Unitary patents and the Unified Patent Court – the choices facing businesses

Out-Law Analysis | 01 Sep 2015 | 10:07 am | 5 min. read

FOCUS: The forthcoming overhaul of the patent system in Europe will be the biggest in the region's history, with new unitary patents likely to become available, and a Unified Patent Court (UPC) operational, next year.

The new regime will sit alongside rather than replace the existing patent system and will therefore require businesses to make careful choices about how they intend to protect their inventions and enforce their patent rights.

The decisions they take could affect their patent litigation strategy and exposure to risk for years afterwards.

What is a unitary patent?

The unitary patent will be a pan-European patent that businesses will be able to obtain through a single registration and validation process at the European Patent Office. Unitary patents will offer protection against unauthorised exploitation of their patented technology in each EU country that participates in the new unitary patent regime.

The unitary patent will only apply in countries that adopt the Unitary Patent Regulation as well as sign and ratify the Unified Patent Court Agreement. It is expected that at least 25 EU countries will participate in the new unitary patent regime.

The unitary patent will differ from European patents which businesses can already obtain today and which will continue to exist after the reforms take effect. A European patent is a 'bundle' of national patents, only effective in the countries in which you pay to validate it.

A new UPC is being created to provide a forum for dealing with disputes over unitary patents. The new court system will also deal with cases concerning the validity or infringement of European patents unless businesses 'opt out' those European patents from litigation before the UPC.

The UPC will have divisions right across Europe, with three central division courts to be located in Paris, Munich and London.

Patent filing options

Under the new regime, businesses will have the option of registering national patents in each European country, a European patent which they can validate in up to 38 countries in the continent, or a new unitary patent which will have automatic application in every participating EU country upon registration.

Companies can register both national and European patents in some countries. This 'double patenting' will also be possible under the new unitary patent regime as some EU countries will allow both national and unitary patents to be registered for the same invention.

Choosing a litigation forum

No business relishes the prospect of major litigation, but the new unitary patent regime will bring implications for the way businesses enforce and defend their patent rights that they need to consider.

Where a business decides to apply for a unitary patent they should be aware that disputes concerning those patents will be exclusively handled by the UPC.

The UPC will also be the forum for all disputes about European patents unless businesses actively opt those patents out from the jurisdiction of the UPC. The 'opt out' option is available as part of a seven year transition period that will apply under the new regime.

If businesses exercise their opt out right then it means disputes concerning those European patents will fall under the exclusive jurisdiction of national courts. Businesses will not be able to opt their European patents out of the UPC's jurisdiction if UPC proceedings have been already commenced concerning those patents.

Companies that opt their European patents out of the UPC's jurisdiction will have the option of opting back in again provided that no proceedings concerning those patents have been commenced before the national courts. There will be a fee for opting out each European patent family and for opting them back in again. It is currently proposed that the fee per opt out/in will be €80.

National courts will retain exclusive jurisdiction for handling cases concerning national patents despite the new regime.

What benefits will the new regime bring?

The unitary patent will cover jurisdictions that the average European patent will not. This will allow companies to enjoy protections across a larger area.

The broader scope of a unitary patent will mean businesses that license their use to others can extract greater value from their licensing arrangements with third parties.

Where businesses that own European patents decide not to opt those patents out from the UPC's jurisdiction they will have the opportunity to enforce their rights in those patents across each of the participating EU countries through a single claim, potentially cutting the cost and complexities associated with multiple litigations.

Litigation before the UPC also promises to be faster than many national courts.

What are the risks?

The biggest risk for businesses that take out unitary patents or do not opt their European patents out from the UPC's jurisdiction is that they could lose their patent rights as a result of a single decision by the UPC.

A further risk is that the UPC's rules and procedures, which have been subject to a number of re-draftings, are untried, and the quality of judicial decision making is untested.

Businesses may also find that it is more expensive to renew unitary patents than European or national patents, if they would previously only have sought protection in a small number of key territories, and might be frustrated that they will only be able to renew unitary patents in their entirety.  It is an "all or nothing" approach.  Fees will likely be pegged around the cost of renewal in the top 4-5 countries where European patents are registered.

European patent owners that opt out from the UPC system are also exposed to the risk of being locked into the national courts system for litigation over those patents if proceedings are brought against them after that opt out decision has been taken. In such circumstances businesses would be prevented from opting those patents back in to the UPC's jurisdiction, even though it might be advantageous for them to do so.

Where unitary or European patents are subject to litigation before the UPC there is a possibility that disputes over the validity of that patent and whether it has been infringed could be determined in two separate trials before the UPC, generating a chance of inconsistency. This approach also creates a risk that patent validity might be determined many months after infringement has been decided, although the UPC rules have been drafted to minimise this risk of an "injunction gap". For some businesses such "bifurcation" might be unwelcome.

The questions businesses should ask themselves

Every business with an interest and desire in retaining control over the use of their technology will need to consider the implications of the unitary patent and UPC regime for their company.

Difficult decisions about whether to embrace new unitary patents, stick to national and European patents and whether to opt out European patents from the UPC will need to be taken. What's right for one company will not necessarily be right for another.

Businesses might find that asking themselves the following questions could help them determine what approach will best suit them: 

  • Do you want to be able to enforce as widely as possible?
  • Are you willing to risk losing a patent in multiple countries through a single revocation action?
  • Do you have a 'crown jewel' patent, loss of which might destroy the business?
  • Do you want to be able use that leverage against another company?
  • Do you license your patents to others in Europe? Is the risk of revocation a real concern?
  • Are you happy to risk being ‘locked out’ of the UPC?

Victoria Bentley and Deborah Bould are experts in patent law at Pinsent Masons, the law firm behind Out-Law.com