New EU IP rules help universities transfer technology

The European Union (EU)’s proposed new intellectual property (IP) rules to safeguard inventions will cut red tape and make it easier for universities to transfer technology, university research experts have told University World News. They praise the increased opportunity to protect new products.

But they also hope that the new compulsory licensing rules in crisis situations, still under discussion by the European Parliament and the EU Council of Ministers, where governments can authorise the use of patented inventions without the consent of patent holders, will be improved.

The proposed regulations on compulsory licensing, along with rules on standard essential patents (SEPs) covering ICT (information and communication technology); and the revision of the legislation on supplementary protection certificates (SPCs) will create “a more transparent, effective and futureproof intellectual property (IP) rights framework”, the Commission argued on 23 April 2023.

Supplementary protection certificates (SPCs) are an IPR (intellectual property right) serving as an extension to a patent right. “They apply to specific pharmaceutical and plant protection products that have been authorised by regulatory authorities,” as stated on the European Commission website.

This overhaul is still under discussion and not due to enter into force until at least spring 2024, a Council official told University World News.

It will complement the new unitary patent system that entered into force on 1 June 2023, designed to supplement and strengthen the existing centralised European patent granting system.

These have involved multiple application and assessment stages, which can be time consuming as the average time from filing to receiving a grant in 2007 was 3.6 years.

The new system involved the creation of the Unified Patent Court, also on 1 June 2023, which has jurisdiction over the new ‘unitary patents’ and old system’s European patents, which remain in force, and which can continue to be authorised. This old system creates European patents, but these must be validated by national patent offices to take effect in target countries.

The new unitary patents offer the same protection as European patents but make the patents system more effective by applying to all UPC countries through one application, “eliminating single market fragmentation, reducing red tape and enhancing efficiency”, said the Commission.

At present, there are 17 UPC member states, but all EU countries could ratify the system and participate. This option is not available to non-EU European countries such as the UK, Norway and Switzerland who are part of the EPO and can continue to use this system if they wish (as can EU member states).

UPS agreement countries include major patent sources such as Germany, France and Italy.

An EPO note said that a UP may be requested for any European patent granted on or after the date of entry into force of the UPC agreement. These rights will only have force in countries ratifying the new system when a patent is granted: “Outstanding ratifications are likely to take place successively, so there will be different generations of UPs with different territorial coverage,” said the EPO note.

The existing European patent system continues in the meantime to cover 39 countries – all 27 EU member states plus non-members, including Norway, Switzerland, Türkiye and the UK.

This new system, combined with the additional proposals, still under discussion, claim university experts, including the European University Institute (EUI) in Florence, represents “an additional, yet complex, tool in the hands of all users of the IP system”, that complements, rather than replaces existing EU patent legislation, which is designed to enable patent holders to secure rights in all EU member states.

“A sophisticated understanding of the IP rules and procedures and a generous budget are necessary to get the best out of the new rules, as was already the case for the pre-existing rules,” said Niccolò Galli, research associate at the EUI’s Centre for a Digital Society.

Indeed, under the new UPC system the cost for the average 10-year patent will be less than EUR5,000 – up to six times lower than it was previously.

Meanwhile, SMEs linked with universities can save up to EUR1,500 on patent registration costs under ‘The Ideas Powered for business SME Fund’, which is designed to help EU-based small and medium-sized enterprises (SMEs) protect their intellectual property (IP) rights, launched in January 2021.

Indeed, “The unitary patent system and the proposed unitary SPC diminish the administrative burden and costs to obtain geographically broad IP protection in Europe, making it easier for universities to transfer technology with a broader range of partners,” and therefore, it could lead to more patents being registered, Galli told University World News.

The proposed new compulsory licensing scheme can also incentivise university-industry collaborations, he said, adding: “The threat of a compulsory licence granted by the European Commission in cases where voluntary licensing does not meet the challenges of crisis or emergencies is a solid motivation to make voluntary licensing work in the first place.”

The EUI expert said that the UPS complements “the old and more cumbersome ways of securing patent protection in several European countries through either the extension of national patents abroad or European patents, which, once granted, become bundles of national patents”.

The Commission’s additional regulations on SEPs, compulsory licensing, and on the creation of SPCs for medicinal and plant products will affect university researchers differently, he said.

“The UPS and SPC imply costs that are much higher than purely national IP rights … But such costs are commensurate with the much higher value of the unitary IP rights, both in terms of geographic coverage and in the potential offered by the centralised exclusive jurisdiction of the Unified Patent Court (UPC),” he explained.

“They could incentivise patent filings,” but these inventions could be “possibly of dubious quality”, the EUI expert continued.

For Galli, quality inventions with a high potential for technology transfer would merit investment in the UPC.

He said that the proposed SEP regulation, meanwhile, “may likely increase costs for companies out-licensing SEPs, while improving the negotiating stance of companies in-licensing them. Given that research institutions, by definition, lack product market activities and instead rely on licensing their intellectual property rights (IPRs) to businesses, the proposed SEP regulation, as it stands, may discourage their participation in standardisation efforts.”

As for UPs, they would be attractive for large multinational companies operating in the pharmaceuticals, chemicals and ICT sectors, said Galli. However, “financially constrained universities might prefer mixed strategies combining unitary patents for far-reaching inventions and national patents for more modest inventions”, he made clear.

The proposed advanced EU compulsory licensing mechanism, when approved, would not likely have a significantly adverse effect on university research, he argued.

Compulsory licensing systems are already in place in EU member states, he said. The new mechanism only aims in addition to address cross-border crises, for example the Covid-19 pandemic. It seeks to ensure supply of and access to critical products, for example new vaccines, in the Single Market, faced with such emergencies.

“The most notable drawback of compulsory licensing, which is the reduction of incentives to invest in R&D, could be less critical for universities that pursue basic research activities as their mission than for companies doing applied research to make a profit,” he told University World News.

However, concerns persist – for example that the proposed SEP regulation and compulsory licensing mechanism, “may weaken patentees’ property rights and diminish inventors’
incentives to seek patent protection,” Galli cautioned.

Galli said that the SEP may also make it harder for higher education researchers to work with other entities, adding bureaucratic burdens to the licensing of SEPs.

“In fact, under the current version of the regulatory proposal, universities do not qualify for the support measures available to SMEs, such as free advisory services and reduced fees for registration of SEPs. Instead, they bear the same treatment as large multinational companies, which might further hamper their ability to obtain a return on investment from their SEPs.

“In that case, inventors may turn to other means of appropriating returns from their innovations, such as trade secrets, lead-time advantages, network effects and the control of complementary assets,” he noted.

Other experts said that the new rules would not have a major effect on researchers and knowledge institutions as patents were more important for protecting business.

As Ruben Puylaert, spokesperson for the body representing 14 Dutch universities, Universities of the Netherlands, told University World News: “There is a research exemption [for patents] to conduct research on inventions described in patent applications. That does not change with the UPS.”

Drs Alain Smolders and Koenraad Debackere, of the Leuven, Belgium-based League of European Research Universities (LERU), a network of 23 leading European universities specialising in innovative research, also said that the UPS “actually poses no problem”. In addition, they argue, the UP rules as such, “do not raise concerns with universities, as in essence there are no major changes versus the ‘ordinary’ EPO patent routes”.

But they foresee problems with compulsory licensing and particularly a research exemption currently operated in Belgium, that exempts certain research activities that would otherwise qualify as patent infringement. The aim of this exemption is to balance the inventors' rights against the promotion of scientific research.

“Compulsory licensing is not just a unitary patent issue, while the research exemption is also a Belgian-specific issue,” explained Smolders, LERU’s senior policy officer for open science and innovation.

Debackere, executive director of Katholieke Universiteit (KU) Leuven's research and development department, warned that compulsory licensing – that has received additional emphasis in the wake of the Covid-19 pandemic, with the call for quick development of vaccines – was a “debatable solution to health crises”.

He cited a Brussels, Belgium-based European think tank that specialises in economics, Bruegel, whose April 2020 paper noted that some countries have already expressed an interest in compulsory licences for Covid-19 vaccines.

However, “the problem with these interventions is that they need to be balanced against the incentives for private developers. For this reason, public de-risking of vaccine development and fair access should go hand in hand”, the study’s authors wrote.

The LERU experts are more concerned about the new wording on the research exemption in the IP rules. They say that this is, “a situation particularly relevant for Belgium,” as from 1 June, the exemption will impede the use of a patented invention as a tool during research.

Debackere referred to an expert note written by Stijn Lagaert, European and Belgian patent attorney at the intellectual property specialists Gevers, explaining that this research exemption in Belgium will be restricted drastically.

For the evaluation of innovative medicines, such as the necessary preclinical and clinical studies, Belgium implemented a very broad exemption in its national law, and could operate freely when using patented products and methods in its research projects.

But now, Lagaert said: “When European patents would be enforced by the patent holder before the Unified Patent Court, it appears more likely than not that the court will not apply the broad Belgian provision. Even before the Belgian court, a patent holder might bring the argument that the broad Belgian provision cannot be applied because it conflicts with the international agreements that Belgium acceded to.”