N. 5, November 2002 
Editorial 
A European patent insurance scheme - a major need exists
Mogens Kring
Director General of the Danish Patent and Trademark Office
Deputy Chairman of the EPO Administrative Council
 
Europe's many small innovative enterprises are an important driver of the European economy. They are an important element of the overall development of innovative products and processes and, thus, important to Europe's competitiveness in the years to come.

Not least having access to swift, inexpensive and reliable patent protection is crucial to these enterprises.

But exactly these enterprises find it difficult to enforce their patent rights if they are infringed. Often they do not have the resources to go into prolonged and costly litigation to defend their patents. It is not unusual to see other companies cynically exploiting this situation.

This problem makes many small enterprises decide not to patent their inventions. For example, the Danish business sector, which is characterised by a large number of small and medium-sized enterprises, we see that large companies take out 30% more patents per employee than medium-sized enterprises do. Small enterprises have an even weaker track record.

And what is even worse - this sense of powerlessness makes many small enterprises cut down on their R&D efforts because they feel that the commercial benefits cannot be secured via patent protection.

This situation is unacceptable to the patent system, the enterprise whose rights are infringed, and society.

Last year, a Danish study of the economic consequences of introducing legal expenses insurance to cover patent holders' costs of litigation showed that this would represent a gain of up to 2.6 billion euro to Danish society, as it would boost innovation. On a European scale, the gain to society would be up to 21 billion euro.

Experience shows that a patent insurance scheme can hardly be established successfully at national level. The policyholder base would simply be too small. As a result, setting up a European patent insurance scheme within the European Union has become a key issue to Denmark.

We have been working on such an insurance scheme for several years, and at a recent conference held as part of the Danish EU presidency, patent insurance was one of the main items on the agenda.

A report from the European Commission made it quite clear that there is a great need for a patent insurance scheme, but also that there are many difficulties to be overcome before a European scheme can be established. Off-hand, many private insurance companies are sceptical because this is a new field and because insuring patent holders involves considerable uncertainty. For example, there is a serious lack of data on risks, and such data are required for insurance companies to calculate premiums.

At the presidency conference, a report from a European group of experts was also presented. The report outlined what is needed to turn a European patent insurance scheme into reality.

One of the group's proposals was a European body, which would ensure critical mass of policyholders and which could market the scheme and provide professional expertise to the insurance companies on a number of issues relating to patent quality. Such a body could also establish a kind of conciliation board to mediate, wherever possible, between infringers and those whose patent rights are infringed. In addition, such a body would ensure that the scheme would apply in all EU Member States on the same terms and conditions.

Later the European Commission is going to consider how and whether the work of establishing a European patent insurance scheme should be continued.

In Denmark, we realise that it may take a long time to find a solution. However, we are very confident that a patent insurance scheme would represent such a major advantage to European enterprises and European society as a whole that it would be worth the effort.