UK: Does Fortune Favour The Brave?

What to do now the UPC package is back on track
Last Updated: 30 March 2017
Article by Peter Thorniley, Gwilym Roberts and Nick Shipp

The UK government took many by surprise with a recent announcement that ratification of the Unified Patent Court Agreement is to proceed, notwithstanding ongoing Brexit deliberations. There has been much speculation as to what the outcome of this might be, but rather less on what patent holders should do about it today. Peter Thorniley, Gwilym Roberts and Nick Shipp take you through the options.

The UK government has announced its intention to ratify the Unified Patent Court Agreement (UPCA) and followed this up with ratification of the Protocol on Privileges and Immunities. All signs are now that the UPC will be open for business at some point in 2017, finally allowing the assertion of patent rights across (most of) the EU in a single forum. This has the potential to be a significant step forward for Europe's position within the global intellectual property framework, offering greater support for innovative companies and innovation itself. However, there is no denying a level of uncertainty associated with these changes, and patent holders need to recognise it is their choice how involved they want to be with the new system at the outset.

Quick read

A unified patent system across Europe is a positive development for patent holders and third parties alike, and we are closer than we have ever been. However, there is no doubt that the UK's impending departure from the European Union will have an impact on what the system ultimately looks like. Patentees have the ability to mitigate this uncertainty by taking clear decisions as to whether to opt their patents out of the new court system, and whether to take advantage of the unitary patent. These decisions should be made carefully and in advance; now is the time to consider your options.

The elephant in the room

There was a simpler time when patent attorneys and others from around Europe fretted over the detail of the UPC agreement and its attendant rules. Pleased with their esoteric debates, they were comfortable with their expertise on the benefits and disadvantages of every procedural trick. However, these earnest discussion now seem like mere parlour games compared with the looming effect of Brexit upon a court system designed to be open only to EU members. Will the UK stay in the UPC system after it leaves the EU? We know that we don't know, which is not the same as knowing nothing at all. We know there is uncertainty. What will you do about it?

The question

Do you want your patents to be subject to this new court system or not? The choice is yours, at least in the short term. Every patent holder needs to make an active decision on this.

The Unitary Patent

What is it?

The unitary patent is an optional approach to validating patents in Europe covering territories that have signed up to the UPC. It will become available when the UPC is up and running. Instead of validating patents separately in each member state and then paying renewal fees independently, you can effectively perform a single validation and pay a single renewal fee for the lifetime of the patent.

What's good?

It could save you money. If you currently validate in a large number of countries, the unitary patent will be cheaper both at the point of validation and for lifetime renewal costs. If you only validate in three or fewer countries, the unitary patent is likely more expensive but would offer broader coverage. Individual circumstances may vary, and your Kilburn & Strode adviser can offer information on request.

What's bad?

Unitary patents can only be litigated at the UPC. You have no option to opt-out if you have selected a unitary patent. There is uncertainty as to what will happen to the coverage of the UK provided by a unitary patent when the UK leaves the EU, although it seems extremely unlikely that the UK government would not provide some mechanism to maintain equivalent ongoing rights.

The opt-out

What is it?

Classical European patents (ie those that were granted through the EPO but then validated nationally) will by default be subject to the UPC (albeit with some overlap where national courts may also act during a transitional period). An optout can be filed to opt a given patent out of the UPC's jurisdiction. It will be possible to file opt-outs in a sunrise period before the UPC comes into effect. An opt-out cannot be filed for a unitary patent.

What's good?

If you opt out, you won't find yourself subject to a revocation action at the UPC on your most important patents. You can opt back in again should you want to later start an infringement action at the UPC yourself (on the proviso that no action has in the meantime been initiated in a national court). The balance of control tips towards the patent holder.

What's bad?

There is currently no official opt-out fee. However, in practice there is an administrative cost to be borne in filing requests covering a large number of patents. That cost is definite, whereas the risk of litigation may seem theoretical, or you may see the UPC as any greater risk than any other court.

What do you recommend?

As always, individual circumstances vary. However, there is no doubt that the UK's ongoing participation in the UPC system is open to question. This means uncertainty as to the effect of decisions in the UPC so far as they pertain to the UK and uncertainty as to the ongoing effect of unitary patents in the UK. You should be carefully considering using opt-outs on your existing portfolio and questioning whether unitary patents are currently in your interest. Decisions will be needed on these points within the year.

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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