The biggest change to European Patent law and litigation system in Europe for 40 years

The European Patent Office (EPO) and the European Union member states are in the final stages of establishing a new patent and patent litigation system for Europe (in particular for the European Union – EU). This represents the biggest change to patent law in Europe for 40 years: it will create a single patent and patent litigation system covering 25 countries (the members of the European Union) with a combined population of 400 million people. This new patent tool will be called the “European Patent with Unitary effect or Unitary Patent”. The new patent system will allow the protection of inventions across Europe in an easier and more cost-effective way because the single patent will cost approximately the same as it currently costs to obtain and maintain protection in just four European countries using the classical European Patent tool with post-grant validations. The new system will also simplify patent enforcement across Europe. Currently enforcement of a European patent implies multiple litigations on a national level with increasing costs and the risk of diverging decisions. The new system provides for a single patent court (the Unified Patent Court – UPC) ruling on infringements and nullity of patents across 25 countries. The new court should be very efficient, with proceedings on the merits for the first instance to be concluded in around one year. Preliminary injunctions covering 25 member states will be also possible.

What changes and what stays the same? What will not change at all is the centralized procedure from filing an application at the EPO through to the grant. The procedure for filing and examination includes the filing stage, the formalities examination, the search stage (with issuing of a search report and an opinion on patentability) and the examination stage, which can take several months depending on how many office actions are issued (typically there are two to three office actions). Sometimes oral proceedings are held before granting where agreement between the applicant and the examiner cannot be reached on certain issues. At the end of the examination phase the application can be either refused or granted. Where the application is refused ex-parte, appeal is possible. On the other hand, if the application is granted then third parties can file an opposition to the grant within 9 months from the publication of the mention of grant, thus seeking centralized revocation of the patent before the EPO. These procedures will not change. The main significant change is in the post-grant procedure. With the new system it is possible to avoid the need to file national validations in one or more countries (thus also avoiding related costs of translation and annuity fees), by requesting unitary effect of the European patent within one month of the publication of the mention of grant. No fees are charged for requesting unitary effect. If unitary effect is requested then the European Patent becomes a single title covering 25 member states in a more cost-effective way because no validations are needed and a single renewal fee is paid at the EPO instead of paying annuity fees to each national patent office. The advantage of the new patent is that it allows enforcement with a single action before the unified patent court (UPC) covering all 25 member states. However, a related risk is central revocation of the patent with a single action before the UPC. If such an action is successful the patent will be immediately revoked in all 25 member states. Another important change regards the patent litigation system in Europe. A single supranational patent court will be established to cover all participating member states with one action. The court will not only be competent to hear cases relating to the new unitary patents but will also be competent for classical European patents. However, there will be a transitional period of seven years for classical European patents only (but not for unitary patents) during which it will be possible to opt out of the exclusive competence of the new Unified Patent Court and litigate on a national level, country by country. To summarize, the new patent litigation system will have the great advantage of stopping infringement over a market of 400 million people with a single action before a single court. This represents a huge change with respect to the current system where infringements can be pursued only by starting national litigation in each country where the infringement has occurred. The downside of this is that the unitary patent will be vulnerable to a central attack throughout its lifetime, being revocable with a single action for all 25 member states. With the current system, instead, there is a window of nine months only to seek central revocation of a European patent by filing an opposition with the EPO (opposition proceedings will still be available under the new system). Once this term has elapsed, only national revocation actions are available.

What to do now? Users must decide soon whether to avail of the new system, given that the new patent package is due to come into force by the end of this year, with a transitional period of seven years during which classical European Patents can opt out of the competence of the Unified Patent Court. Opt-out requests can be filed starting from September 2017. Therefore, users must take immediate action to review their patent portfolio and decide new strategies for patent protection in Europe. On the patent protection front, a number of new protection strategies will need to be designed, and urgent launching of a completely revised strategy to protect inventions in Europe is advisable. On the other hand, those placing products on the market in Europe should remember that while the new litigation system can allow injunctions across 25 states with a single action, it will also allow new strategies for having competitor’s patents revoked. When reviewing a given patent portfolio, it must therefore be decided which European patents are strong enough to face the risk of revocation in all of the European Union with a single action and which European Patents can be conveniently enforced with a single action covering 25 member states.