In our September Patent News – Special Report we reported on the frank exchange of views, at the Warsaw Conference organised by the Polish Presidency of the Council of the EU, on the issue of whether or not the proposed unified patent litigation system is fit for purposes in its current state.

On 12 to 14 October, an informal session was organised by the Polish Presidency, the stated aims of which were (1) to discuss a preliminary assessment of the financing of the Unified Patent Court (“UPC”), and (2) to exchange views on proposed changes to the draft Agreement establishing the UPC and litigation system.

Financing

The EU Commission, in its preliminary findings presented at the meeting, estimates the costs of the UPC in its “steady state” (after the transitional period) to be in the region of €45-60 million per annum. This figure, it would seem, does not address the very significant setup costs (judges’ training, providing facilities, infrastructure development, etc).

On court fees, the Commission presented figures based on “low”, “intermediate” and “self-financed” models, and factoring in a “low” or “high” uptake of the system. The Commission also favours a fixed fee system, rather than a sliding scale based on the “value of the matter.” While the Commission’s analysis is not presented here in detail, the headline estimates are:

  • Infringement action: €3,000 (low) - €12,000 (self-financing)
  • Counterclaim: €2,000 (low) - €7,000 (self-financing)
  • Appeal: €6,000 (low) - €20,000 (self-financing)

The Commission estimates that, on the “low” and “intermediate” fee models, the proportion of the overall costs of the systems covered by the fees - even assuming a high uptake of the system - would be just 27% and 49%, respectively.

The Commission speculates that Member States will likely look to pool resources and keep running costs down by participating in regional divisions of the UPC (rather than setting up their own local divisions). It was also suggested that, at least in the early days, costs might be kept down by relying on (relatively inexpensive) part-time judges.

The Commission has invited the Member States to provide feedback on the costs analysis, with a view to refining further its estimates.

Proposed Changes to the Draft Agreement

It is reported that there was strong opposition at the meeting from the Presidency, the Commission and “some Member States” to varying any of the provisions of the draft Agreement, unless necessary to do so in order to ensure compatibility with the decision of the Court of Justice in Opinion 1/09 and/or other aspects of EU law.

One concession, however, has made it into the draft Agreement. As we have previously reported, the view from industry is that the original transitional period and opt-out mechanism are too restrictive. While the transitional period remains at five years, there is now provision in the Agreement that a patentee may withdraw its decision to opt out of the unified system – i.e. may opt back in again – at any time, as long as the patent in question is not already the subject of proceedings before a national court.

The Commission has also recognised that careful attention must be given to the provisions of the Agreement, and the accompanying (as yet not finalised) Rules of Procedure, vis-à-vis the existing body of EU law. Uncertainties and potential conflicts arise because of the unique nature of the UPC (which is simply not contemplated in existing EU law) and because certain Member States might not participate in the unified system.

A non-paper prepared by the Commission provides some preliminary analysis on this issue. The conclusion of the Commission is that, at least, clarification is needed as to how the UPC system will dovetail with EU rules on the jurisdiction of the courts of the Member States and the enforcement and recognition of decisions across the EU, as set out in the Brussels Regulation1 (which, to complicate matters further, is itself currently subject to a review). The suggestion is that changes to both the draft Agreement and the Brussels Regulation itself are likely to be necessary. Further changes are also contemplated to ensure consistency with other EU instruments, such as the Enforcement Directive2.

Conclusions

Although no formal decisions were made at the October meeting, it appears increasingly unlikely there will be any major movement on the fundamental features of the UPC before it is put before the Member States for signing and ratification. This is disappointing, as it appears key players remain entrenched in the position that there is no going back on the framework of the Agreement in its 2009 incarnation, despite the concerns over the system expressed by actual users of patents courts across the EU.

The apparent charge to get the Agreement finalised is, however, potentially being slowed by the recognition that the UPC must be compatible with all aspects of EU law, and here the devil is very much in the detail.

On financing the UPC, this remains very much a work in progress. The challenge is to find a balance between providing a system that is affordable to all users of the system, yet not overly burdensome on the treasuries of the Member States (at a time when Governments across the EU are looking to cut drastically public spending).

There is clearly still a lot or work to do. In the meantime, of course, we await to see how Spain and Italy’s opposition to the use of enhanced cooperation on the creation of a unitary patent right (see here) plays out.