02.07.16

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UPC: To Understand Who Would Benefit From It Just Look at Who’s Promoting It (Like TPP)

Posted in Europe, Patents at 12:18 pm by Dr. Roy Schestowitz

Summary: The UPC, which is designed to aid patent trolls and aggressors (and their lawyers), is still being advanced by the EPO and some misinformed (but loyal to these former groups) politicians

THE Unitary Patent Court (UPC) is not a step forward but a step backwards. Here is what Glyn Moody (not a patent lawyer or a patent troll) made of the UPC last week, in page 6 of his very detailed article: “EPO’s spokesperson mentioned… [UPC] … as an important reason for revising the EPO’s internal rules” (the context being an attack on staff). Moody filed this under the section “Trolls get ready for the unitary patent,” alluding to a fact that we so often revisit here. The Unitary Patent would work quite well for software patents and for patent trolls, even from abroad. It would not be beneficial to Europe. In this post we explore some recent developments in the race towards UPC, where the main racers are patent lawyers and their biggest clients (large and rich corporations).

Jane Lambert recently had an online dispute/debate. It started with her saying: “Looking forward to my talk on the unitary patent and the Unified Patent Court at 17:00 today in chambers” (UK).

As I pointed out to her, the UPC is not about helping SMEs but about destroying them, by allowing Europe-wide litigation against them. Lambert, who is based in the capital of patent lawyers, London (later Honley), responded with: “I see the UPC as levelling the playing field between SME in the UK and the Mittelstand in Germany and rest of the continent. UPC litigation still much cheaper than litigation in England and Wales alone (see table on page 50 of http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/d/contra_vision_ltd_336_p4_163kb.pdf)” (see with context).

“If one wrongly assumes,” I responded, “that: 1) more/broader litigation is good. 2) companies only sue, never get sued.”

“Cost of litigation never includes EU-wide damages,” Benjamin Henrion added.

It’s a matter of simple economics. The public interests should be factored in.

The matter of fact is, trying to explain this to patent lawyers, who make money from disputes, can be an exercise in futility. Lambert said “UPC makes sense in cost savings even for litigation between 2 UK companies over a European patent designating the UK.”

“Those same companies will easily get sued,” I replied, “by other companies from ~30 countries around Europe. Good for lawyers.

“UPC is a recipe for an epidemic of litigation. Good for patent lawyers, even FANTASTIC for them.”

Henrion then added that “litigating/defending patents is simply out of reach for most of small companies, upc or not http://ur1.ca/ogv4q”

He also asked, “patents are a moving target then?”

Lambert then said this was “better than their being sued in several jurisdictions for essentially the same cause of action. Good for business.”

They wouldn’t be sued like that because the incentive to sue is low. Less money for lawyers. At this point we soon realised that nothing would convince lawyers that the UPC is bad because the UPC is not bad for them. The patent lawyers want what’s good for patent lawyers and their biggest clients (income source).

Lambert later added that “that’s exactly what happens already and it’s the start-ups and other small businesses that suffer the most under present system,” to which I responded with: “Startups are the ones reluctant to sue, and UPC won’t improve that for them. It’ll make them the victim of MORE lawsuits.”

Lambert concluded: “yes it will. The costs of litigation will be so much less than in this country. It will also be easier to obtain IP insurance.” Lambert later added: “Fragmentation of Europe is an enormous barrier to innovation in EU.”

Fragmentation is not the right word. It wrongly assumes that patents need to be global or universal. This clearly isn’t the case. Well, generally speaking, the UPC — like TTP, TTIP, ACTA and more confusing acronyms the public isn’t intended to understand — are hinged on a big pile of Big Lies. They empower multinational corporations and attempt to convince the public that this is somehow better for everyone. The UPC is similar to ISDS in the sense that one helps large businesses sue lots of businesses in one fell swoop. The latter lets them sue nations.

Wouter Pors, a patent lawyer whom we mentioned here several times before, was recently quoted as saying: “Wouter Pors @ #UPP2016 on strategic use of #UPC and #unitarypatent: strong patents more suitable to opt-in?”

When patent lawyers say “strong patents” they don’t mean strong innovation, it’s all about strong (high) profit for strong (rich) companies. Economists are needed here, but not ones who are funded (salaried even) by the EPO. As one shrewd comment put it the other day regarding the EPO’s new French economist (we shall write about that more in a separate article):

Perhaps Yann can turn his attention to the financial impact of the UP upon not only the EPO, but also European businesses?

Darren’s amusing piece (hypothetical discussion with a client) from 20 April 2015 points to reasons why the level of the official fees levied means that advent of the UPC might not be beneficial for all – particularly SMEs.

However, in addition to the issue of official fees, that is the equally important issue of advisory fees.

A little bird tells me that national governments may well be relying upon Article 149a to sanction what would otherwise amount to contraventions of Articles 2 and 64 EPC – i.e. to allow national patents, non-unitary EPs and unitary EPs to all have different effects when it comes to infringement.

On top of this, we have the possibility (now seeming much more like a certainty) that different Participating Member States (PMSs) of the UPCA will have different national laws. Thus, it seems that the process of determining whether a patent application that is eligible for unitary protection will be infringed by actions in country X will now comprise the following steps.

1. Has unitary effect been requested?
2. If so, who was the original applicant?
3. Did the (an) original applicant have a residence / place of business in a state that is a PMS for the unitary patent concerned?
4. If so, determine the applicable national law under Art. 7(1) and (2) of Reg. 1257/2012 (and if not, the applicable law is that of Germany).
5. Seek advice from an expert of the national law determined under step 4.

This is a much more complicated and expensive procedure for determining infringement than we have under the current system. And things just get worse if you are trying to determine freedom to operate in country X and you have identified several potentially relevant patent applications. This is because:
- the above, 5-step process will have to be repeated for each application;
- different applications may have different applicants (giving increased burden for steps 2 to 4) and may therefore be subject to different national laws (giving significantly increased costs in step 5); and
- it will not be possible to provide a definitive answer for step 1 until up to 3 months after the date of grant of the application concerned.

The last point could be particularly galling for clients. This is because it could mean that, whilst they will have to bear the burden of significantly increased costs for FTO, they will be presented with an equivocal conclusion (as there can be no certainty until well after grant of all of the relevant applications).

This might all be OK if the differences between national laws was such that the conclusions would be essentially the same under all potentially relevant laws. But that is certainly not how things appear to be shaping up for indirect infringement and, crucially, for “Bolar” / experimental use.

Will all of the above in mind, any comprehensive analysis of the economic impact of the UP system really ought to take account of the “hidden” costs of advice. If this is done, then I believe that there is certain to be a negative impact upon at least some (if not most) European companies.

Here is another new comment that alludes to the UPC:

I come back to your view, Madhouse, on what constitutes “examination” of patentability.

As we are now, the Enlarged Board of Appeal of the EPO is the commodore of all the ships in the fleet, the fleet I mean being the fleet of national Supreme Courts of the EPC Member States, when it comes to the substantive law of patentability in Europe.

But now we have a new Commodore, the UPC.

And if the UPC has put DG3 out to grass, why should the EPO attempt any longer to issue any decision at all on obviousness? Why should it ever refuse any application for a patent for the reason that the claimed subject matter, even if new, is clearly obvious. Why not save a ton of money and have it merely do a search and issue an advisory EESR opinion on obviousness, and leave it at that.

You know, like INPI does. And like the UK Patent Office used to do until 1978. Isn’t that the cost-saving, modern and efficient way to go? Is that not where BB is taking us all?

Right now we see all sorts of patent “professionals” (usually lawyers) encircling UPC critics like a group of vultures. They even have their own events in favour of the UPC (the EPO funds its own in participation with lawyers' firms). There are even some gullible politicians who are helping patent trolls and aggressive corporations from abroad harm Europe with the UPC, making foolish statements such as: “The new unitary patent will help Europe’s businesses to flourish” (the opposite is true).

“Enforce patent rights across EU with a single, streamlined proceeding may become very attractive to trolls,” Henrion noted, linking to a 2-page PDF on the subject (“MCC INTERVIEW: Dr. Christian Paul & Alastair J. McCulloch / Jones Day – EU Poised to Overhaul Its Patent System – New unitary patent and court are likely to shake up global patent dispute strategies”). This is cited by one of the sections below, which are precede by the following instruction: “On the heels of patent reform in the U.S., the EU is preparing to dramatically shift its approach to patent disputes. A new EU-wide unitary patent to supplement country-by-country patents and a new court system, with jurisdiction that makes it almost as big as the U.S. system, mean big changes ahead. In this interview, Jones Day patent litigators Alastair McCulloch, who leads the firm’s IP team in the UK, and Dr. Christian Paul, who is qualified as a lawyer and graduate chemist in Germany, discuss the likely impact of the new system and what Jones Day is doing to prepare clients for the changes ahead.”

A lot of politicians have a very twisted version of the UPC in mind because they’re being lobbied/greased up by patent lawyers and their clients. They seem to think that broader is better, just as they often think that more (e.g. patents) is necessarily better. Not just trolls but patent aggressors like Apple and Microsoft would benefit from patent maximalism, which augments scope and breadth, both in terms of domains covered and nations covered. Big businesses and their lobbyists, lawyers, paid politicians etc. are passing the UPC without any public debate or input, crushing anyone who stands in their way. The closest analogy we can think of right now is the TPP. Consider this new article titled “They promised us a debate over TPP, then they signed it without any debate” (published 3 days ago).

It says: “The Trans Pacific Partnership is a secretly negotiated agreement between 12 countries, including the US, Canada and Japan, which establishes punishing regimes for censoring and controlling the Internet, as well as allowing corporations to nullify safety, environmental and labor laws that limit their profits.

“The corporations and governments that backed TPP dismissed criticism of the secret negotiations process (even members of Congress and Parliaments were not allowed to know about the substance of the negotiations, though corporate lobbyists were), promising that there would be a “debate” after the TPP was finished (that is, when it was too late).

“Early this morning (US time), representatives of 12 countries gathered in New Zealand to sign TPP. We never got the debate.”

Also see TechDirt‘s “Countries Sign The TPP… Whatever Happened To The ‘Debate’ We Were Promised Before Signing?”

“As we discussed yesterday,” TechDirt wrote the following day, “the TPP was signed by all participating countries yesterday in New Zealand (though there’s still a big ratification fight required to make it matter). We have lots of issues with the TPP, many of which we’ve raised over the years — but the first issue that drew our attention to it was the intellectual property chapter. For years, we’ve questioned how it could possibly make sense to include intellectual property in a so-called “free trade” agreement, as intellectual property is the exact opposite of free trade. It’s a government granted monopoly and restriction on the movement of information. And, yet, in the past two decades, basically any international trade agreement has included sections concerning intellectual property.”

The EFF subsequently wrote: “Top officials of countries involved in the Trans-Pacific Partnership (TPP) are convening in New Zealand today to sign the final agreement. But really this ceremony is just a formality. We knew since November, from the day they announced a completed deal and made the text public shortly thereafter, that they would do this. These officials have not been accountable to the public. They have remained steadfast in excluding public participation and ignoring all calls for transparency over the more than five years of TPP negotiations. Because of this opaque process, trade negotiators were able to fill the agreement with Hollywood and Big Tech’s wish lists of regulatory policies without having to worry about how they would impact the Internet or people’s rights over their digital devices.”

According to the press in New Zealand:”Protesters in Auckland were estimated at more than 5000 at their height and a rump gathered outside SkyCity for several hours after the signing.”

Politicians who represent mega-corporations, i.e. not people, want the TPP to become a reality and the same typically goes for the UPC. Here in the UK the government treats ‘IP’ as a matter of threat. MIP connects this to the UPC as follows: “Purpose of reform includes Unitary Patents The existing law is said to be inconsistent (especially with the civil pre-action procedures) potentially harmful to competition and unclear. The reform seeks to harmonise the law across the relevant IP rights and will be extended to Unitary Patents and European patents…”

When the EPO, patent lawyers, politicians who promote the interests of large corporations and so on call for immediate introduction of the UPC we must remember their motivations. This has nothing whatsoever to do with Europe’s interests or even science and technology. It’s to do with power and domination by a bureaucracy or international oligopolies/monopolies, which often depend on this bureaucracy. It is a power grab.

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