Getting Ready for a new European Patent System: The Unitary European Patent and Unified Patent Court (UPC)

The patent landscape in Europe is set to change dramatically with the introduction of the Unitary European Patent and Unified Patent Court (UPC). The various working groups of the UPC Preparatory Committee, together with national patent offices, are continuing to work out details of the rules for Europe’s new patent system, which we expect will enter into force some time in 2016, or early in 2017.

This note provides answers to questions relating to the new system and outlines key decisions that applicants for European patents and patent holders will need to make when the system comes into effect.

– Why is a new system needed?

Currently, the two options available for obtaining patent protection in Europe include filing separate national applications (i.e. direct applications in Ireland, the United Kingdom, Germany, France etc.), and/or filing European patent applications designating up to 38 contracting states of the European Patent Convention.

Taking the European route, whilst providing an efficient mechanism for obtaining a high quality patent right, does not avoid the need for national registration, since after grant such a “traditional” European patent, which is often referred to as a “bundle” of patents, must still be “validated” in each country in which protection is finally desired. Depending on the national law, the preparation of translations of parts of, or the entire patent specification is usually required in each country of interest. After grant the maintenance of a “traditional” European patent is also country by country and renewal fees must be paid annually in each country to keep the patent in force.

Enforcement of national and “traditional” European patents is also a matter for national law, so that if a third party infringes a patent, a court action for patent infringement, and the inevitable counterclaim for revocation of the patent, must also be taken on a country by country basis. Not only is it extremely expensive to run Court actions in multiple jurisdictions, it is also not unusual for national Courts when considering matters of infringement and validity of a European patent to come to different decisions, even when faced with identical evidence. This inconsistency naturally leads to significant legal uncertainty for both patent holders and third parties.

– How will the Unitary European Patent work?

The first thing to note is that nothing in the new system will affect the right to file and obtain a national patent, and that Irish patents, both short and full term, and United Kingdom patents will still be available.

The European Patent Office (EPO) will also continue to operate as Europe’s central patent granting authority and will still examine patent applications and grant patents. European patents may still be opposed centrally within the usual time limits before the Opposition Division of the EPO.

Under the new system however, once a European patent is granted the proprietor may (within a 1 month time limit) request unitary effect of the European patent, and this provides a Unitary European Patent that will have uniform effect in all EU countries that have signed up to the agreement (currently 24 countries). A proprietor may also elect not to file the request and so will have a “traditional” European patent (i.e. the so called “bundle” of national patents which must be registered nationally).

The EPO will be responsible for collecting and administering a single annual renewal fee for each Unitary European Patent and for maintaining a register of patents.

As the official languages of proceedings before the EPO are English, French and German, no further translations will be required after grant of a Unitary European Patent – although for a transitional period a full translation into English will need to be filed for patent specifications in the French or German language, and for patent specifications already in English, a translation into any other language of the EU will be required.

– What are the benefits of the Unitary European Patent?

The key benefits of the Unitary European Patent are related to cost and ease of management of the patent throughout Europe.

The Unitary European Patent will be a single patent that has uniform effect across a significant part of the European Union. The grant and maintenance system for the Unitary European Patent also eliminates expensive procedural aspects of the “traditional” European patent system by dispensing with the need for obtaining translations of the patent specification in numerous languages of the various European states and also paying annual renewal fees in each and every country in which a patent is validated.

– What about enforcement and revocation of Unitary European Patents?

The other part of the new system that really distinguishes from the “traditional” European patent system has been the development of an international patent court structure, known as the Unified Patent Court (UPC). The UPC will handle actions on infringement and revocation of Unitary European Patents, and “traditional” European Patents (see note below relating to the transitional period and the “opt-out” clause for traditional” European Patents).

Important to note is that the UPC will not have jurisdiction over national patents, such as granted short or full term Irish patents or United Kingdom patents – so actions concerning national patents will continue to be handled by the national court system in each country.

The new UPC court system will comprise a Court of First Instance (CFI), including a Central Division (located in Paris, with sections in London and Munich), and Local and Regional Divisions (two or more European Union states). The Court of Appeal will be located in Luxembourg, and there is no right of appeal from a decision of the Court of Appeal.

Cases concerning the infringement of a patent can be brought before the Local or Regional Division where the alleged infringement occurred, or where the defendant has their residence or principle place of business. As previously reported, Ireland is expected to establish a local division of the UPC which will enable patent holders to enforce their valuable European patent rights in a Court located in Ireland. In the event that there is no appropriate Local or Regional Division, cases can be brought before the Central Division.

A counterclaim for revocation of a patent must be brought before the Division that heard the infringement action, although quite interestingly, all or part of the revocation action can be referred from the Local/Regional Division to the Central Division. Known as “bifurcating” the proceedings, this would give rise to situation in which an action for infringement may be heard in a different court, and at a different time, to the action for revocation (i.e. a court may issue an injunction prohibiting the sale goods, even though the patent may ultimately be found invalid in later revocation proceedings – a so called “injunction gap”).

Whilst the potential for “bifurcation” clearly exists, a Local or Regional Division may, depending on the circumstances of a case, opt to stay the outcome of an infringement action until after the question of validity has been determined in revocation proceeding, or instead, transfer both infringement and revocation actions concerning the patent to the Central Division.

The outcome of any litigation before the UPC is that a judgement is provided that is immediately enforceable in the 25 countries that have signed up to the UPC Agreement. The downside for a patent proprietor is that a decision to revoke a patent will have effect across all countries. The need for country by country litigation is removed, and costs are expected to be similar to those for litigating a patent in a single European continental country.

– As a Patent Proprietor, what are some of the key issues to be considered when the new European patent system comes into effect?

Whilst holding a Unitary European Patent will certainly provide an overall benefit in terms of cost and ease of management, such a patent will immediately be subject to the jurisdiction of the UPC, where the constant threat exists for central revocation of the patent throughout all 25 states.

During a transitional period of 7 years (and likely 14 years) after the date of entry into force of the UPC Agreement, any action for infringement and revocation of a “traditional” European patent may effectively be taken away from the jurisdiction of the UPC by filing an “opt-out” request so that such an action must be initiated before a national court. Again, this would avoid the risk of central revocation of the patent before the UPC.

To return jurisdiction to the UPC, for example, if an infringement action is desired to filed to address a cross-border patent infringement in Europe, an “opt-in” request may be filed – although the filing of a second “opt-out” is not possible.

The role of national patents in any patent portfolio should not be understated since once the transitional period mentioned above has passed, the only way to avoid the jurisdiction of the UPC will be to file patent applications through national Patent Offices, rather than the EPO.

Key considerations therefore include:

Decision 1: Should a request for a Unitary European Patent be filed?

Decision 2: Should a request to “opt-out” a “traditional” European patent from the jurisdiction of the UPC be filed?

Decision 3: Should national patents be held for an invention?

The approach taken to the above issues will depend on the circumstances of the patent involved and its purpose within a broader commercial strategy, such as the perceived strength of the patent (has it undergone and survived Opposition proceedings before the EPO?), the success of the invention, and, as is often the case, the financial position of the patent proprietor.

– Concluding Comments

The Unitary European Patent and Unified Patent Court will benefit patent applicants and proprietors by providing an option for obtaining and enforcing patents that is less expensive and more consistently applied across European states than the current “traditional” European patent.  However, important decisions will have to be taken at all stages of the process to ensure that the all patent rights, including Unitary, “traditional” European, and national patents, are aligned with an overall strategy that takes full account of the UPC system.

The European patent attorneys at MacLachlan & Donaldson are active members of Committees of the various bodies overseeing the implementation of the Unitary European Patent and Unified Court System, and are always available to discuss any specific queries you may have in connection with this highly important and progressive development in European patent law.

Jonathan White, Director, European Patent Attorney

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