Tuesday, March 8, 2011

Court of Justice of the EU deems European Patent Court proposal incompatible with EU law

Today the Court of Justice of the EU (CJEU) delivered its opinion on the compatibility of a proposal for a European and EU Patents Court -- a key building block for a single EU patent -- and deemed the proposal, at least in its current form, incompatible with EU law.

While the European Commission non-judgmentally welcomes the delivery of the opinion, the pro-patent Intellectual Property Expert Group (ipeg) calls this outcome "worse than anyone could have thought", apparently considering this a major roadblock on the way to a unified European patent system.

Yes, the European patent system is still fragmented: there is a European Patent Office, but it merely provides a centralized examination process. A European patent is in fact a bundle of national patents that have to be registered locally and translated into the official language(s) of each country in which the patentee wants them to be valid. They also have to be litigated on a country-by-country basis, as I explained last week in connection with LG's European customs action against the shipment of Sony PlayStations into Europe.

Five years ago I actually campaigned against the European Patent Litigation Agreement (EPLA), a predecessor of the proposal to which today's CJEU opinion relates. I argued, alongside fellow activists, that such a patent judiciary was going to strengthen the enforceability of software patents in Europe. Let me show you one of the documents I handed to policy makers at the time (and then I'll comment on how I view the consequences of today's CJEU opinion):

I stand by what I said then, but I also think it's important to recognize, about five years later, what has happened in the meantime and what hasn't.

Back then, we had just (in July 2005) defeated a proposal for a European law (called a "directive") on computer-implemented inventions, i.e., software and software-related patents. We had not achieved legislation to our liking -- we just achieved that the European Parliament threw out a proposal that we believed would have exacerbated the situation. I was hoping (and so were many fellow activists) that this was going to be a trend reversal and that at some point we were going to bring about change in terms of a law that would truly do away with software patents in Europe, and maybe at a later stage also in the US and other important jurisdictions in the world.

But the movement never made any headway. I left it in 2006, not because I suddenly disagreed (I'm still against the patentability of software, even though I've always been in favor of intellectual property in general) but because I felt we'd never have the political clout (in terms of support from companies) to prevail.

The one lasting effect of our resistance against the software patent directive is that it strengthened democracy in Europe: it was the first time that the European Parliament rejected a proposal from the EU Council (the governments of the EU's then-25 now-27 member states) without conciliation, which was a way to show strength. But on the issue itself, we might as well have lost:

Today, software patents are upheld by the high courts of the economically most important EU member states such as Germany, and there are patent infringement disputes going on between Apple and Nokia not only in the US but also in four European courts in three different countries (see this overview; on pages 31 and 32 of that document you can find a description of the patents-in-suit, which undoubtedly include software patents).

Is standstill desirable?

In light of the state of affairs I just described, I don't think it takes a new court system to make software patents more enforceable in Europe. Therefore, even though I opposed a predecessor of the envisioned European and EU Patents Court, I'm not gloating today.

In the face of reality, I believe it would be positive to bring down the price of a Europe-wide patent. Right now the costs are high: due to translation costs, it takes tens of thousands of euros even to cover only the most important countries, while a US patent costs on the order of $10,000. One can argue that a high cost of patent registration is desirable because it means that fewer patents are filed, so there would also be less litigation and fewer entities collecting royalties. But one cannot reasonably advocate a system that makes patents affordable only to large companies.

If the problem is patent inflation, or the patentability of software, then it must be tackled by other means: patent quality initiatives, or sectorial legislation doing away with software patents. Standstill isn't the answer, especially not when it disadvantages the little guy.

I believe that -- under the circumstances -- small and medium-sized enterprises (SMEs) and the open source community would actually benefit from a lower cost of access to Europe-wide patents. In the current environment, owning patents for defensive purposes is very important and can make all the difference. If you look at the major disputes going on now, such as the one I mentioned between Apple and Nokia (as well as other smartphone-related disputes such as Apple vs. Motorola, Microsoft vs. Motorola, or Sony vs. LG), companies don't only deny the infringement of valid patent claims but also fight back by making infringement counterclaims. One of Android's biggest strategic problems is that Google isn't able to do so.

Open source also needs patents (unless/until the community can achieve their abolition)

I know that especially in the open source community (which I don't claim to represent because my views aren't mainstream FOSS community positions) there is a fundamental dislike for patents, and therefore little enthusiasm for the idea to fight fire with fire. But if the FOSS community doesn't get enough support from companies for the anti-software-patent cause (in fact, the biggest financiers of the Free Software Foundation and some of its satellites are absolutely in favor of software patents), then it can't persuade politicians to change the law, and consequently, there must be a way forward.

A less costly European patent system would also increase the ability of open source developers and small and medium-sized open source companies to obtain and, if necessary, enforce patents on a Europe-wide scale.

A relatively large open source company, Red Hat, takes out patents all the time, in the US, Europe and elsewhere (this list contains many examples of Red Hat patents on a worldwide basis, and this list is limited to European ones). That's the reality we face. Why shouldn't smaller players than Red Hat also be able to afford European patents?

Relying on the OIN as a patent holding entity for open source is certainly not a good idea, as the dispute between its licensees Oracle and Google demonstrates.

Looking beyond software-specific considerations, it's important to keep in mind that the European patent system isn't only about software patents.

We'll see how the EU now deals with the situation it faces. It could change European law but that would require the support of all 27 EU member states, and Italy and Spain are firmly opposed to the current proposal (Italy either wants an English-only patent or wants to require Italian translations, and Spain is against any patent that won't be translated to Spanish). But most politicians in Europe would agree that at some point the EU will want to have a unified patent system, including a single patent court. Theoretically, there could be an EU patent without a pan-European patent judiciary, but that would be an awkward setup.

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