How the London Agreement is shaking up the EuropeanPatent System.

Obtaining patent protection in Europe is currently an expensive proposition. A single European patent can cost between [yen]2,500,000 ([euro]15,000) and [yen]7,000,000 ([euro]45,000) to file and take through to grant. The final figure depends on many factors, particularly the European states where protection is required, with the fees for translations often taking up the lion's share. Recent changes in the European Patent System promise to drastically slash these costs. For Japan, the top patent filing nation in the world, these savings could be a huge benefit.

The current system

The European Patent System has been in place for over 30 years, and exists separately and in parallel with national systems in European member states.

The system allows a single patent application to be filed in respect of all 32 member states of the European Patent Organisation (EPO). However, once the application has been allowed, it must be converted into national patents in each European member state where protection is to take effect. This nationalization process typically requires the payment of national fees and the filing of translations into the language of that member state, a costly task to say the least.

For example, the three official languages of the EPO are English, French and German (GB, FR, DE). A single allowed patent application with around 20 pages of description and around three pages of claims, converted into granted patents in the UK, France and Germany, may incur translation charges of around [yen]500,000 ([euro]3000). If the list of countries is extended to include Austria, Denmark, Italy, Portugal, the Netherlands, Spain, and Sweden, the costs rocket to [yen]2,300,000 ([euro]14,000). With all 32 members states covered, requiring translations in 22 languages, the translation costs for a single application can amount to an eye watering [yen]5,000,000 ([euro]30,000). This is usually much more than the total cost of filing the application and having it successfully searched and examined. To add insult to injury, the translations often remain on file at the national patent offices un-used and un-consulted.

[ILLUSTRATION OMITTED]

The London Agreement

The London Agreement was proposed in 2000 as a way of reducing translation costs. It works by requiring signatories to the agreement to waive their right to a translation of the patent description and patent drawings into their own language. If the signatory's national language is one of the official languages of the EPO, they simply receive a copy of the description and drawings in the official language in which the application was originally filed (GB, FR, DE). If their national language is not one of the official languages of the EPO, then they must select an official language, and will receive translations in that language only.

In most cases, however, the claims of the allowed patent application (which define the legal protection given to the patent holder) will still need to be translated into the national languages of the countries where they will have an effect. Furthermore, if patent litigation ever occurs in that country, a translation of the whole patent will need to be supplied to the defendant in the proceedings.

To return to the above examples, the London Agreement will save around [yen]500,000 for an allowed application converted into patents in the UK, France and Germany. If the application is filed in English, France and Germany will receive a translation of the claims, but no translation of the description and drawings is required. For the ten countries mentioned earlier, the cost savings will be a further [yen]1,050,000 ([euro]6500), as Denmark, Sweden and the Netherlands will receive translations in English.

Despite the name of the agreement, the intention is not to encourage European countries to adopt English as their working language for patents, yet the international character of English means this is exactly what is happening. So far, of the ten signatories, Sweden and Denmark have already selected English as their official languages, and Iceland and the Netherlands are expected to follow suit. Fortuitously, translations in these countries also tend to be relatively expensive compared to those of their other European counterparts, so it is an added advantage that they have joined the agreement from the outset.

What this means for Japan

The selection of English particularly suits Japanese applicants, who often prepare translations of their patent applications into English by way of routine. The same description, claims and drawings can then be used in both the US and Europe. From a Japanese perspective, the more signatories that select English, the better.

Japan also files the most patent applications per year of any country, and in Europe, Japanese applicants account for just over one-sixth of the total annual number, around 10,000 applications in 2006. The cost savings mean that Japanese corporations in particular will now have extra money to invest in their business.

Although the London Agreement currently only applies to a limited number of countries, more countries are expected to join as pressure mounts from countries already in the agreement. Hopefully, further significant cost savings are in the pipeline. If all countries were to one day join, the present costs of [yen]5,000,000 for the maximum number of states could drop by around 90% to just [yen]500,000.

Almost a non-starter

In 2006, it looked as if the London Agreement might never have become a reality. To become law, it was necessary for at least eight European member states to sign and ratify the agreement. However, the states had to include the UK, France and Germany. In 2006, the UK and Germany had joined, along with Denmark, Iceland, Latvia, Monaco, Slovenia, Switzerland, the Netherlands and Sweden. The only country necessary for the agreement to become law was France, but then in the summer of 2006, the French Government refused amid concerns over a possible conflict with its constitution and the effect the agreement would have on the promulgation of the French language.

In October 2007, however, the government finally concluded that there was no constitutional impediment, allowing the London Agreement to come into force. It is now due to deposit the instruments of ratification, almost co-terminously with the writing of this article, and the agreement is expected to become law in April 2008.

Other changes

In addition to the London Agreement, European patent law (from December 13, 2007) has undergone further changes such as the European Patent Convention 2000 (EPC 2000). Most of these changes have made the process of filing patent applications in Europe easier, and allow Japanese applicants to benefit from increased simplicity and reduced costs.

A summary of some of the changes is as follows:

1) European patent applications can, according to the EPC 2000, now be filed in Japanese providing a translation into one of the EPO's official languages is filed within two months (excluding applications filed via the International Patent System). Any corrections to the translation are also now much easier to make.

2) Where the filing date of an earlier patent application is claimed under the Paris Convention, a translation of the original application (typically a domestic Japanese patent application for a Japanese applicant) is no longer required unless specifically requested by a patent office examiner. Translations of the earlier application are not required in all cases giving further savings in translation costs.

3) Any amendments required to a granted patent can now be made by applying centrally to the EPO, rather than separately to each of the respective national patent offices where the change is to take effect. Each separate application would have taken time and money.

The changes and cost savings introduced into the European Patent System will undoubtedly benefit patent applicants from all over the world. However, as a leading and experienced stakeholder in worldwide patent systems, Japan is perfectly positioned to capitalize on those changes and make the benefits work even harder. In conjunction with the recent domestic changes introduced under Japan's own IP national strategy, designed to stimulate innovation and fuel the economy, this is an excellent time for Japanese companies to examine their R & D and innovation practices and make sure they are in shape for the future. How they use such chances remains to be seen, but it will no doubt make an interesting study. In today's competitive climate, a little extra money in your pocket can't be a bad thing.

Nick Reeve is a partner at Reddie & Grose, a leading firm of European patent attorneys. He handles patent applications in the mechanical, electronics, communications and software fields, and is a fluent Japanese speaker. nick.reeve@reddie.co.uk

[ILLUSTRATION OMITTED]