Strategic input about what to do now and in the future in order to not lose competitive advantages is required. I am providing some inputs on such strategic information at the end of this article, but first things first.
Here come my fresh impressions as taken away from a seminar about the Unitary Patent and the Unified Patent Court (UPC), which I have attended last week in Barcelona, Spain.
What Unitary Patent and UPC means in Practice
Currently, we EP practitioners are staring at this event, namely the United Kingdom (UK) ratifying the Agreement on Unified Patent Court (UPC). The UK becoming a participating UPC state has two consequences providing a multitude of options relevant for patent strategies within Europe.
The first consequence would be the European Patent with Unitary Effect (EPUE), also known as the Unitary Patent, can be registered in the participating member states of the European Union (EU). A Unitary Patent replaces a more expensive validation of the European patent in the participating UPC states. This means a single renewal fee instead of a multitude of national renewal fees and also uniform protection: one single revocation and one single infringement proceedings for the Unitary Patent as a whole rather than for each individual nation.
For the second consequence, the UPC is established and it has the exclusive competence to decide cases regarding such Unitary Patents, but not only regarding Unitary Patents. The UPC also has per default the non-exclusive competence to decide cases regarding conventional European patents which are validated in at least one participating member country. "Non-exclusive" refers to the fact that the national court systems are still competent to decide in such cases, even after the UPC system comes into force.
I have never seen it written in only three paragraphs even though you may already know this info. Now, we are on the same page about UPC and Unitary Patents.
When UPC and Unitary Patent is going to take place
Presently, nobody can say anything about the future.
The structure and regulations of both Unitary Patent and the Unified Patent Court are well-known (check out here, especially the FAQs) and we agree that a single EU-wide patent with a single revocation and infringement court system make sense.
However, right now, it is not clear whether or not the Unitary Patent & UPC system will be implemented soon, not even to speak of the tight currently planned start deadline of 1st of December 2017, which is just a few months away from now.
In the patent industry, everybody is closely watching what Britain is doing, because the British ratifying the Agreement on Unified Patent Court is presently - with the UK being still an EU member - the penultimate compulsory prerequisite for entering into force (read the last para before the heading "PART I GENERAL AND INSTITUTIONAL PROVISIONS").
The last compulsory prerequisite for entering into force, the Germans ratifying the UPC system, is not seen as a hurdle that is difficult. As we have seen in the case of Germany saving the Greeks by granting loans, the German parliament is willing to provide night shift work and meetings during its official holidays if deadlines have to be met that are vital for the EU.
Ratification can only be done by the British parliament, which will be re-elected in a few days from today, when I am writing this article. Nobody knows whether or not the newly elected UK parliament will do so, having in mind that a negotiator whom is hardworking will utilise the UPC ratification as a bargaining chip in the ongoing negotiations about Britain leaving the EU.
Please note that the Scottish Parliament has to approve the UPC system before UK ratification. Even though the Scottish Parliament is not dissolved as of now, it is unclear whether this will happen.
Whether all these hurdles can be taken so fast that the planned UPC ratification date of 1st of August can be met is not certain.
Without the UPC system being fully in force, nothing will occur.
Once the UPC system enters into force, there are only 4 months left for applicants to react. It is uncertain when will this take place, but each and every timely predictions of today are not better than tea-leaf reading.
We will have to be on our feet, permanently
It may well be that the transitional period for the UPC will commence as early as 1st of September 2017, and that will be less than 3 months from now.
It may also be that we have to wait until 4 months after Britain has withdrawn from EU, which may (or may not) be the case on Friday, 29 March 2019, or later or even never as this deadline can be extended if all the 28 members of the EU agree, see here.
Having this in mind, we need to stay alert from now on.
On what basis will the UPC Appeal Court decide?
What is the UPC Appeal Court?
Most practitioners have no idea 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 presently the patent world\\'s most predictable patent court, the UPC Appeal Court, which is newly established) has no existing case law etc to rely on.
The decision to get 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 partially still unknown. One can say that decisions by the UPC will likely not be much different from what is known from the EPO Appeal Chamber, but there will be differences which are still not known.
How about the costs in an UPC litigation case
As a rule of thumb, the UPC seminar which I attended last week said that a litigation before the UPC will be expensive in comparison to a litigation before a German court but less costly than litigation before a
British court.
This may influence the answers of UK patent litigation practitioners too when it comes to asking about their opinion about the UPC system.
Litigating before the UPC is no Picnic
Deadlines for replies can be as short as one month, which is the reason a UPC litigation would always need e a team of litigators whom work together closely.
Small firms 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, which is about 6-digit figures.
What is "opt-out"?
With the UPC and Unitary Patent system coming into force, all new and existing EP patents are per default perceived 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 EP patent can make the decision on 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"?
Patent owners, at their own will, can decide to opt their patents in or out of the jurisdiction of the UPC until an action has been started.
Some of the many other Gimmicks of the UPC system
One can diversify a patent portfolio by filing divisional EP applications, hence creating both a traditional European patent, which is opted out of the UPC jurisdiction, and still gain a Unitary Patent, in parallel, thereby creating an (expensive) extra hurdle for potential infringers.
Countries such as Germany and Denmark permit 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 commencing 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 article about what "European" means in Intellectual Property (IP), in here.
Conclusion - Do we recommend a Unitary Patent and the UPC, or not?
Well, it depends on the case.
Starting point is always a specific European Patent or application for European Patent as only EP patents or applications can gain Unitary effect. If there is no application for European Patent, there will not be a Unitary Patent, and there is no need to make the decision to change your European strategy.
From here onward, we recommend a conservative patent strategy.
The first step is to evaluate whether the respective patent or patent application is worth the effort. 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. Businesses such as pharma industry prefers to have a potential patents revocation as costly as possible. Other businesses/industries, for instance, mechanical engineering, do not bother so much about the difference if they lose one patent for one invention in one single country or the entire patent family for many countries.
If losing your specific EP patent for all UPC states in one single legal action would NOT hurt, then it will not be required for you to opt-out it from the jurisdiction of the UPC. Nothing is needed to be done with your existing granted EP patents and you can go on to the next step.
The third evaluation step is to determine whether you want your European Patent Application to become a Unitary Patent in the participating UPC states.
If you do not mind to submit your granted EP patent to the jurisdiction of the UPC and 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, which is the most cost-effective solution.
Call to action: don't lose time, start with step 1 above today!
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