UK: Keep Calm And Carry On? The Unitary Patent And The Unified Patent Court

Last Updated: 19 December 2013
Article by Rebecca Gardner

2013 has seen great strides forward with these projects, which seek to provide a single EU-wide patent and a Court system with jurisdiction over the whole EU in matters relating to enforcement and validity of European patents. One objective is to bring Europe closer to the US model: one patent covering the whole of the EU and a Court able to grant an injunction for the entire EU. These are bold and reasonable aims but this is Europe, so there are national interests and compromises, delays, opt-outs and transitional provisions, which mean that the current system will continue, at least in parallel, for many years to come.

The necessary EU Agreements have been signed but the laws will not be in force until ratification by 13 member states including France, Germany and the UK. The administrative burden in setting up an entirely new Court system covering the whole of the EU is huge, from appointing judges to finding the buildings for a network of local and regional divisions and a dedicated Court of Appeal. As a result, observers do not envisage a commencement date for the Unified Patent Court (UPC) and Unitary Patent (UP) before 2016. Nevertheless, many believed that the Unitary Patent system would never become a reality; now that it looks inevitable, it is causing quite a stir. Concerned users of the patent system are asking various questions: will the new regime save me money; will my European patents be more vulnerable to attack; do I have to operate under the new system at all?

For many patent holders the expectation is that their patents will never be litigated and therefore a change in the European Court system that applies to patents may seem of remote interest. However, an understanding of this new Court system is essential if Applicants are to have an appropriate patent strategy in the years ahead. This article focuses on the proposed changes to the EU patent system from the perspective of those at the front end, who are innovating and seeking patent protection in Europe.

The UPC will be very powerful, a single Court able to injunct or revoke with effect in the whole of the EU. Whether this power is seen by the patent holder as a good thing will depend on their business model and industrial sector, but it is this power which is at the heart of the decisions which will inform any patent strategy.

When the EPO grants you a patent you will be able to choose whether to proceed, as at present, with a bundle of National patents in the territories of interest or to obtain a UP, a single patent in force in all participating members of the EU. It is important to bear in mind that the UP will not be imposed on patent holders, it is a voluntary system. If you proceed with a UP then that patent automatically falls under the sole jurisdiction of the UPC. If instead you opt for a traditional bundle of National patents in Europe, then you have more choice as to the Court system which will apply to your patents.

For at least a 7-year transitionary period from the commencement of the UP system, patentees can opt their newly granted bundle of National patents out of the jurisdiction of the UPC for the lifetime of the patents. This 7-year transitionary period, which may be extended to 14 years, applies to all cases filed during the transitionary period, so with an earliest likely commencement date of 2016, all cases filed within the next 10 years can be opted out of the jurisdiction of the UPC. Existing patents can also be opted out and patentees will need to do this if they wish to avoid the UPC, as the default position will see their existing European patents falling under the jurisdiction of the new UPC.

By opting their European patents out of the UPC patentees do not have all their eggs in one basket and the existing National Courts will have jurisdiction in infringement and revocation matters as they do currently. Thus, by following the opt-out route, while parallel infringement proceedings may need to be brought to stop Europe-wide infringement, revocation of an EP(UK) does not also knock out the EP(DE) and EP(FR), etc.

A protective approach to their patents may cause some patentees to select a bundle of National patents in order to take advantage of the possibility of the opt out, at least until the efficacy and quality of the Courts which make up the UPC is established. Most commentators predict wholesale opting out by large pharmaceutical companies, for example. On the other hand, as well as the prospect of a pan-European injunction against infringers, lower costs are intended to attract patentees to select a UP.

Reducing the cost of patenting in Europe was another major objective of these reforms. The UP will only require payment of a single annual renewal fee and only one translation of the patent is required on grant; it is intended that even this single translation can eventually be machine generated, reducing the cost burden further. At first sight this looks like a significant cost saving. If you currently validate in more than 7 or 8 countries in Europe then there should indeed be a real cost benefit. The main problem is that we do not yet know the size of the 'single' renewal fee, probably at least the equivalent of 4 National renewal fees, quite possibly more. So for the approximately 50% of European patents validated in no more than the UK, France and Germany, annual renewal fees would actually be more expensive with a UP. Also, with the London Agreement already having reduced the burden of translations at the grant stage, the translation requirements are more demanding under the UP system if only the UK, France and Germany are of interest. As with renewal fees, cost savings at this stage will be seen under the UP if the patentee intends to proceed in numerous territories and certainly patent protection will be better value under the UP, in terms of population or regional GDP covered.

It is possible to proceed on grant to validate a bundle of National patents and not opt out of the UPC. However by placing their patents under the jurisdiction of the UPC the patentee is vulnerable to central revocation, as their bundle of National patents stand or fall together in accordance with the 'unitary' principle of the UPC. For this reason, for the period that the opt out is available, this seems to be a less attractive option than either the UP or opting out your bundle of National European patents.

As a footnote to the above it is important to bear in mind that currently Italy, Spain and Poland are not signed up to the UP or UPC and Switzerland and Norway (amongst others), currently members of the European Patent Convention, are not EU member states. Therefore even adopters of the UP will need to consider completing their European protection by proceeding at the EPO grant phase with a UP plus certain National validations. These exclusions erode the benefit of the UP as they include territories which are on many applicants' list of the 5 or 6 territories of primary importance and may tip the cost balance in favour of National patents for some patentees.

The details of the UP and UPC are complex and in some cases still unknown. Nevertheless, those responsible for developing and implementing a patent strategy in Europe may be reassured that the UP and the UPC are not likely to be up and running before 2016 and no new filing strategies will be required; at least in the medium term the decisions to be made only come at the grant stage. The UP and UPC will give more choice but opt out means the existing system can still be used up until 2023 (on current estimates, possibly much longer) for those who are cautious about the potential for central revocation of their patents, or for whom the number of territories of interest is too limited to make the UP attractive financially. In other words, keep calm and, if it better suits your business, carry on!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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