There has been a flurry of articles recently about the “unitary patent system”, which is made up of the newly-created Unified Patent Court (UPC) and the European Patent with Unitary Effect (EPUE, though more often referred to simply as the Unitary Patent).
Although there is not actually a date fixed for the entry into force of the new system, more of the necessary logistical pieces are falling into place and the pace of developments is picking up. It is expected that there will be a “sunrise period” bringing certain provisions into force early, before the entry into force of the full system, and it is predicted that this could begin as soon as Autumn 2016 – so expect to see the number of UPC-related blogs, posts and articles increasing over the next six months!
So what is the UPC? And what is the EPUE? And why should the average patent proprietor/applicant take notice…? This article provides a brief summary of the new system and some of its potential implications. For detailed advice and guidance in relation to your individual circumstances please feel free to contact us.
The EPUE will provide a single (unitary) patent, covering the European Union (EU) member states which have ratified the UPC Agreement.
The unitary patent will be a single, indivisible right. This means that, for example, a unitary patent cannot be sold in respect of only part of the territories of participating member states, although it will be possible to issue licences in respect of part of the territories of the participating member states.
To date, twenty-five EU member states have signed up to the UPC Agreement and nine have ratified the Agreement (i.e. not only has the relevant government signed up to the Agreement, but their state has agreed to be bound by it. For most countries, this in effect means that the treaty has been approved by their parliament). Only Spain, Poland and Croatia remain outside the system at present, and they have the option to join later.
The system will come into force shortly after thirteen member states have ratified the agreement, providing this includes the UK, France and Germany.
There will not be any changes to the process of applying for a patent at the European Patent Office (EPO) – but there will be new options available at the point of grant of a patent.
Under the current system, when a patent is granted by the EPO, the proprietor chooses the countries in which that granted European patent is to be validated. The validations are independent of one another, the detailed requirements vary from country to country, and the Proprietor ultimately obtains a bundle of national Patents, all of which derive from a single application that was pursued through and granted by the EPO.
This system of individual country selection and validation results in what is termed a “classical” European Patent, i.e. a bundle of independent national Patents which are enforced/challenged separately through the relevant national court and are renewed separately through the relevant national office.
However, once the unitary patent system comes into effect, at the grant of a patent by the EPO a proprietor will be able to:
1) use the existing system of validation to obtain a “classical” European patent; or
2) request unitary effect in order to obtain a single patent which will cover the states that have ratified the UPC agreement at that date, a European Patent with Unitary Effect (EPUE); or
3) request unitary effect, in order to obtain a single patent in respect of the states that have so far ratified the UPC agreement AND also use the existing validation systems in respect of EPC contracting states which have not ratified the UPC agreement (or are not in the EU/have not signed up to the unitary patent system), for which the existing validation systems will be unchanged.
There will be a non-extendable period of one month from grant for requesting unitary effect. During a transitional period of 6-12 years this will also require the filing of a translation. For patents granted in French or German, a translation into English will be required. For patents granted in English, a translation into any other official language of the European Union will be required. The transitional period with respect to translation arrangements will start when the Agreement comes into force.
European Patents with Unitary Effect (EPUE) will be renewed centrally through the EPO. Renewal fees will be based on the cost of renewals in the four most frequently validated EP states. EPUE will be enforced/challenged centrally through the new Unified Patent Court.
Unified Patent Court (UPC)
The UPC allows for central enforcement/challenge of patents within its jurisdiction (discussed below), and aims to provide greater consistency in the application of patent law across the member states which have signed up. Central enforcement means that pan-European injunctions and remedies will potentially be available in one set of litigation, but the on the other hand, central revocation could mean a loss of rights across the same territories in one shot.
The new court will feature international panels of judges. The court system will include a central division and local or regional divisions located in the member states. The central division will hear cases in Paris, London and Munich, with each having a technical specialisation: chemical and pharmaceutical cases will be heard in London; mechanical engineering cases will be heard in Munich; and the remaining cases will be heard in Paris. The Registry and Court of Appeal will be based in Luxembourg. There are complex arrangements on languages.
UPC fees will be made up of a fixed fee, with an additional value-based fee applicable to higher value infringement claims or counterclaims (those exceeding €500,000). For multi-party or multi-patent actions, only one set of fees should apply. Fixed fees will also apply to interim applications such as interim injunctions and search and seizure orders, as well as for interim appeals. Fees for damages determination and substantive appeals largely follow the same approach as for the main proceedings.
Jurisdiction and Opt-out
The UPC will have jurisdiction, i.e. the official power to make legal decisions and judgements, over all unitary patents (EPUE).
For classical European patents, things are a little more complicated and there is to be a transitional period (7-14 years) during which proprietors/applicants will have a few different options.
It will be possible to “opt-out” a classical European patent from the jurisdiction of the UPC, provided no actions have yet been brought in the UPC. The opt-out can be registered from the beginning of the “sunrise period” until the end of the transitional period.
The “sunrise period” is expected to be the last three months prior to the UPC Agreement coming into effect. The transitional period with respect to opt-out will last for at least the first 7 years in which the UPC is effective, and may be extended by a further 7 years.
We would advise opting-out during the “sunrise period” to be sure of avoiding third party actions being brought in the UPC, which would remove the possibility of opting-out.
Opting-out would mean that the relevant national courts retain jurisdiction, under their existing systems. The opt-out can be withdrawn provided no actions have been brought in a national court. It is not possible to opt-out the same patent/application more than once.
It will also be possible to opt-out pending European applications during this period, and the opt-out could be withdrawn at grant if the proprietor wishes to request unitary effect.
For classical European patents granted before or during the transitional period, and which are not opted-out, the court first seized of an action during the transitional period will determine jurisdiction for future actions. In other words, if the first action is brought at a national court then the patent must continue to be enforce/challenged through the national courts. However, if the first action is brought at the UPC then the UPC will then have jurisdiction over that patent.
After the transitional period ends the UPC will have jurisdiction over classical European patents granted before or during the transitional period, which are not opted-out (or where the opt-out has been withdrawn), and where no action was brought during the transitional period.
The UPC will also have jurisdiction over all classical European Patents which are granted after the end of the transitional period and validated in at least one member state which has ratified the UPC agreement.
Classical European patents which have not been validated in any states that are part of the UPC agreement, will remain under the jurisdiction of their national courts.
The new system will affect all existing European patents – as explained above, after the transitional period these could automatically come under the exclusive jurisdiction of the UPC.
Therefore, it would be wise to start considering whether/which patents or applications you might wish to opt-out. As mentioned above, we would advise opting-out during the “sunrise period” which may be as short as three months.
You will also need to consider the position of any patents which you license, and discuss opting-out with the proprietor. The UPC will need to be taken into consideration when preparing new licence and joint venture agreements.
You will need to be aware of the possibility of being sued in the new court by competitors and/or non-practising entities, to whom the UPC is likely to be much more attractive than national EU courts.
You will also need to consider whether you might wish to apply for unitary effect for European patents which grant after the system has come into force, and/or potentially delaying grant until this time. The unitary patent system is expected to come into effect in the first half of 2017, which means that applications that are now pending could potentially benefit from unitary effect, and this has implications for budget and litigation factors for future patent filing strategies.
If you would like further information or advice with regard to the unitary patent or the UPC, please feel free to contact us.