INNOVATION, PATENTS AND ECONOMIC GROWTH - Innovation in the Biopharmaceutical Industry - page 75

The IP environment in the EU, a collection of sovereign states, is necessarily
complicated. Although there is a European Patent Office (EPO) with headquarters in
Munich, the Office does not issue patents that are enforceable across Europe. Instead,
an applicant nominates those countries in which it wants to be protected, and, if the
application is granted, the EPO will effectively grant national patent rights for each
of those countries. The patents granted in this process generally have been well
examined and are of a high quality, although the time to grant remains significantly
longer than the US or Japan. The patent can also be opposed, or challenged, for a
period after grant which provides a further opportunity to weed out questionable
patents. However, the fragmented nature of patents in Europe creates two major
problems: first, securing EU-wide coverage is significantly more expensive than
getting IP protection in the US or Japan (largely from translation costs); and second,
there is inconsistency in decisions on IP cases in different countries. These problems
weigh most heavily on SMEs or companies in fast moving industries rather than the
large companies in the longer lead-time industries such as pharmaceuticals. Also,
for the latter industry the length of time for data exclusivity for approved products
in the EU is quite beneficial.
As IP law and policy is now framed at the European level, individual coun-
tries are not able to decide IP agendas. All decisions have to be reached either by
majority or unanimous vote of member states while for directives — which must be
incorporated into national laws — approval of the European Parliament is needed.
Not surprisingly, 5 years of negotiations for a “Community Patent”, originally pro-
posed as an inexpensive, one-stop right designed to cover the entire territory of the
EU, have failed. Similarly, the London Agreement on Translations and the Euro-
pean Patent Litigation Agreements (EPLA) — alternatives designed to reduce the
cost of patenting in the EU and increase consistency of litigation in participating
countries — have stalled for years, although recent initiatives may lead to progress.
But, ii is of concern that in 2004 the Commission introduced a Technology Transfer
Block Exemption Regulation with virtually no discussion or research exploring its
potentially adverse impact on a complex but commercially vital area for the EU.
Unlike the US and China, business method patents are not permitted in Europe,
adversely impacting on the ability of European firms to compete with these two
countries.
In Europe, two other factors have hindered further development of an enabling
environment for IP. First, a vocal and well-organised anti-patent lobby has suc-
cessfully influenced the debate in matters relating to biotechnology and computer
implemented inventions, so that the Computer Implemented Inventions Directive
was rejected by the European Parliament, while the Biotechnology Directive has yet
to be implemented by member states. Second, patent owners have been ineffective