User-driven early certainty: EPO steps back

Since last autumn, the EPO had worked hard to find ways to allow exemptions from its Early Certainty of Examination initiative, which was drafted to cut the current examination time from 22 months to 12 months on average. The result, dubbed User-driven Early Certainty (UDEC), had not only been warmly welcomed by the biopharma sector but also by global IT and engineering giants, who were looking for possibilities to get patent protection for moonshot research resulting in longer-term product breakthroughs.
Just before a three-hour stakeholder meeting in February aimed to discuss the EPO’s UDEC solution – which allowed “applicants to postpone the start of substantive examination for a maximum of three years,”(see European Biotechnology, Spring Edition) – Business Europe sharply criticised the proposal. Business Europe, the only industry association that has observer status both in the EPO Committee on Patent Law and the EPO‘s Administrative Council, called on the EPO not to enter UDEC into force on 1 July 2018. Major issues must be resolved, the association stressed through a press release, including third party uncertainty, potential derogation of the Paris criteria – a plan devised by EU heads dating back to 1999, when the pace of patent issuance was incomparibly slow, to cut examination time to 24 months – and the public perception that UDEC was an industry-driven initiative, and could cast a bad light on the EPO’s decision making. The association called on the EPO to initiate a full impact assessment – a move that left attendants of previous meetings on Early Certainty a bit confused because – in their perception – members of the association so far showed “diverging,” if not “indifferent” attitudes towards UDEC. After a February meeting of the EPO‘s Committee on Patent Law, the EPO Administrative Council decided in March to follow all points proposed by Business Europe and to present a revised paper under the incoming EPO President António Campinos later this year.

Lack of transparency and quality

The Chartered Institute of Patent Attorneys (CIPA), which had pushed the EPO to “hold a dedicated consultation on this significant change to European prosecution” noted that “attendence to the [UDEC] consultation was strictly by direct invitation by the EPO,” which “could lead to doubts over the openness and transparency of the process.” Demands from other attendants for publication of the UDEC proposal and submission of written feedback had been ignored by the EPO. Business Europe’s press office did not answer  press requests asking for background information on its position paper. The perceived lack of transparency in decision-making was reinforced by contradictory information from the EPO and other sources:

• While it was envisaged at the meeting that there would be only a marginal effect for the EPO and the member states in terms of national renewal fees, insiders had told European Biotechnology that implementation of Early Certainty without the option of postponement of examination through UDEC would lead to a huge shift in fees from the EPO to the national patent offices – resulting in earlier and higher cost for the users (European Biotechnology, Spring Edition). The annual renewal fee for a pending patent at the EPO is tenfold lower than the fee payable to the national patent offices after a patent has been granted and nationalised in 30 European countries (the standard case). A three-year earlier nationalisation of the 96,000 patents issued in 2016 would have resulted in flushing nearly €1.47bn more into the national patent offices
• There is also contradictory information concerning the quality level EPO-granted patents will have under Early Certainty in Examination: EPO President Benoît Batistelli said on his blog that the EPO has established several measures to maintain the high quality level of patents, even under the higher throughput of accelerated examination, and created a Standing Advisory Committee before the EPO (SACEPO) Working Party on Quality in January 2017 to “provide another channel to gather feedback on quality at the EPO based on the experiences of major user groups.” An open letter sent in May from 924 EPO patent examiners to the EPO‘s Administrative Council, which controls Batistelli, reads clearly different: Patent quality has fallen, thanks to the push by the EPO management to approve more of them, it says. The underwriters confirm that they are “submitted to constraints that are no longer compatible with fulfilling appropriately our duties within the Search and Examination divisions.” They warn that throughput may not come at the expense of the validity of patents granted – “timelines and number of products should not be the only criteria to assess the Office …”
• Promises from the outgoing EPO President Batistelli to hire more examiners to maintain the high quality level of European patents are not (yet?) reflected in EPO statistics on workforce.

According to Niclas Morey, Principal Director User Support & Quality Management at the EPO, “quality is the EPO President’s number one priority.” Decreasing quality of patents has been a major concern of EPO users in the past, as decreasing quality jeopardises industry investments and revenues. Pharma associations VFA and EFPIA welcomed Early Certainty in Examination only under the prerequisite that the quality level of patents granted would be equally high as before. Biotech Association BIO Deutschland urged the EPO to establish an optional DEPACE mechanism (such as UDEC) to prevent negative effects due to the acceleration of patent examination. “Currently, quality is very high. However, if the pressure increases on patent examiners to examine as many applications as possible, quality will suffer,” predicted Dr. Helmut Buschmann, Head of Patent Affairs at Bayer spin-out AiCuris last year. As quality of patents is relevant when it comes to litigation, “Biotech investors will assess how robust the patent portfolio is when it is challenged.” Pointing to increasingly automated working routines of the EPO examiners, Dr. Jürgen Dressel, Head of Global Patent Litigation Strategy at Novartis Pharma, adds: “It would be bitterly disappointing for an applicant, who is totally dependent on a high-quality assessment of his invention, to get a quick refusal based only on formal reasons, such as lack of clarity.”

PACE vs UDEC?

However, Dressel wonders why the EPO didn’t make use of an instrument that already exists: “From a pharma applicant’s standpoint, the PACE procedure is sufficient to create legal certainty. If there is a third party interest apparent, for example, from Third Party Observations, now the EPO already switches automatically to accelerated examination.” Using the PACE procedure for patentees and third parties would solve the conflicts arising from Early Certainty in Examination: As the EPO has already met the Paris criteria, it could offer the option of faster examination for users in sectors that need rapid patent issuance. This would take some of the workload off examiners, leading to remaining high patent quality and would resolve any third party uncertainty. Additionally, it could prevent a decrease in innovation by leaving the cost for high-tech SMEs as low as it is. Any conspiracy theory suggesting that Early Certainty would grant national patent offices higher annual revenues through fees coming in by earlier nationalisation would be invalidated.

Originally published in European Biotechnology Summer 2018 edition