The Unified Patent Court Agreement (UPCA) was signed on 19 February 2013 by 24 of the then 27 EU Member States (Bulgaria, Poland and Spain did not sign at that time although Bulgaria signed in March 2013). Croatia joined the EU on 1 July 2013 but has not yet signed the UPCA.
Since the UPCA was signed, there have been significant changes in the position relating to the introduction of the proposed new patent regime (ie the unitary patent itself and the Unified Patent Court (“UPC”)), which are noted below.
The unitary patent is unlikely to become operational until 2017 at the earliest. Although there has been progress on ratification of the UPCA in many Member States, remaining preparations for ratification in the UK are unlikely to be completed until mid-2016.
What will happen to the new patent regime if the UK votes in favour of Brexit on 23 June 2016?
It is not clear whether ratification of the UPCA by the UK will have taken place by the date of the EU Referendum. If the UPCA is ratified by 23 June 2016 and the UK votes to leave the EU, the UK could technically participate in the unitary patent system until the date on which the UK finally leaves the EU (likely to be in 2018).
However, if the UK decides not to ratify the UPCA either before 23 June or at all, technically the unitary patent system would have to be delayed until the UK left the EU in 2018 (unless the UPCA is amended) since the UK is one of the three necessary ratifying countries along with Germany and France under the UPCA.
SIGNATORIES TO THE UPCA
Bulgaria signed the UPCA on 5 March 2013. However, Poland and Spain still have not signed the UPCA.
Croatia joined the EU on 1 July 2013 but has not yet signed the UPCA. This will have no impact on the overall introduction of the new regime.
PROGRESS ON RATIFICATION OF THE UPCA BY MEMBER STATES
Austria, Belgium, Denmark, Finland, France, Luxembourg, Malta, Portugal and Sweden have now ratified the UPCA. Thirteen European Union Member States (specifically including Germany and the UK) must ratify the UPCA for the unitary patent to take effect.
The Statutory Instrument amending the UK Patents Act 1977, paving the way for the unitary patent system in the UK, has been made. The legislation will come into force when the UPCA takes effect. The UK remains on track to ratify the UPCA during 2016
RULES OF PROCEDURE FOR THE UNIFIED PATENT COURT – NOW ADOPTED
In October 2015, the UPC Preparatory Committee adopted the Rules of Procedure of the Unified Patent Court (in the form of the 18th Draft of the Rules), subject to some further adaptations once the Committee has decided on UPC fees.
The Rules of Procedure, the result of collaboration between the Preparatory Committee’s Legal working group and the Drafting Committee, underpin the UPC’s framework and functioning. The Rules take into account comments from stakeholders submitted during the written consultation and the oral hearing.
FEES – COURT FEES PUBLISHED
In February 2016, the UPC Preparatory Committee agreed and published the Rules on Court fees and recoverable costs for the unitary patent regime. The Rules will be subject to further legal scrutiny but have been published in order to keep users updated on the current work programme of the Committee. A fixed fee (€11,000) will apply to infringement actions, counterclaims and declarations of non-infringement with a scale of value-based fees for actions valued over €500,000. Revocation actions will incur a fixed fee of €20,000. A previously proposed fee for an opted-out patent has now been dropped.
Concerning recoverable costs, the Rules provide for ceilings on recoverable costs depending on the value of the proceeding.
FEES – PROPOSAL FOR RENEWAL FEES ADOPTED
Following consultation, the Select Committee of the Administrative Council of the European Patent Office (EPO) adopted the “Top 4” proposal for Unitary patent renewal fees in June 2015.
The proposed fees correspond to the sum total of the renewal fees currently paid for the four countries in which European patents are most frequently validated today (Germany, France, UK and the Netherlands).
The main advantage of the Top 4 fee structure is that fees will be low for the first ten years of the unitary patent (this is likely to be attractive to small businesses, universities and individual inventors). In addition, there will be financial compensation for translation costs for small businesses in Member States which do not have an EPO official language as a national language.
It is hoped that the fee structure will encourage small and medium sized companies to apply for unitary patent protection (the costs of applying for patent protection in all Member States has been prohibitive for such businesses under the current regime).
What is not clear at this stage is how the UPC system fees will be apportioned between participating Member States.
Following the recent announcement of Italy’s participation in the regime, the European Commission called on all remaining participating EU countries to ratify the UPC Agreement as soon as possible. However, the unitary patent is unlikely to become operational until 2017 at the earliest.
In October 2015, a Protocol to the Agreement on the UPC was signed, to allow preparation for the court (including judicial recruitment and testing of IT systems) to take place.
LONDON LOCATION OF UPC
The London section of the Central Division and the UK Local Division of the UPC will be based in central London at Aldgate Tower (near the Tower of London).
Confirming that a lease for the premises had been signed, IPO Minister Baroness Neville-Rolfe said:
"The signing of this lease represents a milestone in the UK’s preparations for the introduction of the Unified Patent Court. Aldgate Tower, with its superb central location, will provide an ideal home for a modern court to support the UK’s and Europe’s leading edge innovative companies. This will further strengthen UK’s legal and professional services sector, and reinforce London’s status as a world leading centre for dispute resolution."
The UPC Court of Appeal will be based in Luxembourg.
EARLIER DEVELOPMENTS OF INTEREST
THE CJEU DISMISSED SPAIN’S UPC CHALLENGES
In May 2015, the CJEU dismissed both of Spain’s actions challenging the regulations implementing enhanced cooperation in the area of the creation of unitary patent protection. Spain brought the two actions in March 2013 challenging the UPS proposals and seeking an annulment of two regulations forming part of the UPS proposals (concerning unitary patent protection and applicable translation arrangements). Spain’s actions followed Spain’s and Italy’s earlier unsuccessful challenges, dismissed by the CJEU in April 2013.
The CJEU ruling followed Advocate General Bot’s opinion on the Spanish challenges. It is interesting to note that the Advocate General observed in his opinion:
“the sole purpose of the contested regulation is to incorporate recognition of unitary effect through a European patent already granted under the Convention. To that end the EU legislature limited itself to stating the nature, conditions for grant and effects of unitary protection, covering only the phase subsequent to the grant of the European patent. The regulation only attributes to European patents an additional characteristic, namely unitary effect, without affecting the procedure regulated by the Convention. The protection conferred is regulated by the uniform implementation provisions of the regulation. That protection brings real benefit in terms of uniformity and hence of integration compared with the situation resulting from the implementation of the rules laid down by the Convention (rules which, in every one of those Contracting States, guarantee protection whose extent is defined by national law)”.
Italy changes its stance on the unitary patent regime
Following the CJEU’s dismissal of Spain’s recent challenges, Italy formally notified the Council of the European Union of its intention to participate in the enhanced cooperation regime. The European Commission formally announced Italy’s participation on 30 September 2015. It is expected that Italy will ratify the UPCA in due course.
AMENDMENTS TO “BRUSSELS I REGULATION”
EU Council Regulation No.44/2001 on jurisdiction and the recognition and enforcement of judgments in the European Union (the so-called “Brussels I Regulation”) required amendment for the UPC Agreement to be able to come into effect. Although EU Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in the European Union was adopted on 12 December 2012, this did not contain the necessary provisions.
However, on 30 July 2013, the European Commission (“EC”) published its proposal for amendments to the Brussels I Regulation; this provided clarification on certain matters: that the Unified Patent Court and the Benelux Court of Justice are ‘courts’ within the meaning of the Brussels I Regulation, the operation of the rules on jurisdiction, the application of the rules on lis pendens and the operation of the rules on recognition and enforcement.
EU Regulation 542/2014, which incorporated the EC’s proposals for amendment, applied from 10 January 2015.
EPO AND UP IPO STUDIES
The European Patent Office (“EPO”) has published the results of a study on the effects (advantages and disadvantages) of the UPC regime.
The main concerns raised relate to court fees, costs (unknown) and procedural uncertainties of the UPC.
On 19 March 2015, the UK Intellectual Property Office (“UK IPO”) published a study examining the volume of litigation at the UP Patents Court and Intellectual Property Enterprise Court. The report states that UK businesses face difficult decisions – should they or should they not seek to obtain unitary patent protection; and whether or not to opt-out their existing European Patent portfolios from the UPC’s jurisdiction?
DIVISIONS AND JUDGES
Sweden, Lithuania, Latvia and Estonia have agreed on the creation of a regional division of the UPC. This is the first agreement by a group of member states who are signatories to the UPCA to set up a regional division; there is expected to be at least one more, for the Benelux countries (ie., Belgium, Netherlands and Luxembourg).
A dedicated training centre for judges for the UPC was officially opened on 13 March 2014 in Budapest. Following the UPC Preparatory Committee's call for expressions of interest in becoming judges of the UPC, a list of potential candidate judges was approved in July 2014. Formal applications will follow in due course. The target date for appointment of judges is not yet known.
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