Start Preparing Today: UPC and Unitary Patent Are Going to Happen Very Soon!
I have received this message almost the same moment when it has been published on the JUVE website: Today, the German Constitutional Court rejected the latest applications for an interim injunction (case IDs: 2 BvR 2216/20 and 2 BvR 2217/20) with the aim to stop the German ratification of the UPC.
Here is the JUVE article:
In February 2020, the German Federal Constitutional Court (Bundesverfassungsgericht) stopped the German ratification of the Agreement on a Unified Patent Court (2013/C 175/01) by declaring that the underlying German Federal act was unconstitutional. Having evaluated the ruling, the German Federal Government has made a second attempt to pass a law that will allow the Agreement on a Unified Patent Court to be ratified, so that the Regulation (EU) No 1257/2012, which introduces unitary patent protection, can become applicable.
On November 26, 2020, the Bundestag successfully brought the law to a vote in order to approve the Agreement on a Unified Patent Court. The new draft law was not substantially different from the original bill but this time, it was approved with the required (increased) number of votes.
On December 18, 2020, the second round in the Bundesrat concluded the legislative process. The Bundesrat had already decided not to raise any objections against the draft law.
Following that, new applications for an interim injunction (case IDs: 2 BvR 2216/20 and 2 BvR 2217/20) had beed filed with German Federal Constitutional Court. These applications are now set aside and it is now expected that the final preparatory steps for the establishment of the Unified Patent Court will be initiated without any further delay.
I expect the Unified Patent Court to begin its work in 2022.
So far, 16 signatory states (Austria, Belgium, Denmark, France, Germany, Luxembourg, Malta, Portugal, Sweden, Finland, Bulgaria, Estonia, Italy, Latvia, Lithuania, and the Netherlands) of the 27 EU member states have ratified the Convention.
The UK is NOT a UPC State
The UK will not be a member of the Unified Patent Court system. This is what I found in the IAM Newspaper (click here)
“In an email sent this evening, a spokesperson stated: “I can confirm that the UK will not be seeking involvement in the UP/UPC system. Participating in a court that applies EU law and bound by the CJEU is inconsistent with our aims of becoming an independent self-governing nation.”
Although the previous government led by Theresa May committed the UK to UPC membership, the new government under Boris Johnson has made clear time and again that it envisages a far looser relationship with the EU post-Brexit. As a consequence, it has taken a much harder line on CJEU jurisdiction. Basically, it does not want any in any form.
The CJEU – the Court of Justice of the European Union – has an important role in the UPC agreement as the ultimate arbiter of EU law, while Article 20 of the agreement specifically states that the Unified Patent Court “shall apply Union law in its entirety and shall respect its primacy”. Thus, being part of the system would have meant the UK accepting that EU law takes precedence over UK law in UPC-related matters.
This means also that the central division of the UPC with responsibility for life sciences cases, that had been allocated to London, will ultimately not sit there. My guess is that it will be in Italy, the EU’s third-largest economy.
How The UPC Works
If you want to have a granted Unitary Patent, just file and prosecute a European Patent Application to grant. At one point in time after receiving the Notice of Intention to Grant you need to validate your European Patent in “UPC land” by simply ticking a box. You can in addition validate that European Patent in non-UPC countries, by ticking the corresponding boxes.
Lawyers of the EU member states as well as European patent attorneys with a litigation qualification will still be able to represent clients at the UPC. Inclusive European Patent Attorneys from the UK and from Turkey, which are both countries that are not EU member states.
The structure and regulations of the Unitary Patent and the Unified Patent Court themselves are well-known (check out here, especially the FAQs) and we all agree that ultimately a single EU-wide patent with a single revocation and infringement court system will make a lot of sense.
Don’t lose time!
Once the UPC system enters into force, there are only 4 months left for applicants to react.
We will have to be permanently on our feet from now on. It may well be that the transitional period for the UPC will start very soon.
On what basis will the UPC Appeal Court decide?
Most practitioners do not know that the UPC has its own Appeal Court, and not only decisions of the 1st UPC instance are subject to it but also decisions of the European Patent Office (EPO) – the reliable work-horse which is entrusted with granting Unitary Patents – in Unitary Patent matters are subject to the UPC Appeal Court, and not to the EPO Appeal Chamber.
And here unveils a very relevant point of uncertainty in the UPC system. While the EPO Appeal Chamber is currently the patent world’s most predictable patent court, the newly set-up UPC Appeal Court has no existing case law whatsoever to rely on.
The decision to obtain a Unitary Patent (after the UPC comes into force by either not “opt-out” an existing European Patent or by requesting grant of a Unitary Patent) comes with the submission of the resulting patent to the jurisdictions of the UPC, which is at least partly still unknown. One can already say that decisions by the UPC will very likely not be much different from what is known from the EPO Appeal Chamber, but there will be differences that are still unknown.
How about the costs in a UPC Litigation Case
As a rule of thumb, litigation before the UPC will be more costly than litigation before a German court but less expensive than litigation before a UK court.
Please note that – because of the UK not being part of the UPC system – the entire UPC system will be less attractive to use. That is the consequence of the UK, the world`s 5th largest economy with a population of 65 million, no longer being a part of it.
From a German point of view, patent litigation in France and Italy has never been very attractive. That is mainly because of language reasons, because the court languages there are French and Italian, which are not widely spoken in Germany. Other reasons for German companies not easily initiating court proceedings in France and Italy go back to very different approaches to perceived thoroughness, procedural management, and coherence of the rendered court decisions in these three countries. German companies hope that UPC proceedings will make asserting patents in these two countries easier.
Litigating before the UPC is no Picnic
Deadlines for replies can be as short as one month only. This is why a UPC litigation would always require a team of litigators who closely work together. Compare it with an Olympic Handball team: you need a team of experts that deliberately share the immense workload in order to achieve a better result than a lone warrior.
Small companies without an in-house legal department may experience that a UPC litigation will exhaust their operational bandwidth.
Parties should also be prepared to provide the required liquidity to keep such proceedings going. We are talking about 6-digit figures here.
What is “opt-out”?
With the UPC and Unitary Patent system coming into force, all new and existing EP patents are per default deemed to fall under the jurisdiction of the UPC. In the case of existing EP patents, this applies of course only to those EP member states for which the respective EP patent was validated and which are also UPC member states, in short in “participating states”.
There will be a sunrise period for opting out traditional European patents from the UPC system. This means that the owner of the respective EP patent can decide whether the patent is subject to the jurisdiction of the UPC or not. This is called “opt-out”.
More information about “opt-out” can be found here.
What is “opt-in”?
Until an action has been commenced, patent owners can opt their patents in or out of the jurisdiction of the UPC, at will.
Some of the many other Gimmicks of the UPC system
One can diversify a patent portfolio by filing divisional EP applications, thereby creating both a traditional European patent, that is opted out of the UPC jurisdiction, and still obtain a Unitary Patent, in parallel, thereby creating an (expensive) extra hurdle for potential infringers when it comes to revocation.
Some countries, like Germany, Denmark, Sweden, Finland and Hungary allow national rights in the form of patents and utility models, next to European rights.
Patents that are not opted out from the UPC system can be revoked and litigated either in the national courts under the present system, or through the UPC, at the choice of the party starting the action.
What “European” means
If all this confuses you because there is too much “European” in this article, such as EPO, CJEU/ECJ, EP, EPUE, EU, etc. please read my little article about what “European” means in IP, here.
Conclusion – Do I recommend a Unitary Patent and the UPC, or not?
It depends on the case.
The starting point is always a specific European Patent or European Patent application because only EP patents or applications can obtain a Unitary effect. If there is no European Patent application, there will not be a Unitary Patent, and no decision about changing your European strategy is necessary.
From here onwards, I recommend a Conservative 3-Step Patent Strategy.
Step 1 is to evaluate whether the respective patent or patent application is worth the effort at all. This applies to all your EP patents and patent applications, whether they will be submitted to the jurisdiction of the UPC or not. A patent that is not and will never be useful should be dumped as soon as identified to be so. This evaluation step should be part of the annual house cleaning of each IP portfolio.
If the respective EP patent or patent application has value, proceed to the step 2.
Step 2 is to find out whether it will hurt you more if you lose your specific EP patent for all UPC states in one single legal action, as compared with losing it state by state. Some businesses, such as pharma industry, prefer to have a potential revocation of their patents as expensive as possible. Others, such as mechanical engineering, don’t care so much about the difference whether they lose one patent for one invention in one single country or the entire patent family for several countries.
If losing your specific EP patent for all UPC states in one single legal action would NOT hurt, then you do not need to opt-out it from the jurisdiction of the UPC. Nothing needs to be done with your existing granted EP patents and you can proceed to the next step.
Evaluation step 3 is about a costs comparison: what is cheaper, a European Patent in selected EPC member states or a Unitary Patent in all those participating UPC states?
If you plan to validate the EP patent in more than four (4) participating UPC states, then the answer is a clear no-brainer: go for a Unitary Patent. This is then the most cost-effective solution.
Call to action
Don’t lose time, start with step 1 above today!
Martin (Unitary Patent System) Schweiger
(this is an updated version of an earlier article of September 2018)