June 16, 2017
If you’re the owner of a European Patent (‘EP’) or considering applying for one, but haven’t yet been brave enough to face the prospect of getting to grips with the forthcoming European-wide patent system, then this article is for you. The story thus far on the proposed unitary patent (‘UP’) and its specialised custom-built court system, the Unified Patent Court (‘UPC’) has been decades in the making. This article aims to tell you ‘what-you-need-to-know’ about the UP and UPC, and why it all matters.
What is it?
The current European Patent is a bit of a misnomer. It is better to think of an EP as a bundle of national patents, but with the added administrative convenience of filing for the bundle at one central location, the European Patent Office (‘EPO’). The current system isn’t strictly a “European” initiative – the participating countries are all signatories to the European Patent Convention, a multi-lateral treaty which has been around since 1973 in one form or another and currently includes countries outside the European Union, such as Iceland and Monaco. This is why Brexit will have no impact on the EP system.
That an EP is largely a ‘national’ patent is also its biggest inconvenience. It offers protection in only the countries that the owner has designated. An owner must bring infringement proceedings (or a non-owner bring patent revocation proceedings) in each country on an individual basis. European-wide injunctions remain impossible as a result. Further, applicants must consider relevant validation costs for each designated country and the separate renewal fees, often a costly measure.
The new UP/UPC system seeks to resolve all of that. The owner of a UP will instantly have patent protection across all participating European Member States (Spain, Poland and Croatia are still holding out at time of writing; others have yet to ratify the framework agreement). There will be a single validation fee. There will be a single renewal fee. There will be a single, specialised, court system (the UPC) to deal with infringements and revocations.
So what is happening now?
Setting the UP/UPC system up has been an incredibly complex endeavour, taking years of work to agree the general framework agreements. Amid all the complexity, one essential thing must occur to make it all happen: a minimum of 13 Member States must ratify the framework agreement with 3 key participants, those being the UK, Germany and France, being required. To date, only 12 Member States have ratified and of the 3 essential participants only France has ratified – the UK and Germany holding off until most of the systems have been put into place, which includes setting up the court system, rules of procedure, signing leases on the court buildings, recruiting judges and the like.
All looked on course, but the Brexit referendum result created a very particular political obstacle to the whole system. How could the UK ratify an agreement in which they couldn’t participate? Since the referendum, time has healed some of those wounds. The Conservative government (prior to the 2017 general election) indicated that the UK would ratify the agreement nevertheless. The legal challenges appear to have been mostly overcome, and the general consensus is that the UK can still participate in the system, although it still isn’t clear, in the current political environment, how the UK will be able to justify a UPC system where the ultimate appeal court is the CJEU to those who supported a ‘hard Brexit’.
Timings once again have been pushed back: The UK Government put the UP agenda on hold for the 2017 general election, and Germany just this month has seen a constitutional challenge to the UP/UPC in the German Federal courts (the details of which currently are not publicly known). Despite this, the general consensus is that the new system is looking not just likely, but inevitable – in place by, possibly, Spring 2018.
What do you need to do?
The current EP system will continue to exist as it is. The UP system will exist in parallel.
For new applicants, patent applications will still be made through the EPO in the usual way. However, the applicant will then be given the opportunity to elect for a UP. If a UP is chosen, the applicant will benefit from the costs savings a UP can offer, compared to an EP filed in multiple territories. Applicants will need to consider carefully which Member States are participating (or likely will participate) at the time of election. Further, the UPC will have exclusive jurisdiction over new UPs, meaning a single action in the UPC could have European-wide effect. This is tactical point for those patent-holders who fear having their key patents revoked in one shot, and instead would prefer to defend their patent(s) in individual countries one action at a time.
For current holders of EPs, the most relevant question is which court system they prefer to be under the jurisdiction of. When the system goes live, all EPs will automatically fall under the jurisdiction of the UPC where that Member State has ratified the framework agreement. This has real consequences for some patent holders, as the new court and court procedure will be largely untested (although experienced patent judges are being recruited). Further, in one revocation action filed at the UPC, a patent-holder could have all of their EPs revoked at once.
The system, however, has a built-in “sunrise period” for patent holders to opt-out of the UPC (envisaged as being an initial 7-year period, but extendable). While many patent-owners will see the benefit of leaving their patents ‘in’, patent-owners with EPs in multiple territories should start thinking now about whether they want to keep things as they are for as long as possible. The general guidance, however, is to opt-out as soon as possible as soon as you are able if you want to keep the status quo.
To opt-in or opt-out may depend on a great many factors, including the number of EPs you own; the number of designations you have; whether a particular patent is the “crown jewel” of your portfolio; and the sector the subject matter of the patent relates to.
If you need more information or advice, speak to our patent lawyers.
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