"Down with the Patent Lobby"

or how the European Patent Office has mutated to controlling

engine of the European Economy

Diploma Thesis

for a Masters degree and academic title of

Magister iuris

at the faculty of law of the university: Alma mater Kepleriana of

Linz

written by

Jürgen Augstein

Submitted to the Institute of European Law on April 2008

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"Down with the Patent Lobby"

or how the European Patent Office has mutated to controlling engine of the European Economy

Citation:

AUGSTEIN

, Down with the Patent Lobby, Linz 2008

92 pages, 15206 words, JKU Linz, Austria

For better reading and understanding of this thesis there are only

masculine forms used in a non-discriminating form.

II

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"Down with the Patent Lobby"

or how the European Patent Office has mutated to controlling engine of the European Economy

Dedication

This thesis is dedicated to

Carla

Funky-Hill

III

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"Down with the Patent Lobby"

or how the European Patent Office has mutated to controlling engine of the European Economy

I.

Table of contents

I. Table of contents IV

II. List of tables VI

III. List of figures VII

IV. Bibliography VIII

V. List of abbreviations X

1. Introduction 1

2. Legal Framework 7

2.1. Treaty of Lisbon 11

2.2. The European Patent Convention 12

2.3. Enforcement Directive 2004/48 13

2.4. London Protocol 16

3. Elements of the patent-system 19

3.1. The European Patent Office 19

3.1.1. History 24

3.1.2. Legal department 25

3.1.3. The Board of Appeal and the independent appeal

division 26

3.2. The Community Patent Court 30

3.3. The European Court of Justice 35

4. The grant procedure for European patents 38

4.1. 1st Step 41

4.2. 2nd Step 52

4.3. 3rd Step 59

4.4. 4th Step 61

IV

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4.5. 5th Step 64

4.6. European Community Patent 66

5. Effects on competition in the market 70

5.1. Regulative effects 71

5.2. Financial effects 73

5.3. Exemplary judgments 76

5.3.1. Software-Patents 77

5.3.2. Biotechnical and pharmaceutical patents 82

6. Closing words 90

V

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"Down with the Patent Lobby"

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II. List of tables

1 Steps for a Community Patent 2

2 Categories of intellectual property 9

3 Comparison of actual costs and fees (in Euros) payable for

obtaining patents in the EU, the United States and in Japan 17

4 Contracting States to the EPC 38

VI

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or how the European Patent Office has mutated to controlling engine of the European Economy

III. List of figures

1 The organizational structure of the EPO 23

2 The form 1001 43

3 Scar-free 86

VII

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"Down with the Patent Lobby"

or how the European Patent Office has mutated to controlling engine of the European Economy

IV. Bibliography

BMJ [PUB], German Bundesministerium für Justiz Press release,

30.01.2008

BURGER

, Durch gezielte Schutzpolitik zur Weltmarktführerschaft,

Linz 2002

BURNS

, To a mouse, on turning her up in her nest with the plough,

poem 1785

Commission [PUB], The European Commission Press release,

IP/07/463, 04/03/2007

Council of the EU, 7119/04, 2000/0177CNS, Brussels 2004

EPA (PUB), Fakten und Zahlen, München 2006

EPA [PUB], Der Weg zum europäischen Patent, 10.edition, München

2004

EPA [PUB], Europäische Patente und das Erteilungsverfahren,

München 2006

EPA [PUB], Jahresbericht 2006, München 2007

EPO [PUB], The EPO Press release, 04.06.2007

EPO [PUB], The EPO Press release, 29.06.2007

GOETHE

, Faust eine Tragödie von Goethe, 1. edition, Tübingen 1808

HALL

, Exploring the patent explosion, Cambridge 2004

HARMANN

, Die patentrechtliche Offenbarungswirkung einer inhaltlich

falschen technischen Lehre, Linz 2007

HAYBÄCK,

Das Recht am geistigen Eigentum, Wien 2004

IAM [PUB], Patents in Europe 2006, London 2006

VIII

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or how the European Patent Office has mutated to controlling engine of the European Economy

JENSEN/THURSBY

, Patent licensing and the research university,

Cambridge 2004

KINNE

, Rechtsschutz für Software, Linz 2007

LEWINSKY,

Deutscher und europäischer Patent- und Markenschutz,

München 1987

MAURER/SCOTCHMER

, Profit neutrality in licensing: The boundary

between antitrust law and patent law, Cambridge 2004

MOSER

, How do patent laws influence innovation, Cambridge 2003

OPPENLÄNDER

[PUB], Patentwesen, technischer Fortschritt und

Wettbewerb, Berlin 1984

SAKAKIBARA

, Do stronger patents induce more innovation?,

Cambridge 1999

SCHULTE

, Patentgesetz, 5. edition, München 1994

SCHWAIGER

, Patente, Gebrauchsmuster, Schutzzertifikate, Linz 2001

VALLE

, Der sachliche Schutzbereich des europäischen Patents,

Frankfurt 1996

WINISCHHOFER

, Computersoftware und Patentrecht, Linz 2000

IX

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"Down with the Patent Lobby"

or how the European Patent Office has mutated to controlling engine of the European Economy

V. List of abbreviations

cf.

confer

CFR

Charta of Fundamental Rights of the European Union

CPC

Community Patent Court

CPConv. Community Patent Convention

EC

European Community Treaty

ECHR

Convention for the Protection of Human Rights and

Fundamental Freedoms

ECJ

European Court of Justice at Luxembourg city

ECP

European Community Patent

EEA

European Economic Area

EPB

European Patent Bulletin

EPC

European Patent Convention (Munich Convention)

EPLP

European Patent Litigation Protocol

EPN

European Patent Network

EPO

European Patent Office

EU

European Union

FDA

United States Food and Drug Administration

GDP

Gross domestic product

GL

Guidelines for the examination in the EPO

JPO

Japan Patent Office

NGO

Non Governmental Organization

OHIM

Office for Harmonization in the Internal Market at

Alicante, Spain

OJ

Official Journal of the EPO

X

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PCT

Patent Cooperation Treaty (Washington Treaty 1970)

PUB

Publisher

RFees

Scale of charges and fees of the European Patent Office

Rule

Implementing Regulations to the Convention on the Grant

of European Patents

TLAE

Treaty of Lisbon amending the Treaty on European Union

and the Treaty establishing the European Community

(Treaty of Lisbon 2007)

TRIPs

Agreement on Trade-Related Aspects of International

Property Rights (1993)

USPTO United States Patent and Trademark Office

WIPO

World Intellectual Property Organization

WTO

World Trade Organization

XI

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"Down with the Patent Lobby"

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1. Introduction

The patent law is based on intellectual property rights. The

groundwork for this was laid in 1883 by the Paris Convention for

the Protection of Industrial Property1. The international treaty

allows for regional treaties, such as the Patent Cooperation Treaty

(PCT) and the Agreement of the Trade-Relative Aspects of

Intellectual Property Rights (TRIPs) of the WTO the European

Patent Convention (EPC). These are all treaties devolving from

the Paris Convention. The EPC covers Europe (in the broadest

sense) (cf. Art. 45 PCT). The European Community (EC) is an

entity, by international law (cf. Art. 281 EC) and may represent

its constituent states in the concerns of the WIPO and WTO. The

community has to respect International treaties such as the Paris

Convention and many procedures and measures of the EC

respond to those treaties. In this thesis only the EPC will be

discussed. The EPC created a uniform body of substantive patent

law for patents in Europe. It established a single European

procedure for the grant of patents. A European patent is worth its

fee, because the owner of the patent can use it to economic

1 Founding states: Belgium, Brazil, France, Guatemala, Italy, Netherlands, Portugal, San Salvador, Serbia,

Spain, Swiss (Austria joined in 1909).

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advantage. The EPC also laid the groundwork for the introduction

of a Community Patent by the EC Council. The initial concept of

a Community Patent was first discussed in 1960.

The last attempt to finalize the Community Patent was made in

2007. The member states agreed only on matters of principle, they

couldn′t reconcile their differences. It was agreed that the

Community Patent should protect inventions just like national

patents do and the language problem has to be resolved. Effective

legal sanctions for, and the rights and duties of the patent owners

must still be defined by the Council.

None the less, the current European patent has already enormous

advantages to its owner, compared to national patents. A patent

protects technical inventions that are new, involve an inventive

step and are susceptible of industrial application.

1 Steps for a Community Patent

1960

First discussions about a Community Patent

1968

Joint initiative to define the grant procedure and a

Community Patent Treaty

1973

Signing of the EPC

1975

Community-internal agreement

1989

Modification of the Community-internal agreement

and European Patent Litigation Protocol (EPLP)

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1997

Green Paper on the patent system in Europe

2000

Draft for a Regulation for the Community Patent

2003

Common political guiding principles

2004

Miscarriage of the Regulation for the Community

Patent in May 2004

2006

Public consultation for political unity on patent

regulation

2007

EC Notice of Commission for establishing enhanced

cooperation on patents and the development of the

Community Patent

There is no definition of the meaning of "invention" in the EPC,

but some subject-matter and activities are excluded from

patentability (cf. Artt. 52, 53, 54, 57 EPC; GL C-IV, 2-8). A

patentable invention is considered to be an absolutely new

invention (principle of novelty), which does not form part of the

state of the art (cf. Art. 54 EPC). An invention shall be considered

as involving an inventive step if, in regard to the state of art, it

isn′t obvious to a person skilled in the art (cf. Art. 56 EPC). The

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inventive step requirement is intended to prevent exclusive rights

from forming barriers to normal and routine development.2

The wide-ranging economic significance of patents confers the

right to prevent third parties, such as competitors, from

commercially exploiting the invention.3 The applicant is thus

allowed time to recoup his development costs and to reap the

rewards of his investment and work. The owner can benefit by

granting licenses or selling the protective rights. Smaller

companies and/or natural persons have herewith the power to

protect their invention from theft and may profit greatly from

their patents. Global players and Non Governmental

Organizations (NGO′s) are abusing the patent laws to their

advantage. They often use their patents to create and enforce a

monopoly in a particular market. The patent doesn′t confer the

right to make use of an invention; it allows the owner to prevent

others from deriving economic gain from the invention. Many

companies buy patents only to protect their current product line.

For example, Henkel KGaA is marketing all kinds of cleaning

products, and they are also buying materials patents for products

2 EPA, Der Weg zum europäischen Patent, para. 36.

3 EPA, Europäische Patente und das Erteilungsverfahren, p. 6;

BURGER

, Durch gezielte

Schutzrechtspolitik zur Weltmarktführerschaft, p. 12.

p. 4

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that don′t need cleaning.4 The Ford Motors Company and General

Motors Corporation5 are selling cars fueled with mineral oil, but

they are also buying most of the patents for alternative fuels.

DuPont, Monsanto, Syngenta and Bayer are well-known as

chemistry companies, but they are all buying patents for grains in

order to dominate those markets.6 "Many patents today are purely

defensive"7 and are used close technological markets. "Excessive

patenting can erode the public domain of open science, chilling

the free exchange of knowledge and material which is necessary

for the advancement of science."8 Patents are officially sanctioned

monopolies on ideas. Big industry is striving for more and more

patents with the express intent of preventing competition, both

from their peers, as from upcoming companies. The monopolists

are not interested in free markets, but in maximization of profits

4 That includes the so called Lotus-Effect or other microstructure materials. Henkel noticed that they

won′t sell any cleaner, if no one will need them. Self-cleaning dishes and clothes are already invented,

but Henkel avoids the selling to public. That is against the conservation of nature and natural resources.

5 The Franz-Nebenstrom-Ölfilter-Patent which conserves the motor was also bought by GM. The filter

may consist out of toilet-paper and will last for 100.000 km. GM noticed that the motors of their cars

would have a greater operating time, so they bought the patent to keep the short operating time of their

motors to sell more cars. Today most trucks do have those filters, but no car.

6 Those chemistry companies will produce the insecticides and gen-manipulated grains. Every farmer

must use one of those to have an economic cultivation. They are depending on the chemistry concerns.

7

CONTZEN

(Special Adviser to the Minister for Science, Technology and Higher Education of Portugal,

Lisbon) in EPA, Jahresbericht 2006, p. 10.

8

SCHNEIDER

(Senior Researcher, University Hamburg) in EPA, Jahresbericht 2006, p. 49.

p. 5

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by shutting out competition through unrightfully acquired

monopolies, enabling them to unilaterally dictate prices and

licensing. Anti-globalization activists and critics of the existing

system want to limit the abuse of patents for parasitic and

unnecessary monopolies. After abolishing the Dutch patent

system in 1869 the innovations in food processing increased to 37

percent (11 % before).9 Most of the existing studies10 prefer

patents to increase innovation, but their studies bases on existing

patent systems. The purpose of patents isn′t to establish long-term

monopolies, but to encourage innovation. The standard term of

protection is twenty years, starting from the filing date (cf. Art. 63

EPC, Art. 33 TRIPs). In return for this protection, applicants must

fully disclose their invention. And that is an essential point of

technology transfer. About 80% of the world′s technical

knowledge can be found in patent documents.11 This inspires

further inventions and prevents the duplication of research work.

The publication requirement allows competitors to improve on

patented inventions and come up with even better technical

solutions.

9

MOSER

, How do patent laws influence innovation? p. 8, p. 13.

10

NORDHAUS

1969,

KLEMPERER

1990,

GILBERT

and

SHAPIRO

1990.

11 EPA, Europäische Patente und das Erteilungsverfahren, p. 8.

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A patent isn′t the guarantor of commercial success; it only

provides a save window of opportunity for success.

2. Legal Framework

The European Union was established in 1993 by the Treaty of

Maastricht adding new responsibilities to the EC. One purpose

(relevant to this thesis) of the Treaty is the progressively

establishing of an Internal Market (cf. Art. 14 EC). The internal

market isn′t concerned only with goods as in case of a Customs

Union or free trade area. It provides a framework for the free

movement of goods, persons, services and capital. The primary

objective is the creation of better living conditions for the citizens

of the Union; therefore, innovation and capital investment are to

be encouraged. This can be expedited by the abolishment of

national legal restrictions and differences. A major influence for

the success of this internal market is the protection of intellectual

property rights.12 Patents foster technical innovation, which is

crucial to world market competitiveness and overall economic

growth. A worldwide concept can be found in TRIPs and PCT.

All member states, as well as the Community itself in regard to

12 EPO, The EPO Press release on 29.06.2007.

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matters within its competence, are bound by the Agreement on

Trade-Related Aspects of Intellectual Property (the TRIPs

Agreement), approved as part of multilateral negotiations by the

Council Decision 94/800/EC and concluded in the framework of

the WTO. The TRIPs contains, in particular, provisions for the

means of enforcing intellectual property rights, which are

common standards applicable at an international level and

implemented in all member states.13

The European Community is based on the principle of limited

authority. A regulation of any substantive-matter is only allowed,

if the explicit authority thereto is delegated to the Community in

the treaty. Patents are not specifically mentioned in the EU

Contract. Since they are definitely related to subjects which are

defined in the contract, such as consumer protection, health, and

coherence in the EU-internal Marketplace, the theme is deemed to

be an area of shared competence. The European Union started

efforts to harmonize this matter in 1991. Original ideas and

creative work are assets which may be of commercial value in the

same way as material goods.

13 Preface of the Directive 2004/48/EC.

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2 Categories of intellectual property

Utility models

protect technical innovations which might not

qualify for a patent, and can be protected in some countries

through registration.

Copyright

protects creations such as literary text, musical

compositions and works of art, broadcasts and computer software

against unauthorized copying and certain other uses.

Trademarks

allow brands of products or services to be

distinguished. They may be made up of two- or three-

dimensional signs such as letters, numbers, words, shapes, logos

or pictures, or even sounds.

Designs and models

protect the visual appearance of industrial

products, i.e. the shape and color.

Patents

are concerned with the technical and functional aspects

of inventions.

The first regulation was done to copyright (R 1991) followed by

the commercial legal protection of semi-conductor contractor

(Directive 1986), Flag (R 1994), plant variety right (R 1994),

designs and models (R 2002) and competition law and antitrust

p. 9

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