Choosing a European patent attorney: does the Iron Curtain still exist?

It is not the objective of the author to provoke readers, but to share facts and statistics to demonstrate that in over 20 years since the destruction of the ‘Iron Curtain’, more than seven years after the enlargement of the EU and over eight years after most of the former Eastern European countries joined the European Patent Convention (EPC), applicants from the European Patent Convention residing outside the member states predominantly use representatives from the founding countries of the European Patent Convention.

Currently, there are slightly more than 11,000 patent attorneys who have the right to represent clients before the European Patent Office and who have the required EPI (European Patent Institute—the bar of European patent attorneys) membership, and more than 3,000 (over 25 percent) of them come from countries of the former Eastern Bloc.

More than half of the applicants of the European Patent System are from overseas countries (i.e. are not member of the convention), and according to the current rules, they must be represented by a European Patent Attorney residing in one of the member countries. But only a small fraction of them (less than 5 percent) are represented by patent attorneys from Eastern European countries.

The patent system in several of these countries, including Hungary, goes back to the 19th century. The first national Hungarian patent law was enacted in 1895 to replace the previously common patent system of the Austro-Hungarian Empire, which had an independent operational branch in Budapest. Patent examination has always been based on a thorough novelty search and strict examination of inventive step.

Decisions of the competent office (which has had different names, but now is called the Hungarian Intellectual Property Office or HIPO) could be appealed at a central court with competence for the whole country in patent matters, and there has always been a second court forum that processes appeals against the decisions of the patent court.

In this way, during the past 120 years, a strict and well-established jurisprudence has been a characteristic of the country, and practitioners (Hungarian patent attorneys) have had to work to high professional standards to represent their cases with success before these tribunals.

Recently, the search and examination work of HIPO has achieved an internationally acknowledged high level, and it is among the 14 patent offices that conclude bilateral or multilateral patent prosecution highway (PPH) agreements with each other based on the mutual recognition of their search and examination work in order to eliminate unnecessary duplication of work when examining the same subject matter.

Patent practitioners in Hungary have always made international patent prosecution work, and in the period when Hungary was not a member of the EPC, they prepared patent specifications for Hungarian applicants for international filing.

Many of these applications were prepared in order to eventually become European patent applications, and as non-EPC applicants, they had to use representatives from one of the member states, but the basic attorney’s job was performed by Hungarian practitioners. In 2003, Hungary obtained EPC membership, and the active patent attorneys became European patent attorneys who can directly represent their clients before the EPO.

If we take the example of Danubia Patent & Law Office—the oldest and largest IP law firm in Hungary, awarded tier 1 law firm status in Hungary both for patent prosecution and enforcement since 1997 in annual surveys—it represents applicants in 263 European patent cases, of which 79 have already been granted. The next highest Hungarian agent has 73 cases of which 25 have been granted.

It is a pity that, out of the 263 European patent cases, only about 25 percent come from outside member states. While these 263 cases represent significant inventions, some of which have obtained international recognition and awards, the slightly more than 25 percent of foreign cases are in sharp contrast with the inverse statistics, which show how many out of the cases represented by Danubia come outside Hungary.

The reason for the low proportion of European patent cases cannot be cost, as the price level in Hungary is lower than the EU average, and Danubia’s filing costs are moderate. The acceptance/rejection ratio is also very high; therefore, the low figure cannot be for quality reasons. Danubia attorneys are very active in different IP organisations, and especially in the work of the EPI.

Two of Danubia’s partners have been elected in the EPI Council, and three further ones are members of the most distinguished EPI committees; therefore, this small office has partners recognised as excellent European practitioners.

Therefore, the disproportionally low figure of foreign EP cases has no other explanation than the survival of prejudices and preferences (Iron Curtain effect) established during the first 25 years of the EPC system, when practitioners of these countries were not yet allowed into the European arena.

In 2004, when the enlargement of the EU took place, it was said that the centre of the EU was shifted substantially eastward. Hungary is now more in the centre than in the eastern part of the EU. This shift, however, is not noticeable in the filing practice of overseas clients.

Although the economic downturn has made Western companies much more cost-sensitive, they do not even try to enjoy the benefits provided from the high quality/cost coefficient that could be obtained when choosing representatives in these new member states.

The distorted situation will be more remarkable if the EU patent system moves towards further cost reductions by, for example, increasing the number of EPC countries that accept the London Agreement and so decreasing the costs of validation, and there is a strong move towards the introduction of the Unitary Patent System. In Hungary, access to the London Agreement (from January 1, 2011) has brought about substantial cost reductions for those wishing to obtain protection for their European patents in Hungary.

While this is advantageous, patent professionals have lost revenue from translation of patent specifications. If practitioners wish to survive, the imbalance should be rectified, and the most natural solution would be if the number of incoming European cases from overseas would be distributed more evenly among existing European patent practitioners.

Michael Lantos is managing partner of Danubia Patent and Law Office LLC. He can be contacted at: lantos@danubia.hu