European unitary patent and Unified Patent Court

August 2022 | EXPERT BRIEFING | INTELLECTUAL PROPERTY

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The notion of a single ‘unitary’ patent covering the whole of what is now the European Union (EU) and a single court system for enforcing it has been a dream since the early days of the European Common Market. A treaty to effect this was even signed in 1975, but until now the dream has never been realised. This has changed and depending on the date on which Germany deposits its instruments of ratification of a new Unified Patent Court Agreement (UPCA), a new system will come into effect either toward the end of this year or early in 2023. Germany is deliberately delaying depositing its instruments of ratification to allow preparatory work for the new court system, such as appointment of judges, hiring staff and implementing IT systems, to be carried out.

However, the breakthrough came at a cost in that to achieve the new agreement, it had to be accepted that participation would be limited to only those EU countries that wished to participate. All EU countries except Spain, Poland and Croatia have agreed to participate, but so far only Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovenia and Sweden have completed the necessary legislative steps to participate. When the UPCA initially comes into effect, participation and coverage will be limited to these countries, though others will join later and the date of their participation in the new system and ability to be covered by the unitary patent will be determined by the date on which they join.

The new system has two interrelated elements: a unitary patent and a unified court system.

Unitary patent

The unitary patent builds on the current European Patent Convention (EPC) under which it is possible to file a single patent application with the European Patent Office (EPO) for examination which if the application is found to meet the requirements for patentability, including whether the invention is novel and possesses an inventive step, results in a bundle of patents for the countries of interest to the applicant. After a nine-month period in which they may be opposed in the EPO, such patents are treated as if they had been granted by a national patent office. Under the new system, when examination of a European patent application has been completed by the EPO, the applicant will be given the option of securing a unitary patent covering those EU countries that are participating in the new scheme instead of obtaining individual patents for them. The procedure for other countries that are members of the EPC but are either not members of the EU, such Norway, Switzerland, Turkey and the UK, or who are members of the EU but not participating in the new scheme, such as Spain, will remain unchanged from the present so that once the European Patent Application is allowed, the applicant will still be able to choose the individual countries in which it desires protection.

Three main factors need to be taken into account when deciding whether to opt for the new European Unitary patent or the traditional bundle of patents. The first factor is cost. If protection is desired and is expected to be maintained throughout the 20-year life of the patent in all participating countries, the unitary patent will be cheaper than the traditional route. At present the costs of attending to the formalities in some of the participating countries if one wishes to obtain an individual patent in them are relatively high and annual renewal fees that are payable are payable in each country where it is desired to maintain protection. For a unitary patent, the costs at grant are limited to providing a translation of the patent into one other language and a single annual maintenance fee is payable. This is based on the total fees payable in four EPC member countries using the traditional route. On the other hand, if the participating countries in which protection is desired are limited to a few countries, such as France and Germany, it will be cheaper to continue with the traditional route.

The second factor relates to the fact that it is a unitary property right, which means that there cannot be different owners in different countries as is possible when the European Patent Application produces a bundle of patents. This fact also means that it is not possible to decide to continue to pay renewal fees to keep the patent in force in only some countries. For the unitary patent, it is all or nothing.

The third factor is that unitary patents will, after the nine months period for opposition in the EPO has expired, be subject to the exclusive jurisdiction of the new Unified Patent Court. All individual patents in participating countries arising from a European Patent Application will also ultimately be subject to the exclusive jurisdiction of this court, but for an initial period of at least seven years, this jurisdiction will be shared with national courts and patent owners will have the ability to opt out of the jurisdiction of the new court completely by simply filing a statement to this effect with the court’s registry.

Unified Patent Court

Under the new patent court structure, there will be a court of first instance and an appeals court. The appeals court will sit in Luxembourg. The court of first instance will have local or regional divisions and a central division. The local or regional divisions will be created on the basis of countries or groups of countries. Countries having a large amount of patent litigation may have more than one local division, up to a maximum of four.

The central division was originally intended to have three branches, one of which was to have been in London. However, following Brexit the court will probably open with only two branches. The central division will have its official seat in Paris. However, a branch in Munich will deal with actions relating to mechanical engineering. Cases before the central division in other areas of technology will be heard in Paris. The first instance divisions of court will sit in multinational panels normally of three judges. Panels sitting in countries with little patent litigation will be composed of one legally qualified judge who is a national of that country and two judges from other countries. The converse will apply for panels sitting in countries with substantial patent litigation experience. Panels of the central division will comprise two legally qualified judges from different countries and one technically qualified judge. The court of appeal will sit in panels of five: three legally qualified judges from different countries and two technically qualified judges.

The substantive law applied by the new court will be that of the EPC insofar as issues of patent validity are concerned. Specific provisions are set out in the UPCA on issues of patent infringement. These are largely based on those of the 1975 treaty and have to a significant extent already been incorporated into the domestic patent laws of at least France and Germany. Issues touching on competition law and patent enforcement will, however, be subject to general EU law.

The local and regional divisions will have jurisdiction over infringement matters and any counterclaims for revocation of the patent in suit, although in some circumstances, such a counterclaim, may be transferable to the central division. The central division will have jurisdiction over standalone actions challenging the validity of the patent which, unlike opposition proceedings in the EPO, will be able to be filed at any time during the life of the patent. The central division may also hear infringement actions where the defendant is domiciled outside the EU.

The Unified Patent Court will be able to grant remedies, including injunctions, damages and attorney fees, that are enforceable in all participating EU countries, which is a potential advantage for, patent owners who need protection in a substantial number of participating countries.

The procedures of the new court are front-loaded in favour of detailed written submissions early in the proceedings, which means that they will probably favour the claimant (plaintiff) who will have more time to prepare its case than the respondent (defendant). The rules of procedure of the new court provide for evidence protection by use of procedures like saisie proceedings that are available in Belgium and France, but no discovery or disclosure as it exists in common law jurisdictions. Unlike procedures in the US, if the validity of a patent is challenged, either in a standalone procedure or in a counterclaim for revocation in an infringement suit, the patent owner will be able to amend the patent to try to preserve its validity.

Opting out

It is intended that after the initial period of seven years (which may be extended) all patent infringement and revocation actions in participating countries on patents that have been issued by the EPO will be subject to the exclusive jurisdiction of the new court. The possibility of opting out for non-unitary patents that have been issued by the EPO therefore presents patent owners with an interesting question to answer. The possibility of using a single court to enforce a patent over multiple countries is a major advantage for patent owners who now have to institute multiple actions to obtain effective protection from infringement. The corollary of this, however, is that a single attack on the patent can result in its being held to be invalid for all participating countries. Furthermore, at least to begin with, judges are likely to be feeling their way so that there may be some uncertainty as to how any issue will be dealt with. Anecdotal evidence indicates that at least some owners of large patent portfolios are likely to file opt-outs for their most important patents but will allow others to remain in the system to provide for a build-up of experience to be ready for the day when opting out is no longer possible.

John Richards is of counsel at Ladas & Parry LLP. He can be contacted on +1 (212) 708 1915 or by email: jrichards@ladas.com.

John Richards

Ladas & Parry LLP