In a fundamental change to how European patents are going to be litigated in Europe, the United Patent Court (UPC) will soon have exclusive jurisdiction over European patent disputes and will be able to issue remedies that are binding across almost the entire EU. In contrast, the current system provides for a central examination process at the European Patent Office (EPO) but still requires enforcement or litigation in each individual contracting Member State.
Final steps before launch
On 15 March 2017, almost four years after its first inaugural meeting of 26 March 2013, the Preparatory Committee of the UPC met one last time before the next stage of Europe’s highly anticipated common patent court.
The Preparatory Committee, which is responsible for the setting up of the UPC, has agreed on a final suite of legal, HR and financial documents, and has made final amendments to the Rules of Procedure (with the revised 18th draft to be published shortly on https://www.unified-patent-court.org).
The Preparatory Committee also agreed upon the state of readiness for the Provisional Application Phase (PAP), a protocol signed on 1 October 2015 allowing some parts of the Unified Patent Court Agreement (UPCA) to be applied early in order to ensure the smooth transition into the operational phase.
Provisional Application Phase - May 2017
The PAP, which the Committee says should start in May 2017, will enable final arrangements to be made and see the operation of the UPC's formal governing bodies begin, as preparations are handed over from the Preparatory Committee to the three Administrative, Budget and Advisory committees.
These committees will notably oversee the recruitment and training of judges and the testing of IT systems, as well as the opening of the “sunrise” period, allowing early registration of opt-outs for existing European patents and applications before the actual start of the UPC.
“Sunrise” period - September 2017
The “sunrise” period, planned to start in early September 2017, is critical for patent holders. On the day that the UPCA comes into force – which could happen as soon as December 2017 – all national parts of existing European patents validated in ratifying countries, including pending European patent applications and supplementary protection certificates based on European patents, will by default fall under the jurisdiction of the UPC.
This will make it possible for third parties to file for central revocation of a European patent, i.e., the revocation of all its national parts in a single action.
Patent holders who wish to prevent this will therefore be given the period of approximately three months before the UPC becomes fully operational – the “sunrise” period – to preemptively opt-out their existing European patents and patent applications from its jurisdiction, free of charge. After this, opting-out will remain possible during a transitional period of seven years (renewable), provided that no action has been commenced before the UPC with respect to the European patent at issue.
The launch of the UPC will also kick-start the EPO’s ability to issue unitary patents in addition to the existing European patents.
In the coming months, patent holders will therefore have to consider both their opting-out and patent application options.
Launch of the Unified Patent Court – December 2017
The launch of the UPC requires ratification of the UPCA by at least 13 EU countries that must include the three in which the highest number of European patents was in force in 2012, France, Germany and the UK. The PAP Protocol required its own separate ratification and only comes into force the day after 13 such ratifiers sign or declare themselves bound by the PAP Protocol.
To date, 12 Member States have ratified the UPCA, including France, so that the UPCA has to be ratified by the UK and Germany for the UPC regime to come into effect (see map below).
While this is expected to happen in December 2017, the PAP is likely to start even sooner, as 12 Member States have already declared themselves bound by the Protocol.
In spite of the uncertainty created by last year’s “Brexit” vote, as well as by the UK government’s intention to trigger article 50 of the Treaty of Lisbon on 29 March 2017, the UK now appears back on track to ratify the UPCA.
The UK government indeed confirmed on 28 November 2016 that it was “proceeding with preparations to ratify the Unified Patent Court Agreement”.
The UK’s next step is now to pass national legislation to enact the Protocol on Privileges and Immunities, which gives the UPC legal personality in the UK and sets up privileges and immunities to the court and its staff on UK soil.
It is expected that this will happen in the current or following month.
On 9 March 2017, the German parliament, the Bundestag, unanimously passed the two pieces of legislation required for Germany to ratify the UPCA.
One is Germany’s formal consent to ratify the Agreement, while the other amends German patent law to implement the unitary patent.
The draft bills now must be submitted for confirmation to the second parliamentary chamber representing the German federal states, the Bundesrat, (although this step is considered to be a formality). The vote is expected to be held on 31 March 2017.
Germany will likely postpone the final formal step of depositing its instrument of ratification with the EU Council until August or in any case pending the ratification of the UPCA by the UK.
Spain raised a number of unsuccessful challenges against the Unified Patent Package before the EU’s highest court, the CJEU, and is not a signatory to the UPCA.
However, it may not be completely over for Spain as on 7 March 2017, the Congreso de los Diputados, the Spanish parliament, voted for a non-binding motion which calls on the minority government to reconsider joining the Unitary Patent system. While non-binding, this motion shows that Spain might ultimately join the system.
France was the second Member State to ratify the UPCA and will notably host the central division of the Court of First Instance, which will be located in Paris.
Unlike Germany, France has not made any substantive changes to its national patent law. However, discussions and talks of launching a consultation process are ongoing at the French Chancellery to determine whether to make amendments that would bring French law even closer to the UPCA and the Rules of Procedure.
The UPCA and the Rules of Procedure
Like the French Intellectual Property Code, Article 63 of the UPCA provides for permanent injunctions in cases of patent infringement:
“Where a decision is taken finding an infringement of a patent, the Court may grant an injunction against the infringer aimed at prohibiting the continuation of the infringement”.
The wording of this provision – “the Court may grant” – has led some commentators to wonder whether the court will follow European jurisdictions such as France and Germany in granting automatic or near-automatic injunctions if a patent is held to be infringed, or whether it will refuse an injunction where it would be disproportionate or oppressive, leaning more towards jurisdictions such as the US or the UK, where an injunction is regarded as a discretionary remedy.
While it is clear from the very wording of this provision1 that the court shall have a discretion, some have argued that it seems unlikely that the Court will move significantly towards the position of the US courts2, referring to the UPCA’s preparatory work.
The Legal Group of the Preparatory Committee had indeed indicated in the 17th draft of the Rules of Procedure that “Where the Court finds an infringement of a patent it will under Article 63 of the Agreement give order of injunctive relief. Only under very exceptional circumstances it will use its discretion and not give such an order. This follows from Article 25 of the Agreement which recognizes the right to prevent the use of the invention without the consent of the patent proprietor as the core right of the patentee”.
However, some have put forward that exceptions could still arise in UPC case law, notably with regard to standard essential patents.
While the UPCA and the Rules of Procedure are the result of a joint thinking process between several European Union countries and so from the outset have carried on the common judicial heritage shared between them, Article 63 nevertheless does open up the possibility for the Court to take into consideration all the circumstances of the case so that – as an exception to the general rule – an injunction might be denied even though infringement has been established.
…What about damages, then?
In such cases where the Court does not grant an injunction in spite of infringement having been found, how will the patent holder obtain damages for acts of infringement that would occur after the Court’s decision is rendered?
Indeed, the wording of Article 68 of the UPCA on the award of damages clearly indicates that it is only concerned with past infringement:
“(1) The Court shall, at the request of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in a patent infringing activity, to pay the injured party damages appropriate to the harm actually suffered by that party as a result of the infringement. [emphasis added]
(2) The injured party shall, to the extent possible, be placed in the position it would have been in if no infringement had taken place. The infringer shall not benefit from the infringement. However, damages shall not be punitive”. [emphasis added]
In contrast, French case law on tort liability allows the award of damages to redress future harm if it is the “certain and foreseeable consequence” of a current situation.
Going even further, the so-called “Urvoas” proposed civil liability reform dated 13 March 2017 would allow such award of damages to repair the harm’s “reasonably foreseeable evolution”.
Confidentiality in UPC proceedings
Confidentiality in evidence taking, proceedings, hearings, orders and decisions is an important feature of the new EU Trade Secrets Directive3 which came into force on 5 July 2016.
Effects of the Directive have already started to trickle down into national laws, as evidenced by a new French Ordinance of 9 March 20174 on damages actions in anti-competitive practices, which notably provides protection for evidence containing trade secrets.
In application of the Directive, judges may decide that the proceedings shall be held and that the decision shall be taken outside the presence of the public, if the protection of a trade secret cannot otherwise be ensured.
The UPCA and the Rules of Procedure are directly in line with this growing trend, as is shown by the numerous provisions allowing for confidentiality with regard to:
- the taking and use of evidence5;
- proceedings6 (interim conferences7, oral hearings8 and pleadings9); and
- decisions and settlements10.