Austrian step brings Unified Patent Court closer

Paris-based Emmanuel Gougé of Pinsent Masons was commenting after Austrian lawmakers approved an important treaty that serves as an enabler for the UPC to become operational. He said it is now possible that the new court system could be functioning before the end of 2022.

The Bundesrat, one of the two chambers of Austria’s parliament, approved the Protocol to the Agreement on UPC on provisional application (PAP-Protocol) last week. The PAP-Protocol provides for the final preparatory steps for the UPC to take place, such as the appointment of judges, testing of the IT systems, and setting of the budget.

The PAP-Protocol is not yet in force. It requires to be ratified by one further EU member state. Austria is expected to be the member state that ratifies next, though the Bundesrat’s approval of the PAP-Protocol is not the end of the ratification procedures in the country. The legal instrument approving the PAP-Protocol in Austria still needs to be approved by Austria’s president and chancellor and be published in the Federal Law Gazette. However, when Austria deposits the instrument of ratification, the provisional application phase will begin. The phase is expected to last approximately eight months.

The PAP-Protocol is one of three treaties that underpin the new UPC system.

The Protocol on Privileges and Immunities of the UPC (PPI) came into force on 27 October 2021. This confers legal status on the UPC, and also offers certain privileges and immunities to the court, judges and staff, and deals with tax exemptions.

The final treaty is the UPC Agreement (UPCA), which is the treaty that establishes the UPC system itself. At least 13 EU countries, including the three with the most European patents in effect in 2012 – Germany, France and, with the UK no longer a member state, Italy – must pass national legislation to ratify the UPCA. 

German plans to ratify the UPCA have been tested before the country’s Federal Constitutional Court, but the latest legal challenges were dismissed earlier this year. Germany deposited its instrument of preliminary ratification of the UPCA at the end of September. The full ratification is expected to take place as soon as it is foreseeable that the UPC is fully functional. The government expects that the UPCA can enter into force mid-2022.

“The German industry has always been a great supporter of the unitary patent system. It is therefore very good that the legal challenges in Germany and elsewhere have come to an end so that the industry can start enjoying the benefits of the system," said Marc Holtorf, Munich-based Pinsent Masons patent law expert.

The UPC system will have legal effect on the first day of the fourth month after Germany’s ratification, though the precise timeframe for its operation remains unclear as it depends on the timely commencement and completion of the provisional application phase and the date on which Germany ratifies the UPCA.

Gougé said: “The current indications are that the UPC will become operational by early 2023, but it may be sooner – late 2022 – depending on the momentum being maintained, the smooth running of the provisional application phase and the absence of any further legal challenges or political differences arising that have served to delay the project to-date.”

“Businesses must each weigh the benefits and risks involved in engaging with the new UPC system. The ability to obtain unitary patent protection across Europe will be attractive to some businesses, but others may be wary about the potential for one ruling by a court in the UPC system to knock out their patent rights across multiple jurisdictions,” he said.

The UPC is being set up to provide a dedicated judicial system for litigating new unitary patents. Existing European patents that are not specifically opted-out of the UPC’s jurisdiction will also be subject to the new court system.

The option of registering unitary patents has been provided for in EU law as a means by which businesses can obtain patent protection for their inventions across multiple EU countries through a single, cost-effective application. The existing system of European patents requires patents registered at the European Patent Office to be validated in each of the countries that businesses wish the patent rights to apply – this process entails the translation of those patents into the native language of each country.

The UPC system has been years in the making. It will comprise a system of central, regional and local divisional courts, with a UPC Court of Appeal in Luxembourg and the Court of Justice of the EU (CJEU) the final arbiter on points of EU law in respect of disputes over unitary patents or non-opted out European patents.

Originally it was envisaged that London would be one of the three 'seats' for the central division courts, specialising specifically in resolving patent disputes in the field of life sciences. However, Brexit means that the UK is no longer participating in the new unitary patent and UPC framework.

Earlier this year, Gerrard Barrett, the head of the Intellectual Property Office of Ireland, told a Pinsent Masons event that the committee tasked with making UPC preparations had decided to split the workload anticipated to be undertaken by the London court between the other central division courts in Paris and Munich in the short term. The Paris court is to specialise in technology patent disputes and the Munich court disputes over patents relating to mechanical engineering. This approach has been taken to ensure that the determination of the location of the seat does not delay the start of the UPC system, Barrett said.

At the time, Barrett also said that it was his understanding that a decision on where the third central division court should be located in the longer term will not take place during the first three years the UPC system is operating, and "will only be considered following a full review of the UPC Agreement itself and the related rules and regulations".   

Dublin-based patent litigator Ann Henry of Pinsent Masons said: “Under the Irish Constitution, the UPC Agreement will have to be ratified in a public referendum. That is expected to happen over the coming months, now that the last remaining obstacles to the UPC have been cleared.”