The European Commission’s Competitiveness Compass published yesterday reveals that only one-third of EU patents are commercially exploited. The 2023 patent regulation package proposed by the Commission aimed to remove barriers to commercial exploitation.
But now concerns about two of the three proposals - covering an EU-wide supplementary protection certificate (SPC) for medical products and licensing standard-essential patents (SEPs) - mean they are stalled.
Although the European Parliament approved the drafts in February 2024, the files have been stuck in the Council for almost a year. One reason is the designation of the EU IP Office (EUIPO) – which currently handles EU trademark and design right applications – as the agency responsible for administering both SPCs and SEPs, despite its lack of patents expertise.
Unnecessary competition
Member states have raised considerable concerns about the role the regulations envisage for the EUIPO. Last December the Council diplomatically noted that this “continues to be subject to thorough examination as part of the deliberations”.
The potential issues are multiple. One of them is that the European Patent Office (EPO) already has the expertise to examine and grant patents at the European level. Another is that the EUIPO will have multiple complex responsibilities - from setting up an SEP register to conducting essentiality checks and determining fair licensing terms, to assessing patent rights and medical marketing authorization - in areas where it currently has no experience whatsoever.
These regulations are also at odds with the new Unified Patent Court (UPC). This was created to strengthen and harmonize patent protection throughout Europe but now faces a potential diminution of its role. The EPO was tasked by EU institutions to administer the registration of the unitary patent which underpins the practicality and effectiveness of the UPC system.
Cost and uncertainty
Member states have raised over 200 questions about the SEP regulation. Among them are ones highlighting the immense resources the EUIPO would require to hire and train the necessary expert staff.
Some fear the proposals could also impose substantial costs on member states, especially if the EUIPO’s administrative fees are insufficient to cover operational costs. Furthermore, the regulations rely on national patent offices to fill gaps in the EUIPO’s competences. This is likely to strain already stretched resources.
Against the Draghi and Letta approach
In the light of the EU’s new priorities to avoid burdensome regulation, promote investment in European innovation and leadership in standardization, it is imperative that the Council acts swiftly to address the concerns over the envisaged role of the EUIPO. The risks to patent exploitation, commercial and legal uncertainties, and potential costs argue strongly for reconsideration. Most importantly, without change European researchers and entrepreneurs could be stifled.
Call for action
The EUIPO is a world class trademark and designs agency. It ensures European leadership in these areas. However, it has no experience whatsoever in patents, let alone in areas as complex as SPCs and SEPs. The costs and time required to secure such expertise will be considerable. When the EPO, another world class agency, already possesses the relevant knowledge and skillsets, such duplication is entirely unnecessary.
We must ensure that the administration of SPCs and SEPs is handled by the appropriate bodies with the necessary expertise. It is not hyperbolic to say that the future of European innovation and competitiveness may depend on it.