Introduction
The new Dutch Patent of 1995 introduced so-called registration-patents. These registration patents do not require any examination of the application. They are granted on the basis of the application only and can therefore be obtained quickly and at a low cost. However, the 'quid pro quo' is a relatively short term of protection for such a patent: only six years from the date the application was filed, instead of the regular period of twenty years.
It seems that the Dutch legislature failed to notice that the TRIPS-Agreement that was executed in 1994 provides for a minimum duration for patents of at least twenty years from the filing date. Because of that minimum requirement these registration patent that only last for six years do not deem to be in conformity with TRIPS. On that basis foreign proprietors of such registration patents may take the position that their patents do by operation of law last for the regular twenty-year period, as required by TRIPS. Such a stance is probably not available for Dutch nationals, since they probably cannot rely on TRIPS, as recent case law of the Dutch Supreme Court seems to indicate.
All of this creates an unprecedented advantage for foreign companies that compete with Dutch companies in the Dutch market. In addition, answering questions as to whether certain patented technology is in the public domain in The Netherlands has become much more complicated, which also seems to seriously hinder Dutch industries in particular.
In the meantime, those foreign nationals that want to invoke the regular twenty year term for their registration patents have to make sure that they pay the necessary renewal fees to the Dutch Patent Bureau to avoid being in a position where their patent rights may have lapsed because of a failure to timely pay the mandatory.
Since the system of 6-years registration patents came into effect on April 1 of 1995 these issues are of relevance as from April 1, 2001.
Registration Patents
A registration patent is a true patent under the Dutch Patent Act of 1995. That statute provides for two possibilities to obtain a Dutch patent: the six-year registration patent and the regular twenty-year patent. These two types of patents only differ in terms of (a) their application procedure and (b) the term of protection granted. In addition, one can obtain a Dutch patent via the route of the European Patent Convention. Upon the grant of such a 'European patent' by the European Patent Office such a European patent transforms into a bundle of national patents. Their national patent laws govern these national patents. In The Netherlands such European patents become regular twenty-year Dutch patents.
Both types of Dutch patents are issued on the basis of an application that is drafted and filed by the applicant. In that application, the applicant takes a position as to what is new and inventive about his invention and then claims that invention as he sees fit.
After this 'kick off' by the applicant a regular 20-years Dutch patent requires an examination by the either the Dutch Patent Office or the European Patent Office of, in particular, the state of the art and the inventive step. In most cases there will be a debate with the examiner about the merits of the claimed invention and such debate may result in either (a) an amendment of the original claims or (b) the patent being denied. Of course, this procedure takes time and may create substantial costs. However, that may be money well spent since a patent creates a monopoly on an innovative technology for twenty years from the filing date. Bearing in mind that freedom of technology is one of the pillars of the legal framework for our economic system, a patent provides for an exceptional and powerful weapon.
Compared with the regular 20-years patent the 6-years Dutch registration patent has both good news and bad news for the patentee. The good news is that his costs of obtaining a patent can be reduced dramatically because there is no examination of the application. The patent is issued simply by 'putting a stamp' on the application. In addition, it is an advantage for the applicant that he is not bothered by any critical analysis of his claims by an examiner that may take the position that the application is not worthy of a patent. Instead the recipe is simple: one takes an empty sheet of paper and happily claims how one has in one's own view enriched the state of the art in a manner that is not obvious to the average person skilled in the art. The only bad news is that one can enjoy this self-proclaimed 'kingdom' for a period of six years only. However, this news may be only marginally bad for certain industries. If one can confront competitors quickly with an enforceable patent simultaneously with the market introduction of the innovation the goal of market exclusivity may already be achieved. In addition, a period of six years may for certain technologies be all that one needs since after that time the innovative technology may already become obsolete in light of the next innovation.
Background of the 6-years Registration Patent
The 6-years registration patent was introduced in 1995 because it was feared that the Dutch Patent Office would because of the success of the European patents no longer be in a position to maintain an appropriate staff of patent examiners. The other reason for introducing a registration patent was to lower the threshold of the patent system for small and medium sized companies so that such companies could more easily enjoy the benefits of the patents.
It seems that the registration patent is a success if one takes a look at the numbers for the years after 1995. Of the 2,994 new applications in 2000 about 83% (2,463) was filed by Dutch companies. 44% of these Dutch applications came from small and medium sized Dutch companies.
Utility Model
The Dutch government opted for a six-year registration patent as an alternative for utility models. A draft Utility Models Act was submitted to parliament in 1986, but had been suspended in the meantime as a result of a lobby by Dutch industries fearing that foreign applicants would be the primary beneficiaries of such utility models. Apparently this concern was less acute when the draft for a new Patent Act was submitted to the Dutch Parliament in 1991.
However, the registration patent is clearly inspired by the draft Utility Models Act. As was proposed for the utility model, a registration patent is obtained without any examination of the merits of the application and the duration of the right is set at six years. A difference with the utility model is that utility models would have been limited to material products only while a registration patent can be obtained, like any patent, for all products or processes.
An important difference with the utility model is also that the patent law requirement of an inventive step, i.e., non-obviousness, would not be the test for utility models. Instead, the requirement would be that an object should have new features that are based on an inventive step and create a technical effect. The true merits of this criterion have not become fully clear in the legislative process of that act, but for what it is worth it was the clear and stated intention of the Dutch government to have a lower threshold for utility models compared with the existing threshold for patents. An idea behind the utility model was that it would fill the gap that is created by the exclusion of technical features in the Benelux Industrial Designs Act.
Patents
A 6-years Dutch registration patent is indeed a patent within the definitions of the Dutch Patent Act of 1995. The required novelty, inventive step and 'industrial applicability' do apply in full. The only difference is that in case of a registration patent the applicant, claiming that these requirements are met by his invention, is taken at his word and evidence to the contrary is only of relevance in court proceedings. In case of a regular 20-years patent the applicant must first convince the examiner that his 'invention' does indeed justify the grant of a patent before he can go out and confront competitors with his exclusive right. It is only if the owner of a 6-years registration patent actually takes an alleged infringer to court that the value of his patent will be tested. At that occasion the patentee has to submit a search-report concerning the state of the art. If he fails to do so, a court has to deny the requested relief. If he does submit the required search report, it will be up to the court to evaluate the claims as being novel, non-obvious and capable of industrial application based on that report and based on the arguments of the parties to the litigation. Since a court lacks the required technical expertise, it will in most cases have to appoint independent experts to advise the court on these issues. In this regard, litigating on the basis of a registration patent may turn out to take more time, be more expensive and be less predictable than proceedings on the basis of a regular 20-years patent.
However, in all other respects, a 6-years registration patent does have the same characteristics as a regular 20-years patent under the 1995 Patent Act. Both constitute a patent within the meaning of Article 2(1) of that Act. Consequently subjects like scope of protection and grounds for nullification of the patent are the same for both a 6-years registration patent and a pre-examined 20-years patent.
TRIPS Agreement
The definition of a patent in article 2(1) of the 1995 Dutch Patent Act is almost identical with the terminology used in Article 27(1) of the Agreement on Trade-Related aspects of Intellectual Property Rights ('TRIPS'). Article 27(1) of TRIPS provides that patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they (a) are new, (b) involve an inventive step and (c) are capable of industrial application. There seems to be no light between this definition and the one used in the Dutch Patent Act of 1995, so that it seems clear that any patent under the Dutch Act also qualifies as a patent within the meaning of TRIPS.
The TRIPS-Agreement that had to be complied with as of January 1, 1996 is of relevance for the 6-years registration patent since TRIPS is the first international treaty that provides for a minimum term of protection for patents. Article 33 of TRIPS spells out that the term of protection available shall not end before the expiration of a period of twenty years counted from the filing date.
As a consequence of this regime the United States had to amend its Patent Act to change the calculation of the life of a U.S. Patent from seventeen years counted from the granting date to twenty years counted from the filing date.
TRIPS And The 1995 Dutch Patent Act
The Dutch legislature has not considered the possible impact of TRIPS while drafting the 1995 Patent Act. The reason was that the debate in parliament was already concluded in March of 1994 while TRIPS came about in April of that year. Therefore, after the 1995 Act came into effect on April 1 of that year an amendment of that Act was submitted to parliament in October of the same year. The amendment's purpose was to provide for the necessary changes so that The Netherlands would be TRIPS-compliant on the prescribed date of January 1, 1996. The government was successful in getting the legislation through parliament in time, but the possible implications of the minimum term of protection for patents as provided for in Article 33 TRIPS were overlooked in the process.
Does 6-years Dutch Registration Patent Violate TRIPS Obligation?
It seems clear that the 6-years registration patent is not in conformity with the minimum 20-years term for patents as required by Article 33 of the TRIPS-Agreement and that therefore The Netherlands is in violation of this TRIPS obligation.
One can argue that TRIPS does not require that all patents do have to last for 20-years, but that it is sufficient that there is the option to obtain a 20-years patent if an applicant wishes to do so. Although this position may seem sympathetic and practical from a Dutch perspective, it does not seem likely that such a reading of Article 33 of TRIPS is indeed allowed. The language of Article 33 seems clear and does not seem to give such 'room to maneuver'. Such a strict reading of Article 33 of the TRIPS-Agreement seems in line with the rules on the interpretation of treaties as provided for in the Vienna Convention on the Law Of Treaties between States and International Organizations or between International Organizations of 1986 and the approach taken by the Dispute Settlement Body of the World Trade Organization. It also seems that if the TRIPS-Agreement does allow flexibility such is expressly indicated in the relevant provision.
Such a flexible reading of the requirement of Article 33 TRIPS also does not seem the consistent with TRIPS' goal to provide for adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights. The purpose of TRIPS is that one will not be confronted with too many surprises when dealing in various countries with a subject matter that is governed by TRIPS.
Implications For The Netherlands
A consequence of the likely non-conformity with TRIPS of the 6-years Dutch registration patent is that The Netherlands can be confronted with complaints from other member states and proceedings before the Dispute Settlement Body of the WTO. The likely outcome of such proceedings is that the 1995 Patent Act is to be amended.
In this context one can look at the proceedings that were brought by the United States against Canada. These proceedings were about the implications of the minimum term of protection of article 33 TRIPS. Long before TRIPS, Canada had changed its patent law in 1989 to provide patent protection for a term of twenty years from the date of filing of the application for a patent. Before October 1, 1989, Canada provided patent protection for a term of seventeen years from the date of grant of a patent. However, no mechanism was provided for in the legislation to allow for conversion from one system to the other. Consequently, the new rule applied only to applications filed after October 1, 1989, while the old system remained effective for patent applications filed before October 1, 1989.
The United States took the position that the new regime should also apply to any applications filed before October 1, 1989. The WTO Dispute Settlement Body followed this position. The Appellate Body concluded that the words used in Article 33 presented very little interpretative difficulty and that the calculation of the period of "twenty years" is clear and specific. It was found that Section 45 of Canada's Patent Act was inconsistent with Article 33 of the TRIPS Agreement and Canada was requested to bring Section 45 of its Patent Act into conformity with its obligations under the TRIPS Agreement.
Direct Effect TRIPS Agreement: European Community Law
A more intriguing question is whether article 33 of the TRIPS Agreement may have direct effect in The Netherlands. Direct effect can be a consequence of either European law or national law. There is room for national law in this regard, since the area of patents has not been harmonized by the European Union.
This principle was confirmed in the judgment of the European Court of Justice of December 14, 2000 in the combined cases of Parfums Christian Dior SA v. Tuk Consultancy BV and Assco Gerüste GmbH, et al. v. Wilhelm Layher GmbH & Co. KG et al. There the Court ruled that in a field in respect of which the Community has not yet legislated and which consequently falls within the competence of the member states, the protection of intellectual property rights, and measures adopted for that purpose by the judicial authorities, do not fall within the scope of Community law.
The direct effect of TRIPS as matter of European law was addressed in the Dior-judgment as well as a judgments of the European Court of Justice of November 23, 1999 in Portugese Republic v. Council of the European Union and of September 13, 2001 in Schieving-Nijstad vof et al. v. Robert Groeneveld. From these cases it is clear that as a general rule TRIPS does not have direct effect as a matter of European Union law. However, having said that, the Court added that in a field to which TRIPS applies and in respect of which the Community has already legislated, the judicial authorities of the member states are required by virtue of Community law, when called upon to apply national rules to do so as far as possible in the light of the wording and purpose of Article 50 of TRIPS.
Direct Effect TRIPS Agreement: Dutch Law
Whether or nor TRIPS has direct effect as a matter of the national laws of member states is at the sole discretion of such national law. As the European Court stressed in Dior, Community law neither requires nor forbids that the legal order of a member state should accord to individuals the right to rely directly on the rule laid down by those cases Article 50(6) of TRIPS or that it should oblige the courts to apply that rule of their own motion.
The direct effect of treaty provisions is addressed in article 93 of the Dutch Constitution. In line with the so-called monistic doctrine that applies in The Netherlands, there is a low threshold for direct effect of a treaty provision. Provisions that can have direct effect shall have direct effect as a matter of Dutch law. Against this background the direct effect of certain TRIPS provisions has been advocated by legal scholars and has also found to exist by lower courts in The Netherlands.
In light of the recent judgment of the Supreme Court of The Netherlands of May 26, 2000 in Cassina S.p.a et al. v. Sedetti NV et al. on the direct effect of the Berne Convention, it seems difficult to argue that article 33 of the TRIPS Agreement lacks direct effect. That case addressed article 21(3) of the Benelux Industrial Designs Act. An industrial design is obtained by filing a design with the Benelux Bureau. This will result in an industrial design right that may last up to 15 years, provided the registration is renewed after a first and second 5-year period. Article 21(3) of the Benelux Act applies if an industrial design is also protected by copyright and the same proprietor owns both the copyright and the industrial design right. In that situation article 21(3) of the Benelux Act provides that the copyright will expire simultaneously with the expiration of the industrial design right, unless a statement is filed with the Benelux Bureau by the owner of these rights, indicating that he maintains his copyright for the remainder of term of that copyright (which may be 70 years or more). If he fails to file such a declaration in time, the copyright will expire by operation of law. The Dutch Supreme Court wasted few words to find that this statutory provision violates two provisions of the Berne Convention and that these provisions of the Berne Convention have direct effect under the laws of The Netherlands. The possible 15-year term of the copyright violates article 7(4) of the Berne Convention that requires a minimum term of 25 years for works of applied art. In addition, article 5(2) of the Berne Convention stating that the enjoyment and the exercise of copyrights rights shall not be subject to any formalities was found to be violated by the Dutch Supreme Court because of the provision that a statement is required for the continuation of the copyright after the expiration of the industrial design right. The case was referred to a Court of Appeals with the instruction that the copyright was still alive in spite of the expiration of the industrial design right and the absence of a statement as required by article 21(3) of the Benelux Act. In this regard Dutch law may also find inspiration in European law. In the judgment of the European Court of Justice of November 23, 1999 in Portugese Republic v. Council of the European Union that Court ruled that as a matter of Community law where as a general rule the TRIPS Agreement lacks direct effect a provision of the TRIPS Agreement shall have direct effect if the Community intended to implement a particular obligation assumed in the context of the WTO, or where the Community measure refers expressly to the precise provisions of the WTO agreements. There seem to be no obstacles for applying the same rule under Dutch law. Now that The Netherlands has amended its 1995 Patent Act with the express intention to make sure that its Patent Act will be TRIPS compliant, it is difficult to see why article 33 of the TRIPS Agreement would lack direct effect with regard to the 6-years registration patent.
The TRIPS Agreement Protects Foreign Nationals Only
A strange consequence of the finding that the 6-years registration patent violates the TRIPS Agreement and that this TRIPS provision has direct effect under Dutch law, is that only foreign nationals are likely to benefit from this result.
It is an established legal principle under Dutch law that intellectual property treaties, like the Berne Convention or the Paris Convention, only make sure that foreign nationals are granted certain rights by a member state. However, these treaties do not address situations in which a state fails to take proper care of its own nationals under its own national law. That is a matter of national law only. Although there is no case law on the Trips Agreement, that treaty does not seem to warrant a different finding in this regard. This old doctrine has recently been reconfirmed by the Dutch Supreme Court in its judgment of May 11, 2001 in the case of Vredestein Fietsbanden B.V. v. Stichting Ring 65. In this copyright case, Vredestein relied on the Cassina-judgment (as discussed above) to argue that it still had a copyright in the design of certain bicycle tires in spite of the expiration of the corresponding registration of an industrial design right in these designs and in spite of its failure to file the required copyright-maintenance-statement. The Dutch Supreme Court disagreed arguing that the Berne Convention only safeguards the interests of foreign nationals under Dutch law but does not protect Dutch nationals against their own national law.
The Dutch Supreme Court also found that the circumstance that as a consequence of this doctrine Dutch nationals are discriminated against under their own national laws does not constitute the type of discrimination that is prohibited under article 12 of the European Community Treaty.
International treaty provisions only come to the rescue of foreign nationals, while a country's own nationals remain at the mercy of their national law.
Can Foreign Nationals Claim 20-years Dutch Registration Patents?
In light of the above, it seems that foreign nationals will be in a position to benefit from the advantages that come with a mere registration patent with its quick granting procedure and low costs and disregard the disadvantage of having a patent that will only last for 6 years instead of the regular 20 years.
At the same time, their Dutch competitors will not be able have a disadvantaged position while competing with these foreign nationals in the Dutch market place. It is obvious that this situation should be addressed by the Dutch legislature quickly.
The Interest of Register Clarity
Not only does this result give foreign nationals an unjustified advantage over Dutch competitors, it also leads to chaos if third parties try to determine whether certain technologies are in the public domain in The Netherlands. Answering such questions is the primary use that is made of patent registers and these registers are there to make this determination possible indeed. This so-called register-clarity is severely jeopardized if it turns out that 6-years registration patents may enjoy the regular 20-years term of protection.
This problem is the same for industrial designs where the absence of a copyright-maintenance-statement from the register indicates that the copyright in such a design has also expired. Although the issue of register-clarity in the context of industrial designs was on the table in the above referred to Cassina- and Vredestein-judgments of the Dutch Supreme Court, it did not make that court come to a different conclusion.
Therefore, it does not seem likely that the Dutch Supreme Court will come to a different conclusion if patents are at issue instead of industrial designs.
Maintenance Fees
A hurdle that needs to be taken by those patentees that wish to claim that their 6-years registration patents are still in effect in spite of the expiration of the 6-years term is the payment of maintenance fees. Article 61(1) of the 1995 Dutch Patent Act provides that payment of the yearly maintenance fees is mandatory for the prolongation of the life of a patent. Maintenance fees are first due in year five after the filing date of the patent and then for each consecutive year. Article 62 of the Act provides that a patent expires by operation of law if a maintenance fee has not been paid within six months after the due date..
Consequently, one has to make sure that these fees are paid in time to avoid a situation in which a 6-years registration patent is after the expiration of that 6-hear term deemed to have expired because of a failure to pay the mandatory maintenance fee. How the Dutch Patent Office will deal with requests to pay maintenance fees for patents that have according to the language of the statute already expired is unclear at this stage. It is important, however, for patentees to be persistent in dealing with any administrative hurdles if they want to be able to claim that 6-years registration patent still is a valid patent in any consecutive year after year six.
Utility Models
The present problems with the 6-years registration patent have arisen because The Netherlands changed from a utility model to a patent. This also shows the possible way out.
If one wants to provide some alternative for the 6-years registration patent, one should create something that does not qualify as a patent within the meaning of the TRIPS Agreement. In this regard a utility model, i.e. a right that does not require an inventive step, but perhaps only novelty, will be possible. It is different matter, of course, whether such a right is something one should hope for.
Conclusion
The Dutch 6-years registration patent seems to violate the minimum term of protection for patents as required by article 33 of the TRIPS Agreement. It is likely that foreign nationals can successfully claim that this TRIPS provision has direct effect under Dutch law and that their 6-years registration patents are entitled to the required 20-years minimum term of protection instead. However, it seems that foreign nationals that want to claim that prolonged life for their registration patents have to provide for the continuing payment of maintenance fees for such patents, because of the strict provision in the Dutch Patent Act. Otherwise they risk losing their patents on the ground that having failed to pay the required maintenance fees in time makes a patent expire by operation of law as provided for in article 62 of the 1995 Dutch Patent Act. Dutch nationals may not be able to rely on TRIPS in this regard, so that they are likely to be stuck with 6-years registration patents only. Needless to say that this situation is very disadvantageous for Dutch industries, so that one may expect that the Dutch legislature will deal with this situation soon.