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An update about UP/UPC

The Unitary Patent and the Unified Patent Court – and the decreasing costs for businesses?

Continually, steps are taken towards establishing the unitary patent and the unified patent court. Now, eight member states have ratified The Unified Patent Court Agreement out of the 13 member states needed for the agreement to coming into force. Still, however, the needed ratifications from Germany and United Kingdom are awaited.

One of the main objectives of the unitary patent and the unified patent court has been and remains to be the decreasing of costs for businesses.

Renewal Fees – the “True Top 4” Proposal

On 24 June 2015, under the headline “Business-friendly fee pattern adopted for the unitary patent”, the European Patent Office announced the endorsement by the Select Committee of the Administrative Council of the EPO of the co-called “True Top 4” proposal. According to this proposal, the fees for the renewal of the unitary patent covering the participating 25 member states will correspond to the total of the renewal fees currently paid in Germany, France, UK and the Netherlands – the four countries in which European patents are most frequently validated.

For the first ten years – the average lifetime of a European patent – the total cost of renewing a unitary patent will be less than EUR 5,000 and for the entire 20 years the cumulative total of renewal fees will be just over EUR 35,500. Compared to the total renewal fees for all 25 member states, the reduction of official fees will be app. 78%. A further substantial cost reduction will be on translation costs and fees in each individual member state.

Is this a business-friendly fee pattern? It depends: Still, a thorough evaluation of the needs from both a business and a legal point of view will be needed in order to spend just enough and not too much money on renewals.

Court Fees – Fixed and Variable

As for the unitary patent, one of the main objectives for the unified patent court is cost savings for businesses. Instead of suing and being sued in multiple European countries, the unified patent court will be able to decide with unitary effect on both infringement and revocation/invalidity of unitary patents as well as European patents where the patentee has not opted out of the jurisdiction of the unified patent court.

In May 2015, the Preparatory Committee for the Unified Patent Court has finalised a Consultation Document as to Rules on Court fees and recoverable costs.  A main task is to implement Article 36 (3) of the Unified Patent Court Agreement which reads as follows:

“Court fees shall be fixed by the Administrative Committee. They shall consist of a fixed fee, combined with a value-based fee above a pre-defined ceiling. The Court fees shall be fixed at such a level as to ensure a right balance between the principle of fair access to justice, in particular for small and medium-sized enterprises, micro-entities, natural persons, non-profit organisations, universities and public research organisations and an adequate contribution of the parties for the costs incurred by the Court, recognising the economic benefits to the parties involved, and the objective of a self-financing Court with balanced finances. The level of the Court fees shall be reviewed periodically by the Administrative Committee. Targeted support measures for small and medium-sized enterprises and micro entities may be considered.”

The proposed fixed fee for infringement actions amounts to EUR 11,000 while the proposed scale of an additional value-based fee e.g. will lead to an additional fee of EUR 10,000 if the value of the action is above EUR 1 million and not exceeding EUR 1.5 million. It is proposed that no additional fee shall be paid if the value of the action is not exceeding EUR 500,000 while the upper limit of the additional value based fee is EUR 220,000 and is reached when the value of the action exceeds EUR 30 million.

The fixed fee for revocation actions is proposed to amount to EUR 20,000.

Recoverable Costs – with a Ceiling

The Preparatory Committee is also addressing recoverable costs before the Unified Patent Court in order to implement Article 69 (1) of the Unified Patent Court Agreement which reads as follows:

“Reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity requires otherwise, up to a ceiling set in accordance with the Rules of Procedure.”

The suggested ceiling for recoverable costs of representation per instance and party is e.g. up to EUR 50,000 if the value of the action is EUR 250,000 or below and up to EUR 150,000 if the value of the action is above EUR 500,000 but below EUR 1 million. The upper limit of recoverable costs is suggested to be up to EUR 3 million if the value of the action is more than EUR 50 million.

Also with regard to litigation costs there has been focus on cost savings by litigating before a unified patent court instead of by parallel national litigations. Already in 2006, in the earlier stages of the preparation for the unified patent court, the following was stated by the European Patent Office following a survey among national judges and professional representatives (item 19):

“The rough cost estimates also indicate that it will be cheaper to litigate before the European Patent Court than before national courts in three European states which is today's average parallel litigation.”

Again, whether the Unified Patent Court will lead to decreasing litigation costs or not depends on the comparison: Which and how many national courts would be the relevant alternative(s)? However, in all circumstances, due to the ceiling of recoverable costs, the predictability of costs will certainly improve.

Useful links in connection with this article:

Unified Patent Court Agreement:

http://www.unified-patent-court.org/images/documents/upc-agreement.pdf

EPO News on 24 June 2015 on fees for the unitary patent:

http://www.epo.org/news-issues/news/2015/20150624.html

Consultation Document on Rules on Court fees and recoverable costs:

http://www.unified-patent-court.org/images/UPC_Court_Fees_and_Recoverable_Costs_Consultation_Document_FINAL.pdf

Assessment of the impact of the European patent litigation agreement (EPLA) on litigation of European patents, February 2006:

http://www.eplaw.org/Downloads/EPLA_Impact_Assessment_2006_.pdf