear that s. 60 applies, and Schedule A3 4(2) makes it clear that for unitary patents only, the references to the UK should be replaced by  references to any of the Participating Member States]. The UK Court considers this to be clear and so finds that the UK Company does not infringe since the invention was not put into effect in the United Kingdom.

However, if instead the UK Company is sued before the UPC, the language of Article 26 would indicate there is infringement since there is supply from one Contracting Member State in which the patent has effect to another Contracting Member State in which the patent has effect.  Infringement is found.

No problem given that the judgement will be enforceable in the UK according to Schedule A4?

Or would this be a big political problem? If whether you win or lose depends on the court concerned, what does this do to the idea of justice?  

Now take the same situation from the UK Company’s perspective. Receiving a letter from the patent proprietor threatening infringement they immediately launch a threats action and an action for a declaration of non-infringement and succeed, because of the argument set out above.

What will the UPC do if the proprietor launches a subsequent action before the UPC on the basis that although the same facts are concerned a different law applies?

Justice should be determined on the quality of the judges, not on the quality of the lawmakers, but the present route to implementation of the UPC and UP in the UK appears set to frustrate the aims of the whole project by setting the stage for complex and expensive disputes as to which law prevails; and as to whether the UK has met its obligations under the UPC and EP.

The urge in the UK to to re-write clear treaty provisions to further “clarify” them frequently results in total confusion. This present case meets that model by casting darkness where there was light.

Saturday, 16 January 2016

UK decides on Brexit from EPC and EU

The response to consultation on amendment of UK law to comply with the UPC and UP has been published.

It appears that the UK intend, at least for a while, to have a different scope of infringement for national patents than for European patents.

This indicates that the provisions of Article 64 EPC (requiring equal scope for European and national patents) are to be ignored.

It is to be hoped that this breach of treaty obligations either:-
  • does not happen; or
  • is remedied as soon as possible,
since it would be inconvenient if the UK left the EPC.

The report also indicates that an "Order in Council" will apply the Unitary Patent and the UPC to the Isle of Man. This is interesting and raises the question, "Since when was the Isle of Man part of the EU"?

The UK appears set to raise many legal problems if they seek to implement in this way. Have they taken informed legal advice?

More issues may become apparent when the secondary legislation is published.

UPDATE 20.1.2016

The secondary legislation is here.

The explanatory notes to the statutory instrument indicate that the reason for disapplying Article 27k for national patents was that “The IT and telecoms sectors have expressed strong concern at the uncertainty present in this new exception and it is  not known how many patents could be affected”.

To get a rough idea of numbers I looked  to espacenet.  In 2014, in International class G06 (which covers, inter alia, computers), 1840  British patent applications were published (A or B) publications. Of these 618 had a British applicant, and the rest from abroad, IBM alone accounting for 455. Roughly, in this class, there are two patents filed by non UK applicants for every application filed by a UK applicant. It seems reasonable to assume that in this field foreign patentees holding UK national patents predominate by at least 2:1.

For telecoms class H04, similar numbers are 1463 published, 513 British, 111 IBM: still a preponderance of foreign applicants, but not quite so large.

Applying different standards to European and UK national patents would leave UK software developers free of the patent yoke with respect to European patents, so far as the acts or uses of Article 27(k) of the Agreement on a Unified Patent Court are concerned: but national patents would still be effective against such acts or uses.   This would mean that British innovators would be inhibited in their home market by a preponderance of foreign owned British patents against them, inhibiting their freedom to manufacture and sell in their home market: whereas elsewhere in Europe their competitors would be free to operate in their home market.

This will truly be a test of the effect of patents - will being in a country with patents covering the acts or uses of Article 27(k) spur innovation (to get round those patents) or hobble innovators?

Was it the UK IT industry that asked for this? If so, why don’t they want to manufacture in the UK?

Monday, 2 November 2015

Lies, damned lies, and workplace statistics

There have been recent comment on blogs such as IPKat concerning complaints made to ILOAT [the Administrative Tribunal the International Labour Organization]. 

These comments appear to indicate the EPO as being unusual in the number of complaints received. Reference is made by IPKat to an ILOAT document that contains interesting statistics, but not necessarily useful statistics.

ILOAT has an interesting  case law database.

Looking on the ILOAT database to the organisations with over 100 decisions against them [not necessarily representative of all organisations but a good proxy], and looking at the proportion where the phrase "case is dismissed" appears in the judgement, the following ranking is found:-

Complaint dismissed
% dismissed

If working in IP where would you rather work? Somewhere where an independent body finds only 11% of complaints justified enough to not merit dismissal; or somewhere where the same independent body finds about 18% of complaints justified enough to not merit dismissal? 

Looking closer, one can consider the number of staff for each justified complaint [counting “justified” as synonymous with “not dismissed”, not placing any value judgement on the severity of the complaint].

Complaint not dismissed
Number of staff
Number of staff for each complaint not dismissed

This shows that fewer than one in a hundred EPO staff files a complaint that is found justified, whereas for WIPO there is a much higher chance of a justified complaint being made.

Of course, the numbers are just numbers and do not necessarily reflect other factors at work, but:-
  • appearing third in the list of percent of complaints dismissed would on the face of it appear either a commendation of the EPO or a comment on the nature of complaints filed;
  • appearing average in the number of complaints not dismissed  per member of staff appears to show the EPO not out of the ordinary;
  • on either measure EPO appears to be a better workplace than WIPO.

Of course, simply pointing to the number of complaints and judgements does not tell the whole story, and certainly does not capture aspects of "culture".

A more detailed analysis from ILOAT would appear appropriate.

It might also be appropriate for ILOAT to have some form of case management in the form of an initial filter to weed out cases where there appears little prospect of success, perhaps with a cost penalty if the case is continued.

Time spent on time wasters is damaging to those who have real and justified grievances.  

Friday, 4 September 2015

Who does what in IP?

Statistics are fun, you can torture them to say whatever you want. Unfortunately sometimes the information produced is in the form of incomprehensible screams.

A case in point is provided by the UK statistics on "Turnover of Legal Activities" [latest issue can be found in a spreadsheet here].

These statistics provide monthly turnover figures for Barristers, Solicitors, and a combined category "copyright and patent agents" [neither term in this category being graced with a capital letter].

Using hacker's statistics (choice of a selective time period and linear extrapolation) it would appear that the economic activity of patent and copyright agents would match those of solicitors in about six years’ time [is this a 2020 vision for those described as patent and copyright agents?].

The net balance of payments for legal services in 2013 was a positive £3.3 billion and it would be nice to determine how those exports were distributed among the various legal categories.

It would also be nice to know how much of the activity of patent and copyright agents was attributable to each of these peculiarly different professions/businesses. [The word "agents" seems to be all that is in common between them, just as "ch" is all that is in common between chalk and cheese].

How much of the activity of patent and copyright agents relates to services primarily related to the exploitation of artistic, literary and musical matters? And how much to services primarily related to the establishment, creation, licensing and assertion of registered intellectual property rights?

It would also be nice to have some kind of reliable baseline to compare with, so that when the Unified Patent Court and the Unitary Patent arrive the effect on trade in services can be assessed.

In short there are a lot of nice things we could have, but haven't.

Classification is a difficult exercise, and to maintain comparability between countries it is important that reporting is on a common basis [the UK SIC classification follows the European NACE classification which follows the UN ISIC classification]. However, everyone knows that there is a difference between accounting for reporting purposes, and management accounting. Why not so with government statistics?

When adhering to a classification hides information, and aggregates wildly different professions with wildly different business models, one has to ask why the Office of National Statistics don't have statistics that inform, in addition to producing statistics that conform.

Perhaps the legal professions should lobby ONS for more informative statistics.

Thursday, 19 March 2015

Europe down the plughole?

The Select Committee for the Unitary Patent meets next week to discuss fee proposals that have been widely leaked.

The risk of damage to the reputation of Europe, and the finances of the European system, is extremely high if either proposal is adopted, both of which appear to reflect more fear of the future than a desire to improve the European system.  

Growth rates for European patents (direct filed and PCT regional phase) are already dismal compared with other major economies such as China and USA [EPO annualised growth rate over 2008-2013 was 0.3% compared with 36.9% for China and 5.1% for USA]. No amount of misleading press releases can hide this fact.

This dismal performance reflects not only the state of the European economy (which affects both the resources of European industry to file patents and the attractiveness of Europe as a market for external applicants), but also the reputation of Europe as a high cost patent system. Decisions are often based as much on reputation as reality: and the reality does not help Europe’s reputation.  

If the unitary patent too gets a reputation for being expensive, this will affect user’s decision on whether or not even to apply. Even though the alternative will exist of going for London Agreement countries, the reputation of high costs in Europe will spill over to affect demand overall.

This damage to reputation  will apply both to users within Europe and those outside Europe.

This could set the system on a death spiral:-
  • Perceived added expense to an already expensive system acts as a deterrent to choosing to protect in Europe, leading to a reduction in the number of European applications filed.
  • A reduction in the number of European applications filed affects both those EPC countries inside the unitary system and those outside, since if there are fewer European patents there will be fewer national validations, including fewer Italian patents and fewer Spanish patents.
  • Fewer patents leads to lower renewal fee income for the EPO from granted patents.
  • Lower renewal fee income for granted patents leads to more income being required from European applicants in the form of higher procedural fees and higher internal renewal fees.
  • Higher procedural fees and higher internal renewal fees leads to Europe being perceived as even more costly leading to lower demand.
  •  Lower demand leads to still higher fees to cover EPO liabilities.
  • The system spirals to its doom such that the EPO becomes financially unsustainable and national offices have to look to their liabilities for “special financial contributions” under Article 40 EPC.
  • National offices find that the reputation for high costs in Europe has led to a reduction in their national filings too.
  • No money is available and government have to step in to bail out a system that would have been sustainable had fees not been set at a level guaranteed to deter customers.

Of course, if the unitary patent is abandoned that too could lead to a different death spiral:-
  • Perceived failure to reduce the cost of an expensive system acts as a deterrent to choosing to protect in Europe leading to a reduction in the number of European applications filed.
  • A reduction in the number of European applications filed affects all EPC countries.
  • Fewer patents leads to lower renewal fee income for the EPO from granted patents.
  • Lower renewal fee income for granted patents leads to more income being required from European applicants in the form of higher procedural fees and higher internal renewal fees.
  • Higher procedural fees and higher internal renewal fees leads to Europe being perceived as even more costly leading to lower demand.
  •  Lower demand leads to still higher fees to cover EPO liabilities.
  • The system spirals to its doom such that the EPO becomes financially unsustainable and national offices have to look to their liabilities for “special financial contributions” under Article 40 EPC.
  • National offices find that the reputation for high costs in Europe has led to a reduction in their national filings too.
  • No money is available and government have to step in to bail out a system that would have been sustainable had the opportunity to send a message on costs been taken.

In short, the discussions in the forthcoming Select Committee meeting are critical to the European patent system.

The proposed Top 4 [Top 4 in later years, with matching to the EPO internal renewal fees in the early years] represents a significant increase over the EPO's current income from patent renewal fees. The proposed Top 5 represents a scandalous attempt to freeze out the very users the unitary patent was intended to benefit. Both proposals penalise SMEs who could not rationally choose a unitary patent given fees of such magnitude.

If either of these proposals is adopted, the damage to the reputation and the finances of the European Patent Office (and national offices) will be extreme.

Even Top 4 is high, since it includes two of the most expensive countries [Germany and Netherlands].

Please, Select Committee, send a message that you are serious about the future of the European patent system and decide on a renewal fee schedule Top 4 or below, and review it in a few years’ time to determine whether it is sustainable based on the pattern of take-up.  

Do not be driven by fear of what might happen to decide on fees so high they cannot meet the requirements of the regulation, and that guarantee immense damage to Europe. 

Choosing an appropriate level of renewal fees could lead to a virtuous circle of improved confidence and an improved environment for European business, rather than a self-inflicted death spiral.

Sunday, 1 March 2015

A fair assessment

Yet again, in a recurring ritual, the EPO has released a misleading press release concerning filing statistics. It would appear that a more informative press release might run on the following lines.

European Patent Office receives record number of patent filings – situation returning to normal?

Patent applications at the EPO grew by 2.7% in 2014, hitting a new record high of nearly 152 000, a mere 0.6% higher than the previous record in 2010 [that year numbers were inflated by introduction of the late unlamented divisional rules, which represented a tax on innovators at a time when innovators could least afford it].

In 2014 applications from European applicants grew by 2.2% and from non-European applicants 3.2%. These increases constitute a significant indication of a recovery in European industry, but mostly in non-European industry. [Over the period 2011-2015 applications from EPC applicants increased by 4.4%, whereas those from non-European applicants increased by 8.4%. In 2011 EPC applicants filed 50.4% of applications whereas in 2014 this has dropped to 49.5%].

As yet the recovery is weak. Had the trend prevailing for the 10 years prior to 2008 continued there would have been roughly 30,000 more applications in 2014 than there actually were. The period since 2008 represents relative stagnation.

European filing numbers still remain depressed due to the state of the economy. The following graph shows that EP filing numbers and EU GDP [EU 28 on a PPP basis – source, Eurostat] correlate closely up to 2013 [2014 data not yet on Eurostat].

It should be remembered that application numbers reflect not only the innovation within Europe: but also the attractiveness of Europe as a market. When Europe again becomes a thriving market and a place where people want to invest, the filing numbers should rise again.

The following graph shows the ratio in €m of EU-28 GDP per application. It is evident that Europe became a much more patent intensive region in the run up to the millennium: but since then has remained relatively static [apart from the year of the divisionals].

The prospect of a unitary patent [a single instrument covering a large proportion of the European market] may lead to strong growth, since this may make a European patent a more valuable asset.

As a final point it is worth noting that the term “patent filings” used in previous press releases is now thoroughly discredited as a useful measurement of anything. Combining European applications made and PCT applications made has little relevance to demand for European patents, as is indicated by the ever declining proportion of PCT applications that enter the European regional phase [a further indication that Europe has to come to grips with its place in the world].

In an effort to improve transparency the EPO will henceforth cease using the misleading “patent filings” metric and instead will quote numbers that mean something.

Let us see what happens next year.