The European drug industry has been pushing for the adoption of an EU-wide patent, as it believes this would reduce the cost of patenting and improve the sector's ability to compete on the global stage.
In a statement, the European Council said that "the necessary unanimity could not be found in support of the Presidency compromise proposal for a Council Regulation on the Community Patent."
It appears that Germany, France, Spain and Portugal voted against the compromise put forward by the Irish Presidency while Italy abstained, according to a report from the Cordis information service. Unanimity was required to move forwards.
It is now up to the European Commission to decide whether or not to draft a new proposal. However, the Netherlands, which takes over the EU Presidency in July, has already announced that it will not attempt to revive negotiations on the matter.
The proposal aimed to reduce the costs involved in the patent process and to unify Europe's disparate patent laws into a single system. However, differences in opinion over the number of languages that patents could be secured in made it impossible to reach a consensus on the proposed directive.
Earlier this year the EC's Internal Market Commissioner Frits Bolkestein said that failure to advance the Community Patent plan "strikes at the heart of Europe's ability to compete on the global stage."
At the time, he noted that two years ago the so-called Community Patent was put forward as 'a vital measure for boosting Europe's competitiveness by encouraging innovation'.