In 2017 the European patent system is to undergo its biggest change in 40 years, with the launch of the Unitary Patent Package (UPP). Here we summarise the new system and the practical implications for businesses.
The system consists of two parts:
(i) the new European Patent with Unitary Effect (“EPUE” or “unitary patent”) covering most of the EU;
(ii) the new Unified Patent Court (UPC) which will have jurisdiction for litigating unitary patents and some European patents (unless these have been “opted out”), as well as Supplementary Protection Certificates (SPCs).
So what are the most important points that businesses need to be aware of as we count down to the launch of the new system, currently scheduled for December 2017?
Geographical Coverage:
The UPP is likely to cover a significant proportion of the EU, probably 25 countries eventually, with a total population roughly equal to that of the USA – so the new system will be relevant to every company doing business in the EU.
The map shows the current reach of the new system: countries in dark grey are expected to be in the system at the start, while those in light grey are likely to join the system later. The UK government has recently confirmed its intention to participate fully.
The Unitary Patent:
This will be a single, indivisible patent right covering a number of European countries. Any European patent applications which grant after the UPP goes live can benefit from unitary effect, provided they were not filed before March 2007.
Unitary patent protection will be cheaper for patentees who routinely validate their European patents in more than four or five countries.
Obtaining unitary effect will be simple – request this at the European Patent Office (EPO) within one month of grant, and file a translation of the patent into English if the application was prosecuted in French or German, or into any EU language if the patent was prosecuted in English. Once the request for unitary effect has been recorded, the patent will automatically take effect in the countries in which the UPP is in force.
The geographical coverage provided by a unitary patent will remain fixed, covering only those states which had ratified the UPC Agreement at the time of grant. It will not be possible to have a unitary patent and also use the existing national validation procedures to obtain “classical” European patents in respect of countries which are part of the UPP at the time of grant. However, it will be possible to combine a unitary patent with classical European patents in respect of countries which are not part of the UPP at the time of grant.
The Unified Patent Court:
The UPC will initially be an alternative forum to national European courts for patent litigation, and will eventually become a replacement forum. At least for a transition period of seven years, it will be possible to opt out of the UPC for classical European patents, so that they will remain under the jurisdiction of the national courts. If a classical European patent is not opted out, then eventually the UPC will have exclusive jurisdiction. However, during the transition period, this jurisdiction will be shared with the national courts, and wherever the first action is brought, that system (i.e. UPC or national courts) will have exclusive jurisdiction over that patent.
Unitary patents must be enforced/challenged through the UPC.
Central enforcement via the UPC provides the benefit of being able to enforce a patent across a substantial part of the EU in a single action in a single court, relatively quickly (12-15 months). A single declaration of non-infringement will also be available. On the other hand, central revocation provides the risk of a patent being lost in a single action.
The UPC will be structured as follows:
The central division will be based in Paris with sub-divisions in London and Munich, cases being allocated between these according to their subject-matter. The London sub-division will hear cases related to chemistry, metallurgy and pharmaceutical and human necessities, while the Munich sub-division will deal with cases relating to mechanical engineering. All other subject-matter will go to Paris, i.e. cases relating to performing operations, transporting, textiles, paper, fixed constructions, physics and electricity.
Planning your opt-out strategy:
You will need to consider the risks and benefits of opting your existing European patents and applications out of the UPC, bearing in mind that the ideal time to take this step would be during the “sunrise period” before the UPC opens for business.
The “sunrise period” is predicted to start in early September 2017 to allow for patents to be opted out prior to the opening of the UPC. There is no official fee for opting out.
Factors to consider when deciding whether to opt out include:
- a patent’s strength (certainty of its validity) and the economic value of its protection, which help evaluate the likelihood and consequences of a central revocation if not opted out, including loss of royalties for a licensed patent:
- the likely risk of a central revocation action, e.g. is the patent under opposition at the EPO?
- the number of European countries where simultaneous enforcement may be required;
- the uncertainty of litigating in a new system and the issue of dual jurisdiction in the transition period (at least seven years);
- the costs of enforcement in the UPC compared with the costs of national enforcement;
- uncertainty as to the long-term participation of the UK in the system (“Brexit”).
What other steps do I need to take to prepare?
- For your existing European patent applications which grant after the system starts, you will need to choose whether to validate these in the desired countries using the existing “classical” system, or whether to request unitary effect to cover the countries which are part of the Unitary Patents Package – a combination of these approaches may also be used in order to cover all the desired countries.
- You will need to take the UPC and unitary patent option into consideration when you draft any new licence or joint venture, or any other technology-sharing arrangements, and to review existing agreements.
- You will need to take into account new budgetary implications, litigation risks and opportunities when deciding upon future patent filing and enforcement or defence strategies.
When should I prepare?
Now! With the UPC opening in December 2017 and the sunrise period in early September 2017, businesses need to start preparing and re-evaluating their European patenting and litigation strategies, and review their patent portfolio with regard to opting out.
