In December 2012, the European Parliament voted on the adoption of the Unitary Patent Regulation and the Translation Arrangements Regulation. Two months later, in February 2013, 25 of the 28 EU Member States signed the Unified Patent Court Agreement (“the UPCA”) after about 40 years of discussions. So far, Spain, Poland and Croatia have not adopted the system.
At present, the Unified Patent Court Agreement (UPCA) has been ratified by 14 countries: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Italy, Lithuania, Luxembourg, Malta, Netherlands, Portugal and Sweden, but ratifications by the UK and Germany are also required for the UPCA to come into force. Waiting for the new system to come into force, we take the opportunity to look into the consequences to patent proprietors and third parties. To clarify some important aspects, we will look at the Unitary Patent and the Unified Patent Court individually and further explain how decisions in relation to the Unitary Patent and conventional European patents will impact the enforcement and challenging of patent rights.
The Unitary Patent
The Unitary Patent will serve as a complement to the existing European patent system. In particular, the new patent system aims to reduce administrative and translation costs by offering proprietors a single patent with validity in all of the EU Member States that are participating in the unitary patent system.
There are currently two alternative options for those wishing to protect their inventions in Europe. The first alternative is to file national applications for patent protection in individual European countries either as direct applications or via the PCT route. The second alternative is to apply for a European patent through the European Patent Office (EPO) in Munich either as a direct application or via the PCT route. The European patent, once granted, allows patent proprietors to choose which of the 38 countries within the system that will be covered by the patent protection, and requires all or part of the patent (the claims) to be translated into the national language of each respective selected country (validation).
The unitary patent can be seen as an extension of the current European patent system. In contrast to the current European patent, which is essentially a bundle of identical national patents in the selected EPO member states, the new unitary patent provides a simplified option for obtaining one single patent that is valid in most European countries. To obtain a unitary patent, patent proprietors must submit a request for “unitary effect” to the EPO once the patent has been granted. This request applies to all EU Member States participating in the new patent system at the time of grant. When granted in English, it requires only that the patent is translated into one further language of any of the participating EU Member States. If the patent is granted in French or German, an English translation must be filed along with the request for unitary effect.
The new unitary system offers considerable time and cost savings for companies interested in patent protection in the participating EU Member States. The reduction in the costs of translation and renewal fees depends on the countries where patent protection is wanted and wanted to be maintained. The renewal fees of the unitary patent will correspond roughly to the sum of the national renewal fees in the four major validation countries: Germany, the United Kingdom, France and the Netherlands.
The Unified Patent Court
The establishment of the Unitary Patent will be accompanied by a new Unified Patent Court headquartered in Paris, with two additional subunits in Munich (mechanics) and in London (chemical sciences and pharmaceuticals).
The Unified Patent Court represents a significant change of judicial procedures that will allow a patent to be enforced or challenged in one single action covering all participating states. At present, patents granted by the EPO must be enforced or challenged in national courts in the validation countries. The new court system is intended to streamline an expensive process while eliminating the confusion and uncertainty caused when/if different national courts reach different decisions.
However, the new Unified Patent Court will also have jurisdiction regarding conventional European patents in the participating EU Member States. During a transitional period of seven years (which period may be prolonged by up to seven more years), a conventional European patent may be handled either by the Unified Patent Court with regard to the participating EU Member States or by the national courts in said countries. The Unified Patent Court decision applies to the territory of those participating EU Member States for which the European patent has taken effect. A national court decision will apply to that country only.
During the transitional period, a conventional European patent can be opted out of the unitary patent system by the actual proprietor(s) of the patent. This opt-out will apply after the transitional period, too, but may be withdrawn at the request of the proprietor. However, as soon as proceedings regarding a conventional European patent have been initiated before the Unified Patent Court, opt-out is no longer possible for that patent. This requires immediate and active assessment of options by the proprietors of conventional European patents. A sunrise period for opt-out of European patents will probably start three months before the coming into force of the Unified Patent Court Agreement.
After the transitional period, the Unified Patent Court will have exclusive jurisdiction regarding conventional European patents in the participating EU Member States unless they have opted out during the transitional period. The long-term result of this could be that a company unwilling to take the risk of having its patent rights invalidated in all of the participating EU Member States simply chooses to revert to national patents in those countries.
Litigations in relation to conventional European patents in European Convention States outside the unitary patent system will be handled by national courts like today.
The new system will simplify application, validation and translation requirements and thus reduce administrative costs. On the more negative side, patent proprietors are exposed to an increased threat of litigation and revocation of patent rights across a major part of Europe (i.e. in the EU member states participating in the UPCA) from the concentration to one single court procedure.
The new court implies an ’all-or-nothing‘ approach that is new in a European scenario. If a unitary patent is successfully challenged before the new court, that patent will be invalidated in all of the participating EU Member States. This ’all-or-nothing‘ approach also applies to infringements: A judgment regarding a specific patent infringement will apply in all of the participating EU Member States. This creates a situation where, in some cases, an applicant may opt for the new system which provides a patent that can be enforced against infringers in all participating states in one go. In other cases, it may be preferable to have national patents including validated European patents where the validity can be challenged only on a country-by-country basis. This is possible through the opt-out option available to conventional European patents during the transitional period when the central handling can be deselected. In light of this, companies need to look at their European patent strategies when, or rather before, the new system enters into force.
It is important to emphasise that the unitary patent should be seen as a complement to the existing systems and that it will function in parallel with them. As such, it adds further layers of strategic considerations for patent proprietors when they are to choose the best way to make use of their options and assets. To certain companies, it may open up opportunities to expand their business into new countries at a reasonable cost. To others, it may represent an increased risk that needs to be duly considered.
The fact that patent coverage can apply to a broader geographical area by a request for unitary effect and the fact that the decisions of the Unified Patent Court will have effect in all participating member states will increase the potential exposure of companies that manufacture and sell goods and services. This may increase the need for patent monitoring and freedom to operate analyses before new products are released in the participating EU Member States. Further, since proceedings before the Unified Patent Court will be a ’frontloaded’ system with short notice to establish a comprehensive defence, companies should be prepared at all times, both internally and with immediate access to external advice, to defend themselves in such matters.
Comparing the European patents with unitary effect and conventional European patents, the following observations apply:
Validity: A unitary patent is valid in all participating EU Member States, while a conventional European patent is valid in the Member States in which it is validated.
Litigation: A unitary patent will be handled in the new Unified Patent Court system. A revocation applies to a unitary patent in its entirety. The Unified Patent Court’s decision regarding infringement applies to all participating EU Member States for which the unitary patent has effect.
Cost: It will be less costly to obtain and maintain broad geographical patent protection under the unitary patent system compared to conventional European patents due to reduced translation and renewal costs. However, a conventional European patent can be maintained for a limited number of countries which is not possible for a unitary patent. It is also likely to be less costly to litigate patents before the UPC than to litigate in two or more different national court proceedings individually.