Periodic Reporting for period 1 - PATGOV (The governance of the European patent system)
Reporting period: 2018-06-01 to 2020-05-31
The functioning of the European patent system has been criticized from various angles. Some authors have addressed performance deficiencies of the system (decreasing quality of patents, high patent fees). Others have questioned the ethical appropriateness of patentability of inventions in specific areas (e.g. stem cells, human embryos, and genetically modified organisms). The system has also been criticized for not being able to deal with new technologies, such as large parts of biotechnology, that show characteristics of post-normal science. From the perspective of governance studies, focusing on accountability and legitimacy, it has been argued that the European patent system is in fact a very closed system, an epistemic community of legal-technical experts who at best interact with directly involved stakeholders (i.e. patent applicants) but hardly beyond the patent system as such. Similar criticism comes from Responsible Research & Innovation (RRI) scholars, who have pointed at the lack of inclusion of and responsiveness to societal stakeholders.
In defence of the patent system, it has been argued that the system is not meant to evaluate broader societal issues and should primarily be assessed on its contribution to innovation. The traditional patent paradigm is that inventors need to be rewarded for their efforts by creating a long-term, enforceable, exclusive right to the use of their invention. Within this paradigm the role of the patent system is straightforward. i.e. to establish whether the basic requirements for patentability (novelty, inventive step, and industrial applicability) are met. The links between patenting and innovation are however much more complicated than this basic reward idea presupposes. The empirical evidence on the link between innovation and patents is far from conclusive. Exclusive rights create monopolies which distort markets. Patents impede the combination of new ideas/inventions across actors/sectors (open innovation) and raise transaction costs (the anti-commons problem).
Another possibility is therefore to see patents as regulatory interventions by the state on behalf of society, in service of society’s interest. Granting of patents comes with (economic, ethical) trade-offs and is a balancing act. Patents are privileges, not rights. This is the view taken in the PATGOV project. The project objective was to establish which changes are needed in the governance of the European patent system in order to enhance its responsiveness to societal stakeholders and to open it up to broader societal considerations.
In defence of the patent system, it has been argued that the system is not meant to evaluate broader societal issues and should primarily be assessed on its contribution to innovation. The traditional patent paradigm is that inventors need to be rewarded for their efforts by creating a long-term, enforceable, exclusive right to the use of their invention. Within this paradigm the role of the patent system is straightforward. i.e. to establish whether the basic requirements for patentability (novelty, inventive step, and industrial applicability) are met. The links between patenting and innovation are however much more complicated than this basic reward idea presupposes. The empirical evidence on the link between innovation and patents is far from conclusive. Exclusive rights create monopolies which distort markets. Patents impede the combination of new ideas/inventions across actors/sectors (open innovation) and raise transaction costs (the anti-commons problem).
Another possibility is therefore to see patents as regulatory interventions by the state on behalf of society, in service of society’s interest. Granting of patents comes with (economic, ethical) trade-offs and is a balancing act. Patents are privileges, not rights. This is the view taken in the PATGOV project. The project objective was to establish which changes are needed in the governance of the European patent system in order to enhance its responsiveness to societal stakeholders and to open it up to broader societal considerations.
The project used various research methods: analysis of academic literature, of secondary statistical data, of websites, policy documents and legislation, and interviews (under Chatham House rules) with key actors. It used an analytical framework with two elements: willingness of key actors in the system to include (based on preferences and relative bargaining power), and capacity to include (based on change costs).
The project first analysed existing responsiveness mechanisms as used by the European Patent Organization (EPOrg), an international organization (IO) of 38 contracting states, with the European Patent Office (EPOff) as its executive branch. It also looked at IP Australia and the USPTO and their use of responsiveness mechanisms. It was found that such mechanisms are not abundant and not very well and/or frequently used. This is also true for so-called compulsory licensing, an instrument that has recently received renewed interest, also in light of the coronavirus pandemic.
The analyses then turned to the institutional set-up of the EPOrg, using a principal-agent approach. The EPOrg suffers from a multitude of agency issues, with ignorant primary principals (the contracting states), a highly symbiotic relationship between the supervisory principals (representatives from national patent offices) and the ultimate agent (the EPOff), and an inadequate incentive scheme. Similar problems were found in a comparative analysis that included the EPOrg, the European Union Industrial Property Office (EUIPO) and the Community Plant Variety Office (CPVO).
The project further looked into potential changes in substantive patent law, especially into the use of liability rules. It developed a three-pronged system of patents: (a) traditional patents with enhanced proportionality requirements, (b) inclusive patents with voluntary licensing, and (c) patents with compulsory licensing.
Finally, the project analysed the changes the Unitary Patent and the Unitary Patent Court may bring to the responsiveness of the system. In terms of institutional change the so-called UP/UPC patent package was a missed opportunity. The UP Regulation and the UPC Agreement do however introduce some substantial improvements to patent law. Use of these instruments for substantive patent law change comes with far less costs than EPC revision and can be used to that end in the future as well.
Project findings have been disseminated by means of two conference papers, a final research report and a policy brief.
The project first analysed existing responsiveness mechanisms as used by the European Patent Organization (EPOrg), an international organization (IO) of 38 contracting states, with the European Patent Office (EPOff) as its executive branch. It also looked at IP Australia and the USPTO and their use of responsiveness mechanisms. It was found that such mechanisms are not abundant and not very well and/or frequently used. This is also true for so-called compulsory licensing, an instrument that has recently received renewed interest, also in light of the coronavirus pandemic.
The analyses then turned to the institutional set-up of the EPOrg, using a principal-agent approach. The EPOrg suffers from a multitude of agency issues, with ignorant primary principals (the contracting states), a highly symbiotic relationship between the supervisory principals (representatives from national patent offices) and the ultimate agent (the EPOff), and an inadequate incentive scheme. Similar problems were found in a comparative analysis that included the EPOrg, the European Union Industrial Property Office (EUIPO) and the Community Plant Variety Office (CPVO).
The project further looked into potential changes in substantive patent law, especially into the use of liability rules. It developed a three-pronged system of patents: (a) traditional patents with enhanced proportionality requirements, (b) inclusive patents with voluntary licensing, and (c) patents with compulsory licensing.
Finally, the project analysed the changes the Unitary Patent and the Unitary Patent Court may bring to the responsiveness of the system. In terms of institutional change the so-called UP/UPC patent package was a missed opportunity. The UP Regulation and the UPC Agreement do however introduce some substantial improvements to patent law. Use of these instruments for substantive patent law change comes with far less costs than EPC revision and can be used to that end in the future as well.
Project findings have been disseminated by means of two conference papers, a final research report and a policy brief.
The project has moved the research in this field beyond mere diagnosis of failures towards analysis of potential changes. There has been earlier research on the patent system using an institutionalist approach, but application of the willingness/capacity model is new. Especially the element of lock-in effects proved very useful in the analyses.
The project contributed to the state-of-the-art by offering a comprehensive analysis of responsiveness mechanisms used in European patent governance, based on a RRI framework. The analysis of compulsory licensing moved beyond the state-of-the-art through its focus on the factors that explain the actual (non-)use of compulsory licensing, whereas the current (legal scholarly) literature focuses on the normative-legal aspects of compulsory licensing as such.
Although many authors have pointed to the high level of autonomy of the EPOff as an important (negative) aspect of the functioning of the European patent system, the EPOrg was not previously studied from the perspective of delegation to IOs and principal-agent theory, or the related literature on EU `agentification´. An important contribution was made here by looking at delegation chains and the various roles that actors have within delegation. These roles are multifaceted (and complicated) rather than archetypical, involving more refined characterizations of the behaviour of principals and agents. These insights have value beyond the application to the EPOrg, i.e. have larger relevance for the study of IOs and agencies.
The work on substantive patent law changes brought together a variety of fragmented ideas on inclusive patent law (especially on liability rules replacing property rules) in one comprehensive system.
Finally, the project applied current literature in the field of EU differentiated/alternative integration to the domain of IPRs. It also included a comparative analysis of (the development of) European governance of the main IPRs, beyond patents (e.g. trademarks).
Although the patent system is essence a very closed system, and seemingly immune to change, it is in its current form not sustainable. Important changes are needed to make the patent system serve the interests of society better than it does now. In that sense, some of the proposals made in the project, can have great impact, if followed-up by policy-makers.
The project contributed to the state-of-the-art by offering a comprehensive analysis of responsiveness mechanisms used in European patent governance, based on a RRI framework. The analysis of compulsory licensing moved beyond the state-of-the-art through its focus on the factors that explain the actual (non-)use of compulsory licensing, whereas the current (legal scholarly) literature focuses on the normative-legal aspects of compulsory licensing as such.
Although many authors have pointed to the high level of autonomy of the EPOff as an important (negative) aspect of the functioning of the European patent system, the EPOrg was not previously studied from the perspective of delegation to IOs and principal-agent theory, or the related literature on EU `agentification´. An important contribution was made here by looking at delegation chains and the various roles that actors have within delegation. These roles are multifaceted (and complicated) rather than archetypical, involving more refined characterizations of the behaviour of principals and agents. These insights have value beyond the application to the EPOrg, i.e. have larger relevance for the study of IOs and agencies.
The work on substantive patent law changes brought together a variety of fragmented ideas on inclusive patent law (especially on liability rules replacing property rules) in one comprehensive system.
Finally, the project applied current literature in the field of EU differentiated/alternative integration to the domain of IPRs. It also included a comparative analysis of (the development of) European governance of the main IPRs, beyond patents (e.g. trademarks).
Although the patent system is essence a very closed system, and seemingly immune to change, it is in its current form not sustainable. Important changes are needed to make the patent system serve the interests of society better than it does now. In that sense, some of the proposals made in the project, can have great impact, if followed-up by policy-makers.