All new proposals have to be considered against this background and, for Europe at least, take account of the fact that the current status of protection for this type of innovation varies from essentially none in the United Kingdom [6] and Luxembourg, through Greece, Italy, Portugal and Spain where protection is of the traditional utility model type and given only to three dimensional innovations to Austria, Denmark, Germany and Ireland where the type of subject matter for which protection can be obtained is broader than mere three dimensional objects and it is clear that a lower standard of inventivity is required than for patents to Belgium, France and the Netherlands where the only difference from a patent is that the term of protection is shorter and the grant of a right quicker than for a patent.

The Max Planck Institute in Munich, often a source for ideas in the European intellectual property law debate, issued a paper in 1994 which identified three objectives as being necessary for any Europe-Wide Utility Model Scheme. They are as follows:

The institute proposed the creation of a unitary utility model right to be handled by the European Patent Office in Munich, but suggested that countries which had no history of utility model protection might be given the opportunity to opt out of the enforcement of such a right.

Against this background the European Commission issued a proposed directive to harmonize the law of the member states of the EU on the question of utility model protection on December 12, 1997. [7] Following a first reading by the European Parliament during which a number of amendments were proposed, the Commission issued an amended proposal on June 25, 1999. [8] According to a response by Commissioner Bolkstein to a Parliamentary Question by a Swedish member of the European Parliament, Sweden at present not having any form of utility model protection, on the subject on October 9, 2001, the Commission believes that the amendments made should meet the legitimate concerns of small to medium size businesses that provision of utility model protection for inventions of low inventive merit might lead to “carpet bombing” by “Japanese and U.S. companies” that would inhibit the development of innovations by such relatively small enterprises. [9] The proposal still awaits action by the Council of Ministers and a second reading before Parliament before it is finalized. In view of the Council’s preoccupation with attempts to adopt a Community Patent, it seems that little has been done at the council level on this issue over the past couple of years. However, once the question of the Community Patent has been finally resolved, it is likely that work on the utility model directive will move ahead rather quickly. In the meantime, the Commission is continuing consultations on the issue. [10]

In introducing the proposed legislation, the Commission reported that it had concluded that utility models are a useful form of protection because of their low cost and ability to protect inventions of lesser importance. Some industries, however, particularly the chemical industry, were concerned about the impact of such protection since the low cost is the result of little or no examination and there is a fear of a plethora of unexamined rights which might inhibit research and development in some areas. The Commission's response to these concerns was to exclude not only those types of inventions for which patent protection is excluded under the European Patent Convention from protection by way of utility models but also inventions relating to biological materials, chemical and pharmaceutical substances and processes and inventions involving computer programs.

Under the proposal, novelty for utility model protection is to be judged on an absolute world-wide basis without any general grace period. There will be no substantive examination, although applicants will have the right to request a search if they wish and Member States will have the right to compel a search before commencing court proceedings. To qualify for protection an innovation must not only be new but must also exhibit particular effectiveness in terms, for example, of ease of application or use or a practical or industrial advantage.

The maximum term of protection will be 10 years.

The original proposal was submitted to the European Parliament for a first reading as a result of which Parliament propped a number of amendments. The Commission then modified its original proposal to take account of some of the Parliament’s suggestions. The Commission summarized parliament’s main proposals as follows:

The Commission was not willing to accept Parliament’s proposals on one stop shopping, the provision of an opposition procedure and that on lower fees in certain cases on the grounds that these proposals went beyond what was necessary to achieve harmonization. Parliament’s proposal to limit the subject matter for which protection could be given was rejected on the ground that it was “an outmoded approach”. Parliament’s proposal that some form of practical or technical advantage should be required was also rejected as confusing the requirements for protection. In order to address the other concerns raised by Parliament, the Commission’s revised proposal includes the following features:

1. The limitations on what can be protected are set out in Articles 3 and 4 are confined to:

2. On the question of the novelty required for protection, the amended proposal adds a further category of information that should be considered as prior art to the original definition of “everything made available to the public by means of written or oral description, by use or in any other way”, namely the contents of unpublished prior patent or utility model applications.[12] No grace period is proposed. However, in view of the provision of a grace period in the EU’s design legislation, the present discussions within Europe on the question of whether a grace period might be desirable after all in respect of patent protection and the provision of a grace period in the present German utility model law, it is possible that there may be some change on this issue before the directive is finalized. There certainly seems to be a better case for a grace period in dealing with a protection type giving short term protection aimed at small and medium sized enterprises, which is the stated purpose of utility model protection, than there is for patents.

3. A new definition of how much of an inventive step is required to obtain protection in addition to novelty has been proposed as follows [13]:

At one time the British Patent law allowed oppositions against inventions that were “clearly obvious”, ordinary obviousness required that one sought revocation before the court. This distinction caused endless problems. The thinking in the present case is probably based on the German distinction between erfiinderische Tatigkeit and erfinderischer Schritt, mentioned above. But one is still fearful that the distinction may prove difficult to draw in practice.

4. Provision is made that all countries must effect a search if requested by the applicant or a third party and that a search is to be mandatory before legal proceedings can be brought for infringement.[14] The amended version adds to the original proposal the right of third parties to have a search carried out and the obligation on all countries to have a search carried out before litigation.