In December 2012, a European “unitary patent package” was approved by the European Parliament and the European Council. The package will establish:
- a single patent right across most EU countries - the European Unitary Patent or “EUP”; and
- a centralised European patent litigation forum - the European Unified Patents Court or “UPC”.
The UPC will not only have jurisdiction over European Unitary Patents, but also “traditional” European patents granted by the European Patent Office (EPO).
The unitary patent package was discussed in last year’s MewsNews Review. This article discusses the developments to the EUP and the UPC in 2013, what still needs to be done, and some important aspects to consider before the package is implemented, which is currently thought likely to be in 2015.
For more information about the package, please see our information sheet or ask your normal Mewburn Ellis contact.
WHEN WILL THE PACKAGE COME INTO EFFECT?
The approval of the package in December 2012 was only the first step towards making the EUP and the UPC a reality.
The EUP is linked with the UPC and the EUP will only come into effect when the UPC also comes into force.
The Agreement on the UPC was signed by most of the EU countries in February 2013, thus starting the ratification process needed for both the EUP and the UPC to come into effect. The Agreement to the UPC needs to be ratified by 13 of the EU countries (including the UK, France and Germany) before it comes into force.
Austria was the first country to ratify on 6 August 2013. However, ratification in other countries is taking significantly longer. For example, Denmark and Ireland will each hold a referendum in 2014. The UK has started the ratification process, while France has started the ratification process under an accelerated procedure. As yet, there is no information about ratification in Germany.
In addition to ratification, time is required to establish the infrastructure for the EUP and UPC. The Rules of Procedure of the UPC and EUP are still in draft form. Judges for the Court need to be selected and trained: over 1300 expressions of interest to be a judge had been received by the end of 2013.
Furthermore a key piece of European legislation, the Brussels I Regulation on Jurisdiction and the Recognition and Enforcement of Judgements (Regulation EU 1215/2012), will need to be amended to accommodate the presence of the UPC. There is a proposal for such an amendment of Brussels I, but it is unlikely to take effect before January 2015.
Given the factors above and despite the progress made this year, it is likely that the package will not come into force before 2015.
WHO’S IN AND WHO’S OUT?
The package will cover only those EU countries that ratify the UPC agreement.
So, if 20 EU countries have ratified the agreement by the time it is in force, then a EUP will cover those 20 EU countries and the UPC will have jurisdiction in those 20 EU countries. 25 of the 28 current EU countries initially agreed to participate in the Unitary patent package, with the notable exceptions of Italy and Spain.
Italy and Spain initially opposed the package, primarily over the language provisions.
Spain remains opposed to the package and has an on-going legal challenge at the Court of Justice of the European Union (CJEU). However, Italy has signed the UPC Agreement. As a result, the UPC could decide Italian patents granted by the EPO (although a EUP won’t cover Italy).
Poland was initially interested in the package, but did not sign the UPC agreement as a result of an economical study on the effect of the participating in the package.
In addition, Croatia joined the EU after the package was agreed (in July 2013), and so were not an EU country when the package was agreed. Spain, Poland, and Croatia can all join the package (and Italy can join the EUP) at a later date, if they wish to do so.
HOW WILL THE UNITARY EUROPEAN PATENT WORK?
Once the package is in force, all patent applications granted at the EPO will have the potential to become a EUP.
The European Patent Office will be responsible for the administration of the EUP and one of the most talked about aspects of the EUP is the level of the renewal fee set by the EPO. If the renewal fee is too high, the EUP will be unattractive to patent owners. On the other hand, if the renewal fee is too low, countries may not sign up to the package because of potential revenue loss.
The EPO’s Select Committee will decide the level of renewal fees in 2014.
The EPO President, Benoit Battistelli, has been reported to have said at the IP Summit in Paris in December 2013 that “They [the renewal fees] will be higher than many would hope, but lower than some might fear.” It is thought that the renewal fee level will be equivalent to renewal fees in around 5 or 6 countries.
There has also been concern over the so-called “Maltese Problem”. The EUP will be a single right covering all participating EU countries. However, the EUP cannot cover countries that were not designated in the original European patent application.
Malta only joined the European Patent Convention in July 2007, and around 30% of pending European patent applications do not cover Malta. As a result, any European patent application that does not cover Malta cannot become a EUP if Malta ratifies the package.
A potential solution is for Malta to delay ratification until an acceptably low number of European applications filed before July 2007 are pending. The same conundrum will occur if Croatia joins and ratifies the UPC agreement.
JURSIDICTION OF THE UPC AND OPTING OUT
As mentioned above, the UPC will have jurisdiction over all EUPs and all ‘traditional’ European patents covering a participating EU country. ‘Traditional’ European patents are patents granted from European patent applications and validated in one or more EPC countries under the current ‘validation’ system.
The UPC will automatically have jurisdiction over traditional European patents that are already granted, as well as traditional European patents that are granted in the future. As a result, all traditional European patents for all participating EU countries will eventually be enforced and challenged in the UPC when the UPC Agreement comes into force.
However, traditional European patent proprietors (but not holders of a EUP) will have the option to opt out of jurisdiction of the UPC in the first 7 years of the UPC existence. This opt out period may be extended to 14 years after review by the UPC. The traditional European patent proprietor can opt out at any time during the 7 year period so long as there are no pending proceedings and the opt out lasts for the lifetime of the patent.
The proprietor must actively opt-out each European patent by filing a form with the UPC. A fee will be due for each patent that is opted out - this fee has not yet been set. Hence, owners of large patent portfolios could be hit with a sizeable fee when the UPC comes into existence. There has been some discussion about applying a single fee for each proprietor (independent of the number of patents) when the system first comes into effect. The draft Rules of Procedure also provide for a ‘sunrise’ period to allow an opt-out to be registered before the UPC comes into effect, thus avoiding a deluge of opt-out requests when the UPC first opens its doors.
Once opted-out, the traditional European patent proprietor has a chance to opt back into the jurisdiction of the UPC (for example, to initiate central infringement proceedings) so long as national proceedings have not been initiated.
THE UNIFIED PATENTS COURT PROCEDURE
The Rules of Procedure of the UPC will govern the details of the UPC. The 15th version of the Rules was released for public consultation ending in October 2013.
The Draft Rules set out a detailed time scale for proceedings at the UPC. It is the aim of the UPC to conclude actions in about 12 months. The actions will involve an initial Written Procedure lasting 6 to 8 months, followed by an Interim Conference with one of the judges, and concluded with a short (typically 1 day) oral hearing. This will be welcome news for those who are frustrated by the often long EPO Opposition and Appeal proceedings.
One of the controversial aspects remains the possibility for revocation and infringement proceedings to be heard by separate courts, so-called ‘bifurcation’ of proceedings. Bifurcation will be at the discretion of the courts, but the bifurcated revocation and infringement proceedings should run in parallel unless there is a stay.
This should eliminate any advantage of one action being decided significantly before the other action, particularly as the Draft Rules specify that the decision to bifurcate will be made at the end of the Written Procedure. So the written arguments and counter-arguments for infringement and revocation will have been submitted to the Court, and both actions will have progressed significantly through the proceedings, before bifurcation occurs.
When the infringement and revocation proceedings are bifurcated, the Court may stay one of the proceedings pending the outcome of the other proceedings.
The Draft Rules specify that infringement proceedings will be stayed where there is a high likelihood that the relevant claims will be found invalid following a counterclaim for revocation.
WHAT SHOULD PATENT APPLICANTS AND PROPRIETORS BE CONSIDERING AT THIS STAGE?
The first aspect to consider at this stage is whether or not a EUP would be an attractive option for currently pending European patent applications. There are potential benefits to having a EUP or at least delaying prosecution until the package comes into force so that the option is available.
In particular, the EPO has recently announced a repeal of its divisional time limit Rule. The new Rule is effective from 1 April 2014 and allows a divisional application to be filed up to the day before grant (or refusal or withdrawal) of the application. As a result, European divisional applications can be filed from 1 April 2014 from pending European patent applications even where the ‘old’ divisional application deadline has already passed. Such divisional applications could grant after the Unitary patent package comes into effect, thus permitting an EUP to be granted on the divisional application.
Of course, the level of the EUP renewal fees will influence many and so the announcement later this year is keenly anticipated.
The second aspect to consider at this stage is whether or not to opt-out “traditional” European patents from the jurisdiction of the UPC. Single enforcement litigation covering multiple jurisdictions is attractive, but some may fear the uncertainty of costs and quality of a new system. Accordingly, it seems prudent to opt-out of the system initially, unless the opt out fee is prohibitively high.
Again, the announcement on the fee structure and level will be made later this year and is keenly anticipated.
The unitary patent package has overcome many hurdles to get to the present stage. A lot of hard work is still required for the package to come into force. However, political momentum is with the system and it is likely to become a reality in 2015.
Patent applicants and proprietors can start to consider strategy to maximise the system when it comes into effect.