Cesare Galli May 20 2019 Unitary patent and UPC – Italy moves forward IP Law Galli | Intellectual Property - Italy Cesare Galli Intellectual Property IntroductionNew rulesCommentIntroductionThrough Legislative Decree 18/2019, the government adopted provisions to coordinate national legislation with the EU Unitary Patent Regulation (1257/2012) and the Unified Patent Court (UPC) Agreement.This initiative completes the work started by Law 214/2016 ratifying the UPC Agreement and, as a result, Italy is ready for the new system. Even at a logistical level, the Italian division of the UPC has been established near the Milan Palace of Justice and locations suitable to host one of the central divisions have been identified in the event that the London office has to be moved due to Brexit.New rulesFirst setThe first set of rules (amending Articles 56, 58 and 59 of the Industrial Property Code) clarifies that the content and limits of the rights conferred by both a unitary patent and (from now on) the Italian element of a 'traditional' EU patent will be governed by the UPC Agreement (Articles 25, 26 and 27 in particular). The previous rule that assimilated the national element of an EU patent to a national patent and provided that the infringement thereof should be assessed in the same way as internal patents has been deleted. The burden of filing a translation into Italian has been retained only for traditional EU patents, which must be validated on a state-by-state basis.Second setThe second set of rules amend Article 68 of the Industrial Property Code, which concerns exemptions to rights conferred by patents. The amendments aim to apply a number of provisions in the UPC Agreement regarding EU patents to Italian patents in accordance with the basic choice that has characterised all Italian regulatory interventions in IP matters – namely, to provide national IP rights with the same level of protection as EU IP rights.The legislature has better clarified the experimental use exception, specifying that it refers to "acts carried out on an experimental basis relating to the object of the patented invention, i.e. the use of biological material for cultivation purposes, or the discovery and development of other plant varieties". In this way, any doubt regarding the scope of this exception has been resolved in the sense already accepted by the prevailing Italian case law, which therefore applies only to experimental activity carried out "on" an invention which aims to exceed it and not to experimental activity "with" an invention aimed only at implementing it.The new formulation also distinguishes the experimental use exception from the use of an invention in the private sphere and for non-commercial purposes, which benefit from an exemption granted to rights conferred by patents, but for different reasons, thus clarifying that even an experimental activity for commercial purposes (but not merely preparation for the implementation of the patents of other parties) is legitimate.A further useful clarification is the express inclusion of an exemption regarding the use of a patented invention in the body or the accessories of aircraft or ships of World Trade Organisation member states that are only temporarily or accidentally present in Italian airspace or waters. This exemption was already implied in the Navigation Code and the international conventions in force on the subject (which are expressly referenced in the new rule), but the inclusion of this exemption in the Industrial Property Code is a useful clarification for operators.The same is true for the reference now included in Article 68 of the Industrial Property Code to the fair use of software provided for by Articles 5 and 6 of EU Directive 91/250/EEC (corresponding to Articles 64ter and 64quater of the Italian Copyright Law (633/1941)), concerning exemptions to rights over computer programs and the permitted use of the information thus legitimately obtained.Third setThe third set of rules aims to better coordinate the relationship between the unitary patent and internal rules, clarifying some potentially ambiguous points as follows:the unitary patent is subject to the provisions on compulsory licences, naturally limited to Italian territory (Article 70(4)bis of the Industrial Property Code);the scope of the rights conferred by supplementary protection certificates based on an EU patent will be determined according to the sole regulation of the UPC Agreement (in particular to Article 30 thereof), subject only to the transitional regime provided for by the agreement; andthe Italian procedural provisions will apply only to:cases regarding EU patents already pending before the Italian courts on the date of the agreement's entry into force; andcases which will be brought before the Italian courts during the aforementioned transitional regime.Finally, Article 2 of Legislative Decree 18/2019 provides for the possibility of further provisions implementing the EU Unitary Patent Regulation (1257/2012) being adopted by administrative regulation, but naturally only in matters not covered by the statutory reservation of powers provided for by the Constitution.CommentWith this text – already prepared at the beginning of 2018 by a commission of experts established by the Patent and Trademark Office and now finally adopted by the government – Italy has chosen a proactive approach to the UPC system, aligning its national law with the system's substantive rules in all respects. This will make it easier when the UPC becomes effective for companies and the professionals who assist them to choose whether to include EU patents already granted in the new system and, if so, whether to:have them judged by the new Unified Court as an alternative to national courts during the transitional regime and exclusively after its expiry; orcontinue to submit them to the old state-by-state system for revocation and infringement through the so-called 'opt out' option.Considering that in Italy at least, the substantive rules will be the same, not only the resources of the owner company must be considered, but also those of its competitors with whom it could potentially be in conflict. If these are parties with larger economic resources, there is the risk with an opt out of being dragged into a plurality of cases in several countries, which could drain liquidity and lead to negotiating settlement agreements in a weak condition. On the other hand, for the holders of 'weak' patents, it may seem preferable not to risk having them revoked for all EU countries designated in a single case (as the UPC system requires), instead of keeping them at least for countries where competitors are not strong enough to bear the relevant costs of litigation.In any case, these rules will make it easier to circulate and extend to Italian national judgments the criteria and jurisprudential guidelines that will be developed by the UPC to assess the validity and infringement of EU patents.This further development in terms of legal certainty will probably be the most important effect of the new unitary patent system for patent holders and their competitors.For further information on this topic please contact Cesare Galli at IP Law Galli by telephone (+39 02 5412 3094) or email ([email protected]). The IP Law Galli website can be accessed at www.iplawgalli.it.