European patent shake-up

The Unified Patent Court and unitary patent will bring the biggest change in the European patent landscape for over 35 years. It will bring both a new, unitary EU patent as well as a new, specialist international court system for European patents. This will have significant implications for business in Europe.

The new system comes in two parts: a unitary patent (UP) and the Unified Patent Court (UPC). The UP will be a single patent right that will be effective in up to 25 EU Member States, and possibly more over time. The EU already has Community Trade Marks (CTMs) and Community Designs (CDs) – the UP adds a similar patent right to that list. Unlike CTMs and CDs however, UPs will not be enforced or challenged in national courts. This will happen in a new international court, the UPC. The UPC will also have
jurisdiction over traditional European patents, subject to an opt-out that can be selected during a transitional period.

How will unitary patents be granted?
Strictly speaking, unitary patents will be “European Patents with unitary effect”. When available, a unitary patent will therefore be obtained via a conventional application for a European Patent at the European Patent Office (EPO). Unitary protection in all participating EU Member States can be selected by opting for a UP within a month of grant at the EPO. This applies only to participating EU Member States (currently all except Spain, Poland and Croatia). Protection in non-participating EU Member States, and other countries of the European Patent Convention, will be by national validation, as usual. A UP will be optional - it will remain possible to choose conventional European Patent protection in participating Member States, individually, if desired.

Once granted, renewals of UPs (including renewal fee collection) will be administered by the EPO rather than national patent offices. Renewal fees for a UP will be set at a level that should be attractive for those wanting EU-wide protection – users who choose narrow geographical coverage (a few EU states) should consider costs over the lifetime of their patents to determine how attractive the UP will be, compared to conventional European Patent protection on a country by country basis.

Unified Patent Court structure
The UPC will be a two instance court, comprising Local, Regional and Central first instance divisions, and a single, second instance Court of Appeal. The Court of Justice of the European Union should have no more involvement in the UPC than it currently does in national patent cases, where its role is essentially limited to interpretation of relevant EU law (such as that relating to biotechnology and patent term extensions for pharmaceuticals).

The jurisdictional arrangements for the first instance divisions are relatively complex but the basic rule is that infringement cases will be dealt with in the Local or Regional division(s) where the defendant is domiciled, or where infringement occurs. Counterclaims for revocation can be brought before Local and Regional divisions.

Any participating Member State can host a Local division, and some may host more than one. We expect at least the UK, Germany, France, the Netherlands and Italy to have Local divisions and there may be several more.

Member States can also join together to form a Regional division. These will essentially be the same as Local divisions but will operate as the first instance UPC court for a co-operating group of Member States. Sweden, Latvia, Lithuania and Estonia are already planning one.

The Central division will have jurisdiction for revocation actions and declarations of noninfringement, as well as limited jurisdiction for infringement actions. There will be three branches of the Central division, with jurisdiction in each case based on technology. The London branch will deal with cases relating to human necessities including pharmaceuticals, as well as chemistry and metallurgy; the Munich branch will deal with mechanical engineering, lighting and heating; and the main branch in Paris will deal with the remainder, including electronics.

For the UK, in August 2015 the government announced the location of the UK Local division and London branch of the Central division. They will both be housed in a new building above Aldgate East underground station.

How will proceedings work in the UPC?
Procedure in the UPC will be something of a hybrid of various different systems in Europe. Much of a case will be conducted in writing, and a heavy emphasis will be placed on written submissions, arguments and evidence. There will be some oral proceedings, including examination of evidence and witnesses, which borrows a little from UK proceedings although these will be rather less extensive than typically occurs in UK litigation. Time wise, the UPC will aim to conclude the first instance stage of a case within a year from commencement, which is fairly quick.

All divisions will have panels of judges, and these will be international, in order that the court develops its own identity over time rather than merely reflecting the procedures and approaches of the country in which a particular division may be located. There will also be both legally and, where necessary, technically qualified judges.

This will be an entirely new court system. It will undoubtedly take time to settle down and for all the divisions to harmonise their approaches. Of note, it is likely that the dominant language in UPC proceedings will be English, certainly for international disputes.

Representation in the UPC
Parties in the UPC must be represented. All EU qualified lawyers will have rights of representation, as will many European Patent Attorneys, including most of those from the UK.

The UPC’s procedures and applicable law derive from multiple influences, including the various different court and legal systems of the participating Member States, as well as the European Patent Convention (EPC) and European Patent Office (EPO). Cases will involve many different and potentially complex technologies. Some may be relatively straightforward legally, involving infringement and validity only. Others will be much more complex, with legal issues relating to jurisdiction, liability, contract, competition, remedies and evidence. All cases will require detailed statements of case (dealing with both technical and legal issues) to be prepared at an early stage. With this emphasis, both lawyers and patent attorneys will be involved in representation of clients before the UPC.

When will it start?
The system comes into force three months after the 13th ratification of the UPC Agreement by participating Member States, provided the UK, France and Germany are included within that number. So far, eight countries have ratified, including France but not including the UK or Germany.

There will also be an interim period during which the UPC will come into existence without actually commencing. This is to allow various formalities to be completed during that period, including recruitment (and where necessary training) of judges.

It will also allow the UPC Registry to administer opt-outs of existing European Patents from the UPC jurisdiction, before the UPC commences. This is important for some conventional European patent holders – most obviously in the pharmaceutical sector - since they may wish to opt-out valuable patents in advance so as to avoid UPC revocation proceedings while the court remains an unknown quantity. Any patent holders with similar business critical patents should actively consider whether they wish to use this option.

The UPC Preparatory Committee recently announced a commitment to complete its work by the end of June 2016. This would enable the provisional period to commence then, with actual commencement in January 2017. There are several significant steps still to take before then however so there is potential for some slippage. Nevertheless, full commencement sometime in the first half of 2017 looks likely. Businesses should keep an eye out for more news regarding commencement, and prepare for it now in any case. D Young & Co is already doing this and will publish news as it breaks on our website (