Divisions in Europe on the issue of grace periods are holding up talks on patent law harmonisation, sources close to the negotiations have told Managing IP.
But Business Europe, the industry body representing European businesses in the talks, says it is optimistic a deal can be reached in the coming months.
Business Europe makes up one prong of the Industry Trilateral (IT3), a sub-group of industry representatives in Europe, the US, and Japan that is tasked with leading the work on patent law harmonisation.
Saving grace
One of the issues on the table in a potential harmonisation package is the so-called grace period on pre-filing disclosures.
The US and Japan both operate under a one-year grace period, meaning inventors can file a patent application within a year of disclosing their invention publicly.
But there is no such grace period in Europe, where any public disclosures of an invention before a patent is filed will count as prior art.
This makes it difficult for Japan and US-based companies with ambitions to file in Europe to take advantage of the grace period in their jurisdictions.
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Bridging the jurisdictional gap on grace periods has long been an objective of talks to harmonise international patent laws.
But Business Europe is currently at an impasse, with its member federations having been unable to agree on a consolidated position from which to proceed with negotiations.
One source familiar with the matter, a senior in-house counsel, says the group is split between grace period sceptics and those who are in favour of a compromise.
“The bottom line is that Business Europe is deadlocked. It operates on consensus and we haven’t got one,” they say.
Warring factions
The last working document to emerge from the IT3 was the so-called Elements Paper, dated September 2020.
The trilateral has stressed that the document is “not the final agreed position of IT3 nor any of its individual member associations”.
Business Europe has not been able to sign off the proposals, which include a 12-month grace period if there are “adequate safeguards” against a first-to-publish system.
Multiple sources familiar with the negotiations have confirmed to Managing IP that opinion is split in Business Europe over whether a compromise on grace periods is worthwhile.
Some member federations, such as the UK’s IP Federation, are willing to accept a form of grace period with a view to securing a larger patent harmonisation package.
The in-house source refers to a division between “pro-compromise” and more “sceptical” factions, including Italy, on the issue of grace periods.
“There’s a sense of frustration on both sides,” they say.
“The sceptics feel that the pro-compromise countries are being typically arrogant north-western Europeans.
“The pro-compromise camp thinks the others can’t see the bigger picture,” he adds.
The publication of the Elements Paper late last year, having been under a strict embargo, is said to have heightened the anxieties of some of those opposed to a grace period.
Those members in favour of a compromise are “exasperated” with the resistance from the other side, says the in-house source.
The difference of opinion helps explain why there has been little progress in the harmonisation talks since that paper was published.
Daniel Staudt, chief IP counsel at Siemens in Florida and head of IT3 member the Intellectual Property Owners Association, says this has been a source of frustration for companies outside Europe.
“We’re working extremely hard to come up with something that will satisfy SMEs as well having some of the European perspective,” Staudt says.
Potential breakaway
Pedro Oliveira, head of legal affairs at Business Europe in Brussels, says differences of opinion are normal in a federative organisation, and expresses optimism that an agreement will eventually be found.
“We always have diverse views, there are always nuances and differences. This is normal,” they say.
“I hope that within a few months we will have a more consolidated position,” Oliveira adds.
While acknowledging that grace periods have been the “most controversial” issue in harmonisation talks, Oliveira doesn’t feel concerns over a deadlock are justified.
“I’m quite optimistic, but more work will be required in the next few months,” he says.
“The discussions have improved quite a lot in the last year,” adds Oliveira.
But progress has been slow enough, says the in-house source, that pro-compromise members have been making contingency plans for what to do if Business Europe can’t reach an agreement. That could involve stepping in to negotiate in the trilateral by themselves.
“A loose affiliation of pro-compromise states is coordinating on a regular basis and is waiting in the wings to step in should Business Europe decide it is deadlocked and unable to proceed because it cannot achieve the necessary consensus on the way forward,” they say.
Tony Rollins, a policy adviser at the IP Federation, which represents UK businesses on IP issues at Business Europe, says the aim is to have a European position agreed “in the short term”.
“We are still talking. We do seem to be making some progress.”
EPO input
It is hoped that a new EPO consultation will help advance the process by providing some meaningful evidence on the views of European industry towards grace periods.
The office confirmed in December that it would study the impact of Europe’s strict novelty requirement on the filing and business practices of EPO applicants, and publish a report in the first half of this year.
A spokesperson for the EPO stresses its consultation was not specifically to do with the IT3 elements paper, but says it will provide “solid data” for “evidence-based discussions” on harmonisation.
Rollins says the EPO study should “help inform the debate” in Business Europe.
The in-house source agrees: “The consultation is timely. People can argue for and against a grace period, but it’s all theory until you do a user survey.”
What remains to be seen, however, is whether the EPO’s findings move the debate along or simply reflect the differences already entrenched in Business Europe.
