The Unitary Patent (“UP”) and Unified Patent Court (“UPC”) will soon enter force in Europe, revolutionising the European patent system and presenting both opportunities and risks. Now is the time to start preparing.
The UP will be a new, single patent covering the 25 EU Member States currently participating in the UP System. It will be available as an alternative to the traditional “bundle” of European patents, and will enable the patent proprietor to obtain uniform patent protection in the 25 participating Member States. All existing European Patents will be included in the UPC regime automatically unless they are actively opted out. Proprietors will only have a 3 month window within which to opt out prior to the UP coming into effect (likely early 2023).
There are a number of commercial, practical and administrative steps regarding opting out that businesses should start to consider now ahead of the UPC coming into effect.
Accidental opt outs?
An application to opt a patent out can only be made by the patent proprietor. The patent proprietor can also authorise an individual, such as a European patent attorney (including those based in the UK), to lodge the opt out application on their behalf. Where there are several proprietors of the patent, such authorisation must be received from all proprietors.
However, the European Patent Office (“EPO”) does not update the European Patent register after the end of the 9-month opposition period. The EPO register therefore may not accurately reflect the proprietor or their appointed representative. The UP system acknowledges this, and consequently does not limit access to the opt out function to the registered proprietor. The risk is that someone else could opt your patent out and the UPC guidance suggests checking the UP register or setting up a watch.
A European Patent within your portfolio might be licensed exclusively or non-exclusively to different entities for different territories, fields of use, products or parts of a supply chain.
Irrespective of whether the license is exclusive or non-exclusive, a licensee will not be able to apply to opt out the patent. However, the licensee may have certain rights under the licence i.e., the right to enforce the patent, which may give rise to contractual obligations such as an obligation on the proprietor to consult with the licensee on any decisions regarding opt out. Reviewing licences and engaging with licensees with a view to opting out could give rise to lengthy and complex discussions, particularly where the licences govern different designations in different countries, so steps should be taken to engage with licensees now.
Businesses will also need to review the terms of each licence to determine which party controls any prosecution and litigation in respect of the patent, should any such action arise as a result of trying to opt out the patent or otherwise.
Applicants or proprietors of one single application for a European patent or one single European patent will have to act in common to exercise the opt-out. Therefore, if your business is intending to opt a patent out that is co-owned, you will need to approach the co-owner to seek their agreement and prepare jointly signed documentation.
Once the UPC system comes into existence, there will be a sunrise period of three months, between the final ratification required to bring the UPC system into effect and the UPC system coming into effect, during which patents can be opted out of the UPC regime. It will still be possible to opt patents out of the UPC after this period. However, patents in the UPC are at risk of a central attack from day 1, and so businesses who are minded to opt out should do so prior to the UPC coming into effect.
It is therefore important that businesses start reviewing their portfolios and existing commercial arrangements now, to allow sufficient time to resolve any disputes that may arise with licensees and/or co-owners regarding opting out and complete any necessary formalities and registrations ahead of the expiry of the sunrise period.
The authors would like to thank Chloe Day, trainee solicitor, for her assistance in writing this article.