After years of trials and tribulations, significant reforms to the European patent system, including the creation of the Unified Patent Court (“UPC”) and implementation of the Unitary Patent, are expected to take effect as soon as later this year. In view of this, holders of traditional European patents (“traditional patents”) need to make strategic decisions for their European portfolios over the next few months.
The genesis for the UPC and unitary patents stems from an international agreement that originated in 2013 – the Unified Patent Court Agreement (“the Agreement”). And while the European Patent Organization (“EPO”) has 38 member states, including European Union and non-EU countries, currently there are 25 countries that have signed onto the Agreement. The 25 countries include all European Union countries except for Spain, Poland, and Croatia. In view of Brexit, the United Kingdom is not participating.
Details regarding the UPC and the Unitary Patent are explained below but, as a reminder, a Unitary Patent provides patent protection in countries that are signatories to the Agreement on grant of a patent by submitting a single request to the EPO for a Unitary Patent. This contrasts with the current or traditional system in which an applicant, on grant, must choose individual jurisdictions where the traditional patent is validated. The Unitary Patent is intended to streamline obtaining patent protection in multiple European jurisdictions. The traditional system will remain an option in parallel with the Unitary Patent option. For either option, you still file a single European application.
The UPC
The UPC is a single patent court system for enforcement and invalidation proceedings involving a Unitary Patent, and the UPC will be the default court for traditional patents (in states that ratified the Agreement) unless a patent holder has chosen to opt out of the UPC. Transitional provisions will exist at the outset of the UPC that allow for (i) an “opt-out” from the UPC by holders of existing traditional patents and future traditional patents that are granted during the transitional period (discussed in more detail below), and ii) a default of concurrent jurisdiction between European national courts and the UPC over traditional patents (depending on ‘opt-out’ status). As a result, during the transition period, disputes involving traditional patents may be filed in either the UPC or a national court unless there is an opt-out. If an applicant or holder of a traditional patent opts out of the UPC’s jurisdiction, infringement actions and validity challenges may only be brought in the national courts of the validated countries. The transitional period encompasses the first 7 years of the UPC, although it may be extended up to another 7 years.
The UPC will have jurisdiction over Unitary Patents and traditional patents for which the ‘opt-out’ has not been taken. This means that these patents will be subject to UPC determinations of:
- Injunctions
- Infringement
- Damages, account of profits, legal costs
- Revocation
- Declarations of non-infringement
- Supplementary Protection Certificates (“SPCs”)
It is important to reiterate that every existing traditional patent and any traditional patents that grant after the Agreement takes effect will be subject to the UPC’s jurisdiction by default unless the patent holder takes affirmative action to opt-out of the new system during the transitional period. Opt-outs are not available after the transitional period. The UPC will have jurisdiction over patents that are granted after the transitional period and that are validated in any EU member state that ratified the Agreement (assuming an opt-out was not registered during the transitional period), but any traditional patent validated after the transitional period in states that are not part of the Agreement (even in parallel with a Unitary Patent) will remain under the jurisdiction of the respective national courts. If you want to preclude UPC jurisdiction after the transitional period, you will need to file national applications at the outset, rather than a European application. In hybrid situations where a patent is validated in one or more UPC member states and one or more non-UPC member states, the UPC will have jurisdiction over the patent in the UPC member states and the respective national courts will have jurisdiction over the patents in the non-UPC member states.
A “sunrise” period is expected to start later this year and will last approximately 3 months. During the sunrise period, opt-outs may be submitted with the EPO and the EPO also will accept requests for unitary patent protection. The opt-out affects all states subject to the UPC – there are no partial opt-outs. If opting out is preferred, it is important to do so during the sunrise period – before the UPC formally gets started. Opt-out applications must be filed electronically with the Registry of the Unified Patent Court via its case management system, but there is no government fee for submitting an opt-out request. The opt-out will become effective on entry in the UPC register. Any legal actions filed with the UPC prior to opt-out registration will take precedence and prevent the opt-out from becoming effective.
Patent holders may withdraw the opt out if there is no existing action involving the European patent in a national court but, after doing so, a patent holder may not opt out again. If an action has commenced against a traditional patent in the UPC and an opt-out is not already registered, an opt-out is no longer available.
Unitary Patent
The Unitary Patent is a single patent whose territorial scope will extend to all participating countries, although this may not encompass all 25 signatory countries at the outset depending on the countries that have formally ratified the Agreement. The Unitary Patent will exist alongside the current European patent system and the initial process for obtaining patent protection will be the same for both systems. More specifically, an applicant will file an application with the European Patent Office and the application will be examined consistent with current procedures. After the application is accepted, the applicant will need to decide – within one month of publication of the grant – whether to request a Unitary Patent in UPC member states and be subject to the jurisdiction of the UPC, or to opt out of the UPC and validate in selected countries as a traditional patent. After the transitional period ends, the UPC will be the only jurisdiction for a Unitary Patent and for any European patent that is validated in a UPC member state (assuming it was not opted-out during the transition period) to the exclusion of the national courts of the UPC member states. One aspect of Unitary Patents worth noting is that the geographical scope of a particular Unitary Patent does not increase over time as new countries ratify the Agreement. Instead, the plan is for different ‘generations’ of Unitary Patents based on the countries who have ratified at the time of the patent grant.
Unitary Patents will still be subject to translation, but not in the same way as non-unitary European patents. The EU has three official languages – English, French, and German – and traditional patents must have the claims translated into all three languages. In contrast, Unitary Patents (not just the claims) need to be in or translated into English and either French or German during the transitional period. Currently, these translation requirements will sunset after the transition period, although translations may be needed if a patent dispute arises. Also, a single annual renewal fee will apply, which is expected to be roughly equivalent to the combined fees for the top four validation countries under the existing non-unitary system.
Unitary Patents are enforceable in every country that has ratified the Agreement at the time of grant and can be enforced through the new UPC, which will apply a single body of law. One drawback for Unitary Patent holders is that the Unitary Patent could be invalidated in every applicable European country via a single validity challenge at the UPC. Another potential drawback is the uncertainty of a yet-undeveloped body of law to be applied by the new court. Also, a Unitary Patent may need to be supplemented with national validations to cover jurisdictions where the UPC has not been ratified or is not available. Still, advantages of the Unitary Patent and the UPC, including the expectation that injunctions may be more easily obtained than they are in the U.S., quicker final decisions, and a centralized court for infringement actions, may weigh favorably toward the new system.
Your company’s European patent goals and strategies will play an important role in the decision whether to opt out of the UPC. Consider taking the following steps soon to avoid being caught off-guard when the Agreement takes full effect:
- Confirm that your company is the actual owner of the European patent or application. Only the owner of record with the EPO can file for the opt out. If your company has gone through a name change or European patents have been acquired from third parties, you may need to take appropriate steps to update ownership with the EPO.
- Licensees of European patent rights should communicate with licensors about the impact the UPC may have on the patent rights.
- For existing European patents, patent holders should identify which patents to opt-out of the UPC’s jurisdiction. Patent holders should work with counsel to complete the opt-out procedure before the sunrise period ends.
- For pending European patent applications, applicants should consider – in the next 3-6 months – whether to opt out from the UPC’s jurisdiction because the timeframe for the decision is relatively short after the application is accepted.
- If a European application is near acceptance or has been accepted, and the applicant desires to obtain a Unitary Patent and avail itself of what the UPC offers, the applicant should consider taking steps to delay grant until the Agreement takes full effect.
- For future filings, applicants who desire to avoid the UPC’s jurisdiction altogether may consider filing direct national patent applications rather than filing through the European Patent Office.
We can assist you in weighing the strategy considerations at play with these decisions.