Patent Procurement Strategy in Light of the Unitary Patent and Unified Patent Court
Making Your Mind Up…
The Unitary Patent (UP) and the Unified Patent Court (UPC) will significantly alter the patent landscape in Europe when they come into force, now estimated to be early 2017. Patent proprietors and portfolio managers should begin developing their procurement strategy now, if not already underway, to ensure they obtain the greatest benefit and minimise risk from the new regime. Such consideration should include already granted and validated European Patents, pending European patent applications and future patent procurement strategy in Europe.
- Existing European Patents and pending European applications, once granted and regardless of a request for unitary effect being made or not, will automatically come under the exclusive jurisdiction of the UPC unless opted out
- Non-opted out European Patents will have UPC rules apply for the states in which they have been validated and will be subject to single infringement and/or revocation proceedings that are effective for all the validated states
- No fee for opt-out, very significant as cost of possible opt-out fees sometimes seen as deterrent to opting out
- Opt-out can be made at any time for a Transitional period of seven years from the UPC coming into force BUT if UPC proceedings have already started then opt-out is no longer possible
- You can opt-in, a so-called withdrawal of opt-out, at any time
- There will be a “Sunrise period” for filing opt-outs prior to the agreement coming into force
- UPs will be obtained by making a request for unitary effect within one month of grant of European Patent
- Renewal fees equivalent to the sum cost of renewal in the four most popular countries for validation of European Patents, ie more expensive than the typical two (DE & GB) or three (DE, FR & GB) validation countries most proprietors choose
- Cannot opt-out of UP
- Cannot have different claims for different states so prior national rights effect whole of EU through UP
- UPs are under the exclusive jurisdiction of UPC
- Significant upfront court costs based on value of case
- Brexit – Should the UK leave the EU it will not affect WP Thompson’s ability to represent clients before the EPO or the UPC and to obtain UPs as well as conventional European Patents
- At the time of writing the bookmakers (and their view is generally more reliable than opinion polls) give 2:1 against Brexit
Details of how to effect an opt-out from the UPC system have been released. It will require entry into the UPC electronic case management system of the publication number, the one beginning “EP”, for each application/patent you want to opt-out. The system will cross-check with the EPO database to identify which patent the number refers to and the name of the patent will be displayed.
If the displayed details are correct then the user confirms that you have the authority to opt the patent out of the UPC.
Before the UPC starts accepting opt outs a process will be in place for instances where, after completing the opt-out process, a user realises that a patent number was entered incorrectly. A similar process exists for withdrawing an opt-out.
WP Thompson will be happy to assist Applicants and Proprietors in requesting opt-outs and withdrawing them as required and have developed a cost effective procedure for doing so.
- Should I opt-out my existing European Patents?
- A “wait and see” approach would not be unreasonable for at least some of your portfolio, only letting the least important cases fall under the UPC. The UPC is a totally new and untried system and so observing its performance, the nature of decisions coming out of it and costs seems a sensible approach before using it. Opt-out in the Sunrise period would be the most prudent approach.
- Should I wait and file an opt-out once I have seen how effectively the UPC functions?
- This is a high risk strategy because it provides an opportunity for a competitor to file a revocation action or initiate other proceedings and remove your right to an opt-out. Better to opt-out in the Sunrise period and then withdraw the opt-out.
- Should I request an UP?
- Again, a wait and see approach would not be unreasonable although “testing the water” with a few UPs may be an attractive proposition. However, you may not wish to risk your important cases in the new system as single stand or fall rights and incurring the expense of paying a single (higher) renewal fee for less important cases might not be commercially viable. Options for balancing these conflicting concerns are discussed in detail later in this paper.
- How can I avoid the UPC after the transitional period expires?
- The only way to avoid the UPC once the transitional period expires is not to file a European patent application. A viable and cost effective alternative is to file national patent applications. However, it is not possible to obtain a national patent from a PCT application in every EPC contracting state.
- Do I want to shape the UPC practice?
- Keep cases in the UPC regime so as to test and develop procedural law for example. Possibly even to initiate litigation to create scenarios that would test and develop aspects of concern or interest to you.
- Although not part of procurement strategy it would be prudent to file “protective letters” at the various courts to get notice of ex parte applications for provisional measures , eg for preliminary injunctions, if concerned over litigation. Requires facts, evidence and legal argument as to why application for provisional measure should be refused, a fee and is only valid for six months but extendable on payment of fee
The UP and UPC structures and issues are discussed in more detail below
The Unitary Patent
The UP will be a new right in Europe that is intended to dispense with some of the cost and formalities of the existing systems, such as the need to obtain translations of the description and/or claims, pay validation fees, and pay renewal fees for each state. The UP will take effect in 25 of the 28 EU Member States (Croatia, Poland and Spain are not participating in the enhanced cooperation of the UP at the time of writing). The procedure for filing, prosecuting and granting UPs will remain the same as the existing system that is currently administered by the EPO, but there will be an option to request the patent have unitary effect within one month of grant.
The Unified Patent Court
The UPC will have jurisdiction over the participating 25 EU Member States. The UPC will also have jurisdiction over European patents (EPs) granted by the EPO in the EU Member States participating in the enhanced cooperation of the UP, unless the proprietor has opted‑out of the UPC (available during a seven year transitional period). The UPC will, of course, also have jurisdiction over UPs in all 25 participating EU Member States. The UPC will not have jurisdiction over national patents, patents in non‑EU Member States (e.g. Albania, Iceland, etc.) and patents in non‑participating EU Member States, namely Croatia, Poland and Spain.
The structure of the UPC
The UPC will consist of a Court of First Instance and a Court of Appeal. The Court of First Instance will have Central, Local and Regional Divisions, which will have multinational panels of judges. The Central Division will be located in Paris, London and Munich, and each court will deal with particular subject areas, e.g. chemistry cases will be heard in London.
The options available in Europe
There will be four ways in which patent protection can be obtained in Europe once the UP comes into force:
i) National patents granted by national patent offices;
ii) EPs granted by the EPO enforceable in national courts;
iii) EPs granted by the EPO that are justiciable under the UPC; and
iv) UPs granted by the EPO that have unitary effect.
The UP does not cover all of the available EPC contracting states, so it might be necessary to obtain protection by validating an EP in those specific EPC contracting states or by filing national applications.
It will still be possible to defer the costs associated with obtaining a UP by filing a PCT application. However, it is not possible to obtain a national patent from a PCT application in several EPC contracting states, e.g. Belgium, France, Ireland, Italy, the Netherlands, etc. Thus, if national protection is required in those states it will be necessary to incur translation costs at the start of the patenting process and before an applicant has received any real indication of the patentability of its invention.
What option is best for my business?
It will be necessary to weigh up the costs, risks and advantages associated with each of the available options in order to make an informed decision on the best strategy for a given portfolio. It should be borne in mind that there is no universal strategy for all portfolios, and decisions should be made on a case‑by‑case basis taking into consideration the commercial value of the invention to the business.
Pros and Cons associated with the UPC
The risk of revocation by a single court in all of the participating EU Member States at any time during the lifetime of a patent might not outweigh the perceived benefit of obtaining an injunction that will take effect in all of the participating EU Member States. It is central revocation that is the most persuasive reason to opt‑out of the UPC during the transitional period. Another reason is the fact that the UPC is not yet an established court, so there might be some merit in opting‑out and waiting to see what happens with early cases litigated before the UPC.
In contrast, national patents and EPs that are opted‑out of the UPC will need to revoked and enforced on a country‑by‑country basis, which might be more attractive to businesses that are risk adverse and wish to maximise their options, even if it involves incurring additional costs.
The unitary nature of the UP means it can be renewed by the payment of a single renewal fee and it can lapse, be limited and/or transferred in respect of all participating EU Member States. The UP will also have lower translation costs, because, in time, it will be necessary to translate the claims into English, French and German only. There are other potential cost savings to be made, but they will largely depend on the number of countries in which protection is desired.
EPs, on the other hand, will need to be validated, translated (if the country is not a party to the London Agreement) and renewed in each EPC contracting state in which protection is desired. It is worth noting that the most popular countries for validation are DE, FR & GB (over 70% of EP patents are validated in these countries only), which are all party to the London Agreement). If an EP has been opted‑out of the jurisdiction of the UPC, it will need to be revoked and enforced on a country‑by‑country basis. Central limitation will still be possible post‑grant using the EPO’s central limitation procedure. Opt-out cannot be made after proceedings, infringement, revocation or otherwise have been initiated under the UPC but withdrawal of opt-out can be made at any time.
The ongoing cost of renewal fees should not be underestimated, as they increase towards the end of the normal 20‑year term of a patent. The single renewal fee payable for UPs will be set at the sum of the four countries in which EPs are typically validated, namely France, Germany, the Netherlands and the UK. Thus, the costs of renewing a UP should be less than the cost of renewing four national patents that are derived from an EP, because it will be unnecessary to pay additional charges from attorneys/renewal agencies.
On a renewal fee basis alone, the UP might be a more cost effective way for applicants to obtain protection in four or more EPC contracting states.
Medicinal and veterinary products
In Europe, it is currently possible to obtain supplementary protection certificates (SPCs), which offer compensation for the delay in obtaining regulatory approval, e.g. a marketing authorisation or a product licence. SPCs enter into force once the patent expires, and they can extend the term of protection for the active ingredient by up to five years. An additional six months protection may be available for medicinal products that have undergone appropriate paediatric testing (a so‑called “paediatric extension”). SPCs and paediatric extensions can be based on traditional national patents, or a European patent that has been validated in one or more EPC contracting states.
The proposed legislation for the UP does not currently include any provision for SPCs or paediatric extensions. This will, of course, be a major disincentive for companies that produce pharmaceutical and veterinary products to obtain UPs, because doing so would require them to forgo up to five and a half years additional protection for a given product at a time when the revenue stream is generally at its highest.
Litigation and bifurcation
Infringement actions must be filed and heard before a Local or Regional Division where the actual infringement has occurred or where the defendant (or one of the defendants) is resident or has a place of business. If a defendant is not based in the participating EU Member States, then actions for infringement must be filed and heard before the Central Division. In contrast, any stand-alone revocation action should be brought before the Central Division and a subsequently filed infringement action can be brought before the Central, Regional or Local Divisions, as discussed.
If a counterclaim for revocation is brought in response to an infringement action, then the Local Division may hear the revocation action or stay the infringement action and refer the revocation action to the Central Division; or refer both the infringement and revocation actions to the Central Division (if both parties agree).
There is a scale of court fees at First Instance and Appeal dependent on the value of the case and also a scale for recovery of costs.
If you have any questions or wish to know more please contact your usual WP Thompson contact or the authors.
© 2016 Dr Julian M Potter (firstname.lastname@example.org), Stuart Forrest (email@example.com) – the authors assert their moral rights to be identified as the authors
 WP Thompson news article (25 June 2015) - Unitary Patent Renewal Fees Fixed (at least for the next 4 years) - http://www.wpt.co.uk/resources/news/unitary-patent-renewal-fees-fixed-at-least-for-the-next-4-years/
 It will still be possible to carve out territories for licensing purposes.