Hungarian Intellectual Property Association
mszte.com -
Magyar Szellemi Tulajdonvédelmi Egyesület
The influence of the European unitary patent on small and medium-sized
enterprises of the small countries
The situation
During the Hungarian Presidency of the Council of the European Union, Competitiveness
Council agreed on two draft regulations related to the enhanced cooperation in order to create
unitary patent protection. One of the regulations relates to the uniform protection of the
invention, the other one deals with translation arrangements. In 2013, the members (including
Poland and Italy) also signed the convention on the Unified Patent Court.
In the framework of the enhanced cooperation concerning the unitary patent 25 countries –
i.e. the 28 EU countries without Italy, Spain and Croatia – created the unitary patent that can
be validated, lapsed, assigned as ‘one country’. The enhanced cooperation is open, so further
members or even new EU countries can join. Meanwhile, Italy has also joined, however,
Poland practically withdrew.
Given that the cooperation of the 25 countries affects the validation stage after the grant of the
European patent (including 38 member states), it is appropriate to use the word ‘unitary
patent’, even if not all of the EU countries are members of the cooperation yet. Therefore, we
cannot speak of a new option for patent applications, as the granted patent is still the
European patent we know, that can be validated in the EU’s 25 member states uniformly.
Since currently the granted European patent has to be validated in each country sequentially.
The one by one validation remains an alternative, and in the future as the single option for the
countries that are members of the European Patent Convention. The validation is an action,
similar to the equivalence of diplomas. The London Agreement regulates the countries’
different translation requirements. Several countries do not require translation, for some the
rules are dependent upon the original procedural language. For example, in Hungary if the
procedural language is English, the Hungarian translation of the patent claims is sufficient for
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the validation. In case of a German or French patent the entire patent description has to be
translated. Thus, currently an English speaking developer can understand the description in a
way that he has the opportunity to study both the Hungarian and English patent claims that
include the most important exclusive rights.
Currently, 3000 out of the approximately 70 000 granted European patents are validated in
Hungary, which means, we have to face 3000 exclusive rights every year. In Europe, a
European patent is maintained for an average of 12 years. Two third of the European patents
does not belong to European companies. The number European patents with Hungarian origin
is minimal, about 50, which is a rate of 0,07%.
Therefore, currently the exclusive rights of developments are manageable and to a not too
dangerous amount they are accessible in Hungarian for the Hungarian R&D sector. There
were 4 years since 2011 for those who are responsible for the management of the Hungarian
intellectual property protection to prepare the technical developers and the innovative small
enterprises for the expected effects.
The R&D utilisation of the poorer member states is in danger
Why would it be disadvantageous if patents are cheaper, furthermore, why does it endanger
the interests of the underdeveloped countries in technological innovation?
No doubt that the unitary patent has advantages and disadvantages as well. The problem is
that advantages are present in the rich and developed countries and companies, however,
disadvantages are present in small and technologically underdeveloped countries.
Namely, patent is an exclusive right. The patent holder has the exclusive right to tell who can
utilise the invention. As we indicated earlier, up to the present, in Hungary 3000 foreign
patent right controlled the developers every year. With the starting of the unitary patent this
number will run up to 60 000. Foreign companies will be cautious at the beginning, many of
them will choose the traditional way, then experiencing the advantages of the unitary patent,
and they will switch gradually to this legal form, which after a short period of time will
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stimulate the number of European patent applications, according to EU estimation with 23%.
After the introduction of the unitary patent those who validated their patents only in Germany,
Great Britain or France, presumably will choose the unitary patent. In this case, they will, so
to say, get the small countries’ patents as a present.
Due to the cumulation of the patents’ number, the developers from the small countries soon
will face hundreds of thousands of exclusive rights that as landmines will control their
developments’ utilisation. One part of the R&D sources will rest in blocked
developments or will be spent on infringement proceedings. This might block the delicate
balance of the innovation circle. Despite the growing R&D source in the economy, if it cannot
be utilised properly, the small countries are unable to move forward. Poland prepared an
impact study and decided not to ratify the cooperation, yet.
Until now the exclusive rights were usually accessible in national language, after the unitary
patent the claims including the exclusive rights will be available in English only. Not that the
developers do not speak English, however, to understand the claims in our national language
is also not easy, not to mention a long technical-legal sentence twisted through 2 pages in
English.
One might ask, what are the advantages of the unitary patent for the small countries? Two
third of the European patents are not even European, and a minimal amount originates from
small EU member states. As an example, the amount of the European patents with Hungarian
origin is a rate of 0,07%. Unitary patent may be advantageous for them. However, this
advantage will not arise in the reduction of costs. The fee of the unitary patent will be equal to
as if we would validate in 5 countries. However, Hungarian patents were rarely validated in
more countries before. But now, the patent protection will spread to a greater area. These
advantages confront the above-listed significant disadvantages.
The Hungarian Intellectual Property Office (HIPO) ordered an impact study from
PricewaterhouseCoopers and was prepared in the spring 2014. The 113 pages long study
clearly identifies the disadvantages of the unitary patent. According to its prognosis the
amount of patent litigations increases tenfold and within a few decades the number of the
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exclusive rights (landmines) will be 1.2 million. The study makes it likely that so called
patent trolls will show up and that the Hungarian entrepreneurs will be in a potential
defendant position. The study proposes the Hungarian government to ratify the cooperation
only if the Hungarian innovation expenditures exceed the 1.8% of the GDP. It is estimated by
2020.
It is however unfortunate, that the HIPO did not make the study available even for the
innovation professionals.
There is a solution
We have indicated that the unitary patents as landmines block the developers’ work in small
countries. Landmines, however, are dangerous only for those who do not know where they are
and they step on them. The developer society in such smaller countries can be prepared for the
recognition and deactivation of the landmines. The Hungarian Intellectual Property
Association (HIPA) developed a training program that can be acquired over a short period of
time. With the contribution of Pintz & Partners Patent, Trademark and Law Office LLC, a
software has been developed that is able to detect landmines.
Knowing what should be done and where the landmines are, the developer society of the
small countries can be protected from the disadvantages. In order to do so, we need to prepare
them, which takes time, approximately one year. Therefore, the one year postponement of
the ratification for the technologically least competitive countries is necessary. The HIPA
is ready to cooperate in sharing the training material and introduce the software’s use.
Gyorgy Pintz, President
Hungarian Intellectual Property Association