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The impact of the European patent system on SMEs and national states
Abstract
A centralized and federal patent system in the EU changes economic and constitutional law structures by creating a ‘nationalized’ international patent. As the underlying economic policy has concentrated on the development needs of small and medium-sized enterprises (SMEs), accounting for 99% of all businesses in Europe, statistical analysis and data of their patenting activity and patent ownership are used to assess whether the new regime can help or hinder SMEs and the states in which they are based. Due consideration is given to the monopoly effect of patents and the adversarial nature of the judicial, federal system that is introduced in the absence of a federation of states. Although there are always costs and benefits in such a system, new legal/institutional developments amplify existing imbalances in technological and economic capacities between and within member states, and between them and non-EU states.
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Footnotes
The research work for the article's section ‘SME share in European patents’ was carried out by Hanh Mai Nguyen.
Consider the socialist party in Greece (PASOK) in 2012–13, and subsequently, that of France (PS – Parti Socialiste) in 2017. Both parties were once pioneers in the re-emergence of socialist parties as ruling governments in Western Europe in the difficult years of the Cold War, a status they maintained in centre-left European politics until their recent and rapid demise.
Consider the current coalition governments in Austria and Italy and the rise of the far right in the Netherlands, France, Italy and Greece.
The current parliamentary opposition in the Netherlands, and the major opponent in the French presidential elections (see Louwerse and Otjes, 2019).
Regulation (EU) No 1257/2012, pp.1–8, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32012R1257. Regulation (EU) No 1260/2012, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32012R1260.
‘ … the EU patent should dramatically reduce the cost of patenting in Europe, particularly for SMEs‘ European Commission (2010, p.18) (emphasis added). Convenient statements about SMEs have been appearing in all relevant public communications of the European Commission (see UPC-related tweets of the current, European Commissioner of the Department of Internal Market, Industry, Entrepreneurship and SMEs, Elżbieta Bieńkowska – a Polish national whose national state rejected the UPC on the ground that it would hurt SMEs, on which Poland's economy depends (Deloitte Polska, 2012).
Known until recently as the Office for Harmonization in the Internal Market, its responsibilities do not cover patents but only trademarks and designs.
The monopoly effect of patents is general, but is more directly felt when the patent is valid at national level too. In the current pre-UPP period, European patents are validated less often in small or poor national markets – the great majority of member states (Deloitte Polska, 2012).
In 2018, 924 EPO patent examiners wrote to the EPO's administrative council raising serious concerns about the continuous decline in the quality of patent examination at EPO (available at https://regmedia.co.uk/2018/03/15/epo-examiners-letters.pdf. Reference was made to a position letter (Bausch, 2018). See also the comments of EPO observers and critics: ‘EPO staff has just warned the national delegates that EPO's decline (in terms of patent quality and staff welfare) would be beneficial to patent trolls’ (Schestowitz, 2018).
Similar problems have been encountered in recent decisions of the EU general court, Crosfield Italia Srl v European Chemicals Agency (available at http://curia.europa.eu/juris/liste.jsf?language=en&num=T-587/14) and EU general court, K Chimica Srl v European Chemicals Agency (available at http://curia.europa.eu/juris/liste.jsf?language=en&num=T-675/13 (both accessed November 2019).
The number of patents displayed on the EPO's website is 64,613 for year 2014. The negligible difference from our own dataset of 28 patents does not affect the statistical examination.
Both the dataset and the sample derived from it have been verified by subjecting them to an additional analysis of geographic origin (i.e. applicant company's address in the Patent Bulletin). The national shares found in the sample match the actual national shares of European patents.
The same assumption is made by Eurostat (Eurostat, 2014, p.30).
In the last two years, the number of granted patents has suddenly and substantially increased, reaching 100,000, but the patent application rate remains at the same. This is mainly attributable to management pressure and the EPO's recruitment of more patent examiners. It is difficult to say whether this will be the new average or will last only until the current backlog in the EPO is reduced.
‘[the unitary patent system] limits creation of [technical] solutions which do not infringe those patents, which may decrease willingness to invest in innovations.‘ This should be considered in circumstances where innovation opportunities in patent-dependent industries is already very small (Deloitte Polska, 2012, p.32).
‘In fact, the decisions of the EPO concerning patents can only currently be reviewed by the internal chambers of appeal created within the EPO, excluding any judicial appeal before an external court. There is no possibility of the European court of justice ensuring the correct and uniform application of union law to proceedings taking place before the chambers of appeal of the EPO’ (Kokott, 2010, para.71). This important opinion was never published and archived on the website of the court of justice of the EU. It was only leaked on some websites, which have now cut most of its pages. This is yet another example of lack of transparency at EU level, including that of the court of justice, which never found it necessary to address the remarks of the Kokott (the advocate general; see Borrás, 2006; Drahos, 2010).
Article 6 of the European convention on human rights, and Article 47 of the charter of fundamental rights of the European Union, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:12012P/TXT (accessed November 2019) (Xenos, 2014a; Zielonka, 2018).