04 May 2016

The Impact of the Unified Patent System

The patenting system across the European Union is undergoing major change, and is currently the subject of the largest overhaul in 30 years. Within the next year (the exact date is shortly to be confirmed), the Unified Patent Court (UPC), a new court designed to allow pan-European patent revocation and infringement actions, will commence operating.  At the same time, the Unitary Patent (UP), a single patent with effect across all participating European Union member states, will also come into effect.  Here, we will explore the impact that the new system will have on businesses, and look at the advantages, as well as disadvantages, that it will bring with it.

The Unitary Patent

Following central examination by the EPO, a classical European Patent (EP) provides a bundle of separate national patents each effective in those states in which it is validated.  In contrast, the new Unitary Patent (UP), whilst still examined by the EPO, gives rise to a single patent right which covers all participating European Union states.

Notably, only a single fee is payable to renew a UP, rather than a separate fee per state.  The renewal fee will be set to be equivalent to the current renewal fees for the four largest states, resulting in reduced renewal fees for applicants who would normally validate an EP in a larger number of states.  However, it will not be possible to let protection lapse in some states to reduce overall renewal fees in the latter years of the patent term, as with classical EPs.

The Unified Patent Court

The UPC will enable pan-European patent revocation and infringement actions in respect of both new UPs and classical EPs, both of which will in due course be subject to the exclusive jurisdiction of the UPC.  This is intended to reduce the costs of litigation and to harmonise patent litigation and revocation proceedings across Europe.  In addition, patentees will now have access to pan-European patent infringement injunctions.

The UPC will be made up of specialist patent judges, and will consist of a number of Courts located in various participating states, including a central division split across Paris, London, and Munich and having the exclusive ability to deal with revocation actions and declarations of non-infringement, a number of local and regional divisions, and a Court of Appeal based in Luxembourg.

Transitional period and opting-out

Infringement or revocation actions in respect of a classical EP may still be brought before a national court during an initial transitional period of seven years (extendable for another seven years) following the introduction of the UPC.

Importantly, patentees will have the opportunity to opt-out of the exclusive competence of the UPC in respect of current or pending classical EPs during the transitional period.

New options for patent protection in Europe

Following the introduction of the UP and the UPC, there will be four alternative routes for seeking patent protection in Europe.

  1. Unitary Patent:  Applications at the EPO are prosecuted as normal, and are then designated as a Unitary Patent at grant.  A UP covers all of the participating European Union states.  Other EU states that are not participating (such as Spain and Poland), or other European states not part of the EU, can be covered via separate validations as per a classical EP.
  2.  Classical European Patent:  An application prosecuted at the EPO may alternatively be validated as usual in a number of states of the patentee’s choice.   This may be more cost-efficient for applicants who do not want coverage in more than a small number of European states.  Classical EPs are automatically opted-in to the jurisdiction of the UPC.
  3. Classical European Patent (opted-out):  Classical EPs may be opted-out during the transitional period, making them subject to the jurisdiction of national courts (as in the current system), rather than the jurisdiction of the UPC.  The opt-out remains effective for the life of the patent.  There will be no opportunity to opt-out EPs following the expiry of the transitional period, but opted-out EPs may be opted back in at any time.
  4. National Patent:  Both the EPO and the UPC may be avoided altogether by applying directly at the respective national patent offices of the states of interest.  This will ultimately be the only recourse to avoid the jurisdiction of the UPC for new patent applications in Europe following the expiry of the transitional period.

Strategic considerations 

Among the most pressing issues for businesses having patent interests in Europe are:

  • Central attacks – The risk of a central attack via the UPC invalidating a UP or a non-opted-out EP makes these patents a riskier option for important products, as opposed to using an opted-out EP and/or national patents.
  • The opt-out option – Opting-out is likely to be the preferred option initially, until applicants have a clearer understanding of how the new court will operate. However,  this should be considered on a case-by-case basis.  It is not possible to opt-out where actions are already pending before the UPC, so it is expected that there will be an early rush to opt-out patents when the UPC is first introduced.
  • Filing strategy – The best option for patent protection should be evaluated based on the merits of each IP asset.  It will be possible to use the various options in combination to maximise the protection available, such as by using opted-out EPs or national patents with a broad claim scope in combination with a related UP with a narrower scope.
  • More attractive patent litigation – The UPC sets up Europe as an attractive competitor to the US for litigation, as it will cover a larger population base while likely being cheaper and faster than the US system.  The provision of various different local and central courts will allow litigants to act strategically when considering where to bring an action.

Clearly, these major changes will significantly alter the patent landscape across Europe and it is important for businesses to consider their strategy now so as to ensure that they are in the best possible position for the dawn of this new era in Europe.

Fore more information about this topic please contact your attorney at Mathys & Squire, or send an email at [email protected].