European Union Prepares A New Intellectual Property Rights Strategy

Intellectual property rights and their protection will be high on the agenda of the European institutions in the upcoming legislature, representatives from the European Commission, European Council and the European Parliament said at the first European Innovation Summit in Brussels yesterday. Stronger IP rights (IPR) protection was declared by representatives of all three institutions as indispensable to promote innovation and the knowledge society, while only a few voices were raised asking not to overreach in IPR regulation.

A new IPR strategy for the EU figures prominently in the programme of Commission president Manuel Barroso, said Margot Froehlinger, director for knowledge-based economy of the Internal Market Directorate General of the Commission. While the Union already has an IPR strategy, there are several missing links to be tackled, she said. “Two missing links are the creation of a Community patent and a unified patent litigation system,” she said in Brussels.

[Update: The European Commission issued a Communication on copyright in the knowledge economy on 19 October (IPW, IP Burble, 21 October 2009).]

Community Patent and Centralised Patent Litigation in EU

EU patents currently are 10 to 12 times more costly than US or Japanese patents, said Froehlinger, because patent applicants have to go to all the national patent offices to protect their IP in Europe. The fragmentation also brought “significant legal insecurities,” Froehlinger said, pointing to a patent case for watermarking technology in which the European Central Bank (ECB) is involved.

The ECB after being sued by Document Security Systems went to national courts in several countries to have the patent invalidated. “The High Court in London ruled that it was not a valid patent, the Court in Dusseldorf decided it was valid and infringed, the Court in Paris said ‘we follow the London Court’ and decided for non-valid’ and the Court in The Hague ruled that the patent is valid and infringed,” described Froehlinger. “We have to remedy this,” she said.

“We played with those opportunities,” said Georg Whitten, vice president of Qualcomm, referring to the patent litigation between Nokia and Qualcomm between 2005 and 2008 in which both parties spent millions of US dollars. “We tried to get a quick judgment in Germany. We tried to delay the UK court because we expected it to be patent hostile.” The opportunities “to play” are there for “players who can spend money,” he said, but agreed that a community patent certainly would be better.

Alexander Ramsey from the Swedish EU presidency said that three issues remain to be solved between member states who have been arguing about the Community patent for many years: the language regime, the fee structure and the role of national patent offices. A European Standard for Searches (ESS) as basis for “enhanced partnerships” between the European Patent Office and national patent offices might open the path to consensus, said Ramsey.

The language issue has proven very controversial over the years though, according to Froehlinger, with Spain and Italy for example, declaring they would never join the London Agreement, which since 2008 allows limited translation on patent claims. An unhealthy reliance on machine translation would be a pitfall of a Community patent system, said András Jókuti, legal officer at the Hungarian Patent Office in Brussels.

At least partial agreement on the Community patent is the goal of the Swedish presidency for the December meeting of the Council, but the set-up of a European Patent Court has to be postponed to allow the European Court of Justice to decide on an opinion on the issue. “Some member states have doubts about setting it up by an international treaty,” explained Froehlinger.

Patent Trolls, Licensing, IP Stock Exchange

Fernando Soreino from technology provider Research in Motion (maker of Blackberry phones) asked for possible negative consequences of a Community patent. Companies focused on exploiting patents instead of developing new products might use EU-wide injunctions against alleged infringers, he warned. “My company looks at this with a certain fear, because the EU system could attract the so-called patent trolls,” he said. Such a result might be against the interest of smaller companies.

Froehlinger rejected the concern: “Fortunately in Europe we don’t have any or hardly any trolls, and we want to avoid trolls in the future.” The intent is to design patent litigation in a way to not allow trolls to exploit the system.

Yet a trend to exploit IPR without trying to innovate was described by several speakers. “We are seeing today new business models only living from the licensing business,” said Erik Jansen, legal affairs director at the European Telecommunication Standardisation Institute (ETSI), who acknowledged that standards and IPR were in an antinomic relation. As standards are expected to be used by everyone, patents give exclusivity to an IPR owner. “Therefore there is an inherent conflict,” he said which ETSI tried to address by an early disclosure and a fair licensing obligation.

“Future competition is IP competition,” said IP expert Giancarlo Migliori, who said IP rights have been heavily traded during the economic crisis in the last 12 months. He expects that there will be much more trading in IPR in a fully developed marketplace.

In Chicago, a specialised IP exchange is being developed by US company Ocean Tomo. According to US reports, the Intellectual Property Exchange International (IPXI) will provide tradeable products like IP indexes, IP-backed bonds and securities, standardised IP related futures and options, and possibly also securities based on the outcome of patent litigation. With such a link between the finance and the IP market, Europe needs a much more dynamic IP market, according to Migliori.

Copyright to be Adapted to Digital Age

Adaptation of copyright to the digital age is another point in the EU IPR strategy discussed at the Brussels innovation conference. “Many think that copyright is not fit for the digital environment, and that the internet is the source of their economic difficulties, but in the Commission we think that copyright and internet can be working together very, very well and that copyright can foster the digital economy,” Froehlinger said.

“We need efficient copyright protection in the digital environment, but on the other hand we need to adapt,” she said. The Commission therefore is preparing an update to its Communication on copyright in the digital economy and starting several initiatives. One of the initiatives is aimed at making “orphan works” available. Some 40 percent of the books in the British Library are orphan works, she said. Because authors cannot be located, a lot of extremely valuable knowledge is locked up.

Unification of copyright was recommended in the Copyright panel session by law professor Bernt Hugenholtz. “We should have a Community copyright regulation,” he said. Harmonisation of regulations so far have left content providers aspiring to serve the common market, but also the users with the necessity to navigate through 27 different national laws.

Addressing the legislative plans for orphaned works, Hugenholtz said: “You want to deal with them at the EU level, too.” Unifying EU copyright law which might be a several-year project would also allow “rebalancing rights and limitations that have been tilted towards overprotection,” he said. Froehlinger said the Commission would be prepared to work on a unified EU copyright legislation. “But we are not getting the money we need to work on this.”

Froehlinger announced that the Commission has “several papers in the pipeline” to address the problems faced by pan-European content service providers. One consultation prepared would ask how to address issues of multi-territorial licences. This issue was discussed heavily with European collecting societies.

Community legislation should be careful to allow new online services like Google Book Search, said Antoine Aubert from Google, as they provided a service to users and to rights owners. Users are able to find content that perhaps had long vanished from the offline bookshelf, as there is a disconnect between the length of the copyright – 70 years after the death of the author – and commercial availability. Rights owners, according to Aubert, could also benefit from Google’s services, for example services that allow them to monitor how their content is used.

A far-reaching request with regard to EU copyright came from Christian Engström, a Pirate Party member who was elected to the European Parliament in the recent elections. Engström said his party “certainly wants to limit the copyright term.” If copyright is still valid 70 years after an author’s death, the “investment in new work” argument fails. “Five years would be enough,” said Engström. At the same time, he demanded “legalise file-sharing.” File-sharing allows everybody today to go to the “great Library of Alexandria and you don’t even have to go to Egypt.” Especially Europe, with its various rather small language communities, might benefit, said Engström.

“My members, about 600 game development studios in Europe, are tolerant about copyright issues”, said Malte Behrmann, secretary general of the Europe Online Game Developer Federation. Online games are not easy to hack, and “to a certain degree piracy proof,” he said. Music perhaps still needs to find similar solutions, he added. What his members are much more concerned about, however, are software patents. “My members are very much against software patents,” he said. “I do not know if this is on the hidden agenda,” said Behrmann.

Software patents would hamper innovation in game development and are seen “rather as a threat” by small and medium-sized companies, said Behrmann. But the discussion about copyright in the digital age was overdue, he added. The core freedom of the internet, which is possibly as important even as the abolition of the death penalty or slavery is a question that must be settled over several decades.

ACTA a Major Topic on Enforcement Agenda

IPR enforcement is high on the agenda, said Froehlinger, who named the Anti-Counterfeiting Trade Agreement (ACTA) and bilateral free trade agreements as ongoing projects. Negotiations on the much-debated ACTA are expected to be finalised in 2010, said Pedro Velasco-Martins from the EU Trade Directorate. With each year another €200 billion euro were lost to the parallel universe of pirated goods, he warned.

ACTA, according to Velasco, is expected to make a step forward in international IPR enforcement after similar initiatives were not successful at the World Trade Organization, World Intellectual Property Organization or World Customs Organization. “We willing countries got together,” said Velasco – referring to the 10 countries plus the EU – to make progress, and there is hope that ACTA once finalised would be implemented in other countries, too.

Velasco said there have been frequent accusations that the negotiations have not been made transparent. The innovation conference at least was an opportunity to inform about ACTA, he added. Yet Velasco did not touch on substantial issues.

The agenda of the sixth round of negotiations planned for Seoul, Korea on 4-6 November has been recently published by the EU and US. It includes at least one day of discussion on the highly contentious topic of “enforcement in the digital environment” and on “criminal enforcement” respectively.

On bilateral terms, intensive talks are ongoing, for example with China, including talks between officials and others with stakeholder groups. A long list of issues is being discussed in these talks, including “standards, internet or the difficulty of access to courts for foreigners in China,” said Velasco.