Costly language translations required for filing patent applications in Europe burden the limited budgets of biotech companies.
Biotech patent applications in Europe have grown dramatically in number recently, but this boom is hampered by the cost burden of registering patents in multiple national languages. Biotech companies hope a single patent valid across the European Union will lower patent application costs, but the protective attitude of member states towards their national languages has stalled recent discussions on the proposed “community patent.”
European biotech companies are filing more patents than ever before because they have started to recognize the strategic value of patent portfolios. Germany experienced a strong upsurge in patenting between 1990 and 1999, data collected by the Organization for Economic Cooperation and Development (Paris) shows. Measured by the number of applications filed at all three major patent offices worldwide, Germany’s patenting appetite rose by 45%, for example, compared to 28% for the United States and 14% in Japan over the same period.
Although small and medium-sized companies are picking up speed, large companies dominated the patenting boom. But the upswing will soon level off, according to the authors of a report onpatenting practice in Germany (see Box).”Large companies are complaining of high patenting costs,” says Knut Blind, deputy head of technology analysis and innovation strategies at the Fraunhofer-Institut für Systemtechnik und Innovationsforschung (Karlsruhe, Germany), “so lately they are trying to be more selective.”
This trend holds for the rest of Europe as well, suspects patent attorney Bo Hammer Jensen, chair of the intellectual property working group of the European bioindustry association EuropaBio (Brussels). Indeed, his own company, Novozymes (Bagsvaerd, Denmark), filed about 70 applications last year, says Jensen, down from over 100 a few years ago.
But companies have little hope of cutting patenting costs despite recent attempts to streamline the patenting process in Europe. The latest proposal for a single EU-wide community patent, put forward by the European Commission (EC) in 2000, has stalled. The community patent, as originally designed, would offer the option of filing each patent in only one language, and the patented inventions would be protected in all EU member states under the umbrella of a single European Patent Court.
By contrast, the 1975 European Patent Convention states that companies must currently submit their application to the European Patent Office (Munich) in English, French or German. Once the patent is granted, companies can register separate translations of their central claim into legally distinct national patents in up to 38 countries. On average, companies strategically register claims in about seven countries, minimizing translation and legal costs while still protecting the bigger European market.
However, attempts to protect the importance of national languages have destroyed the idea of the single patent for the EU, according to Ilias Konteas, adviser on intellectual property issues at the Union of Industrial and Employers’ Confederations of Europe (UNICE; Brussels). Last year, the “Competitiveness Council,” in which EU member states negotiate on issuesaffecting the competitiveness of the EU as a whole, agreed to complex amendments to the community patent. Under the new terms, companies would need to translate their claims into all national languages, soon to be about 20.
During the latest Competitive Council meeting on March 11, some countries went even further by demanding that those translations would retain some legal status in national courts. If judges would decide that translation mistakes were made in their particular language, local patent infringers would not pay full damages. Others, mainly Germany, deemed that idea unacceptable. The impasse has left the creation of a community patent “further away than it has been for a long time,” council member and Dutch Minister of Economic Affairs Laurens-Jan Brinkhorst wrote to his national Parliament.
Industry organizations have already called for the deliberation process to start over from scratch. The latest amendments, says Jensen, would create a EU patent that is simply too costly to use, except maybe for really big industries. His own company, for one, would probably just stick to the old route. “The [European] Commission started out with a reasonably good proposal,” says Jensen. “Regrettably, sometimes the political process creates a monster.”
European biotech firms increasingly use patenting as a strategic tool
Between 1995 and 2002, both the European Patent Office (EPO; Munich) and the US Patent and Trademark Office (USPTO; Arlington, Virginia) registered an increase in the share of patent filings from Europe, according to data from the Organization for Economic Cooperation and Development (OECD; Paris). In particular, countries like Ireland, Luxembourg and Portugal grew their (relatively small) market shares in overall patenting by 4–10% in that time frame, according to OECD data.
Germany also experienced an upsurge in patenting between 1990 and 1999, during which the total number of worldwide applications doubled to more than 24,000, according to research by the Fraunhofer-Institut für Systemtechnik und Innovationsforschung (Karlsruhe, Germany) published on March 3 . The German biotech sector showed strong increases, too, according to OECD data: between 1990 and 1999, German patent applications at the EPO grew almost threefold, from 228 to 642, cementing the country’s prime position on biotech patents in Europe. (The United Kingdom and France come in second and third, with 430 and 298 biotech EPO-submissions in 1999.)
The Fraunhofer report attributes the increase to a trend among German companies to file patents for reasons other than just protecting inventions, just like Japanese and US companies started doing many years ago. Companies adopt a strong patenting strategy to fulfill a number of strategic objectives, says Blind, one of the authors of the report. Pharmaceutical and biotech companies, in particular, use voluminous patent portfolios to establish a strong reputation in the eyes of capital investors. Often, patents are used as “currency” in licensing or acquisition deals. Also, the report says, companies are increasingly using patents as internal yardsticks to allocate investments and to obstruct competitors’ product development
(1) Erfindungen kontra Patente, Knut Blind, Jakob Edler, Rainer Frietsch & Ulrich Schmoch, Fraunhofer-Institut für Systemtechnik und Innovationsforschung (ISI, Karlruhe, Germany), December 2003 (published on 3 March 2004 by the German Education and Research Ministry (BMBF)).