Years of debate and negotiation have resulted in a new European patent system ante portas. A Unified Patent Court will be established on the basis of the Unified Patent Court agreement. This court will rule over European patent disputes and will decide on (among others) infringement and validity of European patents.
The new European patent system will apply to both the well-known European patents (already granted or still pending as applications) as well as so-called new Unitary Patents (European patents with unitary effect for all member states). The introduction of the Unitary Patent and the Unified Patent Court shall push the harmonisation of the internal European market by providing supranational patent protection.
The Unified Patent Court will be composed of a Court of First Instance and a Court of Appeal. The Court of First Instance itself will have different divisions – local and regional divisions (hosted in different member states) and a central division. The central division will have its seat in Paris, London and Munich. The Court of Appeal will be seated in Luxembourg.
The local divisions will handle infringement actions, as well as revocation actions as counterclaims to infringement actions. The central division will rule on isolated revocation actions and declaratory actions of non-infringement. The proceedings will, of course, be open to the public.
Members of the court will be national and foreign legally qualified judges as well as technical judges.
The Unified Patent Court agreement provides the right to the patent holder to prevent any third-party from direct and indirect use of this invention without consent. Exhaustion of rights, rights based on prior and certain other limitations, mere private use for example, must be considered by the Unified Patent Court as well.
The territorial scope of decisions of the Unified Patent Court will cover all contracting member states for which the European patent has effect. The decisions of the Unified Patent Court will be enforceable in any contracting member state. National law will apply to the enforcement in each contracting member state.
Though the institution of the Court and the new patent system are, on the whole, unproblematic, some issues have begun to appear. One of the critical issues relates to the competence of the Unified Patent Court. In general, the Unified Patent Court will have exclusive competence. Any litigation regarding infringement and invalidity of European patents (with or without unitary effect) will have to be brought before the Unified Patent Court.
Potential difficulties and conflicts will arise from the transitional regime. For an initial period of seven years, a so-called transitional period will be established for European patents without unitary effect. During this period, the plaintiff may decide to bring its claim before the Unified Patent Court or before national courts.
The agreement explicitly mentions “actions for revocation” and “actions for infringement” being subject to this transitional regime. At first glance this wording appears rather clear. Therefore, some are of the opinion that only “actions for revocation” and “actions for infringement” can be brought before national courts. The exclusive competence of the Unified Patent Court will remain untouched for the other actions mentioned before. This shall be supported by the fact that the agreement elsewhere explicitly mentions a set of various actions including infringement actions, actions for declaration of non-infringement, actions for provisional and protective measures and injunctions, actions for revocation of patents, etc., falling within the scope of the exclusive competence of the Unified Patent Court. Applying this rather literal interpretation consequently may result in actions for infringement before national courts but preliminary injunctions related to the same infringement action and patent in dispute before the Unified Patent Court; actions for infringement before national courts and damage claims which have to be filed with the Unified Patent Court. This literal interpretation misses, for example, that the agreement also distinguishes between “infringement actions” and “actions for injunctions”, which does not really make sense, since infringement actions simply result in a finding for injunctive relief in almost every member state. Bearing this in mind, some argue that “actions for revocation” and “actions for infringement” are mere collective terms for all disputes arising in relation to a European patent. Apparently, the current agreement provides a necessity for interpretation of the scope of the transitional regime and judicial clarification.
Furthermore, the question remains over which law has to be applied by national courts during the transitional period, especially in regard to the ‘opt-out’ possibility. According to the Unified Patent Court agreement, a patent holder may (totally) opt-out from the Unified Patent Court competence during the transitional period. After the patent holder opts-out, only national courts can rule on infringement and validity of the European patent (without unitary effect). However, the patent holder has the option to opt back in. Both the ‘opt-in’ and the ‘opt-out’ have to be communicated to the EPO and is subject to a formal application.
The transitional period and the possibility to opt-out obviously provide a choice of forum. The question remains over whether either or both provide a choice of law as well. According to an Interpretative Note of the Preparatory Committee to the Unified Patent Court agreement “it was the purpose of the contracting states to create a new jurisdiction in order for substantive patent law, to be interpreted by a court common to the contracting states exclusively (i.e. the Unified Patent Court). It was not intended to be obligatory to harmonize national patent law, nor was it intended that national courts would have jurisdiction with regard to the agreement itself”. This rather supports an interpretation according to which – at least after an ‘opt-out’ – national courts will apply national law. However, is this the correct way to proceed also during the transitional period – especially when an infringement action (on the merits) is pending before a national court and the preliminary injunction has been filed before the Unified Patent Court?
Accompanying the Unified Patent Court agreement, a set of Rules of Procedure will provide details on the proceedings before the Unified Patent Court. The Rules of Procedure will determine, among others, the requirements regarding a stay of the proceedings (e.g., the infringement proceedings in respect of pending revocation actions). The question of when to stay the proceedings becomes especially important during the transitional period. It is the plaintiff’s discretion (regarding a revocation action as well as an infringement action) to file an action before either a national court or the Unified Patent Court. During the transitional period, the following constellations may then occur - revocation actions before national courts and an infringement action before the Unified Patent Court; infringement actions before national courts and a revocation action before the Unified Patent Court. It is also possible that infringement actions are brought before national courts as well as the Unified Patent Court and revocation actions are pending before the Unified Patent Court and national courts. Even though in the latter situation, the plaintiff has to respect any national actions and has to exclude the effects from their Unified Patent Court suit regarding the territories already being subject to other pending actions, each court remains, in general, unaffected by the proceeding before the other courts. This leaves, however, the question of if and under which circumstances a national court or the Unified Patent Court has to stay the pending infringement proceedings in the light of the revocation actions. The Rules of Procedure do not seem to provide a proper solution or basis for the split-constellations.
Internal conflicts may also occur arising from the different legal backgrounds of the judges. Especially in divisions with judges coming from bifurcation member states (like Germany). However, those divisions are more likely to be inclined to stay the proceedings.
Last but not least, the Unified Patent Court agreement sets a period of limitation of five years regarding actions relating to all forms of financial compensation. Depending on the applicable substantive law during the transitional period and during an ‘opt-out’, national laws may provide better chances for the patent holder to claim damages. In Germany, for example, damage payments on the basis of unjust enrichment equalling a usual fictitious licence fee can be claimed for a period of 10 years. On the other hand, the regular period of limitation affecting all other claims is three years. If the Unified Patent Court agreement appears to be more ‘convenient’ to the patent holder, he may merely withdraw a pending action before a national court and file a new suit before the Unified Patent Court (and likewise) or opt back in.
The agreement establishing the Unified Patent Court needs to be ratified in at least 13 European member states. Even though there has been resistance from certain individual member states in the past, rumours suggest that the UPC will now open its gates in mid 2016. The Unitary Patent and the Unified Patent Court will then provide a new range of courses of action for both the patent holder and the alleged infringer. It is likely that the transition from the ‘classic’ system to the new system will be a little bumpy. However, with increasing time and after a few initial cases the abovementioned issues will certainly be resolved. For those who remain rather sceptical regarding the new system and want to wait and see how it is put into practice, German law provides a possibility to prosecute infringement in the meantime: the German utility model, which can be branched off from a pending European patent application.
Dr Ulrich Blumenröder is a partner and Sebastian Ochs is a senior associate at Grunecker. Dr Blumenröder can be contacted on +49 (0) 89 21 23 50 or by email at blumenroeder@grunecker.de Mr Ochs can be contacted on +49 (0) 89 21 23 50 or by email at ochs@grunecker.de.
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Dr Ulrich Blumenröder and Sebastian Ochs
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