The European Patent System is facing major challenges resulting from an extension of patentable subject matter leading to an increasing number of patent applications. The European Patent Office has responded with admirable flexibility, but continuing technological change and greater importance ascribed to patents are leading to lengthened examination periods, rising opposition figures and changing behaviour of patent applicants.Stefan M. Wagner analyses problems associated with institutional changes (duration of patent examination and opposition mechanisms), the expansion of the patentable subject matter and organizational challenges for industrial patentees. The study is based on the empirical analysis of large scale datasets on European patents and employs advanced multivariate methods such as semi-parametric and panel-data regression methods.
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Chapter 1 Introduction (p.1 )
Since its creation more than 200 years ago, the patent system has played an important role in stimulating technological innovation by providing legal protection to inventions of every description and by disseminating useful technical information about them (Machlup k Penrose 1950, Scotchmer 2005). Driven by the growing importance of technology to a nations well-being over the last century, the role of patents in the economy becomes increasingly important. Ever-growing numbers of patent applications are a clear indication that firms of all sizes as well as universities and public institutions are ascribing greater value to patents and are willing to bear higher costs to acquire, exercise and defend them in court (National Research Council 2004).
While the patent system has had to adapt to changing conditions throughout its entire history, there have been major changes to the patent system over the last decades. Since the end of the seventies a series of judicial, legislative and administrative actions have changed the international patent systems in distinctive ways. In 1978 the European Patent Office (EPO) - established by the Convention on the Grant of European Patents (EPC) signed in Munich 1973 - started its operations and marked the beginning of a unified European patent system. Employing a centralized examination/ grant procedure as well as a centralized post-grant opposition mechanism, the EPO offers applicants a cost-effective and time-saving way of applying for patent protection in up to currently 36 European countries at once. Additionally, it enables third parties to object against patent grants directly at the EPO within nine months after the patent has been granted instead of turning to national courts (Harhoff &, Reitzig 2001, 2004).
In the United States the establishment of the Court of Appeals for the Federal Circuit in 1982, which consolidated all appeals from patent case decisions of federal district courts in a single specialized court, led to a sharp increase in plaintiff success rates in patent infringement law suits and possibly to a rise in the economic value of patents (National Research Council 2004). In addition to this major institutional changes, patenting has been extended to new scientific and technological domains such as life forms, genes, software and methods of doing business. Due to these changes - strengthening of patent holders position by institutional changes and extension of patentable subject matter - it can be assumed that patents are being more actively sought and vigorously enforced by innovators (Cohen Sz Merrill 2003, National Research Council 2004).
The tremendous increase in the demand for patents (even called the patent explosion by Hall 2004) and the recent expansion of patentable subject matter create new challenges, both to patentees and to patent offices. First, the sheer volume of applications to patent offices - currently more than 150.000 a year at the EPO - threatens to overwhelm the patent examination corps, influence the quality of their work or create a huge backlog of pending cases. Second, various technological fields are currently characterized by prevailing uncertainty on the patentability of inventions which possibly influences market structures in an unfavorable way.
For instance, if some firms possess the capabilities to get patents granted despite unresolved legal questions concerning the patentability of the underlying inventions and others do not, these firms might take advantage of it.