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The Implications of the Unitary Patent and the Unified Patent Court

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The Implications of the Unitary Patent and the Unified Patent Court Master Thesis Law & Technology ‘The Implications of the Unitary Patent and the Unified Patent Court to High-tech Start-up Patenting in Europe’ Wieger Weijland ANR: 645811 Date 24/06/2013 Supervisor Eleni Kosta Table of Contents 1. INTRODUCTION ........................................................................................................................................... 3 2. WHAT ARE HIGH-TECH START-UPS AND THEIR REASONS TO PATENT? ........................................................ 9 2.1 HIGH-TECH START-UPS .................................................................................................................................. 9 2.2 BENEFITS FROM PATENTING TO HIGH-TECH START-UPS ................................................................................. 10 2.3 GENERAL DRAWBACKS TO PATENTING FOR HIGH-TECH START-UPS ................................................................ 12 2.4 OTHER FACTORS INFLUENCING THE DECISION WHETHER OR NOT TO PATENT ................................................... 14 2.5 ALTERNATIVES TO PATENTING........................................................................................................................ 16 3. THE EUROPEAN PATENT CONVENTION AND THE INTRODUCTION OF THE UNITARY PATENT .................... 19 3.1 OBTAINING AND ENFORCING A PATENT UNDER THE EUROPEAN PATENT CONVENTION ................................... 20 3.2 THE UNITARY PATENT ................................................................................................................................... 23 3.2.1 Obtaining a Unitary Patent ............................................................................................................ 23 3.2.2 The Unified Patent Court ................................................................................................................. 25 3.2.3 Problems Relating to the Unitary Patent and the Unified Patent Court .......................................... 26 4. HIGH-TECH START-UPS AND PATENT TROLLS ............................................................................................ 30 4.1 PATENT TROLLS ............................................................................................................................................ 30 4.2 PATENT TROLLS AND HIGH TECH START-UPS ................................................................................................. 31 4.3 CHARACTERISTICS OF EU LEGISLATION AND THE PRESENCE OF PATENT TROLLS ............................................ 33 4.4 THE UNITARY PATENT PACKAGE AND POSSIBILITIES FOR PATENT TROLLS IN EUROPE ..................................... 35 5. THE UNITARY PATENT PACKAGE AND HIGH-TECH START-UP PATENTING; LESSONS FROM THE U.S. ......... 37 5.1 OBTAINING AND ENFORCING PATENTS IN THE U.S. COMPARED WITH THE UNITARY PATENT ........................... 37 5.2 THE UNITARY PATENT PACKAGE AND HIGH-TECH START-UP PATENTING; LESSONS FROM THE U.S. ................ 40 5.2.1 Obtaining Patents ............................................................................................................................ 40 5.2.2 Enforcing Patents ............................................................................................................................ 41 6. CONCLUSION ............................................................................................................................................. 43 BIBLIOGRAPHY ..................................................................................................................................................... 46 Page 2 of 49 1. Introduction New technological and innovative ideas are a contribution to our society. These new ideas and technologies can be protected by intellectual property rights. New innovative technologies that are applicable in industry can be protected by patents. Patents grant the inventor the exclusive right to make, use, sell and license an invention for a limited period of time. After this period the invention can be used by anyone and the technology of the invention can contribute to develop new innovative technologies. A new invention, not done by the research and development team of an existing company, is often the beginning of a new growing technological business; a start-up is born. When this invention is cutting edge and the most advanced technology, it is referred to as high-tech. High- tech inventions relate to information technology, electronics-telecommunication, aerospace, scientific instruments, pharmacy, electrical machinery, non-electrical machinery, chemistry and armament.1 These technological developments are becoming more and more part of society as it is an important part of products we use every day. In 2008 almost 50 000 companies were active in high-tech manufacturing in the European Union.2 When inventors and entrepreneurs want to develop a high-tech invention and make it a continuing business, they can create a legal entity. By creating a legal entity one can more easily attract external investors to help him achieve this goal. But before disclosing any confidential material to attract investors, the inventor or entrepreneur(s) of the high-tech start-up should protect the invention to third parties; this is where the European patent system comes in. In 2014 a new regulation concerning European patents will enter into force. Nowadays, applying for a patent in Europe is regulated by the European Patent Convention (EPC) which establishes a uniform patenting system for all countries signatory to the Convention. The applicant has to file his application at the European Patent Office (EPO) and must indicate to what countries, which are acceded to the EPC, he wishes patent protection.3 Patents granted by the European Patent Organisation (EPO) are referred to as ‘European patents’, a patent issued by the EPO must be validated in all the countries where the patentee would like protection and 1High-technology groups of products referred to by Eurostat in: Eurostat, ‘Science, Technology and Innovation in Europe’, 2012 edition p. 112 2 Eurostat, ‘Science, Technology and Innovation in Europe’, 2012 edition p. 98 3 Art 79 European Patent Convention & Guide for Applicants Part 1, How to get a European Patent, May 2010 Page 3 of 49 translations to these countries must be included.4 Although the patents are referred to as European patents the patents are not based on a unitary right, but based on the multiple jurisdictions of the designated countries. Also the system requires a series of fees and costs such as filing fees, examination fees, translation costs, professional representation costs and fees for every country you designate in the application.5 The costs of a European patent are estimated to be over EU 30 000 on average for a community-wide patent,6 but when in the end the patent is granted, the owner will have his exclusive right to his invention and he can start to develop his business. When the patentee claims that the patent is infringed by a third party, he can only enforce his patent in the national courts of the designated countries. Under this system, enforcement of a patent can lead to multiple legal proceedings in various countries. This gives the patentee an uncertain legal position, whereas his patent can be interpreted in different ways by the multiple national courts. Next to this, enforcement by multiple legal proceedings lead to substantial litigation costs. Altogether, the European patent system is both a legal uncertain, costly and complicated system, this can be a barrier to innovation in Europe. High-tech start-ups are characterized by the fact that their main asset is their innovative idea and they need external financing to develop the idea into a real business. Patents can help start-ups to protect their idea and thus be an incentive to innovation. But on the other hand, the European patent system is a complicated, expensive and time-consuming procedure which can be a barrier for high-tech start-ups to protect and develop their idea. High-tech start-ups have lack of financial resources, legal knowledge and time to fulfill the requirements of the European patent system.7 Financial resources are little because most inventors collected some personal savings and are supported by friends and family.8 Financial resources will grow once the start- up has obtained other resources. Private equity investors, for example, are really attracted to the 4 Guy Trittion (ed), Intellectual property in Europe (Third edition Sweet & Maxwell 2008) p. 138 5 Guy Trittion (ed), Intellectual property in Europe (Third edition Sweet & Maxwell 2008) p. 149 6 Berger, R. Market Research, ‘Study on the Costs of Patenting’ (prepared for the European Patent Office (EPO) august 2004) <http://www.effi.org/system/files?file=cost_anaylsis_2005_study_en.pdf> 7 Shane, S. Technological Opportunities and New Firm Creation, 47 MGMT. SCI. 205, 209 (2001); David J. Teece, Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy, 15 RES. POL’Y 285 (1986); & Graham, Stuart J. H., Merges, Robert P., Samuelson, Pamela and Sichelman, Ted M., ‘High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey’ (June 30, 2009). Berkeley Technology Law Journal, Vol. 24, No. 4, pp. 255-327, 2009; CELS 2009 4th Annual Conference on Empirical Legal Studies Paper. Available at: <http://ssrn.com/abstract=142904> 8 United States Patent and Trademark Office, ‘International Patent Protection For
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