Hot on the heels of the rejection by the Court of Justice of the EU of the challenge brought by Spain to the Unitary Patent / Unified Patent Court (UPC) legal regime (as we previously reported), the Preparatory Committee has commenced a public consultation on the court fees that litigants in the UPC will have to pay and on the amount of costs that the successful party in any UPC proceedings will be able to recover from the losing party. The public consultation launched by the Preparatory Committee of the UPC on 8 May 2015 raises interesting issues. In particular, the proposed figure of €80 per patent to “opt out” existing and new European patents from the UPC environment (or to opt back in) could prove to be very expensive for owners of large portfolios, and the proposed fee and reimbursement structures for the new Court anticipate a broad range of small to large cases being heard, with up to €3 million in costs being recoverable by the winning side from the loser. Responses to the consultation are due by 31 July 2015.
The Preparatory Committee’s role is to oversee the establishment of the UPC, the financial aspects of the Court being one of its major work streams. At its 9th meeting, held on 5th May 2015, the Committee agreed the terms of both the consultation document and process for written consultation (see the press release and the consultation document itself). In this and other aspects, the Committee was very up-beat in reports of its progress: it welcomed the Spanish CJEU decision and reported on the successful completion of the initial stages of training for UPC judges. Momentum is building in every aspect of preparation for the UPC.
This long-awaited public fees consultation deals with:
- The level of court fees, along with two possible alternatives for discounting those court fees for certain parties or in the event of settlement,
- The amounts of costs which winning parties can recover from losing parties, and
- Other significant fees, including the €80 “opt out” fee.
One other important aspect, the cost of renewal fees for the new Unitary Patent itself (as opposed to existing or new European patents), is still undecided. A decision on that is expected by the end of June 2015 (as we previously reported).
Court fees: the basic fee structure will be a fixed fee for all actions brought at the UPC, and an additional value-based fee (kicking in at a value above €500,000) for some actions (e.g. infringement). In particular, infringement actions:
- will be subject to a fixed fee of €11,000,
- with an additional value-based fee ranging from
- €2,500 (for actions worth more than €500,000) to
- a hefty €220,000 (for actions worth more than €30,000,000)
The value of an action will be assessed by the Court based on the objective interest of the party filing the action and guidelines laid down in the decision of the Administrative Committee (which are yet to be published).
By contrast, revocation actions will be subject only to a fixed fee of €20,000.
There are two alternatives proposed for the way in which these fees can be discounted: the first allows for reimbursements of these fees if actions are withdrawn or settled, and the second offers exemptions from the value-based fee for certain organisations (e.g. SMEs and non-profit organisations). Both alternatives should in fact benefit SMEs and non-profit organisations, as many cases involving such parties tend to settle early, but the reimbursements of the first alternative will apply to any action that is withdrawn or settles, regardless of the size of the parties. Further, in either alternative, there is a method allowing an organisation to apply to the Court for reimbursement of the fixed fee and a reduction of the value-based fee if the fee payable “threatens the economic existence” of that organisation.
Costs recoverable by the winner from the loser – The amount of recoverable costs is also based on the value of the action brought. Recoverable costs range from:
- up to €50,000 (for actions worth up to €250,000) to
- up to €3,000,000 (for actions worth more than €50,000,000).
The consultation is silent on the recovery of costs for a revocation-only action, if no value is attributed at the outset. This will no doubt be an area raised in many responses to the consultation. The value could be set by the UPC when it delivers its judgment but it would clearly assist litigants to have the value assessed early on in the proceedings.
Opt-out fee – The figure of €80 is proposed to reflect the administrative cost of managing the opt-out process. It is not intended to be punitive but it is high enough that its cumulative effect will feature in the strategic thinking of major patent holders. It seems likely that patentees will continue to plan to opt out for some of their existing and new European patents, remaining automatically “opted in” for the remainder, and separately requesting that some of their European patent applications are granted as unitary patents.
Generally – The proposed fees have been set to ensure a balance between fair access to justice (in particular for SMEs and non-profit organisations) and an adequate financial contribution from the parties to achieve a viable sustained Court system, recognising the economic benefit to the parties and the need for a self-financing Court. It appears that the fees of the high-value actions are intended to subsidise the fees for the smaller actions; it is unlikely that this huge disparity in fee level will reflect accurately the difference in workload of the Court for each action. However, even for the largest cases, it is expected that a UPC action will still represent value-for-money compared with the existing possibility of multiple cases in multiple jurisdictions.
Finally, there is built-in to the UPC Agreement the obligation by the Administrative Committee to review fees periodically, along with the option for targeted support measures for SMEs. It is highly likely that fees will be reviewed and adapted once the UPC is up and running and the real operating costs are known. However, potential litigants in the UPC now have until 31 July 2015 to make their voices heard in the process of setting the fees that will apply when the UPC commences operation.