Conference participants debate value of IP protection and the Community Patent
'Intellectual property holds the key to innovation, which, in turn, holds the key to our economic future,' said Director-General of the European Commission's Enterprise DG, David White, at the European Inventor of the Year conference in Brussels on 3 May. The guardians of intellectual property (IP) - patents - were the focus of discussion at the first day of the conference, and more precisely, the extent to which patents are an asset, and the degree to which a Community Patent would offer European innovators an advantage. While all speakers agreed on the importance of protecting intellectual property, they had different views on the priorities for EU actors, and indeed on whether the EU's best-known project in this field - the Community Patent - should be pursued at all. The majority were in favour of the Community Patent. Mr White started his presentation by claiming: 'It is not patents, but intellectual property, that is the asset.' He then asked: 'Do patents extract value from intellectual property?' He gave a balanced response to his own question, outlining how patents can demonstrate companies' wisdom and inventiveness, how they can help a company to defend itself from competitors, and how they can help a company get financing. On the other hand, Mr White has come across inventors who have been horrified at seeing their intellectual property exploited when they thought they had protected it. Mr White's comments on the value of patents for attracting finance were put into question by a presentation from James Malackowski, President and CEO of Ocean Tomo LLC, an intellectual property merchant bank in the US. A recent study of 2000 venture capitalists in the US found that of the capital invested, only 25 per cent went to companies that already had one or more patents. He added that the same survey did find that patents are likely to increase the likelihood of a company winning a second round of funding, and reducing the risk of a company going bankrupt - from 24 per cent to 16 per cent. Mr White also addressed investment, stating: 'The financial world finds it difficult to assess the value of a patent and is therefore unwilling to accept them as collateral.' The value of a patent depends upon the context, and what a company is planning on doing with the patent, Mr White explained. For example, there could be a considerable time lapse between the awarding of a patent and the commercialisation of a product or service that is the subject of that patent. 'Venture capitalists tell us that firms also need capacity, a business plan and competent management,' said Mr White. One of Europe's problems is the absence of a single patents system, which means that those with novel ideas must apply for a patent in each of the EU Member States, and abroad. for full coverage. This is a costly process. Five years ago, the European Commission proposed reducing the costs involved in the patent process and unifying Europe's disparate patent laws into a single system. However, differences in opinion over the number of languages that patents could be secured in made it impossible for the Member States to reach a consensus. 'The Commission is prepared to give it another push if we feel we will get a response, particularly from the Member States,' said the Deputy Director-General of the European Commission's Internal Market DG, Thierry Stoll. The Commission carried out a consultation which ended in April, with the aim of finding a solution that is acceptable to all. The process attracted more responses than expected, and from a wide range of stakeholders, according to Mr Stoll. To an appreciative audience, Mr Stoll pledged to put pressure on the Member States to find a compromise: 'We are at a crossroads for the patent system in Europe. We need to up the stakes and make it clear to our political masters that they cannot hide in the complexities of the issue, and they need to take some decisions very soon.' Representing the European Association of Craft, Small and Medium Sized Enterprises (UAPME), Secretary General Hans-Werner Müller spoke very much in favour of a Community Patent. He called for it to be established rapidly, and claimed that it would solve many of the problems currently experienced by small and medium sized enterprises (SMEs). Mr Müller also called for the number of languages involved in the patent system to be reduced to a minimum, and proposed using English, 'the universal language in the field of patents'. For SMEs, the high cost of filing for a patent is a 'major burden', he said. Vice-Chairman of the patent working group at the European employers' federation UNICE, Thierry Sueur, highlighted another way in which the use of many languages would be a drain on resources. If companies and individuals could file for a patent in any EU language, patent examiners with each of these languages would have to be employed. But those with the lesser-spoken languages would probably have gaps of several months waiting for a new application in their language to be filed. In response, Mr Stoll explained how the Commission had put forward proposals involving one, language, five languages, and all EU languages. 'There was no consensus. It is a story of missed opportunities,' he said. Reto Hilty, Managing Director of the Max Planck Institute for IP and a Professor of law, was the dissenter on the panel, claiming: 'If the European Patent Office is a success story, the attempts of the EU to harmonise the system are the opposite.' Professor Hilty argued that the EU's proposal to harmonise patent systems went beyond what was necessary. He rejected harmonisation altogether, and claimed that instead, Europe needs the synchronisation of national jurisprudence. 'The Community Patent is not attractive enough to Member States or industry,' said Professor Hilty. He conceded though that the current deadlock is not desirable, and suggested downsizing the proposal, which, he suggested, is over-ambitious. Supporters of the Community Patent can be reassured by the words of two men whose opinions carry some weight. Both Commission Vice President Günter Verheugen and President of the European Patent Office (EPO) Alain Pompidou spoke in favour of the patent, and Mr Verheugen claimed that he is 'slightly more optimistic' now about finding unanimity between the Member States on the proposal. Mr Pompidou called on the Member States to reach an agreement as a matter of urgency.