Is France changing its position on EPLA?

The rumor goes that France is due to make a sea change shift towards supporting the EPLA, an initiative to harmonize the way patents are being litigated in Europe. The French Research Minister (heading the French Ministère de l'Enseignement supérieur et de la Recherche”) Valérie Pecresse, has sent a letter (or is about to do so) to her German counterpart, expressing the French support for EPLA. We have not been able to find any confirmation or hard evidence for this rumor from anyone yet, nor from the French delegates to the AIPPI ExCO meeting currently taking place in Singapore. They do agree though, that such a letter would implicate a sea change in the position of France, who has been the most vocal of antis against the EPLA proposal. One wonders whether the French Minister – in indeed she sent the letter, or is about to do so – could do this without the backing of Nicolas Sarkozy, the French President (not if you are fond of your job as a French Minister, we imagine).

The support would not only be for EPLA, but also for the London Agreement. The London Agreement was concluded in London on 17 October 2000 with the aim of creating a cost attractive post-grant translation regime for European patents. It is the fruit of the work on reducing European patent costs, which was set in motion at the Intergovernmental Conference held in France in June 1999.

EPLA has been on a bumpy road so far. McCreevy, the EU's internal market commissioner, told the Financial Times in 2006 that "anything remotely concerning this patent area is fraught with minefields at every turn of the road". He said the failure to secure backing from national governments made him "pessimistic" about the prospect of making progress on the issue. Should pessimism now turn euphoric? Not yet, I am afraid. Let us see what the position of France, the major non voter so far, is. Does Sarkozy now lets his influence count on this subject as well?

Anyone in the position to (if necessary namelessly) confirm or deny this rumor? Please reply to this blog (below, push the envelope).

other IPEG blogs on EPLA: see http://ipgeek.blogspot.com/2007/02/negative-opinion-on-powers-of-eu-member.html and the column on the right of this blog, called "EPLA - everything you always wanted to know but was unable to find"

The Increased Importance of Patents for Big Oil

Increasingly, big oil companies use their Intellectual Property to achieve competitive advantage over their state-owned rivals (NOC’s). Why is that so? More than 80% of the world’s oil reserves are in the hands of state-controlled companies. Big Oil is loosing its grip on those energy rich countries and their NOCs. NOCs learned over the years how to handle their natural reserves themselves, using service companies like Schlumberger and Grifco. Rob Cox and Cyrus Sanati suggested three options for the industry to counter this (in “Big Oil, Big Problem” in BreakingViews.com)

“There at least three logical responses by the oil majors to the rise of National Oil Companies (NOCs). The first, already underway, is to invest in countries where they're unlikely to see assets expropriated. The second is to consider buying service firms themselves. Lastly, they could seek mega-mergers, along the lines of an Exxon-Chevron or BP-Shell, to counter the increasing heft of the NOCs.”

The better one, I would say, is using their extensive patent portfolios more aggressively against NOCs and when necessary, also against these service companies. Technological advances and R&D achievements are crucial for the international oil companies to optimize the extraction of oil from the reserves under their control while convincing the NOCs to let them help exploit their resources. By doing so they could more actively rely on their IP, alleging infringement against NOC’s and their service industries.

“Patents will be as valuable as reserves in the future, particularly for the International oil companies”, said Robin West, chairman of PFC Energy. “Technology is critical to unlock the value of reserves”.

A survey by the Financial Times shows an sharp increase in R&D spending by many oil companies. Shell increased their Technology R&D budget 50% over the past three years to US$ 1.2 bn in 2006. Chevron’s R&D has more than doubled over the last 5 years. It is very likely that those increased R&D spending has translated in increased IP portfolios. The strategy behind it must be to provide a greater grip on NOC’s and oil service providers to shield against attempts to cut them out of national reserves exploitation, nationalization and other threats to their market position. By using IP more as a offensive competitive weapon, the oil companies can extend their market share. I expect to see an increase in licensing activity, and, as licensing does not provide the competitive edge, infringement claims may be on the rise in oil and gas the industry.

Is Patent Exhaustion the Big New Thing?

It can be no coincidence that both in the US as well as in Europe “patent exhaustion” has been brought in the legal limelight. Last week in the US the US Supreme Court allowed certiorari in a case Quanta Computer Inc. v. LG Electronics Inc., 06-937.

At the same time in Europe Nokia alleges in German (Mannheim) and Dutch (The Hague) courts that Qualcomm’s patent(s) are “exhausted” in respect of chipsets supplied by Texas Instruments which have been sold on the European Union market with a Qualcomm license. If Nokia’s claim succeeds, Qualcomm would be prevented in Europe from enforcing its respective patents in relation to Nokia handsets. The reason why the case has been brought in The Netherlands, a relatively small market for handsets, is that TI chips used by Nokia are initially supplied to The Netherlands (Rotterdam biggest port of entry in the EU, the Netherlands being an important EU wide distribution country) and subsequently shipped to plants in Finland Germany and Hungary.

TI and Qualcomm are publicly known to have entered into a so called Patent Portfolio License (CDMA/WCDMA license) in 2000 , which expired April 2007. While Nokia is believed to have the option to extend the license under the same terms till December 2008, it is trying to renegotiate better terms with Qualcomm under a renewed license. The inability of parties to agree on new terms caused the current patent struggle in Europe.

The US Quanta-LG case in the US must have inspired Nokia that “exhaustion” is a pretty powerful tool in the negotiations so it must have chosen to use this weapon in its struggle with Qualcomm for better licensing terms. A finding by a Dutch court that patent have been “exhausted” could have a serious impact on Qualcomm’s position as the leading company holding CDMA/WCDMA intellectual property. This effect would be felt by Qualcomm EU-wide (and so not just in The Netherlands). When the goods imported from TI into Netherlands for further distribution in Europe are “patent”- free, or exhausted, this has the immediate that any goods delivered by TI to Nokia are no longer subject to infringement claims anywhere in Europe, as the goods are brought on the EU market with the “consent” of the patent holder and can therefore be “freely” traded on the whole EU market. Quite a smart way of gaining negotiating power as a “normal” infringement or invalidity case would under the current patent rules have only national ( as opposed to EU wide) effects.

One wonders why Nokia paid under this license until April 2007 if it was of the opinion that the patents were exhausted because of Qualcomm’s license to TI, the maker of the chipsets used by Nokia in its handsets. If you think of the consequences of a finding of “exhaustion” for Nokia themselves one cannot but conclude that Nokia has all the reasons in the world not to let it come to any court decision. Nokia themselves would most likely be ripped of their ability to enforce many of its own patents when confronted with infringement. Like the discussion of patent disclosure and standards, these issues work both ways. Once the finding of “exhaustion” is being supported in court is works both ways, Nokia will on the short run found a way out of paying much lower a price for any Qualcomm license, however it will seriously impound their enforcement capability of enforcing their own patents against other mighty players in this highly competitive IP market.

The judgement by the Dutch court is expected to be delivered on October 31.

EU access to the Hague system on international designs

On 24th September, the European Union submitted its instrument of accession to the Geneva Act of the Hague Agreement to the World Intellectual Property Organization. The Geneva Act of the Hague Agreement establishes a system for the international registration of industrial designs. After joining it, economic actors will have the possibility to use a single application to obtain protection of a design not only throughout the EU with the Community Design, but also in the countries that are members of the Geneva Act. This will simplify procedures, reduce the costs for international protection and make administration easier.

The new system will enter into force on 1st January 2008, and it is believed that it will simplify administration procedures and lower the costs of obtaining protection.