Proposal for a European Parliament and Council Directive approximating the legal arrangements for the protection of inventions by utility model
Date: 1997-12-12
Institutions: European Commission
Subjects: approximation of laws, competition law, industrial property, invention, technological change

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  12.12.1997 
COM(97)  691  final 

97/0356  (COD) 

Proposal  for  a 

EUROPEAN  PARLIAMENT  AND  COUNCIL  DIRECTIVE 

approximating the legal arrangements for the protection of inventions by utility model 

(presented  by  the  Commission) 

EXPLANATORY  MEMORANDUM 

INTRODUCTION 

PART ONE:  BRINGING  ABOUT  A  SINGLE MARKET  IN  THE  PROTECTION 

OF INVENTIONS  BY UTILITY MODEL 

A. 
B. 

C. 
D. 
E. 

Harmonising national rules on utility model protection 
Introducing  rules  on  utility  model  protection  in  those  countries  where 
there are none 
Facilitating the free movement of goods 
Avoiding distortions of competition in the single market 
The need for action at Community  level 

PART TWO: ECONOMIC  NEEDS  IN  THE  LIGHT  OF  THE  COMMUNITY 

OBJECTIVES 

A. 

B. 

The economic significance  of utility model protection 
1. 

Utilisation  of the  utility  model  in the  Community  and  the  reasons 
therefor 
The significance  of utility models compared with patents 
The significance  of utility model protection by reference  to the size 
of the firm or industry 

2. 
3. 

Enhancing  the  competitiveness  of  firms  and  promoting  research  and 
development 
1. 
2. 

The utility model and the competitiveness of  firms 
Innovation 

PART THREE:  THE INTERESTS AT STAKE AND FORESEEABLE  TRENDS 

A. 

B. 

C. 

The  position  with  regard  to  industrial  companies  and 
inventors 
Changes  in  product  life  cycles,  times  to  market  and  the  lifetimes  of 
inventions 
Changes in spending on research and development 

independent 

PART FOUR: THE ACTION PROPOSED 

A. 
B. 

The utility model  in practice 
Legal basis 

PART FIVE: EXAMINATION  OF THE PROVISIONS 

EXPLANATORY  MEMORANDUM 

INTRODUCTION 

1.  A  utility  model  is  a  registered  right  which  confers  exclusive  protection  for  a 
technical  invention.  It resembles a patent in that the invention must be new - it must 
possess  "novelty" - and  must  display  a  measure  of  inventive  achievement  - it  must 
involve  an  "inventive  step", though  generally  the  level  of  inventiveness  required  is 
not as great as it is in the case of patents.  Unlike patents, utility models  are granted 
as a rule without  a preliminary  examination  to establish  novelty  and  inventive  step. 
This  means  that  protection  can  be  obtained  more  rapidly  and  cheaply,  but  that  the 
protection conferred  is less secure. 

2. 

In  July  1995  the  Commission  presented  a  Green  Paper  on  the  protection  of  utility 
models  in  the  single  market.1  The  purpose  of  the  Green  Paper  was  to  stimulate  a 
wide-ranging  debate on the need for Community action in this area given the impact 
which  differences  between  national  laws  have  on  the  smooth  functioning  of  the 
single  market,  and  to  propose  various  options  from  which  the  Commission  might 
choose in the light of the comments made. 

3.  Community  action  in this  field  would  first  of  all  make  it possible  to  make the  free 
movement  of  goods  resulting  from  minor  technical  inventions  in  the  Community 
more transparent  and  prevent  differences  between  national  laws or the  lack  of  such 
laws from  causing distortions of competition.  Secondly, such action would  improve 
the  legal  environment  for  Community  firms,  engaged  as  they  are  in  an  ongoing 
process  of  innovation  and  adaptation,  and thus  enhance  their competitiveness  in the 
world market  through  the  protection  of  their  inventions  by  utility  model - a  device 
particularly  attuned  to  serving  the  needs  of  small  and  medium-sized  enterprises 
(SMEs). 

4.  This  initiative  is  one  of  the  measures  envisaged  in  the  first  action  plan  for 
innovation  in Europe, which  was presented  by the  Commission  in November  19962 
with a view to establishing  a framework  favourable  to innovation.  It is stated in that 
action  plan  that  the  Commission  will  decide  in  the  light  of  comments  on  its 
Green Paper  on  utility  models  whether  to  propose  Community  legislation  in  this 
field. 

5.  All  the  interested  circles  have  played  an  active  part  in  the  debate.  Nearly  90 
contributions  have been sent in response to the Green Paper, a sign of how  ~ 

1  Document COM(95) 370 final  of  19 July  1995. 

2 

"Innovation  for  growth  and  employment",  Document  COM(96)  589 final  of  20 November  1996, 
point 2.6. 

important this issue is to all concerned.  The European  Parliament  and the  Economic 
and  Social  Committee  have also made known  their views  on the  subject.  Hearings 
have  been  held  by  the  Commission,  including  one  attended  by  European  trade 
associations  on 23 September  1996 and another attended  by Member  States'  experts 
on  4 November  1996, 
initiative  on 
to  assess 
utility models and to identify  the content of such an initiative. 

the  need  for  a  Community 

6.  The  exercise  has  revealed  a  real  need  for  the  protection  of  inventions  by  utility 
model  in  the  Community,  especially  in  certain  industries  (e.g.  toy  manufacture, 
clock  and  watchmaking,  optics,  microtechnology  and  micromechanics)  and  on  the 
part of SMEs, patent  protection being unsuited  to certain  types  of invention  such  as 
minor technical  inventions. 

7.  The majority  of business circles concerned have come out in favour  of a Community 
initiative  in  this  field  consisting  in  a harmonisation  of  national  laws,  including  the 
introduction  of  a  system  of  utility  model  protection  in  those  Member  States  where 
there is none. 

PART ONE:  BRINGING  ABOUT  A SINGLE  MARKET  IN THE  PROTECTION 

OF INVENTIONS BY UTILITY  MODEL 

A. 

HARMONISING  NATIONAL  RULES  ON  UTILITY  MODEL 
PROTECTION 

8.  The  primary  objective  of  this  proposal  is  to  harmonise  at  Community  level 
the effective  protection  afforded  to technical  inventions  by national  laws and 
in  so  doing  to  ensure  the  smooth  functioning  of  the  single  market.  Such 
inventions  are  currently  covered  by  different  protection  rules - where  indeed 
such rules exist - from  one Member State of the Community to another. 

9.  These differences  between protection arrangements, including the lack of any 
protection  in  some  Member States,  may  discourage  an  inventor  or  a  small 
firm  from  seeking  protection  in  other  Member States.  The  table  below 
shows,  for  the  period  1987-90  and  for  a  few  selected  Member States,  the 
average  annual  number  of  utility  model  applications  from  residents  in  the 
home  country  compared  with  the  number  of  applications  from  other  EC 
countries.3 

Applications from  residents 

Applications  from 

Germany 

Belgium 

Spain 

Greece 

Portugal 

13 608 

177 

3~5Ï9 

269 

56 

non-residents 

1  494 

73 

394 

57 

45 

(Source:  Industrial  Property  Statistics,  publications  A  and  B,  W1PO,  and  Belgian  Patent 

Office) 

According  to a survey  of businesses and independent  inventors  carried  out  as 
part  of a general  survey  by the Ifo  Institute  of the economic  impact  of  utility 
model  protection  in  the  European  Union,4  the  fact  that  the  number  of 
applications  from  other  Member States  is  so  small  is  due  to  the  difficulties 
standing  in the way of 

3 

4 

There  are  no  data  on  Greece  for  1987, the  utility  model  having  been  introduced  in  that  country  that 
year by Law No  1733/1987. 
Survey  by the  Ifo  Institute  of the economic  impact  of  utility  model  protection  in the  European  Union, 
Munich,  May  1994. 

5 

cross-border  applications.  The  differences  between  laws  are  so  many 
administrative  hurdles to be cleared  by applicants, with  difficulty  in the  case 
of  independent  inventors  and  SMEs,  and  they  thus  hamper  industrial 
innovation and the completion of the single market. 

10.  Harmonisation  will make it possible for equivalent  national  systems of utility 
model  protection  to  co-exist.  A  person  applying  for  a  utility  model  will  be 
assured  of  finding  an  equivalent  property  right  in  the  other  Member  States 
and  will  no  longer  come  up  against  different  sets  of  rules. 
If  he  seeks 
protection  in another Member State, he will know what  its scope  is and  what 
essential  requirements  have to be met in order to qualify  for  such  protection. 
Harmonisation  will  also  make  it  possible  to  reduce  costs  and  simplify 
applications for protection in other Member States. 

11.  The  approximation  of  national  laws  must  necessarily  include  substantive 
provisions  defining  the  scope  of  the  present  proposal  and  governing  the 
matter  for  which protection  is sought, the conditions with which  applications 
must  comply,  the  extent  and  duration  of  the  protection,  the  exhaustion  of 
rights  and the grounds for  lapse and revocation.  The approximation  of  these 
provisions  will  help  to  reduce  the  number  of  conflicts  and  the  resulting 
damage to the single market. 

B. 

INTRODUCING  RULES  ON  UTILITY  MODEL  PROTECTION  IN 
THOSE COUNTRIES WHERE THERE ARE NONE 

12.  The  approximation  of the  laws of the Member States  of the  Community  will 
oblige those Member States which have no system of protection  of  inventions 
by utility model to endow themselves with this form  of protection.  This will 
be the case with the United Kingdom, Luxembourg and  Sweden. 

13.  A survey of British firms and  independent  inventors carried  out as part of the 
Ifo Institute's general  survey referred  to above has revealed  the existence of a 
marked  economic  interest,  especially  among  SMEs,  in  this  new  form  of 
protection, supplementing as it does patent protection. 

C. 

FACILITATING  THE FREE MOVEMENT OF GOODS 

14.  Article 3(c)  of  the  EC Treaty  provides  that  the  activities  of  the  Community 
are to include an internal (i.e. single) market characterised  by the abolition, as 
between  Member States,  of  obstacles  to,  among  other  things,  the  free 
movement  of  goods.  Article 7a  of  the  Treaty  provides  that  the  internal 
market  is  to  comprise  an  area  without  internal  frontiers  in  which  the  free 
movement  of  goods  is  ensured.  The  national  systems  for  the  protection  of 
inventions  by  utility  model  produce  effects,  however,  which  are  entirely 
confined  to  the  territory  of  the  Member State  in  respect  of  which  the 
protection  is granted. 

15.  The  utility  model  is  a  right  which  forms  part  of  the  protection  of  industrial 
and  commercial  property  as referred  to  in  Article 36  of  the  EC Treaty.  The 
Court  of Justice  of the  European  Communities  has  had  occasion  to  interpret 
Articles 30  and  36  of  the  EC Treaty  in  the  light  of  the  free  movement  of 
goods  and  has  held  that,  whilst  the  Treaty  does  not  affect  the  existence  of 
rights recognised  by the legislation of a Member State in matters of industrial 
and  commercial  property,  the  exercise  of  these  rights  may  nevertheless, 
depending on the circumstances, be affected  by the prohibitions in the Treaty, 
since  derogations  from  the  free  movement  of  goods  are  admitted  of  only  to 
the extent that they  are justified  for  the purpose  of safeguarding  rights  which 
constitute the specific  subject-matter  of such property.5 

16.  Most  Member  States  have  their  own  system  for  the  protection  of  inventions 
by  utility  model.  Others,  such  as  the  United Kingdom,  Luxembourg  and 
Sweden,  have  decided  to  do  without  utility  model  protection  altogether. 
These differences  between systems of protection are outside the control of the 
right-holder  and  force  him  to  avoid  markets  in  which  he  cannot  obtain 
equivalent protection for his invention. 

17.  The  differences  between  national  systems  of  protection  make  it  more 
difficult,  moreover,  to  obtain  cross-border  protection  for  inventions  in  the 
single  market.  According  to  a  survey  of  firms  and  independent  inventors 
carried out as part of the above-mentioned  general survey by the Ifo  Institute, 
50%  on  average  of  all  firms  questioned  have  experienced  serious  or  some 
difficulties  with  cross-border  applications  for  utility  models  in  the  single 
market,  while  32%  fell  into  the  "don't  knows"  category,  so  great  are  the 
differences  between the various systems. 

The  extent  of  protection  varies  considerably  from  one  national  system  to 
another,  and an invention which qualifies  for protection  in one Member State 
may  not  qualify,  at least not on the  same terms, in another.  This  is the case, 
for  example,  with  the  inventive  step,  the  level  of  inventiveness  required  in 
order  that  an  invention  might  qualify  for  utility  model  protection.  Some 
Member  States  (e.g. Belgium  and  France)  require  the  same  inventive  step  as 
for  a  patent,  while  others  (Greece,  Italy  and  Spain)  are  willing  to  accept  a 
smaller  inventive  step.  But  even  within  those  Member States  in  which  a 
smaller  inventive  step  is  acceptable,  "smaller"  may  be  interpreted  in  many 
different  ways.  The condition  as to novelty  likewise  does not have the  same 
scope  in all Member  States.  In Spain,  for  example, novelty  is determined  by 
reference  to 

See,  for  example,  Case  192/73  Van Zuylen Frères v Hag AG  [03.07.1974]  ECR 731,  and  Case  15/74 
Centrafarm v Sterling  Drug [31.10.1974] ECR  1147. 

the  domestic  state  of  the  art,  while  in  the  other  Member States  the  criterion 
adopted  is that  of the  international  state  of the  art,  albeit  with  restrictions  in 
some cases (Germany and Portugal). 

The  same  applies  to  the  duration,  or  term,  of  protection.  This  may  be  six 
years (e.g. Belgium  and France), seven years (Greece), eight years (Finland), 
ten  years  (e.g.  Austria,  Denmark  and  Germany)  or  more  (e.g.  in  Portugal, 
where the term  is renewable  indefinitely).  This means that an invention  may 
no  longer  be protected  in one Member State, whereas  in another  it  continues 
to enjoy  protection for a longer period. 

Procedure,  including  the  application  procedure,  also  differs  from  one 
Member State to another.  In some cases, a preliminary  examination is carried 
out  to  check  for  novelty  and  inventive  step  (Belgium  and  France),  while  in 
most  other  cases  the  only  check  that  is  carried  out  is  one  to  ensure  that  the 
formal  conditions for protectability  are satisfied.  All this uncertainty  acts as a 
brake on the free movement of goods in the single market. 

The differences  which exist between national protection systems thus have an 
indirect effect  on trade between Member States and on firms'  capacity to treat 
the  single market  as just  that,  a single  setting  in which  to  do  business.  This 
state of affairs  leads to a lack of transparency, and it does nothing to make the 
movement of goods any  freer. 

D. 

AVOIDING  DISTORTIONS  OF  COMPETITION  IN  THE  SINGLE 
MARKET 

19.  Article 3(g) of the EC Treaty calls for  the establishment  of a system  ensuring 
that  competition  in the internal  market is not distorted.  This objective  ties in 
with  the  phrase  in  Article 2  which  requires  "a  harmonious  and  balanced 
development  of  economic  activities"  throughout  the  Community. 
If 
businesses  are  to  take  advantage  of  the  fundamental  freedoms  laid  down  in 
the  Treaty,  the  intellectual  property  rules  must  allow  fair  competition 
between them. 

20.  For  businesses,  and  in  particular  for  independent  inventors  and  SMEs,  the 
differences  which  exist  at  present  between  national  protection  systems  and 
the  consequent  need  for  legal  or expert  advice are  a source  of  administrative 
difficulty  and  a  major  cost  factor.  This  restricts  innovative  activity  on  the 
part of businesses, isolates them and distorts competition.  It may well be that 
businesses  define  their  commercial  policy  in  Member States'  domestic 
markets on the basis of the protection their products are 

afforded  there.  From  the  consumer's  point  of  view,  it  follows  that  the 
products resulting  from  technical  inventions may not be available  throughout 
the Community. 

The  differences  mentioned  in  point  16  also  have  a  direct  impact  on 
competition in the single market. 

21. 

In  those  Member States  which  require  the  same  inventive  step  for  a  utility 
model  as  for  a  patent,  adequate  protection  is  unavailable  for  inventions 
incorporating  only a small inventive step with the result that products may  be 
copied  or  imitated  with  impunity.  The  position  is  even  worse  in  those 
Member States where there is no utility model protection. 

22.  Copies  and  imitations  are  as  a  rule  cheaper  to  make  than  the  originals  on 
In  those  Member States  in  which  the  level  of 
which  they  are  based. 
protection  is low or non-existent, a copy or an imitation may therefore  have a 
bigger  share  of  the  market  than  the  original.  And  in  those  countries  where 
there  is  a high  level  of  protection,  it  may  well  be  that,  as  the  single  market 
becomes more and more  integrated, counterfeit  goods may be imported  more 
easily. 

23.  This  state  of  affairs  is  incompatible  with  the  Community's  objective  of 
shielding  the  rights  stemming  from 
the  creative  efforts  of  European 
researchers  and  inventors  and  the  substantial  investment  carried  out  by 
European  businesses  in this  area  from  infringement  by third  parties.  It, too, 
distorts  competition.  To  restore  the  balance,  businesses  operating  in  the 
single market must be assured of a level playing field. 

E.  THE NEED FOR ACTION AT COMMUNITY LEVEL 

24.  There  is a need  among  business  circles, and especially  among  certain  sectors 
of  industry  and  SMEs,  for  protection  at  Community  level  of  technical 
inventions  by  utility  model.  This  need  cannot  be  satisfied  by  action  taken 
solely  at the  level  of each  Member State.  Harmonisation  of  Member  States' 
laws  at  Community  level  is therefore  necessary.  This  will  make  it  possible 
for  one  and  the  same  invention  to  be  protected  in  an  identical  manner 
throughout the Community. 

25. 

In accordance with the principle of proportionality  laid down in Article 3b of 
the EC Treaty, however, the measures envisaged  must be proportionate to the 
primary  objective  pursued,  namely  that  of  making  the  functioning  of  the 
single  market  more  transparent.  The  harmonisation  of  national  laws, 
including the introduction of a 

system  of  protection  in  those  Member States  where  none  yet  exists,-  will 
therefore  not have to cover every aspect of national  laws affording  inventions 
protection  by  utility  model,  but  instead  will  have  to  be  confined 
to 
approximating  those  essential  provisions  which  have  the  most  direct  impact 
on the functioning  of the single market. 

26.  The aim is not therefore  to create, at Community  level, a Community  right to 
utility model protection which would make it possible to obtain protection  for 
one  and  the* same  territory  covering  all  Member States  through  a  single 
application  to  a common  office  in accordance  with  a single  procedure  and  a 
single  law.  Nor  is  the  aim  to  introduce  mutual  recognition  of  national 
systems  whereby  a utility model registered  in one Member  State can  produce 
effects  in  the  other  Member States  if  the  applicant  so  requests.  Both  these 
approaches aroused only limited interest on the part of the sectors of business 
and  industry  concerned  in the course  of the  consultation  exercise  set  in  train 
by the Commission with the Green Paper. 

10 

PART TWO: ECONOMIC NEEDS IN THE LIGHT OF THE 

COMMUNITY  OBJECTIVES 

A. 

THE ECONOMIC SIGNIFICANCE OF UTILITY MODEL 
PROTECTION 

1.  Utilisation  of the utility  model in the Community  and the  reasons 

therefor 

27.  The rate of utilisation of the utility model in the Community  is a good 
instrument  for measuring  its economic  significance  to businesses.  As 
far  as  national  applications  for  protection  are  concerned,  the  number 
of  applications  in  those  countries  which  have  a  system  of  protection 
requiring  a  small  inventive  step  is  higher  than  in  those  countries 
inventive  step  as  for  a  patent  (e.g. 
which  require 
12 000 annual applications  on  average  in  Germany  compared  with 
only  a  few hundred  a  year  in  France).  As  far  as  cross-border 
applications  are  concerned,  their  number  is  very  small  owing  to  the 
difficulties  caused  by  the  heterogeneous  nature  of  the  various  utility 
model systems in the Community. 

the  same 

28.  As  regards  possible  trends  in  the  behaviour  of  applicants  for  utility 
models  in  the  Community,  a  survey  of  patent  agents  carried  out  as 
part  of  the  above-mentioned  general  survey  by  the  Ifo Institute  has 
shown  that  an  increase  in  applications  for  protection  is  likely  in  the 
event  of 
changed. 
force  being 
Simplification  of the conditions for obtaining protection would  lead in 
particular to more frequent  recourse to the utility model irrespective of 
the size of the business concerned. 

fundamentally 

law 

the 

in 

The  sounding  of  opinions  among  the business  community  carried  out 
by  the  Commission  on  the  basis  of  the  Green Paper  has  revealed, 
moreover,  that  there  is  a  real economic  need  for  the  protection  of 
technical  inventions  by utility  model,  especially  on the  part  of  SMEs 
and 
toy  manufacture,  clock  and 
watchmaking, etc.). 

in  certain 

industries 

(e.g. 

29.  The  reasons  given  for  seeking  utility  model  protection,  these  being 

the features  of this form of protection, are as follows: 

quick,  simple registration:  an applicant  has to wait  an average of 
six months  for  a  utility  model  compared  with  anything  from 
two to  four years  for  a patent,  because  as  a rule  no  examination 
has to be carried  out to establish novelty and inventive  step.  This 
enables, firstly,  the applicant  to be protected  within  a short  space 
of  time  against  copies  and  imitations,  thereby  consolidating  the 
competitive  position 

11 

-  12-

of  businesses,  in  particular  SMEs,  and  helping  to  improve  the 
quality  of their  products,  especially  capital  and  consumer  goods, 
through marketing.  Secondly, rapid registration may lead to rapid 
commercialisation  of  the  invention,  whether  under  licence  or  by 
the applicant himself. 

Flexible conditions  for  obtaining  protection:  whereas  in the  case 
of  a patent  the  invention  must  involve  an  inventive  step  and  be 
absolutely  new,  most  utility  model  systems  require  a  different 
level  of  inventiveness  and  less  than  absolute  novelty  (e.g.  in 
Spain,  where  only  the  domestic  state  of  the  art  is  taken  into 
account),  with  the  result  that  the  requirements  for  obtaining  a 
utility  model  are  more  flexible  and  less  stringent.  The  lower 
inventive  step  requirement  is  an  important  reason  for  seeking 
utility  model  protection  as  this  makes  it  possible  to  cover 
inventions representing  small technological  advances, these  being 
important not only to SMEs but also to large firms. 

Low cost:  unlike patents, utility  models  are  granted  without  any 
preliminary  examination  to  establish  novelty  and  inventive  step. 
This  makes  them  cheaper  to  obtain  than  patents.  This  is 
especially  important  to  firms  seeking  to  protect  themselves  as 
comprehensively  as  possible  against  the  danger  of  copying  and 
imitation,  as  they  have  to  apply  for  a  large  number  of  utility 
models.  Cost  is  also  a  decisive  factor  in  the  case  of  inventions 
the commercial  success  of which  is uncertain.  This  is  especially 
true  in  the  case  of  SMEs,  which  tend  not  to  have  enough 
information  on markets to be able to gauge the  sales prospects  of 
new products, whereas  big  companies  can  make  use  of  tried  and 
tested  planning  and  forecasting  machinery  to  help them  limit  the 
risk of failure. 

Temporary  protection  pending  the  grant  of  a  patent: 
rapid 
registration  means  that  a utility  model  can  be  used  to  bridge  the 
relatively  long  period  which  passes  before  a patent,  involving  as 
it  may  a  preliminary  examination,  is  granted,  always  supposing 
that  the 
invention  qualifies  for  both  forms  of  protection. 
Temporary  protection  is  useful  mainly  in  countries  where  a 
comprehensive  examination  is  carried  out  in  order  to  establish 
novelty  and  inventive  step  before  a  patent  is  granted  and  where 
the procedure is therefore  fairly  long. 

12 

2. 

The significance  of utility models compared with patents 

30. 

The  significance  of  national  systems  of  protection  by  utility  model  as 
compared  with  protection  by  patent  depends  primarily  on  the  way  the 
system  is designed.  A comparison  of figures  for  applications  for  national 
patents  (not registered  with the European Patent  Office),  European  patents 
and utility models in four Member States of the Community  for the period 
1987-91, except  in the case of Italy  where the only  figures  available  were 
those  for  the  period  1987-89  concerning  applications  for  national  patents 
and  utility  models  (see table below), shows that,  in those  countries  where 
the  inventive  step  required  for  a  utility  model  is  smaller  than  what  is 
needed  for  a  patent  (e.g.  Germany,  Italy  and  Spain),  the  number  of 
applications  for  utility  model  protection  is  greater  than  in  those  countries 
where the  inventive  step requirement  is the  same  as that  for  a patent  (e.g. 
France). 

Applications 
national patents 

for 

Applications 
European patents 

for 

Applications  for 
utility  models 

Number of 
applications  for 
patents/utility 
models  by  country 
selected 

Germany 

Spain 

France 

Italy 

88 271 

7 306 

31 209 

10 369 

55 672 

1 017 

22 350 

9 927 

61 057 

17 260 

1 771 

10 890 

(Source:  European  Patent Office,  Epidos/Inpadoc, position  at 9.7.1993;  Ifo patent 
Institute  Calculations) 

statistics;  and  Ifo 

31.  This  state  of  affairs  is  due  to  the  fact  that,  in  the  systems  where  the 
inventive  step  looked  for  is  smaller,  the  requirements  which  must  be 
satisfied  in order to qualify  for protection are lower.  Each of the two types 
of right therefore  has its own raison d'être. 

32.  Utility  model  systems  with  the  same  requirements  as  patents  have  less 
appeal  because  they  are  in  competition  with  patents,  which  many 
applicants prefer because of their greater security. 

3. The  significance  of  utility  model  protection  by  reference  to  the  size  of  the 

firm or industry 

33.  Utility  model  protection  is not  equally  important  to  all  firms:  it  depends 

where the 

13 

firm's  interests  lie. A  study  carried  out  in  Germany,6  but  whose  findings 
are  applicable  to  all  Member States  of  the  Community,  has  shown  that, 
while  large  firms  with  a  turnover  in  excess  of  ECU  1.25  billion  are 
interested  in the  utility  model,  there  is  higher  demand  for  utility  models 
among  firms  with  an  annual  turnover  of  less  than  ECU 5 million.  The 
interest  shown by  SMEs7  is due  primarily  to the  savings  in terms  of  cost, 
time and  administration. 

34.  Owing to their limited financial  and human resources, such  firms'  research 
and development  activities  often  result  in technical  inventions  involving  a 
small  inventive  step which do not  necessarily  satisfy  the requirements  for 
patent protection.  More often  than  not the inventions  amount to  technical 
improvements  which, by their number  and  interaction,  have just  as big an 
impact  as  inventions  proper  on  the  technology  used  in  the  sector 
concerned. 

35.  According to studies8 carried out on the basis of utility model  applications 
in  the  Community,  the  utility  model  is  used  in  a  number  of  industrial 
sectors in which there is a permanent need for innovation, especially  in the 
form  of  minor technical inventions.  The  main  sectors  concerned  are 
mechanical  engineering,  electrical  engineering,  precision  instruments  and 
optics and the automotive  industry. 

B.  ENHANCING  THE  COMPETIVENESS  OF  FIRMS  AND  PROMOTING 

RESEARCH AND DEVELOPMENT 

1. 

The utility model and the competitiveness of firms 

36.  Clearly,  a  sustained  inventive  activity  places  firms  at  an  advantage 
technologically  and  is an  important  factor  from  the point  of view  of  their 
competitiveness.  For a number of years now, the competitiveness  of firms 
has been at the forefront  of European policy.  The capacity to innovate as a 
catalyst of competitiveness  has 

Study  of the  problems  of the German  patent  system  in relation  to the  innovative  activities of  industry, 
carried  out  in  1989 by the Ifo  Institute for the Federal  Ministry of Economic  Affairs. 

Commission  Recommendation  No  96/280/EC  of 3 April  1996 concerning  the  definition  of small  and 
medium-sized  enterprises  defines  SMEs  as  being  enterprises  which  have  fewer  than  250 employees 
and  have  either  an annual turnover  not exceeding  ECU 40 million  or an annual  balance-sheet  total  not 
exceeding  ECU 27 million,  and  which  are  not  owned  as  to  25% or  more  of  the  capital  or  the  voting 
rights  by one  enterprise  or jointly  by several  enterprises  falling  outside the definition  of an  SME  or a 
small enterprise  (OJ No L  107, 30 April  1996). 

European  Patent  Office,  Vienna  Sub-office,  position  at  8 January  1993,  and  survey  of  firms  in 
Denmark, AIPPI  Yearbook  1986, 1-4. 

14 

formed  an  integral  part  of  European  industrial  policy  since  the-early 
1990s.9 

37.  Looked  at from  this point of view, owing to the features  which  distinguish 
it  from  the  patent,  such  as the  speed  and  simplicity  of  filing  applications 
for  protection,  the  utility  model 
instrument  of 
competitiveness  at  the  service  of  firms,  in  particular  SMEs,  helping  to 
safeguard  or improve their market position and facilitate  the economic and 
commercial exploitation of technical inventions. 

independent 

is  an 

38.  The  vast  majority  of  industrial  firms  and  independent  inventors  have 
indicated,  in  response  to  a  survey  carried  out  in  a  number  of  selected 
Member  States  as  part  of  the  above-mentioned  general  survey  by  the 
Ifo Institute,  that,  among  the  positive  effects  of  the  utility  model,  an 
improved  market  position  clearly  occupies  pride  of  place  irrespective  of 
company  size.  Business  people  are  aware  that  they  can  hold  on  to  a 
competitive  lead  only  if  they  are  able  to  keep  their  competitors  from 
copying  or  imitating  them  for  a  certain  time  through  effective  legal 
protection measures such as the utility model. 

Through  their  innovations  in products  and processes, they  seek to  display 
originality  and  to  distance  themselves  from  the  competition,  so  that 
customers  develop a positive  image of their technological  capability.  The 
protection  of  inventions  by  utility  model  may  thus  help  to  strengthen  the 
competitive position of European businesses in the world  market. 

2. 

Innovation 

39. 

Innovation,10  in the  sense of a number  of technical  improvements,  is vital 
to  industrial  enterprises.  Firms  must  constantly  improve  or  renew  their 
products  if they  are to  keep  or  increase  market  shares.  The  development 
of  new  products  improves  firms'  competitiveness  regardless  of  the 
industrial  sector  concerned.  The  innovative  activity  of  the  European 
Community  is not  at  present  exploited  sufficiently  compared  with  that  of 
its  main  trading  partners,  the  United States  and  Japan.  In  the  European 
Community,  the  share  of  GDP  devoted  to  research,  industry's  research 
expenditure, 

-

9 

See  e.g.  Commission  Communication 
16 November  1990 on  industrial  policy, document COM(90) 556  final. 

the  Council  and 

to 

the  European  Parliament  of 

10  See the Commission's  Green  Paper on  innovation, document COM(95) 688  final. 

15 

research  expenditure  per  head  of  population,  and  the  total number  of 
research workers  compared  with  the  active  population  are  lower  than  in 
Japan and the US. 

The  protection  of  inventions  by  utility  model  is  a  significant  means  of 
promoting  technical  innovation  within  European  firms.  As  the  European 
Parliament has stated:11  "Legal  protection of industrial  property  promotes 
innovative  activity  in the EU.  It is important to ease the way  from  idea to 
product". 

40.  While  large  firms  do  not  consider  that  inventive  activities  can  be 
developed  much  further  beyond  the  mere  renewal  of  products  and  that 
product  life  cycles  cannot  be  shortened,  SMEs,  on  the  other  hand, 
acknowledge that they must step up their inventive activities if they are to 
face  up  to  the  stiffer  competition.  Utility  model  protection  therefore 
seems  suited  to  small  technological  advances  with  a  relatively  short 
lifetime  which  are  likely  to  develop  in  future.  SMEs,  which  account  for 
more than 99% of all European firms, 66% of all jobs and 65% of turnover 
in the European Community, will be the first to  benefit. 

11  Report  on  the  Green  Paper  presented  by  the  Commission  on  the  protection  of  utility  models  in  the 

single market, document  EP 214.304/def. of 26 June  1996. 

16 

PART THREE: THE INTERESTS AT STAKE AND  FORESEEABLE 

TRENDS 

A. 

THE POSITION  WITH  REGARD  TO INDUSTRIAL  COMPANIES 
AND INDEPENDENT  INVENTORS 

41. 

In  a  survey  carried  out  in  1993  in  five  Member  States  of  the 
showed 
Community,  companies  and 
considerable  interest  in a specific  form  of protection  for  their  minor 
technical  inventions  supplementing  patent  protection  but  subject  to 
less  stringent  conditions,  involving  no preliminary  examination  and 
being less costly and of shorter duration (see table below). 

independent 

inventors 

Interest in utility model protection 

(as a percentage of the replies received) 

Germany 

Spain 

France 

Italy 

United 
Kingdom 

41 

22 

26 

32 

mPlPr^ *%£jjif|: 
Up 
to 
employees 

100 

41 

- 

101 
employees 

500 

48 

501  -  1  000 
employees 

1  000 

Over 
employees 

29 

27 

All classes 

39 

25 

51 

42 

25 

34 

28 

37 

32 

32 

12 

13 

19 

34 

12 

17 

24 

38 

20 

22 

13 

fei&ESK 
Z&t&WiJMgV» 

13 

10 

(Source: 
calculations,  1994) 

Ifo  Institute  survey  in  selected  EU  countries  in  1993;  European  Commission 

17 

42. 

It is clear from  this table that a fairly  strong need  is felt  by  firms  for 
protection of this type. On average 39% of the firms questioned  said 
they  would  be  very  interested,  32% said  they  would  be  moderately 
interested,  and only  20% would  have  little  interest.  The  breakdown 
by  size  of  firm  shows  that  interest  in  such  protection  is  greatest 
among  firms  with  up to  500  employees,  while  interest  is  somewhat 
lower among companies with over  1  000 employees. 

43.  The  survey  also  shows that,  regardless  of what  sales  they  may  have 
at present in the single market, industrial companies and  independent 
inveiltors  want  at  least  to  keep  open  the  option  of  expanding  their 
market  in the future,  and  are to  a large  extent  interested  in  EU-wide 
utility model protection for that reason. 

B. 

CHANGES  IN  PRODUCT  LIFE  CYCLES,  TIMES  TO  MARKET 
AND THE LIFETIMES OF INVENTIONS 

44.  Major  changes  are  likely  to occur  in the near  future,  making  it  even 
more  necessary  to  seek  flexible  forms  of protection  such  as  that  by 
utility model.  Product  life cycles are shrinking worldwide, that  is to 
say  time-lags  between  invention,  marketing  and  the  next  generation 
of  products  are  growing  shorter.  This  shortening  of  product  life 
cycles  creates  a  need  for  rapidly  obtainable  protection; 
it  is  less 
important  that  the  protection  obtained  should  last  for  a  long  time, 
except in a number of industries such as pharmaceuticals. 

itself  in  a  special  way. 
In  Japan,  this  phenomenon  manifests 
According  to  a  survey  by  the  Japan  Institute  of  Intellectual 
Property,12  the marketing  of articles  protected  by  utility  model  very 
often  begins  in the interval  between  application  and  publication.  In 
the  United  States,  according  to  a  survey  by  the  US Patent  Office,13 
there  is a tendency  for new inventions to be developed  more  rapidly 
in  all 
and 
pharmaceuticals.  The  average  lifetime  of  an  invention  today  is  not 
more than six years. 

chemicals 

industries 

food, 

apart 

from 

fuel, 

45. 

If  one  tries  to  bring  these  shorter  product  life  cycles  and  invention 
lifetimes  into  relation  with  the  industries  which  make  most  use  of 
utility  model  protection  (e.g.  mechanical  engineering,  erectrical 
engineering and the automotive  industry), one finds a striking degree 
of correlation.  It takes on average four years to obtain a 

12  Questionnaire  relating  to  Legal  Protection  of  the  Fruits  of  R&D,  Japan  Institute  of  Intellectual 

Property, 1991. 

13  Business  Week, Science  & Technology, 3 August  1992, CHI Research  Inc. 

18 

European patent.  If we compare this figure with the average  lifetime 
of inventions, we can conclude that demand  for  a form  of protection 
which  can be obtained  quickly  for  short-lived  inventions,  separately 
from  patent protection, will increase.  The utility  model provides the 
best way of meeting this demand. 

C. 

CHANGES IN SPENDING  ON RESEARCH AND  DEVELOPMENT 

46.  Research  and  development  ("R&D")  has  become  a  focus  of 
economic  research. 
However,  a  survey  of  companies  and 
independent  inventors  carried  out  as  part  of  the  above-mentioned 
general  survey  by  the  Ifo  Institute  suggests  that,  especially  in  the 
case of high-tech  industries  and  big  companies, R&D  spending  will 
increase  little  in  future.  Thus  in  mechanical  engineering,  vehicles 
and  accessories,  electrical  engineering,  precision  instruments  and 
optics  and  medical  engineering,  between  50%  and  58%  of 
respondents  felt  that  the  level  of  R&D  spending  would  remain  the 
same.  Given the  intensive  efforts  to cut  costs  currently  being  made 
in  all  branches  of  industry,  a  stable  level  of  R&D  spending  is 
nevertheless to be welcomed. 

the  packaging  and  materials  handling 

47.  There is, however,  scope for  increasing  R&D spending,  for  example 
in 
the 
wood products  and  furniture  industry,  and  among  manufacturers  of 
domestic appliances.  The inventions which  will be made  as a result 
will  require  suitable  protection.  This  trend  suggests  that  utility 
model protection will indeed grow more important  in  future. 

industry, 

in 

19 

PART FOUR:  THE ACTION  PROPOSED 

A. 

THE UTILITY MODEL IN PRACTICE 

48. 

49. 

A utility model  is a registered  right which confers  exclusive protection  for 
It  differs  from  a  design  right  in  that  the  latter 
a  technical  invention. 
protects the external form of an object  and not the underlying invention.  It 
resembles  a  patent  in  that  the  invention  must  be  new - it  must  possess 
"novelty" - and must display  a measure of inventive  achievement - it must 
involve  an  "inventive  step",  though  generally  the  level  of  inventiveness 
required is not as great as it is in the case of patents.  Unlike patents, utility 
models are granted  without a preliminary  examination  to establish  novelty 
and  inventive  step.  This  means  that  protection  can  be  obtained  more 
rapidly and cheaply, but that the protection conferred  is less secure. 

However,  as  the  European  Parliament  has  stated,14  "the 
imperfect 
in  utility  model  protection  should  not  be 
legal certainty 
considered  as an obstacle to  its introduction  in Community  law given  that 
the advantages of this protection outweigh its inconveniences". 

inherent 

Utility model protection  is at present entirely  a matter of domestic  law.  In 
three  Member States  (the  United Kingdom,  Luxembourg  and  Sweden)  no 
form  of utility  model  protection  exists.  The  other  Member  States,  where 
such  protection  does  exist,  have  different  systems,  which  call  the  rights 
they  confer  by  a  variety  of  names:  "utility  model",  "utility  certificate", 
"six-year  patent",  "short-term  patent",  "petty  patent",  "utility  model 
certificate",  etc.  As one might  imagine  from  the range  of terms  used,  the 
systems  diverge  widely,  but  they  all  provide  protection  for  technical 
inventions  alongside  what  is available  under  patent  law.  All  the  schemes 
in existence are intended to boost the innovative capacity of companies. 

50.  These  differences  between  national  systems  are  inconsistent  with  the 
objectives  of  free  movement  of  goods  and  undistorted  competition  in  the 
single  market,  and  they  discourage  innovative  activity  in  European 
companies.  A  high  level  of  innovative  activity  gives  a  business  a 
technological 
its 
competitiveness. 

advantage,  which 

important 

is  an 

factor 

in 

14  Report  on  the  Green  Paper  presented  by  the  Commission  on  the  protection  of  utility  models  in  the 

single market, document  EP 214.304/def. of 26 June  1996. 

20 

51. 

52. 

53. 

54. 

-21 -

Interest  in  the  protection  of  inventions  by  utility  model  has  increased  in 
the  Community  in  recent  years.  A  system  of  protection  was  thus 
introduced  recently  in  five  Member States  of  the  Community  (Ireland, 
Denmark,  Greece,  Austria  and  Finland), with  the  result  that  there  is  now 
such a system in twelve of the fifteen  Member States. 

This proposal  for a Directive seeks to harmonise the basic rules  governing 
inter alia  the  protectable  matter,  the  requirements  for  protectability,  and 
the  extent  and  duration  of protection;  it  does  not  introduce  any  single  set 
of filing arrangements  or provide  for  the setting-up  of a body  with  special 
It  does 
responsibility  for  granting  utility  models  at  Community  level. 
mean,  however,  that  those  Member States  which  do  not  yet  have  any 
system  of  utility  model  protection  will  have  to  introduce  one  into  their 
domestic  law. 

The requirement  that an invention must be embodied  in  three-dimensional 
form,  such  as  is  to  be  found  in  some  national  protection  systems  (e.g. 
Finland,  Greece,  Italy,  Portugal  and  Spain),  has  not  been  included  as  it 
does  not  correspond  to  present  needs.  This  makes  it  possible  to  bring 
processes  within  the  scope of the proposal.  Biological  material,  chemical 
or pharmaceutical  substances and inventions involving computer  programs 
are expressly excluded from  protection by the Directive itself. 

As  a result  of  the  harmonisation,  an  applicant  for  a  utility  model  will  be 
sure  to  find  an  equivalent  property  right  in  every  Member State  and  will 
no  longer  be  confronted  with  a  multitude  of  different  regulations.  If  he 
seeks protection  in another Member  State, he will already  be familiar  with 
The 
the  basic  requirements  for  obtaining  it  and  with  its  scope. 
arrangements  will  help  to  reduce  costs  and  simplify  applications  for 
protection  in other Member States, and in so doing stimulate  innovation. 

list  of  exclusions 

this  proposal  contains  a 

In order to limit the lack of legal certainty  due to the granting  of too many 
rights  without  any  preliminary  examination  to  establish  novelty  and 
inventive  step, 
from 
inter alia  biological  material,  chemical  or 
protectability  comprising 
pharmaceutical  substances  or processes  and computer programs.  It  places 
a  limit  on the  duration  of protection  and  provides  for  the  drawing-Tip  of a 
search  report  at  the  applicant's  request  or,  where  a  Member  State  so 
provides,  in  the  event  of  legal  proceedings  being  brought  to  enforce  the 
rights  conferred  by  the  utility  model.  It  does  not  rule  out  the  possibility 
for  Member  States  to  provide  for  the  payment  of  a  larger  fee  for  renewal 
of the property  right. 

21 

B. 

LEGAL BASIS 

55.  The maintenance of different  national  systems of utility model protection  in 
the  Community  is  likely  to  hinder  the  free  movement  of  goods  and  distort 
competition  in the single market.  Approximation  of the basic national  rules 
governing  utility  models  will  help  to  make  the  functioning  of  the  single 
market  more  transparent,  encourage  innovation  and  technical  progress  at 
Community 
the  movement  of  goods  between 
Member States. 

level  and  promote 

56.  A  harmonisation  of  national  laws  also  reflects  the  interest  shown  by  the 
sectors  of  business  and  industry  concerned,  which  are  largely  in  favour  of 
harmonising  national  laws  on  utility  model  protection  by  means  of  a 
directive  and  introducing  a  system  of  protection  in  those  Member  States 
where one does not yet exist. 

57.  The  Commission  proposes  that  Article  100a  of  the  EC Treaty  be  taken  as 
the  legal  basis  for  this  proposal.  This  was  done  in  the  case  of  other 
directives  aligning  national  laws  on  intellectual  and  industrial  property.15 
This  choice of  legal  basis has been  sanctioned  by the  Court  of  Justice  on a 
number of occasions.16 

1?  See  e.g.  Directive  89/104/EEC  approximating  the  laws  of  the  Member  States  relating  to  trade  marks 
(OJ No  L 40,  11.2.1989,  p.  1);  Directive  93/98/EEC  harmonising  the  term  of  protection  of  copyright 
and  certain  related  rights  (OJ No  L 290,  24.11.1993,  p. 9);  and  Directive  96/9/EC  on  the  legal 
protection  of databases  (OJ  No  L 77, 27.3.1996,  p. 20). 

16  See  Opinion  1/94,  Competence  of  the  Community  to  conclude  international  agreements  concerning 
services  and  the  protection  of  intellectual  property  [15.11.1994]  ECR  1-5267,  and  Case  C-350/92 
Spain  v Council  [13.07.1995]  ECR 1-1985. 

22 

PART FIVE:  EXAMINATION  OF THE PROVISIONS 

58.  The  various  national  systems  of  utility  model  protection  include  provisions 
based  on  national  patent  law  which  correspond  to  the  provisions  of  the 
European  Patent  Convention.  For  the  sake  of  consistency,  a  number  of 
articles in this proposal are also based on the corresponding provisions of that 
Convention. 

Article 1 

59.  The  concept  of  utility  model  must  be  clearly  defined  by  reference  to  the 
various  concepts  employed  in  the  Member States. 
It  should  be  noted, 
however,  that the  Belgian  and  Dutch terms used  are not the  official  ones  but 
are taken  from  draft  legislation.  The definition  will enable  Member States to 
know precisely which domestic provisions are affected  by this Directive. 

Article 2 

60.  This  article  determines 

the  proposal's object.  The  proposal  seeks 

to 
approximate  Member States'  laws, regulations  and  administrative  provisions 
on  utility  model  protection.  Those  Member States  which  have  no  utility 
model  system  will  accordingly  have  to  introduce  one  along  the  lines  of  this 
Directive. 

Article 3 

61.  This  article  specifies  which  inventions  are  protectable  by  utility  model. 
Protectable  inventions  are  inventions  which  are  susceptible  of  industrial 
application,  which  are  new  and  which  involve  an  inventive  step.  The 
following  are not regarded  as inventions:  discoveries,  scientific  theories  and 
mathematical  methods;  aesthetic  creations;  schemes, rules  and  methods  for 
performing  mental  acts, playing  games  or doing  business;  and  presentations 
of  information. 

Article 4 

62.  This  article  sets  out  the  exclusions  from  protectability  by  utility  model. 
Besides  the  traditional  exception  concerning  public  policy  and  morality,  a 
number  of  other  things  are  excluded,  namely: 
inventions  relating  to 
biological  matter; 
inventions  relating  to  chemical  or  pharmaceutical 
substances  or processes;  and  inventions  involving computer  programs.  The 
exclusion  of  biological,  chemical  and  pharmaceutical  inventions  is  justified 
by  the  fact  that  such  matters,  substances  or  processes  call  for  lengthy 
preparation  before  being  placed  on the market  and  should  therefore  be  given 
patent  protection,  which  lasts  longer  than  utility  model  protection.  What  is 
more,  these  sectors  are  complex  ones  in  which  property  rights  involving  no 
examination as to novelty or inventive step are out of place.  The exclusion of 

23 

inventions  involving computer  programs  is  due  to  the  fact 
that  such 
inventions  are  currently  protected  either  by  patent  (inventions  relating  to 
software)  or by copyright (computer programs as such). 

Article 5 

63.  This article explains what is meant by novelty.  An invention is considered  to 
be  new  if  it does not  form  part  of the  state  of the  art.  In keeping  with  most 
national  utility  model  systems,  the  novelty  of  an  invention  is  to  be 
determined by reference  to the international  state of the art (absolute novelty). 
The  state  of  the  art  comprises  everything  made  available  to  the  public  by 
means of a written or oral description, by use, or in any other way, before  the 
date of filing of the utility  model.  Additionally,  the content  of  utility  model 
applications  as filed, of  which  the  dates  of  filing  are prior  to  the  date  of  the 
application  for  the  utility  model  concerned  and  which  were  published  on  or 
after that date, are considered as comprised in the state of the art. 

Article 6 

the  applicant 

64.  This  article  explains  what  is meant by  inventive  step for  the purposes  of this 
Directive.  Here, an invention  is considered  as involving  an inventive  step  if, 
in  the  utility  model  application, 
indicates  clearly  and 
convincingly  that,  compared  with  the  state  of  the  art,  it  exhibits  either 
particular effectiveness  in terms of,  for example, ease of application  or use, or 
a  practical  or  industrial  advantage.  This  wording  is  designed  to  cover  the 
wide  variety  of  situations  which  are  provided  for  in  the  various  national 
systems  and  are  encountered  in  practice  and  which,  as  a  rule,  involve  a 
different  inventive  step  from  that  which  is  required  in  the  case  of  a  patent. 
Examples  are  an  invention  making  it  possible  to  solve  a  technical  problem 
and  an  invention  relating  to  the  effectiveness  or  ease  of  use  of  a product  in 
that  it  increases  the  product's  usefulness  by  making  it  more  effective  and 
easier to use. 

Article 7 

65.  This article explains  what  is meant by an invention  "susceptible  of  industrial 
application".  An invention  is so considered  if  it can be made  or used  in any 
kind  of  industry,  including  agriculture.  Surgical  or  therapeutic  treatment 
procedures  applicable  to  the  human  body  or  the  bodies  of  animais  and 
diagnostic procedures  which are carried out on the human body  or the  bodies 
of  animals  are  not  considered  to  be  inventions  susceptible  of  industrial 
application. 

24 

Article 8 

66.  Paragraph  1 of this article  specifies  the requirements  which  must  be  satisfied 
by a utility model application.  Paragraph 2 stipulates that the application  will 
be subject  to the payment of a filing  fee and, where appropriate, a search  fee. 
The latter is payable only where a search report is drawn up at the  applicant's 
request.  Member States  remain  free  to  provide  that  the  fees  payable  at  the 
end  of  the  first  period  of  validity  should  be  sufficiently  high  to  dissuade 
utility  model proprietors from  retaining their rights where these are no  longer 
of any commercial value. 

Article 9 

67.  This  article  concerns  the  date  of  filing  of  a  utility  model  application.  The 
date  of  filing  of the  application  is the date  on which  documents  filed  by  the 
applicant  contain  an  indication  that  a  utility  model  is  sought,  information 
identifying  the applicant, and a description and one or more claims. 

Article 10 

68.  This  article  provides  that  the  utility  model  application  must  designate  the 
inventor.  If the  applicant  is  not  the  inventor  or  is  not  the  sole  inventor,  the 
designation must  contain  a statement  indicating  the  origin  of the right  to  the 
utility  model. 

Article 11 

69.  This  article on unity  of  invention  stipulates that  the utility  model  application 
must  relate  to  one  invention  only  or to  a group  of  inventions  so  linked  as to 
form  a single general inventive concept. 

Article 12 

70.  This  article  on  disclosure  of  the  invention  provides  that  the  utility  model 
application  must  disclose  the  invention  in  a  manner  sufficiently  clear  and 
complete for it to be carried out by a person skilled in the art. 

Article 13 

71.  This  article  stipulates  that  the  claims  must  define  the  matter  for  which 
protection  is sought and that they must be clear and concise and be  supported 
by  the  description.  It  stipulates,  further,  that  the  number  of  claims  must  be 
limited to that which is 

25 

strictly  necessary  having  regard  to  the  nature  of  the  invention.  " This 
requirement  makes  it  possible  to  limit  the  extent  of  the  protection  so  as  to 
compensate for the lack of any preliminary  examination. 

Article 14 

72.  This article on the abstract provides that the abstract is to serve merely for  use 
as  technical  information  and  that  it  may  not  be  taken  into  account  for  any 
other  purpose  such  as,  for  example,  interpreting  the  scope  of  the  protection 
sought. 

Article 15 

73.  This  article  on  examination  as  to  formal  requirements  provides  that  the 
examination must be confined  to the formal  requirements of Articles 8 and  10 
of  this  Directive  and  that  it  may  not  cover  the  novelty,  inventive  step  or 
inçlustrial application of an invention. 

Article 16 

74.  This  article  on  the  search  report  stipulates  that  the  search  report  is  to  be 
drawn  up only at the request  of the applicant  and that the task of drawing  up 
the  report  may  be  entrusted  to  any  authority  deertied  competent  by  the 
competent  authority  with  which 
filed. 
Member  States may provide that a search report is compulsory  in the event of 
legal  proceedings  being  brought  to enforce  the rights  conferred  by the  utility 
model. 

the  application  has  been 

Article 17 

75.  This  article  on the priority  right  is based  on paragraphs A and  C of Article 4 
of the  Paris Convention.  Any person who has duly filed an application  for  a 
utility  model  or  a  patent  in  one  of  the  Member States,  such  State  being  a 
party  to  the  Paris Convention,  is  to  enjoy,  for  the  purpose  of  filing  a  utility 
model  application  in  the  other  Member States,  a  right  of  priority  during  a 
period of  12 months from the date of filing of the first application. 

Article 18 

76.  This article seeks to permit a person who has filed a patent application,  while 
the  procedure  is  under  way  and  for  a  limited  period,  to  file  in  the  same 
Member  State,  in  addition  to  or  in  lieu  of  his  patent  application,  an 
application  for  a  utility  model.  This  option  must,  of  course,  be  ruled  out 
where  priority  has  been  claimed  for  the  patent  application.  The  general 
provisions concerning the right of priority are applicable here. 

26 

Article  19 

77.  Unlike  in  the  case  of  patents,  where  the  term  of  protection  is  20  years,  the 
duration of the utility model  is fixed at six years from  the date of filing of the 
application.  It may  be renewed  for  two  successive  periods  of two  years,  but 
may not exceed  a maximum period  of ten years from  the date of filing of the 
application.  The  difference  compared  with  the  patent  is  marked  in  view  of 
level  of 
the  short  lifetime  of  technical 
inventiveness  involved. 

inventions  and  the  different 

Article 20 

78.  Paragraphs  1 and  2  concern  the  rights  conferred  by  the  utility  model  where 
the  protected  matter  is  a product  or  a process.  The  provisions  are  based  on 
Article 28(1)  of  the  Agreement  on  Trade-related  Aspects  of  Intellectual 
Property  Rights  (TRIPs)  concluded  under  the  auspices  of  the  World  Trade 
Organisation.  Paragraph 3  concerns  limitation  of  the  effects  of  the  utility 
model  and  is  based  on  the  relevant  provisions  of  points (a)  and  (b)  of 
Article 27  of  the  Community  Patent  Convention.  Paragraph 4,  which  is 
based  on Article 28(2)  of  the  TRIPs  Agreement,  provides  that  the  proprietor 
of a utility  model  has the right to assign  it or transfer  it by  succession  and  to 
conclude  licensing  agreements.  Paragraph 5  is  based  on  Article 30  of  the 
TRIPs  Agreement. 
It  stipulates  that  Member States  may  provide  limited 
exceptions  to the exclusive rights conferred  by a utility  model, provided  that 
such  exceptions  do  not  unreasonably  conflict  with  a  normal  exploitation  of 
the utility model and do not unreasonably  prejudice  the legitimate  interests of 
the  proprietor  of  the  utility  model,  taking  account  of  the  interests  of  third 
parties.  Lastly,  paragraph 6 provides  that,  where  the  law of  a Member  State 
allows  for  use  other  than  that  authorised  under  paragraph  5  without  the 
authorisation  of  the  right-holder  (e.g.  in  the  event  of  compulsory  licences), 
the  provisions  applicable  to  patents  for  similar  use  must  be  complied  with. 
The  aim  is  to  render  the  conditions  laid  down  in  Article 31  of  the  TRIPs 
Agreement applicable by analogy to utility models. 

Article 21 

79.  This  article  on  Community  exhaustion  of rights  incorporates,  in paragraph  1, 
the  principle  set  forth  in  Article 28  of  the  Community  Patent  Convention. 
The  rights  conferred  by  a  utility  model  do  not  extend  to  acts  concerning  a 
product  covered  by  that  utility  model  which  are  done  after  that  product  has 
been  put  on  the  market  in  the  Community  by  the  right-holder  or  with  his 
consent.  By  marketing  the  protected  product  in  a  Member  State,  the 
right-holder  has  been  able  to  benefit  from  the  economic  conditions  which 
accompany  the  exclusivity  he  enjoys,  and  he  has  thus  exhausted  his  parallel 
rights to protection in the 

27 

other  Member States.  To  avoid  any  ambiguity,  paragraph 2  states  trrat  the 
principle  of international  exhaustion  is ruled  out, which means that the  rights 
conferred  by  the  utility  model  do  extend  to  acts  concerning  a  product 
covered  by  that  utility model  after  that  product  has  been  put  on  the  market 
outside the Community by the right-holder or with his  consent. 

Article 22 

80.  Paragraph  1 of  this  article,  which  is  concerned  with  dual  protection,  allows 
one  and  the  same  invention  to  form  the  subject-matter,  simultaneously  or 
successively,  of  a  patent  application  and  a  utility  model  application.  Such 
dual  protection  is  worthwhile  where  the  user  wishes  to  obtain  temporary 
protection  pending  the  grant  of  a  patent,  where  he  is  not  sure  that  the 
inventive  step is sufficient  for  a patent,  or where he wishes  to be  particularly 
well  protected  by two  different  systems  for  the same  invention.  So as not  to 
place  the  right-holder  in too  strong  a position,  however,  Member States  may 
provide  that  a  utility  model  which  has  been  granted  is  deemed  to  be 
ineffective  where a patent relating to the same invention has been granted and 
published  (paragraph 2).  Where  they  avail  themselves  of  this  opportunity, 
the  Member States  concerned  must  at  least  take  appropriate  measures  to 
ensure  that,  where  his  rights  are  infringed,  the  right-holder  cannot  initiate 
successive  proceedings  under  both  sets  of  protection  arrangements 
(paragraph  3).  This  provision  is intended  to  prevent  successive  proceedings 
from  being  brought  by  a  right-holder  who,  having  failed  to  win  his  patent 
action, might  seek to bring a fresh  action on the  strength of the utility  model, 
or vice  versa. 

Article 23 

81.  This article on lapse of the utility model is based on the relevant provisions of 
Article  50 of the Community  Patent  Convention.  The  utility  model  lapses at 
the end  of the period  prescribed,  if its proprietor  surrenders  it, or if the filing 
fee and any search fee have not been paid in due time. 

Article 24 

82.  This article on the grounds for  revocation of the utility  model  is based-on  the 
relevant  provisions  of  Article 56 of  the  Community  Patent  Convention.  An 
application  for  revocation  may  be  filed  only  on  the  following  grounds:  the 
subject-matter  of the  utility  model  is not  protectable;  the  utility  model  does 
not disclose the invention  in a manner sufficiently  clear and complete  for  it to 
be earned out by the person skilled  in the art;  the subject-matter  of the utility 
model  extends  beyond  the  content  of  the  application  as  filed;  and  the 
protection  conferred  has been  extended. 

28 

Article 25 

83.  This  proposal  must  be  transposed  into  national  law  by  31 December  1999. 
Member  States  must  inform  the  Commission  thereof  immediately.  When 
Member  States  adopt  the  necessary  provisions,  these  are  to  contain  a 
reference  to this  Directive  or are to be accompanied  by  such reference  at  the 
time  of  their  official  publication.  Member States  must  communicate  to  the 
Commission the provisions of national law thus adopted. 

Article 26 

84.  This article provides that, in accordance with Article  191(1) of the EC Treaty, 
the  Directive  is to enter  into  force  on  the  twentieth  day  following  that  of  its 
publication in the Official  Journal of the European  Communities. 

Article 27 

85.  This  article  provides  that  the  Directive  is  addressed  to  the  Member States, 
including those which do not have any system of utility model protection. 

29 

Proposal for a 

EUROPEAN PARLIAMENT AND COUNCIL  DIRECTIVE 

approximating the legal arrangements for the protection of inventions by utility model 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN 
UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community  and  in  particular 
Article  100a thereof, 

Having regard to the proposal from the Commission, 

-  Having regard to the opinion of the Economic and Social Committee, 

Acting in accordance with the procedure laid down in Article  189b of the Treaty, 

Whereas  the  Treaty  commits  the  Community  and  Member States  to  creating  the 
conditions  for  Community  industry  to  be  competitive  and  to  promoting  a  better 
technological 
exploitation  of  the  industrial  potential  of  innovation,  research  and 
development policies; 

Whereas  technical  inventions  play  an  important  role  in  that  they  make  available 
improved,  better  quality  products  which  are  particularly  effective  in  terms  of,  for 
example,  ease  of  application  or  use,  or  which  confer  a  practical  or  industrial  advantage 
compared with the state of the art; 

Whereas,  because  of  differences  between  Member States'  utility  model  laws,  an 
invention  may  not  be protected  throughout the Community,  at  least  not  in the  same  way 
or for the same length of time, a state of affairs  which is incompatible  with a transparent, 
obstacle-free  single  market;  whereas  it  is  therefore  necessary,  with  a  view  to  the 
establishment  and  proper 
to  approximate 
Member States'  laws in this area; 

the  single  market, 

functioning  of 

Whereas  it is important  in this context to employ  every possible means of increasing  the 
competitiveness of Community  industry in the field of research and  development; 

Wliereas small and medium-sized firms play a strategic role in relation to innovation  and 
rapid response to market requirements; 

Whereas  there  is  a need  for  placing  at the disposal  of  firms,  and  in particular  small  and 
medium-sized  firms  and  researchers,  an  instrument  which  is  cheap,  rapid  and  easy  to 
evaluate and apply; 

Whereas  utility  model  protection  is  better  suited  than  patent  protection  to  technical 
inventions involving a specific  level of inventiveness; 

30 

Whereas technical  inventions should be suitably protected throughout the  Community; 

Whereas,  in accordance  with  the principle  of  proportionality,  the  approximation  may  be 
limited to those national provisions which have the most direct impact on the  functioning 
of the single market; 

Whereas,  if  the  objectives  of  the  approximation  are  to  be  attained,  the  conditions  for 
obtaining  and  retaining  the  rights  conferred  by  a  registered  utility  model  should  in 
principle be the same in all Member States;  whereas to that end an exhaustive  list of the 
requirements  which  a technical  invention  must  satisfy  if it  is to be protected  by  a  utility 
model must be drawn up; 

Whereas these requirements  are for the most part the same as those for  patent  protection; 
whereas the level of inventiveness required must nevertheless be different  to allow for the 
specific  nature of technical inventions protectable by utility model; 

Whereas utility model protection must be available both to products and to processes; 

Whereas  it  is  necessary  to  exclude  from  utility  model  protection  not  only  those 
inventions  which  are normally  excluded  from  patentability  but also, in order  to meet  the 
needs  of  the  industries  concerned,  inventions  relating  to  chemical  or  pharmaceutical 
substances or processes and inventions involving computer programs; 

Whereas  a  utility  model  application  must  satisfy  requirements  similar  to  those  for 
patents; whereas, however, a utility model application gives rise only to a check to ensure 
that  the  formal  conditions  for  protectability  are  satisfied  without  any  preliminary 
examination 
the 
it  may  form 
subject-matter  of a search report on the state of the art only at the applicant's  request; 

to  establish  novelty  or 

inventive  step;  whereas 

Whereas  it  is essential,  in order to  safeguard  the proper  functioning  of the  single  market 
and  ensure  that  competition  is  not  distorted,  that  registered  utility  models  should 
henceforth  confer  upon their proprietor the same protection  in all Member States and that 
the period of protection should be identical; whereas this period may not exceed  10 years; 

Whereas  the  nature  and  scope  of the  rights  conferred  by  a utility  model  must  be  spelled 
out;  whereas  the  principle  of  Community  exhaustion  of rights  must  apply  in  accordance 
with the case-law of the Court of Justice of the European  Communities, but the  principle 
of international exhaustion must be expressly  excluded; 

Whereas  rules must  also be laid down  on dual protection  by patent  and  by utility  model, 
and on the lapse and revocation of utility models; 

31 

Whereas all Member States of the  Community  are bound  by the Paris Convention for the 
Protection  of  Industrial  Property;  whereas  the  Community  and  all  Member States  are 
bound  by  the  Agreement  on  Trade-related  Aspects  of  Intellectual  Property  Rights 
concluded under the auspices of the  World Trade Organisation; whereas the provisions of 
this Directive must be in complete harmony with those of the Paris Convention and of the 
above-mentioned  Agreement;  whereas  Member States'  other  obligations  stemming  from 
the Convention and the Agreement are not affected  by this Directive, 

HAVE ADOPTED THIS DIRECTIVE: 

CHAPTER ONE 

GENERAL PROVISIONS 

Article 1 

Definitions 

For  the  purposes  of  this  Directive,  "utility  model"  means  the  registered  right  which 
confers  exclusive  protection  for 
in 
Member States by the following names: 

inventions  and  which 

is  known 

technical 

Germany: 

Gebrauchsmuster 

Austria: 

Gebrauchsmuster 

Belgium: 

Brevet de courte durée/Octrooi van korte duur 

Denmark: 

Brugsmodel 

Spain: 

Modelo de utilidad 

Finland: 

Nyttighetsmodellagen 

France: 

Certificat  d'utilité 

Greece: 

niGT07ioir|TiKO U7ioÔ8iyuaxoÇ XP1!crip.oxiTTOC<^ 

Ireland: 

Short-term patent 

~ 

Italy: 

Brevetto per modelli di utilità 

Netherlands:  Zesjarig  octrooi 

Portugal: 

Modelo de utilidade 

32 

Article 2 

Object 

This Directive  seeks to approximate  Member States'  laws, regulations  and  administrative 
provisions on the protection of inventions by utility model. 

CHAPTER II 

SCOPE OF THE UTILITY MODEL 

Article 3 

Protectable  inventions 

1. 

2. 

Utility  models  shall  be  granted  for  any  inventions  which  are  susceptible  of 
industrial application, which are new and which involve an inventive step. 

The following  in particular shall not be regarded as inventions within the meaning 
of paragraph  1: 

(a) 

discoveries, scientific theories and mathematical methods; 

(b) 

aesthetic creations; 

(c) 

schemes, rules and methods for  performing  mental  acts, playing  games or 
doing business; 

(d) 

presentations of  information. 

Article 4 

Exclusions from  protectability 

Utility models shall not be granted in respect  of: 

(a)  inventions  the  exploitation  of which  would  be contrary  to public  policy  or  morality, 
provided  that  the  exploitation  shall  not be deemed to be  so contrary  merely  because 
it is prohibited  by law or regulation in some or all Member States; 

~ 

(b)  inventions relating to biological  material; 

(c)  inventions relating to chemical or pharmaceutical  substances or processes; 

(d)  inventions  involving computer programs. 

33 

Article 5 

Novelty 

1.  An invention  shall  be considered  to be new if it does not  form  part of the  state  of the 
art. 

2.  The  state of the  art shall  be held  to comprise  everything  made available  to the  public 
by means  of a written or oral description,  by use, or in any other way, before  the date  of 
filing  of the utility model  application. 

3.  Additionally,  the  content  of utility  model  applications  as  filed,  of  which  the  dates  of 
filing are prior to the date referred  to in paragraph 2 and which were published  on or  after 
that date, shall be considered  as comprised in the state of the art. 

Article 6 

Inventive step 

For  the  purposes  of  this  Directive,  an  invention  shall  be  considered  as  involving  an 
inventive  step  if,  in  the  utility  model  application,  the  applicant  indicates  clearly  and 
convincingly that, compared with the state of the art, it exhibits either 

(a) 

particular effectiveness  in terms of,  for e\ample, ease of application or use;  or 

(b) 

a practical or industrial advantage. 

Article 7 

Industrial  application 

1.  An  invention  shall  be  considered  as  susceptible  of  industrial  application  if  it  can  be 
made or used in any kind of industry, including agriculture. 

2.  Surgical  or  therapeutic  treatment  procedures  applicable  to  the  human  body  or  to  the 
bodies of animals  and diagnostic  procedures which are carried  out on the human  body  or 
the  bodies  of  animals  shall  not  be  considered  to  be  inventions  susceptible  of  industrial 
application within the meaning of paragraph  1. 

_ 

CHAPTER III 

UTILITY MODEL  APPLICATIONS 

Article 8 

Requirements of the application 

1.  A utility model  application  shall  contain: 

34 

(a) 

a request for the grant of a utility model; 

(b) 

a description of the invention; 

(c) 

one or more claims; 

(d) 

any drawings referred  to in the description or the claims; 

(e) 

an abstract. 

2.  A utility  model  application  shall  be  subject  to tlie payment  of a filing fee  and,  where 
appropriate, a search fee. 

Article 9 

Date of filing 

The  date  of  filing  of  a  utility  model  application  shall  be  the  date  on  which  documents 
filed by the applicant  contain: 

(a) 

an indication that a utility model is sought; 

(b) 

information  identifying  the applicant; 

(c) 

a description and one or more claims. 

Article 10 

Designation of the inventor 

The  utility  model  application  shall  designate  the  inventor. 
If  the  applicant  is  not  the 
inventor  or  is not  the  sole  inventor,  the  designation  shall  contain  a  statement  indicating 
the origin of the right to the utility model. 

Article 11 

Unity of invention 

The utility model application shall relate to one invention only or to a group of inventions 
so linked as to form  a single general inventive concept. 

Article 12 

Disclosure of the invention 

The  utility  model  application  must  disclose  the  invention  in  a  manner  sufficiently  clear 
and complete for  it to be carried out by a person skilled in the art. 

35 

Article 13 

The claims 

1.  The claims shall define  the matter for which protection  is sought.  They  shall be clear 
and concise and be supported by the description. 

2.  The number of claims shall be limited to that which is strictly necessary having regard 
to the nature of the invention. 

Article 14 

The  abstract 

The abstract shall merely serve for use as technical  information.  It may not be taken  into 
account  for  any  other purpose,  in particular  not for  the purpose  of interpreting  the  scope 
of the protection sought nor for the purpose of applying Article 5(3). 

Article 15 

Examination as to formal  requirements 

1.  The competent  authority  with which a utility model application  has been  lodged  shall 
examine  whether  the  application  satisfies  the  formal  requirements  of  Articles 8  and  10 
and shall check whether it contains a description and an abstract. 

2.  If a date of filing  cannot be accorded, the competent  authority  shall give the  applicant 
an opportunity  to  correct  the deficiencies  in accordance  with  such conditions  and  within 
such period as it may fix. If the deficiencies  are not remedied  in due time, the  application 
shall not be dealt with as a utility model  application. 

3.  The competent authority referred  to in paragraph  1  shall not carry out any  examination 
to establish whether the requirements of Articles 5, 6 and 7 have been met. 

Article 16 

Search  report 

1.  If a utility  model  application  has been accorded  a date of filing and  is not  deemed  to 
be withdrawn,  the competent  authority  with which the application  has been  lodged  shall, 
at the applicant's  request, draw up on the basis of the claims a search report  covering  the 
relevant state of the art, with due regard to the description and any drawings. 

2.  The  competent  authority  with  which  the application  has been  lodged  may  entrust  the 
task  of drawing  up the  search  report  to any authority  which  it considers  competent  to  do 
so. 

3.  Immediately  after  it  has  been  drawn  up, the  search  report  shall  be  transmitted  to  the 
applicant together with copies of any cited documents. 

36 

,4.  In  the  provisions  which  they  adopt  in  order  to  comply  with  this  Directive, 
Member States  may  provide  that  a  search  report  is  compulsory  in  the  event  of 
legal proceedings being brought to enforce the rights conferred  by the utility model. 

Article 17 

Priority right 

1.  Any person  who  has duly filed an application  for  a utility  model  or a patent  in or  for 
one of  the  Member States,  such  State  being  a  party  to  the  Paris Convention  for  the 
Protection of Industrial  Property, or his successors  in title, shall enjoy,  for the purpose  of 
filing  a utility  model  application  in  respect  of  the  same  invention  in  one  or  more  other 
Member States a right of priority during a period of twelve months from  the date of filing 
of the first application. 

2.  Any filing that  is equivalent  to a regular national filing under the domestic law of the 
Member  State  where  it  was  made  or  under  bilateral  or  multilateral  agreements  shall  be 
recognised as giving rise to a right of priority. 

3.  By a regular national filing  is meant any filing that is sufficient  to establish the date on 
which  the  application  was  filed  in  the  Member State  concerned,  whatever  may  be  the 
outcome of the application. 

Article 18 

Internal priority 

1.  Any  person  who  has  duly  filed  a  patent  application  shall  enjoy,  for  the  purpose  of 
filing  a  utility  model  application  in  respect  of  the  same  invention,  a  right  of  priority 
during  a period  of twelve months, unless priority  has already  been claimed  for the  patent 
application. 

2.  The provisions of Article  17(2) and (3) shall apply mutatis mutandis. 

CHAPTER IV 

EFFECTS  OF THE UTILITY MODEL 

Article 19 

Duration of protection 

1.  The  duration  of  the  utility  model  shall  be  six years  from  the  date  of  filing  of  the 
application. 

2.  Six  months  before  the  period  indicated  in  paragraph  1 elapses,  the  right-holder  may 
submit  to  the  competent  authority  an  application  for  renewal  of  the  utility  model  for  a 
period of two years. 

37 

3.  Six months  before  the  period  indicated  in  paragraph 2  elapses,  the  right-holdeT  may 
submit a second and last application for renewal for a maximum period  of two years. 

4.  In no circumstances may utility model protection last for more than ten years from  the 
date of filing of the application. 

Article 20 

Rights  conferred 

1.  Where  the  subject-matter  of  a registered  utility  model  is  a product,  the  utility  model 
shall confer  on its proprietor the right to prevent third parties not having  his consent  from 
making, using, offering  for sale, selling, or importing for these purposes that product. 

2.  Where  the  subject-matter  of  a registered  utility  model  is  a process,  the  utility  model 
shall confer  on its proprietor the right to prevent third parties not having  his consent  from 
using  the  process  and  from  using,  offering  for  sale,  selling,  or  importing  for  these 
purposes at least the product obtained directly by that process. 

3.  The  rights  conferred  by  a  utility  model  in  accordance  with  paragraphs  1 and  2  shall 
not extend to: 

(a) 

acts done privately and for non-commercial  purposes; 

acts done for  experimental purposes relating to the subject-matter  of the protected 

(b) 
invention. 

4.  The  proprietor  of  a  utility  model  shall  have  the  right  to  assign,  or  transfer  by 
succession, the utility model and to conclude licensing agreements. 

5.  Member  States  may  provide  limited  exceptions  to the exclusive  rights  conferred  by a 
utility  model,  provided  that  such  exceptions  do not  unreasonably  conflict  with  a normal 
exploitation of the utility model and do no unreasonably prejudice  the legitimate  interests 
of the proprietor of the utility model, taking account of the interests of third parties. 

6.  Where  the  law  of  a  Member State  allows  for  use  of  the  subject-matter  of  a  utility 
model  other  than  that  allowed  under  paragraph 5  without  the  authorisation  of  the 
right-holder,  including  use  by  the  government  or  third parties  authorised  t>y  the 
government, the provisions applicable to patents for similar use shall be complied with. 

Article 21 

Community exhaustion of rights 

1.  The  rights  conferred  by  a utility  model  shall  not  extend  to  acts  concerning  a  product 
covered by that utility model which are done after that product or  has 

38 

been put on the market in the Community by the right-holder or with his  consent. 

2.  The  rights  conferred  by  a  utility  model  shall,  however,  extend  to  acts  concerning  a 
product  covered  by that utility model which are done after  that product  has been put on 
the market outside the Community by the right-holder or with his  consent. 

CHAPTER V 

DUAL PROTECTION, LAPSE AND REVOCATION 

Article 22 

Dual protection 

1.  The same invention may form  the subject-matter,  simultaneously  or successively,  of a 
patent application and a utility model  application. 

2.  Member States may provide that a utility  model which has been granted  is deemed  to 
be  ineffective  where  a  patent  relating  to  the  same  invention  has  been  granted  and 
published. 

3.  Member  States which do not exercise the option referred  to in the preceding  paragraph 
shall  take appropriate  measures  to  prevent  the proprietor,  in the event  of his rights  being 
infringed,  from 
instituting  successive  proceedings  under  both  sets  of  protection 
arrangements. 

Article 23 

Lapse 

A utility model  shall lapse: 

(a) 

at the end of the period laid down in Article  19; 

(b) 

if its proprietor surrenders it; 

(c) 

if the fees referred  to in Article 8(2) have not been paid in due time. 

Article 24 

Revocation 

1.  An application  for revocation of a utility model may be filed only on the grounds that: 

(a) 

the  subject-matter  of the  utility  model  is not protectable pursuant  to Articles 3 to 
7 of this Directive; 

39 

(b) 

(c) 

the utility model does not disclose the invention  in a manner sufficiently  clear and 
complete for it to be carried out by a person skilled in the art; 

The  subject-matter  of the  utility  model  extends  beyond  the  content  of the  utility 
model application as filed; 

(d) 

the protection conferred  by the utility model has been extended. 

If  the  grounds  for  revocation  affect  the  utility  model  only  partially,  revocation 
2. 
shall  be pronounced  in the  form  of  a corresponding  limitation  of the utility  model.  The 
limitation  may be effected  in the form  of an amendment  to the claims, the  description  or 
the drawings. 

CHAPTER VI 

FINAL PROVISIONS 

Article 25 

Transposai 

Member  States 

1. 
and 
into 
administrative provisions necessary to comply  with this Directive by 31 December  1999. 
They shall immediately  inform the Commission thereof. 

regulations 

bring 

laws, 

force 

shall 

the 

When  Member  States  adopt  these  provisions,  these  shall  contain  a  reference  to  this 
Directive  or  shall  be  accompanied  by  such  reference  at  the  time  of  their  official 
publication.  The procedure for such reference  shall be adopted by the Member States. 

Member  States  shall  inform  the  Commission  of  the  main  provisions  of  national 

2. 
law which they adopt in the field governed by this Directive. 

Article 26 

Entry into force 

This Directive  shall  enter into force  on the twentieth day following  that of its publication 
in the Official  Journal of the European Communities. 

Article 27 

Addressees 

This Directive is addressed  to the Member States. 

Done at Brussels, 

For the European Parliament 

The President 

For the Council 

The President 

40 

FINANCIAL  STATEMENT 

TITLE 

Proposal  for  a  European  Parliament  and  Council Directive  approximating  the  legal 
arrangements  for the  protection of inventions by utility model. 

DESCRIPTION  OF MEASURE 

The purpose  of the measure is to enhance the competitiveness  of firms, in particular 
SMEs, and  promote  innovation  by approximating  Member States'  laws,  regulations 
and  administrative  provisions  on  utility  model  protection  and  by  introducing  such 
protection in those Member States where there is none. 

The measure has no financial  implications for the Community  budget. 

41 

THE IMPACT OF THE PROPOSAL ON BUSINESS 
(with special reference to SMEs) 

1. 

WHY IS COMMUNITY  LEGISLATION  NECESSARY? 

To  harmonise  at  Community  level  Member States'  provisions  on  utility  models 
and to introduce  such arrangements in those Member States where there are none, 
by pursuing the following  objectives: 

(a) 

(b) 

(c) 

(d) 

technical 

inventions  by  ensuring 

to  improve  the  functioning  of  the  single  market  in  products  resulting  in 
particular  from  minor 
free 
movement; 
to prevent  the distortions  of competition  which  SMEs seeking to  innovate 
are currently faced  with; 
to  ensure  that  all  firms  and  independent  inventors  enjoy  better  protection 
for  their  technical  inventions  through  the  approximation  of  national  laws 
in this area; 
to  improve  the  competitiveness  of  European  industry  by  supporting 
European research. 

their 

2.  WHO WILL BE AFFECTED BY THE PROPOSAL?' 

All  sectors  of  industry  will  in  theory  be  affected.  According  to  surveys  carried 
out  among  business people,  however,  the  sectors  most  affected  are  mechanical 
engineering,  electrical  engineering,  precision  instruments  and  optics  and  the 
automotive  industry.  On the  other  hand,  some  sectors,  such  as the chemical  and 
pharmaceutical  industries, will, at their request, not be affected  by the proposal. 

SMEs,  especially  those  which  innovate,  will  be  particularly  affected  by  the 
proposal. 

3. 

WHAT  WILL  BUSINESS  HAVE  TO  DO  TO  COMPLY  WITH  THE 
PROPOSAL? 

Utility  model  protection will  be granted  to those firms which  request  it. provided 
all  the  requirements  are  met.  Utility  model  applications  are to  be  filed  with  the 
competent  authorities  (in  practice,  national  patent  offices).  A  filing  fee,  the 
amount  of  which  is  a  matter  for  Member States'  competent  authorities  will  be 
payable. 

42 

4. 

WHAT ECONOMIC EFFECTS IS THE PROPOSAL  LIKELY TO HAVE? 

(a)  On  employment 

Harmonisation  of  the  national  rules  governing  utility  model  protection  will 
constitute,  for  innovative  firms,  an  incentive  to  maintain,  or  even  increase,  their 
investment  in  research  and  development. 
It  will  help  to  establish  a  legal 
framework  suited  to  the  protection  of  innovation  especially  in  the  area  of 
technical inventions, and will therefore  have a favourable  impact  on  employment, 
notably in the research field. 

(b)  On investment and the creation of new  businesses 

Harmonisation  of utility  model  protection  should  increase  the  likelihood  that  the 
firms  concerned  will  recover  their  costs  and  will  thus  encourage  them  to  invest. 
The patent being the best means of encouraging research, it is clear that the utility 
model,  which  complements  it  in  the  case  of  minor  technical  inventions,  will  be 
regarded  as an incentive to research in industry. 

(c)  On the competitiveness  of businesses 

Harmonisation  will  mean  that  SMEs  and  independent  inventors  will  no  longer 
have  to  cope  with  different  protection  systems  in the  Community  and  that  there 
will be less need to consult  industrial property experts or legal advisers.  This will 
help resolve  many  an  insurmountable  administrative  or  financial  difficulty.  Full 
rein  may  thus  be  given  to  firms'  inventiveness,  strengthening  their  competitive 
position both domestically and  internationally. 

5. 

DOES  THE  PROPOSAL  CONTAIN  MEASURES  TO  TAKE  ACCOUNT 
OF THE SPECIFIC SITUATION  OF SMEs? 

The  measures  contained  in the  proposal  are  specifically  targeted  at  SMEs  with  a 
view  both  to  improving  their  competitiveness  by  reducing  the  cost  of  protecting 
their inventions and to promoting technical  innovation at their level. 

6. 

CONSULTATION 

In  July  1995  the  Commission  drew  up  and  published  a  Green  Paper  on  the 
protection  of  utility  models  in the  single  market.17  It  received  nearly  90  replies 
from  a  whole  range  of  interested  parties.  The  European  Parliament  and  the 
Economic and Social  Committee 

17  Document COM(95) 370 final of  19 July  1995. 

43 

have  also  had  the  opportunity  to  make  known  their  views  on  the  subject.18  In 
addition, the Commission  held  a hearing attended  by European  trade  associations 
on  23 September  1996  and  a  meeting  with  Member States'  experts  on 
4 November of that year to sound out their opinions. 

18  EP: document  EP 214.304/def.  of 26 June  1996; ESC: document  ESC  1372/95 of 26 February  1996. 

44 

ISSN 0254-1475 

COM(97) 691  final 

DOCUMENTS 

EN 

01  05  06  10 

Catalogue  number  :  CB-CO-97-715-EN-C 

ISBN  92-78-29149-8 

Office  for  Official  Publications of the European  Communities 

L-2985 Luxembourg 

H*