New agreement will cut the expense of protecting intellectual property rights

Apr 24 2008 by Karen Wilson, The Journal

Dominic Elsworth

ANEW agreement over European patent procedures is set to halve costs for UK businesses seeking to protect their intellectual property rights across all 31 European states, following France’s signing of the London Agreement, which comes into force on May 1 this year.

Up until then a company granted a European patent must be validated in each country where the owner of the patent wishes it to be in force.

This means that a business seeking protection across all 31 of the member states must bear the cost of having what can be a lengthy and technically complex document translated into up to 22 languages.

After the agreement comes into force, states which have declared English, French or German as their official language will opt out of the translation requirements, meaning that a European patent will cover the 10 largest European states without the need for translations to be filed in individual countries.

The agreement comes following the activities of a European working party set up to look at reducing translation costs by 50%, after research showed that the high cost of European patent protection was having a detrimental effect on innovation.

This is good news for UK businesses which seek to protect their intellectual property rights across Europe. Their patent budgets will go significantly further when the agreement comes into force.

Having a patent translated into seven European languages – the average number of translations per application – can easily cost upward of £5,000. The agreement effectively reduces those costs by 45%, which will encourage companies and individuals to file more extensive European patents that protect their rights outside the UK. This will free up more of their research and development budgets, thereby stimulating innovation.

The agreement only needs to be ratified by eight member states, including France, Germany and the UK, to be effective.

However, France’s signing of the London Agreement means it has now been agreed by 10 states and as more countries come on board, applicants will be able to protect their intellectual property rights in more European states, but without the previously prohibitive costs of doing so.

According to the UK Intellectual Property Office, the agreement could see UK businesses save up to £10m every year by not having to file extra patent translations, which is good news for individual businesses, and for the UK economy as a whole.

It is widely known that litigation involving intellectual property rights, and in particular patents, can be expensive. One issue that potential litigants must consider before embarking on litigation is that if they lose they may be liable not only for their own costs but also those of the victor.

The victor may have deep pockets and conduct the case in such a manner as to incur hefty costs. However, in a recent case where the successful claimant’s costs were five times those of the defendant, the judge held them to be disproportionate to what was at stake and so reduced the costs payable to the claimant by the defendant by one-third, and ordered that the claimant pay half the defendant’s costs.

Intellectual property rights do not have to be the subject of litigation to be valuable. Most patents are never the subject of litigation. The mere presence of a patent on a piece of technology is often sufficient to cause competitors to follow a different path.

Dominic Elsworth is head of practice at Hargreaves Elsworth Patent Attorneys, which was established in 2002 and provides advice on intellectual property matters to a wide range of clients from its offices in Charlotte Square, Newcastle

The high cost of European patent protection was having a detrimental effect on innovation