A journalist of WorldIPReview recently asked FFII what were its views of the proposed United Patent Litigation System (UPLS), which is now being questioned by the Council in a submission to the ECJ. FFII had already published a press release mentioning the new push for software patents in Europe via a centralised and trusted court.
Here are some answers to the questions of the journalist, note that I did not touch on the subject of "Where is the European Parliament?" in the legislator section.
Q1: What particular element of the United Patent Litigation System (UPLS) proposal has initiated concern regarding software patents?
The United Patent Litigation System (UPLS) is heavily inspired from the European Patent Litigation Agreement (EPLA). They have a lot of similarities, inside the FFII we call the UPLS the EU-EPLA, which is the EPLA rebranded with a EU flag on top to make it look like an EU project.
The UPLS and EPLA have in common that they are both international treaties, and not EU regulation (directive, council framework decision, etc…) per se. It means that other countries that are non-EU (such as Turkey, Iceland or even the United States) could potentially join the treaty. The fact that it is not an EU piece of law means that the legislator won't be the European Parliament. As we saw with other international treaties such as ACTA, those treaties are typically negotiated behind closed doors, and the Parliaments (the European one or the nationals ones) typically do not have a say over their content. The UPLS is mainly a piece of legislation written by bureaucrats of the Commission and Government officials, with no input whatsoever from members of those parliaments.
The pro-software patent lobby, mainly represented by EICTA members (mainly Philips, Siemens, Alcatel, Nokia, Ericsson) or BSA (heavily driven by Microsoft) called members of the EPP party some days before the vote of failed software patent directive, asking them to vote for rejection, and push for a central patent court instead.
The divergence of opinions of several courts in Europe (mainly Germany and UK) was the argument the Commission used in 2002 to issue a directive proposal on the subject:
With the elimination of different courts and creation of a central patent court for validity cases, the disparity of interpretations by different courts has been abolished.
This disparity is important, because it shows to the legislator where there is conflict of interpretation, and where the legislator should intervene to clarify.
The problem with creating a international patent court between several countries is to balance it with a legislator, who would be competent to correct the behaviour of such court.
In the present state, the legislator would be the government officials signatory of the European Patent Convention, among which you find often that they belong to National Patent Offices.
This conflict of interests has been denounced during the strike of EPO examiners a while ago.
The influence of National Patent Office was also very important during the software patent directive in the Council, where the decision to support software patents was motly made by officials from National Patent Offices.
3. Trusted patent judges
Specialized patent judges have a tendency to favour the patentee, and in the case of the UPLS, they will be handpicked.
The main reason to avoid the creation of patent tribunals inside the ECJ legal system is to be able for the patent establishment to be able to handpick their judges.
Among the top patent judges in Europe, it is pretty easy to see which judges favour software patentability and which do not. The pro software patents will be a criteria for selecting judges. You can expect for example that the delegation of Germany will propose candidates that will favour a narrow and hair-stretched interpretation of the EPC, like the EPO technical board of appeal is doing with "software … as such", software is technical, further technical effect, and so on.
4. No judicial review by the ECJ
One of the main battle right now is the competence by the ECJ to review the behaviour of such court.
The UPLS is a seperate legal system from the EU legal system, and is not connected to it in any meaningfull way.
The US experience with specialized patent courts shows that those courts have interpreted the law broadly, they have notably lowered the threshold of obviousness, allowed software and business method patents, or granted automatic injunctions.
Rencently, the US Supreme Court is taking more and more case for review, in order to correct the abuse behaviour of such specialized patent courts. Such mecanism would not be available in the present draft of the UPLS. It is not surprising to hear that the patent establishment is heavily lobbying against it.
Q2: If software patents are enabled by the UPLS, what might be the effects on how computer programmers work? Please give examples
1. Higher total costs of litigation
The fact that a regional court can issue EU-wide injunctions to stop a potentially infringing product is quite a powerful instrument.
You can expect damages to be calculated in function of the size of the market, in this case the whole EU, plus other countries which will be part of the UPLS agreement.
This is basically what is happening in the United States, where district courts issue US-wide injunctions with US-wide damages.
The patent industry, when trying to justify the need for the UPLS, mostly never mention this.
EU-wide injunctions and damages will be an incentive for patent trolls to enforce their patents.
The other problem with the UPLS is the cost of the procedure. Right now, 90% of cases are not cross-border cases (in one country only), and the Commission and other UPLS proponents try to solve a problem encountered in 10% of cases.
The UPLS, with its system of specialized patent courts, and its international dimension, carries a high probability to raise the lawyer's fees for the majority of non-cross border disputes (90% of cases). Since the system will be fully specialized, patent lawyers will definitely raise their prices. This might be sensitive for Eastern countries, where the cost of litigation is pretty low, compared to western standards.
2. EU-wide injunctions to stop a software product
The main risk with such system is to have a very favourable regional court issuing quasi-automatic EU-wide injunctions in order to stop the diffusion of a suspected infringing product.
There has been recently a hearing in the European Parliament about the IPRED1 directive, where a french expert said french judges were now forced to issue injunctions in the case of "suspicion" of infringement, instead of "quasi-certainty" of infringement.
Right now, it is very complicated for a patentee to obtain an EU-wide injunction, because he has to go to every jurisdiction, and this has never happened up to now. The "lis pendens" mecanism has also provided that a court in one member state has to wait for the outcome of a case in another country if the same patent and the same facts are involved in a pending procedure.
A typical example is the RIM case in the US, where the Blackberry was very close to be wiped out of the US market with a US-wide injunction.
3. Out of court settlements for most of European players
There will be a strong pressure for most software players in Europe to bow to out-of court settlements. It can be expected that in most cases, the cost en entry to go to court will still be too high, especially for very small companies (1 to 10 employees), which represent the majority in the software sector.
The result of this will be the near obligation to sign unfavourable out-of-court settlements.
While large software companies has the means and the ability to defend themselves and go until the end of the court procedure, most of the european software players don't have the financial ressources nor the time to afford litigation in court. This is what we explained in the FFII's submission in July 2006 at the public hearing organised by the Commission on the consultation:
"[…] if you are an SME and accused of patent infringement, it becomes harder to defend yourself because litigation just became more expensive. And if you cannot defend yourself, you will be forced to license, even if the patent is weak or invalid."
4. Loss of legal certainty
It is merely impossible for software producers and users to know if the software they are producing/using/reusing is not infringing a patent. The whole software patent system makes the software development impossible, by creating a situation where producers and users are under a constant threat of being sued. It is not surprising to see that 85% of companies who were questionned in the issue in a survey in Germany fear that software patents might impede their work.
The copyright system provides a legal system where there are very few lawsuits, and when there might be infringement, those are most of time clear and sharp, and thus quickly resolved. This is the total opposite with software patents, since most of them are very broad and thus, which maximise the probability of infringement for the patentee.
Q3: Aside from the software patents element, what is your perspective on the UPLS as a whole?
I don't think it will fly. The main reasons are:
1. Location of the courts: member states don't agree for more then 30 years about where to locate the courts. The UPLS do not provide any indication where the courts will be located, and this is left out of the agreement because it is a too hot potato.
2. Lack of judicial review by the ECJ: I think several member states wants to see a judicial review by the ECJ, notably to avoid the risk of pro-patent courts that would not be "correctable" by a senior court. The US example is very telling about what the EU system would look like with the UPLS, without the fact that you would have a kind of US Supreme court to correct abusive behaviours.
3. Other legal problems, such as:
a. link with national constitutions: in most countries, parties have the right to appeal to a constitutional court, which won't be the case with UPLS cases; this is sensitive in the case where judges might be biaised in favour of one of the parties; you can think to the recent Piratebay case in Sweden where the judges are member of copyright lobby groups.
b. some constitutions of some member states require that the judge is of the nationality of such state: this is the case for France or Bulgaria for example.
c. languages: it is not given that citizens will be able to use their language to defend themselves.
d. impossibility for the EU to join the EPC: the amendments proposed by the Commission do not talk about how the EU (which is not a state as such) would have access to the International Court of Justice (which is only accessible to states member of the UN) in the Hague in case of disputes around the interpretation of the treaty.
Q4: What advantages and disadvantages can you foresee if the UPLS is implemented?
- EU-wide injunctions and damages for patent holders
- EU-wide revocation of a patent for defendents
- Possible invalidation of software patents EU-wide (not very likely, but possible)
- High costs of litigation, good for the patentee to reach a deal out of court
- Uniform caselaw developed for software and biotech patents
- No diverging decisions over the same patent by multiple courts
- No real legislator to correct decisions of such international patent court
- No divergence of decisions which might show to the legislator where to intervene
- Possible validation of software patents EU-wide (very likely)
- Possible forum-shopping with a pro-patent court located in Turkey, Latvia or somewhere else
- More incentives for patentees to litigate and enforce their patents
- Pro-patentee courts
- Raise of the costs of litigation for most member states and stakeholders, due to the specialisation of the courts
- Possible EU-wide injunctions to stop a product (think to the Blackberry removed at the scale of the EU)
- No judicial review to correct the eventual deviance of such specialized courts
- Potential higher costs of litigation for the patent holder