On 1 October 2015, the Unified Patent Court Preparatory Committee announced that it aims to complete its work by June 2016 with a view to the Unified Patent Court opening at the start of 2017.

What does this mean for your patent portfolios?

With recent news and speculation about the Unitary Patent and Unified Patent Court, and whether to opt out or not, we have received a number of enquiries from our clients.

Although some important details of the new system remain to be decided, we have summarised some of the questions we have received and our answers below.

 What is a Unitary Patent (UP)?

The “European patent with unitary effect”, more commonly referred to as the Unitary Patent, is a proposed new type of patent which would have effect in participating member states of the European Union.

Unitary effect can be requested when a European patent application is granted, providing an alternative to the current route of selecting individual countries in which protection is required and validating the patent in those countries.

A UP has the key advantages of reducing complexity and translation requirements, covering a large market and offering enforcement via a single court action. However, a UP has the disadvantages of the possibility of invalidation in all UP countries resulting from a single court action, and reduced flexibility in terms of renewal fees, in that it is not possible to allow rights to lapse in some but not all countries.

When will the Unitary Patent system come into effect?

The date when the UP will come into effect is not currently known, but early 2017 is the current best estimate in light of the Preparatory Committee’s announcement. There is therefore some time available to consider patent filing strategy.

Thirteen EU member states, including the UK, Germany and France, must ratify agreements related to the UP for it to come into force. To date, eight countries (including France) have ratified.

Portugal is currently the most recent country to ratify (August 2015), and an updated list of ratification details can be found here.

Which countries are covered?

Only those EU member states which have accepted the terms of the agreement will be covered by the UP.

The existing European Patent system covers some countries which are not EU members, such as Norway and Switzerland. Protection in those countries will continue to be available via a European application after the UP system comes into force – the applicant simply needs to validate the patent in these countries once the application has been granted, in the traditional way.

Some EU members have chosen not to sign up; namely Spain, Croatia and Poland. After an initial reluctance to do so, significantly, Italy has now joined the UP system. Once a European application is granted by the EPO, validation in Spain, for example, or any of the other non-UP countries, can be effected in the existing way, together with a request for unitary effect can be filed at the same time, so obtaining protection in all countries of interest.

What are some of the advantages and disadvantages of using the existing European (EP) system instead of national applications, and how does the UP fit in?

The EP system requires the filing of just a single application, which is progressed at the EPO to grant and can then be validated in those countries which are selected by the patentee. Once the UP system is in force, a “Unitary Patent” will be one of the options for validation at the end of the EP patent application process at the EPO.

Some translations are needed as part of the grant and validation process for the EP system (and the UP should reduce this burden further), but the examination process is performed entirely in the chosen language of the European Patent Office (EPO) selected by the applicant, i.e. English, French or German.

National patent applications, by contrast, must be filed in each country in a required language, and the examination process is performed separately for each country. Where protection in three or more countries covered by the EPC is required, the filing and processing of national applications is almost always more expensive than taking the EPO route.

A key disadvantage of the EP route is that, if the application is refused by the EPO, no protection can be obtained in any EPO contracting state. By contrast, with national applications, prosecution in each country can be directed to fit the law and practice in that country, and the refusal of one national application in one country does not necessarily prevent a patent being granted in another country.

What changes will the Unified Patent Court bring?

Running alongside the Unitary Patent system, there will also be a Unified Patent Court (UPC). This will include a court of first instance having a decentralised structure, spread over the member states. There will also be a common court of Appeal, with its seat in Luxembourg. The Court will have the power to both revoke, and decide on infringement of, Unitary Patents for all participating member countries, in a single action. An action taken at the UPC should be of lower cost as compared to parallel litigation in several countries in national courts. However, this is a new court, so currently untested. There is therefore some uncertainty as to how reliably it will perform, as compared to national courts.

Advantageously, the UPC allows a patent owner to bring a single infringement action in a single court to obtain injunctions and damages for infringement of a patent throughout the countries covered by the UP. This avoids the cost and difficulty of bringing legal actions in many different countries.

However, a downside to the UPC structure is that a single revocation or invalidity action may be brought centrally against a UP, so leading to the cancellation of a patent throughout all of the UP member states.

Further details of the Unified Patent Court can be found here.

Should I opt out of the UPC?

During a seven year transitional period, applicants pursuing protection via the EPO via the existing route can file an opt-out request, if they do not wish their granted European Patent to fall within the jurisdiction of the UPC. However, it will be possible for patentees to opt back in to the UPC at a later date, should they wish to do so.

A fee of €80 for opting in or out is expected, per patent. Although this fee is set based on administrative costs, this may nevertheless be a significant amount for companies with large patent portfolios.

We expect that many patentees are likely to opt-out, at least for their most valuable patents, until the UPC has become established and tested. It would be possible to opt back in to bring infringement proceedings centrally.

Once the seven year transitional period has ended, it will no longer be possible to opt out of the UPC’s jurisdiction and all European patent applications filed after that date will be subject to the Unified Patent Court (UPC). Direct national filings would be the only way to avoid the use of the UPC.

What about renewal fees for a Unitary Patent?

A Unitary Patent, once granted, will require a single annual renewal fee, payable to the EPO, to ensure maintenance of the UP in all countries covered. This should generally result in lower administrative costs, as well as lower renewal fee costs (on a simple cost coverage per country basis), as compared to renewals under the classical system.

When a UP and national validation in some countries have been requested, one renewal fee will be due for the UP each year, and one for each other country specified.

However, it should be noted that if the patentee selects protection under a UP, it will not be possible to drop protection in some countries later on in order to reduce renewal costs, as is possible with the existing EP system.

As discussed here, the renewal fee level for the UP has been set over the lifetime of a patent, to match the cost of renewing a patent in Germany, France, the UK and The Netherlands. This appears to be good value for covering twenty five countries, but less so if you generally only validate a patent in three countries.

What are the strategic considerations when choosing between the systems?

A Unitary Patent will be optional, and we suggest that its use should be decided on a case-by-case basis.

Where the patentee wishes to cover several or many countries, then the UP should offer cost savings in renewal fees, and in translations. Where protection in only one or two countries is required, then it may well be more cost effective to select the existing EP route. A Unitary Patent will provide a more affordable route for those wishing to protect across as much of Europe as possible, but those interested in coverage in a few countries only could find the Unitary Patent more expensive than the existing system.

If protection in Spain or other non-Unitary countries is required, then these will need to be progressed as designations of a classical European Patent (with the relevant validation and renewal fee requirements), or as separate national applications.

In addition to European applications filed after the start of the UP system, the option of selecting protection by way of a UP will also be available to those European Patent applications filed before the start of the UP system (but after 1 January 2008), which are still pending at that time, and which designate all EU states.