THE EUROPEAN UNITARY PATENT SYSTEM IS FINALLY BACK ON TRACK AND IS NOW SCHEDULED TO ARRIVE IN MID/END 2022 ALREADY In the future, the European Patent Office might also grant a genuine European patent with unitary effect in all participating member states (currently all EU members with the exception of Spain, Poland and Croatia) The European patent system so far only provides for a...
THE EUROPEAN UNITARY PATENT SYSTEM IS FINALLY BACK ON TRACK AND IS NOW SCHEDULED TO ARRIVE IN MID/END 2022 ALREADY
In the future, the European Patent Office might also grant a genuine European patent with unitary effect in all participating member states (currently all EU members with the exception of Spain, Poland and Croatia)
The European patent system so far only provides for a centralized grant procedure, resulting in a bundle of national patents. This is now likely to change, and in the future, the European Patent Office might also grant a genuine European patent with unitary effect in all participating member states (currently all EU members with the exception of Spain, Poland and Croatia). These patents shall in future be enforceable against patent infringers before a Unified Patent Court (UPC) with effect for all participating member states.
The first ideas for such a unitary patent already existed when the European Patent Office was established in the 1970s. Efforts have intensified over the past fifteen years, and since 2013, the relevant agreements to implement this idea have been in place and have already been ratified by numerous EU member states.
Unexpectedly, the German ratification of the agreement on the UPC, which is essential for its entry into force, was held up twice by constitutional complaints, first in 2017 and then again in 2020. Besides some formal aspects of the ratification process, these complaints allege violations of the rule of law, of the fundamental right to effective judicial protection, as well as violations of EU law. The plaintiffs complained, in particular, that the judges at the Unified Patent Court are only appointed for a limited time period, so that judicial independence is not sufficiently guaranteed. The Constitutional Court dismissed all of these complaints, the latest now in June 2021. In the opinion of the Court, the plaintiffs were not able to prove that the organizational structure of the Unified Patent Court violated the rule of law, and to what extent this impaired the principle of democracy. After a four-year interval, the unitary patent has thus cleared a decisive hurdle.
However, some further obstacles on the way to realization remain. As a consequence of Brexit, the United Kingdom already withdrew from the UPC project last year. This poses organizational and legal challenges, because London is explicitly designated in the agreements as one of the three seats of the Unified Patent Court (alongside Paris and Munich). Germany has proposed a division of jurisdiction between Paris and Munich. In the Explanatory Memorandum, the German Federal Government argued that the withdrawal of the United Kingdom would not prevent the implementation of the Unitary Patent.
The provisions of the agreements were to be interpreted in such a way that the withdrawal of a member state, which could not be foreseen by anyone, did not prevent the entry into force for the remaining participants. In addition, the agreements were to be interpreted in such a way that, in the event of the London seat ceasing to exist, its responsibilities could be taken over by Paris and Munich, at least on a transitional basis. France, on the other hand, would prefer to consolidate in Paris. Several other countries have also signaled their interest in taking over the London seat. Italy, for example, has brought Milan into play and has pushed for a corresponding revision of the agreements. Even though the political will to move ahead apparently remains strong, we might still see some heated discussions on the details of the implementation. Moreover, preparations for the establishment of the Unified Patent Court and the selection of judges have come to a standstill due to the Brexit and the German constitutional complaints. This work now needs to resume as soon as possible.
Despite the remaining obstacles, optimistic voices believe that the unitary patent could become a reality within the next 12 to 18 months - a manageable timeframe given the 50 years of preparations.
If the unitary patent system finally comes into existence sometime in 2022 or 2023, patent owners will face tough decisions if and how to use it:
• After the system will have started to operate, unitary protection can be requested within one month after grant of a European patent, without an extra fee. But you should be aware that the UPC system not only affects newly granted European patents, but all existing European (bundle) patents in countries that have ratified the UPC Agreement. By default, they will all be subject to the jurisdiction of the UPC.
• Once a European patent is subject to the jurisdiction of the UPC, either by aforesaid default as a former European (bundle) patent, or as a genuine Unitary Patent, it can form the basis for a court decision on infringement that will be valid in all countries that have ratified the UPC Agreement. This allows, for example, for a cross-border injunction to be enforced directly in all participating countries, without the need to enforce the patent in each of these countries individually.
• Conversely, however, the patent is also subject to a centralized revocation, meaning that the UPC Courts, upon a corresponding challenge, will either uphold or invalidate a patent only in its entirety. Therefore, other than today (and to the extent that these countries participate in the UPC system), the patent cannot be maintained or successfully defended in some European countries, while already invalidated or challenged in others. This possibility is certainly one of the major risks for patent owners under the new UPC system.
• Despite the chances of enforcing patents in several jurisdictions at the same time, owners of European (bundle) patents do not necessarily need to take part in the new UPC system, in particular if they are concerned about the aforesaid risks. There will be a transitional period of at least seven years (possibly extended by another seven years) during which patent owners can opt out of the new system, but this requires an active filing of an opt-out request.
• Once the UPC system starts, the "default setting" applies. Also, an opt-out is not possible anymore once a patent has been subjected to the new system by commencing litigation. Patent owners will therefore be able to file their opt-out requests in a "sunrise period" even before the UPC Agreement comes into force, to avoid that their patents might be attacked by competitors in a centralized revocation action maybe even on the first day of the new system, i.e. before a "regular" opt-out can even be registered.
Now, considering the aforesaid, should you request unitary protection? Should you opt out your existing patents? It's a tough decision that depends on many factors, including the costs of validating and maintaining the unitary patent (moderate) and the costs of litigating patents before the UPC (probably also moderate), but also your faith in a completely new court system without any case law to rely on. Many big filers have vowed to make use of the new system, but may decide to opt out their crown jewel patents, at least for the start.
Either way, a careful review of your company's patent portfolio in Europe and a tailor-made strategy for the important questions of (a) which patents to opt out (and which not) and (b) how to best benefit from the new system, should certainly be back on your priority list - with only little time to lose before the UPC train will, finally, arrive.