Practical implications of the unitary patent system in Europe
Nick Bassil* & Julia Venner
Kilburn & Strode LLP, 20 Red Lion Street, London, WC1R 4PJ, UK *Author for correspondence: E-mail: [email protected]
The procedures for the implementation of the so-called ‘unitary patent’ in Europe are now gathering pace. The Preparatory Committee of the Unified Patent Court (UPC) has started the process for setting up the court. Similarly, the EPO has set up a Select Committee on the unitary patent to oversee its introduction as part of the operations of the EPO.
The relevant legislation governing the new court and patent (the ‘EU Patent Package’) comprises the Unitary patent Regulation (EU) no. 1257/2012, the Translation Arrangements Regulation (EU) no. 1260/2012, and the Agreement on a UPC.
This article seeks to provide an overview of developments and the key features of the new system. Some practical considerations are also set out, as all parties familiar with the current legal landscape in Europe will need to take account of these changes.
Recent key eventsThe final step in the legislative process occurred on 11 December 2012 when the European Parliament voted to approve the EU Patent Package. The vote in the European Parliament followed the announcement by the European Council on 10 December 2012 of the political endorsement of the proposals.
Subsequently, the CJEU issued its judgment of 16 April 2013 in the joined cases [1,2]. The judgment followed the Advocate General’s opinion of 11 December 2012 and the CJEU rejected the arguments filed by Spain and Italy. The Spanish and Italian governments filed submissions that the EU Council’s decision to use the ‘enhanced cooperation’ procedure to bring forward the EU Patent Package was invalid under EU law. The enhanced cooperation procedure enables groups of EU member states to progress with certain legislative developments, even if not all member states wish to take part.
However, Spain has also now launched two separate legal challenges in the CJEU [3,4]. There is a general expectation that since the CJEU has already issued one ruling in this matter that further challenges should also similarly fail.
The UPC Agreement is an international treaty outside the EU. The UPC Agreement was signed on 19 February 2013 by 24 EU member states. Bulgaria subsequently signed the Agreement on 5 March 2013. Poland and Spain still have the option to accede to the Agreement at a later date.
Now that the Agreement has been signed, the ratification process can begin. Once the Agreement is ratified it will come into effect. The Agreement will enter into force on 1 January 2014, after 13 states (including Germany, France and the
Keywords: Europe • opposition strategies • patent application filing system • patent filing strategies
UK) have ratified the Agreement or after amendment of the Brussels I Regulation to clarify the jurisdiction of the UPC, whichever is the latest.
Ratification of the UPC Agreement is important since it governs the date on which the Unitary patent Regulation and the related Regulation on the Translation Arrangements will also come into effect. The Regulations will apply from 1 January 2014 or from the date when the UPC Agreement enters into force, whichever is later. However, since it is not expected that the necessary number of ratifications will have been completed much before 2015 and coupled with the logistical issues of setting up the UPC, the probable date of entry into force is now widely thought to be sometime in 2015.
Unitary patentThe idea of a Unitary patent in Europe was initially proposed many years ago. The concept can be traced back to the negotiations that lead to the setting up of the EPO in the 1970s and the parallel suggestion for the Community Patent Convention (of the European Economic Community as it then was). However, the realization of such an idea had always seemed problematic in view of the language issue with respect to the text of granted patents.
The EU Patent Package that has now been agreed has successfully overcome these problems for the member states that have decided to take part. The new Unitary patent will not replace the existing systems for the grant of national patents by national patent offices, nor will it affect the procedure for the granting of patents by the EPO followed by subsequent national validation in the territories of the designated states of interest.
A key feature of the Unitary patent is that the current national validation procedure for standard European Patents will no longer be necessary in the participating member states of the unitary patent system. However, for any applicant who requests the grant of a European patent with unitary effect, that is, a ‘Unitary patent’, it will still be necessary to carry out national validations in any European Patent Convention (EPC) states or extension states that are not covered by the Unitary patent if the applicant wishes its European Patent to take effect in those states.
The territorial extent of the Unitary patent is defined by the participating member states of the EU (Participating EU member states: all EU states except Italy and Spain) that have also ratified or acceded to the UPC Agreement. Thus, for states such as Spain and Poland that have not signed the UPC Agreement (and may never do so, in the case of Spain at least), the Unitary patent cannot come into effect in respect of these states.
The territorial extent of the Unitary patent is therefore not coterminous with the membership of the EU. Since the UPC Agreement must be ratified by at least 13 states, including France, Germany and the UK to enter into force, it is possible in theory for the Unitary patent in the early months or years of its existence to cover only a subset of the member states that have signed and ratified the Agreement (unless ratification takes place in all states simultaneously).
The Unitary patent Regulation specifies that European patents with unitary effect are to be granted the EPO from a regular European Patent Application [101]. In practice, this means that a request for unitary effect of a granted European patent must be filed within 1 month of the publication of mention of the date of grant of the patent in the European Patent Bulletin.
As indicated above, a Unitary patent will be granted on the basis of a regular European patent application filed at the EPO as at present. Such applications leading to the grant of a unitary patent will therefore continue to be filed and examined in English, French or German. However, at the time of grant following a request for unitary effect, the applicant will need to take certain steps with regard to the language of the patent specification. Thus, even under the regime of the unitary patent some translation activity is still required, but it is much reduced. It is also subject to a transitional provision period of 12 years, after which the procedure for translations will be reviewed. The European Commission is of the view that machine translations will be sufficiently good to enable users to obtain translations in any EU language.
The current requirements specify that a Unitary patent filed and granted in French or German must be translated into English. Conversely, a Unitary patent filed and granted in English must be translated into another official language of a participating member state that is an official language of the EU. It appears that a compensation system for filing applications in an EPO official language will also be provided for applicants resident in a participating member state with a different official language to that of the EPO.
The relevant legislation is the Unitary patent Regulation [5] and the Translation Arrangements
“ It is as yet uncertain whether or not the arrangements under the Unified Patent
Court and Unitary patent will, as intended, facilitate the growth and development of the pharmaceutical industry in Europe by streamlining the patent grant process and
downstream litigation procedures. ”
Pharm. Pat. Analyst (2013) 2(5) 587future science group
Practical implications of the unitary patent system in Europe Commentary
Regulation [6]. EU Regulations have direct legal effect in the participating EU member states and do not require any national ratification or implementing legislation, unlike a EU Directive.
UPC systemThe current system of a European patent becoming a basket of national patents after validation in the designated states of interest has led to a fragmented procedure for litigation of a patent around Europe. The same patent can effectively be litigated before several different patent courts in various member states. The UPC is aimed at resolving this problem for the separate national parts of a European patent subject to the national validation process (unless opted out during the transitional period). The introduction of a Unitary patent in Europe has also required the innovation of a new centralized court system to also hear disputes on infringement and validity.
The UPC is the result of the Agreement on a UPC. The Agreement provides for the establishment of a Court of First Instance (CFI), a Court of Appeal and a Registry. The CFI will have a central division, as well as local and regional divisions in contracting member states that have requested a division and which fulfill the necessary requirements. The central division is where actions for revocation will need to be brought and where more complex infringement litigation cases are expected to be heard.
In states where the courts currently handle a large number of patent cases, a member state can request that a Local Division of the CFI is set up. It is currently expected that at least the UK and Germany will have Local Divisions. Germany may qualify for several Local Divisions to be created. For other states that do not qualify on their own for a local division to be set up, then it will be possible to combine with another state to create a regional division. For example, a Scandinavian regional division may be established. A Local or Regional Division court is where infringement actions may be brought.
The territorial extent of the court will include ‘contracting member states’ to the UPC Agreement of the EU (contracting member states that have signed the UPC Agreement: all EU states except Spain and Poland).
The UPC will have jurisdiction over not only unitary patents, but also standard European Patents and supplementary protection certificates (SPCs).
The seat of the central division of the court was decided after much political argument within the EU. The main seat of the central division will be in Paris, with separate specialist divisions in London (for cases relating to human necessities, chemistry
and metallurgy) and Munich (for cases relating to mechanical engineering, lighting, heating, and weapons and blasting).
In any case brought before the central division, there will be a panel of judges assigned to decide the matter. The panel will be composed of two legally qualified judges and one technically qualified judge. It is possible for a single judge to decide the case if the parties agree. The panels must be composed of mixed nationalities.
The judges in the local and regional divisions will also sit in panels. The panels will be composed of three legally qualified judges. It is possible to request an additional technically qualified judge. Again, it is possible to request a single legally qualified judge if the parties agree. The panels must be composed of mixed nationalities.
The seat of the Court of Appeal will be in Luxembourg. The judges in the Court of Appeal will also sit in panels. The panel will be composed of three legally qualified judges of mixed nationalities and two technically qualified judges.
The setup of the UPC, therefore, provides for a certain amount of forum shopping. For example, an action for patent infringement can be brought before the Local or Regional Division of the CFI in the country or region where the alleged infringement occurred or where the defendant has their normal residence or place of business. The system also permits ‘bifurcation’, where actions for infringement and revocation could be heard in separate courts (e.g., an infringement action could proceed in a local or regional division but the corresponding revocation action could take place in the central division). This scenario is familiar to users of the present German and Austrian legal systems. However until the UPC has been up and running for a number of years it will be difficult to know how prevalent bifurcation will be under the new UPC system.
The question over the languages to be used in the court has been controversial. The UPC Agreement provides that for the central division, the language of proceedings will be the language of the patent as granted. However, for local and regional divisions, the language of the proceedings may be an official language of the EU (which is an official language of the member state in which the division is located) or an official language of the EPO if designated as the language of proceedings of the state. For the Court of Appeal, the language of proceedings will be the same as that in the proceedings before the CFI. Some variations are also allowed on the request of the parties and with the agreement of Court.
The UPC will have the power to decide questions of infringement and validity. Articles 25–30 define the scope of the rights of the patent proprietor, its
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limitations and prior user rights. The UPC will have Rules of Procedure that are currently under discussion and subject to a public consultation process.
There are transitional provisions affecting the UPC. During a transitional period of 7 years, actions for infringement and revocation of standard European patents and actions for infringement and declarations of invalidity of SPCs may still be brought before national courts. This transitional period may, in due course, be extended by an additional 7 years following a review of the new patent system by the Administrative Committee.
During the period of the transitional provisions there will be an option for patent proprietors of standard European patents to avoid the jurisdiction of the court. A proprietor of a standard European patent or patent application granted or applied for prior to the end of the transitional period and a proprietor of an SPC can opt-out of the exclusive competence of the UPC provided the Registry is notified of the opt-out at the latest 1 month before expiry of the transitional period. A proprietor of a Unitary patent cannot therefore avoid the jurisdiction of the court.
The UPC Agreement is an international Agreement between participating EU member states. Consequently, the Agreement is required to be signed by the member states who wish to take part (the ‘contracting member states’). The Agreement also needs to be ratified by the national parliaments before it can come into effect. The Agreement also needs to be brought into effect before the Unitary patent system can be implemented.
Participating/contracting EU member statesAs indicated in [102], certain member states of the EU have decided not to participate in the Unitary patent system. Although Italy and Spain unsuccessfully challenged the legal basis on which the Unitary patent has been be instituted, Italy has signed the UPC Agreement. Spain has filed additional legal challenges also as discussed above. As of the date of writing this paper, Poland has declined to sign the UPC Agreement, so for the time being it would also be outside the Unitary patent system.
The participating EU member states that have agreed to take part in the Unitary patent so far are: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Germany, Denmark, Estonia, Finland, France, the UK, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Sweden, Slovakia and Slovenia.
Croatia became a full EU member state on 1 July 2013, so will also be bound by the relevant EU legislation.
The contracting member states that have signed the UPC Agreement so far are: Austria, Belgium, Bulgaria,
Cyprus, Czech Republic, Germany, Denmark, Estonia, Finland, France, the UK, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Portugal, Romania, Sweden, Slovakia and Slovenia.
Standard European Patents granted by the EPOThe EPO was set up under the terms of the EPC governs, which is an inter-governmental treaty between various different countries [103] in Europe and includes states that are not yet EU member states.
The list of non-EU member states that are signatories of the EPC comprises: Albania, Switzerland, Iceland, Liechtenstein, Macedonia, Monaco, Norway, San Marino, Serbia and Turkey.
There are also some non-EU member states that have entered into agreements with the EPO to provide for the recognition of the grant of a patent by the EPO (so-called ‘extension’ states). As of 1 January 2012, the ‘extension’ states are: Bosnia and Herzegovina and Montenegro.
Practical consequences of the new system ■ Patent filing
Applicants for patents in Europe will need to consider whether the impact of the new UPC will be an advantage for their commercial strategies. If the new UPC is seen as a net negative, then applicants may wish to consider strategies to avoid the jurisdiction of the court.
If parties wish to avoid the jurisdiction of the UPC then filing national patent applications will be a potentially viable option. In terms of costs, national patent filings can often be more expensive than a corresponding European patent application (once more than three or four are filed). However, if only a relatively low number are required then national patent filings could be a useful strategy.
Applicants will need to remember that where an international patent application has been filed via the Patent Co-operation Treaty, that some states have ‘closed’ the national route (e.g., France), so any national patent filings would need to be made as ‘Paris Convention’ filings within 12 months of an earlier priority date rather than as national phase filings derived from a Patent Co-operation Treaty application.
Alternatively, if an applicant wishes to use the standard European patent application then it will be possible to avoid the jurisdiction of the UPC by filing an ‘opt-out’ request as described above. The ‘opt-out’ will be available for parties to request during the period of the transitional provisions as described above. Once an ‘opt-out’ is registered for a European patent, the patent will remain outside the scope of the UPC system and will not fall under the jurisdiction of the court. The ‘opt-out’
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will therefore remain in effect even once the transitional provisions have expired, but no new ‘opt-out’ could be registered after this time.
If the UPC and Unitary patent are seen as a net positive for applicants, then clearly such parties will be keen to see implementation of the system as soon as possible. However, although an earliest in force date is known, it is likely that the actual date of entry into force will be later in 2015, as described above. Applicants who are keen to receive the grant of a Unitary patent can try to put themselves in position to take advantage of the new system from 2015 by delaying the prosecution of any pending European patent applications. Given the current backlogs for examination in the EPO at present, it may be that applicants may not need to do much to slow cases down, but there are steps that can be taken to delay procedures.
Applicants may want to consider filing strategies in Europe that include a European patent application and one or more national patent applications.
■ Patent grantApplicants will not be forced to select a Unitary patent upon grant of a European patent application. The standard validation system will continue to be available.
The level of renewal fees for Unitary patents will be set at a level based on a multiple of the current level of national renewal fees payable for a European patent validated under the current system. It is therefore possible that for applicants who only require validation in five or six states that the Unitary patent may not be that attractive. The London Agreement, which dispenses with national validation formalities entirely or at least partially, will continue to apply, which may permit applicants to achieve the required territorial scope of protection with minimal additional costs.
One point to bear in mind, however, is that once the transitional provisions have expired, all standard European patents that have been validated nationally and where no opt-out has been registered, will fall under the jurisdiction of the UPC. For new European patents granted after the expiry of the opt-out provisions, the Unitary patent may be increasingly seen as a cost-effective alternative to separate national validations.
Patent proprietors may decide to obtain patent protection in Europe through national validations of a European patent and/or a Unitary patent.
■ OppositionOne interesting area to monitor will be whether the availability of a revocation procedure before the Central Division of the UPC will impact upon the opposition procedure available before the EPO. The costs of the EPO opposition procedure should be lower than any
revocation procedure, but the current delays at the EPO in hearing and deciding on oppositions and appeals arising from oppositions means that parties may turn to the UPC revocation procedure.
■ Patent enforcementWhether the UPC will be seen as an attractive forum to decide patent litigation will depend on judgments from the court, so the early years will be critical. Many patent proprietors will not relish the uncertainty over the costs and quality of decisions, so it is expected that a large number of opt-out requests will be filed to take standard European patents outside the jurisdiction of the UPC. The uncertainty over the UPC’s effectiveness means that the initial take-up for the Unitary patent may also be low until the UPC establishes itself.
ConclusionThe likely impact of the new system is therefore uncertain, as many details remain to be decided. The recent legal challenges by Spain could still derail the project. Some final consequential amendments to other EU Regulations are also required before it can be brought into effect. Finally, the participating states need to ratify the UPC Agreement in order for the Unitary patent to be brought into existence.
There are positive developments in the sense that there are now working groups tasked with the practicalities of setting up the UPC and the Rules of Procedure of the UPC. Likewise at the EPO, there is a team working on the procedures necessary to implement the Unitary patent.
Whether the new system will save costs as is hoped or be more expensive remains to be seen. The level of fees set by the UPC and the scale of renewal fees set for the Unitary patent will be critical in this respect.
It is as yet uncertain whether or not the arrangements under the UPC and Unitary patent will, as intended, facilitate the growth and development of the pharmaceutical industry in Europe by streamlining the patent grant process and downstream litigation procedures. At least initially the new system may lead to a period of uncertainty as parties familiarize themselves with the new legal landscape.
Future perspectiveIt is clearly an achievement for the various participating member states to have reached agreement on the Unitary patent and the UPC where all previous attempts over the previous 40 years had failed. There is clearly a large degree of political goodwill behind the new system, so the prospects for success appear good. However, the early years of the UPC will be critical in how the new arrangements are accepted by all users.
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Financial & competing interests disclosureThe authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or f inancial conflict with the subject matter or materials discussed in the manuscript. This includes
employment, consultancies, honoraria, stock ownership or options, expert t estimony, grants or patents received or pending, or royalties.
No writing assistance was utilized in the production of this manuscript.
References1 Spain and Italy v. Council. Case C-274/11
(2013).
2 Spain and Italy v. Council. Case C-295/11 (2013).
3 Kingdom of Spain v. European Parliament and Council of the EU. Case C-146/13 (2013).
4 Kingdom of Spain v. Council of the EU. Case C-147/13 (2013).
5 Regulation (EU) No 1257/2012 of the European Parliament and of the council of 17 December 2012 implementing enhanced
cooperation in the area of the creation of unitary patent protection.
6 Council Regulation (EU) No 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements.
