World renown?

The US is facing stiff resistance over its patent reforms.

The patent systems in the US and Europe have had some problems for a while, with an inherent tension between new and old industries such as information and communications technology (ICT) and pharmaceuticals.

Chief among the problems is that the rate that inventors apply for patents is outpacing the rate at which they can be processed, leaving the offices swamped and the applicants vulnerable.

In the US the situation became so bad that the legislature reformed the law, resulting in the Patent Reform Act last autumn. There have also been some far-reaching changes to the US Patent and Trademark Office (USPTO) Rules.

Patents are intended to encourage innovation by giving the inventor a monopoly for a set amount of time. But there is no such thing as a global patent and so patents have to be obtained in each country where they want to operate.

With the US such an important market, whatever happens there has important implications on the international stage. But that is not all. Other regions, not least Europe, have been grappling with their own challenges, which are in some ways greater than those of the US, and language issues have bogged down progress.

First past the post

The US developments are designed to simplify the process, introduce a first-to-file system (bringing the US into line with other jurisdictions) and limit the scope for abuse.

But not everyone is happy. For some the old system suited them better. Indeed, one of the world’s largest drugs companies GlaxoSmithKline recently won an injunction putting on hold the new rules, which should have come into force last November.

Until the act becomes law, a patent is granted in the US to the first person to invent something, which may be morally just, but which creates a huge amount of uncertainty. This is because the first person to invent something may not be the first person to file for the patent. In these cases someone with a potential claim to be the inventor can ‘interfere’ or challenge a patent.

Historically these interference proceedings have been a slow process, consuming USPTO resources that could otherwise be used to process new applications. They also make life difficult for the parties slugging it out.

These rules are at odds with the law nearly everywhere else, including in Europe, where the first person to file gets the patent.

Other problems the reforms have tried to address include: the facility for anyone with a gripe about patent infringement to shop around for the most sympathetic jurisdiction in which to lodge the action; the appearance that some awards for infringement are out of proportion; and that some people falsely claim to be the rightful owner of the patent.

The critics

So far, so good. But the changes have also controversially limited the extent to which a patent holder may file continuation applications.

It is this that appears to be the sticking point for some, who claim the new rules are a poor solution to a multifaceted issue. In particular, pharmaceutical companies claim that the new rules limit their ability to file a patent application early to protect a compound when it is first identified as interesting and then add to the application as research reveals more.

They believe the reforms are attractive to the ICT community, whose needs and values where patents are concerned differ from their own. For example, the life cycle of a piece of software is far shorter than for a new drug, upping the need for a speedy patent process.

Pharmaceutical companies develop drugs over many years through a succession of complicated trials. As a result flexibility is key to the application process and the successful protection of their investments.

Europe’s perspective

Just as the US system has had its problems, so has Europe. The system here is also creaking and the European Patent Office’s (EPO) opposition process is similarly clogged up.

In addition, we have the unsatisfactory situation of a UK court ruling that it will not necessarily wait for a conclusive opinion from the EPO on the validity of a patent. This means that the UK court could rule a patent infringed and award damages, only for the EPO to determine later that it was not a valid patent in the first place. Damages may not be repayable.

Of almost equal concern is the lack of harmony across Europe in terms of law and enforcement, which is increasingly seen as a source of frustration, not to mention expense, for rights holders.

This is of particular relevance in the ICT sector, where in the international arena attitudes to software and business method patents diverge fundamentally – even within different European jurisdictions.

The future

So what changes, if any, are proposed on this side of the Pond?

There has been a lively debate about creating a fully fledged community patent, uniformly enforceable, or at least having a centralised court for patent litigation matters. The debate has not stopped there, with the EPO producing a paper reviewing four scenarios that might drive the development of patents in Europe.

•Grey (Market Rules).
Driven by big business, the Grey system relies on the mutual recognition of patents implemented. The problems envisaged include: an even greater number of patent applications; that it would encourage patent trolls (someone who buys or assumes control of a patent, often mistakenly granted, which they then use to threaten a company they claim is infringing that patent in order to get compensation); and patent thickets (where a company sits on a patent, hampering innovation in a related field).

•Red (Whose Game?).
The Red scenario is driven by national governments trying to dominate trade. Barriers relating to free movement of goods are relevant here, enabling trade blocks to emerge. But this system is likely to lead to an escalation of international conflict as infringers are often based in emerging countries.

•Green (Trees of Knowledge).
The open source, or Green scenario, is where civil society has lost faith in the patent system, allowing an alternative to develop similar to that of open source software in computing. The problem is that only a few patent sectors, such as engineering, would survive and the rewards for investing in innovation could be limited.

•Blue (Blue Skies).
Finally, the Blue scenario is a two-tier regime, where classic patents are awarded in areas such as pharmaceuticals and new soft patents for ICT. This system is more dynamic and includes a compulsory licensing regime to encourage collaboration.

The EPO has highlighted the same problems between traditional sectors, such as pharmaceuticals, and emerging sectors, including IT. But any long-term, successful reforms will need to go further, looking at it from a truly global perspective – but that would be radical and fraught with political challenges.

Isabel Davies is head of technology, media and telecoms and Nick Beckett is head of life sciences at CMS Cameron McKenna

while Europe just can’t seem to agree. Will a global patent ever materialise? ask Isabel Davies and Nick Beckett